/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/050208.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 8, 2005, Vol. 6, Issue 27 Headlines A R G E N T I N A CITIBANK N.A.: Moody's Withdraws Ratings CLUB ATLETICO: Court Orders Liquidation EDESUR: Reports FY 2004 Net Loss of ARS28.3 Mln FARMACIA INCAICA: Initiates Bankruptcy Proceedings INSTITUTO ACUARIO: Court Favors Creditor's Bankruptcy Plea MORRISON CEREALES: Court Converts Bankruptcy to Reorganization PALMANOVA S.A.: Liquidates Assets to Pay Debts ROYAL SHELL: Optimism Backs Decision Regarding Argentina, Chile TRANSCONTINENTAL S.A.: Liquidates Assets to Pay Debts TRANSENER: Closer to Negotiating New Government Contract WILFE & CO.: Reports Submission Set B R A Z I L BANCO SANTOS: Creditor Groups to Present Solution This Week CEMIG: Rejects Bids for Light for All Program CEMIG: Stockholders to Ratify Debt Transfer Feb. 18 COPEL: Market Grows 1.4% in 2004 CSN: Names New Investors Relations Manager EMBRATEL: Eyes Net Servicos Stake NET SERVICOS: Shareholders OK BRL355M Debenture Issue TELEMAR: Fitch Affirms Ratings TELEMAR: Wins $24M Deal With CVRD C O S T A R I C A ICE: Records Losses of $43K/Month to Mobile Fraud J A M A I C A AIR JAMAICA: Grounds Daily Flights to North America M E X I C O SICARTSA: Workers Return to Work but Talks Continue VITRO: Subsidiary Closes Issuance of $80M Notes U R U G U A Y PARMALAT: International Group Assumes Control of Unit PARMALAT: Ecuador, Paraguay Units to Face Citigroup Charges V E N E Z U E L A IBH: Reports Fiscal 1Q05 Results PDVSA: Teams Up With Enarsa to Service 12% Share of Gas Market - - - - - - - - ================= A R G E N T I N A ================= CITIBANK N.A.: Moody's Withdraws Ratings ---------------------------------------- Moody's Investors Service has withdrawn all of its ratings for Citibank, N.A.'s Argentina branch for business reasons. The branch has no rated foreign currency debt outstanding. Please refer to Moody's Withdrawal Policy on moodys.com. Citibank, N.A. (Argentina), a branch of Citibank N.A., had $ 2 billion in assets as of December 31, 2003. The following ratings were withdrawn: Long Term Foreign Currency Deposit Rating: Caa2, with stable outlook Short Term Foreign Currency Deposit Rating: Not Prime, with stable outlook CLUB ATLETICO: Court Orders Liquidation --------------------------------------- Club Atletico Talleres prepares to wind-up its operations following the bankruptcy pronouncement issued by Court No. 1 of Cordoba's civil and commercial tribunal. The declaration effectively prohibits the Company from administering its assets, control of which will be transferred to a court-appointed trustee. Infobae did not identify the trustee assigned on this case although it reports that the verification of creditors' claims is set to end March 30. The court also expects to receive individual reports from the verified claims on May 30. CONTACT: Club Atletico Talleres Rosario de Santa Fe Nro. 15 Cordoba EDESUR: Reports FY 2004 Net Loss of ARS28.3 Mln ----------------------------------------------- Argentine power utility Empresa Distributadora Sur SA (Edesur) posted a net loss of ARS28.3 million ($1=ARS2.9225) for 2004, bigger than the previous year's net loss of ARS17.1 million, reveals Dow Jones Newswires. Edesur reported a total loss of US$66.8 million since the government converted utility rates into devalued pesos amid economic crisis in January 2002. "This is a consequence of the Company's yet-to-be-repaired economic-financial equation that was broken three years ago by the Economic Emergency law," the Company said in a news release acCompanying a brief earnings report to the local stock exchange. Edesur, which is controlled by Chilean power sector holding Enersis, is currently locked in a tenuous contract renegotiation with the government in which the state has offered it a 15% rate increase with the catch that additional revenues go straight into a state-run investment fund. CONTACT: Edesur S.A. San Jos, 140 Buenos Aires Tel: 4383-0200 4381-1313 FARMACIA INCAICA: Initiates Bankruptcy Proceedings -------------------------------------------------- Court No. 26 of Buenos Aires' civil and commercial tribunal declared Farmacia Incaica de Esmeralda 481 S.R.L. "Quiebra," reports Infobae. Mr. Carlos Wulff, who has been appointed as trustee, will verify creditors' claims until April 6 and then prepare the individual reports based on the results of the verification process. The individual reports will be submitted in court on May 18 followed by the general report on July 1. Clerk No. 52 assists the court on the case that will close with the liquidation of the Company's assets to repay creditors. CONTACT: Farmacia Incaica de Esmeralda 481 S.R.L. Esmeralda 481 Buenos Aires Mr. Carlos Wulff, Trustee Virrey del Piano 2354 Buenos Aires INSTITUTO ACUARIO: Court Favors Creditor's Bankruptcy Plea ---------------------------------------------------------- Ms. Diana Melnik successfully sought for the bankruptcy of Instituto Acuario S.R.L. after Court No. 1 of Buenos Aires' civil and commercial tribunal declared the Company "Quiebra," reports La Nacion. As such, the educational institution will now start the bankruptcy process with Mr. Otto Munch as trustee. Creditors must submit their proofs of claim to the trustee before March 24 for authentication. Failure to do so will mean disqualification from the payments that will be made after the Company's assets are liquidated. The creditor sought for the Company's bankruptcy after the latter failed to pay debts amounting to US$99,038.17. Clerk No. 2 assists the court on the case that will close with the liquidation of all of its assets. CONTACT: Instituto Acuario S.R.L. Hipolito Yrigoyen 2275 Buenos Aires Mr. Otto Munch, Trustee Maipu 509 Buenos Aires MORRISON CEREALES: Court Converts Bankruptcy to Reorganization -------------------------------------------------------------- Morrison Cereales S.R.L. proceeds with reorganization after Court No. 4 of Cordoba's civil and commercial tribunal converted the Company's ongoing bankruptcy case into a "concurso preventivo", states Infobae. Under Insolvency protection, the Company will be able to draft a proposal designed to settle its debts with creditors. The reorganization also prevents an outright liquidation. Mr. Alejandro Masso, the court-appointed trustee, will verify creditors' proofs of claims until February 28. Creditors with unverified claims cannot participate in the Company's settlement plan. The trustee is also scheduled to submit individual reports on April 18. CONTACT: Morrison Cereales S.R.L. Ruta Nacional 9 Km 516 Morrison (Cordoba) PALMANOVA S.A.: Liquidates Assets to Pay Debts ---------------------------------------------- Palmanova S.A. will begin liquidating its assets after Court No. 11 of Buenos Aires' civil and commercial tribunal declared the Company bankrupt, Infobae reports. The ruling places the Company under the supervision of court- appointed trustee Miguel Angel Marceesi. Mr. Marceesi will verify creditors' proofs of claims until March 16. The validated claims will be presented in court as individual reports on April 29. The trustee 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 June13. The bankruptcy process will end with the disposal Company assets in favor of its creditors. CONTACT: Mr. Miguel Angel Marceesi, Trustee Avellaneda 1135 Buenos Aires ROYAL SHELL: Optimism Backs Decision Regarding Argentina, Chile --------------------------------------------------------------- Royal Dutch/Shell Group has decided to stay in Argentina and Chile. This was revealed by Shell Argentina President Juan Jose Aranguren barely a week after Venezuelan President Hugo Chavez said his state-owned oil firm PDVSA was in talks to buy Shell Argentina. "Shell is not leaving (Argentina). Obviously our profitability is not great but we believe the business can improve," Aranguren was quoted as saying in the leading newspaper, La Nacion. "After everything that was said last week, the only important thing is this: The group has decided to stay here and in Chile," he added. Rumors about Shell planning to sell its service stations in Argentina and Chile came after the Company sold some assets in Peru and Venezuela. Analysts have said heavy taxes on oil and fuel have cut into Shell's profit margins in Argentina. TRANSCONTINENTAL S.A.: Liquidates Assets to Pay Debts ----------------------------------------------------- Transcontinental S.A. of Mendoza will begin liquidating its assets following the bankruptcy pronouncement issued by Court No. 2 of the city's civil and commercial tribunal. Infobae states that the ruling places the Company under the supervision of court-appointed trustee Norma Silvia Valinotti. Ms. Valinotti closed the verification of claims November 8. The trustee will present the validated claims in court as individual reports on March 9. A general report will also be submitted on August 18. The bankruptcy process will end with the disposal of the Company's assets to repay its creditors. CONTACT: Ms. Norma Silvia Valinotti, Trustee San Lorenzo 208 Mendoza TRANSENER: Closer to Negotiating New Government Contract -------------------------------------------------------- Argentina's nationwide power transporter Transener (TRAN.BA) and its unit Transba have taken a step closer towards a new contract with the government. According to Dow Jones Newswires, Transener, which controls Argentina's high-voltage power line network, and Transba signed a letter of intent on Wednesday with officials from the government's utility contract renegotiator, Uniren. The transitional agreement is conditioned to the eventual signing of a new contract. Uniren will now hold a yet-to-be- scheduled public hearing before the deal goes to the legislature for review. Transener didn't release details of the deal but according to financial newspaper El Cronista, Transener has accepted a rate increase of 31% and agreed to invest ARS32 million ($1=ARS2.9225) in upgrades this year. Likewise, Transba agreed to a 25% rate increase and to invest ARS6 million. The hikes are expected to lead to rate increases of 0.5% to 1.5% for industrial users but not affect politically sensitive residential clients, reports El Cronista. Transener has about US$520 million in debt but hasn't made any significant advances with its creditors on a debt restructuring deal, leaving it vulnerable to lawsuits and bankruptcy petitions from disgruntled creditors. The Company's finances have suffered immensely since 2002 because of the pesification and a freeze on utility rates. CONTACT: Paseo Colon 728 6th Floor (1063) Buenos Aires Republica Argentina Tel: (54-11) 4342-6925 Fax: (54-11) 4342-7147 Email: info-trans@transx.com.ar Web site: http://www.transener.com.ar WILFE & CO.: Reports Submission Set ----------------------------------- Mr. Carlos Wengorra, the trustee assigned to supervise the liquidation of Wilfe & Co. S.A. is scheduled to submit a general report of the case on June 22. The general report provides the court with an audit of the Company's accounting and business records. Infobae reports that Court No. 2 of Mendoza's civil and commercial tribunal has jurisdiction over this bankruptcy case. CONTACT: Mr. Carlos Wengorra, Trustee Espana 1057 Mendoza =========== B R A Z I L =========== BANCO SANTOS: Creditor Groups to Present Solution This Week ----------------------------------------------------------- Vanio Aguiar, who handles the intervention of Brazilian bank Banco Santos, has given the bank's two largest creditor groups until Feb. 11 to state their interest to negotiate a solution that will avert a possible liquidation of the bank. The creditors, KPMG and local pension association Abrapp, represent between 65% and 70% of Santos' total debt with creditors. Brazil's central bank took over Banco Santos, in November last year after the financial institution ran out of cash to cover its bad loans. The central bank shut Santos branches, its brokerage and asset management units, the first government seizure of a bank since 1999. CEMIG: Rejects Bids for Light for All Program --------------------------------------------- Brazilian power provider Cemig turned down all six bids for BRL1.2-billion (US$460mn) worth of contracts for the rural power supply expansion program Light for All, reports Business News Americas. Company CFO Flavio Moura disclosed Thursday that the bids turned out to be on average 20% higher than the reference price, which is no more than what the Company will pay for. The rejected bids came from Brazilian engineering firms CBPO Engenharia (Odebrecht), Camargo Correa, Andrade Gutierrez, Queiroz Galvao, Selt Engenharia and Unicoba Importacao. The companies now have until Feb. 14 to present new bids. "If they don't reduce their prices, we can, by law, sign a contract with another company even if it didn't participate in the bidding," Moura said. The Light for All program in Minas Gerais state, where state- controlled Cemig operates, wants to connect 176,237 rural properties in poor regions by December in 2006. The program began in 2004. Total investment is pegged at BRL1.64 billion, of which BRL585 million will come from Cemig, BRL161 million from the Minas Gerais state government, and BRL895 million from the federal government. CONTACT: Cemig - Companhia Energetica AV. Barbacenda 1200 Bello Horizonte MG, 30161-970 Brazil Fax: (0XX31) 299-4691 Phone: (0XX31) 3299-4524 CEMIG: Stockholders to Ratify Debt Transfer Feb. 18 --------------------------------------------------- Stockholders of Companhia Energetica de Minas Gerais (CEMIG) are hereby called to an Extraordinary General Meeting, to be held on February 18, 2005 at 9:30 a.m. at the Company's head office, Av. Barbacena 1200, 18th floor, in the city of Belo Horizonte, in the state of Minas Gerais, Brazil, to decide on the following matters: I) To ratify the transfer, from CEMIG to the wholly-owned subsidiary Cemig Geracao e Transmissao S.A., of the debt relating to the two issues of debentures subscribed by the State of Minas Gerais, the proceeds of which were invested in the construction of the Irape Hydroelectric power plant. II) To ratify the maintenance of the counter-guarantee offered by the State of Minas Gerais to the Federal Government of Brazil for the debt contracted by Cemig and payable to KfW and the Inter-American Development Bank, and for the debt arising from the restructuring of the foreign debt which gave rise to the Contract for Acknowledgment and Consolidation of Debt signed under Resolution 98/1992 of the Brazilian Senate, transferred to the wholly-owned subsidiaries Cemig Geracao e Transmissao S.A and Cemig Distribuicao S.A.. III) To give confirmed approval to the transfers which were the subject of the extraordinary General Meeting of Stockholders held on 30 December 2004, the individual amounts of which are greater than or equal to twenty (20) times the minimum limit able to be authorized by the Board of Directors of Cemig. Any stockholder who wishes to be represented by proxy in this General Meeting should obey the terms of Article 126 of Law 6406/76, as amended, and the sole paragraph of Article 9 of the Company's By-laws, by depositing, preferably by 16 February 2004, proofs of ownership of the shares, issued by a depositary financial institution, and a power of attorney with special powers, at the management office of the General Secretariat of Cemig at Av. Barbacena 1,200 - 19th floor, B1 wing, Belo Horizonte, state of Minas Gerais, Brazil, or by showing the said proofs of ownership at the time of the meeting. To view board proposal: http://bankrupt.com/misc/Cemig.pdf CONTACT: Companhia Energetica de Minas Gerais Av.Barbacena, 1200 Santo Agostinho - CEP 30190-131 Belo Horizonte - MG - Brasil Fax:(0XX31)299-4691 Phone: (0XX31)349-211COMPANHIA COPEL: Market Grows 1.4% in 2004 -------------------------------- Power consumption market at Copel's concession area grew 1.4% between January and December 2004 in comparison to the same period of 2003. Residential, commercial and rural consumption grew by 1.9%, 5.6% and 5.6%, respectively. The good performance of the commercial segment is mainly due to the modernization of the sector and to the implementation of new commercial businesses, which in December 2004 registered a 3.5% growth over the number of billed customers registered in the same month of the previous year. Rural segment growth is mainly due to risen exports of agriculture and agribusiness products, increasing producer's income what resulted in the acquisition of electric products. Industrial consumption dropped 1.4% as some large unregulated ("free") customers ceased to be Copel's clients. Excluding such customers from the comparison base, industrial segment would have increased 8.5%, and the total power consumption at Copel's concession area would have risen 5.5%. Power Market at Copel's concession area grows 1.4% from January to December 2004 Direct Distribution Segment In GWh ---------------------------------------------------------- 2003 2004 Change Residential 4,381 4,467 1.9% Industrial 7,233 7,130 (1.4%) Commercial 2,864 3,025 5.6% Rural 1,250 1,320 5.6% Others 1,689 1,728 2.4% ---------------------------------------------------------- Total 17,417 17,670 1.4% CONTACT: Investor Relations: Phone: (55-41) 222-2027 E-mail: ri@copel.com Web site: http://www.copel.com CSN: Names New Investors Relations Manager ------------------------------------------ Brazilian steelmaker Companhia Siderurgica Nacional (CSN) has appointed Marcos Leite Ferreira as Investors Relations Manager, replacing Luciana Paulo Ferreira. According to a Company filing with the Securities and Exchange Commission, Ferreira was executive director of investments for CSN. His responsibilities included evaluating investment projects and new business opportunities. CSN is the second-largest flat carbon steel maker in Brazil, with a total capacity for 5.8 million tpy of crude steel and 5.4 million tpy of rolled products. The Company's steel mill, the largest in Brazil, is located in the city of Volta Redonda, state of Rio de Janeiro (the Presidente Vargas Steelworks). CONTACT: CSN Marcos Leite Ferreira, Investor Relations Rua Lauro Muller, 116 - sala 3702 Rio de Janeiro, RJ Federative Republic of Brazil Tel: 5511 3049-7591 Web site: http://www.csn.com.br EMBRATEL: Eyes Net Servicos Stake --------------------------------- Telefonos de Mexico S.A. (Telmex) intends to propel Brazilian subsidiary Embratel Participacoes S.A. back to profitability by hooking up into Net Servicos de Comunicacao S.A.'s communications infrastructure. The Company will accomplish this synergy by purchasing a minority stake in the Sao Paulo-based cable company. The plan, says Chief Executive Jaime Chico Pardo in a report from Reuters, will make use of Net's cable network to upgrade Embratel's services in Brazil's four biggest cities. With Net's infrastructure, the Company will be able to introduce voice, video and data services to its clients at a lower cost. Mr. Pardo says Embratel will finance this acquisition through a $700 million share sale scheduled Feb. 17. Telmex will buy about a third of the rights offered. The offering, available at 4.30 reais per 1,000 share lot to shareholders of record on the sale date, is estimated to increase the Company's paid capital by as much as 80 percent to 4.10 billion reais. Part of the capital infusion will also be used to repay debt. Mr. Chico Pardo adds the Company will set aside around 278 million reais to repurchase 35 percent of its 11 percent bonds due 2008. Embratel has to work in increasing revenues especially since rivals have encroached on its former market. It reported a loss of 213 million reais in the fourth quarter of 2004. 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 NET SERVICOS: Shareholders OK BRL355M Debenture Issue ----------------------------------------------------- Brazil's biggest pay TV Company Net Servicos de Comunicacao on Friday gained shareholders' approval to issue BRL355 million of debentures, Dow Jones Newswires reports, citing Net's CFO Leonardo Pereira. The issuance is the latest in a series of steps designed to replace BRL1.4 billion of defaulted debt. Pereira revealed the Company is offering its creditors the option of receiving 40% of principal in cash and 60% in new debt. The next step, scheduled to begin in the next few days, involves an exchange of overseas debt, which accounts for approximately one-third of the total debt, Pereira said. Once that exchange begins, Net should be able to determine whether the minimum 85% of creditors required to make it effective will accept the terms, he said. According to Pereira, the final part of the restructuring will be for Net to issue new shares. The entire process should be completed 25 to 30 days after the overseas debt exchange begins. CONTACT: Investor Relations Mr. Marcio Minoru / Mr. Rodrigo Alves E-mail: ri@netservicos.com.br Phone: 55 11 5186-2811 TELEMAR: Fitch Affirms Ratings ------------------------------ Fitch Ratings has affirmed the following ratings for Tele Norte Leste Participacoes S.A. (TNE) and Telemar Norte Leste S.A. (TMAR): TNE --International scale local currency debt rating 'BB+'; --International scale foreign currency debt rating 'BB-'; --National scale rating 'AA-(bra)'. TMAR --International scale local currency debt rating 'BBB-'; --International scale foreign currency debt rating 'BB-'; --National scale rating 'AA(bra)'. All ratings have a Stable Rating Outlook. The rating affirmation reflects the ability of Telemar, the collective name of TNE and TMAR, to reinforce its business position and financial profile over the past year. Telemar continues to hold a leading market position in local service (more than 95% market share) and long distance in region I. In addition, the Company is the second largest wireless operator in its region two years after its introduction. Local service remains the backbone of the Telemar's credit quality. The Company derives a significant portion of revenues from its relatively stable local service operations, which reduces cash flow volatility and business risk. Telemar is likely to maintain its leading market share position in region I, given the capital-intensive barriers facing new entrants. Local service accounted for approximately 53% of revenues during the first nine months of 2004 and generates significant free cash flow due to relatively low capital expenditure needs. Telemar had 15.2 million lines in service at September 2004, which implies penetration rates of 16%. The number of lines in service has remained stable over the past two years, suggesting it is reaching maturity. Additional growth in lines in service has been limited by per capita income levels and by increasing competition from wireless services. Telemar's primary growth opportunities are in newer services such as wireless and Internet. During 2002, Telemar introduced wireless services in region I through its subsidiary Oi. Since then, Oi has been able to significantly grow the number of clients to seven million subscribers by January 2005 and has reached a market share of over 20% in region I. Oi's share of net additions in its region has been over 30%. The cash flow contribution from these operations is modest because wireless revenues account for only around 10% of total revenues and still require significant capital expenditures to meet subscriber growth. The ratings also incorporate the competitive nature of the industry and ongoing regulatory risk faced by Telemar. In particular, the wireless sector is very competitive due to the high number of established wireless operators. Ongoing regulatory risk is illustrated by a legal injunction in 2003 that temporarily prevented Telemar from increasing local-service tariffs according to original concession agreement terms. During 2004, the courts reversed the earlier tariff challenges and Telemar was able to increase tariffs to reflect the original terms. Heightened regulatory risk will remain present for Telemar and the other Brazilian fixed line incumbents, particularly until the new concession agreement terms for the 2006-2025 period are finalized and implemented. Telemar has a solid credit profile, with cash balances of BRL4.9 billion, strong EBITDA generation, and a manageable debt amortization schedule. The Company had interest coverage as measured by EBITDA to interest expense of 8.3 times (x) during the first nine months of 2004, leverage as measured by total debt to EBITDA of 1.7x, and net debt to EBITDA of 0.9x at Sept. 30, 2004. The Company has gradually reduced total debt, net of hedging effects, to BRL10.9 billion at Sept. 30, 2004 from BRL12.2 billion at Dec. 31, 2002 with free cash flow. Approximately 70% of debt is denominated in foreign currencies, with the remainder denominated in reais. Telemar's strategy is to attempt to hedge most of its foreign currency-denominated debt. Capital expenditures of approximately BRL2.0 billion during 2004, are manageable when compared with estimated annual EBITDA of BRL6.5 billion. Capital expenditures for 2005 are expected to reach BRL2.0 billion-2.5 billion and should continue to be financed internally. Telemar provides telecommunications services in region I, which comprises 16 states and includes Rio de Janeiro. Telemar also provides Internet, data transmission, and long-distance services. TNE is majority controlled by Telemar Participacoes S.A., which is in turn controlled by a group of Brazilian investors. CONTACT: Guido Chamorro +1-312-368-5473, Chicago Mauro Storino +55 21 4503-2600, Rio de Janeiro MEDIA RELATIONS: Brian Bertsch +1-212-908-0549, New York TELEMAR: Wins $24M Deal With CVRD --------------------------------- Telecommunications provider Telemar will provide voice and data services to Brazil's Companhia Vale do Rio Doce (CVRD). Business News Americas reports that the US$24 million deal will cover all CVRD's national and international networks for a period of five years. The out-sourcing contract with Telemar is expected to save CVRD, the world's largest iron ore producer and exporter, an estimated 35 percent in communications costs. CONTACT: TNE - INVESTOR RELATIONS E-mail: invest@telemar.com.br Mr. Roberto Terziani Phone: 55 (21) 3131-1208 Mr. Carlos Lacerda Phone: 55 (21) 3131-1314 Fax: 55 (21) 3131-1155 =================== C O S T A R I C A =================== ICE: Records Losses of $43K/Month to Mobile Fraud ------------------------------------------------- A government study revealed that telecoms monopoly ICE is losing nearly US$43,000 a month to fraudulent mobile phone use, reports Business News Americas. According to the report, on average 125 mobile lines per month are used illegally, mostly by organized groups using destitute street people to sign up for lines. The lines are later used in an excessive manner and no one ever pays for the service. "They bill as much as US$6,500 a month on a single line," ICE's legal director Giovanni Bonilla was quoted as saying. It is ICE policy to suspend service on a particular line when excessive usage is noticed but when it goes to charge the party for the fees, ICE discovers that the account is under the name of a homeless person. ICE now has a total of US$23.6 million in unpaid accounts. ============= J A M A I C A ============= AIR JAMAICA: Grounds Daily Flights to North America --------------------------------------------------- Air Jamaica last week grounded up to a dozen of its daily flights to North America, The Jamaica Observer reports. Booking agents attributed the action to low passenger demand. However, well-placed sources say the action is related to America's concerns about aspects of Jamaica's civil aviation oversight procedures and maintenance management controls at the Government-owned carrier. On Saturday, Robert Pickersgill, the minister responsible for aviation, confirmed that America's Federal Aviation Administration (FAA) in December conducted an audit of Jamaica's Civil Aviation Authority (CAA) and related agencies, including Air Jamaica. While he did not explicitly say so, Mr. Pickersgill suggested that the FAA inspectors had not demanded anything substantial from either the CAA or Air Jamaica to be in compliance with International Civil Aviation Organization (ICAO) standards, which Jamaica follows. "There are things we need to do which we are in the process of doing," he said. He declined to be specific on what the Americans asked Jamaica to do to receive their unqualified imprimatur, but said these would take time to complete. "We have been given 90 days," he added. The Government recently took over full ownership of Air Jamaica after the pullout of Gordon "Butch" Stewart's Air Jamaica Acquisition Group. CONTACT: AIR JAMAICA Corporate Communications Tel: 876-922-3460 ext 4060-5 URL: www.airjamaica.com =========== M E X I C O =========== SICARTSA: Workers Return to Work but Talks Continue --------------------------------------------------- Workers at Mexican steel Company Sicartsa's iron ore mine have halted their strike and returned to work Wednesday, reports Business News Americas. However, the Company's management and representatives of the national miners' union in Mexico City are still in negotiations to resolve a disagreement, which arose over the salary review of four workers. "Deferring [the stoppage] doesn't mean we're taking a step back or lowering our guard. Should the Company continue its repressive attitude and demand to penalize workers, unionized workers will take measures which they consider necessary at the next assembly," Company union representative Mario Garcia said. Sicartsa, a division of Grupo Villacero, had feared it would have to suspend operations at its steel plants due to the effects of the strike, which began Jan. 18. The action has cost Sicartsa some US$5 million in lost output, with the Company missing out on 7,000t/d of iron ore production. VITRO: Subsidiary Closes Issuance of $80M Notes ----------------------------------------------- Vitro, S.A. de C.V. announced Friday that its subsidiary Vitro Envases Norteamerica, S.A. de C.V. ("VENA"), Vitro's glass containers division, successfully closed the issuance of US$80 million aggregate principal amount senior secured notes due 2001 (the "Notes"). The Notes were issued at a yield of 10.25%. "The market reacted very positively to the offering, resulting in 100% oversubscription, allowing us to place the Notes at a 10.25% yield, lower than anticipated. The market's positive reaction towards Vitro is a reflection of the Company's improved performance. It also explains why the Notes were placed at a 1.75% lower yield than that of the same notes issued in the summer of 2004, in an increasing interest rate environment. This offering helps reduce our overall cost of debt," commented Alvaro Rodriguez, Vitro's CFO. VENA intends to use the proceeds to repay a portion of the amounts outstanding under the US$230 million loan due 2006 that was entered into on September 24, 2004 with Credit Suisse First Boston and other lenders. The Notes constitute a further issuance of, and form a single series and will be fully fungible with, the 10.75% Senior Secured Guaranteed Notes due 2011 that were issued on July 23, 2004, in the aggregate principal amount of US$170 million. Vitro, through its subsidiary companies, is one of the world's leading glass producers. Vitro is a major participant in three principal businesses: flat glass, glass containers and glassware. Vitro serves multiple product markets, including construction and automotive glass; food and beverage, wine, liquor, cosmetics and pharmaceutical glass containers; glassware for commercial, industrial and retail uses. Founded in 1909 in Monterrey, Mexico-based Vitro has joint ventures with major world-class partners and industry leaders that provide its subsidiaries with access to international markets, distribution channels and state-of-the-art technology. Vitro's subsidiaries have facilities and distribution centers in eight countries, located in North, Central and South America, and Europe, and export to more than 70 countries worldwide. CONTACT: Media Mr. Albert Chico Smith Vitro, S. A. de C.V. Phone: +52 (81) 8863-1335 E-mail: chico@vitro.com Financial Community Ms. Leticia Vargas E-mail: lvargasv@vitro.com Mr. Adrian Meouchi E-mail: ameouchi@vitro.com Vitro, S. A. de C.V. Phone: +52 (81) 8863-1210/1350 US Contacts) Ms. Susan Borinelli E-mail: sborinelli@breakstoneruth.com Mr. Alex Fudokidis E-mail: afudukidis@breakstoneruth.com Breakstone & Ruth Int. Phone: (646) 536-7012 / 7018 ============= U R U G U A Y ============= PARMALAT: International Group Assumes Control of Unit ----------------------------------------------------- Uruguay's Cattle Raising Minister, Martin Aguirrezabala, has announced that the sale of Parmalat's local unit to an international investment group headed by Argentine entrepreneur Matias Campiani will be closed soon. Campiani met with President Jorge Batlle and Aguirrezabala last week. Parmalat Uruguay's president, Jorge Gutman, also attended the meeting. After the encounter, Aguirrezabala explained that the buyer is a foreigner that will establish offices in Uruguay. The amount of the deal was not revealed. Gutman said that the new owners came up from a selection among several companies that were willing to take control of Parmalat Uruguay. PARMALAT: Ecuador, Paraguay Units to Face Citigroup Charges ----------------------------------------------------------- The Parmalat group could face more lawsuits if Citigroup Inc. proceeds to file charges against its subsidiaries in Ecuador and Paraguay, Reuters reports. Efforts to collect from the Latin American subsidiaries have been previously hampered by a preliminary injunction granted under Section 304 of the U.S. Bankruptcy Code. The new order, released by Judge Robert Drain of the U.S. Bankruptcy Court in Manhattan, however opens the way for Citigroup to sue San Lorenzo-based Parmalat Paraguay S.A. and Quito-based Parmalat Del Ecuador S.A., which have respectively defaulted on US$4.8 million and US$6.05 million worth of debts. While the charges may be filed only on or after March 31, the motion grants Citigroup access to the units' management and their books and records. Both parties could also use the interim period prior to March 31 to open communications and come up with a mutually beneficial restructuring of the debts. The Parmalat group has filed for insolvency in Italy after collapsing from a US$18 billion accounting scandal. ================= V E N E Z U E L A ================= IBH: Reports Fiscal 1Q05 Results -------------------------------- Due to the relevance of the agreement reached by IBH and BHP Billiton, in which the latter releases its interests in Orinoco Iron, Operaciones RDI, Brifer and IBMS, and by virtue of the impact of this agreement on the balance sheet and the financial statements of IBH, we have deemed it necessary to begin this quarterly report with a summary of the agreement and its scope, which were announced on November 5, 2004, and confirmed in the Report rendered by the Board of Directors of IBH for the Annual Shareholders Meeting. Pursuant to the abovementioned agreements, on November 5, 2004, BHP-Billiton, who as of that date owned 50% of the capital stock of Orinoco Iron, made the following assignments: (1) to IBH, 2% of its shares in Orinoco Iron (representing 1% of the capital stock of this Company), and (2) to certain financial creditors of Orinoco Iron its remaining shares in Orinoco Iron, as well as a credit it held against Orinoco Iron for approximately US$382 million. Consequently, since November 5, 2004: 1. IBH owns 51% of the capital of Orinoco Iron. 2. IBH assumed the operating control of Orinoco Iron. 3. The total amount of Orinoco Iron's financial debt, which is currently due and payable, remained unchanged. BHP Billiton also assigned to IBH all the shares it held in Operaciones RDI, IBMS and Brifer. Therefore, IBH has the control of all the capital stock of these companies. As part of this agreement, Orinoco Iron undertook to pay BHP Billiton a settlement amount of US$30 million and exempted BHP Billiton from the remaining payment that was due to Brifer for the use of the Finmet Technology at the Port Hedland Plant, owned by BHP Billiton. Additionally, by reason of the settlement agreement (i) an approximate amount equivalent to 50% of Orinoco Iron's matured debt, arising from the financing agreement signed in 1997, may eventually be neutralized in the future, subject to the satisfaction of certain conditions, so as to avoid any impact on the current shareholding structure of Orinoco Iron, or on the economic and political rights of IBH as shareholder of Orinoco Iron; and (ii) certain political rights are conferred upon certain of Orinoco Iron's shareholders other than IBH. According to the applicable accounting standards IBH began to consolidate the results of Orinoco Iron as of the date of the agreement, notwithstanding that it had made reserves in 2002 for its investment in this Company. The material differences between fiscal years 2004 and 2003 that are noted in the financial statements under analysis are mainly due to the fact that they present the results of Venprecar and Orinoco Iron consolidated for the October-December 2004 quarter, as of November 5, versus he results of Venprecar only for the term October-December 2003. The Company would like to point out that the financial risk for IBH regarding Orinoco Iron's financial performance has not changed as a result of the settlement agreement with BHP Billiton or as a result of the consolidation of the accounts of Orinoco Iron into the Financial Statements of IBH. This is due to the fact that the guarantees in favor of the creditor banks of Orinoco Iron were granted in 1997 by IBH and its affiliate Venprecar when the financing agreements were signed for the construction of Orinoco Iron's briquette plant, which has been reported in the Financial Statements of the Company and the notes thereon, as well as in the quarterly financial reports and the Board of Directors' Report for the Annual Shareholders Meeting. On the other hand, the figures presented in this report have been prepared according to International Financial Reporting Standards (IFRS), pursuant to the decision adopted in September 2004 and explained in the Report submitted by IBH's Board of Directors to the Shareholders' Meeting for the last fiscal year. Therefore, the financial statements of the comparable quarter (October-December 2003), which were submitted in due time according to Accounting Principles Generally Accepted in the U.S. (US GAAP), have been converted to IFRS for comparative purposes in this report. International Market The briquettes unloaded on barges in the port of New Orleans, U.S.A., reached an average price of US$341.7/MT in the quarter October-December 2004, compared with US$323,3/MT in the immediately preceding quarter (July-September 2004), and with US$174.7/MT in the same term for the preceding year (October- December 2003). In the quarter subject to this report, the price of metallics reached its maximum historical peak in October, weakening in November and December. The recent price reduction is mainly due to seasonal factors and a decrease in the demand for steel products in the international market. Results In the first quarter of this fiscal year, IBH reported sales for US$104.7 million, compared to the sales for US$26.0 million recorded in the same term of 2003. The increase in the value of sales is due to the consolidating of Orinoco Iron in the results, and the higher price of briquettes in the international market. An operating profit of US$35.7 million was reported, vis-a-vis an operating profit of US$6.0 million in the October-December 2003 quarter. The sales cost in the period under analysis was affected by the change in policy on the way to account for purchases and use of inventory of spare parts and supplies with a turnover of less than one year in Orinoco Iron. The effect of this change resulted in an increase of said costs by approximately US$10.0 million. As part of the agreements mentioned at the beginning of this letter, during this quarter the following financial expenses were recorded: - Adjustment for US$21.1 million in the Value of the Long-Term Loans with a financial institution, with maturity in 2015. This amount represents the greater value that may result in the payment mode options for such loans assumed by Venprecar and Orinoco Iron to fund their operations. - A non-recurring expense for US$ 26.3 million, equal to the present value of the obligations of Orinoco Iron with BHP Billiton as part of the agreements reached in November 5, 2004. IBH's aggregate financial cost of US$52.0 million recorded in the October-December 2004 quarter, is made up mainly by the two items referred to above and by the US$8.2 million interest on the debt of Orinoco Iron with its creditor banks, BHP Billiton and other financial institutions, offset by financial income for US$ 3 million. The minority interests of IBH of US$34.5 million reflect the portion of the losses after taxes that IBH shares with its partners according to its shareholding percentage. Given that now IBH has a majority shareholding in Orinoco Iron (51%), it must consolidate the latter's results and acknowledge the existing minority shareholding percentage (49%). IBH's net profit was US$7.9 million, 43% higher than the net profit of US$ 5.5 million recorded for the same period in the last fiscal year. Analysis of Venprecar's Performance: Venprecar's production in the quarter under analysis was of 209,295 MT, higher than the 197,951 MT produced in the same term in the preceding fiscal year. Due to the insufficiency of pellets, the plant operated at 90% of its installed capacity in the quarter reported. Venprecar's sales totaled US$ 62.9 million, 139% higher than the sales for the quarter October-December 2003. The operating profit was of US$ 44.2 million and the net profit of US$ 49.9 million. Analysis of Orinoco Iron's Performance Orinoco Iron's HBI plant produced 243,954 MT during the quarter October-December 2004, compared with 174,890 MT in the same term of the preceding fiscal year. In the quarter under analysis, train 2 of the Orinoco Iron plant was out of service due to major repairs required to replace the pipes of the recycling gas furnace. It is deemed that this train will resume operations at the beginning of April 2005. Regarding the screening system and crusher, whose acquisition was announced in the Board of Directors' Report to the Shareholders' Meeting of IBH published last December 28, it is estimated that they will start operating next May. With the installation of this system, it is expected to achieve a grading of the iron ore used as raw material for the reduction process and, consequently, a better performance of the reactors' cyclones. Orinoco Iron's sales in this quarter were for US$ 51.8 million, which reflects and increase of 110% vis-avis the same quarter in the preceding fiscal year. The amount of sales was affected by the long-term agreement signed with a client in April 2002, which will expire next April 2007, according to which Orinoco Iron will sell this client about 325.000 MT of briquettes per year at a fixed price negotiated in 2002, which is considerably lower than the current prices in the spot market. The operating loss of Orinoco Iron was US$9.2 million and the net loss was of US$78.8 million. These results are mainly due to the high production costs, the low availability of production trains, and the financial expenses related to the debt of Orinoco Iron and the release of the association between BHP Billiton and IBH explained above. RESTRUCTURING OF ORINOCO IRON'S DEBT As mentioned in prior reports addressed to the shareholders, in 1997, IBH and its subsidiary Venprecar issued guarantees in favor of the financial institution creditors of Orinoco Iron in relation to a loan received by the latter to fund its industrial facilities. Due to operating and market reasons, Orinoco Iron's plant had negative results since the beginning of its operations in 2000. In April 2001, Orinoco Iron defaulted on its payment obligations under the loan agreements and the creditor banks declared the entire outstanding balance due and payable. Thereafter, BHP Billiton declared this investment as a loss and paid the creditor banks of Orinoco Iron the amount pertaining to its 50% interests set in the common guaranty agreement for the debt assumed to build the plant. This made BHP Billiton a creditor of Orinoco Iron for the amount pertaining to this portion, thus becoming a debt subrogated to the same rights as its initial creditors and subordinated to the payments of the creditor banks. At the closing of fiscal year 2002, IBH recognized a reserve for loss for the total amount of the investment in Affiliates, as well as accounts receivable from the companies that make up the association with BHP Billiton (Orinoco Iron, Operaciones RDI and Brifer). Since 2001, Orinoco Iron and IBH have been negotiating a restructuring of the financial debt with the creditor bank. Since no agreement has been reached, in June 2004 the creditor banks began enforcing certain guaranties set in the loan agreement. As part of these measures, in the first quarter of fiscal year 2005, there were foreclosed balances of Orinoco Iron for US$ 41.2 million in accounts receivable and US$ 3.4 million in cash, and balances of Venprecar for US$ 64.3 million in accounts receivable. Considering the liabilities represented by the portion of Orinoco Iron's debt guaranteed by IBH and Venprecar, the future performance of IBH as a Company depends on reaching a solution for the financial status of Orinoco Iron. After the agreement with BHP Billiton for the release of the association, currently the negotiations are focused in restructuring the debt of Orinoco Iron with the creditor banks. The parties continue advancing in their conversations. To view financial statements: http://bankrupt.com/misc/IBH.pdf CONTACT: Mr. Antonio Osorio International Briquettes Holding, IBH Phone: 58-212-707.62.80 Fax: 58-212-707.63.52 E-mail: antonio.osorio@sivensa.com PDVSA: Teams Up With Enarsa to Service 12% Share of Gas Market -------------------------------------------------------------- State-oil Company Petroleos de Venezuela (PdVSA) announced Thursday that the Company and Argentina's Energia Argentina (Enarsa) will seek to service 12% of Argentina's domestic gasoline market in coming years. "Both state-owned companies estimate branding 600 gas stations on Argentine soil, which will allow the commercialization of an average volume of 55,000 barrels of fuel a day, equivalent to 4 million liters a day," PdVSA said in a statement. The announcement from PdVSA came two days after Venezuela's President Hugo Chavez and his Argentine counterpart Nestor Kirchner inaugurated the first two gas stations under the brand Enarsa/PDV, in Buenos Aires. PDVSA is currently represented in Argentina and Brazil by its international subsidiary Interven, but PDVSA plans to eliminate Interven and create a new unit called PDVSA Argentina to manage its affairs in that country. *********** 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. 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