/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/050211.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 Friday, February 11, 2005, Vol. 6, Issue 30 Headlines A R G E N T I N A AGUAS ARGENTINAS: Threatens Argentine Pullout BERSA: Imminent Sale Draws Interest From Three Local Banks CABLEVISION: Fitch Maintains Junk Rating on $1.5B Bonds COMPLEJO JAI ALAI: Enters Bankruptcy on Court Orders DIFUSORA DEL IBERA: Court Concludes Reorganization FM SEGURIDAD S.A.: Files Petition to Reorganize MASTELLONE HERMANOS: Strikes Debt Agreement With French Company MEDICAL EXPRESS S.R.L.: Gets Court OK for Reorganization MEU BEN S.R.L.: Begins Liquidation Process MULTICANAL: $1.3Bln in Bonds Retain Junk Status OBRA SOCIAL FEDERAL: Debt Payments Halted, Set To Reorganize PAPELERA IRIARTE: Court OKs Creditor's Bankruptcy Call PRO-TECHNOLOGY S.A.: Liquidates Assets to Pay Debts SUDAMERICAN S.A.: Court Declares Company Bankrupt SZWARCBERG HERMANOS: Reports Submission Set TELEFONICA DE ARGENTINA: To Issue New Notes Worth ARS250 Mln B E R M U D A GLOBAL CROSSING: Names New Wireless Exchange Head B O L I V I A BANKING SYSTEM: "Static" Situation Gleans "Stable" Ratings B R A Z I L BRASKEM: Alliance Acquires 5.0622% Preferred Shares SABESP: Bear Stearns Cuts ADRs to "Peer Perform" C O L O M B I A ECOPETROL: Expects Panel to Decide on Appeal Today M E X I C O CINTRA: Details Board's Decision to OK Transformation Process DIRECTV GROUP: Begins Secondary Offering ISSSTE: Officials to Discuss Social Security Reforms SATMEX: Government Rules Out Bailout Plans VITRO: Moody's Affirms Existing Ratings For VENA V E N E Z U E L A HEAVY OIL PROJECTS: Moody's Confirms Ratings; Stable Outlook - - - - - - - - ================= A R G E N T I N A ================= AGUAS ARGENTINAS: Threatens Argentine Pullout --------------------------------------------- Aguas Argentinas will leave Argentina if the government does not improve the conditions of its concession, the Company's president, Yves-Thibault de Silguy, said in a letter to Economy Minister Roberto Lavagna. In a letter dated Jan. 13, the French utility Suez (SZE) subsidiary executive wrote: "We have received some work papers that suggest that the government's intention would be to transform the concession contract into a contract of operation and maintenance. This is incompatible with the vision that we have of our role as a responsible operator of a public service." "The government considers it necessary to modify the nature of the contract, taking total control of investments. Even though Suez can respect this decision, it is not disposed to assume the role of an operator in a contract of operation and maintenance. It would follow, then, to rescind the current concession contract," the letter said. Suez and the government are still locked in discussions over a new, long-term contract. Negotiations have proven to be tough due to the sharp disagreements over utility rate hikes and investment commitments. The firm, which serves the province of Buenos Aires, wants a tariff rise of 60% to fund water-supply improvements. But the government has rejected the 60% rise and said a "mixed" company in which the state has partial control is possible, as is a full contract rescission. BERSA: Imminent Sale Draws Interest From Three Local Banks ---------------------------------------------------------- The upcoming sale of provincial bank Banco de Entre Rios SA (BERSA), a former unit of France's Credit Agricole SA, has attracted the interest of three local banks, according to reports in local newspapers Wednesday. The interested bidders are Nuevo Banco de Santa Fe, Banco Hipotecario, and an unnamed bank from the Association of Argentine Banks, or Adeba. Federal bank Banco de la Nacion, which took over BERSA and two other Credit Agricole units, Nuevo Banco Bisel and Banco Suquia, in 2002, plans to accept bids for BERSA early next month. In preparation for the tender, Sedesa, a local institution that manages a financial crisis reserve fund, has offered a capital injection of ARS188 million ($1=ARS2.92), local media reported. Among tender conditions, the buyer must payback ARS18 million that Banco de la Nacion put into BERSA. Other factors to be considered from bidders will be the size of their proposed capital injections, efforts to maintain the current bank staff for the longest period possible, and the quality of the business plan. CABLEVISION: Fitch Maintains Junk Rating on $1.5B Bonds ------------------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. maintains a `D(arg)' rating on US$1.5 billion worth of corporate bonds issued by Cablevision S.A., the largest Argentine cable operator. In its official Web site, the CNV reveals that the rating action affected bonds described as "obligaciones negociables simples." The maturity date of such issue wasn't disclosed. The rating action was taken based on the Company's finances as of February 9, 2005. CONTACT: Mr. Santiago Pena Phone: (5411) 4778-6520 E-mail: spena@cablevision.com.ar Mr. Martin Pigretti Phone: (5411) 4778-6546 E-mail: mpigretti@cablevision.com.ar Web site: http://www.cablevision.com.ar COMPLEJO JAI ALAI: Enters Bankruptcy on Court Orders ---------------------------------------------------- Court No. 4 of Buenos Aires' civil and commercial tribunal declared Complejo Jai Alai S.R.L. 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 Francisco Rogelino Cano. As trustee, Mr. Cano is tasked with verifying the authenticity of claims presented by the Company's creditors. The verification phase is ongoing until March 18. Infobae reports that Clerk No. 8 assists the court on this case, which will end with the disposal of the Company's assets in favor of its creditors. CONTACT: Mr. Francisco Rogelino Cano, Trustee Uruguay 618 Buenos Aires DIFUSORA DEL IBERA: Court Concludes Reorganization -------------------------------------------------- Mercedes-based Company Difusora del Ibera S.R.L. concluded its reorganization process, according to data released by Infobae on its Web site. The conclusion came after the city's civil and commercial tribunal homologated the debt plan signed between the Company and its creditors. FM SEGURIDAD S.A.: Files Petition to Reorganize ----------------------------------------------- FM Seguridad S.A., security services provider, filed a "Concurso Preventivo" motion, reports La Nacion. The Company is seeking to reorganize its finances following cessation of debt payments since February 25, 2003. The Company's case is pending before Court No. 16 of Buenos Aires' civil and commercial tribunal. The city's Clerk No. 31 assists the court on this case. CONTACT: FM Seguridad S.A. Capitan Ramon Freire 4593 Buenos Aires MASTELLONE HERMANOS: Strikes Debt Agreement With French Company --------------------------------------------------------------- Argentine dairy producer Mastellone Hermanos (MLH.YY) has struck a deal with French foodmaker Groupe Danone (DA), under which it will restructure a US$29.1-million loan owed to the latter, reports Dow Jones Newswires. In a filing Wednesday with the Buenos Aires stock exchange, Mastellone said the amount of the debt will be reduced to US$15 million. Instead of repaying the loan in installments between 2007 and 2011, the Company will now make a single payment on Dec. 31, 2013. Finally, the original floating interest rate has been replaced with a fixed rate of 8%. The Company said the refinancing agreement represents a gain of ARS41.2 million when using an exchange rate of $1=ARS2.9140. Mastellone completed in October a restructuring of US$328.9 million defaulted bonds and bank obligations. Meanwhile, the board of Mastellone received from its shareholders US$14.75 million in cash and shares representing 5% of Logistica La Serenisma SA, a distribution unit in which Danone owns a 51% stake. Mastellone said the total ARS48.287 million it will receive from the cash and shares "will be used for general corporate ends" and "will permit the maintenance of a direct link with Logistica La Serenisma SA." MEDICAL EXPRESS S.R.L.: Gets Court OK for Reorganization -------------------------------------------------------- Medical Express S.R.L. will begin reorganization following the approval of its petition by Court No. 13 of Buenos Aires' civil and commercial tribunal. The opening of the reorganization will allow the Company to negotiate a settlement with its creditors in order to avoid a straight liquidation. Mr. Omar Sergio Vazquez will oversee the reorganization proceedings as the court-appointed trustee. He will verify creditors' claims until March 2. The validated claims will be presented in court as individual reports on April 15. The trustee is also required by the court to submit a general report essentially auditing the Company's accounting and business records as well as summarizing important events pertaining to the reorganization. This report will be presented in court on May 30. The Informative Assembly, the final stage of a reorganization where the settlement proposal is presented to the Company's creditors for approval, is scheduled on November 16. CONTACT: Mr. Omar Sergio Vazquez, Trustee Avda Santa Fe 1127 Buenos Aires MEU BEN S.R.L.: Begins Liquidation Process ------------------------------------------ Meu Ben S.R.L. of Buenos Aires will begin liquidating its assets after Court No. 9 of the city's civil and commercial tribunal declared the Company bankrupt. Infobae reveals that the bankruptcy process will commence under the supervision of court- appointed trustee Cesar Alejandro de Virgilis. Mr. Virgilis will receive claims forwarded by the Company's creditors until June 2. After claims verification, He will submit the individual reports for court approval on August 9. The general report will follow on November 10. Clerk No. 17 assists the court on this case. CONTACT: Mr. Cesar Alejandro de Virgilis, Trustee San Isidro Labrador 4040 Buenos Aires MULTICANAL: $1.3Bln in Bonds Retain Junk Status ----------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. reaffirmed the `D(arg)' rating on US$1.3 billion worth of corporate bond issued by Multicanal S.A., the CNV reports. The bonds affected are: - US$1.05 billion worth of "obligaciones negociables" with ndisclosed maturity date; - US$125 million worth of "obligaciones negociables simples" with undisclosed maturity date; and - US$125 million worth of "obligaciones negociables" with undisclosed maturity date. Fitch also gave a `C(arg)' rating to US$300 million worth of bonds described as "Programa de ONs por U$S 300 MM." Fitch gave the rating based on Multicanal's financial condition as of September 30, 2004. OBRA SOCIAL FEDERAL: Debt Payments Halted, Set To Reorganize ------------------------------------------------------------ Court No. 6 of Buenos Aires' civil and commercial tribunal is now analyzing whether to grant Obra Social Federal de la Federacion de Trabajadores de Obras Sanitarias approval for its petition to reorganize. La Nacion recalls that the Company filed a "Concurso Preventivo" petition following cessation of debt payments February 2 this year. Clerk No. 12 assists the court on the Company's case. CONTACT: Obra Social Federal de la Federacion de Trabajadores de Obras Sanitarias Avenida Las Heras 1945 Buenos Aires PAPELERA IRIARTE: Court OKs Creditor's Bankruptcy Call ------------------------------------------------------ Papelera Iriarte S.R.L. entered bankruptcy after Court No. 5 of Buenos Aires' civil and commercial tribunal approved a bankruptcy motion filed by Papelera Iriarte S.R.L., reports La Nacion. The Company's failure to pay US$6,057 in debt prompted the Creditor to file the petition. Working with the city's Clerk No. 10, the court assigned Mr. Edgardo Alberto Borghi as trustee for the bankruptcy process. The trustee's duties include the authentication of the Company's debts and the preparation of the individual and general reports. Creditors are required to present their proofs of claims to the trustee before April 11. The Company's assets will be liquidated at the end of the bankruptcy process to repay creditors. Payments will be based on the results of the verification process. CONTACT: Papelera Iriarte S.R.L. Doctor Domingo Cabred 4839 Buenos Aires Mr. Edgardo Alberto Borghi, Trustee Luis Viale 2176 Buenos Aires PRO-TECHNOLOGY S.A.: Liquidates Assets to Pay Debts --------------------------------------------------- Pro-Technology S.A. will begin liquidating its assets following the bankruptcy pronouncement issued by Court No. 7 of Buenos Aires' civil and commercial tribunal. The ruling places the Company under the supervision of court- appointed trustee Raquel Martha Poliak. The trustee will verify creditors' proofs of claims until March 8. The validated claims will be presented in court as individual reports on May 4. Ms. Poliak 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 June 17. The bankruptcy process will end with the disposal Company assets in favor of its creditors. CONTACT: Ms. Raquel Martha Poliak, Trustee Lavalle 1527 Buenos Aires SUDAMERICAN S.A.: Court Declares Company Bankrupt ------------------------------------------------- Court No. 5 of Buenos Aires' civil and commercial tribunal declared local Company Sudamerican S.A. "Quiebra", relates local daily La Nacion. The court approved the bankruptcy petition filed by Random Argentina S.A., to whom the Company failed to pay debts amounting to US$172,500. The Company will undergo the bankruptcy process with Mr. Horacio Garcia as its trustee. Creditors are required to present their proofs of claims to the trustee for verification before April 11. Creditors who fail to have their claims authenticated by the said date will be disqualified from the payments that will be made after the Company's assets are liquidated at the end of the bankruptcy process. Clerk No. 10 assists the court on the case. CONTACT: Sudamerican S.A. La Pampa 2037 Buenos Aires Mr. Horacio Garcia, Trustee Montevideo 536 Buenos Aires SZWARCBERG HERMANOS: Reports Submission Set ------------------------------------------- Ms. Susana Raquel Manrique, the trustee assigned to supervise the liquidation of Szwarcberg Hermanos S.A., will submit the validated individual claims for court approval on March 16. These reports explain the basis for the accepted and rejected claims. The trustee will also submit a general report on June 27. Infobae reports that Court No. 5 of Buenos Aires' civil and commercial tribunal has jurisdiction over this bankruptcy case. Clerk No. 10 assists the court with the proceedings. CONTACT: Ms. Susana Raquel Manrique, Trustee Lavalle 1675 Buenos Aires TELEFONICA DE ARGENTINA: To Issue New Notes Worth ARS250 Mln ------------------------------------------------------------ Local fixed-line carrier Telefonica de Argentina SA (TAR) is scheduled to issue today, Friday, two tranches of new notes worth ARS250 million. Citing a Company filing to the stock exchange, Dow Jones reports that today's operation will complete the Company's third placement under an ARS1.5 billion program approved last year. Telefonica offered the bonds in a subscription period between Jan. 21 and Feb. 8. The Company, which is a unit of Spain's Telefonica (TEF), said it will issue ARS200 million of a one- year bond with a coupon of 8%, and ARS50 million of a two-year, floating-rate bond whose coupon will start at 7%. No information was given on yields. CONTACT: TELEFONICA DE ARGENTINA Tucuman 1, 18th Floor, 1049 Buenos Aires, Argentina Phone: (212) 688-6840 Home Page: http://www.telefonica.com.ar ============= B E R M U D A ============= GLOBAL CROSSING: Names New Wireless Exchange Head ------------------------------------------------- Global Crossing (Nasdaq: GLBC) announced Wednesday the appointment of Simon Clayton-Mitchell as vice president, wireless services exchange, with the primary role of executing the international launch and establishment of Global Crossing's Wireless Services Exchange(TM), an extranet community for mobile network operators providing high-quality global connectivity to support the convergence of voice, multimedia messaging, video calling and other IP services that will ride across 3G networks. "This appointment underlines our commitment to evolve with the wireless market as the demand grows for high-quality IP services to support converged mobile communications services," said John Legere, Global Crossing's CEO. Mr. Clayton-Mitchell leads a team that will initially concentrate on the European market. Wireless Services Exchange provides mobile network operators (MNOs) with a simplified interconnection structure from a neutral provider with global reach. This single connection supports MNOs' current voice and video applications as well as the imminent convergence with IP data services. "Simon's background in developing market entry strategies will give new impetus to the progress we have made in engaging with pan-European wireless service providers to create a multi-party exchange for the international transport of mobile services," said Phil Metcalf, managing director of Global Crossing's UK business, who oversees the Wireless Services Exchange business unit. Mr. Clayton-Mitchell will work closely with Global Crossing's marketing and carrier sales organizations to further develop Wireless Services Exchange at a time when the mobile operators are targeting international business for growth. The initial introduction of Global Crossing's Wireless Services Exchange will deliver international mobile-to-mobile routing with caller line identity (CLI) and point-to-point video with differentiated billing. The second release, to be launched later in 2005, will include global roaming exchange services (GRX), short messaging services (SMS) and multimedia messaging services (MMS). The growth of 3G services is forcing MNOs down the path of convergence. Global Crossing's international network delivers IP services to more than 500 major cities in 50 countries and supports a global VoIP infrastructure that currently handles up to 2.5 billion minutes a month. This global IP and VoIP infrastructure is ideally suited to MNOs' current demand for international voice termination, plus the inherent capability to support next-generation IP data and multimedia applications running over 3G networks. Mr. Clayton-Mitchell joins Global Crossing from Blueshift Consulting, a Tokyo-based firm of which he was co-founder and principal. In this capacity, he specialized in developing market entry strategies and operational set-up in the Japanese and Asia Pacific markets for international Internet security companies. Prior to this, he served for two years as vice president of data product management for Asia Global Crossing. During his tenure at AT&T Asia Pacific, Mr. Clayton-Mitchell was closely involved in a joint investment project with BT, performing the role of director of product management, covering both the Japanese fixed line and mobile markets. He was also AT&T's regional product marketing director for voice over IP financial transaction services in Asia Pacific. Mr. Clayton-Mitchell has 20 years' experience in telecom, and his earlier career includes positions with the consultancy Booz Allen & Hamilton, NEC America, GTE Communications and Marconi Defense Systems. He holds an MBA from the London Business School and an honors degree in electrical and electronic engineering from Manchester University. About Global Crossing Global Crossing provides telecommunications solutions over the world's first integrated global IP-based network. Its core network connects more than 300 cities and 30 countries worldwide, and delivers services to more than 500 major cities, 50 countries and 6 continents around the globe. The Company's global sales and support model matches the network footprint and, like the network, delivers a consistent customer experience worldwide. Global Crossing IP services are global in scale, linking the world's enterprises, governments and carriers with customers, employees and partners worldwide in a secure environment that is ideally suited for IP-based business applications, allowing e- commerce to thrive. The Company offers a full range of managed data and voice products including Global Crossing IP VPN Service, Global Crossing Managed Services and Global Crossing VoIP services, to more than 40 percent of the Fortune 500, as well as 700 carriers, mobile operators and ISPs. CONTACT: Global Crossing Press Contacts Ms. Becky Yeamans Phone: +1 973-937-0155 E-mail: PR@globalcrossing.com Ms. Kendra Langlie Phone: +1 305-808-5912 E-mail: LatAmPR@globalcrossing.com Mr. Mish Desmidt Europe Phone: +44 (0) 1256-732866 E-mail: EuropePR@globalcrossing.com Analysts/Investors Contact Ms. Laurinda Pang Phone: +1 800-836-0342 E-mail: glbc@globalcrossing.com Web site: http://www.globalcrossing.com ============= B O L I V I A ============= BANKING SYSTEM: "Static" Situation Gleans "Stable" Ratings ---------------------------------------------------------- In its annual report on Bolivia's banking industry, Moody's Investors Service says that its stable outlook for the system's low average ratings is based on both a difficult operating environment and high degree of dollarization, as well as by the weaknesses of heavy deposit withdrawals, scanty economic capitalization, and poor asset quality. "Despite generally prudential supervision and good financial disclosure, economic losses and capital weakness have been masked by underprovisioning and regulatory forbearance," the rating agency concludes. Moody's adds that the banking system's limited access to medium-term funding mirrors Bolivia's own limitations. The summary opinion of Moody's report, "Banking System Outlook: Bolivia", follows: Difficult economic, financial, and social conditions persist in Bolivia and have led to thinner loan and deposit portfolios among the banks. We expect this troubled situation to continue into 2005 because political instability and social unrest appear unlikely to ebb. The banks' poor asset quality is clearly reflected in double- digit non-performers and numerous restructured loans. The system's reported a net loss during 2004 of $5.2 million, but even higher economic losses have been masked by underprovisioning. The decline in operating income also highlights how earnings will be pressured. We expect the banks' core profitability to stay squeezed in the near term, given that credit demand is light and that both operating and credit-related expenses remain high relative to revenues. Moody's currently rates six Banks in Bolivia for foreign currency deposits at Caa1 and Caa2. This difference between the ratings reflects Moody's view that the banks with largest deposit market shares, which are at the foreign-currency country ceiling for deposits of Caa1, would be more likely to receive institutional or shareholder support relative to those rated Caa2. The Caa2 ratings also reflect weaker earnings capacity and balance sheets at the respective banks. Moody's also emphasizes that the low global deposit ratings indicate the Bolivian banks' weak performance under very harsh political, social and economic conditions, as well as reflecting the steady deposit withdrawals the banks have been suffering as a result of instability. Additionally, the creation of a temporary financial transaction tax (ITF for its Spanish initials -- "Impuesto a las Transacciones Financieras"), as announced by the Government in February 2004, has provoked increased withdrawals until its implementation in July of last year. After the ITF was applied, the retail deposits level partly recovered and reached $2.5 billion as of December 2004. The Caa1/Caa2 ratings are also indicative of the still-high dollarization level of the system, despite improving to 85.9% at 12/31/04 from 90.7% as of 12/31/03 given the exemption of the ITF on local currency accounts. The high level of dollarization, together with the country's weak fiat currency, works to severely limit the Central Bank's ability to act as a true lender of last resort. For this reason, Moody's global local- currency deposit ratings for the respective Bolivian banks are at the same levels as their foreign currency deposit ratings. The average Bolivian bank financial strength ratings (BFSRs) are at the lowest rung -- E -- reflecting the banks' scanty economic capitalization and their shaken stand-alone credit strength after constant deposit withdrawals. The stable outlook on the ratings points to the static nature of this situation, which is marked by the bank's weak intrinsic financial strength, continuing deposit weakness, and reliance on the support of shareholders or the Central Bank. Moody's also rates the local currency deposits of six Bolivian banks on a national scale (NSRs) between A1.bo and Baa3.bo. Moody's NSRs, which carries the country identifier of ".bo," ranks the likelihood of credit loss among issuers in a particular country, and, as such, these ratings are not Moody's opinion on absolute default risks. In countries with overall low credit quality, even highly rated credits on a national scale may still be susceptible to default. New York Gregory W. Bauer Managing Director Financial Institutions Group Moody's Investors Service JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Buenos Aires Maria Andrea Manavella Vice President - Senior Analyst Financial Institutions Group =========== B R A Z I L =========== BRASKEM: Alliance Acquires 5.0622% Preferred Shares --------------------------------------------------- In compliance with the article 12, caput, of CVM Instruction n� 358 of January 1, 2002, Alliance Capital Management L.P., a corporation existing and duly organized under the laws of the State of Delaware, the United States of America, headquartered at Avenue of Americas, 1,345, New York City, New York, the United States of America ("ACMLP"), as a fund and/or foreign discretionary clients' investments manager, communicates that the funds and or foreign discretionary clients' investments under its management acquired, through operations executed at the stock exchange market, directly or by American Depositary Receipts - ADRs, 3,047,997,800 class "A" preferred shares issued by Braskem S.A. (the "Company"), corresponding to 5.0622% of the class "A" preferred shares of the Company. This operation is a minority investment that does not change the Company's control composition or the administrative structure. At the present time, ACMLP is not seeking to acquire any certain number of shares of the Company. None of the associated Company or affiliated of ACMLP detains any securities issued by the Company. There is no convertible debentures directly or indirectly detained by ACMLP or to any related party, nor any agreement or contract regulating the voting rights or the purchase and sell of securities issued by the Company in which ACMLP or any related party is a party. CONTACT: Mr. Paul Elie Altit Chief Financial Officer Braskem S.A. Rua Eteno 1561 Polo Petroquimico de Camacari Camacari, Bahia CEP 42810-000 Brazil SABESP: Bear Stearns Cuts ADRs to "Peer Perform" ------------------------------------------------ Investment house Bear Stearns downgraded Wednesday its recommendation on Sao Paulo state water utility Sabesp to "peer perform" from "outperform." In a report, the New York-based firm said the downgrade reflects recent share price outperformance plus Company guidance for lower volume growth and dividends. Bear Stearns noted that Sabesp's share price has risen 33% since it upgraded the Company in November. Sabesp's American Depositary Receipts (ADRs) closed Tuesday at $14.34, down 2.4% from the previous session. Bear Stearns put a new year-end target price for the Company at US$17.50, compared with US$18 earlier. ADRs will continue to be volatile due to the debate over federal water legislation, which aims to decrease the importance of state-level controlled water utilities. But, "we continue to believe that rationality will prevail, and as occurred with the electricity sector, the final version will be considerably more market-friendly than initial populist proposals," Bear Stearns said in its report. Sabesp (NYSE: SBS), Brazil's largest water utility in terms of clients, serves 368 municipalities out of a total of 645 in the state, with 100% drinking water coverage, 85% sewerage coverage and 76% sewage collection. CONTACT: Companhia de Saneamento Basico do Estado de Sao Paulo Helmut Bossert Head of Investor Relations Rua Costa carvalho, 300 Pinheiros - CEP 05429-900 Sao Paulo, S.P. Brazil Tel: 011 55 11 3388-8664 Marisa de Oliveira Guimaraes Investor Relations Tel: 011 5511 3388-9135 marisag@sabesp.com.br Rua Costa carvalho, 300 Pinheiros - CEP 05429-900 Sao Paulo, S.P. Brazil Web site: http://www.sabesp.com.br =============== C O L O M B I A =============== ECOPETROL: Expects Panel to Decide on Appeal Today -------------------------------------------------- An arbitration panel is expected to respond today to an appeal by state oil producer, Ecopetrol, regarding its decision to rehire fired workers. Business News Americas recalls that on Jan. 21, the panel ordered the Company to rehire roughly half of the workers who were fired after taking part in an April 2004 strike. The panel consists of two Ecopetrol lawyers, two representatives from the national labor union USO, and one chamber of commerce official. On Feb. 4, Ecopetrol appeal the decision and said the panel's capacities "are limited to establishing if a fair cause for contract termination had been presented in each case considered." The panel confused the rules in the workers' collective labor contract and did not establish clearly whether the conflict was individual or collective, Ecopetrol added. Ecopetrol has recognized the national labor union USO as a representative of the fired workers even though USO is not supposed to represent its members in such cases, the Company said. =========== M E X I C O =========== CINTRA: Details Board's Decision to OK Transformation Process ------------------------------------------------------------- Cintra's Board of Directors approved Tuesday a series of measures to strengthen the group's structure and prepare its sale in the near term. The details of the decision to sell the group's subsidiaries, as described below, were taken after a detailed and responsible analysis of integration and sale options of the same. The analysis prepared for the Board's consideration is a result of a detailed and precise review of considerations exposed to the Comision Federal de Competencia, (Federal Antitrust Commission) enticing it to gain a respectable status with the Ministry of Communications and Transportation (Secretaria de Comunicaciones y Transportes)'s vision of aeronautical policy. It also embraces market considerations that were widely discussed with potential investors in the sector and reflects the opinion of various participants within the industry and, especially its work force. In this way, a series of measures approved yesterday by Cintra's Board, considered a whole vision of the current Mexican airline industry. It favors the development of a new alternative in air transport available through lower prices, also seeking to protect job sources, ensuring the commitment to go forward with the fleet modernization plan, strengthening the companies' capabilities to better serve the long-haul markets, domestic and regional routes altogether. Among the Board's consideration are, enhancing the group value set by current competitive, labor and financial regulations surrounding Mexican aviation industry. During this session, an important remark was made to continue working with all involved members, and in a group effort, to further advance strengthening measures allowing Cintra's operations; sharing those benefits with Company employees. The Board approved initiating the sale process of the group's subsidiaries in the three following packages: - Grupo Mexicana de Aviacion, integrated by Mexicana, leader in transportation of international passengers, and a new low-cost carrier concept, offering attractive fares and making air travel more accessible to a broad scope of Mexican residents. - Grupo Aerovias de Mexico, comprised by Aeromexico, a Company leader in the national air transport of passengers, and Aerolitoral, which consolidates its place as the regional leading airline and high quality service. - Servicios de Apoyo en Tierra (known as: SEAT), a leading Company in airline ground support services. As part of the overall transformation outline, soon will be disclosed a sale strategy and/or unincorporation of the group's subsidiaries: Aeromexpress, a commercial cargo Company; and Alas de America, an institution dedicated to airline personnel training and development. Cintra is also expecting to announce the group's stock holding participation in its companies and/or subsidiaries such as: Turborreactores, S.A. de C.V. (ITR), dedicated to the maintenance and repair of aeronautical engines and industrial turbines; and in Sabre Travel Network Mexico, a Company leader in managing airlines reservation's system. The decision approved by Cintra's Board of Directors incorporate the best elements available for transforming and selling assets, therefore adopting the most viable option for the Mexican aviation industry. Such options will generate benefits for consumers and the industry alike, maximizing the group's value and minimizing risks during the process. CONTACT: CINTRA S.A. de C.V. Av Xola 535 piso 16 col. del Valle Mexico DF Phone: (5)448 - 8000 E-mail: infocintra@cintra.com.mx DIRECTV GROUP: Begins Secondary Offering ---------------------------------------- The DIRECTV Group, Inc. (NYSE:DTV) announced Wednesday that it has filed an amendment to its registration statement with the Securities and Exchange Commission in connection with the commencement of a secondary offering of its common stock. The selling stockholders, the General Motors Special Hourly Employees Pension Trust, the General Motors Special Salaried Employees Pension Trust and the Sub-Trust of the General Motors Welfare Benefit Trust, will be offering to sell an aggregate of 55,000,000 shares of common stock and intend to grant the underwriters an option to purchase 5,500,000 additional shares held by them. The DIRECTV Group will not receive any of the proceeds from the sale of shares in the proposed offering. Goldman, Sachs & Co. and Morgan Stanley will serve as co- bookrunning managers, with Citigroup Global Markets Inc., Credit Suisse First Boston LLC and J.P. Morgan Securities Inc. acting as co-managers for the proposed offering. A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. A copy of the prospectus relating to these securities may be obtained, when available, from: Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Phone: (212-902-1171) Attn: Prospectus Department or Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Phone: (212-761-6775) The DIRECTV Group, Inc. is a world-leading provider of digital multichannel television entertainment, broadband satellite networks and services. The DIRECTV Group is 34 percent owned by Fox Entertainment Group, which is approximately 82 percent owned by News Corporation. CONTACT: The DIRECTV Group, Inc. Mr. Bob Marsocci Phone: 310-964-4656 ISSSTE: Officials to Discuss Social Security Reforms ---------------------------------------------------- Representatives from Mexico's Social Security and Services Institute for State Workers (ISSSTE) as well as labor leaders met Wednesday to discuss proposed changes in the country's social security scheme. El Economista reports that Benjamin Gonzalez Roaro, ISSSTE general director, Concepcion Castaneda, general secretary of the ISSSTE's national worker's union and Joel Ayala Almeida, president of the Federation of Unions of Workers in the Service of the State (FSTSE), were present during the XIV National Ordinary Congress to study the reforms to be incorporated in the state's pension program. The forum was designed to come up with measures that would enhance the benefits of retired and active workers. Among the changes explored by the federal government include extending the minimum length of service required to receive full pension to 37 years. The current minimum is 30 years for men and 28 years for women. SATMEX: Government Rules Out Bailout Plans ------------------------------------------ The Mexican government has no intention of bailing out the heavily-indebted Satelites Mexicanos SA (SatMex), according to Mexico's Deputy Minister for Communications, Jorge Alvarez Hoth, at a press conference Wednesday. SatMex, in which the government holds a 23.6% stake, missed a US$188 million payment to the government in late December in its third major debt default last year. The Company is in restructuring negotiations. Possible solutions to its financial dilemma include a sale or entry of a strategic partner, a government takeover or bankruptcy proceedings. "This is a process that is ongoing and that takes time," Alvarez said adding, while the government doesn't expect the problem to be solved overnight, neither can it wait indefinitely. Alvarez said the government, in its role as regulator, would intervene if the Company's satellite services were at risk, and that hasn't happened so far. "The only thing I can say is that there won't be a bailout," Alvarez added. SatMex, 49%-owned by Loral Space & Communications Ltd., currently operates the Solidaridad II and SatMex 5 satellites. Plans to launch a third stallite, SatMex6, have been delayed for lack of funds. VITRO: Moody's Affirms Existing Ratings For VENA ------------------------------------------------ Moody's Investors Service affirmed the existing ratings of Vitro Envases Norteamerica, S.A. de C.V. ("VENA), which included the B2 rating for its $250 million guaranteed 10.75% secured note, due 2011 (upsized by $80 million since initial issuance in July 2004). VENA is a holding Company engaged through its subsidiaries in the manufacturing and distribution of glass containers for the beverage, food, cosmetics, and pharmaceutical, industries. VENA, based in Mexico (sovereign rating of Baa1 - stable), accounts for approximately 40% of the revenues of its parent Company Vitro, S.A. de C.V. ("Vitro" has a senior implied rating of B2 with a stable outlook for all ratings). The ratings remain constrained by high financial leverage with pro-forma adjusted debt to EBIT over nine times and adjusted debt to EBITDA slightly over three times. Moody's adjusted debt includes under funded pensions. EBIT margins are below Vitro's, on average, and they are likely to be pressured throughout the intermediate term most notably by challenges with product mix and cost containment. Additionally, the affirmation of existing ratings recognizes VENA's success in reshaping the Company's financial structure by reducing its reliance on inter-Company debt by replacing it with longer duration debt in the fixed income global markets, as well as implementing a master collateral framework to provide financial flexibility in the future. Moody's affirmed the following ratings: B2 rating for the $250 million senior secured guaranteed notes, due 2011 B2 senior implied rating Caa1 senior unsecured issuer rating (non-guaranteed exposure) The ratings outlook is stable. The ratings continue to incorporate moderate cushion under credit statistics to absorb unexpected cost increases or revenue shortfalls, which could arise from the further softening of the demand in any of its markets, specially soft drinks. Specifically, the ratings remain constrained by high financial leverage and modest EBIT coverage of interest expense. The level of consistent cash flow generated by organic operations continues to be a relatively low portion of debt repayment. VENA's revenues are concentrated 60% in domestic sales that are tied to consumer goods industries still in the process of recuperating growth momentum. As a result, VENA remains highly exposed to economic slowdowns. With volumes in VENA's core categories growing sluggishly, revenue increases will likely need to come from price increases transferred ultimately to end consumers, which is a difficult proposition with the Mexican economy expanding slightly below expectations and prevailing monetary constraints designed to further reduce inflation. The B2 senior implied rating also reflects: a) the significant capital investment required to remain competitive and innovative; b) the challenges to fully rely on alternative sources of energy for its furnaces in a still pressured natural gas price environment; c) the concern addressing near term bank debt maturities (2006); and d) the concerns about product conversions away from glass to alternate forms of packaging given that roughly 45% of VENA's revenues come from the products used in the food and carbonated soft drink markets, which are most susceptible to conversion. More positively, the ratings also reflect VENA's exclusive focus on short-run niche products, its well established customer relationships with major suppliers of the Mexican retailer industry and its broad base of customers. The ratings acknowledge VENA's focus on its core business areas by effectively divesting non-essential units. The proceeds from the sale of these units have principally been used over the last four years to meaningfully reduce inter-company debt to approximately $85 million from more than $300 million. Liquidity appears to be acceptable as cash generated by operations should be sufficient to finance working capital and capital expenditures needs throughout the near term. The ratings' outlook remains stable yet is sensitive to small divergences from expectations. The stable outlook reflects the expectation of some continuation in the reduction of financial leverage, albeit likely modest from organic excess cash flow. Free cash flow to adjusted debt continues to be low from historic levels at 5.8% approximately. Should VENA significantly and consistently improve free cash flow generation relative to total adjusted debt well above 6%, there could be positive change in the ratings outlook. During September 2004, VENA obtained a $230 million senior secured term loan maturing in 2006 (not rated by Moody's), to prepay existing inter-Company indebtedness. This bank facility is supported by the same collateral as the Notes, under a Master collateral and inter-creditor agreement (MCIA). Proceeds from the recently added-on $80 million secured notes, will be used to permanently reduce senior secured bank exposure. This add-on plus the $170 million 10.75% senior secured guaranteed notes, due 2011, issued in July 2004 (the "Notes") are now capped at $250 million as per the indenture. Together, the Notes and the secured bank debt are not to exceed $400 million per the indenture and the MCIA. The B2 rating for the VENA notes continues to reflect the benefits and limitations of the collateral and gives consideration to the secured bank debt in the capital structure. The absence of notching above the B2 senior implied rating reflects the absence of excess collateral coverage as well as its illiquid nature, especially under a distress scenario. In addition, the Notes do not benefit from domestic receivables pledged to support the existing $75 million factoring facility. Increased reliance on bank facilities, outside of Moody's expectations, could trigger a downgrade in the rating of the note. Inter-Company debt is effectively subordinated to senior secured debt as represented by the Notes and the bank facility or any other borrowings under the MCIA. However at Empresas Comegua, VENA's joint-venture operating subsidiary based out of Panama to cover Central America, bondholders are structurally subordinated to approximately $23 million of bank debt. The notes are collateralized by perfected first priority liens on the fixed assets of certain Mexican subsidiaries of VENA, plus the pledge of certain current assets and stock. Other creditors may share in the collateral on an equally ratable basis with the Notes. Unconditional guarantees by most of VENA's operating subsidiaries support the Notes. The Notes were sold in accordance with Rule 144A under the Securities Act and outside the United States in accordance with Regulation S under the Securities Act. Headquartered in Monterrey, Mexico, Vitro Envases Norteamerica, S.A. de C.V., is the leading manufacturer of glass containers in Mexico and Central America and a leading global provider of glass containers used in the food, beverage, pharmaceutical, and cosmetics industries. Through two of its operating subsidiaries, Alcali and FAMA, VENA also manufactures and distributes: a) soda ash and sodium bicarbonate and b) capital goods, such as glass- forming machines and molds, respectively. Consolidated annual revenue is approaching $900 million. ================= V E N E Z U E L A ================= HEAVY OIL PROJECTS: Moody's Confirms Ratings; Stable Outlook ------------------------------------------------------------ Moody's Investors Service confirmed the senior secured debt of Venezuelan heavy oil projects Petrozuata, Cerro Negro, Sincor, and Hamaca at B1. The rating outlook is stable for all four issuers. This action concludes the review for possible upgrade that was initiated on September 20, 2004. The placement of the four Venezuelan heavy oil projects on review for potential upgrade reflected continued operational improvements and increased financial flexibility at each of the projects. The review further considered the operating environment in Venezuela, including lingering socio-political unrest and its resultant impact on the operating capacity and financial condition of entities operating within Venezuela. In October the Venezuelan government unilaterally raised the royalty taxes on the projects to 16.67% from the 1% rate documented in the project agreements. This change reduces cash flow coverage of debt service on an on-going basis. At current oil prices and production levels, the increase in royalty taxes has not prevented the projects from achieving strong cash flow coverages. However, the royalty increase would become more significant to cash flow coverage if oil prices were to decline to more historic norms. In addition, the unilateral nature of the change suggests that there might be a greater risk of future sovereign actions that could affect the creditworthiness of the projects. The projects continue to perform well on an operating basis, with increased production levels and elevated oil revenues at all the projects in 2004. Significant planned debottlenecking and restoration projects designed to increase production levels by up to 20% should be completed over the next few years. The ratings of the projects will continue to be influenced by the political and economic environment in the host country. Moody's notes that all four of the projects are currently rated above Venezuela's sovereign foreign currency ceiling, and while this assessment has not changed, there would not necessarily be a complete correlation between future Venezuela sovereign rating actions and the ratings of the projects. Due to the reliance upon PDVSA to supply the natural gas needed by the projects to upgrade the crude prior to its export, the financial and operating condition of PDVSA will remain particularly meaningful to the ratings of the projects. The four Venezuelan heavy oil projects produce and export heavy oil. The four projects are separately owned and operated, and are located in the Orinoco region in Southeastern Venezuela. *********** 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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