/raid1/www/Hosts/bankrupt/TCRLA_Public/040421.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, April 21, 2004, Vol. 5, Issue 78
Headlines
A R G E N T I N A
AGEA: Corporate Bonds Get `raBB-' Rating From S&P
AUTOTINT: Creditor's Bankruptcy Petition Wins Court Approval
BLADD AUTOMOVILES: Court Approves Involuntary Bankruptcy Motion
COMPANIA MEGA: S&P Upgrades Rating on $700M Worth of Bonds
DIMAAT: Petitions for APE Endorsement
DISCO: Ahold Reports Improved Results For 2003
FIDEICOMISO FINANCIERO TGN: S&P Issues Junk Ratings on Debt
GANADOS PAMPEANOS: Declared "Quiebra" by Court
HPU PRODUCCIONES: Court OKs Involuntary Bankruptcy Petition
MULTICANAL: $719M of Bonds Remain on Junk Level
PAN AMERICAN ENERGY: Garners Ba2 Rating from Moody's
PROYECTAR INGENIERIA: Commences Bankruptcy Process
SERVI CHACO: Court OKs Creditor's Bankruptcy Request
B E R M U D A
FOSTER WHEELER: Awarded SCR Contract by American Electric Power
B R A Z I L
CEMIG: To Implement A Securities Distribution Program
EMBRATEL: MCI Likely To Emerge Tuesday From Chapter 11
KLABIN: Farm Occupied By Landless Workers Group
C O L O M B I A
BANCO POPULAR: Moody's Withdraws Ratings for Business Reasons
D O M I N I C A N R E P U B L I C
BANCO LEON: Former Execs Ordered Arrested
BANCO MERCANTIL: Fraud Charges Filed Against Ex-Bosses
BANINTER: Government Accused of Bullying Judge, Lawyer
* DOMINICAN REPUBLIC: Reaches Debt Agreement With Paris Club
E C U A D O R
BANCO DEL PICHINCHA: Ratings Withdrawn by Moody's
J A M A I C A
C&WJ: Appoints Patrick Gillings Sr VP Marketing & Communications
C&WJ: Court Upholds Decisions on Settlement
M E X I C O
GRUPO IUSACELL: Creditors Seek To Block Asset Sale
P E R U
BANCO INTERNACIONAL: Moody's Withdraws Ratings
BANCO WIESE: Ratings Withdrawn by Moody's
V E N E Z U E L A
BANESCO BANCO: Moody's Withdraws Ratings on Business Reasons
- - - - - - - -
=================
A R G E N T I N A
=================
AGEA: Corporate Bonds Get `raBB-' Rating From S&P
-------------------------------------------------
Standard & Poor's International Ratings, Ltd. Sucursal Argentina
assigned an `raBB-' rating to various types of corporate bonds
issued by Arte Grafico Editorial Argentino S.A. (AGEA),
Argentina's securities regulator, the Comision Nacional de
Valores (CNV), reveals on its Web site.
The bonds affected are:
- US$30.6 million worth of `Series and/or Class' bonds described
as "Serie C -ON a Tasa Fija creciente." The maturity date was
not disclosed;
- US$62.05 million worth of `Series and/or Class' bonds
described as "Serie B -ON Tasa Flotante creciente." The maturity
date was not disclosed;
- US$21.67 million worth of `Series and/or Class' bonds
described as "Serie B -ON a Tasa Fija creciente." The maturity
date was not disclosed; and
- US$450 million worth of `Program' bonds described as "Programa
Global de Obligaciones Negociables simples (Programa
originalmente por hasta U$S 600 millones)." These bonds will
mature on November 7, 2008.
The rating, which was given based on AGEA's financial status as
of December 31, 2003, means that the bonds have somewhat weak
protection parameters relative to other Argentine obligations.
According to S&P, the obligor's capacity to meet its financial
commitments on the obligation is somewhat weak because of major
ongoing uncertainties or exposure to adverse business, financial
or economic conditions.
AUTOTINT: Creditor's Bankruptcy Petition Wins Court Approval
------------------------------------------------------------
Judge Gonzalez of Buenos Aires Court No. 8 declared Autotint SRL
bankrupt, granting approval to a petition filed by Maria Alicia
Perez, reports local online newspaper La Nacion.
The petition was filed after the Company failed to pay debts
amounting to US$43,067.09.
Mr. Ricardo Sukkiassian, the court-appointed receiver, will
verify creditors' proofs of claim until July 2. Creditors who
fail to have their claims verified on or before the deadline
will not qualify for the repayments, which will be done
following the liquidation of all of the Company's assets.
Clerk No. 15, Dr. Lezaeta, assists the court on the case.
CONTACT: Autotint SRL
Avenida Juan B. Justo 3214
Buenos Aires
Ricardo Sukkiassian, Receiver
San Martin 1009, Piso 2 "B"
Buenos Aires
BLADD AUTOMOVILES: Court Approves Involuntary Bankruptcy Motion
---------------------------------------------------------------
Judge Chomer of Buenos Aires Court No. 10 declared Bladd
Automoviles SA bankrupt, reports La Nacion. The ruling comes in
approval of the bankruptcy petition filed by Honda Automoviles
de Argentina SA for nonpayment of US$9428.66 in debt.
Clerk No. 30, Dr. Gigglberger, assists the court on the case.
The Company's receiver, Mr. Nestor Del Potro, will examine and
authenticate creditors' claims until June 28, 2004. This is done
to determine the nature and amount of the Company's debts.
Creditors must have their claims authenticated by the receiver
by the said date in order to qualify for payments to be made
after the Company's assets are liquidated.
CONTACT: Bladd Automoviles SA
Curapalige 149, 1 "B"
Buenos Aires
Nestor Del Potro, Receiver
Avenida Corrientes 1291, 9 "4"
Buenos Aires
COMPANIA MEGA: S&P Upgrades Rating on $700M Worth of Bonds
----------------------------------------------------------
The Argentine arm of Standard & Poor's International Ratings,
Ltd. upgraded the ratings of US$700 million worth of corporate
bonds issued by Compania Mega S.A. from `raCCC' to `raBBB+', the
CNV reports. The bonds, classified as `Program' and described as
"Programa de ONs autorizado por AGOyE de fecha 15.12.97," will
mature on June 3, 2004. The upgrade was based on the Company's
financial health as of December 31, 2003.
DIMAAT: Petitions for APE Endorsement
-------------------------------------
Dimaat SA is seeking court ratification of the out-of-court
agreement reached with creditors, according to information
gathered by Argentine online newspaper La Nacion. The Company
awaits the decision of Judge Ottolenghi of Buenos Aires Court
No. 4 on its request. The court is assisted by Dr. Juarez, Clerk
No. 7.
CONTACT: Dimaat SA
Avenida Presidente Roque Saenz Pena 852, piso 8
Buenos Aires
DISCO: Ahold Reports Improved Results For 2003
----------------------------------------------
Highlights of 2003
- Net loss Euro 1 million (2002: net loss of Euro 1.2 billion)
- Operating income Euro 718 million (2002: operating income Euro
239 million)
- Net sales Euro 56.1 billion, a decrease of 10.6% compared to
2002, but an increase of 2.7% excluding foreign currency
translation impact
- Net loss under US GAAP Euro 747 million (2002: net loss Euro
4.3 billion)
- Improved balance sheet: equity increased to Euro 4.9 billion
(2002: Euro 2.6 billion). Net debt reduced to Euro 7.5 billion
(2002: Euro 12.3 billion)
- Net cash before financing activities generated Euro 1.5
billion (2002: net cash outflow Euro 107 million)Zaandam, The
Netherlands, April 19, 2004
"We are pleased to announce that we have clearly improved
results in 2003, an extremely challenging year," said Hannu
Ryopponen, Chief Financial Officer, commenting on the results.
"A very turbulent period for the company was marked by the
events announced in February 2003, as well as a tough trading
environment in our key markets." Anders Moberg, CEO commented:
"Months of ongoing effort resulted in a number of achievements,
specifically defining a new strategy and creating the financial
platform to move forward. At the end of last year we indicated
that 2003 in many respects had been a lost year, but today's
[Monday] announcement also shows that Ahold is on track with its
'Road to Recovery' program."
Executive Summary
Improved results in a very challenging year Results for 2003
were heavily impacted by challenging markets, negative currency
movements and non-recurring items. However, Ahold generated a
modest net loss of Euro 1 million in 2003 compared to a loss of
Euro 1.2 billion for 2002.
Operating income in line with expectations Operating performance
was in line with expectations, with no major additional goodwill
impairment write-downs needed. The most important elements were
the major negative swings in U.S. Foodservice's results from
profit to loss as a result of primarily the sharp deterioration
in pricing leverage with suppliers, the competitive pressure on
U.S. and European retail operations, and the exceptional items
on the sale of various companies. The costs associated with the
irregularities and investigations of 2003 also impacted
operating income.
Higher net sales in local currencies
Although economic conditions in all of Ahold's major trading
areas were tough and competition remained intense, sales in
local currencies nevertheless were resilient on an annual basis.
The main retail trade operations, except Albert Heijn, showed
net sales increases in local currencies, as well as U.S.
Foodservice. The influence of the weak U.S. dollar throughout
2003 can clearly be seen on Ahold's reported net sales numbers
in Euro. Divestments that took place in 2003 only had a slight
impact on net sales.
Improved balance sheet
Ahold concluded 2003 with a significantly improved balance sheet
as part of the 'Road to Recovery' Program that will be continued
in 2004 and 2005. Net debt was reduced by a very substantial
Euro 4.8 billion, as a result of the rights issue and
initiatives to improve cash flow from the businesses. The
strengthening of Ahold's financial position continues; further
proof was delivered last week, when Ahold announced an Euro920
million early debt redemption.
Strong cash flow generation
Whereas 2003 remained a tough year for all our businesses, net
cash from operating activities remained strong. At the same
time, selective investments lead to a sharp decrease in cash
outflow from investing activities. As a result net cash before
financing activities increased sharply to Euro 1.5 billion for
the full year, compared to a net outflow in the previous year of
Euro 107 million.
Ahold 2003 Full Year Results
Ahold prepares its financial statements in accordance with
accounting principles generally accepted in the Netherlands
("Dutch GAAP"). Dutch GAAP differs in certain material aspects
from accounting principles generally accepted in the United
States ("US GAAP"). All financial information in this press
release is based on Dutch GAAP unless otherwise noted.
The figures reported in this press release are unaudited. Ahold
plans to publish its Annual report and file the Annual report on
Form 20-F on the 6th of May.
In certain instances, results presented in this press release
either exclude the impact of fluctuations in currency exchange
rates used in the translation of Ahold's foreign subsidiaries'
financial results into Euros or are presented in local
currencies, which provides a better insight into the operating
performance of foreign subsidiaries. For more information
regarding the non-GAAP financial measure excluding currency
impact, see "Definitions" below. In addition, in certain
instances, operating income for Ahold's business segments is
presented excluding the impact of the impairment and
amortization of goodwill and exceptional items. Operating income
before impairment and amortization of goodwill and exceptional
items is a non-GAAP financial measure. A reconciliation of this
non-GAAP financial measure to the Dutch GAAP measure of
operating income, as well as management's explanation for the
use of this measure, are set forth in Annex B. In this press
release net cash flow before financing is used, which totals the
net cash from operating activities and net cash from investing
activities.
Ahold adopted EITF 02-16 "Accounting by a Customer (including a
Reseller) for certain Consideration Received from a Vendor" in
the fourth quarter of 2003. Because this issue was effective for
Ahold for the period beginning December 30, 2002, the results
previously announced in the quarterly press releases differ from
the results included in the full year 2003.
Net sales
Net sales down 10.6%, but up 2.7% excluding currency impact Many
of Ahold's business areas posted increased net sales in local
currencies despite challenging economic conditions and intense
competition The 10.6% decrease in net sales was largely
attributable to lower currency exchange rates against the Euro,
particularly for the U.S. Dollar. The average U.S. Dollar to
Euro exchange rate decreased approximately 16.5% in 2003
compared to 2002. Net sales excluding currency impact increased
by 2.7% mainly due to increases in net sales excluding currency
impact of 2.7% in the U.S. retail trade operations, 1.7% for the
Europe retail trade operations, 2.3% at U.S. Foodservice and
17.8% in South America. Net sales in 2003 were favorably
impacted by the full year consolidation in Ahold's consolidated
financial statements of Disco, Ahold's subsidiary in Argentina,
which began to be consolidated in the second quarter of 2002 and
the full-year impact of the acquisitions at U.S. Foodservice in
2002. The divestments of various operations during 2003 only
slightly negatively impacted net sales.
Operating income
Operating income before impairment and amortization of goodwill
and exceptional items was primarily affected by a sharp decrease
at U.S. Foodservice and by advisory fees Business profitability
came under pressure in 2003 led by a sharp decrease at U.S.
Foodservice, and competitive pressure on U.S. and European
retail operations. Operating income before impairment and
amortization of goodwill and exceptional items in 2003 decreased
to Euro 1,065 million compared to Euro 2,144 million in 2002.
U.S. Foodservice swung from a positive Euro 314 million of
operating income before impairment and amortization of goodwill
and exceptional items in 2002 to a Euro 72 million loss in 2003
as the loss of leverage with suppliers impacted gross margins
and increased operating costs, resulting from the repercussions
from accounting irregularities announced and investigations
conducted in 2003. Operating expenses also increased in large
part as a result of additional audit, legal, consultancy fees
and other costs primarily in connection with the forensic
accounting and legal investigations and the audit of the 2002
financial statements (approximately Euro 170 million).
Operating income in line with expectations including minor
impairment charges Operating income improved to Euro 718 million
compared to Euro 239 million in 2002 which was in line with
expectations. This was mainly due to a more than Euro 1.2
billion drop in the level of goodwill impairment charges
compared to 2002, and also from lower exceptional items.
Goodwill amortization
Goodwill amortization in 2003 amounted to Euro 166 million, a
decrease of 34.1% compared to 2002. This decrease was primarily
due to lower goodwill balances at year-end 2002 resulting from
the goodwill impairment charges recorded in 2002 and to the
lower average currency exchange rate of the U.S. Dollar against
the Euro.
Goodwill impairment
Goodwill impairment charges decreased from Euro 1,281 million in
full year 2002 to Euro 45 million in full year 2003.
Exceptional items: mostly non cash items with no impact on
equity A loss of Euro 136 million was recorded in 2003 compared
to an exceptional loss of Euro 372 million in 2002. The 2003
exceptional items mainly related to the divestment of foreign
subsidiaries, principally Ahold's Chilean and Malaysian
operations. Of these exceptional items, Euro 96 million related
to the recognition of accumulated foreign currency translation
adjustments in the statement of operations and Euro 44 million
to the reversal of part of the goodwill, both of which had
previously been charged to shareholders' equity. These
exceptional items were non-cash and had no impact on the overall
level of shareholders' equity. Exchange rate differences related
to the translation of the financial statements of a foreign
subsidiary into Euros are recorded directly in shareholders'
equity. When these exchange rate differences are realized upon
the sale of the relevant foreign subsidiary, the cumulative
foreign currency translation adjustments are recognized in the
statement of operations. Under Dutch GAAP, goodwill previously
deducted directly from shareholders' equity upon the acquisition
of the subsidiary has to be reclassified pro-rata to the
statement of operations if the subsidiary is sold within six
years of the initial acquisition. The exceptional loss in 2002
was caused by the default by Velox Retail Holdings, Ahold's
former joint venture partner, on bank debt that Ahold had
guaranteed.
Net loss
Break-even result
Ahold closed 2003 with a small net loss of Euro 1 million,
compared to a net loss of Euro 1.2 billion in 2002 under Dutch
GAAP. This was primarily caused by the significant reduction in
goodwill impairment charges and by the lower amount of
exceptional items as mentioned above.
The company reported an operating loss at U.S. Foodservice as
well as lower operating income at a number of other business
segments and at corporate the company had significantly higher
audit, legal, consultancy and banking fees as well as other
costs. The weakening of the U.S. Dollar against the Euro also
had a negative impact on net income.
Net financial expense includes substantial banking fees for the
2003 credit facility
Net financial expense, which comprises net interest expenses,
gains and losses on foreign exchange and other financial income
and expense, was Euro 938 million in 2003 compared to Euro 1.0
billion in 2002. Net interest expenses in 2003 amounted to Euro
952 million, an increase of 0.8% compared to 2002. Excluding the
impact of currency exchange rates, net interest expenses would
have increased by 14.4%. This increase was primarily caused by
banking fees under the credit facilities entered into in March
and December 2003 and fees in connection with the extension and
amendment of accounts receivable securitization programs at U.S.
Foodservice, as well as the higher applicable borrowing rate
under the March 2003 credit facility compared with the previous
credit facility. These fees amounted to a total of approximately
Euro 80 million.
The March 2003 credit facility was cancelled and repaid in
December 2003, and the company does not expect to draw on the
new December 2003 credit facility (other than for letters of
credit) during 2004 and beyond.
The gain on foreign exchange in 2003 amounted to Euro 14 million
and mainly related to the positive impact of the revaluation of
the Argentine Peso on U.S. Dollar-denominated debt in Argentina.
In 2002, a foreign exchange loss of Euro 50 million was incurred
mainly related to the negative impact of the devaluation of the
Argentine Peso on U.S. Dollar-denominated debt and inflation
adjustment losses related to Argentine Peso-denominated debt in
Argentina.
Income taxes benefit from release of provisions The effective
income tax rate, excluding the impact of non-tax-deductible
impairment and amortization of goodwill and exceptional items,
decreased to 0.9% in 2003 compared to 36.8% in 2002.
Tax Information
Apart from the impact of the different geographic mix of
income, the substantial reduction of income taxes was caused
by:
-- Release of tax provisions due to the partial closure of the
1999 - 2001 U.S. tax audit;
-- Release of tax provisions due to the closure of a large
1997 - 2002 Dutch tax audit;
-- Tax deductible losses as a result of Asian divestments.
Share in income (loss) of joint ventures and equity investees
Share in income of joint ventures and equity investees in 2003
amounted to Euro 161 million compared to a loss of Euro 38
million in 2002, with 2003 benefiting from a sale and leaseback
gain at ICA while 2002 included losses at DAIH which was
consolidated as of the third quarter of 2002.
US GAAP
US GAAP result
Net loss in accordance with US GAAP decreased from Euro 4.3
billion in 2002 to a net loss of Euro 747 million in 2003.
US GAAP reconciliation
The difference between US GAAP and Dutch GAAP of Euro 746
million was mainly caused by the different treatment under US
GAAP of assets held for sale (Euro 506 million), and the
cumulative effect of the change in accounting principles for
certain consideration from vendors (Euro 100 million). Both are
non-cash items.
Under US GAAP if the expectation is that, more likely than not,
an asset will be sold before the end of its estimated useful
life, an impairment analysis should be performed. Since it was
also concluded that these assets are held for sale, in this
impairment analysis the carrying value includes the unrealized
cumulative translation adjustment of Euro 582 million, that was
previously accounted for in shareholders equity.
During 2003 EITF 02-16 "Accounting by a Customer (Including a
Reseller) for certain Consideration Received from a Vendor" was
adopted for both Dutch and US GAAP. Under Dutch GAAP the
cumulative effect adjustment of Euro 100 million was recorded in
opening equity, under US GAAP, in accordance with APB Opinion
20, the amount of the cumulative effect was included in the
income statement.
The full reconciliation of net income in accordance with Dutch
GAAP to net income in accordance with US GAAP can be found in
Annex C.
Improved Balance Sheet
Ahold closed 2003 with a much-improved balance sheet, with net
debt reduced by Euro 4.8 billion. The Euro 2.9 billion rights
offering, completed in December, was critical to putting the
company on a stronger financial footing. Ahold's financial
position also benefited significantly from initiatives to
improve cash flow from the business as the working capital
improvement program continued to yield positive results, capital
expenditures were significantly reduced from 2002 and Ahold
completed its first divestments.
Balance sheet total
Balance sheet total is reduced, reflecting reduced capex,
improved working capital and divestments The company has
significantly strengthened the balance sheet by increasing
equity by Euro 2.2 billion. The company was able to repay its 3%
convertible notes of Euro 678 million in September from the cash
flow before financing activities. A major event of 2003 was the
rights issue, which enabled the company to repay the March 2003
credit facility in December and left the company in a strong
liquidity position at yearend.
The total balance sheet decreased by Euro 1,339 million as a
result of lower fixed assets and improved working capital. In
2003 the company selectively invested in the key operating
companies in such a way that the overall capital expenditure was
lower than depreciation. The balance sheet total was also
impacted by the lower U.S. Dollar rate. The cash impact of
working capital improvement in 2003 amounted to Euro 446 million
compared to Euro 107 million in 2002 and was the result of
negotiating better accounts payable terms in Europe and managing
the inventory levels at U.S. Foodservice.
Equity
Equity increased by Euro 2.2 billion The positive liquidity
impact from the rights issue was approximately Euro 2.9 billion.
This was however off-set by a negative currency impact and other
changes of Euro 666 million and an opening balance adjustment of
Euro 100 million net of tax resulting from the adoption of EITF
02-16, as outlined in Annex D.
The other details related to changes in equity are outlined in
Annex E.
Net debt
Net debt reduced substantially by Euro 4.8 billion
Net debt is substantially impacted by the lower U.S. Dollar to
Euro exchange rate.
In the fourth quarter Ahold was in compliance with the financial
ratios of the covenant of the December 2003 Credit Facility. The
ratios consist of Net Debt / EBITDA and EBITDA / net interest
expenses.
Improved cash flow before financing activities
Ahold generated nearly Euro 1.5 billion in net cash flow before
financing activities in 2003, underscoring control over capital
expenditures, the continued success of working capital
initiatives, initial divestments proceeds and curtailing of
acquisitions.
Net cash before financing activities Net cash flow before
financing activities in 2003 increased to Euro 1,461 million
compared to a net cash outflow of Euro 107 million in 2002. This
increase was including the result of lower net cash outflow
related to investing activities of Euro 2,145 million.
Net cash from operating activities: working capital improvements
offset by lower operating income before impairment and
amortization of goodwill and exceptional items Changes in
working capital resulted in a cash inflow of Euro 446 million in
2003 mainly due to lower inventory levels at all operating
companies, primarily at U.S. Foodservice as a result of focusing
on controlling inventory levels and purchases from vendors. Net
cash from operating activities in 2003 decreased by Euro 577
million compared to 2002, mainly as a consequence of lower
operating income before impairment and amortization of goodwill
and exceptional items at U.S. Foodservice and the fees paid to
auditors, lawyers, consultants and other costs of approximately
Euro 170 million.
Net cash from investing activities: lower capital expenditures
and acquisitions curtailed Net cash used in investing activities
was reduced by Euro 2.1 billion primarily as a result of a
reduction in investments in tangible fixed assets of Euro 822
million to Euro 1,183 million in 2003 compared to Euro 2,005
million in 2002. Acquisitions of group companies were limited to
Euro 58 million, related to the acquisition of some stores at
Stop & Shop, compared to Euro 977 million in 2002. Divestments
of tangible and intangible fixed assets amounted to Euro 555
million in the full year 2003 compared to Euro 590 million in
2002. Divestments of subsidiaries contributed an additional Euro
284 million.
Net cash from financing activities: rights issue and debt
repayment Net cash from financing activities amounted to Euro
1,065 million. This is mainly the result of the proceeds of the
shares issue of Euro 2.9 billion. In 2003 the company, among
other things, repaid the 3% convertible notes of Euro 678
million from its net operating cash flow in September and
further repaid the March 2003 credit facility in December.
Segment Information
Retail Trade - United States
Full Year 2003: Performance Powered by Stop & Shop and Giant-
Carlisle Net sales in the U.S. retail trade operations in 2003
increased by 2.7% in U.S. Dollars compared to 2002. Identical
sales in U.S. Dollars increased 0.1% and comparable sales in
U.S. Dollars increased by 0.9% in 2003 compared to 2002. Stop &
Shop and Giant-Carlisle showed strong U.S. Dollar net sales,
resulting from comparable store gains, as well as from the
opening of stores. Net sales in 2003 were impacted by heightened
competition and competitive store openings, particularly in the
southeastern United States.
Operating income before impairment and amortization of goodwill
and exceptional items in the U.S. retail trade business in U.S.
Dollars decreased by 10.7% compared to 2002. Operating expenses
in the U.S. retail trade business in 2003 were affected by
higher administrative expenses and pension expenses, as well as
continued rising health care costs.
Operating income in U.S. Dollars was relatively flat in 2003
when compared to 2002.
Fourth Quarter 2003: Impact of impairment, additional expenses
and intense competition Net sales in U.S. Dollars in the U.S.
retail trade business increased 0.8% compared to the fourth
quarter of 2002. Identical sales in U.S. Dollar declined 0.1%
for the U.S. retail trade operations, while both Stop & Shop and
Giant-Carlisle showed identical sales growth. Comparable sales
increased 0.6% in the fourth quarter of 2003.
Operating income before impairment and amortization of goodwill
and exceptional items in U.S. Dollars in the fourth quarter of
2003 decreased by 21.9%. Stop & Shop continued its strong
performance during the quarter, while Giant-Landover reported a
decrease due to heightened competitive activity including
pressure from alternative formats.
Operating income before impairment and amortization of goodwill
and exceptional items at Other USA Retail was significantly
impacted by impairment charges relating to long-lived assets of
USD 30 million, mainly at Tops, compared to USD 13 million in
the fourth quarter of 2002. Also, Other USA Retail was adversely
affected in the fourth quarter of 2003 by the intense
competition and increased promotional activity, primarily in the
southeast.
Operating income in U.S. Dollars in the fourth quarter of 2003
increased 33.7% mainly as a result of non-recurring goodwill
impairment charges in the fourth quarter of 2002.
Retail Trade - Europe
Full Year 2003: Competitive pressure in most markets Net sales
in the Europe retail operations increased 0.9% compared to 2002.
Excluding currency impact in Central Europe, the increase of the
net sales in the Europe retail operations would have been 1.7%.
Net sales at Albert Heijn in 2003 declined by 1.7% compared to
2002. Identical sales at Albert Heijn in 2003 declined by 2.7%
primarily due to lower consumer spending and a negative market
sentiment towards Albert Heijn. As a result, Albert Heijn
introduced its price repositioning strategy in October 2003 and
regained market share in the fourth quarter. Net sales at other
Europe retail trade operations in 2003 increased by 2.9%
compared to 2002, primarily due to strong net sales growth at
Schuitema and an increase in net sales in Central Europe and
Spain. The increase in net sales was marginally offset by the
divestments of Ahold's specialty stores (Jamin and De Tuinen) in
The Netherlands, which were completed in the second quarter of
2003. In Central Europe and Spain, net sales increased due to
the opening of new stores. Net sales in Central Europe, however,
were negatively impacted by currency exchange rates, deflation
and the sale of two hypermarkets in Poland.
Operating income before impairment and amortization of goodwill
and exceptional items in the Europe retail trade operations
decreased 28.4% primarily due to lower operating income at
Albert Heijn. This was principally caused by lower net sales
during the first three quarters, lower gross margins due to the
price repositioning strategy and costs relating to its
restructuring program.
Operating income before impairment and amortization of goodwill
and exceptional items at other Europe retail trade operations in
2003 decreased compared to 2002 mainly as a result of increased
costs related to new stores and lower real estate gains. The
operating income before impairment and amortization of goodwill
and exceptional items in Spain was at the same level as in 2002.
Operating income returned from a loss of Euro 654 million in
2002 to a profit of Euro 188 million in 2003 because of the
significant decrease in goodwill impairment charges in 2003
compared to 2002.
Fourth Quarter 2003: Albert Heijn price repositioning strategy
leads to market share gains Net sales in the fourth quarter of
2003 slightly decreased by 0.5% and 0.7% if excluding currency
impact. Albert Heijn recovered market share but reported lower
net sales. Identical sales fell 1.5% in the fourth quarter in
2003. The lower net sales at other Europe retail trade
operations were the result of lower net sales in Spain.
Operating income before impairment and amortization of goodwill
and exceptional items decreased in 2003 by 32.9% compared to
2002. Operating income before impairment and amortization of
goodwill and exceptional items at Albert Heijn in the fourth
quarter of 2003 decreased compared to the same period in 2002.
The decrease was primarily due to lower net sales and gross
margins partially offset by lower operating expenses. The price
repositioning strategy resulted in Albert Heijn regaining market
share in the fourth quarter.
Operating income before impairment and amortization of goodwill
and exceptional items at other Europe retail trade operations
decreased in the fourth quarter of 2003, compared to the fourth
quarter of 2002. This decrease was primarily due to an operating
loss at Schuitema as a result of, amongst others, fixed asset
impairments.
In Central Europe, the company reported operating income before
impairment amortization of goodwill and exceptional items
turning to a positive result, since no further impairment on
long-lived assets was needed. Spain reported a lower operating
loss before impairment and goodwill amortization of goodwill and
exceptional items in the fourth quarter of 2003 primarily due to
lower impairments on long-lived assets.
Operating income in the fourth quarter of 2003 increased from a
loss of Euro 820 million to a profit of Euro 44 million
primarily because of the significant decline of goodwill
impairment charges in 2003 compared to 2002.
Foodservice
Foodservice - United States
Full Year 2003: Sharp loss of profitability at U.S. Foodservice
Net sales at U.S. Foodservice increased by USD 402 million, or
2.3%, in 2003 compared to net sales in 2002. The acquisition of
Allen Foods in December 2002, and certain assets of Lady
Baltimore in September 2002, contributed approximately 1.3% of
the net sales growth. Excluding acquisitions and the increase in
food price inflation as estimated by the company, net sales
would have slightly declined in 2003.
An operating loss before impairment and amortization of goodwill
and exceptional items of USD 74 million was incurred in 2003
compared to income of USD 292 million in 2002. This was
primarily due to U.S. Foodservice experiencing a weakening of
its procurement leverage as vendors raised prices and shortened
payment terms, largely related to irregularities announced and
investigations conducted in 2003. U.S. Foodservice also
experienced higher operating costs. Operating loss was in line
with the operating loss before impairment and amortization of
goodwill and exceptional items since the goodwill amortization
was at the same level in 2003 as in 2002.
Foodservice - Europe: Economic pressures Net sales at the Deli
XL food service operations, located in The Netherlands and
Belgium, in 2003 decreased by 3.8% compared to 2002. This
decrease was primarily due to continuing unfavorable market
conditions. As a result operating income at the European food
service operations in 2003 decreased by 25.0% compared to 2002.
Fourth Quarter 2003: strong sales
Net sales of U.S. Foodservice in U.S. Dollars in the fourth
quarter increased by 6.0%.
Operating income before impairment and amortization of goodwill
and exceptional items of U.S. Foodservice in the fourth quarter
of 2003 benefited significantly from the release of previously,
in 2003, accrued employee benefits.
Other Business Areas: Divestment program underway
Retail Trade - South America
Net sales in the South America retail trade operations in 2003
increased by 3.5% compared to 2002. This increase was mainly due
to the full-year consolidation in 2003 of Disco, which began to
be consolidated in the second quarter of 2002. This increase was
partially offset by the impact of the divestment of Santa
Isabel's Chilean and, to a lesser extent, Paraguayan and
Peruvian operations in July, September and December 2003,
respectively.
The operating loss before impairment and amortization of
goodwill and exceptional items in 2003 was the result of the
general economic depression in South America and vendors'
reaction to the announcements of Ahold's divestments in the
region.
Retail Trade - Asia Pacific
Net sales in the Asia Pacific retail trade operations in 2003
amounted to Euro 364 million, a decrease of 20.5% compared to
2002. This decrease was primarily due to the divestment of our
operations in Malaysia and Indonesia completed in September 2003
and a decline in net sales in Thailand of 6.9% fully due to a
currency exchange rate impact of the Thai Baht compared to the
Euro.
Operating loss before impairment and amortization of goodwill
and exceptional items in the Asia Pacific retail trade
operations in 2003 amounted to Euro 16 million, compared to an
operating loss of Euro 31 million in full year 2002. This was
primarily due to the divestment of operations in Malaysia and
Indonesia, as well as performance improvement in Thailand.
Other Activities
Other activities mainly include operations of three real estate
companies which acquire, develop and manage store locations in
Europe and the United States and corporate overhead costs of the
Ahold parent company.
The operating loss before impairment and amortization of
goodwill and exceptional items in 2003 partially reflected
corporate costs of Euro 263 million compared to Euro 33 million
in 2002. The higher corporate costs in 2003 were mainly caused
by the significant costs incurred in connection with the
forensic accounting and legal investigations, ongoing
litigation, ongoing government and regulatory investigations and
higher audit fees in connection with the audit of the 2002
financial statements (approximately Euro 130 million).
Furthermore, corporate costs increased as a result of an
additional contribution to the loss reserve of the self-
insurance program in the U.S. (Euro 45 million). Gains from the
sale of real estate included in other activities were at the
same level in 2003 compared to 2002.
Operating loss of the total other business areas decreased from
a loss of Euro 678 million in 2002 to a loss of Euro 422 million
in 2003. The exceptional items were reduced from Euro 372
million in 2002 to Euro 136 million in 2003. The exceptional
loss in 2003 relates primarily to the losses of the Chilean and
Malaysian divestments, with regards to the foreign currency
translation adjustment and goodwill reversals which do not
impact equity. Goodwill impairment reduced from Euro 271 million
in 2002 to Euro 42 million in 2003.
Share in Income (Loss) of Joint Ventures and Equity Investees
The share in income of joint ventures and equity investees in
2003 amounted to Euro 161 million, compared to a loss of Euro 38
million in 2002. This was primarily caused by the inclusion in
this line item for 2002 of a Euro 126 million loss at DAIH,
until it began to be consolidated beginning in the third quarter
of 2002. The share in income of ICA, included in European joint
ventures, increased considerably in 2003 mainly as a result of a
gain related to the sale and leaseback of several distribution
centers.
The loss at DAIH reflected the losses incurred at Disco and
Santa Isabel during the period that they were not consolidated
in the financial statements. The loss at DAIH was mainly caused
by the negative impact of the devaluation of the Argentine Peso
on U.S. Dollar-denominated debt.
2004: A Year of Transition
General
2004 will be a year focused on continued efforts to strengthen
the organization, and restructure and integrate the businesses
in order to build a solid platform for future growth and
profitability. Management will concentrate on achieving the
previously announced Road to Recovery performance objectives for
2005 and beyond.
Ahold will continue to strengthen and improve its internal
controls and corporate governance, as well as solidify
compliance with the regulatory environment in 2004. All of these
changes are important cornerstones of our Road to Recovery
strategy. They will require considerable resources and effort
from our operations and corporate support office in 2004.
Retail operations will continue to face increased competition
and price pressure. On the other hand, Ahold expects healthy
sales development in the foodservice sector.
US retail
Net sales growth in U.S. retail operations in 2004 is expected
to be only modest as a result of continued competitive pressure.
One of the key efforts in the U.S. for 2004 will be the
integration of Stop & Shop and Giant-Landover, which will
improve the long-term competitiveness and cost-effectiveness of
these brands. This integration will require an initial
investment during 2004, but will result in significant benefits
in 2005 and beyond. At Tops we continue to focus on
repositioning its 'go to market strategy' and improving its
operational performance. The intended divestment in 2004 of BI-
LO/Bruno's is expected to negatively impact net sales in 2004.
Europe retail
Ahold expects net sales in its Europe retail operations to
increase in 2004 in a generally tough environment with weak
economies, consumer focus on price, and increased competition.
There will be a continued focus on efficiency and
competitiveness in Europe. The planned divestment of our Spanish
operations in 2004 will reduce European net sales.
Foodservice
Market conditions, in particular in the U.S., are expected to be
favorable for the foodservice industry. However, increasing fuel
costs and food commodity prices may have a negative effect on
industry pricing and competitiveness. It is possible that net
sales may experience a small reduction in 2004 at U.S.
Foodservice, as a result of an effect of improved customer mix
specifically related to certain national accounts. Operating
income before impairment and amortization of goodwill and
exceptional items is expected to be positive for 2004 and exceed
the level of 2002, no later than 2006.
Capital expenditures and working capital Capital expenditures
will continue to be made strategically and will increase from
the low levels of 2003 to approximately depreciation level.
Investments will be focused on the growth of our food retail
business. Initiatives to improve working capital started in 2003
and will be continued with expected further improvements in
2004. Net cash from operations is expected to improve.
Finance and Tax
Further reduction of net finance expense in 2004 is expected as
a result of lower fees for our new credit facility and lower net
interest expenses due to the continued reduction of net debt.
Ahold expects its tax position to normalize during 2004, with a
rate marginally above 30%.
Net Debt
The continued recovery and development of our operations
together with the on-going divestment program is expected to
lead to further reductions of net debt (excluding currency
impact) in line with our objectives to reach investment grade
profile by the end of 2005.
Divestments and Other Issues
The clearly improved financial position and liquidity gives us
the platform to manage our divestment in an orderly fashion,
i.e. no need for 'fire-sales'. The company plans to have
divested its remaining operations in South America and Spain, as
well as BI-LO/Bruno's and the remaining convenience stores at
Tops in the United States, by the end of 2004. As announced in
March 2004, Ahold completed the divestment of its stake in CRC
Ahold in Thailand, and thus its exit from the Asia Pacific
region.
However, exceptional items are expected upon completion of the
divestitures of certain South American operations as well as the
divestment of BI-LO/Bruno's. The completion of these
divestitures will lead to the recognition of accumulated foreign
currency translation adjustments (CTA) in the statement of
operations as well as in some cases the reversal of goodwill,
both previously charged to shareholders' equity. The cumulative
exchange rate differences charged to shareholders' equity for
these operations at the beginning of 2004 amounted to Euro 648
million. The aggregate amount of goodwill that would have been
required to be reversed if these operations had been divested at
the beginning of 2004 would have been Euro 309 million. The net
consequence of this is a significant exceptional loss in our
statement of operations with an identical positive adjustment to
net equity. These likely exceptional items will have a
significant impact on net income, but no net impact on equity
and are non-cash items.
Operating expenses in 2004 will also be significantly impacted
by a number of factors, in particular costs related to the
ongoing legal proceedings and governmental and regulatory
investigations, including possible fines or judgements that may
be levied or awarded. Initiatives underway to enable the company
to begin reporting under International Financial Reporting
Standards, as required for 2005, and ongoing work to comply with
the internal controls requirements of Section 404 of the U.S.
Sarbanes-Oxley Act, required to be completed by the end of
fiscal year 2005, will also have an impact.
In summary, 2004 will be a year of execution and transition for
Ahold and has to be seen as an important step on its Road to
Recovery, which is well on track for continued progress beyond
2004.
FIDEICOMISO FINANCIERO TGN: S&P Issues Junk Ratings on Debt
-----------------------------------------------------------
Standard & Poor's International Ratings, Ltd. Sucursal Argentina
issued junk ratings to Financial Trusts issued by Fideicomiso
Financiero TGN Cribs Clase, says the CNV.
The local S&P assigned an `raD' rating to the Company's US$175
million worth of `Debt Security' described as "Titulos de Deuda
Clase I." The maturity of the bonds was not disclosed.
An `raD' rating is assigned to financial obligations that are
currently in default. The ratings agency said that the same
rating may be issued if interest or principal payments are not
made on the due date even if the applicable grace period has not
expired.
GANADOS PAMPEANOS: Declared "Quiebra" by Court
----------------------------------------------
Ganados Pampeanos SRL was declared "Quiebra" by Judge Garibotto
of Buenos Aires Court No. 2, granting approval to a petition
filed by Aeromar SA on nonpayment of debts amounting to
US$23,054.14.
According to La Nacion, the Company will start the bankruptcy
process with the authentication of creditors' proofs of claim by
the appointed receiver, Ms. Marta Addario. This particular stage
of the bankruptcy process will run until June 6, 2004. Creditors
must submit their claims before the said date in order to
qualify for the payments that will be made after the Company's
assets are liquidated.
Clerk No. 4, Dr. Romero, assists the court on the case.
CONTACT: Ganados Pampeanos SRL
Cafayate 1120, Piso 4 "15"
Buenos Aires
Marta Addario
Moreno 442, Piso 10 "H"
Buenos Aires
HPU PRODUCCIONES: Court OKs Involuntary Bankruptcy Petition
-----------------------------------------------------------
A creditor of HPU Producciones SA successfully sought for the
bankruptcy of the latter, La Nacion indicates.
Judge Garibotto of Buenos Aires Court No. 2 approved Guillermo
Ink's petition to declare HPU Producciones "Quiebra." The
petition was filed following non-payment of US$16,022.34 in
debt.
Along with the declaration of the bankruptcy is the appointment
of Ms. Beatriz Colucci as receiver, who will authenticate
creditors' proofs of claim until June 6, 2004.
Clerk No. 4, Dr. Romero assists the court on the case, which
will close with the liquidation of the Company's assets to repay
creditors.
CONTACT: HPU Producciones SA
Libertad 445, Piso 7
Buenos Aires
Beatriz Colucci
Acevedo 217
Buenos Aires
MULTICANAL: $719M of Bonds Remain on Junk Level
-----------------------------------------------
The Argentine arm of Standard & Poor's maintains an `raD' rating
to a total of US$719 million of bonds issued by Argentine
company Multicanal S.A., according to the CNV.
The bonds, which carry the same rating, are:
-- US$125 million of "Obligaciones Negociables simples, con
vencimiento a 10 anos, autorizada poa AGOyE de fecha 7.10.96",
due on February 1, 2007. These were classified under "Simple
Issue"
-- US$125 million of "Obligaciones Negociables simples, con
vencimiento a 5 anos, autorizadas por AGOyE de fecha 7.10.96",
which matured in February 2002, and classified under "Simple
issue".
-- US$150 million of "SERIE C, bajo el Programa de U$S 1050
millones", due on April 15, 2018. These were classified under
"Series and/or Class".
--US$175 million of "Serie E de Ons, bajo el Programa de U$S
1050 millones", also under "series and/or class". The bonds will
mature on April 15, 2009.
-- US$144 million of bonds called "Serie J de ON bajo el
Programa de ON de USD 1050 MM", with undisclosed maturity date.
These bonds are classified as "Series and/or Class."
The rating was given based on the Company's financial status as
of December 31, 2003.
PAN AMERICAN ENERGY: Garners Ba2 Rating from Moody's
----------------------------------------------------
Moody's Investors Service assigned a Ba2 global local currency
issuer rating to Pan American Energy LLC (PAE). This is the
first time Moody's is assigning a global local currency rating
to the Company.
The Ba2 global local currency rating is supported by the
following factors:
(1) PAE's substantial oil and gas reserves and strong market
share in Argentina
(2) its position as a net exporter of oil and gas
(3) its fairly long reserve life on proven developed reserves
and favorable oil production growth outlook
(4) its efficient cost structure
(5) the benefits derived from its relationship with its majority
owner, BP plc (rated Aa1)
(6) its conservative financial leverage.
However, the Ba2 rating also considers other factors such as:
(1) PAE's geographic concentration
(2) its small contribution to BP's worldwide hydrocarbon
reserves and production
(3) political risk and economic weakness in Argentina and in
Bolivia, with negative implications for natural gas reserve
Replacement
(4) PAE's high proportion of proved undeveloped reserves
(5) the potential for increases in its unit full-cycle costs
(6) the company's significant near-term debt maturities.
Simultaneously, Moody's upgraded PAE's foreign currency issuer
rating to B1 from Caa1.
The upgrade of PAE's foreign currency rating to B1 reflects all
of the factors discussed above, as well as PAE's strong track
record in servicing its debt obligations during the Argentine
financial crisis, its ability as an oil and gas company
operating in Argentina to keep a majority of its export proceeds
offshore, and the fact that it has a strong majority owner that
operates outside of Argentina.
PAE's B1 foreign currency rating is constrained by Argentina's
Caa1 long-term foreign currency ceiling, which implies a high
degree of foreign currency convertibility and transfer risk.
The rating outlook for PAE's local currency and foreign currency
ratings is stable.
PAE is a holding company owned 60% by BP plc and 40% by Bridas
Corporation. With over 1.2 billion barrels of oil equivalent
(boe) of proven oil equivalent reserves (85% in Argentina and
15% in Bolivia), PAE is Argentina's second-largest oil and gas
producer by volume, with about 11% of the country's total
hydrocarbon production, says Moody's.
PROYECTAR INGENIERIA: Commences Bankruptcy Process
--------------------------------------------------
Engineering construction company Proyectar Ingenieria
Electromecanica SA will now undergo a bankruptcy process after
Judge Di Noto of Buenos Aires Court No. 15 granted approval to a
creditor's petition.
La Nacion recalls that Banco Rio de la Plata SA requested the
bankruptcy of Proyectar Ingenieria after the latter failed to
pay US$54,488.25 in debts.
The Court, aided by Dra. Tevez, Clerk No. 29, named Adalberto
Corbelleri as receiver. Creditors must submit their proofs of
claim to the receiver before June 14 for verification. Failure
to do so implies disqualification from the payments that will be
made after the Company's assets are liquidated.
CONTACT: Proyectar Ingenieria Electromecanica SA
Avenida de Mayo 666, 7 "A"
Buenos Aires
Adalberto Corbelleri, Receiver
Avenida Carabobo 237, Piso 2 "9"
Buenos Aires
SERVI CHACO: Court OKs Creditor's Bankruptcy Request
----------------------------------------------------
Servi Chaco SA entered bankruptcy after Judge Vassallo of Buenos
Aires Court No. 5 approved a bankruptcy motion filed by Gulf Oil
Argentina SA, reports La Nacion.
Working with Dr. Pole Olivera, the city's Clerk No. 10, the
court assigned Zulma Ghiliano as receiver for the bankruptcy
process. The receiver's duties include the authentication of the
Company's debts and the preparation of the individual and
general reports. Creditors are required to present their proofs
of claim to the receiver before June 16, 2004.
The Company's assets will be liquidated at the end of the
bankruptcy process to repay creditors. Payments will be done
based on the results of the verification process.
CONTACT: Servi Chaco SA
Avenida Presidente Roque Saenz Pena 651, Piso 5
Buenos Aires
Zulma Ghiliano
Pasaje Cipolletti 554
Buenos Aires
=============
B E R M U D A
=============
FOSTER WHEELER: Awarded SCR Contract by American Electric Power
---------------------------------------------------------------
Foster Wheeler Ltd. (OTCBB: FWLRF) announced Monday that its
subsidiary, Foster Wheeler Power Group, Inc., has been awarded a
contract by American Electric Power to supply and install a
state-of-the-art selective catalytic reduction (SCR) system at
its Muskingum River Generating Station. The SCR is destined for
Unit #5, a 600-megawatt (MW) pulverized-coal, pressurized-fired
supercritical boiler, located in Beverly, Ohio.
The contract will provide engineering, material supply,
construction, commissioning and testing for this installation.
The terms of the contract were not disclosed. The booking was
included in the fourth-quarter results. Engineering for the
project will be completed at Foster Wheeler's Clinton, New
Jersey, headquarters by the second quarter of 2004. Construction
is scheduled to begin in Spring 2004, with the systems scheduled
to be in operation by the spring of 2005.
The new SCR system will greatly improve air quality by reducing
emissions of smog-producing nitrogen oxides (NOx) up to 90
percent. Foster Wheeler's proven SCR technology is reducing NOx
emissions in over 100 fossil-fuel-fired plants, making Foster
Wheeler one of the leading providers of this technology.
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.
Web site: http://www.fwc.com
===========
B R A Z I L
===========
CEMIG: To Implement A Securities Distribution Program
-----------------------------------------------------
The Brazilian public service utility Cemig (Companhia Energetica
de Minas Gerais), with shares listed and traded on the stock
exchanges of Sao Paulo, New York and Madrid, informs the public,
in accordance with its commitment to the best corporate
governance practices, and pursuant to CVM Instructions 358 of 3
January 2002 and 359 of 22 January 2003, that it intends to
implement a securities distribution program ("the Program"), in
accordance with CVM Instruction 400 of 29 December 2003. Under
the Program, which will be for a maximum of 2 (two) years from
the date of its filing with the CVM (the Brazilian Securities
Commission), only non-subordinated debentures not convertible
into shares, without guarantee nor preference rights, may be
issued, and the total volume of public offerings under the
program must be less than or equal to BRL1,500,000,000.00 (one
billion and five hundred million Reais).
CEMIG's third public issue of non-convertible non-guaranteed
debentures, without preference rights, in the amount of
BRL400,000,000.00 (four hundred million Reais), with maturity
120 (one hundred and twenty) months from the date of issue, will
take place under the Program. The Program and Cemig's third
issue of debentures are subject to the necessary corporate
approvals, and approvals by the competent authorities.
Belo Horizonte, 16 April 2004
Flavio Decat de Moura,
Finance, Equity Investments and Investor Relations Director
EMBRATEL: MCI Likely To Emerge Tuesday From Chapter 11
------------------------------------------------------
The long distance phone provider formerly known as WorldCom is
expected to emerge from Chapter 11 protection Tuesday, almost
two years after it filed for bankruptcy, when it disclosed that
it misrepresented earnings by US$11 billion over several years,
Dow Jones reports.
Now known as MCI, the U.S' second largest long-distance provider
behind AT&T Corp. got the approval of the Manhattan bankruptcy
court for its reorganizational plan, which stipulates that the
company shell out 36 cents for every dollar of debt owed to its
unsecured creditors. The plan, which was first introduced about
a year ago, enables MCI to shed some US$35 billion in debt, and
leave bankruptcy with only about US$5.5 billion in indebtedness,
far less than other telecom carriers.
For months, Ashburn, Virginia-based MCI had been trading shares
on a "when-issued" basis. But once the company formalizes its
emergence from bankruptcy, which it filed for in July 2002,
actual shares will start trading on the over-the-counter market.
A source close to MCI also revealed that within the next few
weeks, the company will seek listing on the Nasdaq Stock Market.
Shares of MCI, the country's second-largest long-distance
provider behind AT&T Corp. (T), have been trading on a "when-
issued" basis for months. Once MCI formalizes its emergence from
bankruptcy, actual shares will start trading on the over-the-
counter market.
In April 2003, WorldCom started calling itself MCI to put some
distance from its troubled past, wherein Bernard Ebbers, MCI's
former chief executive, and Scott Sullivan, former chief
financial officer, have been charged with helping orchestrate
the accounting fraud. Sullivan pleaded guilty to three criminal
fraud charges in March and agreed to a permanent ban on serving
as a corporate officer or director.
MCI appointed Michael Capellas, president of Hewlett-Packard Co.
(HPQ), as its new CEO in 2002. He was also asked to serve as its
chairman, but when a federal court-appointed watchdog
recommended that the roles of chairman and chief executive be
split, Mr. Capellas had to give up the position to former U.S.
Attorney General Nicholas Katzenbach.
MCI's senior management also underwent significant changes upon
entering bankruptcy, with some 100 executives who directly or
indirectly had something to do with the scandal terminated. Its
board also went through a major shakeup, with the appointment of
several independent directors who will officially join the board
when the company emerges from bankruptcy.
In rebuilding its business, MCI is in for an uphill climb. The
year it filed for bankruptcy, it posted a US$32 billion revenue.
This year, the company expects an income of only US$21.5
billion. Apparently, its intense price competition with long-
distance rival AT&T is taking its toll on sales, in addition to
the fact that cable companies and wireless carriers are
aggressively eating into the market of wireline companies such
as MCI, which sold its wireless division last year. Mr. Capellas
said MCI has plans of forging partnerships with wireless firms.
As for MCI creditors, they have the option to either receive
notes or stock of the company, or a combination of the two. Late
Monday, MCI said that three groups of its creditors asked for
more notes than MCI issued in its reorganization plan, which
means they got only 46.85% of the notes they requested. MCI made
up the difference in stock.
"The oversubscription for the debt suggests that sophisticated
creditors are more interested in protecting their downside than
having a chance on the upside," said Bill Rochelle, a bankruptcy
attorney with Fulbright & Jaworski LLP in New York. "Given the
renewed pressures on telecom, it's not surprising to see people
more conservative in their investments."
Another issue that came up while MCI was in bankruptcy was its
decision to sell its 51.8% stake in Brazil's largest long-
distance carrier Embratel Participacoes SA (EMT) to Mexican
giant Telefonos de Mexico SA (TMX) for US$360 million. With the
Calais consortium, the losing bidder, offering a lot more than
Telmex for Embratel, this sale will have to be resolved by MCI
upon its emergence from bankruptcy, when it would no longer need
the input of its creditors on the decision for the proposed
sale.
The consortium of Brazil's top three phone companies agreed to
pay MCI US$396 million upon signing a contract and US$154
million more should the deal get the approval of Brazilian
regulators.
KLABIN: Farm Occupied By Landless Workers Group
-----------------------------------------------
A spokesman for Brazilian pulp and paper producer Klabin SA
(KLBN4.BR) announced Monday that militant members of Brazil's
Landless Workers' Movement (MST) have taken over one of its
farms during the weekend in an effort to pressure government to
accelerate land reform, relates Dow Jones.
Calling the action ""an arbitrary and violent attack against the
pulp and paper sector, which is of strategic importance for
Brazil's economic development," the company statement reveals
that some 500 people linked to the radical MST have seized
Klabin's 578-hectare farm in the municipality of Sao Cristovao
do Sul. The property, which is part of a network of farms owned
by Klabin in the area, was invaded by the militants in the early
hours of Saturday. According to the statement, the workers have
blocked employee access to the farm, and have started to destroy
part of 247 hectares of native forests maintained by the company
in the property.
Vowing in April to "make life hell" for the government, the
MST's action Saturday is the 87th of its kind since early March,
when the MST began attacking farms owned by multinationals.
===============
C O L O M B I A
===============
BANCO POPULAR: Moody's Withdraws Ratings for Business Reasons
-------------------------------------------------------------
Moody's withdrew all ratings for Banco Popular S.A. in Colombia
for business reasons as stated in Moody's Withdrawal Policy.
Ratings withdrawn are:
- Bank Financial Strength Rating - D
- Long Term Foreign Currency Bank Deposit Rating -- Ba3
- Short Term Foreign Currency Bank Deposit Rating -- Not Prime
===================================
D O M I N I C A N R E P U B L I C
===================================
BANCO LEON: Former Execs Ordered Arrested
-----------------------------------------
Arrest orders were issued Friday for two former executives of
the collapsed financial institution Bancredito for allegedly
diverting some RD$20 billion of bank funds for personal gain,
according to report by local daily DR1 Daily News.
Judge Annikssa Serra de la Mota ordered the arrest of Manuel
Arturo Pellerano, the president of Bancredito at the time of its
collapse, and fellow-bank executive Juan Felipe Mendoza. The two
executives are accused of attempting to cover up information in
connection with the bank funds, and for operating a clandestine
dual banking system similar to the system allegedly run at
Baninter bank, which led to its collapse.
However, the district attorney says that only the arrest order
for Mr. Mendoza could be served since Mr. Pellerano is out of
the country.
Bancredito changed its name to Banco Leon after its acquisition
by the powerful Leon Jimenes Group last year. It has since been
undergoing a significant restructuring involving a full
assessment of the quality of the assets received and operating
cost cuts.
BANCO MERCANTIL: Fraud Charges Filed Against Ex-Bosses
------------------------------------------------------
Six former executives and one board member of Banco Mercantil
were sued by the Dominican Republic central bank and the
Superintendence of Banks for their alleged involvement in an
RD$6.5-billion scam that allegedly took place in 2002 and 2003,
relates local daily DR1 Daily News.
The suit, which was presented to the Office of the Attorney
General, accuses the principal executives of using financial
assistance from the central bank for their personal gains. The
respondents include Andres Aybar, the president of the bank from
1989-2003; Evelyn Perez Montandon, the vice-president of
management and finances; Ramon Aref Henriquez Risk, the vice-
president of operations and technology; Jose Manuel Mateo
Conreras, the vice-president of auditing and security; Rafael
Maximiliano Moya Hernandez, the vice-president of financial
controls and Eduardo Jacinto Alejandro de Castro Sanchez, the
former president of Mercantil's board of directors.
The suit stemmed from the financial aid Banco Mercantil received
from central bank to assist in its liquidity problems, which
intended to ensure the stability of the country's financial and
banking system. The scam supposedly took place before the sale
of Mercantil's majority shares to the Republic Bank Limited of
Trinidad and Tobago in October 2003.
BANINTER: Government Accused of Bullying Judge, Lawyer
------------------------------------------------------
The lawyer defending the former president of the collapsed Banco
Intercontinental SA (BanInter) has accused high-ranking
government officials last week of trying to pressure and
blackmail the judge handling the BanInter case, local daily DR1
Daily News reports.
According to Marino Vinicio Castillo, who heads the defense team
for former Baninter president Ramon Baez Figueroa, these
officials are trying to sway Judge Eduardo Sanchez Ortiz into
dropping from the case the names of Agriculture Minister Eligio
Jaquez, National Treasurer Pastora Mendez and Social Plan of the
Presidency director Ana Maria Acevedo, all key figures in the
reelection campaign of President Hipolito Mejia. Mr. Baez-
Figueroa's defense team have been publicly accusing the three
officials of extorting money from the collapsed bank to finance
the amendment to the Constitution that made President Mejia's
reelection a possibility.
BanInter was intervened after it was found to have engaged in
massive fraudulent operations that drained it of about US$657
million. The country's central bank and the private banking
sector allocated 50 billion pesos to BanInter account holders.
* DOMINICAN REPUBLIC: Reaches Debt Agreement With Paris Club
------------------------------------------------------------
On April 16, 2004, the Paris Club concluded an agreement with
the Government of the Dominican Republic. This agreement
consolidates around US$155 million of maturities falling due
between January 1, 2004 and December 31, 2004, and US$38 million
of arrears due to Paris Club creditors. This rescheduling is
expected to reduce debt service due to Paris Club creditors
between January 1, 2004 and December 31, 2004 from US$479
million to US$293 million.
This agreement follows the IMF's approval of the Stand-by
Arrangement on August 29, 2003, modified at the first review
(February 11, 2004) and is consistent with the financing
expectations of the Dominican Republic in 2004. This
consolidation is expected to make an important positive
contribution to the Dominican Republic's economic outlook and to
strengthen its external position. Paris Club creditors took note
of the measures of adjustment in the economic and financial
programme undertaken by the Government of the Dominican Republic
and stressed the importance they attach to the continued and
full implementation of this programme. The Government of
Dominican Republic reaffirmed its commitment with regards to the
application of the principle of comparability of treatment. The
rescheduling is conducted under the so-called "Classic terms":
all credits are to be repaid progressively over 12 years,
including 5 years of grace (see table attached). ODA loans will
be rescheduled at a rate not higher than the interest rate of
the original loans. Other loans will be rescheduled at a market
interest rate (known as "appropriate market rate") defined on
the basis of risk-free rates for the currency considered. On a
voluntary and bilateral basis, each creditor may also undertake
debt for nature, debt for aid, debt for equity swaps or other
debt swaps. The Dominican Republic agreed to seek comparable
treatment from non-Paris Club bilateral and private creditors.
The principle of comparability of treatment aims to ensure a
balanced treatment among all external creditors of the debtor
country. As a general rule, for private creditors, comparability
of treatment is assessed with the effect of private treatment,
compared to the effects of Paris Club treatment, in terms of
duration, Net Present Value and flow relief. The provision of
new money can also be taken into account.
Background notes
1. The Paris Club was formed in 1956. It is an informal group of
creditor governments from major industrialized countries. It
meets on a monthly basis in Paris with debtor countries in order
to agree with them on restructuring their debts.
2. The members of the Paris Club which participated in the
reorganization of the Dominican Republic's debt were
representatives of the governments of France, Germany, Japan,
Spain and the United States of America. Observers at the meeting
were representatives of the governments of Belgium, Canada,
Denmark, Italy, Norway, Switzerland and the United Kingdom, as
well as the IMF, the International Bank for Reconstruction and
Development, the Interamerican Development Bank, the Secretariat
of the UNCTAD and the Organization for Economic Cooperation and
Development. The delegation of the Dominican Republic was headed
by Mr. Carlos DESPRADEL, Technical Secretary of the Presidency.
The meeting was chaired by Mrs Stephane PALLEZ, Assistant
Secretary for European and International Affairs at the French
Treasury of the Ministry of Economy, Finance and Industry, Co-
Chairperson of the Paris Club.
Technical notes
1. A Stand-by Arrangement was approved by the International
Monetary Fund on August 29, 2003.
2. The stock of debt owed to Paris Club creditors as at January
1, 2004 was estimated to be US$1,561 million, out of which
US$687 million of pre-cut off date debt, and US$874 million of
post-cut off date debt.
The cut off date (June 30, 1984 for the Dominican Republic) is
used by Paris Club creditors for the sole internal purposes of
the Paris Club agreement for official bilateral creditors. When
a debtor country first meets with Paris Club creditors, the "cut
off date" is defined and is not changed in subsequent Paris Club
treatments and credits granted after this cut off date are not
subject to rescheduling. Thus, the cut off date helps restore
access to credit for these debtor countries.
=============
E C U A D O R
=============
BANCO DEL PICHINCHA: Ratings Withdrawn by Moody's
-------------------------------------------------
Moody's withdrew all ratings for Banco del Pichincha C.A. in
Ecuador for business reasons as stated in Moody's Withdrawal
Policy. Ratings withdrawn are:
- Bank Financial Strength Rating -- E+
- Long Term Foreign Currency Bank Deposit Rating -- Caa3
- Short Term Foreign Currency Bank Deposit Rating -- Not Prime
=============
J A M A I C A
=============
C&WJ: Appoints Patrick Gillings Sr VP Marketing & Communications
----------------------------------------------------------------
Cable & Wireless Jamaica President Gary Barrow has announced the
appointment of Patrick Gillings as Senior Vice President,
Marketing and Communications at CWJ.
Mr. Gillings has extensive experience in the Marketing
discipline and possesses an enviable track record of successes.
He joins Cable & Wireless Jamaica from his previous position as
Marking Director for Pepsi America's Caribbean, where he was
responsible for marketing and business development in a very
competitive arena. In that position, he provided strategic
leadership to Pepsi America's regional businesses and was
pivotal in the introduction of the Modern Trade Beverage
Concepts throughout the region.
Prior to that Mr. Gillings had successful stints with both Wray
and Nephew firstly as Brand Manager and subsequently as
Marketing Manger; and at Desnoes and Geddes (D&G) as Regional
Sales Manager and Category Manager for Wines and Spirits.
In announcing Mr. Gillings appointment, CWJ President Gary
Barrow said: As we approach the final stages of our aggressive
transformation, we are committed to aggressively attracting top
marketing and sales talent. This is an essential part of our
strategy as we orient our organization into an aggressive sales
and marketing machine. We now have a new organization, new
processes, new skills and a new approach. We are now fine tuning
as we prepare to continue to hold the position as the number one
full service telecoms provider of choice in Jamaica.
C&WJ: Court Upholds Decisions on Settlement
-------------------------------------------
The Supreme Court has lifted a stay on the implementation of
decisions of the OUR, issued in January and February of this
year, on settlement and termination rates for international
calls to the mobile and fixed networks operating in the island.
The stay was obtained on March 31 by Newgen Technologies Company
Limited, in a judicial proceeding from which Cable & Wireless, a
party affected in the matter, was excluded. The OUR's decisions,
issued on January 23, took effect on January 24 and set minimum
and maximum termination and settlement rates for international
calls to fixed and mobile telephones in Jamaica, in keeping with
a directive by the Ministry of Commerce, Science & Technology.
The Ministry had directed that the agency undertake and
implement measures to stabilize the international incoming call
market while stimulating sustainable and effective competition.
The Ministry's directive followed precipitous decline in revenue
to the national coffers and extremely negative impact on
earnings to several locally based service providers as earnings
from incoming international calls fell from U.S. 62.5cents in
1998 to U.S. 3.5 cents in January of this year. In issuing its
decisions, the OUR recognized that the decline in the settlement
rates benefited neither the Jamaican or US consumer but instead,
to date the sole beneficiary of the decline in settlement rates
have been the foreign carriers.
The OUR's decision stipulated a maximum termination rate for
international calls to fixed lines of five cents (U.S.) per
minute and a minimum of 13.8 cents (U.S.) for calls to mobile
phones. The OUR decision also set a minimum settlement rate of
8.1 cents (U.S.) for calls to fixed lines and 16.9 cents (U.S.)
for calls to mobile phones. (See Editor's Note following.)
Newgen had opposed the minimum rate for terminating fixed line
calls on the grounds that it was not cost based.
However, Cable & Wireless, the country's leading provider of
fixed line services, applied to the court to be added as a party
to the matter and for a Discharge of the Stay, pointing out that
the OUR's decision had halted the slide in Jamaica's income from
settlement rates. The company also pointed out that were the
stay to remain, the monthly loss in earnings to Jamaica would
have been in the region of J$40-million. Cable & Wireless also
argued that if settlement rates fell too low, it would be
virtually impossible thereafter to raise them to profitable
levels.
In handing down his ruling discharging the stay on April 8,
Justice Patrick Brooks cited Newgen Technologies' failure to
make material disclosures in obtaining the stay. He further
noted that Newgen had failed to disclose the nature of Cable &
Wireless' interest in the matter.
Newgen have been granted leave to apply for a judicial review of
the OUR's decisions. The first hearing is set for May 10.
===========
M E X I C O
===========
GRUPO IUSACELL: Creditors Seek To Block Asset Sale
--------------------------------------------------
Grupo Iusacell, the embattled Mexican wireless company owned by
media and retail magnate Ricardo Salinas, faces yet another
legal setback.
According to Reuters, creditors, who hold about 31.8% of
Iusacell's unit Grupo Iusacell Celular notes, asked the Supreme
Court of the State of New York to stop the Company from selling
or transferring real estate, communication towers, subscriber
agreements or bank accounts to third parties.
Citing a court motion made public for the first time on Monday,
Reuters reports that creditors, represented by law firm Manatt,
Phelps & Phillips, accuse Iusacell of granting preferential
treatment to holders of a defaulted US$266 million bank loan by
paying them interest while denying similar rights to
noteholders.
They also say that certain actions from bank loan holders,
including a potential debt renegotiation, have hurt noteholders'
interests and trimmed their chances to obtain security interests
to which they say they are entitled.
Bank loan holders are led by U.S.-based fund firm Marathon Asset
Management.
Lawyer Alan Feld of Manatt, Phelps & Phillips said Iusacell has
already been served with the motion, which is scheduled to be
heard in the New York State trial court on June 9.
=======
P E R U
=======
BANCO INTERNACIONAL: Moody's Withdraws Ratings
----------------------------------------------
Moody's withdrew all ratings for Banco Internacional del Peru --
Interbank for business reasons as stated in Moody's Withdrawal
Policy. The ratings withdrawn are:
- Bank Financial Strength Rating -- E+
- Long Term Foreign Currency Bank Deposit Rating -- B1
- Short Term Foreign Currency Bank Deposit Rating -- Not Prime
- Long Term Foreign Currency Senior Unsecured Rating -- B1
- Short Term Foreign Currency Other Debt -- Not Prime
BANCO WIESE: Ratings Withdrawn by Moody's
-----------------------------------------
Moody's withdrew all ratings for Banco Wiese Sudameris (BWS) in
Peru for business reasons as stated in Moody's Withdrawal
Policy. The ratings withdrawn are:
- Bank Financial Strength Rating - D
- Long Term Foreign Currency Bank Deposit Rating -- B1
- Short Term Foreign Currency Bank Deposit Rating -- Not Prime
BWS, the result of the September 1999 merger of Banco Wiese and
Banco de Lima-Sudameris, is Peru's third largest commercial
bank.
=================
V E N E Z U E L A
=================
BANESCO BANCO: Moody's Withdraws Ratings on Business Reasons
------------------------------------------------------------
Moody's withdrew all ratings for Banesco Banco Universal, C.A.
in Venezuela for business reasons as stated in Moody's
Withdrawal Policy. The ratings withdrawn are:
- Bank Financial Strength Rating -- E+
- Long Term Foreign Currency Bank Deposit Rating -- Caa1
- Short Term Foreign Currency Bank Deposit Rating -- Not Prime
***********
S U B S C R I P T I O N I N F O R M A T I O N
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co-published by Bankruptcy Creditors' Service, Inc., Fairless
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Copyright 2004. All rights reserved. ISSN 1529-2746.
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