/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/050720.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 Wednesday, July 20, 2005, Vol. 6, Issue 142 Headlines A R G E N T I N A CARMELO FAZIO: Bankruptcy Initiated After Court Ruling NOVIPOL S.A.: Liquidates Assets to Pay Debts PAN AMERICAN ENERGY: IFC Loan Will Not Affect Ratings, Says S&P PRODUCAMP S.A.: Court Declares Company Bankrupt SERMED S.R.L.: Reorganization Proceeds To Bankruptcy SOUTHERN WINDS: Foreign Investors to Take Over Airline TRANSENER: Government Suspends Petrobras' Deadline to Sell Stake B O L I V I A AGUAS DEL ILLIMANI: Faces Critical Period in Business Cycle B R A Z I L BANCO BRADESCO: Fitch Affirms Ratings BANCO VOTORANTIM: Fitch Upgrades Long-Term Local Currency Rating BANKBOSTON (BRAZIL): Moody's Withdraws Ratings C H I L E MANQUEHUE NET: Clarifies Independence Following GTD Takeover C O L O M B I A OCENSA: S&P Details Credit Analysis E L S A L V A D O R AES CORP.: S&P Affirms 'BB+' Ratings on 3 El Salvadorian Units M E X I C O ALFA: Alpek to Expand PET Resin Production CORPORACION DURANGO: Ends Non-Strategic Asset Divestment Program GRUPO DESC: Higher Sales Move Company to Profitability in 2Q05 GRUPO IUSACELL: Debt Restructuring Speculation Boost ADRs GRUPO MEXICO: Asarco to Meet With Strikers July 22 GRUPO DESC: S&P Leaves Ratings Unchanged Following Acquisition P E R U PHELPS DODGE: Sets Price for Debt Tender Offer SPCC: Records 28% Boost to 2Q05 Profits P U E R T O R I C O DORAL FINANCIAL: Declares Cash Dividend on Common Stock V E N E Z U E L A PDVSA: Reviews Foreign Units' Operations for Restructuring PDVSA: 2004 Annual Report Delayed Pending Audit - - - - - - - - - - ================= A R G E N T I N A ================= CARMELO FAZIO: Bankruptcy Initiated After Court Ruling ------------------------------------------------------ Carmelo Fazio S.R.L. enters bankruptcy protection after Court No. 3 of Mendoza's civil and commercial tribunal ordered the Company's liquidation. The order effectively transfers control of the Company's assets to a court-appointed trustee who will supervise the liquidation proceedings. Infobae reports that the court selected Francisco R. Quintero as trustee. Mr. Quintero will be verifying creditors' proofs of claim and submit them to court as individual reports. The trustee will also submit a general report. No dates have been disclosed for the deadlines of the said reports. CONTACT: Carmelo Fazio S.R.L. Godoy Cruz 4822 Villa Nueva Guaymallen (Mendoza) Mr. Francisco R. Quintero, Trustee Salta 1829 Ciudad Mendoza NOVIPOL S.A.: Liquidates Assets to Pay Debts -------------------------------------------- Buenos Aires-based Novipol S.A. will begin liquidating its assets following the pronouncement of the city's civil and commercial Court No. 16 that the Company is bankrupt, reports Infobae. The bankruptcy ruling places the Company under the supervision of court-appointed trustee, Antonio Florencio Canada. The trustee will verify creditors' proofs of claim until Aug. 29, 2005. The validated claims will be presented in court as individual reports on Oct. 11, 2005. Mr. Canada 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 Nov. 22, 2005. The bankruptcy process will end with the disposal of the Company's assets in favor of its creditors. Clerk No. 32 assists the court on this case. CONTACT: Novipol S.A. Hubac 6235 Buenos Aires Antonio Florencio Canada Belaustegui 4531 Buenos Aires PAN AMERICAN ENERGY: IFC Loan Will Not Affect Ratings, Says S&P --------------------------------------------------------------- Standard & Poor's Ratings Services said Monday that Pan American Energy LLC's (PAE; LC: B+/Positive/--; FC: B+/Stable/--) recent signing of a $250 million loan with the International Finance Corp. (IFC) through its Argentine branch, Pan American Energy LLC Sucursal Argentina, will not affect the ratings on PAE. The loan will be fully guaranteed by PAE. The credit facility comprises a $110 million 10-year amortizing 'A' loan granted by the IFC, a $135 million seven-year amortizing 'B' loan provided by commercial banks, and a $15 million 11-year 'C' loan. Proceeds will be used to cover the company's financing needs for 2005, in light of its capital expenditures program in the Exploration and Production segment in Argentina. While, as we expected, the company is moderately increasing its leverage, the transaction improves its maturity schedule, and the overall effect is positive for PAE's credit quality. We expect PAE to continue improving its financial profile, and will monitor the pace and extent of the improvements, in the context of Argentina's institutional risk, to determine the possibility of an upgrade. Primary Credit Analyst: Pablo Lutereau, Buenos Aires (54) 114- 891-2125; pablo_lutereau@standardandpoors.com Secondary Credit Analyst: Luciano Gremone, Buenos Aires (54) 11- 4891-2143; luciano_gremone@standardandpoors.com PRODUCAMP S.A.: Court Declares Company Bankrupt ----------------------------------------------- Trenque Lauquen's civil and commercial Court No. 1 declared local company Producamp S.A. bankrupt, reports Infobae. The Company was undergoing reorganization when the ruling was issued. The receiver, Graciela Esther Rea, will verify claims "por via incidental", as the court ordered. The receiver will also be responsible for the individual and general reports. CONTACT: Producamp S.A. Aristobulo del Valle 233 Pehuajo Ms. Graciela Esther Rea, Trustee Urquiza 327 Trenque Lauquen SERMED S.R.L.: Reorganization Proceeds To Bankruptcy ---------------------------------------------------- The reorganization of Sermed S.R.L. has progressed into bankruptcy. Argentine news source Infobae relates that Bahia Blanca's civil and commercial Court No. 7 ruled that the Company is "Quiebra Decretada". The report adds that the court assigned Raquel Angelica Morales as trustee, who will verify creditors' proofs of claim until Aug. 16, 2005. The court also ordered the trustee to prepare individual reports after the verification process is completed, and have them ready by Sep. 28, 2005. A general report on the bankruptcy process is expected on Sep. 28, 2005. Clerk No. 6 assists the court with the proceedings. CONTACT: Sermed S.R.L. Estomba 643 Bahia Blanca Ms. Raquel Angelica Morales, Trustee D Orbigny 325 Bahia Blanca SOUTHERN WINDS: Foreign Investors to Take Over Airline ------------------------------------------------------ The sale of Argentine troubled airline Southern Winds (SW) is surrounded by a number of misapprehensions. Previously, reports indicated that hotel businessman Horacio Rozemblum would become the new owner of the airline. However, David Esquivel, a lawyer that signed a purchase contract on July 8, explained last Monday that Rozemblum was just a mediator that helped to join the purchasing and selling parties, but he is not the purchaser. Sources familiar with the deal said that the investment group that would acquire 100% of SW, as long as the due diligence about the Company's numbers gives satisfactory results, is composed by a US and a European airline with no operations in Argentina, and two foreign investment funds. The source didn't reveal who the investors are based on a confidentiality clause. Other sources close to the purchasing group said that Rozemblum might become the local partner of the foreign group, so as to meet a requirement of the Argentine Aero Commercial Law that establishes that at least 51% of a local airline has to be in the hands of an Argentine party. The airline, which has US$60 million in debt, is controlled by Juan Maggio, with a 67% stake, while Italian group Volare owns a 30.1% stake and the other 2.9% is in hands of Miguel Cartasso Naveira. TRANSENER: Government Suspends Petrobras' Deadline to Sell Stake ---------------------------------------------------------------- Argentina's Energy Secretariat has suspended its resolution that established March 31, 2006 as the deadline for Petrobras Energia, the local subsidiary of Brazil's federal energy producer Petrobras, to sell its stake in power transporter Transener S.A. The suspension, according to a Dow Jones Newswires report, came after Petrobras Energia made a presentation to the Secretariat. Petrobras Energia and local investment group Dolphin Fund Management hold equal stakes in Citelec, Transener's holding company. Petrobras Energia gained the stake when it took over Argentine company Perez Companc in 2003. As part of the deal, Petrobras promised Argentine antitrust regulators that it would sell its stake in Transener to address the government's concerns that the country's biggest power transporter would be in foreign hands. Dolphin has already said it has not intention to increase its stake in Transener. CONTACT: TRANSENER S.A. Paseo Colon 728 6th Floor (1063) Buenos Aires Republica Argentina Tel: (54-11) 4342-6925 Fax: (54-11) 4342-7147 Email: info-trans@transx.com.ar Web site: http://www.transener.com.ar ============= B O L I V I A ============= AGUAS DEL ILLIMANI: Faces Critical Period in Business Cycle ----------------------------------------------------------- The next two weeks will be crucial for ailing Aguas del Illimani (AISA), whose water concession was rescinded by the government early this year after residents protested against poor service and high connection charges. According to Business News Americas, a commission appointed by former President Carlos Mesa to oversee the handing back of the concession has until July 29 to format a new administration, while AISA has until July 26 to renew US$15 million in bonds required under the terms of its concession. The commission may decide this week whether to press ahead with an audit of the Company's books from 1997, when it won the concession to operate basic services in the Bolivian capital La Paz and satellite city El Alto, to date. As previously reported, AISA is resisting the audit, claiming that the period 1997-2001 has already been covered by a previous audit. An audit of the Company's books from 1997 will be carried out "unilaterally if AISA refuses to reach a mutual agreement" on the issue, Sisab director, Alvaro Camacho, said earlier. The extent of the audit must be sufficient to reveal the level of real investment carried out by the Company to date. The regulator wants to make sure the investment recorded in the Company's books is real before it will compensate for the rescission of the contract. AISA is controlled by French water giant Suez. =========== B R A Z I L =========== BANCO BRADESCO: Fitch Affirms Ratings ------------------------------------- Fitch Ratings, the international rating agency, affirmed Monday Banco Bradesco S.A.'s ratings (Bradesco) as follows: --Long-term foreign currency rating: 'BB-'(BB minus) with a Stable Outlook; --Long-term local currency rating 'BB+' with a Stable -Outlook; --Short-term foreign and local currency rating 'B'; --Individual rating 'C'; --Support rating '4'; --National Long-term rating: 'AA(bra)' with a Stable Outlook; --National Short-term rating: 'F1+(bra)'. The ratings reflect Bradesco's robust franchise and consistent track record. The foreign currency ratings are at Brazil's country ceiling. The local currency rating, higher than the sovereign's, reflects a broad-based national franchise with a strong track record of consistent results through turbulent economic cycles, achieved thanks to solid management of a diversified business customer and deposits base. As has its peers, Bradesco has seen robust recent performance as the strength of its franchise has helped to produce strong loan growth driven by consumer and middle-market lending, accompanied by broad-based growth of non-interest income, which has boosted results to record profits. While the growing level of Tier 2 instruments in its capital base bears watching, the bank's commitment to maintain its Tier 1 base at or above Brazil's high regulatory minimum should assure adequate capitalization as the bank continues its growth. Bradesco is the largest privately owned financial conglomerate in Latin America, frequently holding market shares of 10% to 20%. Its insurance and private pension fund subsidiaries are the largest in the country. It is controlled by two entities managed by the bank's top executives. Fitch will be releasing a complete analysis on Bradesco shortly. CONTACT: Kathryn Beeck +5511 4504 2600 Sao Paulo Maria Rita Goncalves +5521 4503 2600l, Rio de Janeiro Peter Shaw +1-212-908 0553, New York BANCO VOTORANTIM: Fitch Upgrades Long-Term Local Currency Rating ---------------------------------------------------------------- Fitch Ratings, the international rating agency, upgraded Monday Banco Votorantim S.A.'s (BV) local currency long-term rating to 'BB+' from 'BB'. At the same time, Fitch has affirmed the bank's foreign currency long- and short-term ratings of 'BB-' and 'B', respectively; the bank's local currency short-term rating of 'B' and the national long- and short-term ratings of 'AA(bra)' and 'F1+(bra)', respectively. The bank's individual rating of 'C/D' and its support rating of '4' were also affirmed. The Rating Outlook on all long-term ratings is Stable. The upgrade of BV's local currency long-term rating reflects Fitch's opinion regarding the strength of the bank's ultimate parent - Votorantim Participacoes S.A, (VPAR) to which a local currency rating of 'BBB' and a national long-term rating of 'AAA' were recently assigned. Fitch believes that the group has both the commitment and financial strength to support the bank, in case of need. VPAR is one of Latin America's largest privately owned industrial conglomerates. Long one of Brazil's strongest companies, VPAR's ratings reflect a diverse operating asset base, the strong market position and competitive cost structure of the industrial businesses of metals, cement, and pulp and paper, as well as its conservative financial profile. The company's core businesses are cyclical and exposed to price and volume volatility. These risks, however, are partially mitigated by the diversity of revenues and cash flows across industry sectors and their relatively low risk correlation, which diminishes the overall risk of the business portfolio. For more detailed information of Votorantim's industrial arm, please refer to Fitch's release regarding 'VPAR' at www.fitchratings.com. The foreign currency ratings of BV are at Brazil's country ceiling. The individual rating reflects a clear focus, ability to manage risk and low cost structure. It also reflects the high exposure to Brazilian sovereign debt (Q105: about 7 times equity) and concentrations in funding base. The Votorantim brand name commands immense respect in Brazil and is an important door-opener. BV is a medium-size bank focused on credit and treasury, with total assets of BRL38.4 billion, total deposits of BRL15.1 billion and equity of BRL3.4 billion as of March 2005. BV is 100% controlled by Votorantim Financas S.A. (VF), a holding company 100% controlled by VPAR. BV operates out of a small structure of three domestic branches, 31 consumer finance offices and, internationally, through a subsidiary and a branch in Nassau and representative offices in London and New York. CONTACT: Claudio Gallina +55-11-4504-2600, Sao Paulo Kathryn Beeck +55-11-4504-2600, Sao Paulo Peter Shaw +1-212-908-0553, New York MEDIA RELATIONS: Jaqueline Carvalho +55 21 4503 2623, Rio de Janeiro BANKBOSTON (BRAZIL): Moody's Withdraws Ratings ---------------------------------------------- Moody's Investors Service has withdrawn all ratings for BankBoston NA (Brazil), BankBoston Banco Multiplo S.A., and BankBoston Latino Americano S.A, for business reasons. This action does not reflect a change in the banks' creditworthiness. For further details please refer to Moody's Withdrawal Policy on moodys.com. The combined operations of BankBoston in Brazil had total assets of US$8.1 billion in March 31, 2005. The following ratings were withdrawn: - BankBoston Banco Multiplo S.A. Bank Financial Strength Rating: D+, with stable outlook Long-term and short-term foreign currency deposit rating: B2/Not Prime, with positive outlook Long-term and short-term foreign currency bond rating: Ba2/Not Prime, with positive outlook - BankBoston, N.A. (Brazil) Long-term foreign currency deposit rating: B2, with positive outlook Short-term foreign currency deposit rating: Not Prime, with stable outlook - BankBoston Latino Americano S.A, Senior Unsecured MTN Program: Ba3, with positive outlook Other short-term: Not Prime, with stable outlook ========= C H I L E ========= MANQUEHUE NET: Clarifies Independence Following GTD Takeover ------------------------------------------------------------ Chilean telco Manquehue Net will operate as an independent company even after local telecoms holding company GTD takes over the firm, Business News Americas reports. According to a source close to GTD, the holding company's decision comes in light of the strength Manquehue has in the residential segment. GTD plans to maintain its brand, targeting corporations, while Manquehue plans to fortify its presence with greater penetration in the broadband market, specifically in the higher income segments. At the end of 2004, GTD offered to pay CLP14.5 billion (US$25mn) to acquire 100% of Manquehue including the latter's US$85- million debt. GTD hopes to finish due diligence on the Company next month, after which, both companies are expected to sign the papers for an acquisition operation. Manquehue is currently owned by gas distribution firm Metrogas (25.54%), US telecoms holding company Williams International Telecom (23.52%), Capital Trust (19.14%), Chile's Rabat family (19.13%) and Xycom Devel Chile (12.67%). =============== C O L O M B I A =============== OCENSA: S&P Details Credit Analysis ----------------------------------- Rationale The 'BB' long-term foreign currency rating on Oleoducto Central S.A.'s (OCENSA) tranche A debt reflects the risk of a single- source repayment (Ecopetrol's contractual payments to OCENSA). The ratings on OCENSA's tranche A debt also take into account OCENSA's strategic importance to the Republic of Colombia through Ecopetrol, which holds a 35% stake in OCENSA's capital stock. These strengths are offset in part by a potential increase in the number of guerilla attacks along the pipeline, which could lead to delays in crude shipments, and weaker than originally expected production at the Cusiana and Cupiagua oil fields. OCENSA's debt is divided into four tranches, each of which is supported almost exclusively by contractual payments, including tariffs, advance tariff payments, transportation notes, and tariff advances. Ecopetrol is the initial shipper in the case of OCENSA's tranche A debt. The initial shipper tariff covers the full amount of OCENSA's costs and is established by OCENSA annually and adjusted monthly. The tariff incorporates OCENSA's operating and maintenance costs, scheduled payments of principal and interest on senior debt of the related senior debt tranche, and a fixed return on equity for each of the pipeline's owners. If tariff payments are insufficient to cover interest payments in any period, the initial shippers are obligated to advance the shortfall to OCENSA through the payment of advanced tariffs or the purchase of transportation notes. If an initial shipper fails to make such payments as they come due, OCENSA is authorized to sell the Cusiana petroleum (other than that from Royalty Oil) delivered to it by that initial shipper and to retain the proceeds to pay the amount of any unpaid tariffs. The terms of the borrowing agreements also compel Ecopetrol unconditionally to make minimum tariff payments to OCENSA for 180 days following the declaration of force majeure or any other excusable event, providing additional flexibility for OCENSA to weather service interruptions. OCENSA is also considered a strategic asset to the Republic of Colombia given that it is the only export route for Cupiagua and Cusiana crude oil and can transport more than 600,000 barrels per day (bpd), enabling Colombia to increase crude oil exports substantially. OCENSA was attacked in 2001, 2002, and 2003. The security environment in Colombia is difficult and potential attacks remain a concern. From 1999 to 2004, production levels at Cusiana and Cupiagua declined gradually and never reached the originally projected volumes. Segment 2 oil transportation during the first-quarter 2005 reached 239,000 bpd, below the projected 243,300 bpd figure. OCENSA's lower-than-expected oil transportation derives from a generalized decline of oil production in Colombia, which is explained by a slowdown in exploration activities during the last decade. Recently, Ecopetrol started focusing on the production of heavy crudes, which is expected to partially offset the adverse impacts in OCENSA's low transportation volumes. However, due to low transportation volumes during 2004, OCENSA received a tariff advance payment for about $137 million. As transportation volumes are expected to continue to decline during 2005, OCENSA could require another tariff advance payment to meet the 2005 scheduled debt service. OCENSA is a capital stock company formed to acquire, develop, own, and operate the 840-kilometer Oleoducto Central pipeline, which transports crude from the Cupiagua and Cusiana oil fields in Colombia's Llanos Basin to the Port of Covenas. Outlook The outlook on OCENSA's tranche A debt is stable, and reflects the foreign currency rating and outlook of the Republic of Colombia, due to the government's ownership of Ecopetrol, the importance of the oil company to public-sector revenues and to the country's economy, and the considerable government's oversight of the company's activities. A sharp decline in oil production activities or significant deterioration in national security could result in downward pressure on OCENSA's creditworthiness. Primary Credit Analyst: Luis Manuel Martinez, Mexico City (52) 55-5081-4462; luis_martinez@standardandpoors.com Secondary Credit Analyst: Jose Coballasi, Mexico City (52)55- 5081-4414; jose_coballasi@standardandpoors.com ===================== E L S A L V A D O R ===================== AES CORP.: S&P Affirms 'BB+' Ratings on 3 El Salvadorian Units -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed Monday its 'BB+' issuer credit ratings on Compania de Alumbrado Electrico de San Salvador S.A. de C.V. (CAESS), Empresa Electrica de Oriente S.A. de C.V. (EEO), and Distribuidora Electrica de Usulut n S.A. de C.V. (DEUSEM). Standard & Poor's also said that it affirmed its 'AAA' rating on CAESS's US$120 million wrapped fixed-rate notes, which are due in 2011. The outlook on all three companies is stable. All three entities are El Salvador-based electric distribution companies majority owned and controlled by AES Corp. (B+/Positive/--). The rating on the notes reflects the unconditional and irrevocable guarantee of full payment on principal and interest as scheduled, provided by MBIA Insurance Corp. (AAA/Stable/--), pursuant to MBIA's financial guaranty insurance policy. The notes also have joint and several guarantees from CAESS, EEO, and DEUSEM. "The ratings on CAESS, EEO, and DEUSEM are limited by the tariff formula being untested in a stress environment," said Standard & Poor's credit analyst Fabiola Ortiz. "In addition, given the undeveloped capital markets in El Salvador, the companies have limited financial flexibility compared with distribution companies operating in countries with more developed financial markets." These negative factors are mitigated by the companies' generate stable cash flow, favorable tariff structure, and customer base profile. AES has strong management experience in successfully operating other distribution companies in Latin America. In addition, there is a quasi-monopoly environment in which the companies provide electric distribution. The financial profile is expected to remain stable over the tenure of the debt, given the amortization schedule and fairly stable cash flow. Operations have been stable and are superior to peers, as demonstrated by low distribution losses. The stable outlook reflects expectations that the regulators will treat the tariff adjustments fairly. Both CAESS and EEO are expected to remain in a central position in the country's distribution sector. The rating could be pressured downward if the financial profile of the companies deteriorates considerably. Standard & Poor's expects the company's debt-to- capitalization ratio and debt-service coverage ratio of less than 60% and more than 1.15x, respectively. Primary Credit Analyst: Fabiola Ortiz, Mexico City (52) 55-5081- 4449; fabiola_ortiz@standardandpoors.com Secondary Credit Analyst: Federico Mora, Mexico City (52) 55- 5081-4436; federico_mora@standardandpoors.com =========== M E X I C O =========== ALFA: Alpek to Expand PET Resin Production ------------------------------------------ Alpek, the petrochemical group of Mexica's No. 2 industrial company Alfa SA, announced Thursday that its subsidiary DAK Americas will expand its PET resin production capacity by constructing a new manufacturing line at its Cape Fear site, near Wilmington, North Carolina. The PET expansion forms part of Alfa's overall strategy of investing in its core businesses. The new facility will add 200,000 tons per year to DAK Americas' existing capacity of 300,000 tons. The amount of investment was not disclosed. A project of this magnitude typically takes 18 months to complete. PET resins are primarily used to produce plastic bottles for carbonated soft drinks and other beverages. The expansion will allow DAK Americas to continue to serve the growing PET market in North America, which grows at a rate of 8% per year. "Our new world-scale facility will incorporate new proprietary state-of-the-art technology that will deliver improved product performance," said Jose de Jesus Valdez, Alpek's General Director. "Additionally, we will benefit from using existing equipment and infrastructure on-site, along with enhanced internal logistics as the new facility is being located adjacent to our existing PTA plant, which will supply the raw materials," he added. In addition to the Cape Fear facility, DAK Americas operates two world-scale PET plants at its Cooper River Site, near Charleston, South Carolina, and its Cedar Creek Site, near Fayetteville, North Carolina. In total, these two plants produce 300,000 tons of PET per year. Alpek is a Mexican company involved in the production of petrochemicals and synthetic fibers. The company is the second largest producer of PTA in North America and one of the leading companies in PET in the USA. As well, Alpek is the leader in the nylon fibers, polypropylene and expandable polystyrene markets in Mexico. In 2004, Alpek reported sales in excess of US$ 2.9 billion and employed more than 4,500 people at its various plants in Mexico and the USA. CONTACT: ALFA, S.A. de C.V. Enrique Flores Vice President Corporate Communications Phone: 01 52 81 8748 1207 E-mail: eflores@alfa.com.mx CORPORACION DURANGO: Ends Non-Strategic Asset Divestment Program ---------------------------------------------------------------- Corporacion Durango, S.A. de C.V., the largest papermaker in Mexico, announced on June 15, 2005, through its subsidiary Ponderosa Industrial de Mexico, S.A. de C.V., that it successfully closed on the divestiture of a particleboard plant, located in the State of Chihuahua. With this transaction, Corporacion Durango concluded its program to divest non-strategic assets, particularly those with minimal impact to the overall business and strategic vision. This permits the Company to reinvest in its core paper business where there is better value and growth potential. The divested operation was not a central business for Corporacion Durango, neither the paper industry nor its products. Sales from the business only represented 2.5% of the Company's total sales. Corporacion Durango is one of the leading industrial groups in Mexico and is the largest paper and container maker nationwide. CONTACT: Corporacion Durango, S.A. de C.V. Mayela R. Velasco Phone: 52 (618) 829 1008 E-mail: mrinconv@corpdgo.com.mx Miguel Antonio R. Phone: 52 (618) 829 1070 E-mail: rinconma@corpdgo.com.mx The Global Consulting Group Kevin Kirkeby Phone: (646) 284-9416 E-mail: kkirkeby@hfgcg.com GRUPO DESC: Higher Sales Move Company to Profitability in 2Q05 -------------------------------------------------------------- Mexican conglomerate Desc SA (DESC.MX) reported a net profit of MXN2.5 million in the second quarter of 2005, compared with a net loss of MXN146.6 million in the year-ago period, reveals Dow Jones Newswires. The Company attributed positive results to sales of MXN6.10 billion in the 2Q05, higher than the MXN5.93 billion in the year-ago period. Operating profit rose 13% to MXN286.6 million. Exports rose 10% to US$265 million due to higher prices and volumes in the auto parts and chemicals divisions. Costs declined in relation to sales despite rising raw materials prices, including steel, natural gas and some petrochemicals, Desc said. Net debt in the second quarter fell by US$50 million to US$570 million. DESC S.A DE C.V. is one of the largest industrial groups in Mexico. Through its subsidiaries, the Company is a leader in the Automobile Parts, Chemical, Food and Property businesses. CONTACTS: In Mexico Marisol Vazquez-Mellado Jorge Padilla Tel: (5255) 5261-8044 E-mail: ir@desc.com.mx In the U.S. Maria Barona Melanie Carpenter Tel: 212-406-3690 E-mail: desc@i-advize.com GRUPO IUSACELL: Debt Restructuring Speculation Boost ADRs --------------------------------------------------------- The histories highs of Grupo Iusacell's (NYSE: CEL) ADRs spawned speculations among analysts that the Mexican mobile operator is nearing a debt restructuring deal with creditors. Business News Americas recalls that on May 3, Iusacell's ADRs were trading at US$8. On July 14, they closed at US$20.47 and on July 18 at US$20.48. Iusacell is currently negotiating to restructure US$800 million of debt. According to James Harper, director of corporate research at US investment firm BCP Securities, there is speculation that in a debt deal there is not going to be as much equity dilution for shareholders as previously thought. Normally, in cases of default or bankruptcy under US law, share value can be diluted to zero because of the debt load, as creditors have priority over shareholders when it comes to repayment, Mr. Harper explained. However, regarding the potential terms of Iusacell's debt restructuring, there is a "deal sheet" circulating "that does not involve substantial equity dilution; that allows [Iusacell's owner Ricardo] Salinas to keep control of the company. That's why the shares would go up," Business News Americas quoted Mr. Harper as saying. "There's expectation that there's going to be an out of court agreement, whereby shareholders will be allowed to keep most or all of the company," Mr. Harper added. Sergio Rodriguez, an analyst with Fitch Ratings Mexico, shares Harper's view of the situation. "Merely speculating I think it could have something to do with advances with its creditors," Mr. Rodriguez said. Meanwhile, Sergio Legorreta, a lawyer with Baker & McKenzie, says the historic rise in Iusacell's ADRs may have been fuelled by rumors of an imminent purchase of the Company and/or its sister company Unefon. The companies could be seen as attractive as they both use CDMA technology and so there would be synergies. CONTACT: Grupo Iusacell, S.A. de C.V. Jose Luis Riera K. Chief Financial Officer or J. Victor Ferrer Finance Manager E-mail: vferrer@iusacell.com.mx Phone: 5255-5109-5927 URL: http://www.iusacell.com GRUPO MEXICO: Asarco to Meet With Strikers July 22 -------------------------------------------------- Asarco LLC and the striking workers at Grupo Mexico's US copper mining unit have agreed tentatively to meet on July 22 for the first talks since the strike started, Bloomberg reports, citing Terry Bonds, District 12 supervisor for the United Steelworkers of America. "We would certainly consider almost anything that wasn't positive rather negative, and we haven't gotten anywhere close to that," Mr. Bonds said. Pete Cinquemani, commissioner of the Federal Mediation & Conciliation Service, a U.S. government agency, was invited to the July 22 meeting, tentatively set for Phoenix, Mr. Bonds said. About 1500 Asarco workers are striking because the Company has allegedly violated fair-labor practices by refusing to negotiate in good faith. Asarco, which was purchased by Grupo Mexico in 1999, has demanded wage freezes and cuts in medical and pension benefits. Those steps are necessary to bring down the costs of Asarco's operations in order to be globally competitive, said Asarco CEO Daniel Tellechea. GRUPO DESC: S&P Leaves Ratings Unchanged Following Acquisition -------------------------------------------------------------- Standard & Poor's Ratings Services said Monday that Desc S.A. de C.V.'s (Desc; B+/Stable/--) announcement that it has closed the acquisition of the Particle Board segment (Paneles Poderosa) of Ponderosa Industrial de Mexico S.A. de C.V. has no impact on the rating or outlook on the company. The announcement is consistent with our expectations that Desc will strengthen its presence in some markets but will not pursue major investments during the next two years, as they could compromise the issuer's efforts to improve its financial flexibility and the conditions required by its debt structure. The acquired operation has no debt and the transaction will be funded with operating cash flow. The acquisition is also expected to increase Desc's revenues from the particle and board laminates business to more than $100 million. Primary Credit Analyst: Federico Mora, Mexico City (52) 55-5081- 4436; federico_mora@standardandpoors.com Secondary Credit Analyst: Santiago Carniado, Mexico City (52) 55-5081-4413; santiago_carniado@standardandpoors.com ======= P E R U ======= PHELPS DODGE: Sets Price for Debt Tender Offer ---------------------------------------------- Phoenix-based copper miner Phelps Dodge Corp. (NYSE: PD - News), which is active in Peru and Chile, announced Monday the reference yield for its previously announced tender offer for any and all of its outstanding 8 3/4 percent notes due 2011. The principal amount of the notes outstanding, which were issued by Phelps Dodge Corp., is approximately $384 million. The reference yield was set at 4.048 percent, resulting in a purchase price per $1,000 principal amount of notes of $1,199.82. The accrued interest per $1,000 principal amount of notes will be $11.91 with settlement of the tender offer on July 20, 2005. The price was determined at 2:00 p.m. New York City time today, as described in the Offer to Purchase dated July 12, 2005. It was based on a yield to maturity equal to a fixed spread of 75 basis points plus the yield on the 5.0 percent, Aug. 15, 2011, U.S. Treasury bond. All payments for notes validly tendered and accepted for purchase will include accrued and unpaid interest on the principal amount tendered up to, but not including, the payment date. The tender offer will expire at 5:00 p.m. New York City time on Tuesday, July 19, 2005, unless extended by Phelps Dodge. The tender offer is not conditioned on a minimum amount of 8 3/4 percent notes being tendered. No tenders will be valid if submitted after the expiration time. The terms and conditions of the tender offer, including the conditions of Phelps Dodge's obligation to accept the notes tendered and pay the purchase price for them, are set forth in the Offer to Purchase. Phelps Dodge has retained J. P. Morgan Securities Inc. to serve as the dealer manager for the tender offer and Global Bondholder Services Corp. to serve as the depositary and information agent for the tender offer. Information and assistance regarding the mechanics of the tender offer and copies of the Offer to Purchase may be obtained by calling Global Bondholder Services Corp. toll-free at 866-857- 2200, or collect at 212-430-3774. Questions regarding the tender offer may be directed to J. P. Morgan Securities at 866-834- 4666. This news release does not constitute an offer to purchase any securities or a solicitation of an offer to sell any securities. The tender offer is being made only pursuant to the Offer to Purchase and only to such persons and in such jurisdictions as are permitted under applicable law. In any jurisdiction where the laws require the tender offer to be made by a licensed broker or dealer, the tender offer will be deemed made on behalf of Phelps Dodge by J.P. Morgan Securities Inc., or one or more registered brokers or dealers under the laws of such jurisdiction. Phelps Dodge Corp. is the world's second largest copper miner and its worldwide operations include Cerro Verde in Peru and Candelaria and El Abra copper mines in Chile. SPCC: Records 28% Boost to 2Q05 Profits --------------------------------------- Southern Peru Copper Corporation (NYSE and LSE: PCU) (SPCC), a subsidiary of Grupo Mexico, S.A. de C.V., posted a 28% increase in second-quarter profit to US$307.2 million, compared with the same period last year. According to a report by Reuters, the Company, which operates the Toquepala and Cuajone pits in Peru's Andes, posted diluted earnings per share, -- which account for unexercised shares in options, warrants and similar issues -- of US$2.09 in the second quarter, compared with US$1.63 in the second quarter of 2004. SPCC's results are its first quarterly earnings following its merger with Grupo Mexico's Minera Mexico operations on April 1. The Company announced Monday it will pay a dividend worth US$1.043 per share, payable Aug. 19. The dividend will be paid to shareholders on record at the close of business on Aug. 5. CONTACT: SOUTHERN PERU COPPER CORP. Avenida Caminos del Inca #171 Chacarilla del Estanque Santiago de Surco Lima, 33 Peru Website: http://www.southernperu.com Phone: +51-(0)1-372-1414 Officers: Oscar Gonzalez Rocha, Pres. GRUPO MEXICO S.A. DE C.V. Avenida Baja California 200, Colonia Roma Sur 06760 Mexico, D.F., Mexico Phone: +52-55-5264-7775 Fax: +52-55-5264-7769 Web site: http://www.gmexico.com ===================== P U E R T O R I C O ===================== DORAL FINANCIAL: Declares Cash Dividend on Common Stock ------------------------------------------------------- Doral Financial Corporation (NYSE:DRL), a diversified financial services company, announced Monday that the Board of Directors declared a regular cash quarterly dividend of $0.18 per common share to be paid on September 9, 2005 to shareholders of record on August 25, 2005. Doral stated that, while it is unable to provide at this juncture complete financial results for the reporting period due to the previously announced restatement process, it is providing certain unaudited and preliminary operational data for the second quarter ended June 30, 2005. Second quarter 2005 operational results included the following: -- Loan production was a quarterly record aggregating $2.30 billion, compared to $2.16 billion for the first quarter 2005 and $1.95 billion for the second quarter 2004, an increase of 6% quarter over quarter and 18% higher than the second quarter of the prior year. During the quarter ended June 30, 2005, internal originations increased to $1.45 billion from $1.19 billion in the first quarter 2005 and the second quarter 2004, an increase of 22%. Doral wishes to caution readers that they should not draw any inference from the loan production data of Doral's gain on sale of mortgage loans or earnings to be reported for the first and second quarters of 2005. -- The mortgage loan servicing portfolio increased to $14.98 billion as of June 30, 2005 compared to $14.63 billion as of March 31, 2005 and $13.53 billion as of June 30, 2004, an increase of 2% over March 31, 2005 and 11% over June 30, 2004. -- Doral's banking subsidiaries increased deposits to $3.99 billion as of June 30, 2005 from $3.53 billion as of March 31, 2005 and $3.24 billion as of June 30, 2004, an increase of 13% quarter over quarter and 23% over June 30, 2004. -- As of June 30, 2005, the Company had cash and cash equivalents of $2.7 billion compared to $2.8 billion as of March 31, 2005 and $1.7 billion as of June 30, 2004. Of this amount, $1.7 billion was unencumbered as of June 30, 2005. Doral reported that it is working diligently to conclude its restatement process. In addition, the Company took the opportunity to confirm that to date it had not received a notice of default under either of its two public indentures and, accordingly, the 60 and 90-day respective grace periods for not filing its quarterly unaudited financial results for the first quarter had not yet begun to run. Doral Financial Corporation, a financial holding company, is the largest residential mortgage lender in Puerto Rico, and the parent company of Doral Bank, a Puerto Rico commercial bank, Doral Securities, a Puerto Rico based investment banking and institutional brokerage firm, Doral Insurance Agency, Inc. and Doral Bank FSB, a federal savings bank based in New York City. CONTACT: DORAL FINANCIAL CORPORATION Investor Relations: Richard F. Bonini, 212-329-3729 Lucienne Gigante, 212-329-3733 ================= V E N E Z U E L A ================= PDVSA: Reviews Foreign Units' Operations for Restructuring ---------------------------------------------------------- State oil firm Petroleos de Venezuela (PDVSA) is currently studying the operations of its 189 foreign subsidiaries as it seeks to restructure domestic and international holdings to make them more efficient, reports Business News Americas. The subsidiaries currently being reviewed include US refining arm Citgo, German refining unit Veba Oil, and Nynas, a refining joint venture with Finland's Fortum Oy that owns facilities in Scotland and Sweden. The results of the study will determine PDVSA's next step. CONTACT: Petroleos de Venezuela S.A. Edificio Petroleos de Venezuela Avenida Libertador, La Campina, Apartado 169 Caracas, 1010-A, Venezuela Phone: +58-212-708-4111 Fax: +58-212-708-4661 Web site: http://www.pdvsa.com.ve PDVSA: 2004 Annual Report Delayed Pending Audit ----------------------------------------------- PDVSA will delay the filing of its 2004 annual report to the US Securities Exchange Commission (SEC), reports Business News Americas. In a letter to the regulator, PDVSA stated: "The filing will be made as soon as the 2004 audit is completed." A PDVSA official said the delay was temporary but gave no information on when the report will be filed. PDVSA CFO Eduomario Carruyo said in June that both the Company's 2003 and 2004 financial reports would be filed by July. PDVSA has delayed making its 2003 and 2004 filings with the SEC, citing problems in compiling detailed financial information after a national oil strike in late 2002 and early 2003 against President Hugo Ch vez. The strike cut off oil production and exports and in the aftermath Chavez fired 18,000 PDVSA workers and split the Company into eastern and western units. *********** 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 Sheryl Joy P. Olano, 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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