/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/040830.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, August 30, 2004, Vol. 5, Issue 171 Headlines A R G E N T I N A ANDRES N BERTOTTO: Proceeds With Restructuring DALVIK S.A.: Seeking Reorganization Approval GARVI S.R.L.: Local Court OKs "Concurso Preventivo" Petition HIDROELECTRICA PIEDRA: Names Bank of New York as Exchange Agent MAC TRADDING: Court Orders Liquidation PINO CAMBY: Enters Bankruptcy on Court Orders SUAT S.R.L.: Court OKs Creditor's Bankruptcy Request B E R M U D A FOSTER WHEELER: Fixes 10.507% Annual Interest on New Notes GALLERIA LTD.: Court Clears Boss SEA CONTAINERS: Sells Folkstone Port for US$20Mln B R A Z I L ACESITA: Arcelor Could Exercise Option by Yearend BOMBRIL: Cirio Receivers Seek Talks With Creditors CFLCL: FondELec Wants Alliant's Stake ELETROPAULO METROPOLITANA: Intensifies Power Anti-Theft Program MRS LOGISTICA: S&P Affirms Ratings SINGER: Extends Tender Offer for Brazil Secured Notes TELESP CELULAR: JP Reduces Recommendation on TCP to Underweight C O S T A R I C A * Fitch Affirms 'BB' Foreign Currency Rating of Costa Rica E L S A L V A D O R * EL SALVADOR: Works with IADB to Improve Businesses G U A T E M A L A * Republic of Guatemala Ratings Affirmed; Outlook Stable H O N D U R A S FCN: Sells Puerto Cortes Property M E X I C O CORPORACION DURANGO: Court Authorizes Bankruptcy INTERNATIONAL WIRE: Court Confirms Plan of Reorganization N I C A R A G U A PARMALAT NICARAGUA: Italian Administrator Warns Local Receiver P E R U PAN AMERICAN SILVER: Pays $36Mln for Peruvian Mine T R I N I D A D & T O B A G O BWIA: Schedules EGM for September 10 BWIA: Stockbroker Remains Skeptical Despite Improved 1H Results NWRHA: Fire the NWRHA Board, Says Ex-Health Minister WASA: Registers $448M Debts V E N E Z U E L A EDC: S&P Upgrades Ratings to `B' From `B-' HARVEST NATURAL: S&P Raises Ratings After Venezuela Upgrade PDVSA FINANCE: S&P Raises Notes Rating To 'B+' - - - - - - - - ================= A R G E N T I N A ================= ANDRES N BERTOTTO: Proceeds With Restructuring ---------------------------------------------- Court No. 2 of Rio Tercero's (Cordoba) civil and commercial tribunal approved the "Concurso Preventivo" petition filed by Andres N Bertotto S.A.I.C., reports local news source Infobae. Under Insolvency protection, the Company will be able to draft a settlement plan for its creditors so as to avoid a straight liquidation. Clerk No. 3 assists the court on the case. DALVIK S.A.: Seeking Reorganization Approval -------------------------------------------- Judge Braga, serving for Court No. 44 of Buenos Aires' civil and commercial tribunal, is currently reviewing the merits of the reorganization petition filed by Dalvik S.A. Argentine daily La Nacion reports that the company filed the request after defaulting on its debt payments since October 31, 2003. The reorganization petition, if granted by the court, will allow the agricultural company to negotiate a settlement with its creditors in order to avoid a straight liquidation. Dr. Julianelli, Clerk No. 44, assists the court on this case. CONTACT: Dalvik S.A. Junin 55 Buenos Aires GARVI S.R.L.: Local Court OKs "Concurso Preventivo" Petition ------------------------------------------------------------ Court No. 8 of Cordoba's civil and commercial tribunal granted Garvi S.R.L.'s petition to start a reorganization process, reports Infobae. The court appointed Mr. Emir Waquim as trustee who will supervise the company during the reorganization process. Important dates, such as the deadline for the submission of the necessary reports, as well as the schedule for the informative assembly will be announced shortly. CONTACT: Mr. Emir Waquim, Trustee Boulevard Illia 480 Cordoba HIDROELECTRICA PIEDRA: Names Bank of New York as Exchange Agent --------------------------------------------------------------- Argentine generator Hidroelectrica Piedra del Aguila S.A. (HPDA) hired The Bank of New York (BNY), a global leader in securities servicing, to serve as exchange agent in connection with the company's recent restructuring, in which HPDA exchanged approximately US$268 million of existing Series I, II, III and IV Trust Notes due 2009 for cash and/or new Series A, B, C and D fixed rate Notes due 2013. The utility also selected The BNY to provide trustee, principal paying agent, and co-registrar services to the new notes, issued as a separate series under an indenture. This transaction is reported to be the largest completed Argentine exchange offer to date. Steven Hodgetts, managing director of global trust services at The Bank of New York, said, "This transaction highlights our track record of servicing many high-profile and complex restructuring transactions in the Latin American and global markets. Our breadth of global capabilities in the corporate trust arena ensures that debt issuers receive the level of commitment and dedication needed to execute their tender and exchange offers in a timely manner." Hidroelectrica Piedra del Aguila S.A. is a private hydroelectric generator in Argentina. Formed through the reorganization of the state-owned hydroelectric company in 1993, the company currently holds a government concession until December 29, 2023 to operate a hydroelectric complex and to use related water resources in Piedra del Aguila for the generation and sale of electricity. MAC TRADDING: Court Orders Liquidation -------------------------------------- Mac Tradding S.R.L. prepares to wind-up its operations following the bankruptcy pronouncement issued by Judge Braga of Buenos Aires' Civil and Commercial Tribunal Court No. 22. The declaration effectively prohibits the company from administering its assets, control of which will be transferred to a court- appointed trustee. La Nacion reports that the court appointed Mr. Raul Pereyra as trustee. He will be reviewing creditors' proofs of claims until October 8, 2004. Dr. Julianelli, Clerk No. 44, assists the court on this case, which will end with the disposal of the company's assets to cover its liabilities. CONTACT: Mac Tradding S.R.L. Blanco Encalada 1710 Buenos Aires Mr. Raul Pereyra, Trustee Parana 467 Buenos Aires PINO CAMBY: Enters Bankruptcy on Court Orders --------------------------------------------- Pino Camby S.A. will enter bankruptcy protection after Court No. 2 of Buenos Aires' Civil and Commercial Tribunal, with the assistance of Clerk No. 3, ordered the company's liquidation. The order effectively transfers control of the company's assets to the court-appointed trustee who will supervise the liquidation proceedings. Infobae reports that the court selected accounting firm "Estudio Carreiro, Harvey & Asociados" as trustee. The firm will be verifying creditors' proofs of claims until the end of the verification phase on October 22, 2004. Argentine bankruptcy law requires the trustee to provide the court with individual reports on the forwarded claims and a general report containing an audit of the company's accounting and business records. The individual reports will be submitted on October 22, 2004 followed by the general report, which is due on September February 18, 2004. CONTACT: Pino Camby S.A. Avda Cramer 2145 Buenos Aires "Estudio Carreiro Harvey & Asociados" - Trustee Presidente Peron 1143 Buenos Aires SUAT S.R.L.: Court OKs Creditor's Bankruptcy Request ---------------------------------------------------- Suat S.R.L. entered bankruptcy after Judge Vasallo of Buenos Aires' Civil and Commercial Tribunal approved the voluntary bankruptcy motion it had requested, reports La Nacion. Working with Dr. Perez Casado, the city's Clerk No. 9, the Company assigned Ms. Viviana Palopoli 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 October 26, 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. CONTACT: Suat S.R.L. Tte. Gral. J. D. Peron 1711 Buenos Aires Ms. Viviana Palopli, Trustee Avenida Cordoba 859 Buenos Aires ============= B E R M U D A ============= FOSTER WHEELER: Fixes 10.507% Annual Interest on New Notes ---------------------------------------------------------- Foster Wheeler Ltd. (OTCBB: FWLRF) announced Thursday the interest rate applicable to the Fixed Rate Senior Secured Notes due 2011, Series A (the "New Notes"), to be issued by Foster Wheeler LLC in the equity for debt exchange offer that the company launched on June 11, 2004. If the exchange offer expires as currently scheduled on August 30, 2004, the New Notes will bear interest at a rate of 10.507% per annum. This rate is equal to 6.65% plus the yield on U.S. Treasury notes having a remaining maturity equal to the maturity of the New Notes determined as of 2:00 p.m. New York City time on the second business day prior to the expiration of the exchange offer. The terms of the New Notes are described in the registration statement on Form S-4 (File No. 333-107054) relating to the exchange offer. If the exchange offer is extended beyond August 30, 2004, the rate on the New Notes will be recalculated and announced at a later date. A copy of the prospectus relating to the New Notes and other related documents may be obtained from the information agent. The information agent for the exchange offer and consent solicitation is Georgeson Shareholder Communications Inc., 17 State Street, 10th Floor, New York, New York 10014. Georgeson's telephone number for bankers and brokers is 212-440-9800 and for all other security holders is 800-891-3214. The dealer manager for the exchange offer and consent solicitation is Rothschild Inc., 1251 Avenue of the Americas, 51st Floor, New York, New York 10020. Contact Rothschild at 212- 403-3784 with any questions on the exchange offer. Investors and security holders are urged to read the following documents filed with the SEC, as amended from time to time, relating to the proposed exchange offer because they contain important information: (1) the registration statement on Form S- 4 (File No. 333-107054) and (2) the Schedule TO (File No. 005- 79124). These and any other documents relating to the proposed exchange offer, when they are filed with the SEC, may be obtained free at the SEC's Web site at www.sec.gov, or from the information agent as noted above. The foregoing reference to the exchange offer and any other related transactions shall not constitute an offer to buy or exchange securities or constitute the solicitation of an offer to sell or exchange any securities in Foster Wheeler Ltd. or any of its subsidiaries. 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 Media: Ms. Maureen Bingert 908-730-4444 or Investors: Mr. John Doyle 908-730-4270 Other Inquiries: 908-730-4000 Web Site: http://www.fwc.com GALLERIA LTD.: Court Clears Boss -------------------------------- A court has cleared Robert Dwinnell, the former manager of a defunct furniture shop, of eight counts of dodging pension payments, dealing a blow to the Crown, which brought the charges against the boss and his wife earlier this year. The Crown sued Robert and Jennifer Dwinnell, the husband and wife managers of Galleria Ltd., for failing to turn over pension contributions that were deducted weekly from staff salaries. But Magistrate Francis last week ruled that Mr. Dwinnell, who faced the allegations alone after his wife left the Island for Canada last year, had no case to answer. According to Mr. Francis, neither Mr. Dwinnell nor the firm could be found guilty of the offence alleged, although he said he was convinced the pension funds had been deducted from employees and were not turned over to a fund at BF&M that had been established in accordance with the National Pension Scheme. After the latest legal development, the eight former Galleria employees may not be able recoup pension monies deducted from their pay. But Crown prosecutor Anthony Blackman said they intend to appeal the ruling and vow to continue pursuing any employer that falls short of pension law requirements. "No, we will not cease from prosecuting this type of offence," Blackman said. SEA CONTAINERS: Sells Folkstone Port for US$20Mln ------------------------------------------------- Sea Containers Ltd (NYSE: SCRA and SCRB) marine container lessor, passenger and freight transport operator and leisure industry investor, announced Thursday that it sold its subsidiary Folkestone Properties Ltd, owners of Folkestone Harbour on the south east coast of the United Kingdom. Contracts were signed for the port sale on July 2, 2004 and the purchase, by businessman Mr. Roger De Haan who is well known as chairman of the Folkestone-based Saga Group, was completed on August 24, 2004. The sale price was $20 million (�11 million). President of Sea Containers Ltd., Mr. James B. Sherwood, said the gain will be recorded in the company's third quarter results. Mr. Sherwood indicated that long term rights were retained for Orient-Express Hotels Ltd., the company in which Sea Containers has a large shareholding, to access the station and car park for passengers and vehicles related to the Venice Simplon-Orient Express and British Pullman tourist trains. CONTACTS: Mr. Steve Lawrence Public Relations and Communications Sea Containers Services Ltd., Sea Containers House, 20 Upper Ground, London SE1 9PF Tel: +44 20 7805 5830 e-mail: steve.lawrence@seacontainers.com Web Site: www.seacontainers.com =========== B R A Z I L =========== ACESITA: Arcelor Could Exercise Option by Yearend ------------------------------------------------- European steel manufacturer Arcelor could raise its stake in Brazil's Acesita to 48.4 percent by the end of the year, Acesita's president Luiz Anibal de Lima Fenandes revealed in a report from Business New Americas. Arcelor could accomplish the move by exercising its option to buy shares owned by local pension funds. Ms. Cristiane Viana, an analyst from BES Securities, says the announcement was surprising since the option is supposed to be exercised only in December next year. The Luxemburg-based group's recent investments in the country are intended to gain more ground in the carbon steel market. In June, the company secured a 28.02 percent stake in CST for US$579 million. Arcelor currently controls 27.68 percent of Acesita. BOMBRIL: Cirio Receivers Seek Talks With Creditors -------------------------------------------------- The receivers of insolvent Italian food group Cirio have scheduled a trip to Brazil for mid-September to hold talks with creditors of the group's Brazilian detergents and household goods subsidiary Bombril, according to a translated article published by Europe Intelligence Wire. Cirio defaulted on EUR1.1 billion (US$1.346 billion) bonds in late 2002 and eventually collapsed at the hands of its majority owner and chairman, Sergio Cragnotti, currently under investigation for fraud. Its downfall was thought to have been caused in part by the ambiguities surrounding Bombril's financial operations. Between 1997 and 1999, Mr, Cragnotti, whose holding company controlled both companies, sold a controlling stake in Cirio to Bombril, then bought it back and transferred control of Bombril to Cirio. CFLCL: FondELec Wants Alliant's Stake ------------------------------------- US-based investment fund FondElec moved to increase its control of power group Companhia Forca e Luz Cataguazes-Leopoldina (CFLCL) by offering to buy Alliant's minority stake in the Brazilian company, says Valor Economico. However, Alliant reportedly rebuffed the offer and reaffirmed its intention to maintain its 21.6 percent holding in CFLCL. FondElec, holds on to a 12.2 percent stake in the Company while the Botelho family has the majority stake of 60.8 percent. Minority shareholders have been scrambling for control over the management of CFLCL's US$339 million debt since 2003 when the Company returned to black after two years of loss. The minority shareholders contend that the controllers maneuvered the gain through the sale of assets and expensive loans in order to maintain control over the Company. Brazilian law confers additional management rights to minority shareholders after three straight years of losses. ELETROPAULO METROPOLITANA: Intensifies Power Anti-Theft Program --------------------------------------------------------------- Power distributor Eletropaulo is buckling down to fight power theft in its territories with a BRL54 million fund that it will use to identify and sue thieves, reports Business News Americas. Vice-president for operations, Mr. Cyro Boccuzzi, explained that the Company is dispatching 870 agents in Sao Paulo and the neighboring municipalities to look out for meter fraud. If the program is successful, the Company hopes to recover BRL600 million in lost revenues by August next year. Eletropaulo further plans to cut illegal connections by 2.5 percent in the period. It will be spending BRL12 million this year to turn illegal connections official. Power theft has been a constant drain on the Company's coffers for years. Theft makes up 4.4 percent of annual losses while illegal connections add up another 3.2 percent. CONTACT: ELETROPAULO METROPOLITANA Avenida Alfredo Egidio de Souza Aranha 100-B, 13 andar 04726-270 San Paulo Brazil Phone: +55-11-548-9461, +55 11 5696 3595 Fax: +55-11-546-1933 URL: http://www.eletropaulo.com.br Contacts: Luiz D. Travesso, Chairman and President Orestes Gonzalves Jr., VP Finance/Investor Relations MRS LOGISTICA: S&P Affirms Ratings ---------------------------------- Standard & Poor's Ratings Services affirmed its 'B+/Positive/--' global scale foreign currency credit rating and its 'BB- /Stable/--' global scale local currency credit rating on MRS Logistica S.A. At the same time, Standard & Poor's affirmed its 'B' global scale foreign currency rating on MRS' outstanding senior unsecured notes. The ratings assigned to MRS reflect the company's relatively high financial leverage, the concentration of its customer base, and the capital-intensive nature of the railroad business. For analytical purposes, Standard & Poor's adjusts the leverage ratios of the company, adding back the present value of the concession obligation and the lease with RFFSA, as well as the value of new commercial leasing contracts for locomotives and wagons (which, together, added $486 million in June 2004 to MRS' total debt). These aspects are partially offset by MRS' favorable tariff model with its main captive-cargo clients, which allows them to repass cost increases and maintain profitability and cash-flow ratios to honor its debt service. Moreover, the company has continuously improved its operational efficiency by reducing costs, increasing volume, and gradually improving its diversification with the capture of new cargo. MRS benefits from rights to explore the railway concession during the next 22 years, renewable for another 30 years, servicing iron ore exporters and steel producers in the region (some of them are captive cargo customers and shareholders of MRS). "MRS has consistently shown high levels of production growth (which amounted to 14% in the first six months of 2004) during the past few years as a result of investments in permanent tracks, the recovery and maintenance of wagons and locomotives, and frequent reviews of operations and systems, allowing better usage of its operating equipment," said Standard & Poor's credit analyst Claudio Gallina. The strong demand for transoceanic iron ore has indirectly benefited MRS' results. The company's total volume has increased consistently, attaining 46 million tons in the first half of this year (the company expects to attain 98 million tons by the end of 2004). In spite of the growing diversification of the transported cargo, MRS may still remain concentrated on iron ore transportation (70% of the total volume) during the next few years. In any event, this scenario sustains the company's protected market situation, since the level of competition of other modal transportation in this type of cargo is relatively low. Even though most of the volume transported by MRS is exported (which protects it from the volatile domestic economic- financial environment), the company is still exposed to cargo fluctuation in the long term. MRS' tariff model agreement with its customers/stockholders contributes toward the maintenance of its financial profile by allowing the transfer both of the variation of its operating expenses (including fuel, the main variable in the composition of costs of MRS) and the variation of financial expenses to the tariffs charged to these customers. The company's strengthening of its profitability (and consequently of its cash generation in the past few years), has been mainly due to the tariff agreement and to the company's efforts to control costs. Therefore, MRS has shown increasing coverage and cash-flow protection indicators-the coverage of interest by EBITDA was around 2.2x in 2004. Even though Standard & Poor's believes that most of the productivity gains (which can be translated as enhanced profitability) will be preserved in the future, the reduction of the company's leverage could imply a certain reduction of the importance of the tariff agreement to the definition of operating margins in the future. Even though this process could result in lower nominal margins, Standard & Poor's believes that the company's FFO will remain strong. The stable outlook on the global scale local currency ratings reflects Standard & Poor's expectation that the business bases of MRS (essentially represented by its favorable market position in the transportation of iron ore) will permit the maintenance of the company's positive cash flow-a key factor for financing its investment strategy and maintaining adequate indebtedness levels. Standard & Poor's expects MRS to continue increasing its transported volumes, adding new cargos in future years, and maintaining firm control over its costs for the maintenance of this operating profitability. The stable outlook also considers the maintenance of the strong demand for transoceanic iron ore, and improvements in the domestic scenario, although to a lesser extent. MRS' outlook could be revised to positive if the company maintains the positive trend of its cash-flow protection (with ratios of EBITDA coverage above 3x), an FFO above 25%-30% during the next months, and profitability (measured by EBITDA margin adjusted by its concession) around 50%. On the other hand, a reversal in the trend of these ratios-due to the increase in MRS' debt, reduction in the company's cargo transportation, or other external factors like the revision of its tariff model or shareholder's misunderstandings, could put negative pressure on the company's rating outlook. The positive outlook on the foreign currency rating mirrors the outlook assigned to the ratings on the Federative Republic of Brazil. ANALYST: Claudio Gallina, Sao Paulo (55) 11-5501-8938 SINGER: Extends Tender Offer for Brazil Secured Notes ----------------------------------------------------- Singer N.V. ("Singer" or the "Company") announced Thursday that Brazil Financing Ltd. ("BFL"), its direct, wholly-owned subsidiary is extending its tender offer for the 10% Series A Secured Notes due 2005 and the Series B Secured Notes due 2007 issued by Brazil Financing (II) Ltd., an indirect, wholly-owned subsidiary of the Company. The expiration time for the offer has been extended from 5:00 p.m., London time, on August 26, 2004 to 5:00 p.m., London time, on August 30, 2004 (the "Offer Expiration Time"). The closing remains subject to the satisfaction of certain conditions including the consummation of the acquisition of BFL and certain other subsidiaries of Singer by KSIN Holdings, Ltd. ("KSIN"). Series A Notes and Series B Notes validly tendered and not validly withdrawn after 5:00 p.m., London time, on August 3, 2004 and at or prior to the Offer Expiration Time will receive the offer consideration of $1,000 per $1,000 principal amount, plus accrued and unpaid interest, and $230 per $1,000 of maximum principal amount, respectively, if the tendered Series A Notes and Series B Notes are accepted for purchase. As of 5:00 p.m., London time, on August 26, 2004, BFL received tenders from holders of approximately $19,939,568 aggregate principal amount of the Series A Notes, representing approximately 88% of the outstanding principal amount of the Series A Notes and from holders of approximately $26,729,089 aggregate maximum principal amount of the Series B Notes, representing approximately 88% of the outstanding maximum principal amount of the Series B Notes. The terms and conditions of the offer, including the conditions of BFL's obligation to accept the Series A Notes and the Series B Notes tendered and pay the purchase price and, if applicable, the consent payment for them are described in the Offer to Purchase and Consent Solicitation Statement dated July 13, 2004, copies of which may be obtained from D.F. King & Co., Inc., the information agent for the offer, at 1-800-769-7666 (US toll free) or, outside the United States, at (44 20) 7920 9700 (collect). This announcement is not an offer to purchase, a solicitation of an offer to purchase or a solicitation of consent with respect to any securities. The offer is being made solely by the Offer to Purchase and Consent Solicitation Statement dated July 13, 2004. All amounts are in U.S. dollars. Singer N.V. was incorporated under the laws of the Netherlands Antilles on December 21, 1999. Effective September 2000, as a result of a successful Chapter 11 reorganization, Singer became the parent company of several Operating Companies formerly owned by The Singer Company N.V., as well as acquiring ownership of the SINGER(R) brand name, one of the most widely recognized and respected trademarks in the world. Through its Operating Companies, Singer is engaged in two principal businesses, Retail and Sewing. The SINGER(R) trademark ties the two businesses together and also stands on its own with licensing and wholesaling potential. CONTACT: John Cannon at (914) 220-5134 Web site: http://www.singer.com TELESP CELULAR: JP Reduces Recommendation on TCP to Underweight --------------------------------------------------------------- Brasilcel's announcement of partial tenders for shares in its Brazilian units prompted investment house J.P. to cut its recommendation on cellular services provider Telesp Celular Participacoes (TCP) to underweight from neutral, Dow Jones Newswires suggests. In a Thursday research note, the investment house said the news "removed the strongest potential upside catalyst we saw for the stock, that is, an accretive consolidation of other Vivo subsidiaries." Brasilcel, the 50-50 joint-venture of Telefonica Moviles (NYSE:TEM) and Portugal Telecom for mobile operations in Brazil, operating under the brand Vivo, announced Wednesday its intention of launching voluntary cash tender offers for a portion of the outstanding shares of some of its subsidiaries, directly, and indirectly through its subsidiary TCP. The offer, which is worth an estimated US$500 million or more, should be launched Sept. 1, and, pending necessary approvals, should wrap up in mid-October. With a cash offer for outstanding ordinary and preferred shares, Brasilcel aims to raise its stake in Tele Sudeste Celular Participacoes (TSD) to 91% from 87%; in Tele Leste Celular Participacoes (TBE) to 51% from 28%; and in Celular CRT Participacoes (CRTPS.BR) to 67% from 52%. With the upside catalyst of a consolidation of the other Vivo subsidiaries potentially gone, Telesp is left "trading at what we view as a very unattractive valuation relative to international peers, particularly (Mexico's) America Movil (AMX)," J.P. Morgan said. "While the likelihood of an eventual tender offer for Telesp by its controlling shareholder has increased, there is no indication of imminency. In fact, in the meantime, a capital increase appears much more likely, which could create an overhang in the stock," it added. CONTACT: Telesp Celular Participacoes SA Rua Abilio Soares 409, - 10o andar Sao Paulo, 04005 Phone: (212) 889-4350 =================== C O S T A R I C A =================== * Fitch Affirms 'BB' Foreign Currency Rating of Costa Rica ---------------------------------------------------------- Fitch Ratings, the international rating agency, affirmed its long-term foreign and local currency ratings of 'BB' and 'BB+', respectively, for the Republic of Costa Rica. The Rating Outlook is Negative. The Negative Outlook and the ratings reflect Fitch's concerns over Costa Rica's persistently high fiscal deficits and the high level of dollarization of its banking system, which in the context of a crawling peg regime increases the country's financial vulnerability. Since the Negative Outlook was assigned last year, the government has made efforts to prevent a further deterioration of its finances. This, combined with higher GDP growth last year has prevented the government's debt from increasing sharply. These positive developments have forestalled downward pressure on the rating for now. Even so, stabilization of the sovereign rating would require inter alia the passage of fiscal reforms, as these are critical to improving public finances and sustaining a higher level of growth. A tighter fiscal stance would also lead to an eventual reduction of other weaknesses in the economy, such as large current account deficits, widespread dollarization, and relatively high inflation. Last year the Costa Rican economy rebounded smartly, driven by higher exports and expansion in the telecommunication sector. Its economy grew at 6.5% in 2003 and is expected to grow at nearly 4% this year. In 2003, higher growth, combined with greater revenues from the contingency fiscal package (CFP) helped to rein in the central government fiscal deficit to 2.9% of GDP. In 2004, the government is exercising expenditure restraint to maintain the central government budget deficit at last year's level. Even so, a permanent reduction in the fiscal deficit will require the passage of a revenue-enhancing tax reform. The prospects of passing the comprehensive fiscal reform, which the authorities believe can raise over 2% of GDP, remain unclear, as smaller opposition parties are using delaying tactics to prevent Congress from voting on it. Costa Rica also needs to consolidate its fiscal accounts to make room for contingent liabilities that could arise from the banking sector. Although private participation has increased in the sector, public sector banks control over 50% of the system's assets and enjoy a blanket state guarantee on their deposits. Moreover, high domestic interest rates, in part driven by persistent fiscal deficits, have led to the widespread dollarization of the banks' balance sheet. Of further concern, a significant proportion of the dollar loans are being made to nondollar earners, exposing banks to significant credit risk. Due to the low saving rate in the economy, Costa Rica suffers from the 'twin deficit' problem, whereby high fiscal deficits get readily reflected in the large external account deficits. Current account deficits have averaged 5% of GDP over the past five years. Fortunately, foreign direct investment flows have been robust, which have helped in financing over 50% of the current account deficit. On the positive side, Costa Rica's rating strengths include its modest external debt burden, a successful diversification of its export base, and relatively strong social indicators, distinguishing it from other countries in the region. Costa Rica's vibrant democratic institutions reduce political transition risk, though the high premium that the society places on consensus building has delayed the passage of reforms. Stabilization in Costa Rica's creditworthiness would depend much on the ability of the government to tackle its fiscal deficits and pass a revenue-enhancing tax reform. Measures to strengthen the banking system, including better scrutiny of off-shore banks, as well as reversal of dollarization would be viewed positively. The implementation of Central America Free Trade Agreement (CAFTA) with the U.S. and passage of laws to improve the regulatory frameworks in the telecom and insurance sectors would also represent positive developments. CONTACT: Shelly Shetty +1-212-908-0324 Theresa Paiz Fredel +1-212-908-0534, New York. MEDIA RELATIONS: Kenneth Reed +1-212-908-0540, New York ===================== E L S A L V A D O R ===================== * EL SALVADOR: Works with IADB to Improve Businesses ---------------------------------------------------- El Salvador's Technical Secretary to the President, Eduardo Zablah-Touche, and Inter-American Development Bank President, Enrique V. Iglesias, signed an agreement to cooperate on an initiative to improve the business climate in El Salvador. In subscribing to the initiative, El Salvador joined many countries in the region that recognize the importance of generating the necessary conditions to create a better business climate and attract private sector participation for economic growth. The countries now participating in this initiative are Bolivia, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Jamaica, Nicaragua, Paraguay, Peru, Suriname, Trinidad and Tobago and Uruguay. The Business Climate Initiative was launched by the IDB in December 2003 to help its member countries in Latin America and the Caribbean improve key elements of their general business climate and complement other activities to promote competitiveness. The initiative includes three aspects: evaluation and complementation of existing diagnostics, financing for business climate reform based on an action plan to eliminate obstacles, and indicators to gauge progress achieved towards the initiative's goals. The plan will provide a framework to guide loans and technical assistance of the IDB Group to foster private sector competitiveness. Numerous studies have demonstrated that the private sector is a driving force of economic growth and the most important provider of economic activity and opportunities. Improving business conditions for the private sector is crucial to sustained economic growth and central to poverty reduction efforts. Measures to achieve an adequate business climate range from offering stable rules of the game for investors, to the removal of barriers that prevent the free flow of investments. The IDB approved $13.1 billion in loans since 1990 to support programs to improve the business climate. A majority of the funds were used to strengthen financial markets, but there were also sizeable resources allocated for institutional and legal reforms, as well as for programs to promote economic stability and trade development. The IDB also provided technical assistance to promote private sector participation in infrastructure. CONTACT: Inter-American Development Bank 1300 New York Avenue, NW Stop B-560 Washington, DC 20577 Fax: (202) 623-3810 Mr. Santiago Real de Azua Chief, Press Section Tel. (202) 623-1371 santiagor@iadb.org Web Site: www.iadb.org ================= G U A T E M A L A ================= * Republic of Guatemala Ratings Affirmed; Outlook Stable -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' long-term foreign and 'BB' long-term local currency sovereign credit ratings on the Republic of Guatemala. Standard & Poor's also affirmed its 'B' short-term foreign and local credit ratings on the republic. The outlook on the ratings remains stable. Standard & Poor's expects to assign its 'BB-' foreign currency rating to Guatemala's upcoming US$300 million international bond issuance, expected in September. The bond issuance will complete the country's financing needs from international capital markets for 2004. According to Standard & Poor's Ratings Services credit analyst Sebastian Briozzo, the recent election of a new government, led by President Oscar Berger, presents a new opportunity for relaunching broad-based initiatives aimed at addressing Guatemala's political and economic structural weaknesses. "While the new government has contributed to stabilizing the political environment, political polarization will continue to constrain Guatemala's creditworthiness over the medium term," Mr. Briozzo said. "The need to achieve consensus on key areas of Guatemala's economic agenda (such as deeper tax reform) in the context of a divided Congress will continue to challenge the leadership of President Berger. Increasing tax collections from the currently low 10% of GDP will mitigate fiscal constraints over the short term and consolidate the position of the public sector in providing basic services and increasing public investment over time," he added. Mr. Briozzo said that, in addition to the political developments, the ratings continue to be constrained by Guatemala's still-poor per capita growth prospects and the country's deteriorating external position. Nonetheless, a relatively strong commitment to moderate fiscal deficits, low inflation, and an only moderate public sector debt burden continues to support Guatemala's creditworthiness at the 'BB-' level. "The stable outlook on Guatemala's ratings balances the political difficulties with the country's modest fiscal imbalances and low debt levels," noted Mr. Briozzo. "While Standard & Poor's does not expect the political situation to improve significantly over the next year, prospects of a free- trade agreement with the U.S. might provide a solid anchor for implementation of economic policy over the medium term. "The ratings could come under pressure if political tension limits the government's ability to implement its economic agenda," he concluded. ANALYSTS: Sebastian Briozzo, New York 212-438-7342 Joydeep Mukherji, New York (1) 212-438-7351 =============== H O N D U R A S =============== FCN: Sells Puerto Cortes Property --------------------------------- Honduran railway firm FCN will sell real estate valued at HNL60 million (US$3.3Mln) to secure much needed cash for unpaid wages and pensions, says local daily El Tiempo. FCN negotiated the sale with the National Port Company (ENPH), who will make an advance payment of HNL10 million for the property located at the Puerto Cortes region of northwestern Honduras. Also, FCN Manager Guillermo Arturo Recarte assures that the Company is cooperating with government agencies and the World Bank to ensure the rail network's survival. =========== M E X I C O =========== CORPORACION DURANGO: Court Authorizes Bankruptcy ------------------------------------------------ The First Federal District Court in Durango, Mexico, has approved Corporacion Durango SA's (CODUSA.MX) bankruptcy filing, declaring the paper goods maker to be in "commercial reorganization," reports Dow Jones Newswires. The company said it will now submit its financial restructuring plan for review by a conciliator. The restructuring "will result in a more adequate and competitive capital structure," said company chairman Miguel Rincon in a release. The plan, which is supported by creditors holding approximately 68% of the Company's unsecured debt, involves restructuring about US$700 million in debt, with creditors receiving new debt worth about 85% of the original principal. The company will issue $433.8 million in new bonds, as well as stock, to its creditors. Corporacion Durango's bank creditors, meanwhile, have agreed to restate $116.1 million in debt. Corporacion Durango is the largest producer of containerboard in Mexico through its Grupo Durango division, is the largest Mexican producer of newsprint through its Pipsamex division, is the largest manufacturer of corrugated containers in Mexico through its Empresas Titan division, is a leading independent paper and packaging producer in the U.S. through its McKinley Paper division, and is one of the largest manufacturers in Mexico of uncoated free-sheet and multi-wall sacks. CONTACTS: Corporacion Durango, S.A. de C.V. Ms. Mayela R. Velasco +52 (618) 829 1008 mrinconv@corpdgo.com.mx INTERNATIONAL WIRE: Court Confirms Plan of Reorganization --------------------------------------------------------- International Wire Group, Inc. announced that the U.S. Bankruptcy Court for the Southern District of New York confirmed the Company's plan of reorganization on August 25, 2004. The confirmation order clears the way for the consummation of the plan. The Company anticipates that this will occur prior to September 30, 2004. "This announcement underscores the strong support that International Wire has enjoyed from its financial partners throughout this process," said Joseph Fiamingo, International Wire's chief executive officer. "To have reached this point in such a short time after our initial filing would not have been possible without their faith in our business plan and our future. Holders of our debt and equity securities voting on the plan unanimously voted in favor of the plan of reorganization." "International Wire's customers have also been supportive during this process. We look forward to fulfilling the commitment to a stronger balance sheet that we laid out several months ago," Fiamingo said. The recapitalization will involve the exchange of approximately $305 million principal amount of International Wire's senior subordinated indebtedness into $75 million principal amount of new 10% senior subordinated notes and 96% of International Wire's common stock. The Company has completed the tabulation of elections made by holders of the Company's 11 3/4% senior subordinated notes and 14% senior subordinated notes under the terms of the plan of reorganization. The distributions to such holders, based on the elections received and the application of the proration provisions of the plan, will be as follows: Holders of 11 3/4% senior subordinated notes electing pro rata treatment or making no election will receive, in respect of each $1,000 principal amount of such notes so held, 31.4668 shares of Company common stock and $245.8343 principal amount of Company 10% notes. Holders of 11 3/4% senior subordinated notes electing to receive all Company common stock in lieu of the pro rata distribution will receive, in respect of each $1,000 principal amount of such notes so held, 34.2473 shares of Company common stock and $211.7731 principal amount of Company 10% notes. Holders of 11 3/4% senior subordinated notes electing to receive all Company 10% notes in lieu of the pro rata distribution will receive, in respect of each $1,000 principal amount of such notes so held, $631.3024 principal amount of Company 10% notes. Holders of 14% senior subordinated notes will receive, in respect of each $1,000 principal amount of such notes so held, 31.9927 shares of Company common stock and $249.9432 principal amount of Company 10% notes. Upon completion of the restructuring, International Wire's debt (excluding accrued and unpaid interest) will decline from approximately $391 million to approximately $181 million and interest will be reduced by approximately $31 million annually. International Wire Group, Inc., headquartered in St. Louis, Missouri, is a leading manufacturer and marketer of wire products, including bare and tin-plated copper wire and insulated copper wire. The Company's products include a broad spectrum of copper wire configurations and gauges with a variety of electrical and conductive characteristics that are utilized by a wide variety of customers primarily in the appliance, automotive, electronics/data communications and general industrial/energy industries. The Company manufactures and distributes its products in 20 facilities strategically located in the United States, Mexico, France, Italy and the Philippines. CONTACT: David Webster, Chief Restructuring Officer Tel: (314) 746-2280 ================= N I C A R A G U A ================= PARMALAT NICARAGUA: Italian Administrator Warns Local Receiver -------------------------------------------------------------- Mr. Enrico Bondi, the administrator of insolvent Italian food group Parmalat, issued a warning against Nicaraguan financier Haroldo Montealegre, who claimed he has full decision-making powers for the company, reports Europe Intelligence Wire. Mr. Montealegre, who was appointed commissioner of Parmalat Nicaragua by a local court, reportedly told local newspapers he had full decision-making powers for the unit. In a letter, Mr. Bondi warned Mr. Montealegre that he would be held responsible for any losses at the subsidiary, which he considers to be under the full control of its Italian parent. ======= P E R U ======= PAN AMERICAN SILVER: Pays $36Mln for Peruvian Mine -------------------------------------------------- Pan American Silver Corp. (PAAS: NASDAQ; PAA: TSX) is pleased to announce it has concluded the purchase of an 88% interest in the Morococha silver mine in central Peru for $36 million. The remaining 12% is held by a number of Peruvian investors. Year-to-date the Morococha mine has produced more than 2 million ounces of silver, together with significant amounts of byproduct zinc, copper and lead, at a cash cost, net of by-product credits, of $3 per ounce of silver. Pan American is expecting to consolidate Morococha's production as of July 1. The addition of Morococha will help reduce Pan American's consolidated cash costs below $3.50 per ounce of silver on a total of more than 11.5 million ounces of production in 2004, rising to a forecast 14.5 million ounces in 2005. Under the acquisition agreement, the profits generated by the Morococha operation since the first of the year are retained in Compania Minera Argentum SA (Argentum), the entity that holds most of the Morococha assets. At closing Argentum had in excess of $5.2 million in working capital. In addition, Pan American will receive immediate benefits from the synergies generated between Morococha and its other Peruvian assets, particularly the Huaron mine which is located only 80 km away. Morococha hosts a very large and prolific network of veins and replacement bodies within a mineral rights package covering 11,620 hectares of historically productive and highly prospective concessions. Pan American will now begin a two-year, 46,000 meter exploration drilling program to convert the property's resources into reserves and to exploit its outstanding exploration potential. The Company also intends to carry out a program of increased mine development and mill upgrades to enable long-term production of approximately 4 million ounces of silver annually at a cash cost below $2.50 per ounce. According to Pan American Chairman, Ross Beaty, "Morococha is our third large silver mine in Peru and its talented and experienced workforce will be a fine addition to our strong Peruvian mining team. The Morococha deposit continues the Company's impressive record of growth over the past 10 years, adding a low-cost, long life orebody to our production profile. With the successful development of our four projects now undergoing feasibility studies, we are set to double our production again by 2007, entrenching Pan American as the foremost primary silver producer in the world." CONTACT: Ms. Brenda Radies VP Corporate Relations (604) 684-1175 Web Site: www.panamericansilver.com ================================= T R I N I D A D & T O B A G O ================================= BWIA: Schedules EGM for September 10 ------------------------------------ Trinidad & Tobago Finance Minister Christine Sahadeo revealed Thursday that there will be an extraordinary general meeting of BWIA shareholders on Sep. 10. The Trinidad Guardian reports that the meeting was scheduled at the request of BWIA directors to discuss changes to the company's by-laws after the State assumed control of the airline. The State re-nationalized BWIA after it put more than 97% of the required capital into the airline's recent US$40 million rights issue. Since the government agreed to take up shares not purchased by the private shareholders, the State increased its shareholding in BWIA to more than 75%. The EGM is meant to address the airline's future direction, Sahadeo said without hinting whether there will be any changes in the board or management of BWIA even though the airline's chairman, Lawrence Duprey, expects to be replaced. CONTACT: BRITISH WEST INDIES AIRWAYS Phone: + 868 627 2942 E-mail: mailto:mail@bwee.com Home Page: http://www.bwee.com/ Contacts: Conrad Aleong, President and CEO (Trinidad) Beatrix Carrington, VP Marketing and Sales (Barbados) Paul Schutz, CFO (Trinidad) BWIA: Stockbroker Remains Skeptical Despite Improved 1H Results --------------------------------------------------------------- Despite the sharp decline in BWIA's losses in the first half of the year, stockbroker Peter Clarke said he doesn't see anything encouraging in the results. The Trinidad Guardian earlier reported that BWIA managed to bring down its loss to US$6.5 million for the six-month period ended June 30, 2004 from US$14.6 million a year earlier. But according to Clarke, "the results are unsatisfactory and put the airline deeper in the red. However, it appears that the Government intends to continue to provide financial support to the airline in the foreseeable future. Therefore any investment in BWIA shares must be considered highly speculative." NWRHA: Fire the NWRHA Board, Says Ex-Health Minister ---------------------------------------------------- Trinidad's Ex-Health Minister Dr. Hamza Rafeeg condemned the alleged incompetence and mismanagement of the North-West Regional Health Authority's Board in a report from the Trinidad Express. The minister had called for the ouster of NWRHA's management after an audit revealed that excessive and exorbitant amounts have been used for social functions. "... we have a situation where people are complaining about the shortage of drugs but the management could find money to fritter away on social functions while the population goes uncared for." Dr. Rafeeg said. NWRHA management had supposedly funneled TT$173,099.61 of taxpayer's monies on social events for its staff members. NWRHA Internal Auditor Harriram Laloo said that the board of directors had not approved these disbursements. WASA: Registers $448M Debts --------------------------- Trinidad and Tobago's Water and Sewerage Authority (WASA) has piled up debts amounting to TT$3.2 billion (US$448 million) between 1994 and 2003, according to information gathered by a Joint Select Committee of Parliament at the Red House. And that figure is climbing, adds the report. Committee Chairperson Senator Parvatee Anmolsingh-Mahabir said between 1998 and 2001, WASA borrowed over TT$1.1 billion to finance various projects, and that as of March 29 this year, WASA was owed TT$507 million by customers and wanted to write off TT$300 million of this as doubtful or bad debts. Anthony Bartholomew, the public utilities and environment ministry's outgoing permanent secretary, blamed high debt servicing and operating costs, as well as high expenses related to overdrafts and credit-line facilities, for driving WASA into this pathetic state. The government's decision to finance WASA's capital investment program through loan financing and not through a public sector investment program also contributed to the problem, Bartholomew said. But he stressed that WASA was not bankrupted because it was government-funded. "If WASA is bankrupt then [the] Government is bankrupt," he added. ================= V E N E Z U E L A ================= EDC: S&P Upgrades Ratings to `B' From `B-' ------------------------------------------ Standard & Poor's Ratings Services raised its foreign currency corporate credit rating on C. A. La Electricidad de Caracas (EDC) to 'B' from 'B-'. The outlook remains stable. The rating action follows the recent decision to raise the long- term credit rating on the Bolivarian Republic of Venezuela (B/Stable/B). "The rating action reflects the fact that EDC has proven its ability to operate in Venezuela, which still faces foreign currency controls and macroeconomic volatility," said Standard & Poor's credit analyst Federico Mora. "EDC's ratings remain closely correlated to the sovereign ratings assigned to the Bolivarian Republic of Venezuela and the macroeconomic environment in which the company operates." EDC's ability to serve its foreign currency debt remains constrained by the country's foreign currency control exercised by Comision de Administracion de Divisas (CADIVI), a federal body established in February 2003 to control the country's currency balances. Since CADIVI's inception, however, EDC has not faced any serious delay in getting resources, as it has effectively managed the formal procedures required by CADIVI to have access to foreign currency. EDC is a vertically integrated utility in Venezuela operating in electricity distribution, transmission, and generation in the capital city of Caracas and its metropolitan area. It is the largest private electric utility in the country and is owned by U.S.-based AES Corp. (B+/Stable/--). ANALYSTS: Federico Mora, Mexico City (52) 55-5081-4436 Santiago Carniado, Mexico City (52) 55-5081-4413 HARVEST NATURAL: S&P Raises Ratings After Venezuela Upgrade ----------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Harvest Natural Resources Inc. to 'B' from 'B-' following the upgrade of the Bolivarian Republic of Venezuela to 'B' from 'B-'. The rating on Harvest is currently capped by the rating on Venezuela due to the company's reliance for 100% of earnings and cash flow from Venezuela. The outlook is stable. As of June 30, 2004, Houston, Texas-based Harvest had $100 million of debt outstanding. "The stable outlook reflects our expectation that Harvest will maintain normal production sales to Petroleos de Venezuela S.A. (PDVSA; B/Stable/--)," said Standard & Poor's credit analyst Paul Harvey. "Until the company becomes less reliant on its Venezuelan operations, its ratings will track those of PDVSA and Venezuela." The rating on Harvest reflects its position as a small, independent exploration and production company with significant sovereign risk due to the dependence on Venezuela for 100% of its earnings and cash flow, as well as an acquisition strategy that favors reserves in emerging markets. These risks are somewhat offset by moderate financial leverage and solid liquidity. Harvest derives all of its cash flow from its 80%-owned Harvest- Vinccler C.A. subsidiary, whose sole asset is operatorship of the South Monagas unit in Venezuela. ANALYST: Paul B Harvey, New York (1) 212-438-7696 PDVSA FINANCE: S&P Raises Notes Rating To 'B+' ---------------------------------------------- Standard & Poor's Ratings Services raised its rating on PDVSA Finance Ltd.'s outstanding notes to 'B+' from 'B'. The rating action follows the recent elevation of the local and foreign currency ratings of the Bolivarian Republic of Venezuela to 'B' from 'B-' and the subsequent upgrade of the corporate credit of Petroleos de Venezuela S.A. (PDVSA) to 'B' from 'B-'. On Aug. 5, 2004, Standard & Poor's downgraded the PDVSA Finance transaction to 'B' from B+/Watch Neg after a tender and consent solicitation by PDVSA. The downgrade reflected changes that were made to the structure of the transaction that, in Standard & Poor's view, diminished the credit protection afforded to investors. The differential between the rating on the PDVSA Finance notes and the issuer credit rating of PDVSA was thereby narrowed to one notch from the two notches that existed before the successful completion of the tender offer. The current upgrade of the PDVSA Finance notes maintains this one-notch differential. Absent additional issuance by PDVSA Finance, or a change in the performance of the transaction, Standard & Poor's expects that the one-notch rating differential will be maintained and that changes in the rating on PDVSA Finance will, in the future, generally track changes in the rating on PDVSA itself. ANALYSTS: Kevin Kime, New York (1) 212-438-6223 Bruce Schwartz, CFA, New York (1) 212-438-7809 *********** 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. 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