/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/040719.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, July 19, 2004, Vol. 5, Issue 141 Headlines A R G E N T I N A ADVANCE LINE: Trustee to Present Individual Reports ESTIQUIM S.A.: Verification Deadline Approaches PAXCO S.R.L.: Court Declares Company Bankrupt REPSOL YPF: Protesters Bar Access To Refinery RODEL S.A.: Will Present Restructuring Plan Wednesday TELECOM ARGENTINA: OKs Creditors' Request to Extend Debt Offer YACYCRETA: Replacements To Be Made At EBY * IMF Declines To Predict When Talks With Argentina Will End B E R M U D A NORTHERN OFFSHORE: Creditors Apply for Liquidation B R A Z I L ENRON: Court Approves Joint Chapter 11 Plan NET SERVICOS: Telmex Close to Wrapping Up Purchase C H I L E TELEFONICA CTC: Shareholders Approve Unit's Sale C O L O M B I A EMCALI: Will Go Ahead With 7% Rates Hike D O M I N I C A N R E P U B L I C EDENORTE/EDESUR: Regulator Opposes Planned Re-Privatization M E X I C O GRUPO POSADAS: S&P Assigns BB- Rating HYLSAMEX: Raises MXN1.12B From Latest Stock Offer PEMEX: Suffers From Heavy Debt, Low Reserves TV AZTECA: Postpones Filing of Form 20-F P A R A G U A Y * Paraguay Mulls $25M Bond Issue to Cover Maturing Debts P E R U * $16.6M World Bank Loan to Support Peru's Decentralization V E N E Z U E L A PDVSA: Details U.S. Ruling on Alleged Expropriation of Assets PDVSA: May Surpass US$46B Net Revenues, Says President - - - - - - - - ================= A R G E N T I N A ================= ADVANCE LINE: Trustee to Present Individual Reports --------------------------------------------------- Mr. Carlos Eduardo Foresti, the trustee for the Advance Line S.A. bankruptcy, is required by the court to submit individual reports of the case on July 20, 2004. These reports are based on the claims forwarded by the Company's creditors during the verification period. The trustee is further obliged to provide the court with an audit of the company's accounting and business records through a general report, which is due for submission on September 15, 2004. CONTACT: Mr. Carlos Eduardo Foresti, Trustee Avenida Callao 449 Buenos Aires ESTIQUIM S.A.: Verification Deadline Approaches ----------------------------------------------- Creditors of bankrupt Argentine company Estiquim S.A. have until July 21, 2004 to submit proof of their claims to the trustee, Ms. Adriana Raquel Esnaola. Failure to comply with the verification deadline will mean disqualification from the payment to be made after the company's assets are liquidated. Court No. 1 of the Buenos Aires Civil and Commercial Tribunal handles this case. CONTACT: Ms. Adriana Raquel Esnaola, Trustee Juncal 615 Buenos Aires PAXCO S.R.L.: Court Declares Company Bankrupt --------------------------------------------- Judge No. 7 of the Buenos Aires civil and commercial tribunal declared local company Paxco S.R.L. bankrupt, says El Pais. The court approved the bankruptcy petition filed by Asimira y Osimira, to whom the Company failed to pay debts amounting to US$4,485.88. Clerk No. 13 assists the court on the case, which will close with the liquidation of the Company's assets to pay its obligations. CONTACT: Paxco S.R.L. Paroissien 3147 Buenos Aires REPSOL YPF: Protesters Bar Access To Refinery --------------------------------------------- Spanish-Argentine energy giant Repsol-YPF SA was hit with another protest, reports Dow Jones Business News. Media reports revealed Thursday that some 500 unemployed people blocked access to the entrance of Repsol's refinery plant located at Ensenada in Buenos Aires province, and placed burning tires in the road to cut off traffic to the plant. Local news agency Diarios y Noticias said the protestors were demanding jobs and claimed the Company was refusing to hire workers who were not affiliated to one of the main construction unions. It wasn't known whether the protest interfered with the plant's operations. RODEL S.A.: Will Present Restructuring Plan Wednesday ------------------------------------------------------ Validated creditors of insolvent Argentine company Rodel S.A. will ratify the Company's settlement plan during the informative assembly on Wednesday, July 21, 2004. The company's case is under the jurisdiction of Cordoba's Civil and Commercial Tribunal Court No. 3. CONTACT: Rodel S.A. Vilela 1362 Buenos Aires TELECOM ARGENTINA: OKs Creditors' Request to Extend Debt Offer -------------------------------------------------------------- Argentine fixed-line carrier Telecom Argentina has extended the deadline of its debt-restructuring offer from July 21 to July 30, reports Dow Jones Newswires. The extension grants a request from several creditors who are trying to buy more time to file their paperwork. Telecom Argentina launched an out-of-court proposal to restructure US$2.63 billion in debt. Under the proposal, known in Spanish as Acuerdo Preventivo Extrajudicial (APE), the Company must secure two-thirds approval from creditors before it can submit its offer to a court for legal clearance that would then make the restructuring terms binding on all creditors. Telecom Argentina didn't say what percentage of its creditors had so far formally approved the restructuring deal. CONTACT: TELECOM ARGENTINA S.A. Alicia Moreau de Justo 50, 10th Floor Capital Federal (1107) Republica Argentina Phone: +54 11 4968 4000 Home Page: http://www.telecom.com.ar Contacts: Alberto J. Ricciardi, Chief Financial Officer Elvira Lazzati, Finance Director Pedro Insussarry, Investor Relations Manager Phone: (5411) 4968-3626/3627 Fax: (5411) 4313-5842/3109 E-mail: inversores@intersrv.telecom.com.ar YACYCRETA: Replacements To Be Made At EBY ----------------------------------------- Some officials of the Entidad Binacional Yacyreta (EBY) are set to lose their posts in the joint venture that administers the Yacyreta hydroelectric project on the border of Argentina and Paraguay. According to Business News Americas, Paraguay's President Nicanor Duarte demanded changes in EBY's management following reports by the World Bank and Inter-American Development Bank (IDB), which blame corruption and inefficiency for the project's ongoing delays and US$10 billion debt. Mr. Carlos Goiburu, the director of the Paraguayan side of the project, said that many EBY officials had not done their jobs correctly, which is why they will be replaced. Some replacements have already been announced. Oscar Ruiz Diaz will replace Humberto Yaluk as strategic planning coordinator for project completion, and Isidro Dioverti will replace the manager of the complementary works department, Osvaldo Nunez. * IMF Declines To Predict When Talks With Argentina Will End ------------------------------------------------------------ The International Monetary Fund declined to predict when talks with Argentina on the third review of the US$13-billion aid program would be completed, reports Dow Jones Newswires. "This is not the sort of thing where the decision (about when to end the talks) is made. The process will continue as long as it takes," IMF external relations director Thomas Dawson said. Another disbursement of a portion of the US$13 billion loan is contingent on the conclusion of the review and Argentina is hoping that it would be completed before the IMF executive board enters into a summer recess in early August. ============= B E R M U D A ============= NORTHERN OFFSHORE: Creditors Apply for Liquidation -------------------------------------------------- Creditors of offshore drilling contractor Northern Offshore Ltd. have elected to liquidate the troubled company, Nordic Business Report says. Represented by Norwegian trustee services company Norsk Tillitsmann ASA, bondholders applied for liquidation proceedings in Bermuda, citing the company's failure to pay interest on its Norwegian bond loans. Prior to this, the group tried to negotiate, but failed to reach an agreement with management. In a statement issued Wednesday, the "Informal Committee of bondholders of Northern Offshore Ltd." said that the breakdown in the refinancing negotiations had been due to "the Company's demand for an excessive share of the equity of the restructured company for existing shareholders." "Although the existing equity has no value, the Informal Committee [was] prepared to agree to existing shareholders retaining 5% of the equity of the restructured Company. This offer was rejected by management," the committee said. "The Informal Committee expects the liquidation proceedings commenced in Bermuda to lead to a restructuring of the bonds to result in a debt-free Northern Offshore business wholly owned by its creditors," the committee added. The committee does not expect Northern Offshore's operations to be interrupted during the liquidation process, and that suppliers, customers and employees would similarly remain unaffected by it. Northern Offshore admitted Wednesday that the Supreme Court of Bermuda had appointed provisional liquidators for the company. Northern Offshore Ltd. is a public limited company registered in Bermuda. The Company was founded in May 2000 and is engaged in providing drilling and production services to the offshore oil and gas industry. The Company's shares are traded on the Oslo Stock Exchange under ticker symbol NOF. Northern Offshore Ltd. is an extension of the offshore drilling and production business of Northern Offshore ASA, a public limited company registered in Norway. CONTACT: NORTHERN OFFSHORE LTD. PO Box HM 1593 Par-la-Ville Place, 4th Floor 14 Par-la-Ville Road Hamilton HMGX Bermuda Phone: +1 441 295 6178 Fax: +1 441 295 3494 Web site: http://www.northern.no/ =========== B R A Z I L =========== ENRON: Court Approves Joint Chapter 11 Plan ------------------------------------------- Enron Corp. announced that the U.S. Bankruptcy Court of the Southern District of New York approved Thursday the Company's Joint Chapter 11 Plan. "Undoubtedly, this was an extremely complex bankruptcy. Today's [Thursday] court approval acknowledges not only the tremendous amount of work that has been accomplished during the last two and a half years, but also the overwhelming support of our economic constituents," said Stephen F. Cooper, Enron's acting CEO and chief restructuring officer. "We still have certain tax and change of control issues that need to be resolved before the effective date, but we will continue working diligently to address those issues so that we can begin initial distributions to our creditors as expeditiously as possible." Under the approved Joint Chapter 11 Plan, assuming the previously announced sales of Portland General Electric and CrossCountry Energy are consummated, Enron's creditors will receive a combination of cash and equity in Prisma Energy International, Enron's international energy asset business. In such case, the proportion of cash to equity is expected to be 92 percent cash and 8 percent equity. At the conclusion of the claims reconciliation process, the allowable claims against the company are expected to be approximately $63 billion, Cooper said. The cash and equity assets available for ultimate distribution are expected to be around $12 billion, he added, not including recoveries from litigation. CONTACT: Enron Corp. Public Relations Dept. P.O. Box 1188, Suite 1600 Houston, TX 77251-1188 (713) 853-5670 public-relations@enron.com Web Site: www.enron.com NET SERVICOS: Telmex Close to Wrapping Up Purchase -------------------------------------------------- An executive of Net Servicos de Comunicacao SA said Thursday he expects Telefonos de Mexico SA (Telmex) to conclude the acquisition of a controlling stake in the Brazilian pay-TV broadcaster in a matter of weeks, Dow Jones Newswires reports. The deal awaits regulatory clearance in Brazil and a new shareholder agreement. But according to Net Servicos Chief Financial Officer Leonardo Pereira: "Approval from (regulator) Anatel won't take long... but the talks for the new shareholder agreement may take a while." He added that a new shareholders' agreement is expected "in a matter of weeks, not months." Telmex said in June it will pay between US$250 million and US$370 million for a controlling stake in Net Servicos, depending on Net's debt restructuring, now underway. Around 70% of Net creditors have already accepted the terms offered by the company. Pereira said he remains confident of winning approval from the rest. "Overall, we have reached an informal agreement with the holders of 95% the company's debt," he stressed. "We think they all will go for it." As of June 30, Net had a debt of BRL1.5 billion. At the same time, Pereira said he expects Net Servicos to reach recurring net profit by late 2005 or early 2006 thanks to the ongoing debt restructuring. Pereira said the restructuring would reduce the Company's debt to BRL730 million. Taking into account cash of around BRL300 million, net debt would be about BRL430 million, Pereira said, cutting the Company's net-debt-to-EBITDA ratio to below 1.5. The Company has been cash flow positive for 18 months, he added. CONTACT: Net Servicos de Comunicacao S.A Mr. Marcio Minoru Mr. Rodrigo Alves 55-11-5186-2811 ri@netservicos.com.br Web Site: nettv.globo.com ========= C H I L E ========= TELEFONICA CTC: Shareholders Approve Unit's Sale ------------------------------------------------ Chilean telco Telefonica CTC Chile successfully convinced shareholders to approve the sale of its mobile unit Telefonica Movil to its parent, Spanish Telefonica SA (TEF). In a controversial extraordinary shareholders' meeting held Thursday, 69.1% of shareholders voted in favor of the proposal, while 20.4% rejected it. CTC's management needed approval from two thirds of the Company's shareholders to put its mobile unit under the wing of Telefonica's Telefonica Moviles (TEM) unit. However, shareholders demanded that TEF raise its offer for CTC's mobile assets by US$51 million. Telefonica offered to pay CTC US$1.01 billion and assume a debt of US$243 million for the mobile unit. But because the transaction would saddle CTC with US$51 million in income taxes, institutional shareholders voted to get Telefonica to pay it. Telefonica wants full control of Telefonica Movil so that it can smoothly merge the unit with BellSouth Chile, one of five BellSouth units the Spaniards are buying for US$5.9 billion. The merger still depends on approval by the anti-monopoly commission TDLC. CONTACT: TELEFONICA CTC CHILE Sofia Chellew E-mail: schelle@ctc.cl Tel.:56-2-691 3867 Veronica Gaete E-mail: vgaete@ctc.cl Tel.:56-2-691 3867 M.Jose Rodriguez E-mail: mjrodri@ctc.cl Tel.:56-2-691 3867 Florencia Acosta E-mail: macosta@ctc.cl Tel.:56-2-691 3867 =============== C O L O M B I A =============== EMCALI: Will Go Ahead With 7% Rates Hike ---------------------------------------- CRA, Colombia's water services regulator, has given Emcali the green light to implement a 7 percent increase in its sewerage charges, reports Business News Americas. The additional charge is intended to defray the estimated US$3 million annual operating expenses for the country's wastewater treatment facility. The increase, which would affect 455,000 users, will be implemented sometime in August or September. To complement the hike, CRA will also offer cuts in its fixed charges. Emcali's plant, constructed two years ago at a cost of US$104 million, treats 40% of the city's wastewater before it flows to the Cauca River. =================================== D O M I N I C A N R E P U B L I C =================================== EDENORTE/EDESUR: Regulator Opposes Planned Re-Privatization ----------------------------------------------------------- The Dominican Republic electricity regulator advised the government not to re-privatize ailing state-owned power distributors Edenorte and Edesur, Business News Americas reports. The regulator, Mr. George Reinoso, said that the financial problems of the two utilities are so severe, making them unfit for re-privatization. The best alternative for President-elect Leonel Fernandez would be to have a private operator provide the distributors with capital and manage them according to government-set objectives. However, the regulator's recommendations contradict the country's national energy commission CNE's proposal, which aims to see the distributors privatized. The Dominican Republic's government sold 50% stakes in distributors and generators in 1999, Business News Americas recalls. In 1999, Spain's Union Fenosa bought Edesur and Edenorte from the Dominican Republic. Last year, the Spanish company handed back the two distributors after heavy losses incurred by the structure of the power sector and a succession of exogenous shocks such as a banking crisis, exchange rate collapse and the knock-on effect of high oil prices on power tariffs. =========== M E X I C O =========== GRUPO POSADAS: S&P Assigns BB- Rating ------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Mexican hotel operator Grupo Posadas S.A. de C.V. (Posadas). The outlook is stable. "The rating on Posadas reflects its position as the largest hotel operator in Mexico, a branding portfolio with well- recognized names, and the development of competitive advantage through technology," said Standard & Poor's credit analyst Fabiola Ortiz. "The rating also considers the relatively high financial leverage of the company, as well as the cyclicality of the industry in which it participates." Posadas operates 79 hotels with a total of 15,305 rooms as of March 2004. The company's operations are concentrated in Mexico (80% of rooms), where it operates 63 hotels. It also operates six hotels in the U.S., nine in Brazil, and one in Argentina. At March 31, 2004, Posadas had about US$21.0 million in cash and approximately US$63.4 million available in credit lines, resulting in additional financial flexibility. The operating cash flow was US$25.0 million as at December 2003, and is expected to remain at positive levels of US$25.0 million and US$43.0 million for the next two years. Moreover, short-term financial obligations amount to US$54.0 million, and the company is therefore evaluating the possibility of reducing the short- term refinancing risk. "We expect that the company will continue improving its operating performance and will be able to generate stable cash flows, even under adverse economic conditions," said Ms. Ortiz. "Moreover, Posadas will be able to refinance its short-term liabilities." ANALYSTS: Fabiola Ortiz, Mexico City (52) 55-5081-4449 Manuel Guerena, Mexico City (52) 55-5081-4411 HYLSAMEX: Raises MXN1.12B From Latest Stock Offer ------------------------------------------------- The Mexican Stock Exchange announced on Thursday that Hylsamex raised MXN1.12 billion from its latest stock offering. A total of 70 million new L shares were sold, 35 million in Mexico at 16 pesos (US$1=MXN11.49) with another 35 million traded abroad at US$41.39 shares. The offering, which was oversubscribed by 9 million shares, is equivalent to 12.15 percent of the Company's shares out in the market. In addition, existing shareholders have made an initial deposit on the offering to purchase 33 million more shares. They will have to pay the rest of the issue price by July 20 to collect their shares. Hylsamex is expected to collect US$144 million if all 103 million shares are sold. The Company will use this cash infusion to pay some of its debts and retire its CPO shares. CONTACT: Hylsamex S.A. de C.V. 101 Ave Munich Cuauhtemoc 66452 San Nicolas de los Garza Nuevo Leon Mexico Phone: +52 81 8865 2828 Fax: +52 81 8865 1210 Home Page: http://www.hylsamex.com.mx Contact: Engr. Dionisio Garza Medina, Chairman Alejandro Elizondo Barragan, Chief Executive Engr PEMEX: Suffers From Heavy Debt, Low Reserves -------------------------------------------- Debt-laden Petroleos Mexicanos (Pemex) would have to sell 95% of its assets if it decides to pay obligations totaling US$71.14 billion now, says local daily El Economista. Apart from its looming debt, the state-run oil company is further burdened by heavy taxes, low productivity per worker and dwindling reserves. A study, involving Pemex and five other global oil players, conducted by the Center for Strategic Research for Mexico revealed that the Company's allocations for exploration are not sufficient to replenish 50 percent of reserves. The country's restoration rate currently stands at only 26 percent while countries such Venezuela and Canada has restoration rates at 100 percent. TV AZTECA: Postpones Filing of Form 20-F ---------------------------------------- TV Azteca, S.A. de C.V. (NYSE: TZA; BMV: TVAZTCA), one of the two largest producers of Spanish language television programming in the world, announced Thursday that it expects to file next week its Annual Report on its Form 20-F, for the year ended December 31, 2003. The Company was not able to file its Form 20-F Thursday due to an audit completion delay. PriceWaterhouseCoopers, the Company's independent auditors, are in the process of concluding the audit of the financial statements of Cosmofrecuencias, S.A. de C.V., a former subsidiary of the Company, which was split-off in December 2003. The Company noted that, on June 30, 2004, it filed its Spanish- language annual report with the Mexican National Securities and Banking Commission as required under Mexican law. That report included TV Azteca's audited consolidated 2003 financial statements prepared in accordance with Mexican GAAP and certified by PriceWaterhouseCoopers. On July 12, 2004, the Company furnished an English translation of that report to the U.S. Securities and Exchange Commission on Form 6-K. The Company believes that the audit of Cosmofrecuencias' results is not material to TV Azteca financial statements. CONTACT: Mr. Bruno Rangel Head of Investor Relations Tel. (5255) 3099 9167 Fax. (5255) 3099 1418 jrangelk@tvazteca.com.mx =============== P A R A G U A Y =============== * Paraguay Mulls $25M Bond Issue to Cover Maturing Debts -------------------------------------------------------- Financially strapped South American country Paraguay plans to issue US$25 million in bonds, the first bond issue since President Nicanor Duarte took office in August 2003. The move, according to a Dow Jones report, is intended to cover payments and interest coming due by year's end on part of the US$2.4-billion debt. The bond issue would help defray part of the US$159 million in debt financing costs coming due between now and December, government official Miguel Gomez said. The plan will require congressional approval because it would be backed by the national treasury. ======= P E R U ======= * $16.6M World Bank Loan to Support Peru's Decentralization ----------------------------------------------------------- The World Bank approved Thursday two loans for a total of $16.6 million for Peru to support the decentralization of key social programs and fiscal administration. "The decentralization of fiscal management and public services will help authorities at all levels channel resources to where they are needed most, especially the rural poor," said Marcelo Giugale, World Bank Country Director for Bolivia, Ecuador, Peru and Venezuela. The $8.8 million Institutional Capacity for Sustainable Fiscal Decentralization Technical Assistance Project seeks to provide regional and local governments with the necessary tools for planning, monitoring and evaluating sustainable finances, while strengthening the capacity of the national government to monitor and evaluate the country's fiscal and financial performance. The project, which supports Peru's ongoing decentralization process and public sector modernization program, will: - Introduce basic financial management tools (tax collection, accounting, budgeting) at the regional and local government level to produce data and monitor fiscal performance in accordance with the new legal fiscal decentralization framework. - Enhance the efficiency of public expenditure by designing an initial set of institutional performance management indicators for projects and activities, and by evaluating and improving existing results-based management agreements. - Upgrade the national public investment system by providing training for newly created decentralized offices for public investment. - Strengthen local capacity for managing public assets through transfers of know-how and technological support among the 1,700 regional governments and agencies. - Extend the Integrated Financial Management System (SIAF) - which ensures uniform accounting, budgeting and reporting standards to cover all local governments, and finance the design of a consolidated national payroll control system. Accountability for Decentralization in the Social Sectors Technical Assistance Project The $7.8 million Accountability for Decentralization in the Social Sectors Technical Assistance Project aims to ensure that the targeting and efficiency of social programs, such as education and health, are maintained and improved throughout the decentralization process. In particular, the project seeks to: - Improve the quality of social policies and programs through policy development and evaluation related to education, health, pension system, and other social programs, and the implementation of performance agreements and accreditation systems of social programs at the local level. - Improve the monitoring and evaluation system of social programs by building monitoring instruments and analytical capacity, such as a monitoring system for the Ministry of Women and Social Development programs, and a more user-friendly "Consulta Amigable" Web site to provide open access to information about budgets, expenditures, services and the performance of social programs. The two single-currency, fixed-spread loans are repayable in 14 years, including 8 years of grace. Disbursements will run from 2004 through 2008. CONTACT: Mr. Lee Morrison (202) 458-8741 Lmorrison1@worldbank.org Web Site: www.worldbank.org ================= V E N E Z U E L A ================= PDVSA: Details U.S. Ruling on Alleged Expropriation of Assets ------------------------------------------------------------- Statement of Ali Rodriguez Araque PDVSA President July 14, 2004 The United States Overseas Private Investment Corporation ("OPIC") formally informed us yesterday that it has decided to pay the San Diego firm Science Applications International Corporation ("SAIC") based on SAIC's claim that its investment in Venezuela has been expropriated. We have every reason to believe that OPIC's decision was based on prevailing politics in Washington, D.C., and the desire to satisfy a politically powerful U.S. company, rather than on the facts. We have consulted with outside legal counsel in the United States, as well as with a noted U.S. academic expert in the field of international law and expropriation, and both have concluded that OPIC's determination is entirely without merit. OPIC simply accepted the allegations of SAIC without examining the actual facts. The facts are straightforward: - In 1996, PDVSA made the decision to outsource its information technology services. It entered into a joint venture with SAIC, and together they created a Venezuelan joint venture company called "INTESA" to provide outsourced information-technology services to PDVSA. - SAIC - through an offshore subsidiary called "SAIC Bermuda" - invested $1,200 in the venture, while PDVSA provided all financing for the venture as well as all equipment, office space, personnel and $800. The venture was governed by a five- year contract that could be renewed upon agreement of both parties. The contract gave SAIC both management and board control of INTESA. - Under the contract, PDVSA paid INTESA all costs for services provided, plus a mark up of approximately 10 percent. PDVSA paid each month in advance. - SAIC profited handsomely from the venture, earning more than $40 million in dividends on its investment of twelve hundred dollars, and an additional $53 million in subcontract fees. - By contrast, the venture was not economically beneficial to PDVSA. A July 2000 report by PDVSA's internal auditor raised questions about the cost-plus outsourcing agreement. Guaicapuro Lameda, who was then President of PDVSA, created an internal committee to evaluate that agreement and recommend changes. PDVSA hired the Gartner Group, an internationally recognized IT consulting firm, to examine and assess the agreement. Both the internal committee and Gartner recommended that PDVSA not renew the agreement unless its terms were changed significantly. - After a series of attempts to renegotiate the working arrangement, and after SAIC refused to change the operating terms, PDVSA informed SAIC that it would not renew the agreement after it expired. OPIC concluded that the decision not to renew the agreement "effectively ended the viability of the joint venture." It apparently decided that PDVSA made that decision at the direction of the government and for political reasons. That is simply untrue. PDVSA made that decision purely for commercial reasons based on its own internal studies and the advice of an expert outside consultant. PDVSA has consistently tried to meet with SAIC to work out an orderly dissolution of INTESA in conformity with the terms of the joint venture contract. PDVSA has made clear in all these efforts that it would pay SAIC its share of the value of the company as determined by an independent audit, in accordance with the contract. SAIC has refused even to meet. It has also consistently refused to allow any independent audit of INTESA's books. Such an audit is particularly important because INTESA's own auditors had refused to certify the accuracy of its financial statements. PDVSA, of course, cannot make a payment based on guess work and unaudited financial statements. Rather than work out an orderly dissolution with PDVSA in accordance with the contract, SAIC sought political support in Washington from various agencies and members of Congress and filed a claim with OPIC alleging that PDVSA and the Government of Venezuela have "expropriated" its investment in INTESA. Neither the Government of Venezuela nor PDVSA was notified of SAIC's filing or has ever been allowed even to see SAIC's claim. OPIC has tried to pressure PDVSA to pay SAIC in order to make this dispute go away and to avoid any controversy that might occur as a result of an OPIC determination. But we simply cannot be subjected to such blackmail. PDVSA has a public trust and it cannot pay money that is not lawfully due. I personally find it astonishing that a government agency such as OPIC would pay out millions of U.S. taxpayer dollars based purely on the self-serving allegations of the company making a claim and in the absence of any certified financial information. The OPIC process, in which only one party is able to present its case, is not an appropriate venue for resolving these types of commercial disputes. On April 28, PDVSA notified SAIC of its intent to submit this dispute to arbitration before the International Chamber of Commerce in accordance with the specific terms of their joint venture contract. This is the proper forum for the resolution of disputes between the parties. This independent adjudicative body will allow for a proper and unbiased review of all facts in this matter. We are confident of the outcome. The wide array of companies that continue to invest in the oil business in Venezuela - with more than $25 billion of direct investment to date - is testament to our commitment to the highest standards of commercial and legal propriety. Now, as always, PDVSA is deeply committed to its international business partners and to upholding the laws and regulations that bind us together. PDVSA: May Surpass US$46B Net Revenues, Says President ------------------------------------------------------ This year's spike in oil prices could send PDVSA's sales past the US$46 billion mark it recorded in 2003. Mr. Ali Rodriguez, PdDVSA president, said in a Dow Jones Newswires report that "If the situation remains how it is, the net revenue of the corporation ... is going to surpass $46 billion." With the improved financial outlook, the state-run company has earmarked US$2 billion to finance infrastructure projects. PDVSA has also committed US$1.7 billion in its 2004 budget for literacy and social outreach programs. However, analysts caution that the Company's social programs could divert much needed investments in production and exploration, making it harder to boost production from present levels. *********** 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 * * *