/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/050201.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 Tuesday, February 1, 2005, Vol. 6, Issue 22 Headlines A R G E N T I N A CINEMATOGRAFICA LARA: Creditor Claims Report Due MULTIFINAN S.A.: Reports Submission Set PETROBRAS ENERGIA: Additional Teikoku Deal Details Emerge THE SECURITY GROUP: Trustee to Close Verification Phase B E R M U D A INTELSAT: Zeus Holdings Completes Acquisition ISS CONSULTING: Members Vote to Wind Up NATIONAL AMERICAN: Debt Claim Filing Ends February 11 SFC LTD.: Proceeds With Voluntary Liquidation SUNRISE HOLDINGS: Names Robin Mayor as Liquidator B R A Z I L EMBRATEL: Analysts Anticipate Lower 4Q04 Profit C H I L E ENERSIS: S&P Revises Outlook To Positive C O L O M B I A AVIANCA: Names New President BAVARIA: Fitch Sees Acquisition As Potentially Negative E C U A D O R PETROECUADOR: Refinery Upgrades Draw Significant Tender Interest J A M A I C A KAISER ALUMINUM: Files Term Sheet on Claims Resolution M E X I C O AMERICAS MINING: S&P Raises Company's, Subsidiaries' Ratings CFE: To Lobby for Budget Increase CINTRA: Federal Regulators Question 2005 Income Budget GRUPO MEXICO: Off S&P CreditWatch, Ratings Improve GRUPO MEXICO: Agrees to Make $55M Payment to Mine Workers ISSSTE: Unions Agreeable to Reform With Certain Conditions V E N E Z U E L A PDVSA: Local Stations' Transfer Contemplated for Better Control * VENEZUELA: Dodges Potential $35M Oil-Indexed Bond Payment - - - - - - - - - - ================= A R G E N T I N A ================= CINEMATOGRAFICA LARA: Creditor Claims Report Due ------------------------------------------------ Individual reports from claims forwarded by creditors of Cinematografica Lara S.R.L. are due for court submission Thursday, February 3, 2005. The company is undergoing liquidation under the supervision of Mr. Miguel Angel Drucaroff, court-appointed trustee. Court No. 17 of Buenos Aires' civil and commercial tribunal handles this case with help from the city's Clerk No. 33. CONTACT: Mr. Miguel Angel Drucaroff, Trustee Avda Corrientes 2470 Buenos Aires MULTIFINAN S.A.: Reports Submission Set --------------------------------------- Mr. Gustavo Daniel Micciullo, the trustee supervising the liquidation of Multifinan S.A., will submit individual reports from the case Thursday, February 3, 2005. The individual reports contain information on all claims submitted by the Company's creditors. Court No. 18 of Buenos Aires' civil and commercial tribunal handles this case. Clerk No. 35 assists the court with the proceedings. CONTACT: Mr. Gustavo Daniel Micciullo, Trustee Avda Cordoba 1417 Buenos Aires PETROBRAS ENERGIA: Additional Teikoku Deal Details Emerge --------------------------------------------------------- Argentina's Petrobras Energia SA released more details of its recently announced agreement with Japan's Teikoku Oil Co., Ltd.. Under the transaction, Petrobras will transfer 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 OCP. In a statement filed with the Buenos Aires bourse, Petrobras said Teikoku will make an upfront cash payment of US$5 million, followed by an additional US$10 million at a later date linked to infrastructure construction at Block 31. Furthermore, Teikoku will assume its pipeline obligations once production on Block 31 reaches an average rate of 10,000 barrels a day for a period of 30 days, the filing said. The "ship or pay" contract calls for Petrobras Energia to assure a transport capacity of 80,000 barrels a day, for a period of 15 years beginning on Nov. 10, 2003. Petrobras Energia added that the deal, which is subject to approval by the Ministry of Energy of Ecuador, will free up "40% of the lines of credit that Petrobras Energia maintains to allow it to comply with commercial obligations tied to the OCP transport contract. "That will reduce the financial burden and free up the margin of credit in favor of the company," the statement said. CONTACT: Petrobras Energia Participaciones SA Avenida de Mayo 701, Piso 16 Buenos Aires, Phone: (212) 657-5100 Fax: (212) 825-5674 Web Site: http://www.petrobrasenergia.com THE SECURITY GROUP: Trustee to Close Verification Phase ------------------------------------------------------- The verification of creditor's claims for The Security Group S.A. bankruptcy case will end Thursday, February 3, 2004. Creditors with valid claims against the Company must submit proof of these debts to trustee Aldo Roberto Markman by the said date in order to qualify for any post liquidation distributions. Buenos Aires' civil and commercial Court No. 24 holds jurisdiction this case with assistance from Clerk no. 37. CONTACT: The Security Group S.A. Virrey Loreto 3709 Buenos Aires Mr. Aldo Roberto Markman, Trustee Adolfo Alsina 1441 Buenos Aires ============= B E R M U D A ============= INTELSAT: Zeus Holdings Completes Acquisition --------------------------------------------- Intelsat, Ltd. ("Intelsat"), a global satellite communications leader providing services in over 200 countries and territories, announced Friday the successful closing of the amalgamation under Bermuda law of Intelsat and a subsidiary of Zeus Holdings Limited ("Zeus"). Zeus is a company formed by a consortium of funds advised by Apax Partners, Apollo Management, Madison Dearborn Partners and Permira. As a result of the closing of the transaction, those organizations and individuals that held shares in Intelsat immediately prior to the closing are entitled to receive $18.75 in exchange for each such share. The total value of the transaction, including approximately $2 billion of existing net debt, was approximately $5 billion. Merrill Lynch and Morgan Stanley acted as financial advisors to Intelsat, Ltd. in connection with the transaction. Credit Suisse First Boston, Goldman, Sachs & Co. and Lehman Brothers Inc. acted as financial advisors to Zeus in connection with the transaction. About Intelsat As a global communications leader with 40 years of experience, Intelsat helps service providers, broadcasters, corporations and governments deliver information and entertainment anywhere in the world, instantly, securely and reliably. Intelsat's global reach and expanding solutions portfolio enable customers to enhance their communications networks, venture into new markets, and grow their businesses with confidence. About Apax Partners Apax Partners is one of the world's leading private equity investment groups, operating across Europe, Israel and the United States. The firm manages or advises over $12 billion on behalf of institutional investors around the world. With over 30 years of direct investing experience, Apax Partners' Funds provide long-term equity financing to entrepreneurs to build and strengthen world-class companies. It pursues a balanced equity portfolio strategy, investing in companies at all stages of development from early stage to buy-out. Apax Partners' Funds invest in companies across its six chosen global sectors of information technology, telecommunications, healthcare, media, financial services, retail and consumer. Some of Apax Partners' Funds information technology and telecommunications investments include Audible, Dialog Semiconductor, Frontier Silicon, Jamdat, Kabel Deutschland, Sonim Technologies and Yell. About Apollo Apollo, founded in 1990, is among the most active and successful private investment firms in the U.S. in terms of both number of investment transactions completed and aggregate dollars invested. Since its inception, Apollo has managed the investment of an aggregate of approximately $13 billion in equity capital in a wide variety of industries, both domestically and internationally. About Madison Dearborn Partners Madison Dearborn Partners (MDP), based in Chicago, is one of the largest and most experienced private equity firms in the United States. MDP has approximately $8 billion of equity capital under management and makes new investments through its most recent fund, Madison Dearborn Capital Partners IV, L.P., a $4.0 billion fund raised in 2001. MDP focuses on management buyout and other private equity investments across a broad spectrum of industries, including basic industries, communications, consumer, financial services and healthcare. Over the last decade, MDP has been an active investor in the communications industry, with investments in such companies as Omnipoint Corporation, Nextel Partners, Telemundo Communications Group, Clearnet Communications, and XM Satellite Radio, Inc. About Permira Permira is a leading global private equity firm, advising funds of $13 billion, including Permira Europe III, an E5.1 billion fund raised in 2003. Permira is an independent business with offices in Frankfurt, London, Madrid, Milan, New York, Paris and Stockholm, focusing on buyout transactions across a number of sectors, including technology & telecom, consumer, business services, chemicals, industrial products and services, and healthcare. Since 1985, funds advised by Permira have invested in over 260 transactions and have an investor base comprising principally public and corporate pension funds and other institutions. CONTACT: Intelsat, Ltd. E-mail: media.relations@intelsat.com Phone: +1 202-944-7500. ISS CONSULTING: Members Vote to Wind Up --------------------------------------- IN THE MATTER OF THE COMPANIES ACT 1981 And IN THE MATTER OF ISS Consulting Ltd. The Member of ISS Consulting Ltd., acting by written consent without a meeting on January 24, 2005 passed the following resolutions: (1) THAT the Company be wound up voluntarily, pursuant to the provisions of the Companies Act 1981; (2) THAT Robin J. Mayor be and is hereby appointed Liquidator for the purposes of such winding-up, such appointment to be effective forthwith. The Liquidator informs that: - Creditors of ISS Consulting Ltd., which is being voluntarily wound up, are required, on or before February 11, 2005 to send their full Christian and Surnames, their addresses and descriptions, full particulars of their debts or claims, and the names and addresses of their lawyers (if any) to Robin J Mayor at Messrs. Conyers Dill & Pearman, Clarendon House, Church Street, Hamilton, HM DX, Bermuda, the Liquidator of the said Company, and if so required by notice in writing from the said Liquidator, and personally or by their lawyers, to come in and prove their debts or claims at such time and place as shall be specified in such notice, or in default thereof they will be excluded from the benefit of any distribution made before such debts are proved. - A final general meeting of the Member of ISS Consulting Ltd. will be held at the offices of Messrs. Conyers Dill & Pearman, Clarendon House, Church Street, Hamilton, Bermuda on March 1, 2005 at 9:30 a.m., or as soon as possible thereafter, for the purposes of: (1) receiving an account laid before them showing the manner in which the winding-up of the Company has been conducted and its property disposed of and of hearing any explanation that may be given by the Liquidator; and (2) by resolution determining the manner in which the books, accounts and documents of the Company and of the Liquidator shall be disposed of; and (3) by resolution dissolving the Company. CONTACT: Mr. Robin J. Mayor, Liquidator Clarendon House Church Street Hamilton, Bermuda NATIONAL AMERICAN: Debt Claim Filing Ends February 11 ----------------------------------------------------- IN THE MATTER OF THE COMPANIES ACT 1981 And IN THE MATTER OF National American Insurance Limited (In Members' Voluntary Liquidation) NOTICE IS HEREBY GIVEN that the Creditors of National American Insurance Limited, which is being voluntarily wound up, are required, on or before February 11, 2005, to send their full Christian and Surnames, their addresses and descriptions, full particulars of their debts or claims, and the names and addresses of their solicitors (if any) to Mike Morrison at KPMG Financial Advisory Services Limited, Crown House, 4 Par-La-Ville Road, Hamilton, HM 08, Bermuda, the Liquidator of the said Company, and if so required by notice in writing from the said Liquidator, and personally or by their solicitors, to come in and prove their debts or claims at such time as shall be specified in such notice, or in default thereof they will be excluded from the benefit of any distribution made before such debts are proved. SFC LTD.: Proceeds With Voluntary Liquidation --------------------------------------------- IN THE MATTER OF THE COMPANIES ACT 1981 And IN THE MATTER OF SFC Ltd. The Member of SFC Ltd., acting by written consent without a meeting on January 24, 2005 passed the following resolutions: (1) THAT the Company be wound up voluntarily, pursuant to the provisions of the Companies Act 1981; (2) THAT Robin J. Mayor be and is hereby appointed Liquidator for the purposes of such winding-up, such appointment to be effective forthwith. The Liquidator informs that: - Creditors of SFC Ltd., which is being voluntarily wound up, are required, on or before February 11, 2005 to send their full Christian and Surnames, their addresses and descriptions, full particulars of their debts or claims, and the names and addresses of their lawyers (if any) to Robin J Mayor at Messrs. Conyers Dill & Pearman, Clarendon House, Church Street, Hamilton, HM DX, Bermuda, the Liquidator of the said Company, and if so required by notice in writing from the said Liquidator, and personally or by their lawyers, to come in and prove their debts or claims at such time and place as shall be specified in such notice, or in default thereof they will be excluded from the benefit of any distribution made before such debts are proved. - A final general meeting of the Member of SFC Ltd. will be held at the offices of Messrs. Conyers Dill & Pearman, Clarendon House, Church Street, Hamilton, Bermuda on March 1, 2005 at 9:30 a.m., for the purposes of: (1) receiving an account laid before them showing the manner in which the winding-up of the Company has been conducted and its property disposed of and of hearing any explanation that may be given by the Liquidator; and (2) by resolution determining the manner in which the books, accounts and documents of the Company and of the Liquidator shall be disposed of; and (3) by resolution dissolving the Company. CONTACT: Mr. Robin J. Mayor, Liquidator Clarendon House Church Street Hamilton, Bermuda SUNRISE HOLDINGS: Names Robin Mayor as Liquidator ------------------------------------------------- IN THE MATTER OF THE COMPANIES ACT 1981 And IN THE MATTER OF Sunrise Holdings Ltd. The Member of Sunrise Holdings Ltd., acting by written consent without a meeting on January 18, 2005 passed the following resolutions: (1) THAT the Company be wound up voluntarily, pursuant to the provisions of the Companies Act 1981; (2) THAT Robin J. Mayor be and is hereby appointed Liquidator for the purposes of such winding-up, such appointment to be effective forthwith. The Liquidator informs that: - Creditors of Sunrise Holdings Ltd., which is being voluntarily wound up, are required, on or before February 11, 2005 to send their full Christian and Surnames, their addresses and descriptions, full particulars of their debts or claims, and the names and addresses of their lawyers (if any) to Robin J. Mayor at Messrs. Conyers Dill & Pearman, Clarendon House, Church Street, Hamilton, HM DX, Bermuda, the Liquidator of the said Company, and if so required by notice in writing from the said Liquidator, and personally or by their lawyers, to come in and prove their debts or claims at such time and place as shall be specified in such notice, or in default thereof they will be excluded from the benefit of any distribution made before such debts are proved. - A final general meeting of the Member of Sunrise Holdings Ltd. will be held at the offices of Messrs. Conyers Dill & Pearman, Clarendon House, Church Street, Hamilton, Bermuda on March 4, 2005 at 9:30 a.m. for the purposes of: (1) receiving an account laid before them showing the manner in which the winding-up of the Company has been conducted and its property disposed of and of hearing any explanation that may be given by the Liquidator; and (2) by resolution determining the manner in which the books, accounts and documents of the Company and of the Liquidator shall be disposed of; and (3) by resolution dissolving the Company. CONTACT: Mr. Robin J. Mayor, Liquidator Clarendon House, Church Street Hamilton, Bermuda =========== B R A Z I L =========== EMBRATEL: Analysts Anticipate Lower 4Q04 Profit ----------------------------------------------- Analysts see Brazilian telecommunications company Embratel Participacoes SA posting a lower profit for the fourth of 2004. A survey of five analysts by Dow Jones Newswires revealed an average forecast for net profits of BRL51.8 million ($1=BRL2.67) in the fourth quarter, lower than the BRL69.1 million posted in the same period of 2003. But due to uncertainties surrounding Embratel, the analysts' estimates varied wildly, from a net loss of BRL123 million to a net profit of BRL310 million. The uncertainties remain focused on whether Embratel's controlling shareholder, Telefonos de Mexico SA (TMX), or Telmex, will continue to move some of Embratel's BRL2 billion in possible liabilities onto the Brazilian firm's books as provisions, a practice which started last quarter. On the operating side, most analysts are expecting a slight improvement in the fourth quarter, compared to the third quarter, as Embratel tends to benefit from an increase in long distance phone calls toward the end of the year. Nevertheless, the firm's year-on-year performance will likely be down, as the company continues to lose revenues and market share due to the extremely competitive environment in the long- distance market. The survey showed an average forecast for net revenues of BRL1.79 billion, up marginally from BRL1.77 billion in the third quarter but down 4.2% from BRL1.87 billion the same period a year ago. Embratel is expected to release its earnings early this week. CONTACT: Embratel Participacoes S.A. Rua Regenta Feijo 166 sala 1687-B Centro Rio de Janeiro, 20060-060 Brazil Phone: 5521-519-6474 Website: http://www.embratel.net.br ========= C H I L E ========= ENERSIS: S&P Revises Outlook To Positive ---------------------------------------- Standard & Poor's Ratings Services affirmed its 'BBB-' corporate credit rating on Chile-based electricity provider Enersis S.A. and revised the outlook to positive from stable, reflecting Standard & Poor's expectations that Enersis' financial profile will continue improving as a result of continuing consolidation in its investment performance, combined with further debt reduction. In addition, the 'BBB-' corporate credit rating on Enersis' 60% owned subsidiary, Chilean power generator Empresa Nacional de Electricidad S.A. (Endesa Chile), was affirmed. The outlook for Endesa Chile remains stable. "The outlook change is based on the better prospects for most of its investments, partly based on the important growing trend in power demand in Chile, Colombia, Argentina, Brazil, and Peru. This, combined with a further debt reduction, should improve debt coverage ratios over the levels achieved in fiscal 2004. An upgrade to 'BBB' would require Enersis to continue successfully facing different regulatory, market, and operating challenges within a volatile environment in the region," said Standard & Poor's credit analyst Sergio Fuentes. In Endesa Chile's case, Standard and Poor's also expects better financial ratios in the next three fiscal years as a result of projected higher cash flow generation and debt reduction, assuming a normal hydrology in the Chilean Central Interconnected System (SIC) and the continuing consolidation of its non-Chilean investments. Nevertheless, and although the probability of occurrence is very low in 2005, there are still some uncertainties related to a potential adverse scenario in the SIC (the market where Endesa Chile sells its energy) given by a potential combination of natural gas shortages with poor hydrology. "A change in outlook to positive would mainly require further debt reduction and stronger debt coverage ratios," Mr. Fuentes added. The 'BBB-' corporate credit rating on Enersis is mainly based on its good business profile, which reflects the strong credit profile of its Chilean investments, the strong competitive position in the countries where it operates, and growing power demand in the region, partly offset by the noninvestment-grade credit profile of its non-Chilean investments. The rating also incorporates a good financial profile for the rating category deriving from the better performance of most of its investments, which is reflected on an adequate leverage, good debt coverage ratios and a significantly improved financial flexibility. The 'BBB-' corporate credit rating on Endesa Chile is based on the strong credit profile of the company's Chilean assets, partly offset by investments in weaker economies in Colombia, Argentina, Brazil, and Peru. The rating also incorporates an adequate financial profile for the rating category, which is expected to gradually improve in coming years as a result of the strong performance of its Chilean operations, the consolidation of its non-Chilean investments, and a further debt reduction. Enersis is a holding company, 60.6% owned by Spanish electricity utility Endesa S.A (A/Negative/A-1), with investments mainly in electricity generation and distribution in Chile, Colombia, Argentina, Brazil, and Peru. Enersis directly holds its investments in electricity distribution and indirectly holds its investments in power generation through its 60.0% ownership interest in Endesa Chile. =============== C O L O M B I A =============== AVIANCA: Names New President ---------------------------- Leadership of Avianca is set to change hands in March when Mr. Fabio Villegas takes over the reigns of the Colombian carrier as president. An insider interviewed by Reuters revealed that Mr. Villegas, head of Colombia's National Association of Financial Institutions (ANIF), will replace current president Juan Emilio Posada when the latter assumes presidency of Brazilian businessman German Efromovich's holding company controlling assets in Brazil, Ecuador and Peru. Avianca exited Chapter 11 bankruptcy protection after Mr. Efromovich's Sinergy investment trust won control over the airline. Sinergy offered to pour US$63 million and assume US220 million in debt. BAVARIA: Fitch Sees Acquisition As Potentially Negative ------------------------------------------------------- Fitch Ratings, the international rating agency, said Friday that an acquisition of the Colombian brewer Bavaria SA (rated Senior Unsecured 'BB') by a major international brewer might be questioned and may well have negative credit implications. Names rumored to be showing an interest in Bavaria for a speculative sum of up to USD9 billion include Anheuser-Busch, Heineken, Inbev and SABMiller. "In the event of a bidding process for Bavaria, due to the competitive fervour in the market, the winner is almost sure to pay a high price except if it has something unique to bring to its target. Moreover, even if such an acquisition is to be financed entirely with equity, it would lead to deterioration in the purchaser's credit metrics. This is due to Bavaria's higher leverage than the potential bidders' and its volatile income stream generated in low-rated countries," says Frederic Gits, Beverage Analyst in Fitch's European Corporate team. Bavaria SA's EBITDA margin (on net sales) is at over 40%, already at the best-in-class levels. Ambev, the Brazilian market leader has 35%, while SABMiller's South African operations, which benefit from an equivalent quasi-monopoly situation, delivers an EBITDA margin of 31.5% (turnover basis). This suggests that there may not be that much headroom to improve margins. In terms of synergies with existing operations, Inbev, Ambev's parent, is the only major brewer with significant operations in South America, and hence first-hand market knowledge, but even in this case cross-border economies of scale are not obvious to implement. However, by acquiring Bavaria Ambev would fill its South American portfolio and prevent another large brewer from establishing a footprint in the region as well as improve its competitive positions in the Latin American soft drinks market. Nevertheless, Inbev may become over-exposed, as South America would then constitute around 50% of its EBITDA. Anheuser-Busch, Heineken and SABMiller would all be interested in Bavaria for the same obvious, and hence fully priced, reasons: weighted market share of 98% in its four markets - Colombia, Peru, Ecuador and Panama - with a relatively young population of 86 million and increasing per capita consumption. The low purchasing power in the countries where it operates and the strength of Bavaria's brands leave little opportunity or need to launch the premium brands international brewers typically bring to a market after an acquisition. As Fitch explained in its report on Bavaria (dated October 2003 on www.fitchratings.com) "International brewers have shied away from entering the company's markets because of the strong - and almost nationalistic - brand equity of the company's flagship brands." It is unlikely that an acquisition of Bavaria would be an all cash transaction, particularly because this route would have detrimental tax consequences on Bavaria's owners, who would have little use for this money inside Colombia. Hence, a potential transaction would probably be structured as a merger, where owners of Bavaria would gain a significant stake in the acquirer - as with the AmBev-Interbrew transaction. From a credit perspective, even a fully equity-financed deal would drive up the leverage of most potential acquirers. Anheuser-Busch, Inbev, SABMiller and Heineken have leverage or a net-debt-to -EBITDA ratio of 2.0x or less, while Bavaria's, with net debt of USD1.8bn, was at 3.1x as at YE03. A fully equity- financed acquisition by SABMiller for example, would drive the latter's leverage up by 0.4x to 1.8x on a pro forma basis at YE04. Moreover, Bavaria generates all of its profits in the local currencies of Colombia (rated 'BB'), Peru ('BB'), Ecuador ('B-' (B minus)) and Panama ('BB+') whereas half of its debt is denominated in US dollars. Taking on Bavaria' debt at a time when the brewing sector is quickly consolidating would eat up a significant portion of any acquirer's debt capacity or headroom to undertake other acquisition opportunities. This could prove detrimental when major markets with strong potentials like Russia and China are still fragmented and still offer significant investment opportunities. In these countries the value an international brewer can bring to its target in the form of its know-how, its brands or its financial backing is more obvious than in the case of Bavaria. Fitch rates Bavaria SA 'BB'; Anheuser-Busch 'A+'; SABMiller 'BBB'; Scottish & Newcastle 'BBB'; Anadolu Efes 'BB-' (BB minus); Ambev 'BB+'; whereas Inbev and Heineken are publicly unrated. CONTACTS: Frederic Gits, Paris Tel: +33 (1) 44 29 91 34 Joe Bormann, Chicago Tel: +1 (312) 368 3349; Gian-Carlo Laguzza, New York Tel: +1 (212) 908 0212 MEDIA RELATIONS: Alex Clelland, London Tel: +44 20 7862 4084 ============= E C U A D O R ============= PETROECUADOR: Refinery Upgrades Draw Significant Tender Interest ---------------------------------------------------------------- Twenty-five companies have signified their intent to participate in the tender for the upgrading of Petroecuador's refineries, says Dow Jones Newswires. The presentation of documents to participate in the bidding is open until February 10. Among the companies that have presented proposals are Colombia's Ecopetrol, Brazilian firms Norberto Odebrech and Petroleo Brasileiro (PBR) as well as Spanish-Argentine group Repsol-YPF (REP). The contracts, to be handed out by the government, will cover the modernization and administration of Petroecuador's Esmeraldas, La Libertad and Shushufindi plants. Around US$558 million in investment is needed to upgrade and add residual treatment facilities to these plants. The government plans to direct US$400 million of the money to Esmeraldas, which has the largest refining capacity. Esmeraldas contributes 110,000 barrels per day to the 175,000 barrels combined daily output of the plants. ============= J A M A I C A ============= KAISER ALUMINUM: Files Term Sheet on Claims Resolution ------------------------------------------------------ Kaiser Aluminum has filed with the U.S. Bankruptcy Court for the District of Delaware a term sheet executed on January 26 between Kaiser and other parties concerning the resolution and treatment of personal injury claims and demands within the context of a Plan of Reorganization (POR) that the company expects to file within the next several months. The term sheet was filed as an attachment to a proposed amendment to Kaiser's pending Intercompany Settlement Agreement (ISA), which is the subject of Bankruptcy Court hearings scheduled to begin on February 1. As a result of the execution of the term sheet, the proposed amendment, and certain other agreements, all parties either have withdrawn or will withdraw their objections to the ISA. Parties to the term sheet, in addition to Kaiser, are the Unsecured Creditors Committee, the United Steelworkers of America, the Pension Benefit Guaranty Corporation, the Official Committee for Asbestos Claimants, the Representative for Future Asbestos Claimants, and the Representative for Future Silica and Coal Tar Pitch Volatiles Claimants. Broadly speaking, the term sheet contains the following elements: - The company's POR will provide for the creation of a trust or trusts that will be funded as described and will assume the liability for covered personal injury claims (as defined), with appropriate channeling injunctions pursuant to Sections 524(g) and Section 105 of the Bankruptcy Code to become effective upon confirmation of the POR. - Covered personal injury claims include asbestos claims and demands, silica claims and demands, coal tar pitch volatiles claims and demands, and noise-induced hearing loss claims. Assets to be contributed to the trust(s) will include: - Proceeds from future postpetition insurance settlements for covered personal injury claims, through the effective date of the POR, together with the amounts currently held in Court- established escrow accounts; - Rights to proceeds under certain insurance policies as to covered personal injury claims; - Assumption by the trust(s) of the responsibility for and right to control litigation and settlement of insurance coverage litigation for covered personal injury claims after consummation of Kaiser's POR; - $13 million in cash from the company; - Distributions in respect of 75% of the prepetition, unsecured intercompany claim held by Kaiser Finance Corporation (KFC) against Kaiser Aluminum & Chemical Corporation (KACC), which shall be in the form of equity of the reorganized Kaiser Aluminum; - 100% of the stock of a subsidiary of KACC, whose sole asset will be a piece of real property that produces modest rental income. The term sheet also expressly acknowledges that there are conditions precedent to the POR, including Bankruptcy Court approval of the proposed ISA with the proposed amendment to the ISA, and that there are other terms of the pending POR that have not been agreed upon by certain of the parties. In addition, the proposed amendment to the ISA is subject to approval by the lenders under the company's current Debtor-in-Possession credit facility. Kaiser Aluminum (OTCBB: KLUCQ) is a leading producer of fabricated aluminum products and owns interests in alumina and primary aluminum. CONTACT: Kaiser Aluminum, Houston Mr. Scott Lamb Phone: 713-332-4751 =========== M E X I C O =========== AMERICAS MINING: S&P Raises Company's, Subsidiaries' Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit rating on Americas Mining Corp. (AMC) and AMC's three mining subsidiaries, Minera Mexico S.A. de C.V. (MM), ASARCO Inc., and Southern Peru Copper Corp. (SPCC), to 'BB-' from 'B-.' The ratings were removed from Creditwatch, where they were placed on Nov. 8, 2004. The outlook is positive. "The three-notch upgrade reflects the companies' huge debt reduction in 2004, improved operating performance, good copper price performance, and advance in financial flexibility due to Minera Mexico's ability to refinance its security export notes with a syndicated loan that led to a more comfortable amortization schedule and interest expense reduction," said Standard & Poor's credit analyst Juan P. Becerra. The rating on AMC and its subsidiaries reflects the company's below-average debt profile, volatile metal prices, average cost position, limited product and geographic diversification, and reliance on SPCC's and MM's dividends. These factors are balanced by AMC's position as the third-largest copper producer in the world, its vertical integration, its improved financial flexibility, and its realized and expected cash-flow generation due to higher copper prices, as well as the merger of SPCC and MM. ` Standard & Poor's views the ratings on MM, Asarco, and SPCC to be equal due to common ownership and management, centralization of certain functions, and intercompany transactions. The outlook is positive. The rating could be raised if AMC demonstrates its ability to sustain its cash-flow generation and continues its leverage reduction at the AMC holding and MM levels and the financial policy regarding dividend payments continues unchanged. CFE: To Lobby for Budget Increase --------------------------------- In an effort to bring forward projects that have been called off, state-owned electricity company Comision Federal de Electricidad (CFE) will lobby for an increase in its investment budget of around MXN4.64 billion (US$413 million), reports El Universal. The Finance Department of the CFE claims that the original cost of the seven projects did not reflect the economic situation in the country and the possible private investors were looking rather reticent. As a result, the public works contract had to be revalued to make them more attractive to investors under the Deferred Investment Projects in Spending Registers (Pidiregas) scheme. The situation will mean a 4.08% increase in the company's debts classified as direct financed investment this year compared to 2004. These debts total MXN118.36 billion (US$10.5 billion). CINTRA: Federal Regulators Question 2005 Income Budget ------------------------------------------------------ The government's decision to include income of US$222 million from the sale of the airline holding company Cintra in the 2005 Income Budget despite the absence of a solid plan to re- privatize Aeromexico and Mexicana de Aviacion has raised the eyebrows of the federal deputies. Comtex Business reports that the secretary of the Communications Commission of the Chamber of Deputies, Mr. Jesus Gonzalez Schmal, criticized the Treasury Secretariat for including the amount in the Income Budget despite the fact that the basis for the auction of the airlines has still not been sorted out. "Curiously, the Treasury Secretariat told us that it was going to enter MXN2.5 billion [US$222 million] from the sale of Cintra and it happens that IPAB [the Bank Savings Protection Institute] tells us that this [the sale process] is still being resolved," said Gonzalez Schmal. Mr. Schmal relates that information from IPAB, the main shareholder of Cintra, indicates that there is a liability of around MXN15 billion (US$1.33 billion) between the two airlines. The issue "of why this income is being considered" would be discussed in the next ordinary period of sessions because "it is very important," Mr. Schmal said. The Mexican government controls more than 65% of Cintra, mostly through IPAB, which acquired a 50.5% stake when the government rescued troubled banks in the mid-1990s. CONTACT: CINTRA S.A. de C.V. Av Xola 535 piso 16 col. del Valle M,xico DF Phone: (5)448 - 8000 e-mail: infocintra@cintra.com.mx Web Site: http://www.cintra.com.mx GRUPO MEXICO: Off S&P CreditWatch, Ratings Improve -------------------------------------------------- Standard & Poor's Ratings Services raised its long-term corporate credit rating on Grupo Mexico S.A. de C.V. (Gmexico) to 'BB' from 'B+'. The rating was removed from CreditWatch, where it was placed on Nov. 8, 2004. The outlook is positive. "The two-notch upgrade on Gmexico reflects its debt reduction at the holding level, and the current and expected improvement in its mining business financial profile," said Standard & Poor's credit analyst Juan P. Becerra. The improvement at the mining division was due to huge, but still below-average, debt reduction in 2004 (almost 16%), improved operating performance, good copper price performance, and advances in financial flexibility. The rating on Gmexico reflects the company's below-average debt profile, cyclical and volatile copper prices, cash-flow generation, and high fuel cost, which are affecting somewhat its railroad and mining divisions. These factors are balanced by the company's position as the third-largest copper producer in the world, including the very low-cost mines of Southern Peru Copper Co., Americas Mining Corp.'s (AMC) better financial profile, and Ferromex's steady cash-flow generation. The outlook is positive. The rating could be raised if the rating on AMC is raised and the railroad operation continues its positive performance. In turn, the rating on AMC could be raised if its ability to sustain its cash-flow generation continues, it keeps its leverage reduction at AMC holding and Minera Mexico S.A. de C.V. level, and if the financial policy regarding dividend payments continues unchanged. GRUPO MEXICO: Agrees to Make $55M Payment to Mine Workers --------------------------------------------------------- Grupo Mexico, the world's third-largest copper producer, has paid out US$55 million to Cananea and La Caridad mine workers to settle an equity claim related to the privatization of the mines 15 years ago. Business News Americas recalls that the Mexican government carried out the sale of the Cananea and La Caridad mines between 1988 and 1990 for a total of US$475 million. The privatization contract detailed that 5% of the shares would be apportioned to the workers. Union spokesperson Consuelo Aguilar said that a list of workers who belonged to the companies when they were privatized will be drawn up so they can receive their due. CONTACT: GRUPO MEXICO S.A. DE C.V. Avenida Baja California 200, Colonia Roma Sur 06760 Mexico, D.F., Mexico Phone: +52-55-5264-7775 Fax: +52-55-5264-7769 Home Page: http://www.gmexico.com ISSSTE: Unions Agreeable to Reform With Certain Conditions ---------------------------------------------------------- The Democratic Federation of Civil Servants Unions (FEDEESP) is agreeable to the fact that there's a need to revise the law of the Social Security and Services Institute for State Workers (ISSSTE) in order to make the institution viable. But, according to a Notimex report, the group also stressed that should there be any changes, the assets of workers should not be affected. Ignacio Castillo, head of the Union of Agriculture Secretariat employees, said that the "deplorable" financial and operative situation of the institution is not the responsibility of the employees and therefore they should not have to bear the burden of the reform. ================= V E N E Z U E L A ================= PDVSA: Local Stations' Transfer Contemplated for Better Control --------------------------------------------------------------- State oil firm Petroleos de Venezuela SA (PDVSA) said it is considering handing over 158 gas stations to local cooperatives as part of the government's plan to obtain more control over the domestic fuels market, relates Business News Americas. The announcement to hand over the stations, which are owned by PDVSA's gasoline distribution arm Deltaven, but operated by private companies under concessions, came after the government said it would implement a fuel rationing plan in the domestic market to curb smuggling of cheap gasoline to neighboring countries. The recent announcement has spurred apprehension among some of the country's gas-station owners. "That's 10% of the gas stations in Venezuela, going to inexperienced hands," said Norbis Pena, the president of the gas-station owners' association Fenegas. "Of course, those stations are the government's, but they have offered current [private] operators no reason why [the government] wants their gas stations back," added Mr. Pena. * VENEZUELA: Dodges Potential $35M Oil-Indexed Bond Payment ----------------------------------------------------------- Venezuela said it will not make the US$35 million oil-indexed bond payment that Standard & Poor's said was due in October 2004, reports Bloomberg. PDVSA's preliminary calculations found the government does not owe a payment on oil-indexed obligations linked to some of the country's other bonds because the price of oil was not high enough to trigger the payment, the finance ministry said in a statement on its Web site. "The reference price was $28.20 a barrel and the strike price is $28.45 a barrel," the statement said. "Accordingly, no payment would likely be due." S&P recently cut Venezuela's long-term foreign currency debt rating to SD (selective default) after the country missed the payments in question on oil-indexed obligations. *********** 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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