/raid1/www/Hosts/bankrupt/TCRLA_Public/050105.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, January 5, 2005, Vol. 6, Issue 3
Headlines
A R G E N T I N A
BEM TAMIM: Liquidating Assets to Pay Debts
BHENTSOL SRL: Initiates Bankruptcy Proceedings
CENTRAL DISTRIBUIDORA: Court Orders Liquidation
CENTRIFIN S.A.: Court Approves Reorganization Petition
CHALET S.A.: Enters Bankruptcy on Court Orders
COMPANIA MEGA: S&P Releases Ratings Report
CORRIAL S.A.: Begins Liquidation
CREST S.A.: Liquidates Assets to Pay Debts
DI MARIO: Court Designates Trustee For Bankruptcy
DISENO DIDACTICOS: Court Declares Company Bankrupt
LA JUSTA SA: Court Appoints Trustee for Reorganization
B A R B A D O S
SUNBEACH COMMUNICATIONS: Shareholders to Seek Legal Action
B E R M U D A
FOSTER WHEELER: Updates Capital Share Information
B R A Z I L
BASA: Fitch Assigns International Ratings
EMBRATEL: Future Still Vague
C O S T A R I C A
ICE: System Upgrade Delay Won't Affect Finances, Says Director
M E X I C O
CFE: Inks $20M Power Accord With Durango
GRUPO ELEKTRA: Merrill Lynch Reduces Stock Recommendation
ISSSTE: Workers' Union Reject Reform
P E R U
SIDERPERU: Fulfilling Debt, Interest Obligations
- - - - - - - -
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A R G E N T I N A
=================
BEM TAMIM: Liquidating Assets to Pay Debts
------------------------------------------
Bem Tamim S.R.L. will begin liquidating its assets following the
pronouncement of Buenos Aires Court No. 6 that the Company is
bankrupt, Infobae reports.
The bankruptcy ruling places the Company under the supervision
of court-appointed trustee, Francisco Guerreno. The trustee will
verify creditors' proofs of claim until March 8, 2005.
The bankruptcy process will end with the disposal of Company
assets in favor of its creditors.
CONTACT: Mr. Francisco Guerreno, Trustee
Rodriguez Pena 794
Buenos Aires
BHENTSOL SRL: Initiates Bankruptcy Proceedings
----------------------------------------------
Judge No. 9 of Buenos Aires civil and commercial court declared
Bhentsol S.R.L. "Quiebra," reports Infobae. Clerk No. 17 assists
the court on the case, which will close with the liquidation of
the Company's assets to repay creditors.
Mr. Raul Jose Abella, who has been appointed as trustee, will
verify creditors' claims until April 25, 2005 and then prepare
the individual reports based on the results of the verification
process.
The individual reports will then be submitted to court on June
20, 2005, followed by the general report on Sept. 13, 2005.
CONTACT: Mr. Raul Jose Abella, Trustee
Uruguay 660
Buenos Aires
CENTRAL DISTRIBUIDORA: Court Orders Liquidation
-----------------------------------------------
Buenos Aires Court No. 1 ordered the liquidation of Central
Distribuidora S.A. after the Company defaulted on its
obligations, Infobae reveals. The liquidation pronouncement will
effectively place the Company's affairs as well as its assets
under the control of Ms. Adriana Esnaola, the court-appointed
trustee.
Ms. Esnaola will verify creditors' proofs of claim until March
15, 2005. Clerk No. 2 assists the court on this case, which will
end with the disposal of the Company's assets in favor of its
creditors.
CONTACT: Ms. Adriana Esnaola, Trustee
Juncal 615
Buenos Aires
CENTRIFIN S.A.: Court Approves Reorganization Petition
------------------------------------------------------
Centrifin S.A. will begin reorganization following the approval
of its petition by Buenos Aires Court No. 2. The opening of the
reorganization will allow the Company to negotiate a settlement
with its creditors in order to avoid a straight liquidation.
Mr. Jorge Eladio Feito will oversee the reorganization
proceedings as the court-appointed Trustee. He will verify
creditors' claims until March 18, 2005. The validated claims
will be presented in court as individual reports on April 29,
2005.
The Trustee is also required by the court to submit a general
report essentially auditing the Company's accounting and
business records as well as summarizing important events
pertaining to the reorganization. This report will be presented
in court on June 10, 2005.
The Informative Assembly, the final stage of a reorganization
where the settlement proposal is presented to the Company's
creditors for approval, is scheduled for Dec. 2, 2005.
CONTACT: Mr. Jorge Eladio Feito, Trustee
Medrano 537
Buenos Aires
CHALET S.A.: Enters Bankruptcy on Court Orders
----------------------------------------------
Chalet S.A. will enter bankruptcy protection after Buenos Aires
Court No. 5, with the assistance of Clerk No. 9, 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 Ms. Maria del Carmen
Amandule as trustee. She will be verifying creditors' proofs of
claim until Feb. 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 March 22, 2005, followed by the general report, which is due
on May 3, 2005.
CONTACT: Ms. Maria del Carmen Amandule
24 de Noviembre 1226
Buenos Aires
COMPANIA MEGA: S&P Releases Ratings Report
------------------------------------------
Major Rating Factors
Strengths:
* Project fundamentals provide strong economic incentives
for sponsor support, and
* Long-term contracts should provide stable revenues.
Weaknesses:
* Potential risks for governmental intervention, and
* Somewhat exposed to products' market price volatility.
Rationale
The ratings on Compania MEGA S.A. 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), strong parental support, and the project's
sound operating performance.
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.
The project had outstanding operational and financial
performance in 2004, coupled with an improved financial profile
due to the early cancellation of financial debt during the year.
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.
Although government intervention in 2005 cannot be discarded,
particularly in the context of a deeper energy crisis than in
2004, Standard & Poor's considers that the most probable effect
would not be significant to materially affect the financial
performance of the project should the current favorable pricing
scenario persist.
The project sponsors are closely related to the Company's
operations. Ethane is sold to PBB Polisur S.A., a Dow Chemical
subsidiary in Argentina, and natural gasoline and LPG to
Petroleo Brasileiro S.A., while 100% of the Company's natural
gas needs are provided by YPF. The strong presence of the
sponsors in the commercialization process of the Company
somewhat protects profitability from the domestic conditions of
the country. In addition, almost 60% of the Company's revenues
are expected to come from exports (LPG and natural gasoline) and
therefore will remain U.S. dollar denominated, and since 2004
the free U.S. dollar exchange rate is being applied to both
ethane sales and natural gas purchases; both contracts were
originally dollar denominated.
The Argentine natural gas sector is undergoing a crisis that
might lead to increased government intervention or natural gas
supply shortages, thus affecting MEGA's future performance.
There is a mismatch between natural gas supply and demand caused
by the reduction in the relative price of natural gas compared
with alternative fuels (especially crude oil derivatives in the
current international price environment) after the pesification
of prices to regulated customers since early 2002. Although the
government has taken many measures to offset the effects of the
crisis, the outcome is still uncertain. Production could be
increased in the short term by not reinjecting gas into wells.
However, in the medium term, unless there are new investments in
the sector (which are unlikely in the current price context
given natural gas projects' low profitability), production will
decrease following the natural decline rate of the wells. If the
mismatch increases, so might political risk and MEGA could face
lower supply and a direct impact on its operating performance.
In December 2003, given the uncertainties of Argentina's
economic environment, the parents of the project sponsors,
Spanish-based Repsol-YPF S.A. (BBB+/Stable/A-2), U.S.-based Dow
Chemical Co. (A-/Negative/A-2), and Brazilian-based Petroleo
Brasileiro S.A. (Petrobras; not rated) extended guarantees on
the Company's financial obligations until Dec. 31, 2005.
Although the rating on the project would not be made equivalent
to those of the sponsors, given the different tenor between the
guarantees and the bonds, the extension of the guarantees
reflects a higher degree of parental support, which could help
offset the risks of operating in Argentina. The extended
guarantees were accompanied by a set of put options for the
bondholders and call options for the sponsors to purchase MEGA's
outstanding debt up to each sponsor's share. In January 2004,
all of the fixed-rate series G holders exercised put options for
US$169.8 million while Repsol-YPF exercised its call option on
floating-rate obligations up to its share for about US$85
million. On Dec. 1, 2004, the rest of the sponsors exercised
their call options on the variable rate debt and, as a result,
the sponsors hold 100% of existing notes. Although the exercise
of the call options did not lower MEGA's debt, it has enhanced
financial flexibility in the short term (despite the fact that
those notes could be sold in secondary markets and therefore
returned to third parties). With all the debt is in sponsors'
hands, Standard & Poor's expects that adjustments required by
the troubled Argentine economic environment could be solved more
easily and without significant delays.
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 the Company sells, the high levels
of production reached, and the positive effect of the peso
devaluation on the Company's operations (since about 60% of
revenues come from exports, ethane sales are dollar denominated
since 2004, and certain costs remained in Argentine pesos).
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 lower debt. In
addition, Standard & Poor's believes that the Company's export
base should constitute a benefit and be sufficient to meet its
debt service if government intervention does not prevent the
Company from freely disposing of such funds to meet financial
obligations.
MEGA was originally designed with an aggressive capital
structure to finance the construction of its operations.
However, given the strong results reached in the last two years
and some debt reduction (about US$40 million prepaid in 2004 in
accordance with the financing documents), total debt to total
capitalization reached 49.5% as of Sept. 30, 2004, down from
61.4% in 2003.
Outlook
The stable outlook reflects Standard & Poor's opinion that the
Company's strong operating and financial performance and higher
degree of parental support would be enough to mitigate
increasing uncertainties originated by the natural gas crisis in
Argentina and the potential government intervention.
Business Description
MEGA is essentially a natural gas separation plant, a pipeline,
and a gas fractionation facility. The Company operates a natural
gas separation facility in Loma de la Lata (province of
Neuquen), where YPF owns large natural gas reserves, a
fractionation plant in BahĦa Blanca (province of Buenos Aires),
and a 372-mile long pipeline connecting these two sites. The
Company separates natural gas into ethane, butane, natural
gasoline, and LPG. MEGA has sales contracts with two of its
shareholders (ethane to Dow Quimica and natural gasoline and LPG
to Petrobras), and a natural gas purchase contract for 100% of
natural gas needs with YPF.
The Company's shareholders are YPF S.A., a Repsol-YPF subsidiary
(38%), Brasoil Alliance Co., a Petrobras subsidiary (34%), and
Dow Investment Argentina S.A., a Dow Chemical Co. subsidiary
(28%).
Business Profile
MEGA's business risk is below average as a result of its
susceptibility to further government intervention in its
operations. Rising taxes, natural gas restrictions, foreign
exchange controls, and transferability restrictions could affect
the Company's operations.
Altogether, market and competitive risks are minimal, given that
the contracts governing the sale prices of the products are
based on the cost of inputs, MEGA's ability to sell LPG and
natural gasoline to parties other than Petrobras at spot prices,
and MEGA being a low-cost producer of its products that should
be able to effectively compete in the global markets if needed.
The contractual base of the project is solid, supported by the
fact that a sponsor provides the feedstock and that the off-
takers are also the sponsors. In addition, after the mandatory
conversion to Argentine pesos of all private contracts in early
2002 (including MEGA's natural gas purchase contracts and ethane
off-take contracts), the Company agreed with its sponsors some
compensation adjustments for 2002 and 2003 and the free U.S.-
dollar exchange rate is being applied for both contracts since
January 2004.
Construction
With a four-month delay in construction, MEGA started commercial
operations on April 1, 2001. The provisional acceptance was
dated April 30, 2001. The final acceptance took place in April
2002. The Company's facilities, now certified, completed, and
operational, were constructed based on a turnkey contract with
an EPC consortium, including JGC Corp., Comercial del Plata
Construcciones, and Saipem.
According to the independent engineer (IE) report, the
facilities' design and construction have been developed in
accordance with industry standard engineering practices, and the
project bears resemblance to similar existing projects for
natural gas liquids' (NGL) extraction and fractionation in other
parts of the world.
MEGA has a unique characteristic concerning the NGL separation
facility, given that the high content of carbon dioxide in the
natural gas feedstock is not to be removed upstream in Loma la
de Lata, but in the fractionation plant in Bahia Blanca. The IE
also has provided comfort on the ability of the project to
handle the expected carbon dioxide concentration. If, however,
the MEGA design were to require carbon dioxide removal at the
inlet, the cost involved in adding a carbon dioxide removal
facility (amine treating facility) at the front end of the
extraction unit has been estimated at $7 million to $10 million.
Space has been allotted for that event in the plot plan, and the
cost of the facility can likely be paid out of excess cash flow.
The primary risk is that the project may have to be off line
while the carbon dioxide removal system is constructed.
Regarding the facilities' specifications, MEGA's production
should be according to the schedule, based on a natural gas
supply of 36 million cubic meter per day--or 1.2 billion cubic
feet (bcf) per day.
Markets
Although Petrobras and PBB are obligated to purchase the
project's products, further market analysis was done to
determine Petrobras' and PBB's willingness to honor their
obligations under the off-take agreements. This analysis' scope
first determined the demand for MEGA's products and then
determined the project's cost structure and competitive position
within the world markets. Based on those analyses, Standard &
Poor's concluded that off-take terms of the respective sales
agreements are attractive in both Brazil and Argentina, and that
the project would be able to sell its products (especially
gasoline and LGP) even in the absence of the sales agreements
with Petrobras and PBB.
In addition, because natural gasoline is a commodity whose price
subsequently is linked to the U.S. dollar, Standard & Poor's
believes that cash flow derived from spot sales would not be
affected if the product was sold into Brazil to alternate
buyers, but would likely be below the cash flow derived from
sales to Petrobras under the sales agreement if sold outside
Brazil due to increased transportation costs, which is usually
taken out of sale prices.
LPG and natural gasoline
Although Brazil is a large user of LPG and natural gasoline, the
country's fundamentals for LPG and natural gasoline are strong.
It is expected that Brazil's need for LPG imports would range
from 1.5 million to 2.5 million tons per year through 2017, and
the project was designed to provide up to 564,000 tons a year,
which could be therefore easily absorbed.
Given its importance for the population, even if Petrobras is
unable to honor its contract obligations under the sale
agreement, Standard & Poor's expects other parties to take over
the importation of LPG. In addition, the commodity
characteristic of the product provides comfort regarding supply
and transportation pricing. Although it could be provided from
other markets, the Argentine supply has significant cost
advantages in terms of transportation. Standard & Poor's expects
that LPG sourced from Argentina (from MEGA) will remain
attractive to Petrobras due to its proximity and lower
transportation costs than the LPG sourced from other regions.
Natural gasoline is a type of naphtha originated from a gas-
processing facility and not a crude refinery. Naphtha is a
commodity used in gasoline production and as a chemical
feedstock (mostly used as feedstock in ethylene plants).
Petrobras is a large producer of naphtha at its crude
refineries; however, according to Pace, Brazil can only meet
two-thirds of its requirements internally. MEGA is expected to
provide Brazil with about 197,000 tons/year of competitively
priced natural gasoline with competition coming primarily from
Venezuela.
Ethane
Ethane differs from LPG and natural gasoline because it is not
easily or economically transported, and therefore the producers
must be located close to the final user. Ethane is the chief
ingredient for ethylene production.
The ethane produced by the project is taken by PBB and used in
its plant in Bahia Blanca, which has been upgraded. PBB's
expansion of 400,000 tons of ethylene will enable PBB to
purchase all of MEGA's ethane production (500,000 tons per
year). The price of ethane to PBB is determined under the ethane
sales agreement. The ethane contract was priced in U.S. dollars
and is derived from mathematically averaging the free on board
price Mont Belvieu, Texas published in specific trade magazines.
Therefore, the ethane price is tied to world spot prices, which
should have kept the price PBB paid in line with the prices
other ethylene producers are paying for the largest cost
component of ethylene production.
Sale Contracts
MEGA's products are essentially sold to PPB, a Dow QuĦmica
subsidiary, and Petrobras, both under sale contracts. MEGA's
sales agreements are LPG and natural gasoline sales with
Petrobras, and ethane sales with PBB. All the sales agreements
are take-if-tendered contracts, which contain minimum
contractual volumes of the respective products that need to be
supplied by the project and purchased by the purchasing entity.
This mechanism allows all of MEGA's production to be absorbed by
its sponsors, regardless if the Company could sell LPG and
natural gasoline in the spot market. Price is exposed to market
fluctuations, generating a price-related risk. Table 2 shows the
minimum takes and indexes to which product processes are
contractually tied.
Originally, all the sales agreements had an initial term of 10
years with an automatic extension clause until 2017, as long as
no particular renegotiations take place. Since a renegotiated
contract can go into effect as early as the 10-year anniversary
of the first deliveries, while the debt extends through 2013,
some risk is introduced. The fact that the contracts have
automatic extensions if new terms are not negotiated, the
assumption that the sponsors will act in their best interest,
and the requirement for lenders' approval of any renegotiated
terms provide Standard & Poor's with some comfort that the sales
agreements will be in place for each product for the term of the
debt. Nevertheless, once completed, Standard & Poor's will
analyze the amendment to the original contracts to determine if
those amendments, triggered by the legal changes described
above, have any effect on the credit quality of the Company.
Feedstocks
The Company's natural gas feedstocks are provided by YPF under a
10-year assignment agreement. YPF is obligated to supply the
project with 36 million cubic meters per day (1.2 bcf/day) of
natural gas, and the project has the first right of refusal for
natural gas produced in the Neuquina basin. YPF is the largest
exploration and production Company in the country. As of
December 2003, YPF had 2.69 billion barrels of oil equivalent
proven consolidated reserves, almost all concentrated in
Argentina (47.2% oil, 76% developed reserves).
The gas supply contract had an initial term of 10 years with an
automatic extension clause that keeps the agreements in place
until 2017, as long as no particular renegotiations take place.
Any modification to the original contract is subject to the
lender's consent. Supply contract renegotiation risk is further
mitigated by the fact that YPF is not a controlling owner and
the other equity participants should act in their own self-
interest in any renegotiation. Standard & Poor's has also
concluded that key risks assumed by the bondholders include the
risks associated with extending the natural gas supply contract
and the market price risk associated with the pricing of the
natural gas under the contract.
Operations
MEGA was built to process, on average, 36 million cubic meters
per day of natural gas. Nevertheless, the Company has processed
gas volumes over its technical capacity during the winter period
in Argentina. The Loma de La Lata facility separates natural gas
into methane gas and NGLs. The methane gas is returned to YPF
and the NGLs are retained by the project to be further refined
at the Bahia Blanca facility. The project pays YPF for the
retained million Btu (mmBtu) according to the pricing formula in
the gas supply assignment agreement. The price paid by the
project for natural gas is equal to $1.342 per mmbtu as of year-
end 1996, multiplied by an adjustment factor. The adjustment
factor is the percentage change in price of a basket of
hydrocarbon products that includes diesel oil, fuel oil, LPG,
naphtha, and ethane.
Because the adjustment mechanism does not perfectly match the
products driving the revenue side of the transaction, there is a
potential for a mismatch to occur. For the built-in margin to be
negatively affected, the pricing correlation among the basket of
hydrocarbons broke down and some components in the index
(specifically, fuel and diesel oil) would have to experience
higher prices while the other components of the index experience
lower prices.
Financial Analysis
Although MEGA's notes are guaranteed by the parents of the
project sponsors, given that these guarantees will not be
outstanding for the full life of the notes, Standard & Poor's
did not factor them into the rating so as to equalize the rating
with those of the sponsors. However, the extension of the
guarantees until December 2005 evidences a certain degree of
support from the parents.
Financial Profile
Since fiscal 2002, MEGA's operating performance has been boosted
by the high prices of the products commercialized by the
Company, and the positive effect of the Argentine peso
devaluation on the Company's export and dollar-linked revenue
base, with certain domestic operating costs denominated in
Argentine pesos (such as labor). Therefore, the project's EBITDA
margin reached a solid 52.6% for the year ended Sept. 30, 2004
and 52% in fiscal 2003. MEGA also reported a strong 29% return
on permanent capital for the year ended Sept. 30, 2004, as a
consequence of the solid operating results and lower volatility
of the Argentino peso/U.S. dollar exchange rate.
The strong operating performance resulted in solid credit
measures for the rating category. MEGA reported a high 3.38x
DSCR for 2003, and a DSCR above 2.50x is expected for 2004.
Funds from operations (FFO) for the year ended Sept. 30, 2004
covered approximately 50% of total debt, while FFO interest
coverage improved to a strong 6.0x from 4.8x in fiscal 2003.
Standard & Poor's expects cash-flow protection measures to
remain adequate, even under lower international prices for the
Company's products, mainly due to the adequate cost structure of
the project. In addition, the Company's export base should be
sufficient to meet its debt service if government intervention
does not prevent the Company from freely disposing of such funds
to meet financial obligations.
MEGA was originally designed with an aggressive capital
structure to finance the construction of its operations.
However, given the strong results reached in the last two years
and some debt reduction (approximately US$40 million prepaid in
2004 in accordance with the financing documents), total debt to
total capitalization reached 49.5% as of Sept. 30, 2004 down
from 61.4% in 2003.
Primary Credit Analyst: Pablo Lutereau, Buenos Aires (54) 114-
891-2125; pablo_lutereau@standardandpoors.com
Secondary Credit Analyst: Luciano Gremone, Buenos Aires (54) 11-
4891-2143; luciano_gremone@standardandpoors.com
CORRIAL S.A.: Begins Liquidation
--------------------------------
Corrial S.A. of Buenos Aires will begin liquidating its assets
after Court No. 6 declared the Company bankrupt. Infobae reveals
that the bankruptcy process will commence under the supervision
of court-appointed trustee, Norberto Bonesi.
The trustee will review claims forwarded by the Company's
creditors until March 8, 2005. Clerk No. 12 assists the court on
this case.
CONTACT: Mr. Norberto Bonesi, Trustee
Avda Juan B Justo 5096
Buenos Aires
CREST S.A.: Liquidates Assets to Pay Debts
------------------------------------------
Crest S.A. will begin liquidating its assets following the
pronouncement of Buenos Aires Court No. 19 that the Company is
bankrupt, Infobae reports.
The bankruptcy ruling places the Company under the supervision
of court-appointed trustee, Mr. Jorge Arias. The trustee will
verify creditors' proofs of claim until Feb. 17, 2005. The
validated claims will be presented in court as individual
reports on April 4, 2005.
Mr. Arias 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 May 16, 2005.
Clerk No. 38 assists the court on the case, which will end with
the disposal of Company assets in favor of its creditors.
CONTACT: Corrial S.A.
Bartolome Mitre 3749
Buenos Aires
Mr. Jorge Arias, Trustee
Avda Rivadavia 1227
Buenos Aires
DI MARIO: Court Designates Trustee For Bankruptcy
-------------------------------------------------
Buenos Aires accountant Clara Susana Auerhan was assigned
trustee for the bankruptcy of local Company Di Mario Disegni
S.A., relates Infobae. The city's Court No. 26 is handling the
Company's bankruptcy case with the aid of Clerk No. 5.
The trustee will verify creditors' claims until March 17 next
year, the source adds. After that, he will prepare the
individual reports, which are to be submitted to the court on
May 2, 2005. The general report should follow on June 14, 2005.
CONTACT: Di Mario Disegni S.A.
Jose Enrique Rodo 4362/64
Buenos Aires
Ms. Clara Susana Auerhan, Trustee
Uruguay 872
Buenos Aires
DISENO DIDACTICOS: Court Declares Company Bankrupt
--------------------------------------------------
Diseno Didacticos S.A. entered bankruptcy on orders from Buenos
Aires Court No. 6, reveals Infobae.
Working with Clerk No. 12, the court assigned Mr. Jorge Fernando
Podhorzer as receiver. He is to verify creditors' claims until
March 28, 2005.
Creditors who fail to have their claims validated before the
deadline will be disqualified from receiving any payments to be
made after the Company's assets are liquidated.
CONTACT: Mr. Jorge Fernando Podhorzer, Trustee
Pasaje El Carmen 716
Buenos Aires
LA JUSTA SA: Court Appoints Trustee for Reorganization
------------------------------------------------------
La Justa S.A., a Company operating in Azul, is ready to start
its reorganization after the city's Court No. 1 appointed Mr.
Raul Galarza to supervise the proceedings as trustee.
An Infobae report states that Mr. Galarza will verify creditors'
claims until March 11, 2005. The court has scheduled the
informative assembly for Nov. 18, 2005.
CONTACT: La Justa S.A.
Rivadavia 2718 Olavarria
Azul
Mr. Raul Galarza, Trustee
Alvaro Barros 2768 Olavarria
Azul
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B A R B A D O S
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SUNBEACH COMMUNICATIONS: Shareholders to Seek Legal Action
----------------------------------------------------------
Some minority shareholders in the once top-performing Internet
service provider Sunbeach Communications Inc. plan to take legal
action against the Company's directors, the Barbados Daily
Nation reports.
The move is aimed at forcing these directors to reveal the terms
and conditions of a loan offer, which managing director Michael
Wakley said the Company received in November.
"They cannot do a thing unless they call a meeting of
shareholders. They [directors] have not yet disclosed to
shareholders the conditions of the proposed loan," the group's
spokesperson told BUSINESS AUTHORITY over the weekend.
At the same time, the minority shareholders, who number over
800, also want the directors of the Company to follow through on
an undertaking given by the board to hold a special general
meeting early in the new year to apprise shareholders of the on-
going situation with the Company.
On September 28, the Barbados Stock Exchange suspended trading
in Sunbeach's shares following concerns by the Company's
auditors Toppin, Walker and Co about the ability of the Company
to continue as a going concern. The Company then voluntarily
sought suspension of its shares on the Alternative Investment
Market of the London Stock Exchange.
Sunbeach is the only Company awarded a cellular license by
Government but has not yet started its mobile service.
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B E R M U D A
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FOSTER WHEELER: Updates Capital Share Information
-------------------------------------------------
Foster Wheeler Ltd. (OTCBB: FWHLF) announced Monday that,
subsequent to its November 29, 2004 shareholders meeting,
524,460 or 87.4% of its Series B Convertible Preferred Shares
have been converted into 34,089,900 Common Shares. As a result,
the total number of the Company's outstanding Common Shares at
the close of business on December 31, 2004 was 40,542,898, and
the Company's common share market capitalization was
approximately $643.4 million.
75,484 Series B Convertible Preferred Shares remain outstanding
as of December 31, 2004. These Preferred Shares are convertible
into an additional 4,906,441 Common Shares.
As previously announced, the Series B Convertible Preferred
Shares ceased to have voting rights immediately following the
Company's shareholders meetings on November 29, 2004, except in
limited circumstances as required under Bermuda law and the
Company's bye-laws.
Foster Wheeler Ltd. is a global Company offering, through its
subsidiaries, a broad range of design, engineering,
construction, manufacturing, project development and management,
research and plant operation services. Foster Wheeler serves the
refining, upstream oil and gas, LNG and gas-to-liquids,
petrochemicals, chemicals, power, pharmaceuticals, biotechnology
and healthcare industries. The corporation is based in Hamilton,
Bermuda, and its operational headquarters are in Clinton, New
Jersey, USA.
===========
B R A Z I L
===========
BASA: Fitch Assigns International Ratings
-----------------------------------------
Fitch Ratings, the international rating agency, assigned the
following international ratings to Banco da Amazonia S.A.
(Basa):
--Individual 'D';
--Long-term foreign and local currency 'BB-';
--Short-term foreign and local currency 'B'.
At the same time, the agency affirmed Basa's support rating of
'4' and the long-term and short-term national ratings of
'A+(bra)' and 'F1(bra)', respectively. The Rating Outlook for
all of the long-term ratings is Stable.
The long-term ratings assigned to Basa reflect control by the
National Treasury and the bank's major importance to Brazil's
North Region, which compensate for its outdated technology and
controls, deficiencies that are being corrected by current
management. The individual rating includes an ambitious
strategic planning, which foresees sizable loan growth, in
addition to its traditional development lending products. Market
risk is modest, and the high risk of its development credit is
minimized by the continued support of the federal government,
which has successively restructured the maturities of rural
lending using resources of the Constitutional Financing Fund of
the North (FNO), which represents the bulk of the bank's credit
risk. The foreign and local currency ratings are at Brazil's
sovereign ceiling.
Basa plays a major role in the development of the Amazon Region,
being responsible for 52% of the loans conceded in the region in
2003. It benefits from being the manager of the FNO and
administrator of the Amazon Investment Fund (Finam), whose
administration and delcredere fees are intended to compensate
for the risk assumed in development credit, a consequence of the
bank's social function. Basa's objective, as well as its main
challenge, is to expand the volume of resources available for
the economic and social development of the North Region at
acceptable loan loss levels. To do so, its current management,
which took office in mid-2003, has undertaken a broad
restructuring with the assistance of consultants, beginning with
renovation of its technology platform, needed to unify the
bank's systems base. The bank is intensifying operations with
its customer base, offering higher spread commercial products,
and intends to increase its network to 140 branches to improve
coverage in its vast business region.
Earnings, excluding 2001 when the federal government cleaned up
the bank, have been good for a development bank, but
substantially supported by gains on its securities (70% of June
2004 assets). The bank has endeavored to increase its higher
margin commercial lending, selecting amongst its development
customers with a better track record, seeking to compensate for
the decline in securities gains due to the lower, albeit still
high, local interest rates. Consolidated pro forma lending (i.e.
bank and FNO), being 94.5% related to development activities and
89% using FNO resources, grew 18% in the first half of 2004 to
BRL6,156 billion. Basa shares 50% of the risk on 52% of the FNO
loans (BRL5,481 million), with 14.9% classified in the lowest
risk ratings 'D-H', not unusual for a development bank and
significantly benefiting from the successive restructurings
under the aegis of official laws. Basa's portfolio quality has
fluctuated considerably in recent years. Due to the bank's need
for more adequate credit systems, the Central Bank requested a
preventive reserving of a number of loans, with those in ratings
'D-H' increasing to 25.3% of the total at June 2003. With
implantation of the controls, this ratio improved to 4.7% at
June 2004, better than the financial system's average. Coverage
for loan losses (97.5% of the bank's 'D-H' loans) strictly
adheres to local rules. Basa also has provisions equal to 13.2%
of its portfolio that shares risk with the FNO (equivalent to
88.1% of the 'D-H' loans for which Basa is responsible at the
FNO).
Basa, founded in 1942, is 96.92% controlled by the federal
government. A publicly traded Company, it acts as the
development bank for Brazil's North Region, focusing mainly on
small rural producers and micro and small companies. It has 106
outlets, including 88 branches.
EMBRATEL: Future Still Vague
----------------------------
Analysts are having a hard time trying to figure out what
Embratel's financial future will be due to recent unfavorable
news about the Company, reports Business News Americas.
In December, majority controller Mexican telco Telmex (NYSE:
TMX) announced plans to issue BRL1.9 billion (US$700mn) worth of
new shares in Embratel. Analysts took this as a sign of interest
in acquiring other telecom stock in Brazil, particularly pay
television provider Net Servicos, which would probably be
harmful to Embratel's minority shareholders.
Also in December, Embratel agreed to pay a total of BRL457
million (US$169 million) to fixed-line telephone companies Tele
Norte Leste Participacoes (Telemar) and Brasil Telecom
Participacoes to settle a long running dispute over
interconnection rates. Embratel's financial results during the
last quarter of 2004 will reflect this agreement.
Embratel is uniquely positioned to be the all-distance
telecommunications network of South America. The Company's
network has countrywide coverage with 32,466 km of fiber cables.
CONTACT: Ms. Silvia M.R. Pereira
Investor Relations
Phone: (55 21) 2121-9662
Fax: (55 21) 2121-6388
e-mail: silvia.pereira@embratel.com.br
invest@embratel.com.br
===================
C O S T A R I C A
===================
ICE: System Upgrade Delay Won't Affect Finances, Says Director
--------------------------------------------------------------
Costa Rica's telecoms and electricity monopoly ICE is yet to
embark on a US$6.6-million customer attendance system upgrade.
Business News Americas recalls that ICE awarded US software firm
Artinsoft the contract in 2003 with hopes it would be
implemented by August 2004. However, the Company hasn't been
able to send several clarifications to the country's comptroller
about the contract. The information was necessary to approve the
project.
According to ICE's IT director Luis Conejo, the delay will not
affect ICE's finances or services, although it required
Artinsoft to temporarily lay off nearly a dozen employees.
Artinsoft's corporate and research facilities are based in San
Jose, Costa Rica's capital.
===========
M E X I C O
===========
CFE: Inks $20M Power Accord With Durango
----------------------------------------
Mexico's federal government, state power producer CFE secured a
MXN222-million (US$19.8 million) agreement with the Durango
state government, reports Business News Americas.
Under the agreement, CFE will provide electricity to some 5,700
people in 36 rural towns in Durango. The project consists of a
subtransmission line, a feeder, a substation and 1,800 power
poles. Construction is scheduled to begin in March 2005 and
finish in November 2006, CFE said.
National indigenous development commission CDI, Durango state
government and the CFE will put up the funds.
GRUPO ELEKTRA: Merrill Lynch Reduces Stock Recommendation
---------------------------------------------------------
Increased competition as well as a sharp rise in Grupo Elektra
SA de CV's (EKT) shares prompted Merrill Lynch to cuts its stock
recommendation on the Mexican specialty retailer to neutral from
buy, reports Dow Jones Newswires.
"Shares appreciated 76% in 2004, and are approaching our $38
price objective," Merrill Lynch said in a research note.
Elektra's shares trading in New York ended at $37.24 Friday.
Merrill Lynch also said it is "beginning to see signs of
competitive pressure capable of impacting the profitability and
growth of Elektra's high margin consumer credit portfolio over
the longer term."
Competitors have intensified promotional efforts, said the
investment bank.
Also, Merrill Lynch believes the 24-month installment credit
terms being offered at Elektra's Mexico City stores carries a
higher default risk and may result in more bad debt reserves.
Grupo Elektra is Latin America's leading specialty retailer,
consumer finance and banking services Company. Grupo Elektra
sells retail goods and services through its Elektra, Salinas y
Rocha, Bodega de Remates and Elektricity stores and over the
Internet. The Group operates 947 stores in Mexico, Guatemala,
Honduras and Peru. Grupo Elektra also sells and markets its
consumer finance, banking and financial products and services
through its Banco Azteca branches located within its stores and
in other channels. Banking and financial services include
consumer credit, personal loans, money transfers, extended
warranties, savings accounts, term deposits, pension-fund
management and insurance.
CONTACTS: Investor and Press Inquiries:
Mr. Esteban Galindez, CFA
Director of Finance & IR
Grupo Elektra, S.A. de C.V.
Phone: +52-(55)-8582-7819
Fax: +52-(55)-8582-7822
e-mail: egalindez@elektra.com.mx
Mr. Rolando Villarreal
Head of Investor Relations
Grupo Elektra, S.A. de C.V.
Phone: +52-(55)-8582-7819
Fax: +52-(55)-8582-7822
e-mail: rvillarreal@elektra.com.mx
Ms. Samantha Pescador
Investor Relations
Grupo Elektra, S.A. de C.V.
Phone: +52-(55)-8582-7819
Fax: +52-(55)-8582-7822
e-mail: spescador@elektra.com.mx
Web Site: http://www.grupoelektra.com.mx/
ISSSTE: Workers' Union Reject Reform
------------------------------------
Deadlines being imposed for passing a reform law for the Social
Security and Services Institute for State Workers (ISSSTE) have
been rejected by the 80,000 union members affiliated to entity,
reports Comtex Business.
While Concepcion Castaneda Ortiz, the federal deputy and leader
of the ISSSTE's national workers' union, acknowledges that
there's a need to modernize the entity, the leader said "we will
not allow them to impose short-term solutions on us because we
are part of the [ISSSTE], not its problem."
The Institutional Revolution Party (PRI) legislator insisted
that in order to establish a reform, a consensus must first be
reached among the unionized bureaucratic class.
She added that the institution is not concerned with what
international financial organizations are saying regarding this
matter.
The official also reiterated that union workers are fully
against the privatization of their retirement funds, since they
are convinced that this would not be the best solution.
In September 2004, Mr. Alfredo E. Thorne, director of Economic
Research for Latin America at JP Morgan, said if there is no
reform, the ISSSTE's liabilities could reach as much as 45% of
GDP, considering the current value of pensions for current and
retired workers.
If the reform is postponed, for each year of delay, the
contingent debts of the institution will increase by 2
percentage points, "mainly because the [past] governments
decided to guarantee the workers pension schemes that were
excessively generous," said Thorne.
=======
P E R U
=======
SIDERPERU: Fulfilling Debt, Interest Obligations
------------------------------------------------
Peruvian steelmaker Siderperu told securities regulator Conasev
that it has made payments of US$1.3 million and US$1.1 million
to fulfill its debt and interest obligations for the October-
December 2004 period.
Business News Americas reports that the amounts include the
Company's payment obligations for the first issue of Siderperu
bonds.
Siderperu's announcement came on the heels of Peruvian ratings
agency Equilibrium Clasificadora de Riesgo's December decision
to maintain its C category rating for SiderPeru's first issue
bonds. The C rating means the Company is regarded as very close
to insolvency and not paying its debts.
Siderperu, which is controlled by Peruvian holding Sider, posted
a US$3.94-million net profit for the third quarter of 2004.
***********
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 2005. All rights reserved. ISSN 1529-2746.
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