/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/041229.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 Wednesday, December 29, 2004, Vol. 5, Issue 257 Headlines A R G E N T I N A AEROLINEAS ARGENTINAS: Makes Final Debt Payment ALTAMIRA S.A.: Begins Liquidation AZEGAL S.R.L.: Court OKs Creditor's Bankruptcy Call CALOVETO S.A.: Enters Bankruptcy on Court Orders CAPEX: S&P Issues Ratings Report CELIA S.A.: Enters Bankruptcy on Court Orders COMPANIA MEGA: S&P Raises Ratings To 'B' FAEL S.A.: Liquidates Assets to Pay Debts FRIGOFRUIT S.A.: Files Petition to Reorganize GRUPO FARMAVIDA: Court Designates Trustee For Bankruptcy GUSTAVO LOPEZ: Bankruptcy Process Begins By Court Order HIDROELECTRICA PIEDRA: Fitch Confirms B(arg) Rating LITTLE PALACE: Court Authorizes Reorganization LUMICOM S.A.: Court Appoints Trustee for Reorganization MOLINOS RIO: Fitch Affirms Company At 'B-' PETROBRAS ENERGIA: To Participate in the "Foninvemem" YPF: Fitch Affirms International Ratings At 'BB' B R A Z I L CSN: Approves New Buy Back of Common Shares DVI INC.: Fitch Withdraws Brazilian Lease Securitization SADIA: Ratings Unaffected By Buy Says S&P TCP: Announces Capital Increase Through Share Subscription D O M I N I C A N R E P U B L I C CDEEE: Strikes $90M Financing Deal With Canada G U A T E M A L A BANCO INDUSTRIAL: Fitch Assigns Ratings; Stable Outlook M E X I C O CYDSA: Misses $7.5M Interest Payment TV AZTECA: S&P Withdraws Ratings XIGNUX: S&P Affirms Local, Foreign Currency Ratings P E R U LANPERU: Appeals Court Lifts Suspension Order T R I N I D A D & T O B A G O BWIA: PM Gives Board Ultimatum to Resolve Woes NWRHA: Firing of Pharmacist Deemed Illegal by High Court - - - - - - - - ================= A R G E N T I N A ================= AEROLINEAS ARGENTINAS: Makes Final Debt Payment ----------------------------------------------- Argentina's flag carrier Aerolineas Argentinas (AR.YY) began making its third and final debt payment Monday as planned, reports Dow Jones Newswires. With the payment, the Company completes a restructuring deal approved by creditors two years ago. The Company, whose controlling shareholder is a consortium headed by Spanish travel group Marsans (GMSN.YY), filed for bankruptcy in June 2001, burdened by heavy debts and labor disputes. In late 2002, it reached a restructuring agreement with the majority of its creditors for ARS3.5 billion ($1=ARS2.99) in debt. The last payment, of ARS245.7 million, is the final hurdle before Aerolineas Argentinas can float its shares on the local stock exchange. The previous payments were made in March and December of 2003. "Aerolineas is now up to date with its suppliers. We don't have any loans. And with the restructuring behind us, the next goal is to be listed on the (Buenos Aires) Stock Exchange, which we will do in the coming months," Julio Scaramella, a Company spokesman said. Aerolineas estimates that this year's revenue will total more than USD$900 million, with an operating profit of USD$50 million. CONTACT: AEROLINEAS ARGENTINAS Torre Bouchard 547, 1106 Buenos Aires, ARGENTINA Phone: (54-11) 4310-3000 Fax: (54-11) 4310-3585 E-mail: volar@aerolineas.com.ar Home Page: www.aerolineas.com.ar ALTAMIRA S.A.: Begins Liquidation --------------------------------- Grupo Editor Altamira S.A. of Buenos Aires will begin liquidating its assets after Court No. 13 declared the Company bankrupt. Infobae reveals that the bankruptcy process will commence under the supervision of Court-appointed trustee, Ruben Nestor Acosta. The trustee will review claims forwarded by the Company's creditors until March 8, 2005. Clerk No. 25 assists the Court on this case. CONTACT: Mr. Ruben Nestor Acosta Tucuman 1545 Buenos Aires AZEGAL S.R.L.: Court OKs Creditor's Bankruptcy Call --------------------------------------------------- Azegal S.R.L. entered bankruptcy after Buenos Aires Court No. 19 approved a bankruptcy motion filed by AADI Capif Asociacion Civil Recaudadora, reports La Nacion. The Company's failure to pay $17,025.84 in debt prompted the association to file the petition. Working with Dr. Mazzoni, the city's Clerk No. 37, the Company assigned Ms. Irma Aguilera 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 claim to the trustee before March 2, 2005. 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: Azegal S.R.L. San Martin 961 Buenos Aires Irma Aguilera Luis Saenz Oena 1690, piso 1 "3" Buenos Aires CALOVETO S.A.: Enters Bankruptcy on Court Orders ------------------------------------------------ Caloveto S.A. will enter bankruptcy protection after Buenos Aires Court No. 23, with the assistance of Clerk No. 45, ordered its 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. Anibal Daniel Osuna as trustee. He will be verifying creditors' proofs of claim until March 2, 2005. 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 April 15, 2005, followed by the general report, which is due on May 30, 2005. CONTACT: Mr. Anibal Daniel Osuna Mercedes 3259 Buenos Aires CAPEX: S&P Issues Ratings Report -------------------------------- Rationale Standard & Poor's Ratings Services' 'D' rating on Argentine power generator CAPEX S.A. reflects the Company's decision to suspend payments of principal on its financial debt during 2002. CAPEX operates a 672 MW, natural gas-fired plant in Argentina. The Company's business and financial profile significantly eroded since 2002 mainly because of the indirect pesification of electricity prices in Argentina, combined with the Argentine peso's strong devaluation. Although CAPEX engages in nonregulated businesses, such as crude oil exploration and production and liquefied petroleum gas and gasoline production, power generation (partly fueled by its own gas reserves) continues to be the Company's core business (about 60% of sales). The Argentine government's indirect pesification of electricity prices, which decreased to about US$9 per megawatt- hour (MWh) in 2002 and US$13 per MWh in 2003, from about US$23 per MWh in 2001, created a strong imbalance between the Company's highly peso-related cash generation and the evolution of its mostly U.S. dollar-denominated financial debt, which reached US$290.8 million in October 2004. As a result of this situation, the Company's leverage increased from 52% as of April 2001 to 73.8% as of October 2004. Because of the pesification and freeze of electricity tariffs charged by distribution companies to end-users, the energy price (seasonal price) that is passed through to end-users (and remitted to Cammesa, the wholesale electricity market administrator, who then pays the generators) is not enough to cover generation costs, especially during winter when more higher -cost thermal power generators are dispatched. In this context, the country's secretary of energy issued Resolution 240 in August 2003 reducing the spot price for electricity to a level equal to the variable cost of the next natural gas-fired unit to be dispatched into the pool system. Thus, the variable cost incurred by power generators that need to burn fuel no longer has any influence in determining the spot price. Before the resolution, the electricity price was set relative to the next generating unit to be dispatched, regardless of fuel. This measure further deteriorated the financial condition of Argentine power generators. However, in spite of Resolution 240, the funds remitted to Cammesa continued to be insufficient to cover power generation costs. As a result, power generators (mainly hydro generators) are not collecting 100% of their sales and are accruing growing credits with Cammesa, which are periodically reduced thanks to loans from the government to Cammesa. Through Resolution 1427 dated Dec. 6, 2004, the Secretary of Energy offered power generators to apply at least 65% of the uncollected sales for January 2004 through December 2006 as an equity contribution into a fund (FONINVEMEM) that will finance the construction of new thermal power generation plant of at least 800 MW. The Argentine government will mainly provide the cash that will finance the construction of the new power generation capacity. In exchange, the Secretary of Energy is committed to gradually increase electricity prices in the next few years and to return to the marginal cost system defined by Law 24.065 after the start-up of the new power generation capacity. The decreasing capacity reserves of the Argentine electricity industry as a result of the strong increase in electricity demand since second-half 2002, combined with a low availability of water and natural gas to generate electricity, resulted in interruptions to interruptible customers during first-quarter 2004. Despite some mitigating measures taken by the Argentine government (such as importing natural gas from Bolivia and importing fuel oil for thermal generation), thermal power generators could be affected by a low availability of natural gas during longer period throughout the year compared with shortages mainly during the peak winter season years before. However, CAPEX is protected from such risk because part of the plant's natural gas consumption comes from its own natural gas reserves. In addition, CAPEX's operating margins have already improved in the six months ended October 2004 and is projected to continue improving due to the higher electricity prices in May 2004 through July 2005 to large users as a consequence of the natural gas price-increase path established between the government and producing companies. CAPEX's primary business is generating electricity in the Comahue region in southwestern Argentina. Its thermal plant, with six gas-fired units and one steam unit, has an installed nominal capacity of 672 MW, representing about 3% of total installed capacity in the Sistema Argentino de Interconexi¢n. CAPEX is controlled by Compa¤¡a Asociadas Petroleras S.A. (CAPSA) through a 60% ownership stake, with the rest trading on the Buenos Aires and Luxembourg stock exchanges. CAPSA is a privately owned Company that explores for, develops, produces, and sells oil. Liquidity CAPEX's financial flexibility and liquidity position are severely restricted because of the Company's current default situation. As of Oct. 31 2004, the Company had US$290.8 million in financial debt while cash reserves reached only US$11.2 million. CAPEX's liquidity will remain constrained until the Company restructures its debt profile and electricity prices in Argentina significantly increase. The Company has shown significant progress on its debt restructuring process by refinancing US$40 million debt in March 2004, which is now due in 36 quarterly installments from Jan. 30, 2005 and by reaching a preliminary agreement in December 2004 with an important portion of debtholders of most of the remaining US$250.8 million debt. Primary Credit Analyst: Sergio Fuentes, Buenos Aires (54) 114-891-2131; sergio_fuentes@standardandpoors.com CELIA S.A.: Enters Bankruptcy on Court Orders --------------------------------------------- Celia S.A. will enter bankruptcy protection after Buenos Aires Court No. 20, which is assisted by Clerk No. 40, 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. Francisco Cipriotti as trustee. She will be verifying creditors' proofs of claim until April 8, 2005. 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 May 20, 2005, followed by the general report, which is due on July 5, 2005. CONTACT: Mr. Francisco Cipriotti, Trustee Avda Belgrano 615 Buenos Aires COMPANIA MEGA: S&P Raises Ratings To 'B' ---------------------------------------- Standard & Poor's Rating Services raised its ratings on Argentina-based Compania MEGA S.A. to 'B' from 'CCC+' due to the project's outstanding operational and financial performance in 2004, coupled with an improved financial profile due to the early cancellation of financial debt during the year. The outlook is stable. "Standard & Poor's considers that there are economic incentives for early cancellation of MEGA's outstanding senior secured notes given the project's sound performance and the benefits for the sponsors in line with the guarantees and put-options included in the financial guarantee provided by the sponsors," said Standard & Poor's credit analyst Pablo Lutereau. "Although government intervention in 2005 cannot be discarded, particularly in the context of a deeper energy crisis than the one experienced in 2004, Standard & Poor's considers that the most probable effect would not be significant to materially affect the project's financial performance should the current favorable pricing scenario persist," he added. The ratings on MEGA reflect the risks associated with operating in the country's unsettled economic and social environment, particularly the potential risks of higher governmental intervention in light of the current natural gas crisis in Argentina. The ratings also reflect the Company's exposure to market price volatility. However, those risks are partially offset by a strong export revenue base (more than 60% of MEGA's revenues), the strong parent support, and the project's sound operating performance. In fiscal 2003 and the first nine months of operation in 2004, MEGA showed a sound financial performance due to the unusually high prices for the products sold by the Company, the high levels of production reached, and the positive effect of the peso devaluation on the Company's operations. As a result, Mega reported a high 3.38x debt service coverage ratio (DSCR) for 2003 and DSCR above 2.50x is expected for 2004. Standard & Poor's expects the DSCR to remain adequate, even under lower international prices for the Company's products, mainly due to the adequate cost structure of the project and the improved financial profile resulting from the lower indebtedness. The stable outlook reflects Standard & Poor's opinion that the Company's strong operating and financial performance and higher degree of parent support would be enough to mitigate increasing uncertainties originated by the natural gas crisis in Argentina and the potential government intervention. MEGA is an operating project involving a natural gas separation plant, a pipeline, and a gas fractionation facility devoted to the separation of natural gas into ethane, butane, natural gasoline, and liquefied petroleum gas (LPG). YPF S.A. (38%), Brasoil Alliance Co. (34%), and Dow Investment Argentina S.A. (28%) own MEGA. MEGA commenced operations in 2001. FAEL S.A.: Liquidates Assets to Pay Debts ----------------------------------------- Buenos Aires-based Fael S.A. will begin liquidating its assets following the pronouncement of the city's Court No. 20 that the Company is bankrupt, reports Infobae. The bankruptcy ruling places the Company under the supervision of Court-appointed trustee, Roberto Leibovicius. The trustee will verify creditors' proofs of claim until March 23, 2005. The validated claims will be presented in Court as individual reports on May 6, 2005. Mr. Leibovicius will also submit a general report, containing a summary of the Company's financial status as well as relevant events pertaining to the bankruptcy, on June 21, 2005. The bankruptcy process will end with the disposal Company assets in favor of its creditors. CONTACT: Mr. Roberto Leibovicius, Trustee Tucuman 1585 Buenos Aires FRIGOFRUIT S.A.: Files Petition to Reorganize --------------------------------------------- Frigofruit S.A. filed a "Concurso Preventivo" motion, reports La Nacion. The Company is seeking to reorganize its finances following cessation of debt payments since Jan. 11, 2002. The Company's case is pending before Court No. 7, under Judge Gutierrez Cabello, who is assisted by Clerk No. 13 Dr. O'Reilly. CONTACT: Frigofruit S.A. Avda San Martin 5830 Buenos Aires GRUPO FARMAVIDA: Court Designates Trustee For Bankruptcy -------------------------------------------------------- Buenos Aires accountant Gabriel Jorge Churin was named trustee for the bankruptcy of local Company Grupo Farmavida S.A. relates Infobae. The city's Court No. 24 handles the Company's case. The trustee will verify creditors' claims until March 7 next year, the source adds. After that, he will prepare the individual reports, which are to be submitted to the Court on April 18, 2005. The general report should follow on May 31, 2005. CONTACT: Grupo Farmavida S.A. Godoy Cruz 2771 Buenos Aires Mr. Gabriel Jorge Churin, Trustee Sarmiento 731 Buenos Aires GUSTAVO LOPEZ: Bankruptcy Process Begins By Court Order ------------------------------------------------------- Buenos Aires Court No. 16 declared Gustavo C. Lopez y Cia S.A. "Quiebra," reports Infobae. The declaration signals the Company to proceed with the bankruptcy process, which will close with the liquidation of its assets. The Court, assisted by Clerk No. 31, appointed Ms. Lidia Roxana Martin, as trustee who will authenticate proofs of claim until Feb. 24, 2005. Afterwards, the trustee will prepare the individual reports based on the results of the authentication and then submit these reports to Court on April 11, 2005. After these results are processed in Court, the trustee will then submit the general report on May, 24, 2005. CONTACT: Ms. Lydia Roxana Martin, Trustee Cordoba 1352 Buenos Aires HIDROELECTRICA PIEDRA: Fitch Confirms B(arg) Rating --------------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. confirmed the B(arg) rating assigned to four series of debentures totaling US$162 million issued in June in this year by hydro generator Hidroelectrica Piedra del Aguila S.A. (HPDA). Business News Americas reports that the outlook is stable. The new structure gives HPDA greater flexibility in facing its obligations, the credit ratings agency said. HPDA 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. LITTLE PALACE: Court Authorizes Reorganization ---------------------------------------------- Buenos Aires Court No. 26 authorized Little Palace S.A. to start its reorganization process. According to Infobae, the Court, which is assisted by Clerk No. 51, granted the Company's "Concurso Preventivo" motion, appointing Mr. Pablo Amante as trustee. Creditors have until Feb. 28, 2005 to submit their proofs of claim to the trustee, who will verify these claims and submit them to Court as individual reports on April 13, 2005. After these reports are processed in Court, the trustee will then prepare the general report and submit it to Court on May 26, 2005. The informative assembly, the last stage of a reorganization process, will be held on Sept. 28, 2005. CONTACT: Little Palace S.A. Guemes 3856 Buenos Aires Mr. Pablo Amante, Trustee Lavalle 1537 Buenos Aires LUMICOM S.A.: Court Appoints Trustee for Reorganization ------------------------------------------------------- Lumicom S.A., a Company operating in Buenos Aires, is ready to start its reorganization after Court No. 18 appointed Mr. Gustavo Daniel Micciullo to supervise the proceedings as trustee. Clerk No. 36 assists the Court on this case. An Infobae report states that Mr. Micciullo will verify creditors claims until April 8, 2005. Afterwards, he will present these claims as individual reports for final review by the Court on May 20, 2005. Mr. Micciullo will also provide the Court with a general report pertaining to Lumicom's reorganization on July 5, 2005. CONTACT: Mr. Gustavo Daniel Micciullo, Trustee Avda Cordoba 1417 Buenos Aires MOLINOS RIO: Fitch Affirms Company At 'B-' ------------------------------------------ Fitch Ratings has affirmed Molinos Rio de la Plata, S.A. (Molinos) international scale local currency rating at 'B-'. The rating also applies to Molinos' senior secured export notes (SENs). The Rating Outlook is Stable. The ratings reflect the Molinos' ability to earn dollar-based revenues through exports. The ratings also reflect a leading business position in domestic branded food products. Molinos' strategy is based on developing complementary crushing activities and branded food products manufacturing activities. The ratings are constrained by the cyclicality of operations due to the volatility of crushing margins, high leverage and foreign currency exposure resulting from the Company's mostly dollar- denominated debt. Following the Argentine peso devaluation of 2001, the Company increased its focus on foreign markets, consolidating various export-oriented businesses and expanding its crushing and merchandising activities. In recent years, oilseed crushing operations, which are primarily oriented to the export market, have continually grown in importance, accounting for 62% of revenues during the first nine months of 2004 compared to 50% in 2003 and 25% in 2002. For the first nine months of 2004, total exports reached US$424 million and accounted for 70% of revenues. While Molinos' business re-orientation has boosted dollar-revenues, the volatility of the business has increased and margins have declined. As the Argentine economy recovers, the Company's strategy also remains focused on strengthening its branded food businesses. The Company has continued to consolidate its business position in domestic branded foods with small acquisitions such as that of Jugos Minerva, a lemon juice producer, for US$3 million. Molinos is also increasingly looking at opportunities to enhance exports of branded products. Last August 2004, Molinos created a joint venture with Corpora Tresmontes, a Chilean food Company, for the manufacturing of branded oil in Argentina for sale in Chile. During the first nine-months of 2004, revenues grew by 39% driven by higher exports and the integration during the second quarter of 2003 of the purchase of the remaining 50% of Pecom Agra S.A. Exports grew by 62% and sales of branded products in the domestic market grew by 6%. In the domestic market, consumption has continued to recover, translating into higher volumes and margins of branded products and the recovery of premium brands. Nevertheless, margins of branded products remain below pre-devaluation levels due to the high component of dollar-denominated inputs in the cost structure, which have only been partially translated to consumer prices. EBITDA and profitability have deteriorated in 2004 due to the Company's ongoing shift to lower-margin commodity export activities and higher energy costs. For the first nine months of 2004, EBITDA declined to US$42 million from US$49 million for the comparable period in 2003. Break-even margins in the crushing of sunflower seeds and lower margins in soybeans due to poor harvests have also affected profitability and cash flows. Molinos is at present undertaking a substantial capacity expansion of its oilseed crushing and logistics operations with the construction of a port and the expansion of the San Lorenzo crushing plant, which will triple capacity at the facility. With this project, at a total US$90 million cost and expected to be completed by mid-2005, the Company is seeking to strengthen its business position in soybean crushing. Molinos is also investing US$10 million in the expansion of a pasta plant and another US$10 million in a bottled-oil plant in Peru. These investments have been financed with internal cash flows. Last October 2004, Molinos announced the sale of its bottled oil operations in Russia to Bunge Limited for US$19.3 million. Total debt at Sept. 30, 2004 was US$240 million, unchanged from Dec. 31, 2003. Approximately 85% of the debt was dollar- denominated and 83% was due in the short-term (largely pre- export financing). Total debt was composed of the following: US$25 million outstanding balance on the SENs, US$110 million of pre-export financing (including a US$60 million 3-year revolving loan from the International Finance Corporation due 2006) and US$105 million of loans with local and foreign banks. Liquidity is adequate with US$42 million of cash and marketable securities at Sept. 30, 2004. Leverage remains high at 4.3x total debt to EBITDA for the first nine months of 2004. The interest coverage, however, has improved to 4x from 3x during 2003 despite lower EBITDA generation because the cost of funding for Molinos has declined substantially this year. Molinos is one of Argentina's largest food companies and exporters of oilseeds, and the country's largest exporter of bottled oil. The Company is also Argentina's largest branded food products manufacturer. Molinos produces a wide range of packaged foods for domestic consumption, including bottled oil, margarine, pasta, premixes, packaged flour, yerba mate, rice, cold cuts and frozen foods. The Company's controlling shareholder is Perez Companc Family Group (PCFG) with a 64% stake. The remaining stock trades publicly in the local stock market. PETROBRAS ENERGIA: To Participate in the "Foninvemem" ----------------------------------------------------- Petrobras Energia Participaciones S.A. (Buenos Aires: PBE, NYSE:PZE), controlling Company with a 98.21% stake in Petrobras Energia S.A. (Buenos Aires: PESA), informs that Petrobras Energia S.A. has decided to participate in the "Fund for Investments required to Increase the Supply of Electric Power in the Wholesale Electricity Market" ("Fondo para Inversiones Necesarias que Permitan Incrementar la Oferta de Energia Electrica en el Mercado Electrico Mayorista" - (FONINVEMEM)) created under Resolution N. 712/04 of the Argentine Secretariat of Energy. In view of the need to increase the available supply of electric power generation in Argentina, the FONINVEMEM funds will be used to build a new combined cycle generation plant with commercial operations estimated to begin by the year 2007. The Company has accepted to participate with 65% of the credit balances resulting from the 2004-2006 period between Genelba and Hidroelectrica Pichi Picun Leufu electric power generation plants and Compania Administradora del Mercado Electrico Mayorista S.A. (CAMMESA) with respect to the margin between the energy sale price and the variable generation cost attributable to each unit in the market. Total credit balances for 2004 fiscal year amount to US$7.5 million. Likewise, the total contribution estimated for the 2004-2006 period would amount to US$35 million, accounting for approximately 8% of the principal of the fund. The final amount will depend, among other factors, on the dispatch by CAMMESA of the Company's generation units. CONTACT: PETROBRAS ENERGIA PARTICIPACIONES S.A. Maipu 1, Piso 22 (1084) Buenos Aires, Argentina YPF: Fitch Affirms International Ratings At 'BB' ------------------------------------------------ Fitch Ratings has affirmed the senior unsecured local and foreign currency ratings of YPF S.A. (YPF) at 'BB' and the Argentina national scale rating at 'AAA(arg)'. The Rating Outlook is Stable. The assigned ratings incorporate the benefits of YPF's ownership structure, solid operating performance and credit protection measures, and proven hard currency-generating ability. Credit indicators through September 2004 are again at record levels, with EBITDA/interest coverage of 46.9 times (x), EBITDA- CAPEX/interest coverage of 35.0x, total debt/EBITDA of 0.2x and a total debt to capitalization ratio of 8.8%. Although the Company's credit indicators suggest rating levels higher than those assigned, the Argentine sovereign's credit profile continues to constrain YPF's standalone credit ratings. Nonetheless, strong credit fundamentals, coupled with the Company's cash flow and export capabilities, mitigate exposure to transfer and convertibility risk, allowing YPF to be rated multiple notches above the Argentine country ceiling of 'B-'. Importantly, the Company remains exposed to the risks of intervention by the sovereign. The Argentine government's decision earlier this year to raise export taxes on crude oil to 25% from 20% and on liquefied petroleum gas to 20%, and to introduce a 5% export tax rate on gasoline underlines the Argentine government's readiness to use its discretion to interfere in the energy sector. YPF may be subject to additional government interference, such as further changes in retention rates and taxes or imposing transferability or exchange controls on hard currency, which could reduce the amount of U.S. dollar cash flow that is available to meet financial obligations. As further example, the government is directing the expansion Transportadora Gas del Norte (TGN) and Transportadora Gas del Sur (TGS) pipelines by 4.7 million per day from July 2005 onwards. The investment in the expansion of TGN's pipeline is estimated at US$169 million, and will be financed by Repsol YPF (US$100 million), BNDES (US$31 million), Banco Nacion (US$27 million), and TGN (US$11 million). The actions by the Argentine government illustrate its willingness to pressure private sector companies to make investment decisions regardless of commercial considerations. At this time, the likelihood or level of further interference is uncertain, although these risks could ease if the Argentine government reaches an agreement with creditors and the International Monetary Fund (IMF). Despite the underlying sovereign turbulence, YPF's credit profile not only remains strong, but has actually improved substantially. The strong international oil price environment, coupled with cost reduction initiatives, benefits from the ARP's devaluation and improved value-added downstream export flows, contributed to a 5% rise in third quarter 2004 (3Q'04) EBITDA to ARP7.5 billion from ARP7.2 billion. Net income during this period totaled ARP3.9 billion, compared to an ARP3.3 billion though 3Q'03. The strong cash generation was accompanied by a US$277 million reduction in total debt, further strengthening credit protection measures. Even though YPF's debt is technically non-recourse to Repsol YPF, the assigned ratings assume a strong level of support by the parent Company, reflecting YPF's importance in the overall group strategy. The acquisition of YPF resulted in a more balanced integrated business mix for Repsol YPF, correcting the historical bias towards downstream operations. Through September 2004, YPF accounted for just under half of Repsol YPF's EBITDA but only 8% of the group's consolidated leverage. Repsol YPF has recently changed the terms of its medium term note program, under which YPF no longer qualifies as a principal subsidiary in connection with the cross-default clause. Although existing bonds remain subject to cross-default, this is no longer expected to be the case going forward, limiting required support from Repsol YPF. YPF S.A. is an integrated oil and gas Company engaged in exploration, development and production of hydrocarbons as well as the refining, marketing, transportation and distribution of oil and a wide range of petroleum products, oil derivatives, petrochemicals and liquid petroleum gas. The Company is a subsidiary of Spain's Repsol YPF (rated 'BBB', Outlook Stable by Fitch). CONTACT: Jason T. Todd +1-312-368-3217, Chicago Ana Paula Ares, +5411-5235-8121, Buenos Aires MEDIA RELATIONS: Brian Bertsch +1-212-908-0549, New York =========== B R A Z I L =========== CSN: Approves New Buy Back of Common Shares ------------------------------------------- Companhia Siderurgica Nacional approved new buy back of its common shares, as of December 22, 2004, in order to remain in treasury and subsequent sale or cancellation. Such buy back shall be in compliance with the following terms and conditions, pursuant to CVM Instruction No. 10/80: I. Amount of the Shares of the Buy Back: up to 5,000,000 common shares. II. Term: 180-day period, as of December 22, 2004, terminating on June 19, 2005. III. Amount of the Free Float (excluding the shares held by the controlling shareholder): 153,568,682. IV. Amount of the Shares in Treasury: 10,023,599. V. Place of the Buy Back: Bolsa de Valores de Sao Paulo - BOVESPA ("Bovespa"). VI. Maximum Price of the Shares: the purchase price of the common shares shall not be higher than its market price in Bovespa. VII. Stock Brokers: Ita£ S.A. Corretora de Valores S.A., Pactual CTVM S.A. and Credit Suisse First Boston CTVM S.A. CONTACT: CSN Luciana Paulo Ferreira, Investor Relations Tel: 5511 3049-7591 E-mail: luferreira@csn.com.br Web site: http://www.csn.com.br DVI INC.: Fitch Withdraws Brazilian Lease Securitization -------------------------------------------------------- Fitch Ratings has withdrawn the ratings on MSF Funding LLC, series 2000-1 following the transaction's prepayment on the Dec. 27, 2004 payment date. MSF Funding LLC was a securitization of medical equipment leases originated from Medical Systems Finance S.A. (MSF) and Healthcare Systems Finance (HSF), Brazilian subsidiaries of DVI Inc. (DVI). Since the declaration of an early amortization event in August 2003, the structure had been benefiting from fully sequential amortization as well as an accumulation of excess cash flows in a reserve account. As of December of this year the reserve accounts totaled approximately $4.82 million, and fully defeased the outstanding Fitch-rated debt of $4.81 million. The reserve account was held by JP Morgan Chase, acting as trustee, in a bankruptcy remote account for the benefit of noteholders. The defeasance contributed to MSF's announcement in mid-December of its intention to repay the remaining balance on the notes on the next payment date, Dec. 27, 2004. The transaction's history is noteworthy given that the structure successfully weathered several stresses, in particular, currency devaluation and sovereign crisis as well as the bankruptcy of the U.S. parent, DVI. The sovereign crisis was expected to produce increased defaults on the underlying leases. As of Dec. 1, 2004, however, the accumulated loss on the portfolio was a surprisingly low 2.6%, and over 90% of the leases remained current. Similarly, concerns over shared expertise and operational platforms between the bankrupt parent and its Brazilian subsidiary never transformed into material servicing or liquidity issues. CONTACT: Sam Fox +1-312-606-2307, Chicago Greg Kabance +1-312-368-2052, Chicago MEDIA RELATIONS: Sandro Scenga +1-212-908-0278, New York SADIA: Ratings Unaffected By Buy Says S&P ----------------------------------------- Standard & Poor's Ratings Services said Thursday that the acquisition of 100% of So Frangos Produtos Alimenticios Ltda (So Frango) by Sadia S.A (Sadia; LC: BB/Stable/--; FC: BB-/Stable/-- ) for $26.5 million (approximately Brazilian reais [BrR] 71 million at an exchange rate of BrR2.68 per $1.0) will not have an immediate effect on the ratings or outlook on the Company. The acquisition (still subject to approval by antitrust authorities) and the required cash disbursement should not affect Sadia's creditworthiness given its strong cash-flow generation and liquidity (EBITDA of approximately $220 million accumulated in the nine months ended Sept. 30, 2004, and cash reserves of $832 million as of September 2004). In addition, So Frango is expected to generate BrR220 million on gross revenues this year and will add 150,000 birds daily, equivalent to approximately 10% of Sadia's current production. The acquisition is positive to the Company's business profile as it will improve Sadia's market share in Brazil chicken production to 14% and reinforce its regional presence in the Midwestern region of the country. TCP: Announces Capital Increase Through Share Subscription ---------------------------------------------------------- Telesp Celular Participacoes S.A. (TCP) announced Monday, based on information provided by Banco ABN Amro Real S.A., the registrar for the Company's shares, (i) the number of remaining TCP common shares (ON), preferred shares (PN) and American Depositary Shares (ADSs), subscribed for in the Brazilian and U.S. markets, respectively, during the first reoffering round of unsubscribed shares, which began on December 21, 2004 and ended on December 23, 2004, (ii) the total number of shares subscribed in the Brazilian and U.S. markets through December 23, 2004, and (iii) the number of remaining unsubscribed shares that are available for subscription in the second reoffering round by TCP shareholders who subscribed shares during the first reoffering round and indicated an interest in subscribing for additional shares. First Reoffering Round - Shares Subscribed - Brazilian and U.S. Markets Common Shares (%)(1) Preferred Shares(%)(2) TOTAL (%)(3) 6,782,833,394 5,255,577,802 12,038,411,196 98.69% 93.79% 96.49% Summary of Rights Offering Results until December 23, 2004 (Initial Preemptive Rights Exercise Period + First Reoffering Round) Common Shares (%)(1) Preferred (%)(2) TOTAL (%)(3) Shares (including preferred shares underlying ADSs) 143,423,215,342 266,917,863,944 410,341,079,286 99.94% 99.87% 99.89% Unsubscribed Shares Available for Subscription from December 27, 2004 through December 29, 2004 Common Shares (%)(1) Preferred Shares (%)(2) TOTAL (%)(3) 89,851,276 0.06% 348,243,732 0.13% 438,095,008 0.11% (1) Percentage of common shares offered (2) Percentage of preferred shares offered (3) Percentage of total shares offered TCP shareholders who subscribed for shares during the first reoffering round and indicated an interest in subscribe for additional shares in the second reoffering round will have the right to subscribe for 0.01324686466270 common shares and 0.06626174040606 preferred shares for each common and preferred share subscribed for, respectively, during the first reoffering round. The Company reminds shareholders that the period for subscription of the remaining unsubscribed shares in the second reoffering round by preferred and common shareholders who indicated an interest in purchasing additional shares in the second reoffering round ends on December 29, 2004. After that date, if there are any remaining unsubscribed shares, a public auction is expected to be held at the Sao Paulo Stock Exchange (BOVESPA), where such unsubscribed shares are expected to be offered to the public. The procedures relating to holders of ADSs are described in the prospectus referred to below. A registration statement on Form F-3 ("F-3") has been filed with the U.S. Securities and Exchange Commission ("SEC") regarding the preferred shares, ADSs and the related subscription rights to be offered in the United States of America and has been declared effective. This press release does not constitute an offer to sell or the solicitation of an offer to buy preferred shares, ADSs or the related subscription rights in the United States or to U.S. persons (as such term is defined under Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act")), nor shall there be any sale of subscription rights, preferred shares or ADSs in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the laws of any such state. The prospects relating to the offering of subscription rights, preferred shares and ADSs may be obtained from the following address: MacKenzie Partners, Inc., 105 Madison Avenue, New York, New York, 10016, U.S.A., tel. (212) 929-5500. The rights offered to U.S. holders of TCP common shares may be transferred by U.S. holders only in accordance with Regulation S under the Securities Act. The offering of rights described herein is made for the acquisition of securities of a Brazilian Company. The offering is subject to disclosure requirements in Brazil, which are different from those of the United States. It may be difficult for a person in the United States subscribing for shares to enforce its rights and any claim it may have arising under the U.S. federal securities laws, given that the Company is located in Brazil and some or all of its officers or directors are residents of Brazil or of other foreign countries. A person in the United States subscribing for shares may not be able to sue the Company or its officers or directors in a Brazilian Court or in a Court in another country outside the United States for violations of the U.S. securities laws. It may be difficult to compel a Brazilian Company and its affiliates to subject themselves to a U.S. Court's judgment. CONTACT: VIVO - Investor Relations Telephone: +55 11 5105-1172 Email: ir@vivo.com.br URL: www.vivo.com.br/ir =================================== D O M I N I C A N R E P U B L I C =================================== CDEEE: Strikes $90M Financing Deal With Canada ---------------------------------------------- Dominican Republic state power Company CDEEE sealed a US$90- million financing accord with the Canadian government, reports DR1 Daily News. The financing is being guaranteed by the Canadian Commercial Corporation. These resources will be used to develop hydroelectric ventures and improve the transmission lines in the DR. One part of the money will go towards rural electricity service. Saul Santana, of the CDEEE, told El Caribe reporters that 42 substations of 138KV and 69KV would be reconditioned, and a 30MW substation would also be built with the funds. The agreement was signed by Ambassador Adam Blackwell for the Canadian government and Radhames Segura, the head of the CDEEE. ================= G U A T E M A L A ================= BANCO INDUSTRIAL: Fitch Assigns Ratings; Stable Outlook ------------------------------------------------------- Fitch has assigned ratings to Guatemala's Banco Industrial (BI) as follows: --Long-term foreign currency 'BB-'; --Short-term foreign currency 'B'; --Long-term local currency 'BB-'; --Short-term local currency 'B'; --Individual 'D'; --Support '4'. The Rating Outlook is Stable. Industrial's ratings are based on its prominent position within Guatemala's banking system, its strong franchise, a broad and stable retail deposit base, and improved asset quality. The ratings are constrained by the economic environment in Guatemala, the high degree of balance sheet dollarization (which poses significant threats to the banking system), the bank's relatively thin equity base, and its large exposure to the government in the form of securities. While the bank is the largest in Guatemala, if it ran into difficulties there is a limited probability of support from the authorities, given the country's economic conditions. While BI's profitability ratios are relatively low by international standards, this is mostly due to the declining interest rate environment and increased competition from both within and outside Guatemala. However, profitability is sufficient to allow the bank to continue operating successfully in challenging conditions. The bank is aided by the fact that it is fairly cost efficient by Central American standards despite its relatively large branch network, partly explained by a high degree of automation. BI's main source of credit risk is its loan book, which is largely focused on the corporate sector in Guatemala. The bank's consolidated reported past-due loan ratio at end-2003 of 1.05% was low, while loan loss reserve coverage was 114%, a significant improvement from previous years. On an unconsolidated basis, BI's asset quality deteriorated in 2004, with past-due loans nearly tripling to reach a past-due to total loans ratio of 2.5% at end-October 2004 (compared to end-2003's 0.9%) with loan loss reserve coverage of 43% (end-2003: 87%). An additional source of credit risk is BI's hefty government securities portfolio, which amounts to over 4 times equity. Main market risks are balance sheet dollarization (40% of assets and liabilities are in US dollars) and maturity mismatches (longer term loans are largely funded by short-term deposits); the latter risk is mitigated by a stable retail deposit base, which has benefited from 'flight to quality' in times of stress. BI's equity to assets ratio reached a relatively low 7% at end- 2003, which has to be viewed in light of the high proportion of fixed and foreclosed assets on its balance sheet. At that same date, the bank's capital to risk-weighted assets ratio of 11.7% was above the local regulatory minimum of 10%. BI is the largest Guatemalan bank, with an asset market share of 20% at end-2003. Established in 1968, the bank has primarily focused on serving the corporate sector and high-income individuals, although it also provides a wide range of banking services to its broad client base. The bank is owned by around 1,350 Guatemalan shareholders and is an integral part of Corporacion BI, a financial group made up of a total of 11 companies. BI consolidates a Bahamian offshore bank, a finance Company, and a credit card issuer. CONTACT: Gustavo Lopez +1-212-908-0500, New York Peter Shaw +1-212-908-0500, New York Mauricio Choussy +503-263-1300, San Salvador Raul Castellon +503-263-1300, San Salvador MEDIA RELATIONS: Kenneth Reed +1-212-908-0540, New York =========== M E X I C O =========== CYDSA: Misses $7.5M Interest Payment ------------------------------------ Mexican industrial group Cydsa (BMV: CYDSASA) informed the local bourse that it did not make the US$7.5-million interest payment due December 23 from a US$159 million bond due 2009, relates Business News Americas. Company officials will propose plans in a January 15 noteholders meeting to swap the US$159 million in debt for stock options. Specifically, the Company will offer 27.4 million shares of series-A stock, 137 million shares of series-C and US$25.5 million in bonds maturing May 2008 in exchange for existing notes, plus interest. Cydsa is a major Mexican industrial Company with leading market share in some of its lines of business and with long-standing relationships with major Mexican and international companies. Cydsa is engaged in manufacturing and marketing products and services in the following industries: petrochemicals and specialty chemicals; synthetic fibers and yarns; packaging film and folding carton. Cydsa's operations are organized and managed through the following business segments: Chemicals and Plastics; Fibers and Yarns and Packaging Film and Folding Carton. CONTACT: Avenida Ricardo Margain Zozaya 565-B Col. Parque Corporativo Santa Engracia San Pedro Garza Garcia,Nuevo Lesn, Mixico, C.P. 66267 URL: http://cydsa.com/Espanol/index.htm TV AZTECA: S&P Withdraws Ratings -------------------------------- Standard & Poor's Ratings Services said Monday that upon confirmation of the full prepayment of TV Azteca S.A. de C.V.'s $300 million notes due February 2007, the Company's only rated debt, it withdraws its ratings on this Company, including its 'B+' corporate credit rating. "The ratings assigned to the holder of 60% of its capital stock, Azteca Holdings S.A. de C.V., including the 'CCC+' corporate credit rating, are also withdrawn," said Standard & Poor's credit analyst Manuel Guerena. XIGNUX: S&P Affirms Local, Foreign Currency Ratings --------------------------------------------------- Standard & Poor's Rating Services affirmed its 'BB-' local and foreign currency corporate credit rating of Xignux S.A. de C.V. The outlook was changed to stable from negative. The 'mxBBB+' national scale corporate credit rating on the Company was also affirmed. The outlook on the national scale rating was changed to positive from negative. Standard & Poor's also affirmed its 'B+' senior unsecured debt ratings assigned to Xignux's notes due 2009 and the national scale 'mxA-2' rating assigned to the issuer's domestic short-term program. "The rating actions reflect the successful execution of Xignux's refinancing plans during 2004 and the improvement of its key financial measures," said Standard & Poor's credit analyst Jose Coballasi. During 2004, the Company completed an exchange and a new issue in the international capital markets to refinance its notes due 2004, and issued around $50 million in the domestic capital markets. In addition, the issuer was able to secure credit facilities of around $125 million to extend debt maturities and to improve its liquidity position. Driven by top- line growth across the board, for the 12 months ended Sept. 30, 2004, Xignux posted EBITDA interest coverage, total debt-to- EBITDA, and funds from operations-to-total debt ratios of 3.7x, 3.6x, and 15.1%, respectively, which compare favorably to the 3.8x, 4.1x, and 12.5% posted in 2003. The stable outlook on the global scale ratings and the positive outlook on the national scale rating anticipates that Xignux's financial performance and liquidity will continue to improve. The aforementioned improvement will result in a one-notch upgrade in the national scale. A significant improvement in financial performance could lead to a positive rating action in the global scale. Weakness in the Company's financial and operating performance could lead to a negative rating action. The ratings on Xignux reflect its high leverage, the cyclical nature of some of its end markets, and increasing costs as a result of the strength of the Mexican peso in recent years. The ratings also consider Xignux's significant market-share positions, product diversity, and vertical integration. Its emphasis on high quality has attracted world-recognized joint- venture partners, providing Xignux, a diversified holding Company, with low-cost access to state-of-the-art technology and enhancement of its export possibilities. The 'B+' rating assigned to Xignux's notes due 2009 reflects the structural subordination of the issue relative to the Company's priority liabilities. Despite the debt at the holding Company being guaranteed by some of the subholding and operating subsidiaries, the proportion of priority liabilities (i.e., current and long-term liabilities at operating Company level vs. holding Company level) relative to consolidated total assets is significant (around 30%), leading to a possible low residual claim for Xignux's holding Company creditors. Xignux is a diversified holding Company whose subsidiaries manufacture a variety of products, mostly for industrial markets. The Company sells auto parts, chemicals, food, cable, foundry, power, and distribution transformers. The stable outlook on the global scale ratings and the positive outlook on the national scale rating anticipate that Xignux's financial performance and liquidity will continue to improve. The aforementioned improvement will result in a one-notch upgrade in the national scale. A significant improvement in financial performance could lead to a positive rating action in the global scale. Weakness in the Company's financial and operating performance could lead to a negative rating action. Primary Credit Analyst: Jose Coballasi, Mexico City (52) 55-5081-4414; jose_coballasi@standardandpoors.com ======= P E R U ======= LANPERU: Appeals Court Lifts Suspension Order --------------------------------------------- A Peruvian appeals Court lifted an order that earlier this year led to a brief suspension of Lan's (LFL) flights from Peru, reports Dow Jones Newswires. Earlier this year, a Superior Court judge in the southern city of Arequipa, Eloy Zamalloa, ordered that the government suspend LanPeru SA's operations for non-compliance of local ownership regulations. LanPeru briefly grounded flights in October then restarted them after the government passed an emergency decree and reissued the airline permits to fly. The airline appealed the Court order and was informed of the judicial ruling late last week that lifted the suspension order. CONTACT: MSP Communications, Inc., Coral Springs, Fla. Misty Pinson, 954-341-2535 mspcomm@bellsouth.net or LAN PERU Public Relations Monica Verastegui, 011-511-213-8384 monica.verastegui@lanperu.com.pe ================================= T R I N I D A D & T O B A G O ================================= BWIA: PM Gives Board Ultimatum to Resolve Woes ---------------------------------------------- Trinidad & Tobago's Prime Minister, Patrick Manning, gave the board of directors of cash-strapped national airline BWIA an ultimatum to either fix the carrier or the government will find someone who can, the Trinidad Express reports. The board must come up with a strategic plan for the airline's future, Manning said, adding, "We will see whether we agree or not. If it is viable or not viable and if the board is able to carry out the plan, fine. If not, we will put a board that can." According to Manning, an agreement had been reached among Caricom heads of government that there was need for a carrier to service the needs of the region. "What we have agreed (to do) is to restructure BWIA and restructure LIAT and put both of those new restructured airlines into a new carrier," Manning said. "The restructuring of BWIA and LIAT could mean a complete shutting down of either or both of the airlines and starting something else prior to putting into the holding Company a viable entity. That is what we are working on now." But he stressed ". we have not yet decided on how we are going to proceed. We have problems with Liat and we have problems with BWIA." 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) NWRHA: Firing of Pharmacist Deemed Illegal by High Court -------------------------------------------------------- A Trinidad and Tobago High Court judge ruled that the decision by NorthWest Regional Health Authority (NWRHA) to fire Pharmacist Ameena Ali as primary health care administrator in September last year was illegal, null and void. Newsday quotes Justice Sebastien Ventour as saying in a 47-page judgment: "Public officials have to be reminded that their source of power and authority comes from the people through their elected representatives in Parliament." Ali, 42, of San Juan, was a pharmacist II attached to the St Ann's Hospital. On June 25, 2001, the acting CEO of the NWRHA offered her employment as an administrator - primary health care centers. Ali took up duties on a two-year contract but on June 3, 2003, the NWRHA terminated her services, just three months before her two-year contract ended. On May 20, 2003, the NWRHA had informed Ali that a new organizational structure had rendered her position redundant, but Ali exercised her option to remain employed with the authority. However, the Ministry of Health subsequently wrote to Ali instructing her to report to the Permanent Secretary since she was no longer employed with the NWRHA. In October last year, Ali was granted leave by a San Fernando High Court judge to seek judicial review of the NWRHA's decision. She sued the NWRHA, the Minister of Health and his Permanent Secretary. Justice Ventour stated that the NWRHA failed to produce evidence to show there was an overriding public interest in abolishing Ali's post of administrator of primary health care centers. Ventour stated that though the reorganization was aimed at making the authority more effective, it was not at liberty to ignore Ali's legitimate expectation of working in the position until her contract ended. *********** 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 * * *