/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/050210.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, February 10, 2005, Vol. 6, Issue 29 Headlines A R G E N T I N A COOPERATIVA DE VIVIENDA: Gears for Reorganization DELTAGRO S.A.: Hopes to Reorganize, Avoid Bankruptcy DISCO: Must Operate Separately From Jumbo Chain GONZALEZ HERMANOS: Declared Bankrupt by Court PETROBRAS ENERGIA: Reports Sales Volumes & Average Prices RABBIONE SU TRANSPORTE: Liquidating Assets to Pay Debts ROTOMPLAST S.A.: Enters Bankruptcy on Court Orders SULADESO S.A.: Begins Liquidation on Court Orders SUPERMERCADOS PARADA: Ends Reorganization * ARGENTINA: Italian Banks to Fund Lawsuits Challenging Plan B E R M U D A FOSTER WHEELER: To Build Import-Export Facility for TNK-BP INTELSAT: Fitch Lowers, Removes Ratings LINES OVERSEAS: Requests Stay of Judge's Order B R A Z I L EMBRATEL: Names New Vice-President NET SERVICOS: Opens Exchange Offer for Existing Notes C O S T A R I C A ICE: Could Offer 600,000 New GSM Lines in October J A M A I C A AIR JAMAICA: Enhances Plane Maintenance Program M E X I C O AOL LATIN AMERICA: To Move Away From Access Business BALLY TOTAL: Audit Committee Finds Multiple Accounting Errors BALLY TOTAL: Hires David Reynolds as Controller CEESP: Legislators Must Focus on Passing Reforms CINTRA: Board OKs Separate Sale of Aeromexico and Mexicana HYLSA: S&P Issues Ratings Report MINERA AUTLAN: Secures $25M Credit Line With Germany's WestLB P E R U EMPRESAS LUCCHETTI: Loses to Peru in Long-Standing Dispute * PERU: To Present Formal Debt Proposal to Paris Club March 15 U R U G U A Y UTE: Board to Meet This Week to Discuss Tariff Hikes V E N E Z U E L A PDVSA: Still Reeling From the Effects of 2002-2003 Strike PDVSA: Oil Spill Investigation Continues - - - - - - - - ================= A R G E N T I N A ================= COOPERATIVA DE VIVIENDA: Gears for Reorganization ------------------------------------------------- Court No. 23 of Buenos Aires' civil and commercial tribunal issued a resolution opening the reorganization of Cooperativa de Vivienda Credito y Consumo Lider Ltda, reports Infobae. This 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 a court appointed trustee. Mr. Anibal Daniel Ozuna will serve as trustee during the course of the reorganization. He will be validating creditors' proofs of claims until April 4. The Company will present the completed settlement proposal to its creditors during the informative assembly scheduled on December 15. CONTACT: Mr. Anibal Daniel Ozuna Mercedes 3259 Buenos Aires DELTAGRO S.A.: Hopes to Reorganize, Avoid Bankruptcy ---------------------------------------------------- Court No. 7 of Buenos Aires' civil and commercial tribunal is currently reviewing the merits of a petition to reorganize submitted by Deltagro S.A. Infobae recalls that the Company filed the petition following cessation of debt payments. Reorganization will allow the Company to avoid bankruptcy by negotiating a settlement with its creditors. Clerk No. 14 assists the court with the proceedings. CONTACT: Deltagro S.A. Avda Cordoba 315 Buenos Aires DISCO: Must Operate Separately From Jumbo Chain ------------------------------------------------- Argentina's antitrust authority, the National Commission for Defense of Competition, ordered supermarket chains Disco and Jumbo last month to operate as separate companies, reports Dow Jones Newswires, Disco is a unit of Royal Ahold NV, which was sold to Jumbo's owner, Chilean retailer Cencosud SA, in November. According to an Ahold representative, the Argentine regulator issued the order to comply with a bureaucratic requirement to follow an identical ruling from a federal judge in Mendoza province. The Ahold source said nothing should change as a result of the rulings from the Mendoza court and the antitrust authority because Disco and Jumbo are already operating separately. Cencosud bought an 84.75% stake in Disco through its Jumbo unit and the funds were deposited in escrow. According to Dow Jones, those funds haven't yet moved because of the court ruling in Mendoza, which blocked the Disco sale on a lawsuit from a provincial rural association. Ahold said in November that the remaining 15.19% would be acquired "as soon as it is legally possible." Ahold and Cencosud filed an appeal to the court decision in early December. Later that month, the appeals court rejected that appeal. Ahold appealed again, but there has been no further ruling from the court. CONTACT: Ahold Corporate Communications Royal Ahold N.V. P.O. Box 3050 1500 HB Zaandam Netherlands Phone: +31 (0)75 659 57 20 Fax: +31 (0)75 659 83 02 Web Site: http://www.ahold.com DISCO S.A. Larrea 847, Piso 1 1117 Buenos Aires, Argentina Phone: +54-11-4964-8000 Fax: +54-11-4964-8076 Home Page: http://www.disco.com.ar GONZALEZ HERMANOS: Declared Bankrupt by Court --------------------------------------------- Gonzalez Hermanos S.R.L. is now "Quiebra" - meaning bankrupt, says Infobae. Court No. 16 of Buenos Aires' civil and commercial tribunal decreed the Company's bankruptcy and appointed Mr. Jose Miras as trustee. The court, which is aided by Clerk No. 32, will conclude the bankruptcy process by liquidating its assets to repay creditors. CONTACT: Gonzalez Hermanos S.R.L. Piedras 1841 Buenos Aires Mr. Jose Miras, Trustee Paraguay 1307 Buenos Aires PETROBRAS ENERGIA: Reports Sales Volumes & Average Prices --------------------------------------------------------- Petrobras Energia Participaciones S.A. (MERVAL: PBE, NYSE: PZE), controlling Company of Petrobras Energia S.A. (Buenos Aires: PESA), announces sales volumes and average prices of the main products marketed by Petrobras Energia S.A. Volumes and net average prices of the main products marketed are presented on these tables: http://bankrupt.com/misc/Petrobras.pdf Petrobras is headquartered in the city of Rio de Janeiro, and has offices and administration managers in major Brazilian cities, such as Salvador, Brasilia and Sao Paulo. CONTACT: Petrobras Energia Participaciones S.A. Edificio Perez Companc Maipu 1 Buenos Aires, C 1084 ABA Argentina Phone: 54-11-4344-6000 Website: http://www.petrobrasenergia.com RABBIONE SU TRANSPORTE: Liquidating Assets to Pay Debts ------------------------------------------------------- Buenos Aires-based Rabbione Su Transporte S.A. will begin liquidating its assets following the bankruptcy pronouncement issued by Court No. 1 of Buenos Aires' civil and commercial tribunal. The ruling places the Company under the supervision of a court- appointed trustee who will oversee management prior to liquidation. CONTACT: Rabbione Su Transporte S.A. Monasterio 269/271 Buenos Aires Phone: (54) - (11) - 49424456 ROTOMPLAST S.A.: Enters Bankruptcy on Court Orders -------------------------------------------------- Court No. 3 of Buenos Aires' civil and commercial tribunal declared Rotomplast S.A. bankrupt after the Company defaulted on its debt payments. The order effectively places the Company's affairs as well as its assets under the control of court- appointed trustee Rosa Gerscovich. As trustee, Ms. Gerscovich is tasked with verifying the authenticity of claims presented by the Company's creditors. The verification phase is ongoing until February 25. Following claims verification, the trustee will submit the individual reports based on the forwarded claims for final approval by the court on April 11. A general report will also be submitted on May 23. Infobae reports that Clerk No. 5 assists the court on this case, which will end with the disposal of the Company's assets in favor of its creditors. CONTACT: Ms. Rosa Gerscovich, Trustee Tucuman 540 Buenos Aires SULADESO S.A.: Begins Liquidation on Court Orders ------------------------------------------------- Suladeso S.A. of Buenos Aires will begin liquidating its assets after Court No. 23 of the city's civil and commercial tribunal declared the Company bankrupt. Infobae reveals that the process will commence under the supervision of court-appointed trustee Hugo Oscar D. Ubaldo. The trustee will review claims forwarded by the Company's creditors until March 23. After claims verification, the trustee will submit the individual reports for court approval on May 6. The general report submission will follow on June 21. Clerk No. 45 assists the court on this case. CONTACT: Suladeso S.A. Virrey Aviles 3465 Buenos Aires Mr. Hugo Oscar D. Ubaldo, Trustee A. Alsina 1535 Buenos Aires SUPERMERCADOS PARADA: Ends Reorganization ----------------------------------------- The reorganization of Supermercados Parada Canga S.A. has been concluded. Information provided by Infobae on its Web site indicated that the process was concluded after Court No. 9 of Corrientes' Civil and Commercial tribunal homologated the debt agreement signed between the Company and its creditors. * ARGENTINA: Italian Banks to Fund Lawsuits Challenging Plan ------------------------------------------------------------ Angered by Argentina's approach to restructuring its defaulted international bonds, Italian banks will fund lawsuits challenging the indebted government's debt plan, reveals Bloomberg. "If there should be legal action, the Italian banking system would cover the costs," Nicola Stock, who represents 450,000 Italian bondholders, was quoted as saying on Tuesday. A spokesman for Italy's banking association, ABI, confirmed that the banks would support the lawsuits. Italian banks have sold clients more than US$14 billion of Argentine bonds. Argentina is offering to swap US$81.2 billion of defaulted debt at about 25 cents on the dollar. The government, which defaulted in late 2001, opened the offer Jan. 14 and is set to close it Feb. 28. Argentina needs to get at least two-thirds of creditors to accept the offer for the International Monetary Fund to consider the exchange a success and begin lending again to the government, said analysts such as Pablo Morra at Goldman, Sachs & Co. According to two news agencies designated to receive a weekly update on the progress of the six-week debt exchange as part of a requirement by Italian securities regulator Consob, the face value of old bonds tendered as of Feb. 4 was US$34.65 billion. Italian news agency, ANSA, said this information is based on statement by the Argentine government citing data from the global exchange agent, the Bank of New York. The figure amounts to 42.3% of the total US$81.8 billion in face value defaulted debt eligible for the exchange. The Feb. 4 cut-off date was considered important because it marks the end of a three-week period in which small bondholders got preferential treatment. During this period, holders of bonds worth less than US$50,000 got priority access to the offer's limited issue 35-year par bonds, which carry no reduction in principal. Some US$10 billion of those bonds will be offered in total, a figure that will rise to US$15 billion if overall acceptance rates rise to 70%. ============= B E R M U D A ============= FOSTER WHEELER: To Build Import-Export Facility for TNK-BP ---------------------------------------------------------- Foster Wheeler Ltd. (OTCBB: FWHLF) announced Tuesday that its UK subsidiary Foster Wheeler Energy Limited has been awarded a concept selection study contract by TNK-BP for an oil and oil products import and export facility, including a marine facility, tankage and rail unloading terminal at Ust-Luga in the Gulf of Finland. The terms of the award were not disclosed. The project will be included in the Company's fourth-quarter bookings for 2004. "Foster Wheeler is delighted to be awarded this contract by TNKBP," said Steve Davies, chairman and chief executive officer of Foster Wheeler Energy Limited. "This success builds on Foster Wheeler's good relationship with TNK-BP, and reinforces our strong position in both oil and gas and in doing business in Russia." "Using our wealth of oil and gas experience and technical expertise, we will work closely with TNK-BP to identify and evaluate a range of options, and so develop a design which maximizes the value of the project to TNK-BP and its other stakeholders," added Malcolm Harrison, divisional director, of the Foster Wheeler Oil & Gas Division. "Foster Wheeler is a quality company with a first-class reputation in oil and gas," commented Dan Warden, director of project appraisal, infrastructure and projects technology, TNK- BP. Foster Wheeler's scope of services will include the evaluation of options for capacity and operations criteria, cost estimating and outline design of the selected option, and liaison with third- party design institutes and officials in connection with overall master planning, railway expansion and port interfaces. The study is scheduled for completion in the first quarter of 2005. About Foster Wheeler Foster Wheeler Ltd. is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the refining, upstream oil and gas, LNG and gas-to-liquids, petrochemical, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. The corporation is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, New Jersey, USA. CONTACTS: Foster Wheeler Ltd. Ms. Maureen Bingert Phone: 908-730-4444 Ms. Anne Chong Phone: +44 (0) 118 913 2106 Other Inquiries Phone: 908-730-4000 Web site: http://www.fwc.com/ INTELSAT: Fitch Lowers, Removes Ratings --------------------------------------- Fitch Ratings has downgraded and removed from Rating Watch Negative the ratings of Intelsat, Ltd. (Intelsat) and its wholly owned subsidiary, Intelsat (Bermuda), Ltd. (Intelsat Bermuda) following the issuance of $478.4 million ($305.2 million gross proceeds) of senior discount notes at an intermediate subsidiary currently named Zeus Special Sub Ltd. (Zeus). Intelsat's Rating Outlook is Stable. Fitch has also initiated a rating of 'B-' on the new Zeus senior discount notes. The rating actions are as follows: Intelsat, Ltd. --Senior unsecured notes to 'CCC+' from 'B-'. Zeus Special Sub Ltd. --Senior unsecured discount notes initiated at 'B-'. Intelsat (Bermuda), Ltd. --Senior unsecured notes to 'B' from 'B+'; --Senior secured credit facilities to 'BB-' from 'BB'. The Stable Rating Outlook reflects the prospects for stable revenues from its lease backlog and the expected resulting free cash flow offset by a very competitive operating environment and ownership by an investment group. Fitch's rating action affects about $4.9 billion of existing debt. The new Zeus notes were issued by a newly formed intermediate subsidiary placed between Intelsat and Intelsat Bermuda. This ranks the new issue as structurally senior to the Intelsat senior notes and structurally junior to all of the debt at Intelsat Bermuda. The issuance and subsequent use of proceeds to retire equity increases the estimated pro forma total leverage as of Sept. 30, 2004 from about 6.2 times (x) to 6.6x, based on Fitch estimates. When cash accrual on the notes begins in 2010, the annual cash interest payment will be approximately $44.3 million. Fitch's ratings not only reflect the overall increased leverage in the consolidated capital structure but also reflect Intelsat's possible need to increase capital spending at about the same time as the new Zeus senior discount notes go cash pay. This action is based on existing public information and is being provided as a service to investors. CONTACT: Phelps B. Hoyt +1-312-368-3205, Chicago Michael Weaver +1-312-368-3156, Chicago MEDIA RELATIONS: Brian Bertsch +1-212-908-0549, New York LINES OVERSEAS: Requests Stay of Judge's Order ---------------------------------------------- Lines Overseas Management (LOM) and its Managing Director Scott Lines have filed a request for a stay with a US District Court, regarding an order to comply with four subpoenas issued by the Securities and Exchange Commission in connection with two separate investigations of alleged securities fraud. The Royal Gazette recalls that Magistrate Judge Alan Kay of the U.S. District Court for the District of Columbia last month ordered the Bermuda-based Company and its managing director to comply with the subpoenas. In addition, Judge Kay ordered LOM and Mr. Lines to follow-up the submission of documents by appearing before the SEC in Washington, D.C. to give testimony on all matters. But late last month, LOM applied for the stay as it seeks a review of Judge Kay's order. Lawyers for LOM and Mr. Lines said in their joint application that they are entitled to the stay on the basis that "they are likely to succeed [in having the Judge's decision overturned] on their merits of their claims". They argue that Judge Kay's order suffers from "numerous fatal deficiencies" which include his failure to "provide a reasoned explanation for his decision to resolve a number of disputed factual issues against the respondents". LOM lawyers also call his ruling regarding personal jurisdiction "enormously and erroneously broad, in that it would subject any foreign broker-dealer that executes trades in the US markets to the full scope of the SEC's regulatory authority, as well as subject Scott Lines to the Court's authority based solely on his status as Managing Director and his ownership interest in trading proceeds." They say that Judge Kay also failed to explain how the respondents could comply with the subpoenas in the face of legal obligations imposed by the countries in which they conduct business. The lawyers for LOM and Mr. Lines argue that a stay will neither harm the SEC nor the public - the SEC already has in its possession "the great majority of the material it seeks" and the public will not be harmed as the investigation relates to events that occurred nearly two years ago. However they argue that their clients would be "irreparably injured" because complying with the subpoenas will cause them to breach their duty of confidentiality to their customers and expose them to the threat of civil and criminal liability" in their won countries. CONTACT: LOM Group The LOM Building 27 Reid Street Hamilton HM 11 Bermuda Tel: 441 292 5000 Fax: 441 295 3343 E-mail: info@lom.com LOM Asset Management Limited Tel: 441 296 5802 Fax: 441 296 5597 E-mail: lomam@lom.com LOM Securities (Bahamas) Limited Millennium House P.O. F42498-350 Freeport, Grand Bahama Bahamas Tel: 242 351 5000 Fax: 242 351 7738 E-mail: info.bahamas@lom.com =========== B R A Z I L =========== EMBRATEL: Names New Vice-President ---------------------------------- On February 3, 2005, Jose Formoso Martinez was appointed vice president of Embratel Participacoes S.A. Mr. Martinez was also elected as vice-chairman of the Company's board of directors. Embratel previously disclosed that its controlling shareholder Telefonos de Mexico, S.A. de C.V., or Telmex, may offer the opportunity to acquire one Brazilian investment it already owns and another Brazilian investment it has agreed to acquire. The two investments consist of a wholly-owned subsidiary called Telmex do Brasil Ltda., or Telmex do Brasil, and an interest in Net Servicos de Comunicacao S.A., or Net. According to disclosures made by Telmex, Telmex expects to acquire a total direct and indirect equity interest of between 30% and 60% (calculated by multiplying the shares of Net to be owned by a special-purpose vehicle by Telmex's percentage equity interest in the vehicle, and adding the shares Telmex will own directly in Net). Telmex has also stated that the total cost of its interest in Net will be between U.S.$250 million and U.S.$370 million, and that it expects that its cost and equity interest will fall at the high end of these ranges. Under current Brazilian law governing cable operators, because Telmex is not controlled by Brazilian persons, neither Telmex nor Embratel is permitted to control Net. Globo Comunicacoes e Participacoes S.A., Distel Holding S.A., and Roma Participacoes Ltda. (together, "Globo") will own a majority of the voting interests in the special-purpose vehicle, which will own a majority of the voting shares of Net. Telmex has agreed that if Brazilian law changes to allow Telmex to own a controlling interest in Net, Telmex has the right to purchase from Globo an additional interest in the special-purpose vehicle to give Telmex control of 51% of the voting shares of Net, and Globo has the right to sell such interest to Telmex. No specific transaction between Embratel and Telmex involving Telmex do Brasil or Net has yet been proposed, and Telmex is under no obligation to make these assets available. Embratel believes there might be advantages because of the complementarity and possible synergies with its current business. The Company is also analyzing the possibility of technical and commercial arrangements it could conclude with Net that could provide some of the same advantages. If Telmex is prepared to convey these assets to Embratel, such a transaction would present a number of important issues, including the transaction structure, the consideration, and the procedures to be followed to negotiate and approve the transaction while protecting the interests of other shareholders. As a result, there can be no assurance as to whether any specific transaction will occur or, if it does occur, on what terms or on what timetable. If Embratel does acquire one or both of these assets, it could have a material effect on its business prospects and results of operations, including future cash requirements. 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: Opens Exchange Offer for Existing Notes ----------------------------------------------------- Net Servicos de Comunicacao S.A. (the "Company") announced Wednesday that it has commenced an exchange offer and consent solicitation pursuant to a registration statement that was declared effective on February 8, 2005. The Company is offering to exchange (the "Exchange Offer") up to US$76,593,068 aggregate principal amount of its 7.0% Senior Secured Notes due 2009 (the "New Notes"), which have been registered under the Securities Act of 1933, as amended, and cash, for its US$97,692,000 12 5/8% Senior Guaranteed Notes due 2004 (the "Existing Notes"). Furthermore, the Company is soliciting (the "Consent Solicitation" and together with the Exchange Offer, the "Exchange Offer and Consent Solicitation") consents (the "Consents") from holders of the Existing Notes to amendments (the "Proposed Amendments") to certain provisions of the indenture governing the Existing Notes, dated as of June 18, 1996, pursuant to which the Existing Notes were issued (the "Indenture"). Holders who tender their Existing Notes in the Exchange Offer and Consent Solicitation will be deemed to have given their consent to the Proposed Amendments to the Indenture. The Exchange Offer and Consent Solicitation will remain open until 5:00 p.m., Eastern time, on March 9, 2005, unless extended. Questions regarding the Exchange Offer and Consent Solicitation should be directed to: Credit Suisse First Boston LLC Dealer Manager and global solicitation agent Eleven Madison Avenue, New York, New York 10010-3629 Attention: Liability Management Group Phone: (800) 820-1653 or (212) 325-2547. Non-U.S. holders outside the United States may also contact: Eurovest Global Securities, Inc. Solicitation agent for non-U.S. holders Rua Sansao Alves dos Santos 102 - 6th floor Sao Paulo, SP - 04571-090, Brazil Phone: (55 11) 5505-3334 or (55 11) 3346-9400. Requests for additional copies of the prospectus or other materials related to the Exchange Offer and Consent Solicitation should be directed to: D.F. King & Co., Inc. Information Agent 48 Wall Street, 22nd floor New York, New York 10005 Phone:(800) 290-6429 or (212) 269-5550 Copies of the prospectus related to the Exchange Offer and Consent Solicitation and other materials filed by the Company under the United States Securities Exchange Act of 1934 may also be obtained free of charge through the website maintained by the United States Securities and Exchange Commission at http://www.sec.gov. This press release shall not constitute an offer to sell or solicitation of an offer to buy, nor shall there be any sale of the Existing Notes or the New Notes, or solicitation of consents, in any jurisdiction in which such offer, solicitation or sale would be unlawful. CONTACT: Mr. Marcio Minoru Miyakava Head of Investor Relations Net Servicos de Comunicacao S.A. Phone: +5511 5186-2811 E-mail: minoru@netservicos.com =================== C O S T A R I C A =================== ICE: Could Offer 600,000 New GSM Lines in October ------------------------------------------------- Local telecom monopoly ICE expects to open up 600,000 new GSM lines in its system once Costa Rica's comptroller general approves the long-delayed US$130 million contract with equipment provider Ericsson, says Business News Americas. The contract, awarded over a year ago, had suffered delays in implementation because of questions over alleged irregularities during the bidding process. This time however, ICE's mobile telephony director Orlando Cascante is confident that the contract, re-submitted February 8, will finally get the green light from regulators. Mr. Cascante further anticipates selling the new mobile lines by October this year. The new lines should boost mobile subscriptions at ICE, which currently has a waiting list for more than 400,000 lines. Pending approval of the new contract, potential subscribers will have to rely on sequestered lines from delinquent accounts to gain mobile phone access. ICE plans to resell these lines on a monthly basis. ICE also has plans to open 3G services once the Ericsson lines are installed. The tender, scheduled for 2006, will be for an estimated 400,000 lines. ============= J A M A I C A ============= AIR JAMAICA: Enhances Plane Maintenance Program ----------------------------------------------- Air Jamaica announced Monday that it has launched an expanded maintenance and quality assurance check program as a supplement to its normal scheduled maintenance checks. As a result, a revised schedule has been implemented with some daily flight consolidation and rescheduling affecting 10-12% of the carrier's weekly operations. Air Jamaica customer relations staff is re- accommodating passengers on alternate Air Jamaica service, as well as flights on other carriers in line with IATA guidelines. Executive Chairman, Dr. Vincent Lawrence says the airline has taken the decision to allocate additional resources to accelerate its maintenance and quality assurance checks. According to Dr. Lawrence, the national airline continues to guard very jealously its unblemished safety record of 35 years. The Government, as owners of the airline, has committed funding to ensure the provision of these additional resources. Dr. Lawrence says the airline apologizes for the inconvenience to our valued passengers and thanks them for their patience, understanding and continued support. He says these quality assurance checks and the full corporate restructuring supports the carrier's comprehensive goal to deliver on the same level of high-quality world-class service that passengers have come to expect from Air Jamaica over the years. About Air Jamaica Air Jamaica is a service-oriented passenger airline offering travelers a level of comfort, convenience and amenities not commonly found in air travel today. All Air Jamaica flights feature hot meals and unlimited complimentary champagne, wine and beer for all passengers of legal drinking age. Even Air Jamaica 's flight schedules are developed with the customer in mind - arrival times are set early enough and departure times late enough to ensure travelers maximize precious vacation time. The Air Jamaica fleet is comprised of new Airbus A320, A321 and A340 aircraft. Air Jamaica operates 300+ weekly scheduled flights connecting 13 cities in the U.S., Canada and the UK with 12 Caribbean destinations. CONTACT: Jamaica/Nassau/ Grand Cayman/ Havana Ms. Marcia McDonnough 4 St. Lucia Avenue Kingston 5 Jamaica Phone: (876) 922-3460 Fax: (876) 929-5643 =========== M E X I C O =========== AOL LATIN AMERICA: To Move Away From Access Business ---------------------------------------------------- Dial-Up's waning popularity over Internet users could spell the end for AOL Latin America's ISP operations in Mexico. In a statement published by Business News Americas, IT analyst Jorge Euran predicts that AOLA will likely go the way of Terra Mexico in the next few months and assign its subscribers to other operators. The move, he adds, will pave the way for AOLA to remake itself as a content portal. However, the analyst contends that this move is unsustainable especially since the Company does not see improvements in sales volume this year. A change in business direction will also be expensive for AOLA. Migration to broadband has precipitated the demise of dial-up in Mexico. Analysts say that the need to access greater content over the Internet has emphasized the effectiveness of broadband over slower dial-up connections. BALLY TOTAL: Audit Committee Finds Multiple Accounting Errors ------------------------------------------------------------- HIGHLIGHTS: - As previously disclosed, investigation finds multiple accounting errors. - Report finds two former and two current finance executives engaged in improper conduct. - Company terminates its Controller and its Treasurer for improper conduct. - Bally ceases severance payments to Lee Hillman, former CEO and current President of Liberation Investment Advisory Group, LLC, and former CFO John Dwyer. Investigation finds both responsible for multiple accounting errors and for creating a culture of aggressive accounting. - Company discloses material weaknesses in internal controls over financial reporting. Bally Total Fitness (NYSE: BFT) announced that the Audit Committee of its Board of Directors has completed its previously announced investigation into various accounting issues. The extensive, five-month investigation was led by former Securities and Exchange Commission attorney Herbert F. Janick III of Bingham McCutchen LLP, with forensic audit work conducted by PricewaterhouseCoopers LLP. In addition to the accounting matters previously disclosed from the November 2004 interim report, this report includes the final conclusions on two other accounting issues, as well as an assessment of responsibility. The Company has reported the investigation results to the SEC and continues to fully cooperate in the ongoing SEC investigation. Accounting Findings Bally Total Fitness previously announced in November 2004 its decision to restate financial statements from January 1, 2000 through the first quarter of 2004, primarily as a result of errors in its revenue recognition methods as identified in the interim report of the Audit Committee investigation. At that time, Bally also announced that the Company's financial statements and other communications related to the same periods should not be relied upon. The recently completed investigation also found errors in the Company's rationale for and implementation of its deferral of membership acquisition costs under Bally's prior accounting method. The investigation also concluded that the Company took aggressively optimistic positions on several matters related to the analysis of the adequacy of the allowance for doubtful accounts, which were without a reasonable empirical basis. Given the manner in which the Company intends to restate its consolidated financial statements, correction of these errors will not affect the planned presentation of the restated financial statements. Currently, the Company is focused on completing the restatement of its financial statements for the years ended December 31, 2002 and 2003, completing its 2004 financial statements, and fully supporting its current auditor, KPMG LLP, in the audit of those statements. The Company anticipates filing these financial statements by July 31, 2005. These financial statements may require additional adjustments to the Company's previously issued financial statements. Responsibility for Accounting Errors The Audit Committee's review found multiple accounting errors in the Company's financial statements and concluded that the Company's former Chairman and Chief Executive Officer Lee Hillman (held position from 1996 to 2002) and former Chief Financial Officer John Dwyer (held position from 1996 to 2004) were responsible for multiple accounting errors and creating a culture within the accounting and finance groups that encouraged aggressive accounting. The investigation found, among other things, that certain accounting policies and positions were suggested and implemented without a reasonable empirical basis and concluded that Mr. Dwyer made a false and misleading statement to the SEC. As a result of the findings, the Company has decided to make no further payments to Messrs. Hillman and Dwyer under their severance arrangements and will evaluate its legal options with respect to these former executives. Both Messrs. Hillman and Dwyer are certified public accountants, previously employed by the Company's longtime and now former auditors, Ernst & Young LLP, and were partners on the engagement teams that audited Bally's former parent Company for several years prior to joining the Company. Mr. Hillman presently serves as President of Liberation Investment Advisory Group, LLC, as well as a member of the Board of Directors for RCN Corporation, Lawson Products Inc., Wyndham Hotels and Resorts, and HealthSouth Corporation where he serves as chairman of the Company's audit committee. The investigation also found improper conduct on the part of the Company's Vice President and Controller Ted Noncek (from 2001 to 2005) and Vice President and Treasurer Geoff Scheitlin (former Controller from 1997 to 2001). As a result, both have been terminated. Mr. Noncek has been offered the opportunity to consult with the Company on a short-term basis in order to facilitate timely completion of the ongoing audits. Former Auditors Although the scope of the investigation did not specifically examine former auditors Ernst & Young, Bally believes that the firm made several errors in the course of their work. The Company is currently evaluating its legal options with respect to Ernst and Young. Internal Control Over Financial Reporting Separately, as a result of the investigation and Bally's efforts to comply with Section 404 of the Sarbanes-Oxley Act of 2002, the Company has identified deficiencies in its internal controls over financial reporting. A number of these deficiencies, either individually or in the aggregate, constitute material weaknesses in its internal controls over financial reporting. These material weaknesses include deficiencies in the Company's finance and accounting internal control environment, specifically a lack of acceptable and clearly communicated policies reflecting management's attitudes towards financial reporting and the financial reporting function, the lack of a permanent Chief Financial Officer, ineffective delegation of authority and responsibility, insufficient instruction to employees responsible for significant estimates emphasizing the need to report using accurate and reasonable assumptions and judgments, and insufficiently experienced and trained staff. In addition, these material weaknesses include deficiencies in the controls surrounding the selection and application of accounting principles, specifically, ineffective policies requiring contemporaneous documentation of factual support for key judgments applied within its financial reporting process and the retention of that documentation in accordance with a formal document retention policy. Management, with the oversight of the Audit Committee, has been addressing all of these issues and is committed to effectively remediating known material weaknesses as expeditiously as possible. Due to the nature of and the time necessary to effectively remediate each of the material weaknesses identified to date, the Company expects to conclude that some of these material weaknesses will not have been effectively remediated by December 31, 2004. As a result, the Company believes that KPMG will not be able to issue an unqualified opinion on the effectiveness of the Company's internal controls in the Company's 2004 Annual Report on Form 10-K. The Bally Board of Directors commended the members of the Audit Committee and their legal and forensic accounting experts, thanking them for tirelessly dedicating their time and efforts to a fair and honest review of these matters. Bally Chairman and CEO Paul Toback commented, "The completion of the Audit Committee investigation is another important step toward putting our past accounting and financial issues behind us. We are sending a clear message that the culture that allowed this type of aggressive accounting will not be tolerated. While we recognize that we still have much work ahead in order to restore investor confidence, our team is committed to earning that trust through the timely and accurate reporting of our financial results, improvements in financial and operational performance and a commitment to strong corporate governance." About Bally Total Fitness Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and nearly 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally is dedicated to improving the lives of active, fitness-conscious consumers and being the leader in providing health and fitness services and products. CONTACT: Bally Total Fitness Mr. Jon Harris Phone: 773-864-6850 E-mail: www.BallyFitness.com or MWW Group Mr. Carreen Winters Phone: 201-507-9500 E-mail: cwinters@mww.com BALLY TOTAL: Hires David Reynolds as Controller ----------------------------------------------- Bally Total Fitness (NYSE: BFT) announced Tuesday that it has named David Reynolds its new Controller. Over a career that has spanned two decades, Mr. Reynolds has served in a variety of senior positions in the areas of accounting and finance systems, as well as treasury and investor relations. Most recently, he was the Senior Vice President and Controller of Comdisco, Inc. At Bally, Mr. Reynolds will oversee the processing and reporting of all financial transactions for the Company. He will also be responsible for maintaining effective internal controls over financial reporting and the efficient and effective operation of Bally's accounts payable, payroll and revenue accounting, as well as implementation of Sarbanes-Oxley Section 404. "A key component to Bally's turnaround plan is attracting top talent with targeted areas of expertise at all levels of the organization. Bringing on David Reynolds is an important step in this initiative," said Paul Toback, Chairman and CEO, Bally Total Fitness. "His proven track record in financial controls, continual process improvements and broad-based accounting expertise will be an important asset as we work to complete our financial statements while ensuring consistent application of new quality controls and policies." "I'm excited to be joining the senior team at such a significant time, and look forward to further strengthening the financial foundation for the future of the Company," said Reynolds. Reynolds holds a M.B.A. from Lehigh University in Accounting and Finance and holds accreditations as a Certified Public Accountant and Certified Cash Manager. Mr. Reynolds is the most recent executive to join Bally Total Fitness as part of the Company's "Best In Class" initiative, a program launched in 2003 designed to recruit and retain top talent to the organization. Mr. Reynolds joins recent executive additions Senior Vice President and General Counsel Marc Bassewitz, Vice President of Diet and Nutrition Barbara Barry and Vice President of Franchising Ben Amante. CEESP: Legislators Must Focus on Passing Reforms ------------------------------------------------ Mexico's economic think-tank, the Center of Private Sector Economic Studies (CEESP), warned that a delay in initiating structural reforms could affect the country's power to generate jobs and improve education. Local news source Cronica reports that the statement came after CEESP criticized the legislators' move to institute a hefty salary increase for themselves rather than prioritizing the debate over reforms. CEESP added that the legislators even took advantage of a legal loophole to pass the salary adjustment. There is a general consensus that the reforms are necessary to moderate political confrontations in the country. Analysts say that continued political confrontations hinder progress in improving services such as employment, education and health. CINTRA: Board OKs Separate Sale of Aeromexico and Mexicana ---------------------------------------------------------- The board of Mexican airline holding Company Cintra SA has given their approval to the reorganization and sale of the Company's assets in three packages, Cintra revealed in a filing with the Mexican Stock Exchange. Under the plan, government-controlled Cintra will sell leading domestic carrier Aeromexico together with regional unit Aerolitoral. The country's top international carrier, Mexicana, will be sold together with a new low-cost carrier that will offer flights at a 30% discount from normal fares. Mexicana unit AeroCaribe's assets will be included in that sale. Lastly, ground services unit Servicios de Apoyo en Tierra (SEAT) will be sold independently. Cintra said it will soon decide how to sell off other assets and what stake, if any, it will retain in them. "This arrangement will allow us to strengthen the airline industry and lay the foundation for the sustained development of Mexican aviation in the long term," Cintra said in the filing. The holding Company said the restructuring "gives financial viability to the Group, addresses the interests of the Federal Competition Commission and fits the aviation policy vision of the Communications and Transportation Secretariat." Previously, Cintra had intended to merge Aeromexico and Mexicana into one carrier for sale and to combine AeroCaribe and Aerolitoral into another to compete with the larger entity. Cintra was created in 1995 to prevent the bankruptcy of Mexico's largest carriers. 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 HYLSA: S&P Issues Ratings Report -------------------------------- Rationale The rating on Mexican steel producer Hylsa S.A. de C.V. (Hylsa) reflects the Company's below-average financial profile, the challenges posed by industry cyclicality, very competitive steel markets, the high percentage of spot sales to total sales, and exposure to the automotive and construction industries. The rating also reflects Hylsa's backward integration, an important debt reduction and strong operational performance during 2004, and its position as one of the largest steel makers in Mexico. Currently, the steel industry is on the upper part of the cycle and most of the companies in the industry are benefiting from this situation. Standard & Poor's Ratings Services believes that demand will likely continue well into 2005 and provide pricing power to Hylsa. Nevertheless, we also believe that steel prices have more downside potential than upside, which will affect Hylsa's cash-flow generation. Additionally, a high percentage of Hylsa's sales is realized at spot price, which increases operation performance exposure to the volatile spot market. The conditions in the current market favor Hylsa's business model of backward integration into iron ore and its capacity to switch between steel scrap and direct-reduced iron in the steel- making process. This situation is evident in the EBITDA margin. At year-end 2004, the Company reported a margin of 34.6%, which is the highest of the past five years. Moreover, Hylsa's EBITDA generation during 2004 was 4.9x superior to the previous year. We do not expect this level of EBITDA margin in the upcoming years. The Company used its extra cash-flow generation in 2004 to prepay debt by $248 million or 33%. The combination of higher EBITDA and debt prepayments have a direct effect on the Company's debt-to-EBITDA ratio, lowering it to 0.7x at year-end 2004 from 5.5x a year ago, and has eliminated any considerable maturity in the next two years. We believe Hylsa is in a better financial position to support a downward trend in steel prices, but it remains below average. Moreover, we do not anticipate the Company will continue to make more debt prepayments in 2005. Hylsa is the second-largest producer of flat steel in Mexico (3 million metric tons), vertically integrated, and has low-cost production. In 2004, the Company revenues were $1.9 billion and sold 2.9 million tons. Liquidity Hylsa's liquidity is adequate. The Company had $54 million in cash as of Dec. 31, 2004, and a three-year committed credit line of $60 million. Maturities for 2005 and 2006 are $22 million and $26 million, respectively. We do not expect Hylsa to have problems covering obligations. Hylsa is comfortably in compliance with financial covenants established under its loan agreements. Outlook The outlook is stable. The ratings could be raised over time if Hylsa improves its business profile, increases its value-added mix, and maintains adequate debt levels. The ratings could be lowered if improved financial performance is not sustainable and leverage increases. Primary Credit Analyst: Juan P Becerra, Mexico City (52) 55-5081-4416; juan_becerra@standardandpoors.com Secondary Credit Analyst: Santiago Carniado, Mexico City (52) 55-5081-4413; santiago_carniado@standardandpoors.com MINERA AUTLAN: Secures $25M Credit Line With Germany's WestLB ------------------------------------------------------------- Mexican manganese producer Minera Autlan (BMV: AUTLANB) has arranged for a US$25-million credit line with German bank WestLB. The credit line, which Autlan can tap into at its discretion within the next six months, will be used to refinance debts and fund new projects, according to Autlan's CFO Lorenzo Belden. The new credit source will save the Company some US$1.2 million in payments over the next six months alone, Belden said. The long-term credit is structured in such a manner that payments will be made through future exports. The exports will also act as guarantees on the credit. Autlan ended the fourth quarter of 2004 with revenue of MXN585 million (US$52.2mn), 125% up on the same period in 2003 thanks to increased demand for its manganese-ferroalloy products from Mexican steelmakers. ======= P E R U ======= EMPRESAS LUCCHETTI: Loses to Peru in Long-Standing Dispute ---------------------------------------------------------- The International Center for Settlement of Investment Disputes (ICSID) has sided with Peru in a long-standing dispute against Chilean pasta maker Empresas Lucchetti. Dow Jones Newswires recalls that the city of Lima ordered Lucchetti to close a pasta factory built outside the capital city following several years of controversy over operating licenses and land permits. In late 2002, Empresas Lucchetti filed a complaint with the ICSID, arguing that its investment in Peru was protected by bilateral investment agreements and that it was the victim of discrimination. Among other things, the pasta maker demanded US$150 million in compensation. On Monday, however, the ICSID ruled that the agreement isn't applicable as it was signed several years after Empresas Lucchetti had set up its operations and, therefore, the ICSID isn't the competent body to look at the case. ICSID is an autonomous organization with close links to the World Bank. CONTACT: EMPRESAS LUCCHETTI S.A. 2600 Av Vicuna Mackenna Comuna de Macul Santiago Chile Phone: +56 238 2711 +56 238 6592 Home Page: http://www.lucchetti.cl/ * PERU: To Present Formal Debt Proposal to Paris Club March 15 -------------------------------------------------------------- Peru's Deputy Finance Minister Luis Carranza said Tuesday that the government expects to present a formal proposal in mid-March to restructure up to US$1.5 billion in outstanding debt with the Paris Club of nations, relates Dow Jones Newswires. If the proposal, which includes a discount, gets rejected, Peru will continue with other avenues in its overall debt restructuring process, Carranza said. "This is a relatively small amount of debt that we are proposing to restructure. If we don't reach a deal, then the sky won't fall in," Carranza said. "The strategy is to make the formal presentation on March 15. We are trying to obtain the best discount possible. That is part of the negotiations," he said, adding that some nations are ready to accept "a certain discount rate to obtain liquidity." Carranza said that Peru's initial request to prepay some of its Paris Club debt, made last year, was met with "good will, but also with caution." "We are going to make an aggressive proposal, and if they don't give us what we want, then we won't carry it out," he said. Peru faces a hump in debt payments over the next few years, with large obligations to the Paris Club group of 19 permanent member governments. As of September, Peru's debt with the Paris Club totaled US$8.18 billion. ============= U R U G U A Y ============= UTE: Board to Meet This Week to Discuss Tariff Hikes ---------------------------------------------------- The board of Uruguay's state power Company UTE is scheduled to meet this week and next to tackle issues including electricity rates hike and the soon-to-expire electricity contract with Brazil, reports Business News Americas. In a meeting last Jan. 25 and Feb. 1, the board considered raising electricity rates 6-10%. But according to a UTE spokesperson, the meetings saw no decision to the proposal. The lack of rain and higher demand has forced UTE to increase production from its thermoelectric plants and to import electricity from Argentina and Brazil. UTE is currently receiving 400MW of electricity from Brazil and will continue to do so until the contract expires on February 28. The Company may consider renewing that contract through April. ================= V E N E Z U E L A ================= PDVSA: Still Reeling From the Effects of 2002-2003 Strike --------------------------------------------------------- State-run oil producer Petroleos de Venezuela (PDVSA) was unable to boost crude production in 2004, leaving total oil output close to 3.1 million barrels per day, according to PDVSA President Rafael Ramirez. Ramirez, who is also the nation's oil minister, said it would take at least five years for PDVSA to completely recover from the strike it suffered in late 2002 and early 2003. Venezuela's oil production dropped from over 3 million barrels of crude oil per day to under 100,000 barrels a day during the strike. Industry analysts often argue that Venezuela is still pumping less oil than it was prior to the strike. They claim Venezuela's currently output is approximately 2.7 million barrels per day. Meanwhile, Ramirez revealed PDVSA registered profits of US$6.6 billion from January through November last year, an 88% increase over the same period in 2003. PDVSA: Oil Spill Investigation Continues ---------------------------------------- State oil Company PDVSA denied reports that the Santo Domingo River oil spill in Barinas state on Saturday night was caused by a leaky valve from one of it's installations in the area. Mr. Jesus Manuel Ruiz from Barinas' civil protection agency further clarified that the leak came from a Company that was preparing an asphalt mixture for road surfacing. Business News Americas states that while PVSA cleared its culpability over the incident, the Company had also worked to bring the spill, contaminating a 28-kilometer stretch of the river, under control. PDVSA is also investigating the cause of the spill. The timing of the incident has raised speculations of sabotage. Mr. Neiro Ramirez, the states' environment minister, believes that foul play was involved because the incident occurred at night. *********** 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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