/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/040524.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, May 24, 2004, Vol. 5, Issue 101 Headlines A R G E N T I N A ADVINTON: Court Issues Bankruptcy Ruling AEROMET INDUSTRIAL: Court Sets Claims Verification Date BANCO DE GALICIA: IFC Extends $310M Debt Reorganization BY CLUB: Court Declares Company Bankrupt COSME SAAVEDRA: Default Leads to Court Ordered Liquidation CQ 3: Claims Verification Period Begins DEASTI HERMANOS: Court Approves Creditor's Bankruptcy Motion DERIM: Declared Bankrupt by Court DIRECTV LA: Seeks to Eliminate Late-Filed, Duplicative Claims DISTRIBUIDORA GLASS: Court Approves Creditor's Bankruptcy Motion EXPRESO ANGELICA: Moves Court to Authorize Reorganization LECTRA: Court Approves Creditor's Request MABEGO: Gets Court Approval to Reorganize R.I.A.: Bankruptcy Process Begins By Court Order RODOLFO SATURNINO: Court Sets Verification Deadline SOCIEDAD ARGENTINA: Court Declares Company Bankrupt YACYRETA: Another Delay Hampers Progress * Argentins: Bondholders Allege Broken Debt Pledge B E R M U D A FOSTER WHEELER: Secures Bahrain National Gas Contract GLOBAL CROSSING: Shares Jump As Slim Eyes Additional Stake B R A Z I L AMBEV: Lawsuits Delay Peru Beer Market Entry NET SERVICOS: Independent Accountants Issue Review Report PARMALAT BRAZIL: Report Shows Funds Shifted to Uruguay C H I L E AES GENER: Plans to Issue 800 Million of New Shares TELEFONICA CTC: S&P Moves Rating to CreditWatch Negative TELEFONICA CTC: Wireless Divesture Neutral to Credit Profile C O S T A R I C A * World Bank Extends US$218 Million Aid to Costa Rica D O M I N I C A N R E P U B L I C CDEEE/EDENORTE/EDESUR: Taking Steps To Deal With Enormous Debts * US Offers Assistance in Dominican Republic 'Dollarization' J A M A I C A AIR JAMAICA: Higher Fuel Costs Prompt Fare Hikes NWC: Union Alleges Agency Still Owes Pensioners M E X I C O AEROMEXICO: Delta Airlines Balks at Acquisition Plans TFM: Abandons Bid for Huehetoca Suburban Train V E N E Z U E L A PDVSA: Hits Impasse Over Orimulsion Talks With PetroChina - - - - - - - - - - ================= A R G E N T I N A ================= ADVINTON: Court Issues Bankruptcy Ruling ---------------------------------------- Buenos Aires Judge No. 3 declared Advinton S.A. bankrupt, reports Infobae. With the ruling, the Company's assets are placed under the supervision of Mr. Santiago Manuel Quiben, the court-appointed trustee. Mr. Quiben will collect and review creditor's claims for verification. Creditors must have their claims validated during the verification phase scheduled until July 15, 2004. The trustee will submit the individual reports for court approval on September 10, 2004. The individual reports explain the basis for the approved and rejected claims. A general report containing details of the bankruptcy proceedings will also be presented for court review on November 25, 2004. CONTACT: Advinton S.A. Montevideo 153 Buenos Aires Mr. Santiago Manuel Quiben, Trustee Esmeralda 783 Buenos Aires AEROMET INDUSTRIAL: Court Sets Claims Verification Date ------------------------------------------------------- Creditors' claims for the Aeromet Industrial S.A. bankruptcy case are due to be filed by July 12, 2004. Analyzing these claims is important because the outcome of the process will determine the amount each creditor will receive after liquidation. Infobae states that Mr. Francisco Napoli will oversee the bankruptcy process as the court-appointed Trustee. Court No. 16, which is aided by Clerk No. 31, will conclude the bankruptcy process by liquidating the company's assets to repay creditors. CONTACT: Mr. Francisco Napoli, Trustee Callao 67 Buenos Aires BANCO DE GALICIA: IFC Extends $310M Debt Reorganization ------------------------------------------------------- The International Finance Corporation, the private sector arm of the World Bank Group, has restructured $310 million in outstanding loans to Argentina's Banco de Galicia y Buenos Aires S.A. The restructured loans include $65 million in loans for IFC's account and a $245 million syndicated loan. This operation is part of the general restructuring of Banco Galicia's outstanding debt of $1.34 billion equivalent. During the discussions, IFC served as chair of the Ad Hoc Steering Committee of Banco Galicia's unsecured creditors. Banco Galicia is the largest private sector commercial bank in Argentina in terms of assets ($7.4 billion as of February 2004) and third in terms of shareholders' equity ($448 million). The restructuring is a critical step in the bank's plan to improve its competitiveness as it emerges from the difficult environment of the last three years. Jyrki I. Koskelo, IFC's director for Global Financial Markets, said, "Banco Galicia has maintained a strong franchise and reputation during difficult times in Argentina. By improving its capitalization and overall financial profile, the restructuring strengthens the competitiveness of one of the country's leading banks, allowing it to pursue selective growth of its business offerings in an improving economic climate." Bernard Pasquier, IFC's director for Latin America, added, "The completion of Banco Galicia's restructuring is an important development for the private sector in Argentina. Revitalizing the banking sector is one of the crucial steps necessary for the sustainable recovery of the Argentine economy." Jonathan R. Hakim, IFC's director of Syndications and Resource Mobilization, said, "This is a very complex and significant restructuring. We are pleased that we were able to work closely with a large group of B-loan participants to achieve this result." In fiscal year 2003, IFC committed $1.8 billion to 54 projects in 16 countries of the Latin America and Caribbean Region. This was an increase of $706 million from investment commitments made to the region during fiscal year 2002, and the largest amount committed by IFC to Latin America and the Caribbean in recent years. The total IFC financing amount also included $918 million mobilized from banks participating in IFC syndicated loans. IFC's financing to Latin America and the Caribbean accounted for almost half of IFC's global funding to clients in fiscal year 2003, the latter of which totaled $5.0 billion. IFC's mission (www.ifc.org) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through the close of the last fiscal year on June 30, 2003, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's committed portfolio at the end of FY03 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications. CONTACT: Adriana Gomez Phone: +1 (202) 458-5204 Fax: +1 (202) 974-4384 E-mail:agomez@ifc.org BY CLUB: Court Declares Company Bankrupt ---------------------------------------- By Club S.A. entered bankruptcy on orders from Buenos Aires Court No. 16, reveals Infobae. Working with Clerk No. 32, the court assigned Mr. Francisco Napoli as Trustee. Mr. Napoli is charged with verifying creditors' claims until June 4, 2004. Creditors who fail to have their claims validated before the deadline will be disqualified from receiving any payments to be made after the Company's assets are liquidated. The individual reports, which are due on August 2, 2004, are to be prepared upon completion of the verification process. The court also requires the Trustee to prepare a general report and file it on September 14, 2004. This report contains a summary of relevant events leading to and during the course of the liquidation. CONTACT: Mr. Francisco Napoli, Trustee Av Callao 67 Buenos Aires COSME SAAVEDRA: Default Leads to Court Ordered Liquidation ---------------------------------------------------------- Buenos Aires Court No. 25 ordered the liquidation of Cosme Saavedra S.A. after the Company defaulted on its obligations, Infobae reveals. The liquidation pronouncement will effectively place the Company's affairs as well as its assets under the control of Mr. Bernardo Waldfogiel, the court-appointed trustee. Mr. Waldfogiel will verify creditors' proofs of claim until July 7, 2004. The verified claims will serve as basis for the individual reports to be submitted in court on September 1, 2004. The submission of the general report follows on October 14, 2004. Clerk No. 49 assists the court on this case, which will end with the disposal of the company's assets in favor of its creditors. CONTACT: Mr. Bernardo Waldfogiel, Trustee Av Corrientes 1186 Buenos Aires CQ 3: Claims Verification Period Begins --------------------------------------- CQ 3 S.A. of Buenos Aires enters bankruptcy after the city's Court. No. 4 announced that it is "Quiebra". Infobae reveals that Ms. Maria Paulina Alva will serve as Trustee during the bankruptcy process. She will review creditor's proofs of claim until July 6, 2004. The verified claims will be the basis for the individual report, which the trustee will present for court approval as the case progresses. Clerk No. 8 assists the court on this particular case. CONTACT: Mr. Maria Paulina Alva, Trustee Montevideo 536 Buenos Aires DEASTI HERMANOS: Court Approves Creditor's Bankruptcy Motion ------------------------------------------------------------ Judge Sala of Buenos Aires Court No. 14 declared Deasti Hermanos S.A. bankrupt, says La Nacion. The ruling comes in approval of the bankruptcy petition filed by the Company's creditor, Banco Credito Rural Argentino S.A., for nonpayment of US$82,173.31 in debt. Clerk No. 28, Dr. Sarmiento Laspiur, assists the court on the case, which will conclude with the liquidation of the Company's assets. The court-appointed trustee, Ms. Susana Marino, will examine and authenticate creditors' claims until July 16, 2004. This process is undertaken to determine the nature and amount of the Company's debts. Creditors must have their claims authenticated by the trustee by the date specified in order to qualify for the payments that will be made after the Company's assets are liquidated. CONTACT: Deasti Hermanos SA San Nicolas 3632 Buenos Aires Ms. Susana Marino, Trustee Uruguay 560 Buenos Aires DERIM: Declared Bankrupt by Court --------------------------------- Derim S.A. is now bankrupt, reveals Infobae. Buenos Aires Court No. 4 decreed the Company's bankruptcy and appointed Mr. Ernesto Iob as Trustee for the Company. Mr. Iob will be reviewing creditors' claims until June 29, 2004. Analyzing these claims is important because the outcome of the process will determine the amount each creditor will get after all the assets of the Company are liquidated. The court, which is aided by Clerk No. 8, will conclude the bankruptcy process by liquidating its assets to repay creditors. CONTACT: Mr. Ernesto Iob, Trustee Presidente Peron 1186 Buenos Aires DIRECTV LA: Seeks to Eliminate Late-Filed, Duplicative Claims ------------------------------------------------------------- Claimholders were required to file proofs of claim against DirecTV Latin America, LLC, with any supporting documentation on or before the September 2, 2003 Bar Date. M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, states that AT&T Corp.'s Claim Nos. 124, 125, and 126, aggregating $87,589, was filed after the Bar Date. AT&T filed Claim Nos. 124 and 125 on January 16, 2004 and Claim No. 126 on February 9, 2004, each as an unsecured claim for $29,196. Furthermore, Mr. Cleary relates that Claim Nos. 124, 125 and 126 indicate the same details listed on Claim No. 10. Claim 10 was filed as an unsecured claim for $29,196 against DirecTV. Accordingly, DirecTV asks the Court to expunge in their entirety AT&T's Claim Nos. 124, 125 and 126. (DirecTV Latin America Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) DISTRIBUIDORA GLASS: Court Approves Creditor's Bankruptcy Motion ---------------------------------------------------------------- Buenos Aires-based Distribuidora Glass S.A. commences with its liquidation under the supervision of Mr. Jorge Omar Inafuku, the court-appointed trustee. Court No. 5, with the assistance of Clerk No. 10, ordered the Company's bankruptcy after it defaulted on its debt payments. The verification of creditors' claims is ongoing until July 14, 2004. Following claims verification, the Trustee will submit the individual reports for court approval on August 25, 2004. A general report will also be submitted on October 10, 2004. CONTACT: Distribuidora Glass S.A. Fournier 2781 Buenos Aires Mr. Jorge Omar Inafuku, Trustee Cerrito 1070 Buenos Aires EXPRESO ANGELICA: Moves Court to Authorize Reorganization --------------------------------------------------------- Expreso Angelica S.A. of Buenos Aires is seeking to reorganize after failing to pay its obligations, reveals Infobae. The petition for reorganization or "Concurso Preventivo", if granted, will allow the company to avoid bankruptcy by negotiating a settlement with its creditors. The company's case is pending before Court No. 15. Clerk No. 29 assists the court with the proceedings. CONTACT: Expreso Angelica S.A. Almirante F J Segui 309 Buenos Aires LECTRA: Court Approves Creditor's Request ----------------------------------------- Buenos Aires-based company Lectra S.A. entered bankruptcy after Judge Herrera of the city's Court No. 3 approved a bankruptcy motion filed by Aprotec S.R.L., reports La Nacion. The Company's failure to pay US$4159 in debt prompted the creditor to file the petition. Working with Dr. Villaroel, the city's Clerk No. 5, the court assigned Ms. Nelida Grumbatt de Nobile as trustee for the bankruptcy process. The trustee'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 claims to the trustee before July 15, 2004. The Company's assets will be liquidated at the end of the bankruptcy process to repay creditors. Payments will be based on the results of the verification process. MABEGO: Gets Court Approval to Reorganize ----------------------------------------- Buenos Aires Court No. 2 granted Mabego S.R.L.'s petition for reorganization, reports Infobae. Mr. Mario Norberto Aragon, the court-appointed trustee, will now receive creditor's proofs of claims for verification. The verification phase continues until July 6, 2004. Individual and General reports pertaining to Mabego's reorganization case will be presented in court on October 13, 2004 and April 27, 2004, respectively. CONTACT: Mr. Mario Norberto Aragon Adolfo Alsina 1535 Buenos Aires R.I.A.: Bankruptcy Process Begins By Court Order ------------------------------------------------- Buenos Aires Court No. 3 declared R.I.A. S.R.L. "Quiebra," reports Infobae. The declaration signals the Company to proceed with the bankruptcy process, which will close with the liquidation of its assets. The court, assisted by Clerk No. 5, appointed Mr. Mario A. Adornetto as Trustee. He will authenticate proofs of claim until July 13, 2004. Afterwards, the Trustee will prepare the individual reports based on the results of the authentication and then submit these reports to court on September 8, 2004. After these results are processed in court, the Trustee will then submit the general report on October 21, 2004. CONTACT: Mr. Mario A. Adornetto, Trustee Suipacha 670 Buenos Aires RODOLFO SATURNINO: Court Sets Verification Deadline --------------------------------------------------- Creditors with claims against Rodolfo Saturnino Rojas e Hijos S.A. have until August 20, 2004 to present their claims to the court-appointed Trustee, Ms. Griselda Isabel Eidelstein, notes Infobae. The Company's bankruptcy case is under the jurisdiction of Buenos Aires Court No. 16. Clerk No. 31 assists the court on this case. CONTACT: Ms. Griselda Isabel Eidelstein, Trustee Lambare 1140 Buenos Aires SOCIEDAD ARGENTINA: Court Declares Company Bankrupt --------------------------------------------------- Judge Herrera of Buenos Aires Court No. 3 declared dry cleaning company Sociedad Sociedad Argentina de Franquicias SA "Quiebra", relates local daily La Nacion. The court approved the bankruptcy petition filed by Veronica Sarmiento, to whom the Company failed to pay debts amounting to US$18,700. The Company will undergo the bankruptcy process with Mr. Juan Lewin as trustee. Creditors are required to present their proofs of claim to the trustee for verification before July 13, 2004. Creditors who fail to have their claims authenticated by the said date will be disqualified from the payments that will be made after the Company's assets are liquidated at the end of the bankruptcy process. Clerk No. 5, Dra. Villarroel, assists the court on the case. CONTACT: Sociedad Argentina de Franquicias SA Corrientes 2763 Buenos Aires Juan Lewin, Trustee Quirno 353 Buenos Aires YACYRETA: Another Delay Hampers Progress ---------------------------------------- The bi-national Yacyreta hydroelectric project is facing another delay with the World Bank and the Inter-American Development Bank saying that without their approval, the project cannot proceed, Dow Jones reports. The World Bank is involved because it has provided about US$1 billion to programs connected with Yacyreta since the late 1970's, while a standing US$130 million loan granted by IDB to Yacyreta in 1993 also gives them a say in the project. Earlier this month, Argentina and Paraguay--the project partners--announced plans to increase the water levels at the dam from 76 meters to 77 meters. The plan was to have the project done in 45 days, thereby adding 250 megawatts to a power system stretched to capacity by low water levels and natural gas shortages. In a report Thursday by local daily Clarin, the World Bank's approval could take a matter of "days, weeks or months", according to unnamed government sources. The Yacyreta project is now the subject of an ongoing probe by the Foreign Relations Committee of the U.S. Senate. The committee is investigating allegations of corruption and mismanagement in the project, which ended up costing a lot more than originally estimated. Another problem that Yacyreta is facing is the lack of a plan to relocate families who live in the project area. According to officials close with the multilateral lenders, raising the water level of the dam by a meter could flood more of the land around the dam. Recently, the World Bank has released a report describing environmental assessments and evaluations of resettlement plans for the project as "very inadequate". * Argentins: Bondholders Allege Broken Debt Pledge -------------------------------------------------- The largest group of Argentina bondholders has accused the government of reneging on its word to negotiate repayment terms on US$99.4 billion of defaulted debt before submitting to the U.S. Securities and Exchange Commission its restructuring plan, says Bloomberg. Hans Humes, co-chairman of the Global Committee of Argentina Bondholders, said the Argentine government's actions are not consistent with what it laid out to them earlier. He said Argentina failed to hold any talks with the committee as promised in April before it invited creditors this week to hear a final proposal next month. "We don't have any indication of what Argentina plans to offer," Mr. Humes complained. Argentina's President Nestor Kirchner has said the country will offer bondholder new securities that pay US$250 per each US$1,000 in defaulted bonds. Dozens of creditors are now challenging that offer in court. Last week, Argentina said its excess revenue will be used to boost energy supplies and for social programs, and not for debt repayment this year. Argentina pledged to enter "good faith" negotiations with creditors under a US$13.3 billion aid agreement signed with the International Monetary Fund in September. The Global Committee of Argentina Bondholders claims to represent some US$37 billion in defaulted Argentinean debt. ============= B E R M U D A ============= FOSTER WHEELER: Secures Bahrain National Gas Contract ----------------------------------------------------- Foster Wheeler Ltd. announced Friday that its subsidiary Foster Wheeler Energy Limited has been awarded a contract by the Bahrain National Gas Company for front-end engineering design to revamp BANAGAS' liquefied petroleum gas (LPG) facilities. The value of the contract was not disclosed. BANAGAS is 75 percent owned by the Government of Bahrain with the remaining 25 percent equally owned by the Arab Petroleum Investment Corporation and Caltex Bahrain. Ian Bill, chairman & chief executive of Foster Wheeler Energy Limited, said: "The award of this contract by BANAGAS reflects Foster Wheeler's extensive experience in sour gas/condensate handling and LPG treatment. We are pleased to assist BANAGAS in the development of Bahrain's oil and gas industry. This builds on the good relationship that we have already established with the Bahrain Petroleum (BAPCO) refinery, part of the same group of companies as BANAGAS." The BANAGAS LPG facilities will process 308 MMSCFD of associated sour gas with Arab gas and refinery offgas rich in LPG liquids. The present facilities process 280 MMSCFD of gas in two gas/condensate reception plants with associated gas treatment and LPG/naphtha export facilities, located at the Bahrain oil field, south of Awali, and refrigerated product storage and loading areas at Sitra, 15 kms south of Manama, the capital of Bahrain. Foster Wheeler will undertake the front-end engineering design for the revamp of process units at both of the central gas plants, the refrigerated product storage area and export facilities at Sitra, including the transfer pipelines. This may involve the use of new technology and the potential upgrade of the lean oil system at the central gas plants. The LPG products and naphtha are exported under existing marketing agreements. The naphtha is routed via the BAPCO refinery and the residue gas, mainly methane and ethane, is routed to Aluminium Bahrain (ALBA), the BAPCO refinery and Electricity Directorate's Riffa power station. 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, upstream oil and gas, LNG and gas-to-liquids, petrochemicals, 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 Ltd. Media: Richard Tauberman, 908 730 4444 or Anne Chong, +44 (0)118 913 2106 or Other Inquiries: 908 730 4000 Web Site: www.fwc.com GLOBAL CROSSING: Shares Jump As Slim Eyes Additional Stake ---------------------------------------------------------- With Mexican billionaire Carlos Slim's announcement that he and his family are eyeing a bigger stake in Global Crossing Ltd., the shares of the Bermuda-based fiber optic network operator rose US$3.21, or 28.79%, to US$14.40 on Thursday, Reuters reports. In a filing received Wednesday by the Vermont Public Service Board, the Slims said they are seeking authority to acquire more than 10%, but less than 20%, of Global Crossing voting securities. At present, the Slim family holds 9.9% of Global Crossing's total equity. As of April 1, they owned 11.25% of the company's publicly traded shares. The filing also said that the Slims intend to remain as passive investors. Shortly after Global Crossing emerged from bankruptcy in December, Mr. Slim and his six children began acquiring shares of the company. Latin America's richest man, he first disclosed the acquisition of a 9.1% stake in Global Crossing in March. Global Crossing is 61.5%-owned by ST Telemedia, which in turn is controlled by the Singapore government. =========== B R A Z I L =========== AMBEV: Lawsuits Delay Peru Beer Market Entry -------------------------------------------- More than a dozen lawsuits seeking to block the construction of Cia. de Bebidas das Americas or AmBev's US$40 million brewery in Lima are going to set back the launch of the company's beer operations in Peru by at least three months, an AmBev official said. Juan Vergara, head of AmBev's international operations, revealed to Bloomberg that while 17 lawsuits alleging that the Hauchipa plant threatens the water quality of a reservoir that serves Lima are still pending in court, the company cannot open its plant. AmBev has already said in court documents it has fully complied with all Peruvian environmental laws and regulations. "We have found ourselves mired in a bunch of legal obstacles, in a very well orchestrated plan to delay our building the factory," said Mr. Vergara. AmBev is relying on production from the plant, which was scheduled to open in the third quarter, to inaugurate sales in Peru's US$350 million beer market dominated by UCP Backus & Johnston SA, a unit of Colombian brewer Bavaria SA. Interbrew SA, the brewer of Beck's and Stella Artois, agreed to buy control of AmBev in March to create the world's second- largest beermaker in a transaction valued at US$11 billion. NET SERVICOS: Independent Accountants Issue Review Report --------------------------------------------------------- The Board of Directors and Stockholders of Net Servicos de Comunicacao S.A. We have reviewed the accompanying condensed consolidated balance sheet of Net Servicos de Comunicacao S.A. and subsidiaries as of March 31, 2004 and the related condensed consolidated statements of operations and cash flows for the three-month periods ended March 31, 2004 and 2003, the condensed consolidated statements of changes in capital deficiency for the three-month period ended March 31, 2004 and of comprehensive loss for the three- month periods ended March 31, 2004 and 2003. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical review procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of Net Servicos de Comunicacao S.A. and subsidiaries as of December 31, 2003, and the related consolidated statements of operations, cash flows and changes in capital deficiency for the year then ended (not presented herein) and in our report dated February 20, 2004, we expressed an unqualified opinion on those consolidated financial statements and included an explanatory paragraph regarding the Company's ability to continue as a going concern. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2003, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. The accompanying condensed consolidated interim financial statements have been prepared assuming that Net Servicos de Comunicacao S.A. will continue as a going concern. As more fully described in Note 1, the Company has incurred recurring operating losses and has a working capital deficiency. In addition, the Company has not complied with certain covenants of debt agreements. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The accompanying interim financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. ERNST & YOUNG Auditores Independentes S.S. 2SP015199/O-6 Pedro L. Siqueira Farah Partner To see financial statements: http://bankrupt.com/misc/Net_Servicos.htm PARMALAT BRAZIL: Report Shows Funds Shifted to Uruguay ------------------------------------------------------ Collapsed Italian dairy giant Parmalat Finanziaria SpA transfered some US$300 million in 1999 to its Uruguay subsidiary after claiming that the amount would be used to prop-up its Brazilian operations, Dow Jones reveals, citing a report Thursday by Brazilian daily Valor Economico. According to Dow Jones, a group led by Bank of America raised the funds with the overt intention of buying 18% of Parmalat Administracao, Parmalat's Brazilian unit. However, the Valor report adds that during that period, Wishaw, an Uruguay unit, received the same amount as a loan from Parmalat Administracao SA, the controller of Brazilian operational company Parmalat Alimentos. Parmalat Finanziaria is now selling some of its subsidiaries in South America after the Milan-based company filed for bankruptcy last year. The company's collapse was triggered by the failure of its executives to account for billions of dollars in funds missing from their books. ========= C H I L E ========= AES GENER: Plans to Issue 800 Million of New Shares --------------------------------------------------- As part of a larger refinancing plan, Chilean generator AES Gener said in a statement it has started Thursday the preferential purchase period for its existing shareholders to buy new stock in a capital increase worth around US$114 million and involves the issuance of some 800 million shares, BNamericas relates. The preferential period is for shareholders of record as of May 14 and runs through June 19. U.S. utility AES, which owns 98.6% of the Chilean firm, has earlier said it would buy some US$100mn of the new stock. AES Gener has already refinanced the debt of its Argentine units TermoAndes and InterAndes, and repurchased US convertible notes and Chilean convertible bonds. TELEFONICA CTC: S&P Moves Rating to CreditWatch Negative -------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BBB' long-term corporate credit rating and senior unsecured debt rating on Compania de Telecomunicaciones de Chile S.A. (CTC) on CreditWatch with negative implications following the company's announcement regarding the sale of its mobile operations to Telefonica Moviles S.A. (TEM). The company's Board of Directors agreed to recommend to shareholders the approval of the offer made by TEM to acquire 100% of the equity in CTC's mobile operations (Telefonica Movil Chile S.A.) at a price of $1,007 million. TEM would also pay down Telefonica Movil Chile's debt of about $243 million. The Board will also propose an extraordinary dividend payment of about $800 million as part of this transaction. The completion of the transaction will require CTC's creditors' and shareholders' approval. Mobile operations represent about 30% of CTC's consolidated revenues and 20% of consolidated EBITDA and is the fastest growing segment. Therefore, the divestment will have a significant impact on CTC's business and financial risk. "Firstly, we will analyze the effect of CTC's concentrating more of its revenue base on mature and regulated businesses. Secondly, we will evaluate the company's resulting cash- generation potential in relation to the new debt structure, assuming that part of the proceeds of the transaction are applied to debt reduction. We will reassess the rating upon approval of the transaction," said Standard & Poor's credit analyst Ivana Recalde. The ratings on CTC also reflect the company's leading competitive position in the Chilean telecommunications sector and its moderate financial policy, enhanced by the strength and expertise of its major owner, Telefonica de Espana S.A. These strengths are partially offset by regulatory risk and tariff revisions, which can result in aggressive interference in CTC's local-service pricing strategy, as seen during 1999. In addition, CTC faces increasing competition in most segments. With a network of about 2.4 million lines in service and 2.5 million mobile subscribers as of March 2004, CTC is Chile's largest telecommunications provider, operating nationwide. The company provides local, long-distance, mobile, and data services. During first-quarter 2004, 43% of its revenues came from fixed telephony, 33% from mobile services, 9% from corporate services, and 8% from long-distance traffic. TELEFONICA CTC: Wireless Divesture Neutral to Credit Profile ------------------------------------------------------------ Fitch Ratings views Compania de Telecomunicaciones de Chile S.A.'s (CTC) proposed divestiture of its wireless subsidiary, Telefonica Movil Chile S.A. as neutral to its credit quality. Fitch currently maintains the 'BBB+' ratings on the international scale foreign and local currency to the senior unsecured debt of CTC. Fitch also maintains the 'A+(Ch)' national-scale senior unsecured rating and the'F1+/A+' national scale short-term debt rating. The Outlook for all the Ratings is Stable. The proposed transaction according to the current terms is expected to slightly improve CTC's credit protection measures. A smaller cash flow generation is expected to be offset fully by lower debt levels. CTC's wireless divestiture would reduce its revenues and EBITDA by approximately 20% and 30%, respectively. During 2003, the company had $1,369 million of consolidated revenues (including $408 million of wireless revenues) and $643 million of EBITDA (including $131 million of wireless EBITDA). Following the transaction, CTC is expected to have approximately $400 million of cash available to pay down debt. Fitch estimates that on a pro forma basis, the company's EBITDA/Interest during 2003 would improve to 7.0 times (x) from 6.3x while Debt/EBITDA at year-end 2003 would also improve to 2.0x from 2.2x. While the transaction would slightly strengthen CTC's financial position, it would also slightly weaken its business profile. Without the wireless business, CTC would have lower revenue diversification since all of its revenues would be generated by the fixed line business. Until now, CTC has benefited by having fixed and wireless businesses under one umbrella because the wireless business provides a hedge against the migration of traffic from fixed to wireless. In addition, the wireless business provides a hedge against possible regulatory risks; fixed line tariffs are regulated while wireless tariffs are not regulated. On May 18, 2004, Telefonica Moviles S.A. of Spain offered to acquire 100% of CTC's wireless subsidiary Telefonica Movil Chile S.A for a total price of $1,250 million (including $1,007 in cash plus the cash payment of a $243 million intercompany loan owed to CTC by Telefonica Movil Chile S.A.). After paying an estimated $50 million in taxes related to the divestiture and distributing $800 million in extraordinary dividends, CTC would have $400 million of cash available to reduce debt. CTC had $1.4 billion of debt at Dec. 31, 2003 and could reduce them closer to $1.0 billion. Telefonica Moviles S.A. had acquired BellSouth's Chilean wireless operations during March 2004. BellSouth currently has 1.3 million Chilean subscribers CTC currently has 2.5 million Chilean wireless subscribers. The offer by Telefonica Moviles S.A. to buy CTC's wireless subsidiary clarifies uncertainties regarding CTC's long term business strategy. Going forward, CTC's managerial efforts will be centered on its fixed line operations. Because the fixed line business is relatively mature, CTC will need to focus on complementary services, such as data and internet, which still have growth opportunities due to their relatively low penetration in Chile. The transaction will require approval by CTC's shareholders and certain creditors. Fitch will complete a review of the transaction and its ultimate impact on the credit quality of CTC as it approaches completion over the next month or two. CTC is the largest local exchange operator with a market share of 75%, the second largest wireless provider with a market share of 30%, the second largest long distance provider with market shares of 40% in domestic long distance and 30% in international long distance. CTC is 43.6% owned by Telefonica S.A. of Spain. CONTACT: Guido Chamorro +1-312-368-5473, Chicago Ivonne Ibanez +562 206-7171, Santiago MEDIA RELATIONS: James Jockle +1-212-908-0547, New York =================== C O S T A R I C A =================== * World Bank Extends US$218 Million Aid to Costa Rica ----------------------------------------------------- The World Bank Group's Board of Directors on Tuesday discussed the institution's new Country Assistance Strategy (CAS) for Costa Rica, with project and investment loans likely to total $218 million between 2004 and 2007, in addition to knowledge sharing and advisory services. "The objective of this Country Assistance Strategy (CAS) is to support Costa Rica's efforts to continue its record of equitable economic growth and improvements in social indicators, and its leadership in environmental management," said Jane Armitage, the World Bank's Country Director for Central America. "The CAS is focused on mutually beneficial activities that allow the Bank to learn from Costa Rica's rich and successful experience in areas that are central to the Bank's mission of poverty reduction, while helping Costa Rica improve the quality and impact of public programs in key sectors, and enhance its competitiveness in an increasingly integrated global economy." The four-year CAS will target investments in education, water and sanitation, environment, infrastructure, agriculture, and information and communications technologies. In addition, the Bank will provide knowledge-sharing and advisory services in the areas of public sector debt management, domestic debt market development, financial sector reform, management of international reserves, and public-private partnerships in infrastructure. The Bank will also prepare a study on the country's investment climate and regional studies on key issues for Costa Rica and Central America as a whole. Forthcoming regional studies will address the Central American Free Trade Agreement (CAFTA), trade facilitation and logistics, the drivers of rural growth, and shocks and social protection. The World Bank's strategy aims to support Costa Rica's growth while building on its progress in social welfare. In the 1990s, the Costa Rican economy grew by an average of five percent while its poverty rate fell substantially from 31.9 percent in 1991 to 20.6 percent in 2000. The country has achieved the millennium development goals for reducing extreme poverty by half and promoting gender equality, and is on track to achieve or surpass other development goals by 2015. The CAS was developed after consultation with government officials, as well as representatives from a broad spectrum of Costa Rican society. A CAS consultation workshop held on January 27 in San Jose drew input from around 50 representatives of organizations including trade unions, business chambers, NGOs, research centers, academic institutions, community organizations, environmental organizations, as well as indigenous and afro-descendant organizations. CONTACT: Lee Morrison (202)-458-8741 Lmorrison1@worldbank.org Alejandra Viveros (202)-473-4306 Aviveros@worldbank.org Web Site: www.worldbank.org =================================== D O M I N I C A N R E P U B L I C =================================== CDEEE/EDENORTE/EDESUR: Taking Steps To Deal With Enormous Debts --------------------------------------------------------------- Intelligence reports show that Dominican Republic state electricity utility CDEEE owes private generators over US$160 million, while Edenorte and Edesur owes US$75 million and US$45 million, respectively, relates DR1 Daily News. In an interview with El Caribe newspaper, Radhames Segura, the former director of CDEEE, suggested that the incoming government issues must take up issues regarding electricity sector finances. According to Segura, the new administration is contemplating the integration of the mining and power sectors under one new entity, the Ministry of Energy and Mines. He said that the energy technicians of the new PLD government are analyzing the situation and that they have looked at establishing a financial sustainability fund, where loans from multilateral institutions would be taken, guaranteed by the assets of the state in the power companies. "It is converting short-term debt with high interest into long- term debt with soft interest, a mechanism that will allow us to pay off debtors," said Mr. Segura. * US Offers Assistance in Dominican Republic 'Dollarization' ------------------------------------------------------------ The United States offered Thursday to help the Dominican Republic in pegging its peso to the U.S. dollar if it decides to do so, but only with the consent of the country's officials, says the Associated Press. U.S. Treasury Undersecretary John Taylor stated in Washington, D.C. that once the Dominican Republic makes the decision, "we would do our best to help with technical implementation." Should the Dominican Republic peg its currency to the dollar, it would join Panama and Ecuador among Latin American countries that have adopted the measure, which some economists believe could help curb soaring inflation and prevent governments from devaluating the currency to cover costs. However, dollarization, which the measure is so-called, requires billions of dollars in federal reserves and makes such nations more susceptible to U.S. market fluctuations. According to government spokesman Hector Olivo, newly-elected President Leonel Fernandez has discussed dollarization a number times but never supported it. At present, the Dominican peso trades at 45 to the U.S. dollar. ============= J A M A I C A ============= AIR JAMAICA: Higher Fuel Costs Prompt Fare Hikes ------------------------------------------------ Troubled carrier Air Jamaica announced Thursday it has raised ticket prices for travel between the Caribbean and the United States by US$40 to counter a sharp rise in fuel costs, observed The Jamaica Observer. According to airline CEO Christopher Zacca, Air Jamaica had been absorbing the impact of higher fuel prices, but could no longer maintain doing so. "We have now come to a point where we have no option but to pass on the costs if we are to remain viable," he said. Higher fuel prices have forced Air Jamaica to pay US$4.2 million over its budget in the first quarter of 2004, the chief executive said. Until last November, Air Jamaica had been paying US$0.89 for a gallon of jet fuel. The airline now spends US$1.26 per gallon. The price of crude last week hit a record high at US$41 (J$2,460) a barrel. Experts attribute the rise to several factors, including lower production by OPEC, instability in the Middle East and growing demand in the United States and China. NWC: Union Alleges Agency Still Owes Pensioners ----------------------------------------------- Despite the US$3.2-billion provision made by Jamaica's National Water Commission to cover obligations going back 16 years, trade union officials stressed some pensioners have been short by up to a third on the monthly pension due them, reveals The Jamaican Observer. Wesley Nelson, a senior negotiator for the Bustamante Industrial Trade Union (BITU), said, "Some people have got about 70% of the full monthly pension. Money is still owed to some of them." Mr. Nelson, however, could not immediately say how much money the NWC, which laid off hundreds of workers last year as part of its restructuring, still owes the pensioners. The pension issue started when all permanent staff at the NWC were placed on the pension plan in 1988, apparently without making any financial provision for it until the agency, under union pressure, decided to book the charge during the financial year that ended March 2004. As a result, liabilities have accumulated for those on the pension plan, and NWC was not able to make appropriate payments for years. The charge also exacerbated what would have been a loss of US$400 million by the NWC to US$1-3.6 billion. CONTACT: NATIONAL WATER COMMISSION Coporate Office 5th Floor LOJ Centre 28-48 Barbados Ave. Kingston 5, Jamaica Tele: (876) 929 - 5430 Fax: (876) 929 - 1329 Email: pr@nwc.com.jm Toll Free: 1-888-Call NWC 1-888-225-5692 =========== M E X I C O =========== AEROMEXICO: Delta Airlines Balks at Acquisition Plans ----------------------------------------------------- Delta Airlines still prioritizes its goal to expand its presence in Mexico but has discarded intentions to acquire the assets of the Mexican airline Aeromexico, says El Economista. Instead, Delta will just continue the partnership with Aeromexico, currently being managed by IPAB, into Star Alliance. Aeromexico serves over 40 cities in Mexico and 17 gateway cities in the United States and six countries in Europe and South America. Founded in 1988, AeroMexico has become the leading carrier in the region by maintaining the highest service levels, which have earned the airline numerous top rankings in the industry. The airline's corporate headquarters are in Mexico City and its U.S. operations are based in Houston. TFM: Abandons Bid for Huehetoca Suburban Train ---------------------------------------------- Mexican business daily El Financiero reports that TFM (Transportacion Ferroviaria Mexicana) is not joining the race for the tender for the Huehetoca suburban train stretch called by the transportation secretariat. According to the report, the Company is still negotiating with the finances secretariat SHCP the return of the VAT when it acquired Ferrocarril del Noroeste in 1997 for an estimated at US$1 billion. The negotiations include the acquisition of the roads of the suburban train and the acquisition of the 20% stake held by the federal government on TFM. ================= V E N E Z U E L A ================= PDVSA: Hits Impasse Over Orimulsion Talks With PetroChina --------------------------------------------------------- Petroleos de Venezuela SA (PDVSA) is struggling to reach an accord with PetroChina Fuel Oil Co., a unit of PetroChina Co. (PTR), over the price of Venezuela's benchmark Orimulsion fuel oil for this year, reports Dow Jones. Industry sources suggest that Venezuela's state oil company is seeking to up the price of the Orimulsion it is supplying to PetroChina Fuel to US$60 a metric ton. In 2001, PDVSA signed an agreement with PTR's parent company, China National Petroleum Corp., to jointly develop Orimulsion blocks in Venezuela. A PetroChina Fuel Oil official revealed that the unit imported "some" Orimulsion cargoes early this year, but the imports have since been suspended due to price concerns. *********** 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 Lucilo Junior M. Pinili, 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. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *