/raid1/www/Hosts/bankrupt/TCRLA_Public/041015.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
Friday, October 15, 2004, Vol. 5, Issue 205
Headlines
A R G E N T I N A
ALCRI PLUS: Files Petition to Reorganize
ALDAGAR S.A.: Court Converts Bankruptcy to Reorganization
CASA SINEBEAN: Enters Bankruptcy on Court Orders
DALVIK S.A.: Reports Submission Set
DIRECTV LA: Fitch Comments on Reorganization of LatAm Ops
HUECA S.A.: Court Grants Reorganization Plea
MEDICINE OF THE WORLD: Debt Payments Halted, Set To Reorganize
MIEL LAS HERAS: Liquidates Assets to Pay Debts
SCP: $400M of Bonds Retain Junk Rating From Local Fitch
SOLDYMAT S.R.L.: Court Sets Verification Deadline
B E R M U D A
AAHSA ASSURANCES: Proceeds with Voluntary Wind-Up
EQUITY ACCESS LTD.: Robin Mayor to Serve as Liquidator
GLOBAL CROSSING: Continues to Trade in NASDAQ under GLBC Symbol
HOPEWELL INTERNATIONAL: Members Decide to Wind-Up
WORLDWIDE SECURITIES: Enters Voluntary Wind-Up Proceedings
B R A Z I L
DIMON: Moody's Cuts Various Ratings
ELETROPAULO METROPOLITANA: S&P Issues Update on Ratings
VASP: Ordered to Make Daily Payments to Infraero
C H I L E
ENERSIS: Completes Exchange Offer of 7.375% Notes
C O L O M B I A
TRANSGAS: S&P Issues Update on Ratings
D O M I N I C A N R E P U B L I C
* DOMINICAN REPUBLIC: Unlocking IMF Loan on Top of List
M E X I C O
SATMEX: Service Affected by Satellite Glitch
P E R U
LANPERU: Transport Ministry Appeals Grounding Order
V E N E Z U E L A
EDC: Fitch Rates Proposed Bond Issuance 'B+'
- - - - - - - -
=================
A R G E N T I N A
=================
ALCRI PLUS: Files Petition to Reorganize
----------------------------------------
Alcri Plus S.R.L. filed a "Concurso Preventivo" motion, reports
La Nacion. The Company is seeking to reorganize its finances
after defaulting on its debt payments.
Infobae says that the Company's case is pending before court no.
17 of Buenos Aires' civil and commercial tribunal. Clerk no. 33
assists the court on this case.
CONTACT: Alcri Plus S.R.L.
Paraguay 3795
Buenos Aires
ALDAGAR S.A.: Court Converts Bankruptcy to Reorganization
---------------------------------------------------------
Buenos Aires-based Aldagar S.A., which was undergoing
liquidation proceedings, entered insolvency protection on orders
from court no. 6 of Buenos Aires' civil and commercial tribunal,
according to Infobae. The court assigned Francisco Guerreno as
the Company's Trustee. The trustee will conduct the credit
verification process "por via incidental."
CONTACT: Mr. Francisco Guerreno, Trustee
Rodriguez Pena 794
Buenos Aires
CASA SINEBEAN: Enters Bankruptcy on Court Orders
------------------------------------------------
Casa Sinebean Hogar S.A. entered bankruptcy protection after
court no. 7 of Buenos Aires' civil and commercial tribunal, with
the assistance of clerk no. 14, ordered the company's
liquidation. The bankruptcy 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 Mr. Jose Antonio Planas
as trustee. He will be verifying creditors' proofs of claims
until the end of the verification phase on November 23.
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 February 15, 2005 followed by the general report, which is
due on March 29, 2005.
CONTACT: Casa Sinebean Hogar S.A.
Alvarez Jonte 2104
Buenos Aires
Mr. Jose Antonio Planas, Trustee
Paraguay 631
Buenos Aires
DALVIK S.A.: Reports Submission Set
-----------------------------------
Ms. Ines Etelvina Clos, the trustee assigned to supervise the
liquidation of Dalvik S.A., will submit the validated individual
claims for court approval on February 4, 2005. These reports
explain the basis for the accepted and rejected claims. Ms. Clos
will also submit a general report on March 18, 2005.
Infobae reports that the Company is scheduled to present a
completed settlement plan for its creditors on August 4, 2005.
Court no. 22 of Buenos Aires' civil and commercial tribunal,
assisted by clerk no. 44, has jurisdiction over this bankruptcy
case.
CONTACT: Dalvik S.A.
Junin 55
Buenos Aires
Ms. Ines Etelvina Clos, Trustee
Lavalle 715
Buenos Aires
DIRECTV LA: Fitch Comments on Reorganization of LatAm Ops
---------------------------------------------------------
DIRECTV Group, Inc. (DTVG), the parent company of DIRECTV
Holdings, LLC (DIRECTV), and News Corporation together with
Grupo Televisa, Globopar, and Liberty Media International
(Liberty) have announced a series of transactions to reorganize
their Latin American direct broadcast satellite (DBS) businesses
that will result in the combination of the two DBS operators in
the Latin American region. Fitch rates DIRECTV's senior secured
credit facility 'BB+' and its senior unsecured notes 'BB' with a
Stable Rating Outlook.
Prior to the restructure, DTVG owned approximately 86% of
DIRECTV Latin America while Darlene Investments held the
remaining equity stake. As of the end of the second quarter of
2004, DIRECTV Latin America had approximately 1.538 million
subscribers, including 423,000 in Brazil and 266,000 in Mexico.
While the restructure does not directly effect DIRECTV's U.S.
operations, it does significantly improve DTVG's competitive
position and growth prospects in Latin America. Fitch believes
that the reorganization will position DTVG's Latin American
segment to generate sustainable revenue and free cash flow
growth, reducing the likelihood of DIRECTV funding the cash
requirements of DIRECTV Latin America.
The restructure will result in the combination of DBS businesses
in Brazil, Mexico, Chile, and Colombia, creating a DBS business
that will have over 3.3 million subscribers. DTVG has agreed to
pay a total of $579 million in cash to News Corp. and Liberty
for their equity stakes in Sky Brazil, Sky Mexico, and Sky
Multi-Country and to other parties for their equity interests in
Sky Multi-Country. In addition, DTVG will consolidate
approximately $210 million of debt related to the Sky Brazil
business. Following the restructure, DTVG will have a 72%
interest in the merged Brazilian DBS operation, a 43% ownership
position in Sky Mexico. Pro forma for the restructure as of June
30, 2004, each of the merged Brazilian operations and Sky Mexico
would control approximately 1.2 million subscribers; however,
Fitch does not expect 100% of DTVG's Mexican subscribers to
migrate to the Sky Mexico platform. DBS operations outside of
Brazil and Mexico, with subscribers totaling 938,000 after the
restructure, will be consolidated under the PanAmericana
platform, which will be 100% owned by DTVG. Fitch expects that
before one-time charges related to set top box replacement and
eliminating excess satellite capacity are instituted, DTVG's new
Latin America segment will generate positive free cash flow in
2005.
Fitch expects that DTVG will fund the transactions through
utilization of existing cash balances. During 2004, DTVG raised
substantial cash by selling its set top box receiver
manufacturing business to Thomson, its Hughes Software Systems
business to Flextronics, and its 80.4% equity interest in
PanAmSat Corporation to affiliates of Kohlberg, Kravis Roberts &
Co, LP. The asset sales position DTVG with significant
liquidity. Fitch estimates total cash available to DTVG of
approximately $4.3 billion after the close of the PanAmSat sale.
CONTACT: David Peterson +1-312-368-3177
Michael Weaver +1-312-368-3156, Chicago
MEDIA RELATIONS: Brian Bertsch +1-212-908-0549, New York
HUECA S.A.: Court Grants Reorganization Plea
--------------------------------------------
Hueca S.A., company operating in Buenos Aires, begins
reorganization proceedings after court no. 18 of the city's
civil and commercial tribunal granted its petition for "concurso
preventivo". During the reorganization, the company will be able
to negotiate a settlement proposal for its creditors so as to
avoid a straight liquidation.
According to Argentine news source Infobae, the reorganization
will be conducted under the direction of Mr. Nestor Agustin
Iribe, the court-appointed trustee.
Creditors with claims against the Company must present proofs of
the company's indebtedness to the trustee before November 24.
These claims will constitute the individual reports to be
submitted in court on February 8, 2005. The court also requires
the trustee to present an audit of the company's accounting and
business records through a general report due on March 22, 2005.
Creditors will ratify the company's settlement plan during the
informative assembly on August 24, 2005.
CONTACT: Mr. Nestor Agustin Iribe, Trustee
Avda Corrientes 1250
Buenos Aires
MEDICINE OF THE WORLD: Debt Payments Halted, Set To Reorganize
--------------------------------------------------------------
Court no. 18 of Buenos Aires' civil and commercial tribunal is
now analyzing whether to grant Medicine Of The World S.A.
approval for its petition to reorganize. La Nacion recalls that
the company filed a "Concurso Preventivo" petition following
cessation of debt payments. Clerk no. 35 assists the court on
the Company's case.
CONTACT: Medicine Of The World S.A.
Paraguay 3842
Buenos Aires
MIEL LAS HERAS: Liquidates Assets to Pay Debts
----------------------------------------------
Buenos Aires-based Miel Las Heras S.R.L. proceeds toward
liquidation of its assets after court no. 26 of Buenos Aires'
civil and commercial tribunal issued a resolution opening the
Company's bankruptcy. The notice posted by local news source
Infobae did not provide the name of the trustee who will
supervise the liquidation or the relevant dates for the
bankruptcy proceedings.
CONTACT: Miel Las Heras S.R.L.
Avda Las Heras 2219
Buenos Aires
SCP: $400M of Bonds Retain Junk Rating From Local Fitch
-------------------------------------------------------
Fitch Argentina Calificadora de Riesgo S.A. maintains a `D(arg)'
rating on US$400 million worth of corporate bonds issued by
Sociedad Comercial del Plata S.A. (SCP).
The CNV relates that the rating was given based on the Company's
finances as of June 30, 2004. The issue, which has an
undisclosed maturity date, is described as "Obligaciones
Negociables."
SCP is controlled by Argentine businessman Santiago Soldati.
SOLDYMAT S.R.L.: Court Sets Verification Deadline
-------------------------------------------------
Mr. Juan Manuel Vila Perbeils, the trustee supervising the
liquidation of Soldymat S.R.L., is set to close the verification
of creditors' claims on November 1, 2004. Creditors who fail to
submit proofs of their claims by the deadline will not be
eligible to receive post-liquidation distributions.
Infobae reports that Clerk no. 7 of Buenos Aires' civil and
commercial tribunal handles this case with assistance from the
city's clerk no. 14.
CONTACT: Mr. Juan Manuel Vila Perbeils, Trustee
Vidal 1670
Buenos Aires
=============
B E R M U D A
=============
AAHSA ASSURANCES: Proceeds with Voluntary Wind-Up
-------------------------------------------------
IN THE MATTER OF THE COMPANIES ACT 1981
and
IN THE MATTER OF Aahsa Assurances Ltd.
By Written Resolutions of the Sole Member of Aahsa Assurances
Ltd. on October 8, 2004, the following resolutions were duly
passed:
1) the Company be wound up voluntarily pursuant to the
provisions of the Companies Act, 1981; and
2) Mr Ernest A. Morrison, of "Milner House", 18 Parliament
Street, Hamilton, Bermuda be and is hereby appointed Liquidator
for the purposes of winding-up, such appointment to be effective
forthwith."
Mr, Morrison informs that:
- Creditors of the Company are required on or before October 28,
2004, to send their names and addresses and the particulars of
their debts or claims to the Liquidator of the Company and, if
so required by notice in writing from the said Liquidator, to
come in and prove their said 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.
- The Final General Meeting of the Sole Member of Aahsa
Assurances Ltd. will be held at the offices of Cox Hallett
Wilkinson, Milner House, 18 Parliament Street, Hamilton HM12,
Bermuda on the 15th day of November, 2004, at 10 o'clock in the
forenoon, for the following purposes:
1) receiving an account showing the manner in which the winding-
up of the Company has been conducted and its property disposed
of and hearing any explanation that may be given by the
Liquidator;
2) by resolution determining the manner in which the books,
accounts and documents of the Company and of the Liquidator
shall be disposed of; and
3) by resolution dissolving the Company.
CONTACT: Mr. Ernest A. Morrison, Liquidator
Milner House
18 Parliament Street
Hamilton HM 12
Bermuda
EQUITY ACCESS LTD.: Robin Mayor to Serve as Liquidator
------------------------------------------------------
IN THE MATTER OF THE COMPANIES ACT 1981
and
IN THE MATTER OF Equity Access Ltd.
The Members of Equity Access Ltd., acting by written consent
without a meeting on October 5, 2004 passed the following
4resolutions:
1) That the Company be wound up voluntarily, pursuant to the
provisions of the Companies Act 1981;
2) That Robin J. Mayor be and is hereby appointed Liquidator for
the purposes of such winding-up, such appointment to be
effective forthwith.
The Liquidator inform that:
- Creditors of Equity Access Ltd., which is being voluntarily
wound up, are required, on or before October 27, 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 lawyers (if any) to Robin J. Mayor
at Messrs. Conyers Dill & Pearman, Clarendon House, Church
Street, Hamilton, HM DX, Bermuda, the Liquidator of the said
Company, and if so required by notice in writing from the said
Liquidator, and personally or by their lawyers, 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.
- A final general meeting of the Members of Equity Access Ltd.
will be held at the offices of Messrs. Conyers Dill & Pearman,
Clarendon House, Church Street, Hamilton, Bermuda on 17th
November 2004 at 9.30am, or as soon as possible thereafter, for
the purposes of:
1) receiving an account laid before them showing the manner in
which the winding-up of the Company has been conducted and its
property disposed of and of hearing any explanation that may be
given by the Liquidator;
2) by resolution determining the manner in which the books,
accounts and documents of the Company and of the Liquidator
shall be disposed of; and
3) by resolution dissolving the Company.
CONTACT: Mr. Robin J. Mayor
Clarendon House
Church Street, Hamilton
Bermuda
GLOBAL CROSSING: Continues to Trade in NASDAQ under GLBC Symbol
---------------------------------------------------------------
Global Crossing (NASDAQ: GLBCE) announced Wednesday that,
following the company's filings with the Securities and Exchange
Commission (SEC) on October 8, 2004, it received notification
from NASDAQ that its common stock will continue to be listed on
the NASDAQ National Market. Accordingly, NASDAQ will remove the
fifth character "E" from the company's ticker symbol and the
symbol will revert to "GLBC" effective with the market opening
on Thursday, October 14, 2004. As previously disclosed, the
company's ongoing listing is conditioned upon the timely filing
of all SEC periodic reports over the next year.
Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network. Its core
network connects more than 300 cities and 30 countries
worldwide, and delivers services to more than 500 major cities,
50 countries and 6 continents around the globe. The company's
global sales and support model matches the network footprint
and, like the network, delivers a consistent customer experience
worldwide.
Global Crossing IP services are global in scale, linking the
world's enterprises, governments and carriers with customers,
employees and partners worldwide in a secure environment that is
ideally suited for IP-based business applications, allowing e-
commerce to thrive. The company offers a full range of managed
data and voice products including Global Crossing IP VPN
Service, Global Crossing Managed Services and Global Crossing
VoIP services, to more than 40 percent of the Fortune 500, as
well as 700 carriers, mobile operators and ISPs.
CONTACTS: Press Contacts:
Ms. Becky Yeamans
Phone: + 1 973-937-0155
e-mail: PR@globalcrossing.com
Ms. Kendra Langlie
Phone: + 1 305-808-5912
e-mail: LatAmPR@globalcrossing.com
Ms. Mish Desmidt
Europe
Phone: + 44 (0) 7771-668438
e-mail: EuropePR@globalcrossing.com
Analysts/Investors Contact:
Ms. Laurinda Pang
Phone: +1 800-836-0342
e-mail: glbc@globalcrossing.com
Web Site: http://www.globalcrossing.com/
HOPEWELL INTERNATIONAL: Members Decide to Wind-Up
-------------------------------------------------
IN THE MATTER OF THE COMPANIES ACT 1981
and
IN THE MATTER OF Hopewell International Insurance Company Ltd.
The Members of Hopewell International Insurance Company Ltd.
held a meeting on October 6, 2004 and passed the following
Resolutions:
1. That the Company be wound up voluntarily, pursuant to the
provisions of the Companies Act 1981; and
2. That Mike Morrison be and is hereby appointed Liquidator for
the purposes of such winding-up, such appointment to be
effective forthwith.
Mike Morrison, in his capacity as Liquidator, informs that:
- Creditors of Hopewell International Insurance Company Ltd.,
which is being voluntarily wound up, are required, on or before
November 3, 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 Mike Morrison, the undersigned, at KPMG Financial
Advisory Services Limited, Crown House, 4 Par-La-Ville Road,
Hamilton, HM 08, Bermuda, the Liquidator of the said Company,
and if so required by notice in writing from the said
Liquidator, and personally or by their solicitors, to come in
and prove their debts or claims at such time 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.
CONTACT: Mr. Mike Morrison, Liquidator
KPMG Financial Advisory Services Limited
Crown House, 4 Par-La-Ville Road, Hamilton
Bermuda
WORLDWIDE SECURITIES: Enters Voluntary Wind-Up Proceedings
----------------------------------------------------------
IN THE MATTER OF THE COMPANIES ACT 1981
and
IN THE MATTER OF Worldwide Securities Limited
The Members of Worldwide Securities Limited, acting by written
consent without a meeting October 4, 2004 passed the following
resolutions:
1) That the Company be wound up voluntarily, pursuant to the
provisions of the Companies Act 1981; and
2) That Robin J. Mayor be and is hereby appointed Liquidator for
the purposes of such winding-up, such appointment to be
effective forthwith.
Mr. Mayor informs that:
- Creditors of Worldwide Securities Limited, which is being
voluntarily wound up, are required, on or before October 27,
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 lawyers (if any) to Robin J
Mayor, the undersigned, at Messrs. Conyers Dill & Pearman,
Clarendon House, Church Street, Hamilton, HM DX, Bermuda, the
Liquidator of the said Company, and if so required by notice in
writing from the said Liquidator, and personally or by their
lawyers, 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.
- A final general meeting of the Members of Worldwide Securities
Limited will be held at the offices of Messrs. Conyers Dill &
Pearman, Clarendon House, Church Street, Hamilton, Bermuda on
November 16, 2004, at 9: 30 a.m., or as soon as possible
thereafter, for the purposes of:
1) receiving an account laid before them showing the manner in
which the winding-up of the Company has been conducted and its
property disposed of and of hearing any explanation that may be
given by the Liquidator;
2) by resolution determining the manner in which the books,
accounts and documents of the Company and of the Liquidator
shall be disposed of; and
3) by resolution dissolving the Company.
CONTACT: Mr. Robin J. Mayor
Clarendon House
Church Street, Hamilton
Bermuda
===========
B R A Z I L
===========
DIMON: Moody's Cuts Various Ratings
---------------------------------
Moody's Investors Service downgraded various ratings of DIMON
Incorporated ("DIMON") and kept them under review for possible
downgrade.
The ratings downgraded and kept under review for possible
downgrade are: (To/From)
- Issuer rating B2 B1
- Senior implied rating B1 Ba3
- Bank credit facility B1 Ba3
- US$200 million senior notes due 2011 B1 Ba3
- US$125 million senior notes due 2013 B1 Ba3
Moody's said the downgrade is triggered by an increased margin
pressure from cigarette companies as a result of their own
necessity to reduce costs.
The downgrade also reflects the difficulties in securing a
steady flow of supplies. DIMON has recently become vulnerable to
a global shift in leaf sourcing. Political difficulties in
Zimbabwe have led to drastic cuts in shipments out of this
country. While DIMON is well-positioned in Brazil, which is an
alternative source to Zimbabwe, changing market dynamics there
have created a more difficult environment for company as tobacco
farmers have postponed deliveries and tried to extract a higher
price from leaf dealers, and new entrants are now competing to
purchase a portion of the crop.
Ratings remain under review as a result of a technical default
under the company's indentures and revolving credit, said
Moody's.
On October 11, 2004, DIMON sought consent of waiver of previous
defaults under the limitation on restricted payments covenant
under the indentures arising from or related to the payment of
dividends to holders of the company's common stock, and
investments in a majority-owned subsidiary.
It also sought an amendment of certain provisions of the
indentures to confirm the company's ability to make dividend
payments to holders of its common stock in an amount not to
exceed $14.1 million in any 12 month period and to allow the
company to make up to $2 million of investments in subsidiaries
through December 31, 2005, each case without regard to a
consolidated interest coverage ratio tests.
The company is also seeking a waiver of the cross-default clause
under the revolving credit agreement. Dividend payments have
been made since December 2003 in violation of the indentures as
a result of an apparent misunderstanding by company's management
of the restrictions under the indentures.
Based in Danville, Virginia, DIMON is the world's second largest
dealer of leaf tobacco with operations in more than 30
countries.
ELETROPAULO METROPOLITANA: S&P Issues Update on Ratings
-------------------------------------------------------
RATIONALE
The ratings assigned to Eletropaulo Metropolitana Eletricidade
de Sao Paulo S.A. (Eletropaulo) (B/Stable/--) reflect Standard &
Poor's Ratings Services' reassessment of Eletropaulo's
creditworthiness following the conclusion of the debt
restructuring the company started in 2002. The Brazil-based
company refinanced some Brazilian real (BrR) 2.3 billion in debt
in March 2004. In June 2004, Eletropaulo also completed the
exchange offer on a US$2.3 million portion of a euro commercial
paper issue still in default (on an overall basis 99.9% of
bondholders accepted the exchanges).
The ratings reflect that, although the new terms and conditions
of the debt restructuring are more favorable and the
amortization schedule is smoother than before, Eletropaulo still
faces fairly tight cash flow to handle its debt maturities in
2005, and will need to take on additional debt to refinance debt
amortizations starting in 2007. As the company has just
completed far-reaching debt renegotiations, even though
Eletropaulo demonstrates resilient cash generation, its credit
access has not been fully restored or tested so far.
The ratings reflect the following concerns:
- Still untested financial flexibility as the company is just
emerging from a significant debt restructuring.
- Leveraged capital structure (funds from operations -(FFO) to
total debt should remain below 20% during the next two to
three years).
- Pressure to upstream dividends together with AES Tietˆ and
Uruguaiana to holding company Brasiliana Energia S.A.
- (Brasiliana) to support payment of US$510 million debt at the
holding company level. Brasiliana holds an 11-year debt
starting to amortize in 2007.
- High volume of past-due accounts receivable, mostly related to
state government and municipalities (in June 2004, Eletropaulo
reported BrR921 million of renegotiations with delinquent
consumers).
- Regulatory framework that is still evolving and bound to be
revisited as it is tested.
The following strengths partially mitigate these weaknesses:
- Strong and fairly resilient cash flow generation, with EBITDA
margins in the range of 20% of revenues.
- Lower exposure to currency mismatches, as only 30% of
restructured debt is denominated in foreign currency (most of
it is already hedged).
- Smoother debt amortization schedule, which Standard & Poor's
expects will be supported by internal cash generation at least
until 2006.
- Favorable customer mix base, as 70% of revenues come from
residential and commercial consumers, presenting more stable
consumption.
- A 30-year monopoly to distribute electricity in the most
developed and dense region of Brazil, and its adequate
operating efficiency indicators measured by outage duration
(DEC) and outage frequency (FEC).
Standard & Poor's calculated that at fiscal year-end 2003,
Eletropaulo registered EBITDA of BrR1.16 billion, an improvement
of 18% over the previous year. This result was fueled by the
11.35% tariff increase during the year. Considering the tariff
increase of 18.62% that the regulator already allowed for the
company, Standard & Poor's expects EBITDA to reach about BrR1.3
billion in 2004. Standard & Poor's also expects FFO to interest
coverage to grow to 2.2x in 2004 compared with 1.78x in 2003.
The improvement in FFO should reflect stronger operating
profitability and lower interest expenses after the debt
restructuring. However, Eletropaulo continues to present a
leveraged capital structure with ratios of total debt to total
capitalization of 73% and total debt to EBITDA of roughly 4.0x
as of June 2004, not considering the cash income from Reajuste
Tarif rio Extraordin rio (RTE) in the EBITDA calculation.
In 1998, Eletropaulo was granted a 30-year concession to
distribute energy in the metropolitan region of Sao Paulo.
Eletropaulo supplies electricity to more than 15 million people
spread out in 5.1 million consumption units, with a consumption
of 32,774 gigawatt hours (GWh) in 2003. Together with AES Tietˆ
and AES Uruguaiana, Eletropaulo is part of the Brasiliana group
controlled by the non-operating holding company, Brasiliana.
Brasiliana shareholders are Banco Nacional de Desenvolvimento
Economico e Social (BNDES; foreign currency BB-/Stable/--; local
currency BB/Stable/--; 53.6% of total capital) and the AES Corp.
(AES; B+/Positive/--; 46.4% of total capital). U.S.-based AES
manages the group.
LIQUIDITY
Standard & Poor's considers Eletropaulo's liquidity and
financial flexibility still tight, as the company has emerged
from a default, and they are the key rating factors.
Eletropaulo's debt restructuring has managed to reduce the
company's exposure to refinancing risk and provide a smoother
amortization schedule, thus enhancing the prospects of future
cash flow generation. In addition, the debt restructuring
reduced the company's exposure to currency mismatches. However,
debt is still high, with FFO to debt at 16% (annualized June
2004). Eletropaulo reported total debt of BrR5.6 billion as of
June 2004, including BrR1.45 billion of the pension fund
liability (Funda‡ao CESP). Short-term maturities are BrR1.1
billion and represent about 20% of the total debt, compared with
the historical level of short-term debt of more than 50%. The
company reduced foreign currency exposure to 22% of the total
debt compared to 40% in 2003, and has already swapped 90% of the
total until maturity.
For 2004, Standard & Poor's believes Eletropaulo amortizations
are resolved. Of the BrR810 million of amortizations during
2004, about BrR250 million are BNDES financings related to
compensation for deferred revenues (Reajuste Tarif rio
Extraordin rio (RTE) and the 2003 deferred Conta de Compensa‡ao
dos Valores da Parcela A (CVA) receivables), which present a
specific source of repayment (extraordinary charge to tariffs).
The remaining balance will be paid with expected internal free
cash flow generation, plus some BrR210 million already received
plus some BrR243 million to be received from BNDES (also related
to regulatory assets).
Funding requirements from 2005 on are more difficult to project,
as many uncertainties remain regarding the definition and
implementation of the new regulatory framework, and refinancing
risk could increase again. Besides, from 2007 on, Brasiliana
will start to amortize its debt with BNDES, which will require
Eletropaulo to increase the amount of dividends upstream
(together with AES Tietˆ and Uruguaiana). Eletropaulo's capacity
to raise new debt to fund cash gaps is still to be tested,
limiting financial flexibility and constraining the rating, even
considering that by 2007 Eletropaulo should post a leverage
ratio lower than it is now.
Standard & Poor's views dividends sent to Brasiliana as a
mandatory requirement for Eletropaulo, mostly from 2007 on, due
to the contributions Eletropaulo will need to make to its non-
operating holding company. Brasiliana holds in its books an 11-
year, US$510 million debt with BNDES, which starts to mature in
2007 and whose sole repayment source is cash from its
subsidiaries: Eletropaulo AES Tietˆ, and AES Uruguaiana.
OUTLOOK
The stable outlook assigned to the ratings on Eletropaulo's debt
reflects Standard & Poor's expectation that the company will
continue to present financial indicators that are in line with
the rating category (minimum EBITDA margin of 18%, minimum FFO
to interest coverage of 2.0x, FFO to total debt higher than
12%). The ratings also include Standard & Poor's expectation
that the company will not need external sources of funding from
2007 on, and the foreign currency exposure on financial debt
will not materially increase.
Eletropaulo's creditworthiness should improve as the company
shows better financial flexibility and market perception,
accesses new funding (banks or capital markets), and delivers
more sustainable cash flow protection ratios. Conversely, the
ratings would come under downward pressure if the company fails
to deliver the financial performance required for the current
rating.
BUSINESS DESCRIPTION
In 1998, Eletropaulo was granted a 30-year concession contract
to distribute energy in the metropolitan region of Sao Paulo.
Eletropaulo supplies electricity to more than 15 million people
spread out in 5.1 million consumption units, with a consumption
of 32,774 GWh in 2003.
Eletropaulo is now 73% controlled by Brasiliana, a holding
company created in December 2003, as a result of the debt
restructuring agreement between AES and BNDES.
CORPORATE RESTRUCTURING
At the end of 2003, AES completed its restructuring of the
US$1.2 billion debt it owed to BNDES, which originated from the
Eletropaulo acquisition. The US$1.2 billion debt was split in
two AES subsidiaries used to acquire Eletropaulo: AES Elpa and
AES Transg s, which were in default with BNDES during 2003. .
The terms and conditions established in the agreement were:
- Out of the US$1.2 billion debt, US$600 million of BNDES
credits were used to create Brasiliana Energia S.A., a new
holding company to control Eletropaulo, AES Tietˆ, and
Uruguaiana. BNDES owns 100% of the preferred shares and 49.99%
of the ordinary shares, which represent BrR285 million (US$99
million) and BrR1.7 billion (US$591 million), respectively.
AES management in Brazil exercises the Eletropaulo's control.
However, if Brasiliana defaults in any amount regarding the
debentures described below, the amount is automatically
converted into capital, which would give to BNDES the majority
control of the group (Eletropaulo, AES Tietˆ, and AES
Uruguaiana).
- AES Corp. paid US$90 million in December 2003.
- US$510 million debt was kept as a debt, but in a different
structure. This debt portion is a convertible debenture
totally held by BNDES, with an 11-year tenor, and starting
principal amortization in December 2007.
The deal between AES and BNDES was positive to Eletropaulo, as
it allowed the company to continue having access to BNDES credit
lines specific to the Brazilian electricity sector, and solved
ownership uncertainties during the period of Eletropaulo's
holding companies default with BNDES.
REGULATION
The industry is regulated by a Brazilian federal regulatory body
called Agˆncia Nacional de Energia El‚trica (ANEEL). ANEEL is
responsible for supervising the concessions, issuing regulations
for the sector, and setting tariffs. The system operator,
Operador Nacional do Sistema El‚trico, is responsible for system
operation, planning, and dispatch. The wholesale energy market,
Cƒmara de Comercializa‡ao de Energia El‚trica , determines
prices and settles transactions in the spot market. Brazil's
Ministry of Mines and Energy (MME) is responsible for the
macrostrategy and planning of the sector. Although concession
granting is an MME attribution, it transfers to ANEEL to grant
the concessions.
To avoid energy shortages in three to four years, Brazil needs
significant investments in new generation capacity. It is
estimated that the country needs to add 3,000 MW per year just
to meet organic growth, at an expected cost of US$3 billion.
Historical regulatory uncertainties and macroeconomic volatility
have been keeping investors away from the energy sector.
Corporations that are energy-intensive have made investments in
new capacity. In order to promote investments and guarantee
stable returns to potential investors, the MME decided to revamp
Brazil's long-term energy policy.
On March 15, 2004, the Brazilian Congress approved a new law
reforming electricity sector rules. The MME expects the new
model to establish a more stable operating environment for
distribution companies (discos) and power generation companies
(gencos), where long-term prices and demand are more
predictable--a crucial condition to promote investments and
guarantee a fair and steady return to investors. In the new
regulatory model, the commercial transactions can be established
in two different marketplaces: the "pool", where prices will be
regulated, and the competitive market. This law defined the
cornerstone for the sector and brought the guidelines of how the
sector will function, but the entire detailed ruling and
practical operation of the system was published in a resolution
issued late July. Overall market perception on this new
regulatory framework is particularly positive.
In the pool, discos are compelled to acquire power to serve
regulated consumers. Supplying prices in the pool will be
adjusted annually by an inflation index (not yet determined),
and will differ for each source of energy (hydro, thermo, wind).
Each genco selling to the pool will sign a supply contract with
each of the 64 discos that operate in Brazil, proportional to
the market share of each of them in the Brazilian distribution
market. As the gencos will deal with the different credit risks
of discos, the new model should allow the continuity of
collateral backed on discos' receivables.
There also will be a competitive environment where the
generators can sell energy to "free"consumers (entities that
demand more than 3 MW per year) and traders. Under the new law,
discos are not allowed to procure power in the competitive
market, and consumers that chose to buy power in the competitive
market are not permitted to buy power from the regulated pool.
Generators, however, can operate in both environments, as long
as, when they sell in the pool, they follow regulated prices.
MARKETS
Eletropaulo serves 5.1 million consumption units in 24
municipalities in the state of Sao Paulo, including the state
capital, the Sao Paulo city metropolitan area and industrialized
adjacent regions. The amount of energy Eletropaulo distributed
in its concession area in 2003 was equal to 36.9% of the total
amount supplied in the state of Sao Paulo and 11.5% of Brazil's
total consumption. The total amount the company supplied reached
32,774 GWh in 2003 compared with 32,451 GWh in 2002. There was a
slight recovery of Eletropaulo market during 2003 of about 1%
over the previous year, despite of the country's aggregated
consumption growth of 3.2%. This was caused by industrial
consumers leaving Eletropaulo's regulated base to become "free
consumers" able to acquire electricity directly from generators
or traders.
Eletropaulo has a well-diversified customer base where
residential and commercial segments together represent about 60%
of volume and 70% of revenues. Eletropaulo benefits from this
customer mix base, as the residential and commercial segments
present more stability in the company's revenue flow.
Eletropaulo serves a small number of consumers qualified as
"low-income" in its concession area. The sector regulation
establishes parameters to certain clients to be classified as
low-income, thus benefiting from federal government subsidy that
could reach up to 80% of the tariff, and the remaining is
collected directly from customers. To Eletropaulo it represents
about BrR10 million per year, which is immaterial.
The company also counted on the exit of 25 "free consumers" at
the end of 2003 representing 1.005 GWh. In the first semester of
2004, the company lost more consumers who chose competitive
suppliers, which together with the 25 consumers that left
Eletropaulo's base in 2003, constituted 1,121 GWh in the
semester. It is important to note that the exit of a regulated
corporate consumer does not mean an equivalent drop in
profitability, because the "free" consumer still must pay a
"wheeling" fee to Eletropaulo for the use of its electricity
distribution system.
Eletropaulo accounts roughly BrR900 million of agreements with
consumers that have high levels of overdue receivables: mostly
state and municipal governments. Out of the total, some BrR300
million relates to Sao Paulo municipal government; BrR200
million to Sao Paulo state government; BrR170 million to other
small municipalities; and about BrR100 million to the state-
owned company that controls Sao Paulo's subway system.
Eletropaulo's tariffs are readjusted each July. An 18.62% tariff
increase was granted in July 2004 compared with 11.35% adjusted
in the previous year. As the demand for energy is still low, the
tariff adjustment is the main reason for the company's
improvement in revenues and cash generation.
Eletropaulo participates in a social program named
Universaliza‡ao. It was created by the federal government to
expand the network in any region that has electricity. Although
the total cost for the project was not defined, Standard &
Poor's does not expect the company to disburse a significant
amount of resources, because 99.9% of its concession area is
covered.
OPERATIONS
As of the end of 2003, Eletropaulo had invested about BrR1.6
billion since its privatization to improve its service quality
in the concession area. The company's main objective is to
continue improving its efficiency and quality of service and to
reduce operating costs and energy losses. Eletropaulo has
already registered some important advances in improving its
efficiency indicators.
The consumption in the industrial segment has been decreasing
largely due to the exit of large industrial captive consumers to
the competitive market. The industrial segment registered an
8.6% volume reduction in 2003 compared with the previous year.
On the other hand, the commercial segment has been increasing
its consumption, which has offset the industrial sector plummet,
and contributing to an increment of about 1% in the total volume
of electricity invoiced in 2003.
Consumption in the residential segment has showed stability over
the past five years, as the 2001 electric power rationing
contributed to current consumers' saving habits that, to date,
have kept demand below the level that was prior to the
rationing. However, the residential segment is still the most
significant class of consumption in terms of revenues, volume,
and number of customers, providing much more stability to the
company's projections.
In 2003, the company invested about BrR213 million mainly in
maintenance and connection of new clients. Such investments
significantly improved the company's efficiency indicators. DEC
and FEC ratios, which measure the duration and frequency of
energy supply interruptions, were reduced by 26% and 20%,
respectively, compared with 2002, reaching 8,21 hours and 6.9
times respectively. Those indicators are below the standards set
by ANEEL of 12,57 hours and 8,95 times, respectively.
While energy losses are high for many Brazilian distributors,
Eletropaulo's ratios have been reasonable when compared to other
privatized utilities in Brazil, some of which present losses of
up to 23%. Energy losses maintained almost the same level
registered in 2002. Commercial losses represented about 7.6% of
energy losses and are primarily the result of theft, and
technical losses represented 5.6%. The company is working on
improving the distribution system to start reducing commercial
losses until the end of 2004. Each percentage point of energy
loss represents about BrR100 million of EBITDA to Eletropaulo.
Eletropaulo purchases about 33% of its energy needs from Itaipu
through a long-term U.S. dollar denominated contract that
expires in 2023. Itaipu is the world's largest hydropower
facility resulting from a joint venture between the governments
of Brazil and Paraguay. Brazilian federal law requires that all
15 utilities participating in the South/Southeast/Midwest
interconnected power system acquire energy from Itaipu on a pro-
rata basis. The remaining energy contracts are initial
contracts, that will expire in 2005 and 2006. In order to
partially replace the reduction of the initial contracts, the
company closed a 15-year bilateral agreement with AES Tietˆ,
which meets about 30% of the company's needs. The company plans
to contract for the remaining 37% through bilateral contracts
and auctions organized by ANEEL under the contracting and price
rules of the new electric sector model.
COMPETITIVENESS
The rating on Eletropaulo recognizes the credit strength derived
from the utility's exclusive concession to distribute
electricity in the Sao Paulo city metropolitan area, which
mitigates by-pass risk.
FINANCIAL POLICY
Eletropaulo developed an aggressive financial profile in the
past until 2003, largely due to its decision to bear a
significant amount of U.S. dollar-denominated bank debt with a
large maturity concentration in the second semester 2002.
During 2002, the entire electricitysector was struggling with
reduced levels of revenues and cash generation stemming from the
rationing crisis in 2001, which kept banks and investors away
from this sector. Additionally, in the second semester of 2002,
when a credit crunch affected Brazilian companies overall,
Eletropaulo had some 60% of its total debt maturing. Those
combined effects deeply impacted Eletropaulo and the company
defaulted on Aug. 27, 2002, on a US$225 million syndicated deal,
one month before announcing a wide debt restructuring.
Only in March 2004, Eletropaulo finally concluded the debt
restructuring process on about BrR2.3 billion with its local and
foreign creditors. The conclusion of the restructuring process
allowed Eletropaulo to extend its amortization schedule, to
reduce its foreign exchange exposure, and to reduce the
refinancing risk.
As part of the debt restructuring process, the related debts
were converted into two syndicated loans split in four series
each (tranches A, B, C and D), treating all creditors in an
equal basis, and unifying rates, terms and conditions.
Additionally, 26.9% of the U.S. dollar-denominated debt was
converted into reals and the final picture was 30.2% denominated
in U.S. dollars and 69.8% denominated in reals. Final maturities
are between 2006 and 2008.
Banco Itau is an agent of the first syndicated loan, which
comprises the local currency debts of about BrR1.5 billion. Bank
of New York is the agent of the second syndicated loan, which
comprises the U.S. dollar credits, about US$237 million. The
debt is also now partially guaranteed by a pledge on accounts
receivable of up to BrR200 million. In addition, new financial
covenants clauses were incorporated in the debt agreement.
The debt restructuring process also contemplates down payments
that are conditioned to the company receiving the loan related
to the CVA and the third tranche of the rationing loan, BrR210
million (already received) and BrR243 million, respectively.
Standard & Poor's expects Eletropaulo to receive the resources
related to the third tranche until the end of this year.
Besides Eletropaulo's own debt amortization, Standard & Poor's
expects the company to be contributing to amortize the debts at
the holding company level (Brasiliana) through dividends
upstream limited to the level allowed by Brazilian corporate
law. Brasiliana backs an 11-year, convertible, US$510 million
debentures owed to BNDES. However, this debt is required to
start amortization only from December 2007 on.
FINANCIAL PROFILE
Profitability and cash flow
Net revenues increased 11.4% as of fiscal year end2003 compared
with 2002, reaching BrR6.4 billion. Such improvement is helped
by the 11.35% tariff adjustment in July 2003 and 1% growth in
demand during the year. As of June 2004, net sales reached
BrR3.3 billion, indicating stability relative to 2003. However,
Eletropaulo granted an 18.62% tariff increase valid from July
on, which will raise the company's net sales to some BrR7.2
billion. EBITDA reached BrR1.16 billion and the EBITDA margin
level was 17.9% in 2003. For fiscal year end 2004, Standard &
Poor's expects Eletropaulo to achieve an EBITDA of BrR1.35
billion, which is an EBITDA margin of 18.7%. Although its EBITDA
margin has been stable since 2000 at current levels, EBITDA
interest coverage has showed improvements since 2002 as a result
of the gradual reduction of local interest rates in Brazil,
Eletropaulo's EBITDA annual volume growth, and the debt cost
charged to the company, including the restructured debt.
Eletropaulo had FFO of BrR440 million as of fiscal year end2003
and BrR418 million up to the first half of 2004. Standard &
Poor's expects FFO in fiscal 2004 to reach some BrR700 million
and should be primarily used to repay debt and capital
expenditures. FFO interest coverage also improved between 2003
and the first half of 2004, benefiting from the same reasons
that supported interest rate reduction. The FFO interest
coverage ratio was 1.78x in fiscal 2003 and 3.29x in the first
half of 2004. But, for the full fiscal 2004, the projections
indicate that Eletropaulo should post a FFO to interest coverage
of 2.2x-2.5x.
Capital structure and financial flexibility
Eletropaulo's main weakness is its leveraged financial profile.
Total debt was BrR5.3 billion in 2003 and BrR5.6 billion in the
first half of 2004, including the pension fund liability
(Funda‡ao CESP), which represents about 26% of the company's
total debt. In 2003, 72% of the total debt (BrR3.8 billion) was
in the short term, due to cross-default clauses, and 39% was
exposed to the U.S. dollar exchange rate. In June 2004, after
the conclusion of its debt restructuring, 20% of the total debt
was in the short-term and 22% was U.S. dollar-denominated debt.
Eletropaulo's total debt was BrR5.6 billion as of June 2004,
including BrR1.45 billion from Funda‡ao CESP. Short-term debt
was BrR1.1 billion and represents about 20% of the total debt,
compared with a short-term debt that historically had been
higher than 50%. Foreign currency exposure was reduced to 22% of
the total debt, compared with 40% in fiscal 2003. The company is
now 90% hedged.
For 2004, Standard & Poor's believes Eletropaulo amortizations
are resolved. In addition to the expected operating free cash
flow of some BrR200 million in 2004, Eletropaulo this year
received about BrR521 million from BNDES stemming from the 2003
deferred CVA financing and is expected to receive until the end
of this year BrR243 million regarding the third tranche of the
rationing financing. Out of the total, the company should apply
some BrR460 million to reduce debt. Also, counting on the RTE
and the 2003 deferred CVA receivables, the company should not
resort to external sources of financings.
Eletropaulo capital structure indicators show a total-debt-to-
total-capitalization ratio of 74% in 2003, which Standard &
Poor's expects to be pretty much the same for 2004. However,
measuring the capital structure by the internal cash generation,
Eletropaulo presented a FFO to total debt of 8.3%, and in fiscal
2004 the company should post a ratio of some 13.3%.
PRIMARY CREDIT ANALYST: Marcelo Costa, Sao Paulo
(55) 11-5501-8955; marcelo_costa@standardandpoors.com
VASP: Ordered to Make Daily Payments to Infraero
------------------------------------------------
Brazilian air transportation company Vasp made a BRL63,000
(US$23,200) payment to state owned airports management company
Infraero for landing and takeoff fees for its Wednesday flights,
reports the Associated Press.
Infraero spokeswoman Juliana Holanda said Vasp must continue the
daily payments until it presents a long-term debt payment plan.
Vasp already owes BRL11 million (US$3.8 million) to Infraero,
which manages all of Brazil's airports. The company said it will
unveil a debt payment plan before the end of the year.
The airline is currently operating on a six-month "emergency"
license granted by the government pending presentation of the
plan.
The carrier hasn't divulged the amount of its debt, but analysts
believe the figure is about BRL2 billion (US$714 million).
=========
C H I L E
=========
ENERSIS: Completes Exchange Offer of 7.375% Notes
-------------------------------------------------
ENERSIS S.A. (NYSE: ENI) has exchanged US$348,249,000 principal
amount, or 99.5%, of its unregistered 7.375% notes due 2014 (the
"Old Notes") for new 7.375% notes due 2014, which are registered
under the Securities Act of 1933, as amended (the "New Notes").
The exchange offer period began on August 6, 2004 and ended on
September 3, 2004.
The New Notes were issued on September 10, 2004, with the
tendering holders of the Company's Old Notes receiving a like
principal amount of its New Notes. US$1,751,000 principal amount
of the Old Notes remain outstanding.
The Company did not receive any proceeds from the issuance of
the New Notes in the exchange offer.
CONTACT: Enersis S.A.
Santa Rosa 76
Santiago, CHILE
Phone: 56 (2) 353 4682
Ms. Susana Rey
Head of Investor Relations
e-mail: srm@e.enersis.cl
Phone: 56 (2) 353 4554
Mr. Pablo Lanyi-Grunfeldt, Trustee
Investor Relations
Engineer
e-mail: pll@e.enersis.cl
Phone: 56 (2) 353 4552
Mr. Francisco Luco
Investor Relations
Engineer
e-mail: fjlv@e.enersis.cl
Phone: 56 (2) 353 4555
Mr. Cristian Palacios
Investor Relations
Engineer
e-mail: cpg1@e.enersis.cl
Phone: 56 (2) 353 4492
Ms. Carmen Poblete
Investor Relations
Engineer
e-mail: cpt@e.enersis.cl
Phone: 56 (2) 353 4447
Ms. Mariluz Munoz
Investor Relations
Assistant
e-mail: mlmr@e.enersis.cl
Phone: 56 (2) 353 4682
Web Site: www.enersis.cl
===============
C O L O M B I A
===============
TRANSGAS: S&P Issues Update on Ratings
--------------------------------------
RATIONALE
The 'BB' foreign currency rating on TransGas de Occidente S.A.'s
(TransGas) US$240 million notes due 2010 reflects the risk of a
single source of bond repayment--the monthly tariff paid to
TransGas by Ecopetrol S.A. (formerly Empresa Colombiana de
Petroleos). In addition, the rating reflects sluggish natural
gas demand in Colombia, which may affect economic incentives to
operate the TransGas project. Furthermore, the transaction's
structure contains a performance-driven tariff and refinancing
risk triggers under ownership change.
Positive factors that mitigate these risks are that the tariff
is linked to the pipeline's availability, which has been 100%,
and there are protective clauses that either cancel or lessen
risks derived from dispute resolution and exchange risk.
TransGas is a 344-kilometer (215-mile) mainline natural gas
pipeline running from Mariquita in the central region of
Colombia to Cali in the southwest of the country. The two major
sponsors are TCPL Marcali, a subsidiary of TransCanada, and BP
Colombia, a subsidiary of British Petroleum Co. PLC
(AA+/Stable/A-1+). TransGas was formed to build, operate,
maintain, and eventually transfer the pipeline along with
associated lateral lines for 1% of total construction costs to
Ecopetrol in 2017. The project is part of the Colombian
government's strategy to substitute the use of electricity and
fuel oil with natural gas, formally known as the Gas Plan.
Bond repayment depends fully on Ecopetrol's tariff payments.
Yet, in a cash shortfall, there is credit comfort from a debt
service reserve of up to six months of interest and principal,
equivalent to a one-semester payment. Moreover, there is a
contingency subaccount of the debt service reserve when the
company distributes dividends. There are no other alternative
sources of repayment other than the transportation services
contract with Ecopetrol.
The transaction contains a feature in the TransGas trust
indenture that stipulates that if TransCanada reduces its
ownership of TransGas below 25%, the TransGas notes will be
redeemable at the option of any noteholder at par plus accrued
interest, plus a make-whole premium. However, Standard & Poor's
Ratings Services does not expect material reduction of
TransCanada's current 46.5% stake. Also, according to the
TransGas indenture, TransGas has established covenants that
TransCanada will own or control at least 25% of the capital
stock of TransGas. If this level of ownership is not maintained,
an event of default will occur.
A negative factor is that thermal power plants, which are the
major consumers of the project, are not consuming gas at the
levels originally assumed due to the surplus of hydroelectric
power in Colombia, resulting in the project's utilization rate
of between 20%-30%. While the low throughput does not affect
TransGas' performance and the transportation tariff schedule, it
appears to make the project less economic for Ecopetrol than
anticipated.
The project's debt service coverage ratio one-year average as of
June 2004 stood at 1.46x and as of July 26, 2004, the company
certified that no default or event of default exists under the
indenture.
Outlook
TransGas' dependence on payments from Ecopetrol links its rating
to Ecopetrol's creditworthiness. The rating on Ecopetrol is
constrained by the foreign currency rating on the Republic of
Colombia. A weakening of the Colombian government's support for
its gas plan or any other event that could jeopardize complete
and timely payments to the project would result in a rating
action by Standard & Poor's.
Primary Credit Analyst: Jose Coballasi, Mexico City
(52) 55-5081-4414; jose_coballasi@standardandpoors.com
Secondary Credit Analyst: Santiago Carniado, Mexico City
(52) 55-5081-4413; santiago_carniado@standardandpoors.com
===================================
D O M I N I C A N R E P U B L I C
===================================
* DOMINICAN REPUBLIC: Unlocking IMF Loan on Top of List
-------------------------------------------------------
Dominican Republic President Leonel Fernandez revealed that
unlocking a US$600 million standby loan from the International
Monetary Fund and concluding negotiations with the Paris Club
were his government's priorities as it tries to fill a US$500
million-plus funding gap.
Renegotiation of bonds held by private creditors will come
later, the leader indicated. According to him, his government
had not yet presented a restructuring proposal to holders of
US$1.1 billion in bonds. However, it had received suggestions
from banks and investors, including Morgan Stanley, JP Morgan
and Bear Stearns.
===========
M E X I C O
===========
SATMEX: Service Affected by Satellite Glitch
--------------------------------------------
Mexico's Communications and Transport Ministry disclosed that a
satellite operated by Satelites Mexicanos (Satmex) malfunctioned
Wednesday, affecting the quality of its service, relates Dow
Jones Newswires.
In a press release, the ministry said that the Satmex 5
satellite, which was manufactured by Boeing Satellite Systems
International, Inc., went into self-protect mode early
Wednesday.
Both the ministry and the company are taking measures to rectify
the problem as soon as possible.
Satmex is owned by Loral Space and Communications Ltd. (LRLSQ),
Mexico's Autrey family, and the Mexican government.
=======
P E R U
=======
LANPERU: Transport Ministry Appeals Grounding Order
----------------------------------------------------
The Peruvian Transportation Ministry disclosed Tuesday that the
government has appealed a regional court ruling that ordered
that all flights by LanPeru be grounded, reports Bloomberg News.
In a statement, the ministry said that the government is seeking
to overturn a ruling by Judge Eloy Zamalloa that, LanPeru, a
unit of LanChile, violated domestic ownership laws.
Peru decreed earlier this week a 90-day state-of-emergency in
its troubled airline sector, allowing LanPeru to continue
flying. The government has expressed concerns that grounding
LanPeru would seriously harm the Andean nation's tourism and
business sectors.
=================
V E N E Z U E L A
=================
EDC: Fitch Rates Proposed Bond Issuance 'B+'
--------------------------------------------
Fitch Ratings has assigned a rating of 'B+' to the proposed
offering of unsecured notes to be issued by Electricidad de
Caracas Finance B.V. (EDC Finance) and unconditionally and
irrevocably guaranteed by C.A. La Electricidad de Caracas (EDC).
The notes are being offered under Rule 144A and Regulation S.
The proceeds of the offering are expected to be used to acquire
a 100% undivided interest in a loan from ABN AMRO Bank N.V. to
EDC. EDC will use the proceeds from the loan to refinance
existing indebtedness. The Rating Outlook is Stable.
The ratings assigned to the issuance by EDC Finance are based on
the guarantee by EDC. The ratings of EDC reflect the company'
position as the largest private electric utility company in
Venezuela and as a low-cost, vertically integrated company. The
company is well positioned to operate in the evolving Venezuelan
electricity market. EDC's long history as a profitable, reliable
private entity helps provide comfort in the company's and
management's ability and willingness to meet its financial
obligations in the event of material adverse events. The ratings
also incorporate the many adverse economic and political
challenges that have pressured the credit quality of the company
and Venezuelan sovereign alike. Positively, EDC has effectively
managed several issues despite facing severe economic and
political volatility during 2003 and 2004, which has illustrated
the company's ability to partially mitigate these risks.
***********
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 * * *