/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/040315.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 Monday, March 15, 2004, Vol. 5, Issue 52 Headlines A R G E N T I N A BANCO FRANCES: Net Loss Shrinks in 2003 BELLSOUTH CORP.: Telefonica Braces for Argentine Challenges FRIO Y CALOR: Seeks Court Approval to Reorganize JUAN MINETTI: Registers Positive Turnaround in 2003 NII HOLDINGS: Resale Registration Statement Declared Effective PSEG: Saesa Strikes Deal With Camuzzi Over Edersa Sale SCP: Corporate Bonds Get Default Ratings From Local S&P B E R M U D A FOSTER WHEELER: Gets New Gen Manager at FW USA Puerto Rico Ops B R A Z I L AMBEV: Previ Wants Regulator to Review Interbrew Deal COSIPA: EBITDA Reaches BRL1 Billion in 2003 EMBRATEL: Parent Blocks Bidders' Access to Data Room EMBRATEL: Makes Changes in Qualcomm Contract LIGHT: Reports Profit in 4Q03 on Tariff Increases C H I L E PARMALAT CHILE: Dairy Farmers' Deliveries Being Phased Out TELEFONICA CTC: Expert Panel Formed to Scrutinize Rates Decree C O L O M B I A * Colombian Government Prioritizes Foreign Debt Payment M E X I C O COPAMEX: Fitch Moves Ratings to Rating Watch Negative TFM: Obtains Waiver Under Credit Agreements V E N E Z U E L A PDVSA: In Talks With NB Power to Settle Conflict PDVSA: Forces Workers To Sign Denials Over Recall Petition - - - - - - - - - - ================= A R G E N T I N A ================= BANCO FRANCES: Net Loss Shrinks in 2003 --------------------------------------- Argentine bank Banco Frances SA (NYSE: BFR), a unit of Spain's Banco Bilbao Vizcaya Argentaria SA, posted a ARS79.6-million loss in the fourth-quarter of 2003, down from a ARS266.8-million loss in the same period in 2002. Citing a press release, Dow Jones reports that the bank, Argentina's third-largest in terms of deposits, said the fourth quarter results meant the bank ran a net loss in all 2003 of ARS276 million, a sharp improvement from the ARS1.2-billion loss the Company generated in 2002. For the fourth quarter of 2003, the bank reported a net loss per share of 22 centavos and a net loss per American Depositary Share of 65 centavos. That compares with a net loss per share of ARS1.27 the previous year and net loss per ADS of ARS3.82 a year earlier. The bank didn't give earnings per share figures for the whole of 2003. All figures reported are subject to adjustments for inflation for operations up to Feb. 28, when a regulation requiring inflation adjusting was repealed. Data arising from operations after that reflect nominal figures. CONTACT: BBVA Banco Frances SA 199 Reconquista Buenos Aires Argentina 1003 Phone: +54 11 4346 4000 Home Page: http://www.frances.com.ar Contacts: Jaime Guardiola Romajaro, Chairman BELLSOUTH CORP.: Telefonica Braces for Argentine Challenges ----------------------------------------------------------- Spain's Telefonica Moviles SA (TEM) is expected to encounter regulatory challenges in Argentina in its plans to purchase the local subsidiary of US operator BellSouth, Business News Americas reports, citing analysts. Argentine regulations place a 50MHz cap on the amount of wireless spectrum an operator may control. Movicom BellSouth and TEM, known locally as Unifon, together control over 80MHz of cellular and PCS spectrum, all but guaranteeing a return of spectrum to the local regulator, analysts said. As such, spectrum excesses will not prevent the companies from merging operations. Antitrust inquiries are expected to surface in Argentina, where National Commission for the Defense of Competition (CNDC) will investigate the merger, to determine whether it blocks out competition in the mobile segment. It will also evaluate whether the vertical integration of a larger mobile operator with Telefonica's local fixed line subsidiary threatens competition. Those arguments are expected to be difficult to establish. Earlier reports have suggested that the deal will help Movicom solve its debt issues. The Company has around US$500 million in defaulted debt, composed as follows: US$150 million in bonds, US$68 million from a loan that expired in 2002, US$200 million from another loan that expired last year, US$39 million owed to suppliers and US$34 million in outstanding interest payments. FRIO Y CALOR: Seeks Court Approval to Reorganize ------------------------------------------------ Buenos Aires Company Frio y Calor S.A. filed a petition for "Concurso Preventivo," reports Infobae. Judge Herrera of Court No. 3, with aid from Clerk No. 6 Dra. Gutierrez Huertas, handles the Company's case. The court is yet to assign a receiver on the matter and set important dates for the submission of the necessary reports. The Company ceased to make payments on Feb. 19, 2004, says the report. CONTACT: FRIO Y CALOR S.A. Joaquin V. Gonzalez 646 Buenos Aires JUAN MINETTI: Registers Positive Turnaround in 2003 --------------------------------------------------- Juan Minetti, Argentina's second largest cement producer, posted a ARS121-million net profit in 2003, reversing a ARS210-million net loss in the previous year, reports Business News Americas. The Company, in a statement to the country's securities regulator (CNV), said the turnaround was a result of a successful financial restructuring and increased sales. Operating profit in 2003 reached ARS123 million, compared to ARS18.3 million operating loss in 2002, while net sales jumped 52% to ARS380 million. Swiss cement giant Holcim controls Juan Minetti. CONTACT: Juan Minetti SA 87 Ituzaingo Cordoba Argentina 5000 Phone: +54 51 26 7529 Fax: +54 51 24 4709 Home Page: http://www.juanminetti.com.ar Contacts: Dr. Manuel Augusto J. Baltazar Ferrer, Chairman Atty. Carlos Buhler, Executive Vice Chairman & General Manager NII HOLDINGS: Resale Registration Statement Declared Effective -------------------------------------------------------------- NII Holdings, Inc. (Nasdaq: NIHD) announced that the Securities and Exchange Commission declared effective at 12:00 p.m. Thursday its registration statement on Form S-3 for the resale by selling security holders of notes and underlying shares of common stock relating to its $180 million aggregate principal amount 31/2% convertible notes due 2033. The notes were privately placed in September 2003 and were subject to a registration rights agreement. The filing and subsequent effectiveness of the registration statement satisfy NII's requirements under the registration rights agreement. About NII Holdings, Inc. NII Holdings, Inc., a publicly held company based in Reston, Va., is a leading provider of mobile communications for business customers in Latin America. NII Holdings, Inc. has operations in Argentina, Brazil, Mexico and Peru, offering a fully integrated wireless communications tool with digital cellular service, text/numeric paging, wireless Internet access and Nextel Direct Connect(R), a digital two-way radio feature. NII Holdings, Inc. trades on the NASDAQ market under the symbol NIHD. Nextel, the Nextel logo, Nextel Online, Nextel Business Networks and Nextel Direct Connect are trademarks and/or service marks of Nextel Communications, Inc. CONTACTS: Investor Relations: Tim Perrott (703) 390-5113 tim.perrott@nii.com Media Relations: Claudia E. Restrepo (786) 251-7020 claudia.restrepo@nii.com Web site: http://www.nii.com PSEG: Saesa Strikes Deal With Camuzzi Over Edersa Sale ------------------------------------------------------ US power company PSEG (NYSE: PEG) is about to make a complete exit in Argentina, Business News Americas indicates. PSEG spokesperson Paul Rosengren announced that the Company's Chilean subsidiary Saesa has reached an agreement to sell its 50% stake in Argentine distributor Edersa to the Camuzzi group. The agreement, which local news source Infobae said could be worth between US$12 million - US$15 million, awaits pending regulatory approval by Argentine authorities. Camuzzi already owns the other half of Edersa. If the Edersa sale goes through, PSEG will have washed its hands of its Argentine investments, after abandoning its stake in Entre Rios distributor Edeersa in March 2003. SCP: Corporate Bonds Get Default Ratings From Local S&P ------------------------------------------------------- Standard & Poor's International Ratings, Ltd. Sucursal Argentina assigned an `raD' rating to various corporate bonds issued by Sociedad Comercial del Plata S.A., according to the National Securities Commission. The default rating, which was given based on the Company's financial status as of September 30, 2003, applies to the following bonds: - US$25 million of "Serie 8, emitida bajo el Progr. Global de Obligaciones Negociables por un monto de US$400 Millones," under Series and/or Class. The bonds matured August 12, 2002. - US$40 million of "Serie 7, emitida bajo el Progr.Global de Obligaciones Negociables por un monto de US$400 Millones," under Series and/or Class. The maturity of the bonds was not disclosed. - US$125 million of "Serie 6, emitida bajo Progr. Global de Obligaciones Negociables por un monto de US$400 Millones," under Series and/or Class. The maturity of the bonds was not disclosed. - US$60 million of "Serie 4, emitida bajo Progr. Global de Obligaciones Negociables por U$S 400 Millones," under Series and/or Class. The bonds matured on December 21, 2002. - US$400 million of "obligaciones negociables" under Program. The maturity of the bonds was not disclosed. ============= B E R M U D A ============= FOSTER WHEELER: Gets New Gen Manager at FW USA Puerto Rico Ops -------------------------------------------------------------- Foster Wheeler Ltd. (OTCBB: FWLRF) announced Thursday that William Diaz has been appointed as director and general manager of Foster Wheeler USA Corporation's Puerto Rico Branch Operations. Based in San Juan, William will develop local opportunities for Foster Wheeler, primarily in the pharmaceutical, biotechnology and healthcare industries. Leveraging Foster Wheeler's resources and proven project execution track record in the world's key pharmaceutical investment locations, William will play a key role in developing an enhanced offering to our clients in the region, building upon the high quality validation services currently provided by the Puerto Rico Operations Centre. Clive Mullins, global business development director, pharmaceuticals, Foster Wheeler, said: "William brings in-depth business development, quality management and business administration experience to further strengthen our already highly successful team. Puerto Rico is a key location for Foster Wheeler and in the last two years alone, this office has completed over 70 validation projects. With William at the helm, we will continue to build on this success. "Clients in Puerto Rico had a chance to meet with William and the key members of his team at a seminar which Foster Wheeler sponsored at the Banker's Club, Hato Rey, Puerto Rico, on 17 February ," he continued. Diaz is a graduate of the University of Puerto Rico, Mayaguez Campus, and holds a Bachelor of Science degree in Chemical Engineering. In addition, he has completed graduate courses towards a Master's degree in Marketing and Human Resources from the Interamerican University of Puerto Rico. He has over 15 years' experience of business development, project management, engineering design, quality systems implementation and business administration for major engineering and construction companies in the USA and the Caribbean. He is an associate director of the Puerto Rico Manufacturers' Association as well as an active member of the American Society for Quality (ASQ) and the American Society for Engineering Management (ASEM). ABOUT FOSTER WHEELER 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. CONTACT: Foster Wheeler Energy Limited Anne Chong Public Relations Manager TEL: +44 (0)118 913 2106 E-mail: anne_chong@fwuk.fwc.com Web site: www.fwc.com =========== B R A Z I L =========== AMBEV: Previ Wants Regulator to Review Interbrew Deal ----------------------------------------------------- Banco do Brasil's pension fund Previ is planning to ask Brazil's securities regulator for a scrutiny into the recently announced merger between Brazilian brewer Companhia da Bebidas das Americas (ABV), or AmBev and Interbrew SA (INTB.BT), according to Dow Jones Business News. Luiz Aguiar, Previ's investment director, says he will ask Brazil's securities regulator, the CVM, to investigate whether AmBev paid too much for the USD11.27 billion merger. AmBev, alleges many minority shareholders, overpaid for the assets in the Americas. The merger deal, which would create the world's biggest brewer, stipulates that in exchange for a 57% stake in AmBev, Interbrew would hand over to the Brazilian brewer assets in the Americas, including Canada's Labatt, 70% of Labatt USA, and 30% of Mexico's Femsa Cerveza. A spokeswoman for Previ, which owns 14% of AmBev's non-voting stock and 8% of its capital overall, said the pension fund has suffered a loss of some BRL600 million on that investment since the merger announcement. AmBev's non-voting stock has plunged 32% to BRL550.00 since March 1, two days before the merger was announced. Voting shares, which will receive a premium price because they carry control, have climbed 16% to BRL965.00 over the same period. The CVM has yet to confirm whether they have received a formal request for an inquiry from Previ. COSIPA: EBITDA Reaches BRL1 Billion in 2003 ------------------------------------------- Companhia Siderurgica Paulista - COSIPA - (Registration CVM 01.831-7 - BOVESPA CSPC3, CSPC4), announces its results for the year of 2003. The Company's operating and financial information are presented based on consolidated numbers, in Reais (R$), according to the Corporate Legislation. The comparisons made in this report take into consideration the same period of 2002, except when specified in contrary. Highlights Sales and Revenue: Steel products sales volume of products in the 4Q/03 reached 1,024 thousand tons and totaled 3,666 thousand tons in 2003. In the year, the volume commercialized grew 4% in relation to previous year, new commercial records having been established, with emphasis to the increase of exports. Net Revenues summed up BRL961 million, accumulating BRL3,520 million in the year, 30% higher than the year of 2003. EBITDA: EBITDA reached BRL262 million in the 4Q/03, accumulating BRL1,007 million in the year, 11% higher than in the year of 2002. The EBITDA margin decreased from 33% to 29% due to the pressure upon costs of main raw materials utilized in steelwork process. Results: The operating profit (before the financial income) of the 4Q/03 was of BRL289 million, accumulating BRL858 million in the year of 2003. Thanks to the good operational performance, providing the establishment of records in production and sales, the Company recorded an accumulated net income in the year of BRL258 million, reverting the net loss of BRL549 million in previous year. Perspectives: In 2004, Cosipa will concentrate its efforts in the reduction and extension of its debt and in the increase of profitability, focusing the generation of value to the shareholder. The Company foresees a lower interest and risk-country scenario, thus minimizing the pressure in credit market and enabling renegotiation of terms and rates. Indicators point to the increase of domestic demand and the sustentation of the consumption levels in the international market. The suspension of safeguard 201 by the United States should contribute for the maintenance of international prices in favorable levels and for geographical decentralization of exports. The great challenge of the year will be answering quickly to eventual movements of cost increases, eventuality for which Cosipa already has operational and commercial strategies. During the year, the synergy within Usiminas System will be intensified, searching better results in the relationships with suppliers, with effects upon costs. Operational Performance Production In the first year of full operation capacity, the pig-iron production reached 4.1 million of tons, 10% higher than the one recorded in 2002. The volume of liquid steel totalized 4.2 million of tons, 6% higher than previous year. 3.8 million tons of flat-rolled shapes, among slabs, heavy plates, hot and cold sheets, hot and cold coils have been processed, volume which exceeded in 5% the production of 2002. Technology In order to become more competitive, Cosipa continuously invested in the incorporation of new technologies to its processes. Two high points of 2003 were the IF ("Interstitial Free") plate production technology development utilizing technologic transfer and technical assistance of Usiminas, and the retaking of heavy plates production with API ("American Petroleum Institute") quality. These more noble products are mainly utilized by the automotive industry and by the oil industry, respectively. Commercialization Scenario With the increase of sales in the domestic market and exports, Cosipa beat new commercial records in 2003. Shipped volume totalized 3.7 million tons of flat-rolled products, 4% higher than 2002. Gross revenue totalized BRL4.5 billion, in comparison to BRL3.4 billion in previous year. In the domestic scenario, the expansion was ensured by business with exporting companies and the retaking of purchases of clients in general in the end of the year. In the international scenario, China continued absorbing great volumes, in spite of the increase of local production, thus maintaining steel prices in high levels. Internal market The domestic market absorbed 2.2 million tons of flat steel, representing an increase of 1% over 2002. The gross revenue reached BRL3.1 billion, an amount 34% higher than the one recorded in previous year. With such sales volume, Cosipa guaranteed a 30% "market share", very near to the share presented in 2002, of 31%. The hot rolled segment had the higher share in the total of physical sales: 39%. Cold rolled contributed with 32% in the composition of such total commercialized, heavy plates answered for 23%, slabs utilized 3% and "blanks", another 3%. Exports Flat-rolled shipments for foreign market reached 1.5 million tons, 7% higher than the one accumulated in 2002. Exports produced a gross revenue of BRL1.4 billion, what is equivalent to a growth of 27% in relation to previous year, in spite of exchange rate being less favorable for exporters. Slabs sales answered for 60% of the international market businesses, thus solidifying the position of the Company as a regular supplier of such line. From the total of rolled shape products exported, Cold Rolled Shapes represented 19%, Thick Plates 13%, Hot Rolled Shapes 5% and "Blanks" 3%. China provided the greatest demand for Company in the year. Even with the negative effect of the so-called `Asian flu', which paralyzed the local economy between the first and second quarter of the year, the sales of flat-rolled shapes to the country exceeded 500 thousand tons. The Chinese demand, associated to the reduction of shipments to the United States, in reason of the surtax imposed by the North-American government, increased Asia's participation in the total volume of exports from 44% in 2002 to 66% in 2003. Economic-Financial Performance Net Revenues Net Revenues increased 30% in 2003 totalizing BRL3.5 billion, benefited by the expansion of volume commercialized and obtaining of better prices. In a higher steel quotation scenario, Cosipa incorporated new production technology, thus aggregating value to its sales. The average weighted price per volume increased 22%, from BRL775.86/t in 2002 to BRL943.06/t. Net Revenues in domestic market summed up BRL2.3 billion, an increase of 33%; exports accumulated BRL1.2 billion, an increment of 24%. Gross Profit Cosipa's gross profit reached BRL953 million, an increase of 15%. However, there was a reduction in gross margin of 27%, in comparison with 31% in 2002, in reason of the increase in costs of the main production inputs, notably coal, coke, energy and iron ore, as well as the effect of the lower exchange rate upon exports in the year. The average cost per ton sold was of BRL700.18 - an expansion of 32% in relation to previous year. Operating Income The operating income before the financial income increased 18% reaching BRL858 million in 2003. The operational margin of 27% decreased to 24%, reflecting the fall in gross margin. EBITDA reached the never seen record of BRL1.0 billion, increasing 11% over 2002 and pointing a new level of cash generation after closing of a great cycle of investments. Financial Income Net financial income had a reduction of 70% mainly in reason of the favorable variation of 18% in the exchange incurring upon the debt in dollar, partially annulled by losses derived from "hedge". Net Income Cosipa recorded in 2003, a net income of BRL258 million, equivalent to BRL0.0643 per share. This result, the best in the Company's history, derives from the excellent sales and operational performance. Capital Structure The onerous debt of BRL5.4 billion in 2002 became BRL4.6 billion in 2003, benefited by the impact of the Real valorization upon foreign currency operations, notwithstanding an actual reduction of debt in the amount of BRL212.0 million. Debt profile improved, with more extension in maturities and an increase in the participation of financing lines in Reais, thus reducing the exposition of the Company to the exchange risk. In the total of debt, the commitments with long term maturity represented 63%, in comparison with 57% in previous year, and the participation of local currency obligations increased from 22% to 32%. Investments During 2003, the Company invested R$166 million, applied mainly in technologic updating and maintenance projects. Capital Market Cosipa is an open capital company listed in Bovespa. Its capital stock is constituted of 4,006,906 thousand shares, being 1,335,635 thousand common shares (CSPC3) and 2,671,271 thousand preferred shares (CSPC4). At the closing of the year-end 2003, Usiminas had an interest of 92.9% in the total capital of the Company. In 2003, common and preferred shares valorized 154% and 123%, respectively, in comparison to an Ibovespa positive variation of 95%. CONTACT: Gilson Rodrigues Bentes Financial Executive Board Relations with Investors Advisory Tel: (11) 5070-8980 and/or Leandro J. Cappa de Oliveira Econ/Financial Analyst Tel: (11) 5070-8887 E-mail: investidores@cosipa.com.br EMBRATEL: Parent Blocks Bidders' Access to Data Room ---------------------------------------------------- MCI barred Brazil's three incumbent operators plus new entrant Geodex from accessing the data room of its Brazilian unit long- distance carrier Embratel Participacoes, reports Business News Americas. "The consortium formed by Geodex and the local concessionaires will not have access to any data room," MCI said. "No relevant information about Embratel will be handed to those companies by MCI or by Embratel." The move follows an order from telecoms regulator Anatel, which earlier halted Embratel's sale process on concern that the three incumbents could profit at the expense of reduced competition from seeing into Embratel's books. Tele Norte Leste Participacoes SA (Telemar), which holds the concession for local service for 53% of Brazil's population; Brasil Telecom Participacoes SA, which serves the west and south; and the Brazilian unit of Spain's Telefonica SA, which provides service in the state of Sao Paulo, have formed a consortium to bid for a controlling stake in Embratel. Market observers believe they invited data services provider Geodex to take a 40% stake in the operation, in order to bypass antitrust regulation. CONTACT: Silvia M.R. Pereira, Investor Relations Tel: (55 21) 2121-9662 Fax: (55 21) 2121-6388 Email: silvia.pereira@embratel.com.br invest@embratel.com.br EMBRATEL: Makes Changes in Qualcomm Contract -------------------------------------------- Embratel modified its contract with US telco supplier Qualcomm (Nasdaq: QCOM), in which Embratel will buy Qualcomm's Brazilian radio towers rather than rent them, Norbert Glatt, Embratel's chief financial officer, said. According to Business News Americas, the original agreement was made last year when Embratel acquired fixed-wireless operator Vesper from Qualcomm. The executive also said Embratel's new satellite, to launch by the beginning of 2006, will cost US$200 million. More than half the cost of the satellite will appear on Embratel's books this year, he added. LIGHT: Reports Profit in 4Q03 on Tariff Increases ------------------------------------------------- Light Servicos de Electricidade, Rio de Janeiro's main power distributor, made a profit in the fourth quarter of 2003 following a loss in the preceding quarter, says Reuters. Light, a unit of France's state Electricite de France (EdF) [EDF.UL], posted a net profit of BRL60 million ($20.6 million) in the fourth quarter, a huge improvement on the BRL250-million loss it made in the third quarter. The Company said tariff increases were responsible for the quarter's positive results, which in turn helped reduce annual loss to BRL488 million from BRL1.2 billion in 2002, despite a 6.3% drop in energy sales in 2003. CONTACT: LIGHT SERVICOS DE ELETRICIDADE S.A. Avenida Marechal Floriano, 168 20080-002 Rio de Janeiro, Brazil Phone: +55-21-2211-2794 Fax: +55-21-2211-2993 Home Page: http://www.lightrio.com.br Contact: Bo Gosta Kallstrand, Chairman Michel Gaillard, President and CEO Joel Nicolas, Executive Director, Operation Paulo Roberto Ribeiro Pinto, Executive Director, Investor Relations and CFO ========= C H I L E ========= PARMALAT CHILE: Dairy Farmers' Deliveries Being Phased Out ---------------------------------------------------------- Parmalat Chile's failure to pay its debts to local farmers has prompted Chilean milk producers to reduce its deliveries to the company, the Wall Street Journal reports. Carlos Arancibia, chief executive of dairy farmer association Fedeleche, said, "Today we started to withdraw and we estimate that by tomorrow or the day after they (Parmalat) won't be receiving any milk." Parmalat has promised on a number of occasions to pay their debts amounting to some CLP3 billion for milk provided since December, but it has yet to make good on that promise. Mr. Arancibia said that since the story of Parmalat's failure to pay broke out in December, deliveries to the Company have whittled down to just 80,000 liters a day in the past few days, a far cry from the 350,000 liters delivered daily in December. Neither Parmalat Chile, which has filed for protection from creditors under local law, nor its prospective buyer, local investment holding Bethia, has opened talks with the dairy farmers about the debt, Mr. Arancibia added. TELEFONICA CTC: Expert Panel Formed to Scrutinize Rates Decree -------------------------------------------------------------- Chile's telecoms regulator Subtel and the country's largest telco Telefonica CTC Chile (NYSE: CTC) have created an expert panel that will issue a non-binding opinion on proposed rates adjustments for the operator, Business News Americas reports, citing a Subtel statement. The three experts, who make up the panel, are Renato Agurto and Leonardo Mena - appointed by CTC and Subtel, respectively - and Jose Pablo Arellano, who was drawn by lots late Thursday afternoon. The panel has until April 4 to submit its recommendations. The Authority, in turn, must submit the final decree to the Chilean General Controller, no later than May 4, 2004 for its knowledge and release to the official gazette. CTC, a unit of Telefonica SA (TEF), published its rates proposal in November, calling for rates hikes, and Subtel responded March 5 with a proposal for a 19% average cut in local call prices. CTC believes the overall proposal would mean an US$87 million revenue reduction for 2004. In the meantime, the Company's workers are worried an upcoming regulatory decision could lead to major layoffs, union President Robinson Navarro said. Workers say they fear they may be hit by another round of layoffs, which have been aggressive in recent years, because the Subtel bases its tariff model on a supposed "fully efficient company" operating in an ideal, fully competitive market. That "ideal CTC" in the tariff proposal has just 2,285 employees, compared to about 3,500 currently. It also assumes cutting benefits 12%-15% and limiting workers' rights, Navarro said. "We're analyzing the Subtel proposal, but from our point of view if it is applied we're talking about a reduction of 1,300 out of the 3,500 the company has, and that obviously has us worried," he said. The union was scheduled to meet company officials Thursday to further review the situation and to possibly pressure the government to win a softer stance in the final ruling. 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 =============== C O L O M B I A =============== * Colombian Government Prioritizes Foreign Debt Payment ------------------------------------------------------- Rather than prepay debt as originally planned, the Colombian government has expressed its intention to instead use US$500 million in international reserves to cover foreign debt expiring in 2004, Dow Jones reports, citing local press reports. President Alvaro Uribe has already announced the plan Friday, citing fears that the Colombian peso could grow stronger and hurt exporters. In the past few months, the peso has strengthened about 10% against the dollar. After a meeting yesterday, Senator Luis Guillermo Velez said the government was planning some sort of debt "swap" that would see external debt traded for internal loans. In the new plan, the government would take the US$500 million in foreign reserves and use it to pay expiring foreign bonds. It would then issue treasury bonds in Colombian pesos that will be acquired by the central bank. According to a statement by Finance Vice Minister Maria Ines Aguda, foreign debt will rise to about COP28 billion in 2004. =========== M E X I C O =========== COPAMEX: Fitch Moves Ratings to Rating Watch Negative ----------------------------------------------------- Fitch Ratings places Copamex, S.A. de C.V. (Copamex) senior unsecured foreign and local currency rating of 'BB-' on Rating Watch Negative. The rating also applies to the senior notes 11.375% due April 30, 2004. Fitch has also placed on Rating Watch Negative the 'A-'(mex) national scale rating, which applies to Copamex 2001, Copamex 2002 and Copamex 2002-2 issues, and the 'F2'(mex) short-term rating. The rating action incorporates higher refinancing risk associated with the company's upcoming bullet maturity on the senior notes. While Copamex has continued to make steady progress in its refinancing efforts, certain dates corresponding to milestones of the refinancing process, which includes an association with a strategic partner, have been extended since our Jan. 28, 2004 press release. The company is in the process of refinancing the senior notes with a credit facility totaling US$175 million from the International Finance Corporation (IFC). The facility includes a US$50 million 'A' loan directly from the IFC, a US$100 million 'B' loan to be syndicated among a group of banks and a US$25 million quasi-equity 'C' loan structure directly from the IFC. Syndication on the 'B' loan is currently ongoing and commitments are expected from banks within the next three weeks. The IFC transaction is now expected to close by early to mid- April after all conditions precedent are satisfied and other contemplated aspects of the refinancing plan are completed. Any additional delays regarding this transaction or other aspects of the company's refinancing plan increases the probability that Copamex will not meet the US$146 million senior notes bullet payment due April 30, 2004 and a rating downgrade will likely be warranted. Copamex is one of Mexico's largest producers of paper-based consumer and industrial products, with revenues of US$761 million in 2003. The company participates in three major paper- product segments: packaging (kraft paper, corrugated boxes and specialty paper), printing and writing paper (bond and copy paper) and consumer products (tissue, feminine hygiene and diapers). CONTACT: Giovanna Caccialanza, CFA +1-212-908-0898, New York Sergio Rodriguez, CFA +528-18-335-7179, Monterrey, Mexico MEDIA RELATIONS: James Jockle +1-212-908-0547, New York TFM: Obtains Waiver Under Credit Agreements ------------------------------------------- Grupo Transportacion Ferroviaria Mexicana, SA. de C.V. and its subsidiaries ("TFM") are pleased to announce that effective Wednesday, March 10, 2004, it has received a waiver from the banks which participate in the Credit Agreement of the Term Loan and U.S. Commercial Paper Program. TFM is now waived from the financial covenants under such Agreement for the three months ended December 31, 2003. TFM continues to work with such banks for the completion of the refinancing of the U.S. Commercial Paper maturing in September 2004, and will provide further information in the near future. ================= V E N E Z U E L A ================= PDVSA: In Talks With NB Power to Settle Conflict ------------------------------------------------ Faced with a case filed by NB Power, Petroleos de Venezuela SA is reportedly in the middle of negotiations with the Canadian power company, says local newspaper La Nacional newspaper. NB Power recently filed a case against PDVSA asking for an indemnification of US$2 billion for the sudden cancellation of a verbal agreement to supply the reformed thermal power plant Coleson Cove with the Orimulsion bitumen, produced by PDVSA's subsidiary Bitor (Bitumenes del Orinoco). NB has invested US$600 million to remodel the Coleson plant. NB also claims that with the bitumen supply cancellation, it suffered a net loss of US$185 million. PDVSA, for its part, has suspended investments on Bitor as part of its restructuring, and passed its operations to PDVSA Oriente. The Venezuelan state oil company has alleged that the production of Orimulsion bitumen represents a daily loss of US$2 per barrel, worth US$250,000. PDVSA: Forces Workers To Sign Denials Over Recall Petition ---------------------------------------------------------- Petroleos de Venezuela SA said it will cancel contracts and withhold payment to employees and contractors if workers don't sign notarized statements denying they signed petitions seeking a recall vote on President Hugo Chavez, unidentified industry officials said. According to an El Universal report, the Company opted to pressure signers, rather than fire them because so many had signed petitions. Venezuela's opposition submitted in December petitions bearing 3.4 million signatures in December. The country's election agency recently ruled that the opposition fell 600,000 signatures short of the required 2.43 million. Another 1.1 million signatures are being revised, and need to be reconfirmed for a vote to go forward. *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter - Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. John D. Resnick, Edem Psamathe P. Alfeche and Oona G. Oyangoren, Editors. Copyright 2004. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. 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