/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/050127.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 Thursday, January 27, 2005, Vol. 6, Issue 19 Headlines A R G E N T I N A MUTUAL METALURGICA: Court Grants Reorganization Motion NICOLAS DAZEO: Reorganization Devolves to Liquidation PETROBRAS ENERGIA: Shareholders OK Consolidation of Operations PETROBRAS ENERGIA: Signs Sale, Partnership Deal With Teikoku PETROBRAS ENERGIA: S&P Rating Unaffected by Assets Sales PITRIZZA S.A.: Moves Toward Resolving Reorganization TELEFONICA DE ARGENTINA: Agreement End Renews Complaint to Ciadi * Argentina's Final Offer: 30 Cents on the Dollar B R A Z I L COPEL: Bear Stearns, UBS Raise Stock Rating Over Politics MSF FUNDING/DVI: S&P Withdraws LLC Series 2000-1 Notes Ratings VASP: Defense Minister Orders Financial Audit C H I L E BANCO DE CHILE: Informs Superintendence of Ongoing US Probe BANCO DE CHILE: Probe May Expose Poor Supervision at Santiago HQ ENDESA CHILE: Resettlement Negatively Impacts Balance Sheet ENDERSIS: ENDESA Cuts Debt by EUR745 Mln in 2004 G U Y A N A * GUYANA: IMF Approves $14.1M Disbursement J A M A I C A KAISER ALUMINUM: Court Starts Hearings on Settlement Deal M E X I C O GRUPO TMM: Intitrust Waiting Period Expires for KCS Deal P E R U * PERU: Expects Paris Club Response to Debt Proposal in March P U E R T O R I C O CENTENNIAL COMMUNICATIONS: Details Ex-President's Exit Deal V E N E Z U E L A PDVSA: Ambassador Herrera Comments on Harvest/PDVSA Issue PDVSA: Signs Joint-Venture Deal With Petrobras - - - - - - - - - - - ================= A R G E N T I N A ================= MUTUAL METALURGICA: Court Grants Reorganization Motion ------------------------------------------------------ Mutual Metalurgica San Nicolas successfully petitioned for authorization to reorganize after Court No. 3 of San Nicolas' civil and commercial tribunal issued a resolution opening the company's insolvency proceedings. Under insolvency protection, the company will continue to manage its assets subject to certain conditions imposed by Argentine law and the oversight of a court-appointed trustee. The Boletin Oficial for the province of Buenos Aires relates that Mr. Juan Carlos Colella will serve as trustee during the course of the reorganization. The trustee will be accepting creditors' proofs of claims for verification until March 8. The company will endorse the settlement proposal, drafted from the submitted claims, for approval by the creditors during the informative assembly scheduled on August 29. CONTACT: Mutual Metalurgica San Nicolas Mitre 282 San Nicolas Mr. Juan Carlos Colella, Trustee Francia 208 San Nicolas NICOLAS DAZEO: Reorganization Devolves to Liquidation ----------------------------------------------------- Nicolas Dazeo S.A.C.I.F.I., which was in the process of reorganizing, entered bankruptcy on orders from Court No. 2 of Mar del Plata's civil and commercial tribunal. Infobae reports that the court assigned Ms. Mirta Beatriz Antonanzas as trustee. The credit verification process will be done "por via incidental", adds the report. CONTACT: Nicolas Dazeo S.A.C.I.F.I. Calle Rawson 3039 Mar del Plata Ms. Mirta Beatriz Antonanzas, Trustee Avda. Luro 3894 Mar del Plata Phone: (0223) 473-9310 Fax: (0223) 473-0933 PETROBRAS ENERGIA: Shareholders OK Consolidation of Operations -------------------------------------------------------------- Petrobras Energia Participaciones S.A. (Buenos Aires: PBE, NYSE:PZE), controlling of Petrobras Energia S.A. (Buenos Aires: PESA), announced that the Special Shareholders' Meetings of Petrobras Energia S.A. (PESA), Eg3 S.A. (Eg3), Petrobras Argentina S.A. (PAR) and Petrolera Santa Fe S.R.L. (PSF), held on January 21, 2005 approved the merger process of Eg3, PAR and PSF into PESA, as described in the Preliminary Merger Agreement ("Compromiso Previo de Fusion") dated November 12, 2004, the most relevant terms of which have been reported in the Press Release of Relevant Fact issued on the same date. As a result of the merger, PESA, the absorbing company, will absorb Eg3, PAR and PSF, the absorbed companies, which shall be dissolved without liquidation. Petroleo Brasileiro S.A. - Petrobras, owner of a 99.6% interest in Eg3 and a 100% interest in PAR and PSF, all of them through its controlled company Petrobras Participaciones SL , will receive through the latter 230,194,137 new common, Class B shares, of a nominal value of P$1 each and entitled to one vote per share of PESA, representing 22.8% of PESA's corporate stock. After registration of the merger with the Board of Trade, interest of Petrobras Energia Participaciones S.A. in PESA will be 75.8%. Considering its 58.62% interest in Petrobras Energia Participaciones S.A., Petrobras will have a 67.2% indirect interest in PESA. CONTACT: Petrobras Energia Maipu 1, Piso 22 (1084) Buenos Aires, Argentina Phone: (5411) 4344-6655 Mr. Daniel E. Rennis E-mail: drennis@petrobrasenergia.com Mr. Alberto Jankowski E-mail: Ajankows@petrobrasenergia.com Web site: http://petrobrasenergia.com PETROBRAS ENERGIA: Signs Sale, Partnership Deal With Teikoku ------------------------------------------------------------ Petrobras Energia Participaciones S.A. (Buenos Aires: PBE, NYSE:PZE), controlling company of Petrobras Energia S.A. (Buenos Aires: PESA), announced that its controlled company Petrobras Energia S.A. has entered into a sale and partnership agreement with Teikoku Oil Co., Ltd, whereby Petrobras Energia has transferred 40% of Blocks 18 and 31, located in Ecuador, as well as 40% of its rights and obligations under the transportation agreement with Oleoducto de Crudos Pesados. Teikoku has agreed to contribute investment capital to develop Block 31, and 40% of the Company's rights and obligations under a Ship-or-Pay crude oil transportation agreement with OCP, from the time when production from Block 31 reaches an average of 10,000 oil barrels a day for a term of 30 calendar days. The transaction will not generate material accounting results. The partnership with Teikoku Oil Co., Ltd will generate the synergy required to develop the full potential of those assets, by consolidating operations in Ecuador as a relevant component in the future development of businesses in that country and the Company's business portfolio. After this agreement, which is subject to approval by the Ministry of Energy of Ecuador, Petrobras Energia S.A. acting through its controlled companies in Ecuador will hold a 60% share in Block 31 and a 30% share in Block 18. Petrobras Energia S.A. will continue to be an operator in connection with both blocks. PETROBRAS ENERGIA: S&P Rating Unaffected by Assets Sales -------------------------------------------------------- Petrobras Energia S.A. (PESA; B-/Watch Pos/--) announced Monday that it has reached an agreement with Teikoku Oil Co. Ltd. (Teikoku; BBB+/Stable/--) to transfer 40% of PESA's participation in Blocks 18 and 31 in Ecuador and 40% of its rights and obligations under the transportation contract of Oil Pipe Oleoductos Crudos Pesados to Teikoku. Under this transaction, Teikoku will assume the obligation to make capital expenditures to develop Block 31. PESA will remain the operator in both blocks. Since the transaction does not represent a significant inflow for the company and does not affect its production capacity, Standard & Poor's Ratings Services said that PESA's rating is not affected by the sale of the above- mentioned participations. PESA's current rating will remain on CreditWatch with positive implications in light of Petroleos Brasileiros' (Petrobras) announcement that it will consolidate most of its Argentine operations under PESA. PESA's rating will likely be raised after the completion of the legal approval of the merger. 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 PITRIZZA S.A.: Moves Toward Resolving Reorganization ---------------------------------------------------- Judge Paula Maria Hualde, serving for Court No. 9 of Buenos Aires' civil and commercial tribunal, issued a resolution opening the reorganization of Pitrizza S.A., reports the province's Boletin Oficial. The pronouncement authorizes the Company to begin drafting a settlement proposal with its creditors in order to avoid liquidation. The reorganization further allows the Company to retain control of its assets subject to certain conditions imposed by Argentine law and the oversight of the court appointed trustee. Mr. Juan Alberto Krimerman will serve as trustee during the course of the reorganization. He will be validating creditors' proofs of claims until March 28. The results of the verification will be presented in court as individual reports on May 9. The trustee is also required to provide the court with a general report of the case on June 21. The general report summarizes events relevant to the reorganization and provides an audit of the Company's accounting and business records. The Company will present the completed settlement proposal to its creditors during the informative assembly scheduled on December 19. CONTACT: Mr. Juan Alberto Krimerman, Trustee Uruguay 594 Capital Federal TELEFONICA DE ARGENTINA: Agreement End Renews Complaint to Ciadi ---------------------------------------------------------------- Telefonica de Argentina (NYSE: TAR) has renewed its complaint against Argentina with the World Bank's international arbitration tribunal Ciadi, reports Business News Americas. In July 2003, Telefonica first presented its appeal to Ciadi, seeking compensation for the 2002 financial crisis in Argentina and is seeking damages of US$2.83bn. Its main argument is that the government should not have ordered operators to charge in pesos rather than dollars. However, the company reached an agreement with the government, allowing the latter to put off talks for a new contract, and with it new price ceilings, until December 31, 2004. Now that the agreement has expired, the Spanish parent company Telefonica Espana (NYSE: TEF) and its authorities have resumed the trial as an element of pressure to ensure the government drafts new price ceilings. CONTACT: TELEFONICA DE ARGENTINA Tucuman 1, 18th Floor, 1049 Buenos Aires, Argentina Phone: (212) 688-6840 Home Page: http://www.telefonica.com.ar * Argentina's Final Offer: 30 Cents on the Dollar ------------------------------------------------- Argentina filed the supplemental prospectus of its widely anticipated debt swap with the U.S. Securities and Exchange Commission on January 12. The unprecedented transaction involving 152 bonds in eight currencies will run from January 14 to February 25. In exchange for US$103 billion in defaulted principal and interest, Buenos Aires is offering US$41.8 billion in three new securities bearing lower interest rates and longer maturities. The new bonds also come in four currencies. "If accepted, the debt swap would seem to close a painful chapter in Argentine history when its economy and finances largely collapsed -- setting off a severe political crisis and pushing millions of Argentines into poverty," The New York Times said on January 12. For it to be considered a success, the level of acceptance must be 70%, analysts say. Already there are indications that holders of Argentine debt, in particular institutional investors, will accept the offer, which pays only 30 cents on the dollar. Some analysts believe the three years it took to finalize this restructuring have sufficiently worn down investors. "Right now, the momentum is in favor of the Argentine authorities," Paulo Vieira da Cunha, head of Latin America research at HSBC in New York, told the New York Times. "The probabilities of the deal being a success have increased considerably over the last few weeks, and mainly for reasons that don't have much to do with Argentina." With banks and funds making up about 60% of the debt, the odds does favor Buenos Aires. According to the paper, institutional investors are better able to take a loss than individual investors. One such investor that is willing to trade its holdings of junk bonds for new ones is Michael Conelius, who manages the T. Rowe Price Emerging Markets Bond Fund and holds US$80 million in Argentine debt. "In my mind, all it takes is a modest improvement from the last terms that we saw, and the combination of fatigue and the external environment would cause the deal to be successful," Mr. Conelius told The New York Times. Individual investors, meanwhile, believe they can still derail the process and force the government to restart negotiations. One group that has vowed to sit out is the Argentina Bondholders' Association, which claims to represent 7,000 local investors. "The person who accepts this is hostage to a government that can do whatever it wants," Mr. Horacio Vazquez, the group's treasurer told The New York Times. "We'd rather battle this in court." The government, however, insists this is its last offer. Taking out newspaper ads both in Argentina and abroad in recent weeks, Buenos Aires warned bondholders against boycotting the process. "Argentina isn't contemplating future payments on eligible bonds that don't enter the swap," the ads read. A copy of the prospectus is available free of charge at http://bankrupt.com/misc/ArgentinaProspectus.htm CONTACT: Finance Minister Guillermo Nielsen Hipolito Yrigoyen 250 (1310) Cdad. Aut. de Buenos Aires Phone: 4349-5000/5010/5020 E-mail: ministrosecpriv@mecon.gov.ar Web site: http://www.mecon.gov.ar/finance/ =========== B R A Z I L =========== COPEL: Bear Stearns, UBS Raise Stock Rating Over Politics --------------------------------------------------------- Following Companhia Paranaense de Energia SA's (Copel) announcement to raise tariff rates by 5% from Feb.1, Bear Stearns and UBS Investment Research upgraded their stock recommendation on the Brazilian electric power utility. According to Dow Jones Newswires, Bear Stearns upgraded its recommendation on the stock to outperform from peer perform while UBS Investment Research to buy from neutral. Also behind Bear Stearns' rating upgrade are the increasing signs that Parana state Governor Roberto Requiao may not be re- elected next year. Bear Stearns had downgraded Copel in August 2003 to peer perform on concerns about corporate governance after Requiao didn't allow Copel to increase tariffs that year. Brazil's electric power regulator, Aneel, allowed Copel to hike tariffs by 25.3% that year, but Requiao and the Parana state government, which controls the utility, has kept electricity prices down, saying they help economic growth in the state. Bear Stearns noted that Copel's American Depositary Shares have risen 41% since August 2003. In a research note, Bear Stearns said the "Requiao factor" has been "the most significant driver of Copel's shares over the last 18 months. Hence, Copel's stock price should be highly correlated with Governor Requiao's showing in local political polls over the coming months leading up to the October 2006 election." CONTACT: Companhia Paranaense de Energia (COPEL) Investor Relations team Phone: (55-41) 222-2027 E-mail: ri@copel.com Web site: http://http://www.copel.com/ MSF FUNDING/DVI: S&P Withdraws LLC Series 2000-1 Notes Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services has withdrawn its ratings on MSF Funding LLC's series 2000-1 notes. The withdrawal follows the early redemption in December 2004 of all classes of notes (see list). The decision to redeem the notes early was made by DVI Inc.'s post-bankruptcy asset manager, who owned the Brazilian operations of DVI in addition to the class D and E notes. The notes were redeemed with funds from the current lease payments and amounts held in the transaction's reserve account. On the redemption day, only $4.8 million in rated notes were outstanding from the original $68 million issuance. The underlying collateral consisted of U.S. dollar-denominated medical equipment leases to Brazilian obligors. The leases were originated by the Medical Systems Finance S.A. (MSF) companies, DVI's Brazilian operations. The asset portfolio performed extremely well despite the early amortization of the notes and the bankruptcy and liquidation of the parent, DVI. Throughout the life of the transaction only 2.6% (seven leases) of the portfolio defaulted. Total delinquencies in the last payment period equaled 7.02% of the portfolio and throughout the term of the transaction averaged only 6.83%. If the early redemption had not occurred, the rated tranches would have been redeemed by scheduled principal amortization on the following payment dates: class A: December 2004; class B: February 2005; class C: May 2005; and class D: January 2006. The ratings on the notes were continuously monitored and were maintained at their original levels even during the early amortization period and the subsequent bankruptcy filing of DVI. The trustee (JPMorgan Chase Bank N.A.) declared an early amortization event on the notes on Aug. 13, 2003. The declaration was based on information including DVI's Aug. 13, 2003, announcement that its CFO was placed on administrative leave and that the company discovered apparent improprieties in its previous dealings with lenders involving misrepresentations of the amount and nature of collateral pledged to lenders for U.S. transactions. The issues surrounding the U.S. transaction's ratings suspension and DVI bankruptcy filings did not affect the performance of the Brazilian securitization. The MSF companies were excluded from the U.S. bankruptcy filings. TRANSACTION CLASSES MSF Funding LLC Class Rating Balance (mil. US$) To From Original Current A N.R. A 52.0 0.08 B N.R. BBB 5.6 1.65 C N.R. BB 6.4 1.89 D N.R. B 4.0 1.18 E N.R. N.R. 12.0 3.55 N.R.-Not rated. Primary Credit Analyst: Gary Kochubka, New York (1) 212-438- 2514; gary_kochubka@standardandpoors.com Secondary Credit Analyst: Cesar Fernandez, New York (1) 212-438- 2681; cesar_fernandez@standardandpoors.com VASP: Defense Minister Orders Financial Audit --------------------------------------------- Brazilian Vice President Jose Alencar warned debt-laden airline faces possible sanctions because of massive cancellations of flights in recent weeks. Mr. Alencar, who also holds responsibility over civil aviation affairs as the country's defense minister, met Tuesday with Vasp executives to discuss the cancellations and its financial condition. "As a concession-holder, VASP must follow certain rules, and one of them is maintaining its regular schedule of flights," Mr. Alencar said. He added that he had ordered the country's Department of Civil Aviation to audit the company's books. "Once the audit is completed, we will decide what to do about VASP," said Mr. Alencar. Civil Aviation Department officials said the audit will be completed within a few days. They said government sanctions against VASP could include heavy fines and permanent cancellation of routes. In recent weeks, VASP has adopted a policy of routinely canceling flights that aren't at least half full. Following Tuesday's meeting with Mr. Alencar, VASP President Wagner Canhedo said the airline will continue to cancel flights, based on the 50% policy, "for the next 15 days or so." ========= C H I L E ========= BANCO DE CHILE: Informs Superintendence of Ongoing US Probe ----------------------------------------------------------- Banco de Chile sent a letter to the Chilean Superintendency of Banks, the Chilean Superintendency of Securities and Insurance and Chilean stock exchanges, on Jan. 21 informing the existence of targeted examinations with respect to the U.S. branches of the Bank. Below is the content of the letter sent by Chief Executive Officer Pablo Granifo Lavin: According to Articles 9 and 10 of the Securities Law N� 18,045 the Bank hereby informs you of the following essential information regarding Banco de Chile: The Office of the Comptroller of the Currency (OCC) is conducting a targeted examination of the New York Branch of Banco de Chile to determine the Bank's compliance with U.S. Bank Secrecy Act and anti-money laundering requirements with respect to certain accounts of the New York Branch. The Federal Reserve Bank of Atlanta is also conducting a targeted examination with respect to certain accounts of the Bank's Miami Branch. The Bank is cooperating fully with these examinations. In connection with its examination, the OCC has designated the New York Branch to be in such a condition that it must obtain prior approval from the OCC before making new appointments of certain senior executive officers. The ongoing examinations are likely to result in additional supervisory actions by the OCC and the Federal Reserve Bank of Atlanta, which could include operating restrictions and the assessment of monetary penalties, although the extent of such actions or penalties cannot be determined at this time. CONTACT: Jacqueline Barrio -FVP-Investor Relations Manager Phone: (562) 637-2938 Fax: (562) 637-6889 E-mail: jbarrio@bancochile.cl Ximena Tarzijan-Investor Relations Officer Phone: (562) 637-2868 Fax: (562) 637-6889 E-mail: xtarzijan@bancochile.cl BANCO DE CHILE: Probe May Expose Poor Supervision at Santiago HQ ---------------------------------------------------------------- Chile's banking Superintendent said Tuesday that the investigation launched by U.S. authorities into Banco de Chile SA's New York branch potentially expose poor supervision at the bank's Santiago headquarters, reports Dow Jones Newswires. According to a Business News Americas report, U.S. regulators are investigating into a possible money laundering involving accounts linked to former dictator Gen. Augusto Pinochet. The information "is not good news" for Chile's number two bank, said Enrique Marshall, head of Chilean banking regulator Sbif. As it is up to U.S. investigators to handle the probe, Chile's banking authority won't undertake a parallel investigation of its own, Mr. Marshall said. However, conclusions drawn from the probe will likely reflect on Banco de Chile's local activities, and his regulatory agency is in close contact with its U.S. peers on the matter, added Mr. Marshall. So far, the probe has preliminarily revealed weak internal controls, but any sanctions would have to wait until the full investigation has run its course, he also said. Meanwhile, the probe has prompted Banco de Chile to fire Hernan Donoso as the manager of its New York branch. Mr. Donoso was removed in late December after more than 18 years on the job. The decision to fire Donoso was related to the handling of Pinochet family accounts that, apparently, were not correctly reported to U.S. bank regulators. Mr. Donoso was working for Banco de Chile in the 1980s when the checking accounts now being investigated by Chilean Judge Sergio Munoz and U.S. regulators were opened. Mr. Donoso's link to Pinochet was via attorney Oscar Aitken. The lawyer had Pinochet's power of attorney from October 2002 until he resigned late last year. Judge Munoz, who is investigating Pinochet's secret foreign accounts, found that the former dictator and his wife, Lucia Hiriart, had at least seven accounts at different banks in the United States, including the Banco de Chile branches in New York and Miami. Judge Munoz determined that Pinochet's secret accounts totaled some $15.9 million. On Jan. 16, Banco de Chile closed the accounts belonging to the Pinochet family and a foundation that bears the general's name. ENDESA CHILE: Resettlement Negatively Impacts Balance Sheet ----------------------------------------------------------- Endesa Chile (NYSE: EOC) announced the following: During December 2004, the Panel of Experts foreseen in the General Electricity Services Law, resolved a series of differences presented by the generating company members of the CDEC-SIC concerning the calculation of Firm Capacity within that entity. In the light of the resolutions of this Panel of Experts, on December 9, 2004, the Operations Director of CDEC-SIC, informed the grid's generating companies this week of the result of the re-settlements of balances of Firm Capacity corresponding to the period April 2000 to March 2004 as well as the result of such re-settlements for the period April to November 2004. As a result of these re-settlements made by the CDEC-SIC and their subsequent payment, the consolidated financial statements of Empresa Nacional de Electricidad S.A. will be negatively impacted by a sum of Ch$ 14,522,772,161 (US$ 26.1 million) for the period April 2000 to March 2004 and a sum of Ch$ 3,665,377,677(US$ 6.6 million) for the period April to November 2004. Empresa Nacional de Electricidad S.A. believes it correct to inform the market that, despite the fact that the Company will make the payments resulting from these settlements, this does not imply its approval of them. In fact, Empresa Nacional de Electricidad S.A. reserves the right to take all legal opposing actions in the light of the fundamental guarantees enshrined in the state's Political Constitution and which were affected by the mentioned resolutions of the Panel of Experts and in the Ministerial Resolution No.35 of the Ministry of the Economy. For greater clarity, and as was informed promptly to the market on December 28, 2004, Empresa Nacional de Electricidad S.A. brought Public Right Nullity proceedings against the Ministerial Resolution No.35 of the Ministry of the Economy, which opened extemporaneously and without competence for it, the capacity re- settlements between the grid's generating companies for the period 2000 - 2003. We should also inform the market that on January 20, 2005, Empresa Nacional de Electricidad S.A. asked the CDEC-SIC to call an extraordinary meeting of the board of directors in order to pronounce on the representation that the CDEC-SIC Operations Director made of the Laja and Rapel reservoirs in the calculation of the Firm Capacity which probably would account for a new difference to be resolved by the Panel of Experts. CONTACT: Mr. Jaime Montero Investor Relations Director Endesa Chile Phone: (56-2) 634-2329 E-mail: jfmv@endesa.cl ENDERSIS: ENDESA Cuts Debt by EUR745 Mln in 2004 ------------------------------------------------ ENDESA's (NYSE:ELE) net financial debt totalled Euro 16,505 million at December 31st, 2004, on provisional figures, a reduction of Euro 8,502 million (34%) on year-end 2001. Year-on- year, the company's debt fell by Euro 745 million or 4.3%. Of the Euro 16,505 million on the books at end-2004 the amount attributable to ENDESA and its direct subsidiaries -excluding the Chilean holding company Enersis- was Euro 12,320 million with the remaining Euro 4,185 million attributable to Enersis group. Also, at 31 December 2004 the liquidity of ENDESA in Spain and its direct subsidiaries -excluding Enersis Group- stood at Euro 4,046 million, of which Euro 2,732 million corresponded to unused credit lines. This sum covers maturities falling due in the next 17 months for this group of companies. At the same date Enersis group could draw on liquidity of Euro 695 million, which also covered debt maturing for the next 17 months. Hedging policy The policy for hedging interest rates over the last few years has allowed the group to keep a high percentage of its debt fixed rate and protected 85% at the end of 2004. In line with its policy of managing exchange rate risks Enersis group debt denominated in Chilean pesos rose to 26%, versus 5% in 2003. Debt denominated in other local Latin American currencies rose to 21% versus 16% the previous year. All other Enersis group debt is denominated in dollars. Debt owed by ENDESA in Spain and its direct subsidiaries, excluding Enersis Group, was 96% denominated in euros. For the group as a whole, euro debt made up 72% of the total, dollar debt 16% and Chilean peso debt 7% with the other 5% denominated in other Latin American currencies. The average maturity of the group's debt remains unchanged at 5.2 years. CONTACT: ENDESA North America Investor Relations Office David Raya, 212-750-7200 http://www.endesa.es =========== G U Y A N A =========== * GUYANA: IMF Approves $14.1M Disbursement ------------------------------------------ The IMF Executive Board of the International Monetary Fund (IMF) has completed the third review of Guyana's economic performance under its SDR 54.55 million (about US$83.2 million) Poverty Reduction and Growth Facility (PRGF) arrangement. Completion of the review makes a further SDR 9.27 million (about US$14.1 million) immediately available to Guyana under the arrangement. The Executive Board approved Guyana's request for waivers on the non-observance of two end-September quantitative performance criteria, and three end-November structural performance criteria, as well as the continuous performance criterion on contracting of nonconcessional external debt. The Board has also approved the authorities' request to extend the arrangement to September 2006, and to rephase the remaining disbursements, including the one made available now, in four equal installments in the amount of SDR 9.27 (about US$14.1 million) each. Following the Executive Board's discussion of Guyana on January 24, 2005, Takatoshi Kato, Deputy Managing Director and Acting Chair, stated: "The Fund extends its sympathy to the people of Guyana for the losses suffered from the recent devastating floods. "Guyana has made welcome progress in implementing its medium- term economic program. While economic growth has been weak in the face of a difficult domestic and external environment, macroeconomic stability has been achieved. Inflation is low, the exchange rate is stable, and the external debt is lower following the HIPC Initiative completion point. Nevertheless, there have been significant delays in moving ahead in a number of structural areas. Closer cooperation with the Fund will help ensure that program implementation remains on track. "Although economic growth is expected to strengthen in the medium term, the economic outlook is subject to considerable risk associated with high world oil prices, the envisaged liberalization in EU sugar prices, and the forthcoming presidential elections. Managing these risks so as to boost economic growth to levels that will make a significant dent on poverty, while safeguarding medium-term external debt sustainability, will require steadfast implementation of the authorities' fiscal and structural reform program and the continued support of the international community. "It will be especially important to place the public finances on a sustainable path by strengthening tax collections and containing public spending. Crucial measures in this regard will be the implementation of the value added tax by July 2006, establishment of strict limits on the wage bill, and careful selection of public sector investment projects to ensure their financial viability and consistency with the debt strategy. Consistent with the government's commitment to improving fiscal transparency and accountability, the authorities would be well advised to avoid the use of the Infrastructure Development Fund as a vehicle for extra-budgetary transactions. "Achieving the program's growth and poverty reduction objectives requires the improvement of the investment climate. Overcoming existing structural impediments to private investment will involve improved governance, reduced financial intermediation costs, and measures to facilitate private sector development. Steps to streamline regulations for business registration, licensing, custom clearance, land title issuance, and the establishment of commercial courts will be critical. Directors look forward to the upcoming PRSP progress report with the objective to enhance the discussion and ownership of the program, strengthen monitoring of social expenditures, and help to attain the poverty reduction objectives," Mr. Kato stated. The PRGF is the IMF's concessional facility for low-income countries. PRGF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in a Poverty Reduction Strategy Paper, or PRSP. This is intended to ensure that each PRGF-supported program is consistent with a comprehensive framework for macroeconomic, structural, and social policies, to foster growth and reduce poverty. PRGF loans carry an annual interest rate of 0.5 percent, and are repayable over 10 years with a 5 �-year grace period on principal payments. CONTACT: International Monetary Fund External Relations Department 700 19th Street, NW Washington, D.C. 20431 USA Public Affairs: 202-623-7300 Fax: 202-623-6278 Media Relations: 202-623-7100 Fax: 202-623-6772 ============= J A M A I C A ============= KAISER ALUMINUM: Court Starts Hearings on Settlement Deal --------------------------------------------------------- With two key issues being covered in specially scheduled hearings during the month of January, the regular hearing held Monday addressed mainly routine matters. Special Hearings The special hearings represent two major milestones in Kaiser's restructuring. First, after considering the evidence presented at the January 18 hearing, the Court has issued an order approving the PBGC settlement. Second, the Court is scheduled to begin three days of hearings on January 31 on the previously announced Intercompany Settlement Agreement. Timing of POR and Disclosure Statement While agreement was not forthcoming in December, the Company continues to move closer to reaching consensus with major creditors on the principal elements of the Kaiser Plan of Reorganization and Disclosure Statement so that it can file these documents with the Court within the next few months. New Financing Arrangement The Company announced January 15 that it has signed a commitment letter with JPMorgan and The CIT Group regarding a replacement for existing Debtor-in-Possession (DIP) financing, which expires on February 13, and a commitment for a multi-year exit financing facility. The new arrangement has been designed to provide the size, terms, and flexibility required to complete the reorganization and look ahead to a future as a highly competitive fabricated products company. The exit financing, in particular, is expected to enable Kaiser to emerge from Chapter 11 with a sound financial profile and the liquidity necessary to support continued growth. The Company has asked the Court to schedule a hearing on this matter for February 2. Liquidity Liquidity - defined as cash and borrowing availability - has continued to be adequate. Assuming Court approval of the new DIP on February 2, Kaiser expects to make a smooth transition to the new facility and to retain comparable borrowing availability, which has been near or above the $100 million range. CONTACT: Kaiser Aluminum Corp. 5847 San Felipe Suite 2500 P.O. Box 572887 Houston, TX 77257-2887 USA Phone: 713-267-3777 Web site: http://www.kaiseral.com =========== M E X I C O =========== GRUPO TMM: Intitrust Waiting Period Expires for KCS Deal -------------------------------------------------------- Grupo TMM, S.A. (TMM) (BMV: TMM A and NYSE: TMM) and Kansas City Southern (KCS) (NYSE: KSU) announced Tuesday that the 30-day waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) for the Amended and Restated Acquisition Agreement (AAA) has expired without a formal request from the U.S. Department of Justice (DOJ) for additional information of documentary material. This allows KCS and TMM to consummate the transaction without an antitrust challenge from DOJ and to bring The Kansas City Southern Railway Company, The Texas Mexican Railway Company and TFM, S.A. de C.V. under the common control of KCS. "We are pleased that the U.S. Department of Justice has again allowed the transaction to proceed without a request for additional information and without a challenge under the antitrust laws," said Michael R. Haverty, KCS chairman, president and chief executive officer. "We believe that this transaction will enhance rail competition in the United States and Mexico, enhancing service for shippers in the North American trade corridor." On December 15, 2004, KCS and TMM announced that the companies had entered into the AAA whereby TMM will sell its 51 percent voting interest in Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V. (Grupo TFM) to KCS for $200 million in cash, 18 million shares of KCS common stock, $47 million in a two-year promissory note, and up to $110 million payable in a combination of cash and KCS common stock upon successful resolution of the current proceedings related to the VAT Claim and the Put with the Mexican Government. The $47 million promissory note and a portion of the $110 million contingent payment will be subject to certain escrow arrangements to cover potential indemnification claims. With the completion of the HSR process, KCS shareholder approval of the issuance of the shares to TMM required under the AAA remains the final step to completion of the proposed transaction. The Securities and Exchange Commission is currently reviewing KCS' draft amended proxy statement. Headquartered in Mexico City, TMM is a Latin American multimodal transportation company. Through its branch offices and network of subsidiary companies, TMM provides a dynamic combination of ocean and land transportation services. KCS is a transportation holding company that has railroad investments in the United States, Mexico and Panama. Its primary domestic holdings include The Kansas City Southern Railway Company (KCSR), founded in 1887 and The Texas Mexican Railway Company, founded in 1885. Headquartered in Kansas City, Mo., KCSR serves customers in the central and south central regions of the United States. KCS' rail holdings and investments, including TFM, S.A. de C.V., are primary components of a NAFTA Railway system that links the commercial and industrial centers of the United States, Canada and Mexico. CONTACT: Grupo TMM S.A. Av. de la Cuspide # 4755 Colonia Parquer del Pedregal Tlalpan, 14010 Mexico Phone: 525-629-8866 Web site: http://www.grupotmm.com ======= P E R U ======= * PERU: Expects Paris Club Response to Debt Proposal in March ------------------------------------------------------------- Peru's Finance Minister Pedro Pablo Kuczynski anticipates an answer from the Paris Club of nations in mid-March on the government's plan to renegotiate outstanding debt, reports Dow Jones Newswires. Peru, whose debts with the Paris Club totaled US$8.18 billion as of September, presented a proposal to the latter in December. Renegotiating Paris Club debt is part of the finance ministry's overall plan to restructure government debt. The government has said it hopes to buy back debt at a discount and refinance it with longer term market debt. Mr. Kuczynski indicated earlier of carrying out a minimum of US$500 million in debt repurchases with the Paris Club, although it could be more. Some of that debt could be placed in local capital markets, analysts say. ===================== P U E R T O R I C O ===================== CENTENNIAL COMMUNICATIONS: Details Ex-President's Exit Deal ----------------------------------------------------------- On January 19, 2005, Centennial Communications Corp. entered into a severance agreement and general release (the "Agreement") with John de Armas, Centennial's former President - Caribbean Operations. Mr. de Armas resigned as an officer of Centennial effective January 11, 2005. Under the Agreement, Mr. de Armas will continue to receive his base salary with respect to the one-year period following such resignation, a pro rata portion of his accrued bonus for the current fiscal year and certain other fringe benefits. The Agreement also provides that, for a period of one year following his resignation, Mr. de Armas will be subject to certain non- competition provisions. The foregoing description of the Agreement is qualified in its entirety by reference to the provisions of the Agreement. To view severance agreement: http://bankrupt.com/misc/Centennial.htm CONTACT: Centennial Communications Corp. 3349 Route 138, Bldg A. Wall, NJ 07719 Phone:(732) 556 2200 Web site: http://www.centennialwireless.com/ ================= V E N E Z U E L A ================= PDVSA: Ambassador Herrera Comments on Harvest/PDVSA Issue --------------------------------------------------------- Ambassador Bernardo Alvarez Herrera of the Venezuelan Embassy in Washington D.C. released this press statement in response to the issues involving PDVSA and Harvest: EMBASSY OF THE BOLIVARIAN REPUBLIC OF VENEZUELA January 25, 2005 We are in the process of resolving this isolated commercial matter with Harvest. It involves an existing agreement between PDVSA and Harvest regarding agreed upon oil production levels. PDVSA is in full compliance with its contract with Harvest. Dozens of other companies operate within Venezuela with similar production contracts. All the rest are abiding by the terms of these agreements. PDVSA permitted Harvest to temporarily increase it production to 30,000 barrels per day from 22,000 barrels per day for 60 days in order to make up for a production shortfall. Harvest wanted to continue production at an even higher level of 36,000 barrels per day, but our contract clearly states that they must return to the contracted level of 22,000 barrels per day. We will continue our discussions with Harvest and believe the matter will be resolved shortly. This is a business decision. The wells in this field have the highest production costs of any wells in Venezuela -- $23 per barrel. The national average for other, non-marginal fields is between $3-4 per barrel. I believe it does not make business sense for PDVSA to increase production from these wells. Venezuela and the United States have been successful energy partners for many years. Venezuela remains the fourth largest oil supplier to the United States. PDVSA wants to maintain and strengthen this mutually beneficial relationship. Toward that end, I am having ongoing, productive conversations with important leaders in the energy sector. I believe that through conversations, we will be able to ensure our relationships with our international partners will be beneficial to both. PDVSA: Signs Joint-Venture Deal With Petrobras ---------------------------------------------- Venezuelan President Hugo Chavez's dream of forging a large- scale energy company in Latin America, to be called Petroamerica, comes closer to reality as Brazil's Petrobras and local oil giant PDVSA inked a cooperation deal last week. Business News Americas reports that the Memorandum of Agreement signed between PDVSA and Petrobras paves the way for the creation of a joint, mixed-capital company. PDVSA president Rafael Ramirez says that the companies intend to work together in areas such as Petrochemicals and natural gas exploration, production, commercialization and shipping. *********** 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. 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. 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