/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/040525.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 Tuesday, May 25, 2004, Vol. 5, Issue 102 Headlines A R G E N T I N A AOL LATIN AMERICA: Shareholder's Meeting Announced CAMPANA SERVICIOS: Liquidates Assets to Pay Creditors CLISA: Reports Red After Financial Losses, Mounting Costs DIDIER: Court Makes Liquidation Official FEDESA: Begins Bankruptcy Process FIDAL: Court Sets Verification Deadline GRUPO GALICIA: Loss Mounts, Brighter Results Predicted HOSPITAL VECINAL: Court Declares Company Bankrupt MARMOLERIA: Seeks Court Authorization to Reorganize METROGAS: Re-Extends Debt Offer Deadline PARKING ARGENTINA: Reports Deadlines Set PROTENAC: Court Issues Bankruptcy Ruling SCP: Unit Settles Extended Legal Battle With US Company TB & M TRENDS BUSINESS: Bankruptcy Starts With Court Order TRANSPORTE LA MERCED: Debt Repayment Requires Liquidation TORSBY: Court Deems Bankruptcy Necessary B E R M U D A GLOBAL CROSSING: Shalov Stone & Bonner LLP Files Suit GOLD EAGLE: Issues Liquidation Notice to Creditors B R A Z I L BRASKEM: Independent Accountants Issue Report on Limited Review RBS PARTICIPACOES: Ratings Affirmed; Outlook Negative TELEMAR: Issues New Debt on Local Market C O S T A R I C A RICA FOODS: Enters Trust Amendment Agreement With Lenders J A M A I C A C&WJ: Details GSM Mobile Telephone Network Improvements M E X I C O CORPORACION DURANGO: Seeks Court Protection Under Mexican Law EMPRESAS ICA: Slim Reduces Ownership to 13.9% PEMEX: Needs US$130 Billion to Improve Operations PEMEX: Urged to Prioritize Debt Reduction - - - - - - - - - - ================= A R G E N T I N A ================= AOL LATIN AMERICA: Shareholder's Meeting Announced -------------------------------------------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 23, 2004 TIME: 2:00 p.m. PLACE: The Americas Society 680 Park Avenue New York, New York MATTERS TO BE VOTED ON: (1) a proposal to elect Donna J. Hrinak, William H. Luers, M. Brian Mulroney and Robert S. O'Hara, Jr. as members of our board of directors to serve for a one-year term (except with respect to Ms. Hrinak, who would serve a shorter term as noted below), and until their successors are elected and qualified; (2) a proposal to ratify our board of directors' selection of Ernst & Young LLP as our independent auditor for 2004; and (3) proposals to amend our restated certificate of incorporation to: (A) effect a 1-for-2 reverse stock split of the issued and outstanding shares of our common stock; (B) effect a 1-for-3 reverse stock split of the issued and outstanding shares of our common stock; (C) effect a 1-for-5 reverse stock split of the issued and outstanding shares of our common stock; (D) effect a 1-for-7 reverse stock split of the issued and outstanding shares of our common stock; (E) effect a 1-for-10 reverse stock split of the issued and outstanding shares of our common stock; or (F) effect a 1-for-15 reverse stock split of the issued and outstanding shares of our common stock. If the amendments set forth in proposals 3(A) through 3(F) are approved as stated above, we will file with the Delaware Secretary of State a certificate of amendment that will amend our restated certificate of incorporation as set forth in one of proposals 3(A) through 3(F), as determined by our board of directors (or by a committee of our board). Notwithstanding the approval of these amendments to our restated certificate of incorporation, our board of directors (or a committee of our board) may, in its sole discretion, determine not to implement any reverse stock split and, therefore, abandon all of the amendments. We will also discuss and take action on any other business that is properly brought before the meeting. RECORD DATE: You may vote at the meeting if you were a stockholder of record at the close of business on Wednesday, April 28, 2004, the record date. If on Wednesday, April 28, 2004, your shares were held of record by a brokerage firm on your behalf or another similar organization on your behalf, you may vote at the annual meeting if you obtain a valid proxy card from them issued in your name. CAMPANA SERVICIOS: Liquidates Assets to Pay Creditors ----------------------------------------------------- Zarate-Campana Court No. 1 declared Campana Servicios S.A. bankrupt reports Infobae. Mr. Gerardo Gomez, who has been appointed as Trustee, will verify creditors' claims until June 7, 2004 and then prepare the individual reports based on the results of the verification process. The individual reports will be submitted to court on August 2, 2004, followed by the general report on September 15, 2004. The case will close with the liquidation of the company's assets to repay creditors. CONTACT: Mr. Gerardo Gomez, Trustee Bolivar 691 Zarate CLISA: Reports Red After Financial Losses, Mounting Costs --------------------------------------------------------- Financial losses and administrative costs pushed Clisa (Compania Latinoamericana de Infraestructura Servicios) into the red in the nine-month period ended March 31, 2004, the Argentine infrastructure and public services holding said. Citing Clisa's statement to the country's securities regulator (CNV), Business News Americas reports that the Company posted a net loss of ARS1.17 million (US$408,000) during the said period, against a net profit of ARS208 million in the same period a year ago. For the period, operating losses closed at ARS2.79 million against an operating profit of ARS442,000 in the previous period. Sales increased 11.5% to ARS269 million pesos, the statement revealed. Clisa has four operating divisions: mass transportation management (Metrovias); waste management (environmental engineering); construction (Benito Roggio e Hijos); and toll- road management. It has operations in Bolivia, Brazil, Chile, Ecuador, Mexico, Paraguay and Uruguay. DIDIER: Court Makes Liquidation Official ---------------------------------------- Buenos Aires Court No. 3 ordered the liquidation of Didier S.R.L. 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. Oscar Luis Serventich, the court-appointed trustee. Mr. Serventich will verify creditors' proofs of claims until July 2, 2004. The verified claims will serve as basis for the individual reports to be submitted in court on August 31, 2004. The submission of the general report follows on October 13, 2004. Clerk No. 5 assists the court on this case, which will end with the disposal of the company's assets in favor of its creditors. CONTACT: Mr. Oscar Luis Serventich, Trustee Piedras 1319 Buenos Aires FEDESA: Begins Bankruptcy Process --------------------------------- Judge Fernandez of Buenos Aires Court No. 19 declared the bankruptcy of Fedesa S.R.L. after the Company defaulted on a US$12,315.00 liability to ACDI Capif Asociacion Civil Recaudadora. The court assigned Mr. Eduardo Aguinaga to serve as Trustee during the liquidation proceedings. He will be reviewing creditors proofs of claim until July 6, 2004. Clerk No. 38, Dr. Johnson, assists the court on this case. CONTACT: Fedesa S.R.L. Avenida Callao 1082 Buenos Aires Mr. Eduardo Aguinaga, Trustee Pergamino 331 Buenos Aires FIDAL: Court Sets Verification Deadline --------------------------------------- Buenos Aires Court No. 7, with the assistance of Clerk No. 13, ordered the liquidation of Fidal S.A. following the Company's failure to pay its liabilities. Infobae states that Mr. Gabriel Eduardo Bigal will serve as Trustee during the bankruptcy process, which will begin with the validation of creditors' claims. The verification is ongoing until September 1, 2004. CONTACT: Mr. Gabriel Eduardo Bigal, Trustee Reconquista 1011 Buenos Aires GRUPO GALICIA: Loss Mounts, Brighter Results Predicted ------------------------------------------------------ Sergio Grinenco, vice chairman of Grupo Financiero Galicia, said that the Argentine financial group is banking on the evolution of the local loan market this year to breakeven, relates Business News Americas. In the first quarter of the year, GF Galicia saw its net loss increase to ARS112 million (US$38.2 million) from losses of ARS21.8 million in the previous three months. Grinenco said that even if lending is gradually returning in Argentina, loan volumes are still very low and have not permitted its interest revenue to offset the extraordinary losses, which is necessary to return to black. Excluding the extraordinary items, the group's operating loss was only ARS3.9 million in the first quarter. CONTACT: GRUPO FINANCIERO GALICIA SA 2nd Floor No 456 Tte Gral Juan D Peron Buenos Aires Argentina 1038 Phone: +54 11 4343 7528/9475 Home Page: http://www.gfgsa.com Contact: Atty. Abel Ayerza, Chairman HOSPITAL VECINAL: Court Declares Company Bankrupt ------------------------------------------------- Lomas de Zamora Court No. 7 declared local company Hospital Vecinal Llavallol (Asociacion sin Fines de Lucro) bankrupt, reports Infobae. The Company was undergoing reorganization when the ruling was issued. The trustee, Ms. Ema Luisa Boelter, will verify claims "por via incidental", as the court ordered. The receiver will also be responsible for the individual and general reports. CONTACT: Hospital Vecinal Llavallol Doyhebnard 296 Llavallol Pdo. de Lomas de Zamora Mr. Ema Luisa Boelter, Trustee Casillero 6858 de la Sala de Profesionales del Calz Calle Larroque y Pte. Peron Lomas de Zamora MARMOLERIA: Seeks Court Authorization to Reorganize --------------------------------------------------- Marmoleria Sierra Chica S.A., a Buenos Aires-based company engaged in the sale of marble, requested for a reorganization after failing to pay its liabilities since December, 18, 2003. The reorganization petition, once approved by the court, will allow the Company to negotiate a settlement with its creditors in order to avoid a straight liquidation. Argentine daily La Nacion reports that the case is pending before Judge Bavastro Modet of Court No. 17. Dr. Trevino Figueroa, Clerk No. 33, assists on this case. CONTACT: Marmoleria Sierra Chica S.A. Sanchez de Bustamante 1758 Buenos Aires METROGAS: Re-Extends Debt Offer Deadline ---------------------------------------- Argentine natural gas distributor Metrogas SA extended to July 1 its offer to restructure US$440 million in debt, reports Business News Americas. The Company launched its offer on November 7 and has extended the deadline on numerous occasions, since it has been unable to reach the necessary backing to subscribe an out-of-court agreement. As of its previous deadline, May 20, creditors representing about US$109 million, or 24.7% of the total debt, had signed on to the proposal. Business News Americas previously reported that Metrogas CFO Pablo Boselli said the Company is negotiating with some banks holding about 50%, or US$220 million, of the debt. The offer applies to holders of US$100 million in series A debentures due 2003, EUR110 million in series B debentures due 2002, US$130 million in series C debentures due 2004 and bank debt totaling US$70 million, of which about US$20 million is in Argentine pesos and the rest is in US dollars. Spain's Repsol-YPF SA (REP) and the U.K.'s BG Group PLC (BRG) control 70% of Metrogas. CONTACT: METROGAS, S.A. Gregorio Araoz de Lamadrid 1360 Buenos Aires Argentina CPA C 1267 Phone: +54 11 4309 1010 Fax: +54 11 4309 1025 Home Page; http://www.metrogas.com.ar Contact: William Harvey Alvarez, President PARKING ARGENTINA: Reports Deadlines Set ---------------------------------------- Mr. Francisco Jose Granja, the Trustee assigned to supervise the liquidation of Parking Argentina S.A., will submit on August 17, 2004 the validated individual claims for court approval. These reports explain the basis for the accepted and rejected claims. Mr. Granja will also submit a general report on September 28, 2004. Infobae recalls that Buenos Aires Court No. 2 is handling this particular case with assistance from Clerk No. 4. CONTACT: Mr. Francisco Jose Granja, Trustee Parana 467 Buenos Aires PROTENAC: Court Issues Bankruptcy Ruling ---------------------------------------- Protenac S.A. will now enter bankruptcy after Buenos Aires Court No. 10 declared it "Quiebra," reports Infobae. With assistance from Clerk No. 19, the court named Ms. Monica Patricia Jodor as receiver. He will verify creditors' claims until July 12, 2004. Following claims verification, the receiver will submit the individual reports, which were prepared based on the verification results, to the court on September 6, 2004. The general report is due for submission on October 18, 2004. The Company's bankruptcy case will close with the liquidation of its assets to pay its creditors. CONTACT: Ms. Monica Patricia Jodor, Trustee Gregorio de Laferrere 3767 Buenos Aires SCP: Unit Settles Extended Legal Battle With US Company ------------------------------------------------------- Argentine holding company Sociedad Comercial del Plata revealed that its energy unit, Compania General de Combustibles (CGC), settled a 6-year-old legal dispute with U.S.-based Reef Exploration Inc. In the agreement signed Thursday, both parties will drop all legal actions in Argentine and U.S. courts and CGC will pay Reef Exploration US$175 million. That means Reef Exploration will withdraw its objection to CGC's debt restructuring, removing the only appeal to the debt offer. SCP is going through its own bankruptcy procedure and debt restructuring. It faces three objections to its debt offer, which calls for an 80% reduction on about US$110 million of debt. That case is waiting to be heard in a higher commercial court. CGC's legal troubles, along with debt problems amid Argentina's economic downturn, had prompted both SCP and CGC to file for Chapter 11 bankruptcy in 2000. SCP owns 19% of CGC after it sold its majority stake to private equity fund Southern Cross last year. Established in 1927, SCP is a diversified industrial holding company mainly involved with public services, construction and engineering. Owner of the fastest growing oil company in Argentina, both in upstream and downstream activities it also holds a dominant market position in growing public services managed by international operators. Recent unique real state developments provide a new source for additional growth in earnings. CONTACT: Sociedad Comercial del Plata Av. Davila 350 Buenos Aires, Argentina Phone: 54 1 310-0490 Fax: 54 1 310-0493 TB & M TRENDS BUSINESS: Bankruptcy Starts With Court Order ---------------------------------------------------------- Buenos Aires-based TB & M Trends Business & Marketing S.A. was declared bankrupt by Buenos Aires Court No. 22 after the Company defaulted on its debt payments. Infobae reports that the liquidation process will proceed under the supervision of Mr. Julio Jorge Surenian, court-appointed Trustee. Mr. Surenian will receive creditors' proofs of claims for verification until July 13, 2004. The verified claims will form the basis of the individual reports, which the court requires for submission on September 7, 2004. A general report regarding the status of the bankruptcy will be presented on October 19, 2004. Clerk No. 44 assists the court on the case. CONTACT: Mr. Julio Jorge Surenian, Trustee Tucuman 1657 Buenos Aires TRANSPORTE LA MERCED: Debt Repayment Requires Liquidation --------------------------------------------------------- Villa Mercedes-based Transporte La Merced S.R.L. will begin liquidating its assets following the pronouncement of the city's Court No. 1 that the Company is bankrupt. The bankruptcy ruling places the Company under the supervision of court-appointed trustee, Mr. Luis Alberto Costamagna. The trustee will verify creditors' proofs of claim until June 29, 2004. The validated claims will be presented in court as individual reports on August 26, 2004. Mr. Costamagna will also submit a general report, containing a summary of the company's financial status as well as relevant events pertaining to the bankruptcy, on October 7, 2004. The bankruptcy process will end with the disposal company assets in favor of its creditors. CONTACT: Transporte La Merced S.R.L. 25 de Mayo 2125 Villa Mercedes San Luis Mr. Luis Alberto Costamagna, Trustee Pringles 125 Villa Mercedes San Luis TORSBY: Court Deems Bankruptcy Necessary ---------------------------------------- Torsby S.A. de Servicios, which was undergoing reorganization, entered bankruptcy on orders from Buenos Aires Court No. 23. Infobae relates that the court, which is assisted by Clerk No. 46, appointed Estudio Franqueiro & Asociados, as Trustees on the case. The Trustees will conduct the credit verification process in the ordinary course of the court-authorized reorganization. CONTACT: Torsby S.A. de Servicios Maipu 42 Buenos Aires Estudio Franqueiro & Asociados, Trustees Avenida Corrientes 534 Buenos Aires ============= B E R M U D A ============= GLOBAL CROSSING: Shalov Stone & Bonner LLP Files Suit ----------------------------------------------------- Shalov Stone & Bonner LLP commenced a securities fraud class action lawsuit on May 3, 2004, in the United States District Court for the District of New Jersey, on behalf of purchasers of the securities of Global Crossing Ltd. (NASDAQ:GLBC; NASDAQ:GLBCE) between December 24, 2003 and April 26, 2004, inclusive. The complaint alleges that the defendants committed securities fraud in violation of sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, by issuing a series of material misrepresentations to the market during the period. from December 24, 2003 through April 26, 2004. The complaint alleges that the defendants knew or recklessly disregarded that: (i) Global Crossing lacked adequate internal accounting controls, (ii) Global Crossing's costs of access were materially understated in Global Crossing's financial statements, and, as a result, (iii) Global Crossing's reported earnings were artificially inflated, causing investors to suffer damages. CONTACT: SHALOV STONE & BONNER LLP Jennifer A. Sullivan, Esq. 485 Seventh Ave., Suite 1000 New York, NY 10018 (212) 239-4340 jsullivan@lawssb.com GOLD EAGLE: Issues Liquidation Notice to Creditors -------------------------------------------------- IN THE MATTER OF THE COMPANIES ACT, 1981 AND IN THE MATTER OF GOLD EAGLE CAPITAL 2001 LIMITED IN LIQUIDATION IN CREDITORS' VOLUNTARY LIQUIDATION NOTICE IS HEREBY GIVEN that the creditors of the above named Company, which is being voluntarily wound up, are required on or before 31 May 2004, to send their full Christian and Surnames, their addresses and descriptions, full particulars of their debts or claims, and the names and addresses of their solicitors (if any) to the undersigned, at PricewaterhouseCoopers, PO Box HM 1171, Hamilton, HM Ex, Bermuda, being the Joint Liquidator of the said Company, and if so required by notice in writing from the said Joint Liquidators are personally, or by their solicitors, to come in and prove their debts or claims at such time and place as shall be specified in such notice, or in default thereof they will be excluded from the benefit of any distribution made before such debts are proved. NIGEL J S CHATTERJEE Joint Liquidator 4 May 2004 =========== B R A Z I L =========== BRASKEM: Independent Accountants Issue Report on Limited Review --------------------------------------------------------------- To the Board of Directors and Shareholders Braskem S.A. 1) We have carried out limited reviews of the Quarterly Information (ITR) of Braskem S.A. for the quarters ended March 31, 2004 and 2003. This information is the responsibility of the Company's management. The limited reviews of the quarterly information at March 31, 2004 and 2003 of Politeno Industria e Comercio S.A. (jointly-controlled entity) and of Petroflex Industria e Comercio S.A. (associated company), which are recorded under the equity method, were conducted by other independent accountants. Our reviews, insofar as they relate to the amounts of these investments at March 31, 2004 and December 31, 2003, in the amounts of R$ 192,121 thousand and R$ 179,705 thousand, respectively, and the profits generated by them for the quarters ended March 31, 2004 and 2003, in the amounts of R$ 12,415 thousand and R$ 15,219 thousand, respectively, are based solely on the opinions of the other independent accountants. 2) Our reviews were carried out in conformity with specific standards established by the Institute of Independent Auditors of Brazil (IBRACON), in conjunction with the Federal Accounting Council (CFC), and mainly comprised: (a) inquiries of and discussions with management responsible for the accounting, financial and operating areas of the Company with regard to the main criteria adopted for the preparation of the quarterly information and (b) a review of the significant information and of the subsequent events which have, or could have, significant effects on the Company's financial position and operations. 3) Based on our limited reviews and on the reports on limited reviews of the quarterly information issued by other independent accountants, we are not aware of any material modifications that should be made to the quarterly information referred to above in order that such information be stated in conformity with the accounting practices adopted in Brazil applicable to the preparation of quarterly information, consistent with the Brazilian Securities Commission (CVM) regulations. 4) The Quarterly Information (ITR) also includes accounting information for the quarter ended December 31, 2003. We audited such information at the time it was prepared, in connection with the audit of the financial statements as of and for the year then ended, on which we issued an unqualified opinion dated February 6, 2004, with paragraphs emphasizing the issues mentioned below. 5) As described in Note 16(c) to the quarterly information, a rescissory action was filed against the Company and certain subsidiaries, seeking to overturn a final court judgment which exempted them from paying the social contribution on net income, enacted by Law 7689/88. The outcome of this matter cannot presently be determined. In addition, as described in Note 19, the Company and its subsidiaries are parties to other judicial and administrative processes of a tax, civil and labor nature, including the lawsuit regarding the validity of Clause 4 of the Collective Labor Agreement of SINDIQUIMICA. Management does not expect significant losses from these disputes in excess of the amounts already provided. The quarterly information of the Company does not include a provision for losses from eventual unfavorable outcomes to the social contribution rescissory action and the Clause 4 lawsuit. 6) The Company belongs to a group of companies comprising the Braskem group and carries out financial and commercial transactions, in significant amounts, with its subsidiaries and other group companies, under the conditions described in Note 8 to the quarterly information. 7) As described in Note 1(d) to the quarterly information, at March 31, 2004, the Company recorded an excess of liabilities over assets in the amount of R$ 1,502,115 thousand (in consolidated, the net working capital is positive in the amount of R$ 259,587 thousand). The plans and actions being taken by management and the shareholders, in order to give the Company a proper capital structure, are described in Note 1(d). 8) As described in Note 1(b) to the quarterly information, the Company is involved in a broad business and corporate restructuring process, as part of the overall restructuring of the Brazilian petrochemical industry, intended to give the industry a more adequate capital structure, greater profitability, competitiveness and economies of scale. The Company is being, and will continue to be, affected by economic and/or corporate changes resulting from this process, the outcome of which will determine how the operations of the Company will be developed, including the management of total liabilities and current and long-term assets. Furthermore, as a result of this process and the matters described in Note 2, the comparability between the quarterly information of Braskem S.A. as of March 31, 2004 and the financial statements for the year ended December 31, 2003 has been impacted. 9) As described in Notes 10, 11 and 12 to the quarterly information, the Company recognized goodwill on the acquisition of investments based on the surplus of market over recorded values of property, plant and equipment and the expected future profitability of the investees. These goodwill balances are being amortized in accordance with the period of return defined in the independent valuation reports and the financial projections prepared by management. The maintenance of these goodwill balances, and the current amortization criteria in the financial statements of future years, will depend upon the realization of the projections of cash flows and income and expenses used by the valuers in determining the surplus, and the future profitability of the investees. 10) Our reviews were conducted for the purpose of issuing a report letter on the limited reviews of quarterly information, referred to in the first paragraph, taken as a whole. The statement of cash flows is presented in the quarterly information for purposes of additional analysis and is not a required part of the quarterly information. This information has been subjected to the auditing procedures described in paragraph 2 and we are not aware of any material modifications that should be made to this statement in order that such information be fairly presented in all material respects in relation to the quarterly information taken as a whole. Salvador, April 27, 2004 PricewaterhouseCoopers Auditores Independentes CRC 2SP000160/O-5 "F" BA Marco Aurelio de Castro e Melo Contador CRC 1SP153070/O-3 "S" BA RBS PARTICIPACOES: Ratings Affirmed; Outlook Negative ----------------------------------------------------- Standard & Poor's Ratings Services affirmed Friday its 'B-' local and foreign currency corporate credit ratings on RBS Participacoes S.A. The rating on the company's $125 million medium-term notes (MTNs) due 2007 was also affirmed at 'B-'. The outlook remains negative. "The ratings action reflects RBS' still inadequate capital structure, presenting a high debt burden if compared to the company's expected capacity to generate cash flows, relatively limited financial flexibility, and operations strongly dependent on the volatile advertising market," said Standard & Poor's credit analyst Jean-Pierre Cote Gil. "These negatives are partially offset by the group's dominant share of audience and advertising in its service area, a good quality programming and the distribution of TV Globo's high quality content, the expected savings stemming from RBS' recently implemented cost and expenses rationalization plan, and its good track record of financial support from shareholders." Brazil-based RBS Participacoes is part of the RBS Group (RBS), which operates in television and radio broadcasting, newspaper publishing, and other media businesses in the southern states of the country. Total gross debt for the combined RBS entities as of April 2004 was $178 million. The negative outlook on the ratings takes into account Standard & Poor's concerns about the challenges RBS will face in consistently maintaining solid business results under a volatile and still-adverse market environment, along with the long-term refinancing risk represented by RBS Participacoes' $125 million MTNs' maturity in 2007. The ratings could be lowered if RBS comes closer to the MTNs' maturity date with no clear refinancing strategy in place. A change in the outlook to stable would depend on the consolidation of RBS' current business achievements, coupled with the maintenance of a positive (or at least stable) trend for the advertising market, to be confirmed in the consolidated results for first-semester 2004. In turn, a positive outlook or an upgrade would depend on RBS finding alternatives to reduce the refinancing risk imposed by its MTNs' maturity in 2007. ANALYSTS: Milena Zaniboni, Sao Paulo (55) 11-5501-8945 Jean-Pierre Cote Gil, Sao Paulo (55) 11-5501-8946 TELEMAR: Issues New Debt on Local Market ---------------------------------------- For the second time this year, Brazilian holding company Telemar Participacoes SA, issued debt on the local market, reports Dow Jones Newswires. The unlisted company, which controls the interests of Brazil's biggest telecom group, said Friday it raised BRL150 million in debt that would mature in March 2007. According to Telemar, the yield would pay a little more than the rate of floating-rate debt, which provides a return that's about half the key lending rate of 16.00%. Telemar said it would issue 15,000 non-convertible debentures at a value of BRL10,000 each. No reason was given as to why the company was raising the money. In January, Telemar also sold BRL250 million in debt. CONTACT: TNE - INVESTOR RELATIONS GLOBAL CONSULTING GROUP Roberto Terziani (terziani@telemar.com.br) 55 21 3131 1208 Kevin Kirkeby (kkirkeby@hfgcg.com) Carlos Lacerda (carlosl@telemar.com.br) 55 21 3131 1314 Fax: 55 21 3131 1155 1 646 284 9494 Tel: 1-646-284-9416; Website: www.telemar.com.br/ir =================== C O S T A R I C A =================== RICA FOODS: Enters Trust Amendment Agreement With Lenders --------------------------------------------------------- Rica Foods, Inc. (Amex: RCF) announced Friday that as of May 21, 2004, the Company entered into an amendment (the 'Trust Agreement Amendment') to the Trust Agreement (defined below) with certain of its lenders in connection with the Company's debt restructuring. On September 22, 2003, certain wholly-owned subsidiaries of the Company (the 'Subsidiaries') entered into a trust agreement (the 'Trust Agreement'), governed under Costa Rican law, pursuant to which they established an irrevocable ten-year trust (the 'Trust') to guarantee any outstanding indebtedness owed to certain lenders (the 'Principal Beneficiaries'). In consideration for the establishment of the Trust, the Principal Beneficiaries agreed to waive any and all defaults, excluding defaults resulting from the failure to pay interest as due, that the Subsidiaries have committed or may have committed prior to March 22, 2004 (the 'Amnesty Period') with respect to outstanding indebtedness owed to the Principal Beneficiaries. Accordingly, the Subsidiaries were relieved of any obligation to make principal payments to the Principal Beneficiaries until the end of the Amnesty Period. The Subsidiaries were still required to pay interest to the Principal Beneficiaries in accordance with the terms of an agreed upon schedule. After the end of the Amnesty Period, the Subsidiaries were required to resume the payment of principal. Pursuant to the Trust Agreement, the Subsidiaries transferred all of their real and personal assets, including forty parcels of land, to the Trust (the 'Trust Assets'). Under the terms of the Trust Agreement, the value of the Trust Assets would be deemed, for purposes of the Trust, to be worth 70% of their appraised value, and would, at all times, have to be equal to a certain percentage of the indebtedness secured by the Trust. As of May 21, all appraisals have been completed. The Company believes the Trust Assets have an appraised value sufficient to collateralize the indebtedness of the Principal Beneficiaries in accordance with the terms of the Trust Agreement and may be sufficient to collateralize additional loans in accordance with the terms of the Trust Agreement. The Trust Agreement further provided that if the Subsidiaries failed to, among other things, make any principal or interest payment to any of the Principal Beneficiaries when due or became insolvent, the Subsidiaries would be in breach of the Trust Agreement (a 'Breach'). Upon the Trustee's notification to the Subsidiaries of a Breach, the Subsidiaries would have fifteen days to cure such Breach (the 'Cure Period'). If the Subsidiaries failed to cure the Breach within the Cure Period, the Trust Agreement required the Trustee to sell the Trust Assets and use the proceeds of such sale to repay to the Principal Beneficiaries all outstanding indebtedness due and owed to them by the Subsidiaries. Any proceeds remaining after repayment is made in full to all of the Principal Beneficiaries will be returned to the Subsidiaries. In the event of such sale, the Trust would terminate in accordance with the terms of the Trust Agreement. The Trust Agreement also contemplated that additional Principal Beneficiaries could sign and become subject to the terms of the Trust Agreement on the condition that the value of the Trust Assets continued to be equal to a certain percentage of the indebtedness secured by the Trust. Since the establishment of the Trust on September 23, 2003, the Company has satisfied its debt obligations to nine Principal Beneficiaries under the Trust Agreement. As of May 21, the Trust has only five Principal Beneficiaries remaining (Banco Interfin, S.A. ('Interfin'); Banco de Costa Rica; Banco Credito Agricola de Cartago ('Agricola'); and Banco Internacional de Costa Rica S.A. ('BICSA'). The Trust Agreement Amendment modifies the Trust to reflect the above-described change in Principal Beneficiaries and eliminates any distinction in the Trust between Principal Beneficiaries and Secondary Beneficiaries. Additionally, the Trust Agreement Amendment modifies certain other provisions of the Trust, some of which are described below. (The Trust, as modified by the Trust Agreement Amendment, is hereinafter referred to as the 'Modified Trust'). The Modified Trust may secure up to an aggregate amount of US$44 million of indebtedness, which indebtedness could take the form of loans, bonds, or other extensions of credit. The Trust Agreement Amendment provides for a new Trustee, Banco Improsa, S.A. The Trust Agreement Amendment further modifies the Trust by granting certain rights to, as well as imposing certain obligations upon, the Trustee, including granting to the Trustee the same rights as a creditor with regards to any mortgages transferred to the Trust and endorsed to the Trustee. The assets of the Modified Trust currently include real estate properties and their corresponding mortgages, registered equipment and certain intellectual property (trademarks and brand names) of the Subsidiaries. All other types of assets currently in the Trust have been released from the Trust by the Trustee. However, the Subsidiaries may transfer new assets to the Modified Trust in order to increase the value of the Trust Assets. The Trust Agreement Amendment modifies the Trust to require that the total value of the Trust Assets be, at all times, equal to or greater than 125% of the aggregate amount of the total indebtedness secured by the Trust (which, as mentioned above, cannot exceed the aggregate amount of US$44 million). So long as this 125% threshold is met and subject to certain other conditions set forth in the Modified Trust, the Subsidiaries may solicit the Trustee for the release of some of the Trust Assets. The failure to maintain the 125% threshold, on the other hand, is grounds for the foreclosure and sale of the Trust Assets. Upon such an occurrence or the occurrence of any default of any credit agreement between a Principal Beneficiary and a Subsidiary, the Trustee may dispose of the Trust Assets in accordance with the terms and conditions and following the procedures set forth in the Trust Agreement, as amended by the Trust Agreement Amendment. Pursuant to the terms of the Modified Trust, each of the Subsidiaries has agreed to certain negative covenants. For instance, without the prior written consent of the Board of Beneficiaries (as defined below), the Subsidiaries have agreed not to (i) distribute any annual dividends to its shareholders unless (A) its total debt to equity ratio is less than 60% and (B) the amount of the annual dividends is, in the aggregate, equal to or less than 50% of its profit for that year; (ii) make any change in its stock ownership; and (iii) make any 'insider loans'. The Trust Agreement Amendment does permit the Subsidiaries to make loans of up to $2.5 million annually to the Company upon certain terms and conditions. The Modified Trust requires that the Subsidiaries, with certain exceptions, (i) maintain an amount of paid-in share capital equal to or greater than its stated share capital and (ii) maintain a current ratio, defined as a ratio of current assets to short term liabilities equal to or greater than 1.3. In accordance with the Trust Agreement Amendment, a board of beneficiaries will be established to represent and protect the rights of the Principal Beneficiaries under the Modified Trust (the 'Board of Beneficiaries'). The Board of Beneficiaries will be comprised of one representative of each of BICSA, Agricola, Interfin, Banco de Costa Rica, and, in the event the Company issues certain debt securities, Sama Puesto de Bolsa S.A. The board will have certain rights vis-a-vis the Company and the Trustee including, without limitation, the right to receive and review certain financial information provided by the Subsidiaries; notify the Principal Beneficiaries of a situation that might impair the Trust Assets; appoint a replacement Trustee (from three candidates chosen by the Subsidiaries); instruct the Trustee to cancel certain mortgages and other liens over the Trust Assets or to release certain Trust Assets; and represent the Principal Beneficiaries in certain decisions, in each case in accordance with the conditions of the Modified Trust and applicable law. All decisions of the Board of Beneficiaries will be made upon a majority vote of its members, with the President of the Board of Beneficiaries having a tie- breaking vote. All provisions of the Trust Agreement and the Trust not modified by the Trust Agreement Amendment are anticipated to remain unchanged. The Company hopes that with the Trust Agreement Amendment in place, it will soon be able to finalize the debt restructuring process it commenced in January 2004. The Trust Agreement Amendment provides that the Trust will terminate upon the performance by the Subsidiaries of all of their obligations under the credit agreements between the Principal Beneficiaries and the Subsidiaries, including the repayment of all of the outstanding indebtedness owed to the Principal Beneficiaries. Email: mmarenco@ricafoods.com Tel: +1-305-858-9480 E-mail: mmarenco@ricafoods.com http://www.ricafoods.com ============= J A M A I C A ============= C&WJ: Details GSM Mobile Telephone Network Improvements ------------------------------------------------------- Cable & Wireless Jamaica (C&WJ) began upgrading Thursday its less than a year-old GSM mobile telephone network, allowing for wider coverage and better service. The upgrade is both in hardware and software and runs on the 850 mega hertz radio frequency, complementing C&WJ's 1900 mega hertz GSM band. The project requires some US$13.1 million investment and will be paid for from internal resources and debt, said Sean Bryan, C&WJ's chief operating officer (COO). The expansion is expected to be completed by the end of June. Earlier this year, the Company announced that it had loan commitments for US$92 million, two-thirds from the US Ex-Im Bank and the remainder from Export Development Canada, to expand both its fixed line and mobile networks. With the improvement of service, C&WJ expects revenues to increase. =========== M E X I C O =========== CORPORACION DURANGO: Seeks Court Protection Under Mexican Law ------------------------------------------------------------- Corporacion Durango SA, Mexico's largest paper maker, filed for bankruptcy protection Friday under "Concurso Mercantil," the country's rough equivalent of Chapter 11, reports Dow Jones Newswires. The move aims to compel all investors to participate in an agreement to renegotiate terms on about US$800 million of debt it defaulted on more than a year ago. An agreement approved by 51% of creditors would be binding on all debt holders under the Mexican bankruptcy law, the Company said in a statement. Corporacion Durango announced last month it reached a preliminary agreement with creditor representatives to a plan that includes creditors taking a 17% stake in the Company and getting US$715 million of new debt in four different notes that mostly mature in 2010. Meanwhile, the Company said it's also seeking court protection from creditor action in the U.S. Corporacion Durango is the largest producer of containerboard in Mexico through its division Grupo Industrial Durango, is the largest Mexican national producer of newsprint through its division Pipsamex, is the largest manufacturer of corrugated containers in Mexico through its division Empresas Titan, is the largest Mexican national company of wood products through its division Ponderosa, is the Mexican paper company with the largest industrial operations in the U.S. through its division McKinley Paper and is also one of the largest manufacturers in Mexico of uncoated free-sheet and multi-wall sacks. CONTACTS: CORPORACION DURANGO, S.A. DE C.V. Mayela R. Velasco Tel: +52 (618) 829 1008 E-mail: mrinconv@corpdgo.com.mx The Global Consulting Group Mariana Crespo Tel: (646) 284 9407 E-mail: mcrespo@hfgc.com Miguel Antonio R. Tel: +52 (618) 829 1070 E-mail: rinconma@corpdgo.com.mx EMPRESAS ICA: Slim Reduces Ownership to 13.9% --------------------------------------------- Magnate Carlos Slim has cut his interest in Mexican construction company Empresas ICA following a rise in the company's shares that saw Slim and his associates locking in a profit and ending April with a 13.9 percent stake in the company. Reuters reports that ICA shares have gained 40 percent so far this year, an upsurge largely driven by Slims support for the troubled company. Carlos Hermosillo, an analyst at Vector Casa de Bolsa, stated that "Inbursa (Slim's Financial Group) always said that its interest in ICA was financial and that it did not intend to hold on to a controlling stake". Slim has reduced his holdings in ICA to the current level from a high of 24 percent in January, a capital infusion that raised US$215 million as part of a restructuring plan. The outlay has allowed the company to control its debt situation and invest in key building projects that should further improve its finances. PEMEX: Needs US$130 Billion to Improve Operations ------------------------------------------------- The Mexican government's plan to boost natural gas and fuel output while reducing dependence on fuel imports over the next decade would cost Pemex, the state-owned oil company, US$130 billion in additional capital outlays, reveals Business News Americas. The US$130 billion will be spread over the company's key activities to increase efficiency and maximize production. Exploration and Production would require US$117 billion, refining, US$10.1 billion, gas and basic petrochemicals, US$1.6 billion, petrochemicals, US$1.4 billion and Corporate, US$600 million. Mr. Felipe Calderon, Mexico's Energy Secretary, admitted during a conference in California that Pemex will have to initiate some reforms in order to attract complementary investments from the private sector since Mexico does not have the funds to shoulder all the investment requirements. Towards this end, the government intends to improve corporate government in Pemex, modify the company's tax regime, review the energy price policy and strengthen the energy regulatory commission. Raising such a large capital requirement will not be easy for Mexico and so apart from private sector investments, the country has the option to allot a higher federal budget for Pemex, rely on non-budgetary government resources through the Pidiregas financing system, and take on more debt. However, Calderos admitted that relying on the last three options would pose problems for the country. For one, Pemex's budget for 2004 is already twice as large as the Education allotment and the government cannot afford to pour more resources to the company at the cost of basic social programs. In addition, the Pidiregas funds are reaching their limit, making the system more inefficient to finance the sector. Further, Relying on more private loans would increase Mexico's foreign debt burden, which in turn would limit Pemex's access to financial markets. Calderon said that "It's clear that the alternative of more debt is possible, but it's limited,". Considering the limited options available from public funding, Calderon adds that the solution is to attract more private investment. The Mexican government is currently trying to pass energy reforms in congress to facilitate the entry of private investments into the country's energy market. PEMEX: Urged to Prioritize Debt Reduction ----------------------------------------- Mr. Carlos Hurtado, Mexico's Finance Minister, wants state-owned Petroleos Mexicanos (Pemex) to prioritize its debt payments as soaring oil prices this year opened options for Pemex to allocate its excess oil revenues either on refining, exploration, production or debt reduction. Mr. Hurtado adds that using the US$ 8 per barrel increase in oil prices to pay part of the company's US$40.1 billion debt this year would help prevent the company's rising debt from hurting investor confidence in Mexico's debt, which is now selling bonds at record low yields. Moody's Investor Service rates Mexico's Foreign-Debt, Baa2, one level above the lowest investment-grade rating while Standard & Poor's gives it a rating of BBB-, its lowest investment-grade rating. Reuters reports that Pemex used bonds and loans to acquire funds, which were used to find more oil and replace the company's dwindling reserves. Over the last three years, the company has doubled its investment in exploration and production and in the process raised its debt from US22.4 billion to the present level of US$10.8 billion. However some investors, notably Roberto Sanchez-Dahl, who helps manage $600 million in emerging-market debt including Pemex bonds at Federated Investment Management Corp. in New York, say that they would want Pemex to use its money towards increasing its productions. Mr. Sanchez-Dahl says that "the level of debt can be offset if they establish a 5-year investment program in exploration." *********** 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. 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