/raid1/www/Hosts/bankrupt/TCRLA_Public/050902.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, September 2, 2005, Vol. 6, Issue 174
Headlines
A R G E N T I N A
ALORA COMPANIA: Court Grants Reorganization Request
BANCO FRANCES: Profits Prompt $627M Debt Payment to Central Bank
BOSTON MEDICAL: Deadline for General Report Approaches
CLUB ATLETICO: Verification Deadline Fixed
COLEGIO DE FAMILIA: Launches Reorganization Process
FUNDICIONES AGENA: Initial Report to be Filed September 5
INSTITUTO COGHLAN: Trustee to Submit General Report Monday
TELECOM ARGENTINA: Finalizes Debt Restructuring
TGS: Three Directors Resign
B E R M U D A
INTELSAT: Moody's Affirms Notes' Junk Rating; Outlook Improves
B R A Z I L
BANCO RURAL: Expects Restructuring To Restore Financial Health
COPEL: Board Elects Trompczynski as CFO, IR Officer
UNIBANCO: CGD to Sell Stake Via Global Public Offering
C H I L E
PETROPOWER ENERGIA: S&P Issues Ratings Analysis
C O L O M B I A
TELECOM: Telmex Deal Shelved Pending Comptroller's Analysis
C O S T A R I C A
RICA FOODS: Majority Shareholder to Commence Tender Offer
J A M A I C A
KPMG: Unit Explains Distinctions Regarding Parent's Fraud Case
M E X I C O
ASARCO: Court Authorizes Maintaining Insurance Agreements
ASARCO: Court Modifies Stay to Allow Owens-Illinois Action
ASARCO: Chapter 11 Prompts Moody's Ratings Withdrawal
BALLY TOTAL: Bondholders Waive Covenant Default Until Nov. 30
BALLY TOTAL: Lenders Amend Credit Pact to Allow Payment
GRUPO IUSACELL: To Launch New Products, Services to Remedy Debts
SATMEX: Local Bankruptcy Proceedings Face Delay
SICARTSA: Strike Predicted to Resolve Soon
VITRO: Fitch Downgrades Ratings
U R U G U A Y
ANCAP: Rating Reflects Uruguay's Tough Economic Environment
UTE: Revises Location Plans on Two 100MW Gas-Fired Projects
- - - - - - - - - -
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A R G E N T I N A
=================
ALORA COMPANIA: Court Grants Reorganization Request
---------------------------------------------------
Alora Compania Constructora S.A., a company operating in Mar del
Plata, begins reorganization proceedings after the city's Court
No. 9, with assistance from Clerk No. 8, granted its petition
for "concurso preventivo". During the reorganization process,
the Company will be able to negotiate a settlement proposal for
its creditors so as to avoid a straight liquidation.
According to Argentine news source Infobae, the reorganization
will be conducted under the direction of Ms. Maria Cristina
Ratibel, the court-appointed trustee.
Creditors with claims against Alora Compania Constructora S.A.
must present proofs of the Company's indebtedness to Ms. Ratibel
before Sep. 28, 2005. These claims will constitute the
individual reports to be submitted in court on Nov. 10, 2005.
The court also requires the trustee to present an audit of the
Company's accounting and business records through a general
report due on Dec. 27, 2005.
CONTACT: Alora Compania Constructora S.A.
Rivadavia 2333
Mar del Plata
Ms. Maria Cristina Ratibel, Trustee
Corrientes 1725
Mar del Plata
BANCO FRANCES: Profits Prompt $627M Debt Payment to Central Bank
----------------------------------------------------------------
Banco Frances (BFR) will pay down today, Friday, the full
ARS1.827 billion ($627 million)) in outstanding discount loans
it owes to the central bank, says Dow Jones Newswires. In a
statement, the bank said its board of directors made the
decision "in a year marked by the bank's good economic results
and a significant improvement in activity."
Banco Frances, a subsidiary of Spanish financial group BBVA,
posted a net profit of ARS30.3 million in the second quarter of
the year, a big turnaround from the ARS44.6 million loss it had
a year earlier. For the first half of 2005, Banco Frances' net
profit is ARS60.3 million, the company said Wednesday.
In the midst of the 2002 financial crisis local banks received
loans from the central bank to face liquidity shortages. Many
banks have gone to great lengths to reduce their debt with the
central bank this year, which the monetary authority has said
will positively impact their risk ratings and funding costs.
CONTACT: Banco Frances S.A.
Reconquista 165-199
Buenos Aires, Argentina
Phone: 54-11-346-4310
Web site: http://www.bancofrances.com.ar
BOSTON MEDICAL: Deadline for General Report Approaches
------------------------------------------------------
The deadline for the submission of general report on the
reorganization of Boston Medical Group S.A. will be on Monday,
Sep. 5, 2005. Court No. 17 of Buenos Aires' civil and commercial
tribunal approved the Company's petition for reorganization and
appointed Mr. Nestor del Potro as trustee.
Mr. del Potro verified creditors' claims until June 24, 2005.
The validated claims were presented in court as individual
reports on August 5, 2005.
An 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 29.
Clerk No. 33 assists the court on this case.
CONTACT: Mr. Nestor del Potro, Trustee
Avda Corrientes 1291
Buenos Aires
CLUB ATLETICO: Verification Deadline Fixed
------------------------------------------
The verification of creditors' claims for the Club Atletico
Independiente insolvency case is set to end on Oct. 18, 2005,
states Infobae. Court-appointed trustees Martha Magdalena Comba,
Mariana Alicia Nadales and Miguel Angel Pizzolo, tasked with
examining the claims, will submit the validation results as
individual reports on Dec. 1, 2005. He will also present a
general report in court on Feb. 16, 2006.
Next year, the Company's creditors will vote on the settlement
proposal prepared by the Company. Infobae adds that Court No. 5
of Lomas de Zamora's civil and commercial tribunal handles the
Company's reorganization case.
CONTACT: Ms. Martha Magdalena Comba
Ms. Mariana Alicia Nadales
Mr. Miguel Angel Pizzolo, Trustees
Serrano 447
Lomas de Zamora
COLEGIO DE FAMILIA: Launches Reorganization Process
---------------------------------------------------
Buenos Aires' civil and commercial Court No. 7, with assistance
from Clerk No. 14, issued a resolution opening the
reorganization of Colegio de Familia S.R.L. This pronouncement
authorizes the Company to begin drafting a settlement proposal
with its creditors in order to avoid liquidation. The
reorganization allows Mr. Jose Scheinkopf to retain control of
its assets subject to certain conditions imposed by Argentine
law and the oversight of the court appointed trustee.
Mr. Scheinkopf will serve as trustee during the course of the
reorganization. He will be validating creditors' proofs of claim
until Sep. 16, 2005. The results of the verification will be
presented in court as individual reports on Oct. 28, 2005. The
trustee is also obligated to give the court a general report of
the case on Dec. 9, 2005. The general report summarizes events
relevant to the reorganization and provides an audit of the
Company's accounting and business records.
Colegio de Familia S.R.L. will present the completed settlement
proposal to its creditors during the informative assembly
scheduled on June 13, 2006.
CONTACT: Colegio de Familia S.R.L.
Roseti 758
Buenos Aires
Mr. Jose Scheinkopf, Trustee
Avda. Pueyrredon 468
Buenos Aires
FUNDICIONES AGENA: Initial Report to be Filed September 5
---------------------------------------------------------
The submission for the general report on the liquidation of
Fundiciones Agena S.A. will be on Monday, Sep. 5, 2005. The
individual claims of creditors were submitted in court on July
7, 2005 after undergoing verification, which ended on May 26,
2005.
Buenos Aires accountant Nora Mabel Pszemiarower was assigned
trustee by the city's Court No. 14. Clerk No. 27 assists with
the wind-up proceedings.
CONTACT: Ms. Nora Mabel Pszemiarower, Trustee
Corrientes 1257
Buenos Aires
INSTITUTO COGHLAN: Trustee to Submit General Report Monday
----------------------------------------------------------
Ms. Irma Susana Aguilera, the trustee appointed for the
Instituto Coghlan S.R.L. reorganization, will submit the general
report on Monday, Sep. 5, 2005. The report includes the
Company's accounting and business records as well as the summary
of important events pertaining to the reorganization.
Ms. Aguilera verified the claims of the Company's creditors
until May 23, 2005. The validated claims were presented in court
as individual reports on July 8, 2005.
Court Court No. 4 of Buenos Aires' civil and commercial tribunal
handles the Company's case with the assistance of Clerk No. 8.
An Informative Assembly, the final stage of a reorganization
where the settlement proposal is presented to the company's
creditors for approval, is scheduled on March 29.
CONTACT: Ms. Irma Susana Aguilera, Trustee
Luis Saenz Pena 1690
Buenos Aires
TELECOM ARGENTINA: Finalizes Debt Restructuring
-----------------------------------------------
Telecom Argentina S.A. (BASE: TECO2, NYSE: TEO) ("Telecom
Argentina" or the "Company") announced Wednesday August 31, 2005
(the "Issuance Date"), that it successfully completed its debt
restructuring process by issuing the new Notes and paying the
cash consideration in exchange for the Outstanding Debt, in
accordance with the terms of the Acuerdo Preventivo
Extrajudicial entered into by Telecom Argentina and its
financial creditors (the "APE"), resulting in the extinguishment
of all Outstanding Debt pursuant to the APE. The Company also
made prepayments on the new Notes issued pursuant to the APE,
further strengthening it post-restructuring debt profile, as
described in more detail below.
"We are very pleased to be concluding the debt restructuring
process of Telecom Argentina under an agreement that was
endorsed by almost all of our creditors. We greatly appreciate
the support received from our creditors throughout the
restructuring process. With this restructuring and with cash
flow generation of the Company we were able to reduce
significantly our level of indebtedness. Moreover, we were able
to obtain a conservative profile of maturities and we have
considerably improved our credit ratios. We believe that the
restructuring will give Telecom Argentina a firm foundation to
continue expanding its business in the Argentine
telecommunications market," said Carlos Felices, Chief Executive
Officer of Telecom Argentina.
On Wednesday, the Company issued to its creditors the Series A
and Series B Notes. Telecom Argentina also paid its creditors
cash pursuant to the terms of the APE and made certain
additional cash payments under the terms of the new Notes. As a
result of the payments and prepayments of the new Notes, the
principal amortization payments due up to and including October
15, 2007 have been prepaid. These payments and prepayments,
which represent 15.2% of the original principal amount of the
Series A Notes and 40.0% of the original principal amount of the
Series B Notes, have been allocated among the new Notes in
accordance with the amortization schedule described in the new
Notes.
Payments to the holders of new Notes issued in global form were
made through the settlement systems of DTC, Euroclear and
Clearstream, as applicable. Payments to holders of new Notes
issued in certificated form were made by wire transfer to the
accounts of the respective holders.
Pursuant to the terms of the APE, non-participating creditors
are entitled to receive consideration in the form of Series A
Notes and cash consideration under Option A. The consideration
payable to such holders has been issued and is available for
collection by the holders, together with the payments made on
the Series A Notes issued to those holders, by following the
collection procedures detailed in the restructuring section of
the Company's website.
Set forth below is summary information regarding the
consideration paid by the Company on the Issuance Date:
1. The Company issued Series A Notes in the following currencies
and original principal amounts: approximately P$26 million
(including CER adjustment), approximately US$105 million,
approximately euro 534 million and approximately 12,328 million
yen. Additionally, the Company paid to creditors who received
consideration under Option A interest payments for the period
January 1, 2004 through August 31,2005 (based on the nominal
amount of Series A Notes) at the following annual rates: 3.23%
for Peso Notes, 5.53% for Dollar Notes, 4.83% for Euro Notes and
1.93% for Yen Notes, amounting to a payment of approximately P$1
million, US$10 million, euro 43 million and 396 million yen,
respectively.
2. The Company issued approximately US$999 million of Series B
Notes under Option B. Additionally, the Company paid creditors
who received consideration under Option B interest for the
period January 1, 2004 through August 31, 2005 (based on the
nominal amount of Series B Notes) at an annual rate of 9.00%,
amounting to a payment of approximately US$150 million.
3. The Company paid an aggregate amount equal to US$565 million
to creditors who selected or were allocated into Option C.
Additionally, the Company paid creditors who received
consideration under Option C interest on the Option C for the
period January 1, 2004 through August 31, 2005 at an annual rate
of 2.28%, amounting to a payment of approximately US$21 million.
4. The Company made payments of approximately P$4 million,
US$416 million, euro 81 million and 1,874 million yen under the
terms of the new Notes issued pursuant to the APE consisting of:
a. The mandatory principal amortization payments scheduled for
October 15, 2004 and April 15, 2005.
b. The cash amounts reserved but not applied pursuant to Option
C under the APE and an additional principal prepayment, that
will be applied as a Note Payment and will cover the principal
amortization payments under the new Notes up to and including
October 15, 2007.
The amount to be issued and the remaining outstanding principal
amount of new Notes, after giving effect to the payments and
prepayments described above, are detailed in Annex 1.
The interest and principal amortization payments on the new
Notes were made in the currency in which each Series is
denominated (Pesos, Euros, US Dollars or Yen), except to
residents in Argentina, to whom all payments were made in
Argentine pesos, at the prevailing Foreign Exchange rates as of
the Issuance Date. Payments of Option C cash and interest on
Option C cash were made in US Dollars, except to residents in
Argentina, to whom payments were made in Argentine Pesos at the
prevailing Foreign Exchange rates as of the Issuance Date.
Set forth in Annex 2 is an analysis of the amounts paid to
creditors per 1,000 equivalent of Principal Face Amount of
Outstanding Debt.
CONTACT: TELECOM ARGENTINA S.A.
Pedro Insussarry
Phone: (54-11) 4968-3743
Moira Colombo
Phone: (54-11) 4968-3627
Gaston Urbina
Phone: (54-11) 4968-3628
Morgan Stanley & Co. Incorporated
Carlos Medina
Phone: (1-212) 761-6520
MBA Banco de Inversiones S.A.
Diego Steverlynck
Phone: (54-11) 4319-5865
TGS: Three Directors Resign
---------------------------
Transportadora de Gas del Sur's (TGS) attorney in fact Adrian E.
Hubert informed in a letter sent to Comision Nacional de Valores
that Mr. Kalil George Wasaff and Mr. Miguel Mendoza submitted
their resignations based on personal motives as Directors. Mr.
James Monroe also submitted his resignation as Alternate
Director to TGS's Board of Directors in the meeting held
Tuesday.
CONTACT: Buenos Aires
Investor Relations
Mr. Gonzalo Castro Olivera
Finance & IR Manager
E-mail: gonzalo_olivera@tgs.com.ar
Ms. Maria Victoria Quade
Investor Relations
Ms. victoria_quade@tgs.com.ar
Phone: (54-11) 4865-9077
Media Relation
Mr. Rafael Rodriguez Roda
Phone: (54-11) 4865-9050 ext. 1238
Mr. Kevin Kirkeby
E-mail: kkirkeby@hfgcg.com
Phone: (646) 284-9416
=============
B E R M U D A
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INTELSAT: Moody's Affirms Notes' Junk Rating; Outlook Improves
--------------------------------------------------------------
Moody's Investors Service has affirmed Intelsat, Ltd.'s ratings
and changed the outlook for all ratings to developing from
negative following the company's announcement that it is
acquiring PanAmSat for $3.2 billion plus the assumption of
PanAmSat's debt ($3.2 billion). The transaction, which Moody's
expects to be largely, if not entirely, financed with new debt,
would significantly increase Intelsat's pro forma leverage
thereby increasing credit risk for Intelsat debt holders and
pressuring the rating downwards. Therefore, Moody's anticipates
placing all ratings on review for possible downgrade or lowering
the ratings once the timing and structure of the transaction and
resolution of regulatory review becomes more certain.
Moody's has affirmed these ratings:
Intelsat:
* Corporate family rating -- B2
* $400 Million 5.25% Global notes due in 2008 -- Caa1
* $600 Million 7.625% Sr. Notes due in 2012 -- Caa1
* $700 Million 6.5% Global Notes due in 2013 -- Caa1
Intelsat Subsidiary Holding Company Ltd.:
* $300 Million Sr. Secured Revolver due in 2011 -- B1
* $350 Million Sr. Secured T/L B due in 2011 -- B1
* $1 Billion Sr. Floating Rate Notes due in 2012 -- B2
* $875 Million Sr. 8.25% Notes due in 2013 -- B2
* $675 Million Sr. 8.625% Notes due in 2015 -- B2
Intelsat (Bermuda) Ltd.:
* $478.7 Million Sr. Unsecured Discount Notes due 2015 --
B3
Moody's has changed the outlook to developing from negative.
The developing outlook reflects the uncertainty surrounding the
timing of the domestic and international regulatory review
processes. Once Moody's has greater certainty with respect to
such processes, a potential review for possible downgrade would
likely focus on Moody's assessment of:
1) Intelsat's financing strategy;
2) the company's strategy for successfully integrating
PanAmSat's operations and generating meaningful cost
reductions; and
3) the company's ability to generate pro forma cash flows and
its strategy for reducing debt.
The review would also likely focus on Intelsat's pro forma
market position as the world's largest fixed satellite service
provider and whether the elimination of a major FSS competitor
and its effect, if any, on pricing pressures, partially offsets
the credit impact of the aforementioned leverage increase. As
part of a potential review, Moody's would also assess pricing
pressures from terrestrial-based competition. Moody's would
likely lower Intelsat's ratings if the company does not
delineate a clear debt reduction strategy subsequent to closing
the transaction.
Intelsat, headquartered in Bermuda, is one of the top three
fixed service satellite operators and is owned by funds advised
by or associated with:
* Apollo Management,
* Apax Partners,
* Madison Dearborn, and
* Permira.
The company owns and operates a global communication satellite
system that provides capacity for:
* voice,
* video,
* networks services, and
* the Internet in more than 200 countries and territories.
(Troubled Company Reporter, Sep. 1, 2005, Vol. 9,
No. 207)
===========
B R A Z I L
===========
BANCO RURAL: Expects Restructuring To Restore Financial Health
--------------------------------------------------------------
Banco Rural is embarking on an aggressive restructuring plan in
a bid to restore its financial health, which has been battered
by almost three months of congressional investigations into an
alleged involvement in a bribes-for-votes scheme. Under the
plan, Rural will close some 30 of its 79 branches and cut its
1,800-strong staff through a voluntary retirement program.
Rural's Executive Director Joao Heraldo said the bank, which
lends mostly to small and mid-sized companies, has hired former
central bank President Gustavo Loyola and ex-central bank
directors Paulo Zaghen and Nelson Carvalho to help it with the
restructuring process.
Rural is under investigation for its alleged involvement in a
scheme by President Luiz Inacio Lula da Silva's Workers' Party
to pay bribes to lawmakers.
The bank's image has taken a hefty beating from the accusations
and on Wednesday it reported a BRL130-million (US$55mn) loss for
the first six months.
In addition, the bank's deposits fell by almost half in the
first six months of 2005 from a year ago, as clients grew
concerned about last year's collapse of Banco Santos SA and the
congressional probe into alleged graft by Lula's party and
government.
COPEL: Board Elects Trompczynski as CFO, IR Officer
---------------------------------------------------
- Ratifies Meinert's appointment as CEO
The Board of Directors of Companhia Paranaense De Energia -
COPEL elected, by unanimous vote, Mr. Paulo Roberto Trompczynski
Copel's CFO and Investor Relations Officer, replacing Mr. Rubens
Ghilardi, who resigned from this position, but will continue
serving as CEO and ratified Mr. Luiz Carlos Meinert's
appointment as CEO of Companhia Paranaense de Gas - Compagas.
SUMMARY OF THE MINUTES OF THE 73rd EXTRAORDINARY MEETING OF THE
BOARD OF DIRECTORS
1. VENUE: Rua Coronel Dulcidio n 800, Curitiba - PR.
2. DATE AND TIME: August 30, 2005 - 2:00 p.m.
3. PRESIDING BOARD: Joao Bonifacio Cabral Junior - Chairman;
Rubens Ghilardi - Secretary.
4. DELIBERATIONS:
I. elected, by unanimous vote, Mr. Paulo Roberto Trompczynski
Copel's CFO and Investor Relations Officer, replacing Mr. Rubens
Ghilardi, who resigned from this position, but will continue
serving as CEO;
II. ratified Mr. Luiz Carlos Meinert's appointment as CEO of
Companhia Paranaense de Gas - Compagas;
III. approved, by unanimous vote of the voting Officers and
abstention of the members of the Audit Committee, the proposal
that members of the Audit Committee receive, in addition to the
remuneration related to their activities as Officers,
remuneration equivalent to the position bonus granted to the
Company's Superintendent, retroactively to June, when the
operations of that Committee were launched;
IV. approved, by unanimous vote, the execution of the memorandum
of understanding with Eletrosul whose object is the feasibility
study of joint participation in biddings for the concession of
generation projects; and
V. approved, by unanimous vote, Copel's mission, vision, values
and strategic guidelines which will result in the development of
the corporation's strategic objectives with the respective
business and service developments, which should also be
presented to the Board of Directors.
CONTACT: COMPANHIA PARANAENSE DE ENERGIA- COPEL
Rua Coronel Dulcidio 800
Curitiba
Parana, 80420-170
Brazil
Investor Relations team:
E-mail: ri@copel.com
Phone:(55 41) 3222-2027
UNIBANCO: CGD to Sell Stake Via Global Public Offering
------------------------------------------------------
Portuguese state bank Caixa Geral de Depositos (CGD) is pulling
out of Brazil's third largest private bank Uniao de Bancos
Brasileiros SA (Unibanco). Business News Americas reports that
CGD will sell its stakes in Unibanco and its parent Unibanco
Holding through a global public offering in which investors can
reserve shares between September 8 and 12. At the end of March,
CGD had a 12.3% stake in Unibanco Holdings and a 4.8% stake in
Unibanco.
The offering will consist of units (on the Brazilian Bovespa
exchange) and global depositary shares (GDS) on the NYSE. Each
unit represents one preferred share of Unibanco and of Unibanco
Holdings each. Each GDS represents five units. The price will be
set on Sep. 13 and offer will be registered and begin on Sept.
14.
Unibanco and UBS Investment Bank are coordinating the offering.
Unibanco said the organizers have a greenshoe option for up to
15% of the shares on offer.
Despite the sale, CGD has said it plans to maintain its
commercial relationship with Unibanco, which aims to provide
reciprocal preferential treatment for banking operations between
Portugal and Brazil.
CONTACT: Unibanco
Investor Relations Area
Av. Eusebio Matoso
891 ? 15th floor - Sao Paulo
SP 05423-901- Brazil
Phone: (55 11) 3097-1980
Fax: (55 11) 3813-6182
E-mail: investor.relations@unibanco.com
URL: www.ir.unibanco.com
=========
C H I L E
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PETROPOWER ENERGIA: S&P Issues Ratings Analysis
-----------------------------------------------
Rationale
Petropower Energia Ltda. is a delayed coker, hydrotreater, and
net 59 MW cogeneration facility in Chile (FC: A/Stable/A-1) that
is jointly owned by Foster Wheeler Ltd. (LC: B-/Negative/--; FC:
B-/Negative/--; 85% ownership), Empresa Nacional de Petroleo
(ENAP; FC: A/Stable/--; 7.5% ownership), the Chilean national
oil company; and ENAP Refinerias S.A. (former Petrox; 7.5%
ownership), a subsidiary of ENAP.
The rating on Petropower reflects the following risks:
- High operating standards, such as availability requirements
in excess of 90% for several units, to receive full revenue
payments;
- The project's reliance on one large contract and therefore
on the ability and willingness of the host refinery,
Petrox, to perform its contractual obligations under the
processing service and supply agreement; and
- Events of default related to Foster Wheeler's credit
quality and the increasing likelihood that Foster Wheeler
will not be able to provide certain project shortfall
guaranties.
The following factors help offset the risks:
- The project has exhibited a strong operating record since
the beginning of its operations;
- The project provides a strategically valuable asset to
Petrox, a refinery operating under ENAP Refinerias S.A., a
wholly owned subsidiary of ENAP, the Chilean national oil
company;
- The project burns green coke, a byproduct of the refinery,
which allows Petrox to avoid a costly upgrade of its
utilities and enhances its profitability;
- ENAP guarantees Petrox's contractual performance to
Petropower;
- Petrox has assumed product commodity price risk, inflation,
and foreign currency exchange risk;
- Debt service coverage ratios, which average 1.77x for the
life of the transaction, resist deterioration under
Standard & Poor's Ratings Services' sensitivity analysis;
and
- Chile has a reasonably healthy economy and political
stability.
Petropower's financing documents include defaults related to
Foster Wheeler's credit quality, particularly in the case of
payment defaults on the company's financial obligations.
Petropower's financing structure also incorporates Foster
Wheeler's extensive participation through different guarantees,
particularly performance guarantees. Given the deterioration in
Foster Wheeler's credit quality since the project was first
rated, we consider it unlikely that those protections could be
met by Foster Wheeler if needed. Should Foster Wheeler not
fulfill those guarantees in a timely manner, Petropower's
bondholders would have the opportunity to accelerate the notes.
Given the strong operational performance of the project,
however, we expect that there are sufficient economic incentives
for the noteholders not to accelerate Petropower's debt or to
waive an automatic acceleration, if triggered.
Former Petrox and ENAP formed Petropower as a special-purpose
entity to develop, design, construct, and operate a delayed
coker, hydrotreater, and net 59 MW cogeneration facility now
integrated with ENAP's Petrox refinery, located about 500
kilometers south of Santiago, Chile. Petropower allows Petrox to
optimize its assets to take advantage of less expensive, heavier
crude oil feedstocks to serve the growing and more
environmentally sensitive Chilean market.
Petropower services its debt largely with revenues from its
Petrox contract, which provides fixed fees for refinery-
processing services, electricity, and attendant steam
production. The project structure has been resilient to a
variety of adverse conditions, including some degree of
inflation in Chile, currency devaluation, and reduced
availability, while ensuring sufficient cash flow to provide
adequate debt service coverage.
Since the beginning of operations, the project has had very good
operating performance, with annual availability of both the
delayed coker and the cogeneration facility above project
expectations. In addition, its debt service coverage ratio for
2004 was 1.6x, which is in line with our original expectations.
Petropower had $110.4 million of total debt as of June 30, 2005
(including only the balance of the rated trust certificates),
while cash holdings and short-term investments totaled $1.9
million. The project debt consists of the trust certificates for
an original amount of $162 million that was issued in 1996, with
final maturity in 2014. The certificates amortize in 30
semiannual payments started in February 1999.
Outlook
The stable outlook reflects the project's strategic importance
to its offtaker, the Petrox refinery, and its strong operational
and financial performance to date, which allow us to conclude
that the rating should not deteriorate. Minimal potential for
improvement in the project's debt service coverage will limit
rating upgrades for the foreseeable future. The rating could
come under pressure if the project's operating performance
deteriorates and significantly affects cash generation, which we
currently do not anticipate.
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
===============
C O L O M B I A
===============
TELECOM: Telmex Deal Shelved Pending Comptroller's Analysis
-----------------------------------------------------------
The Colombian government suspended a plan to sell a majority
stake in state-run phone company Colombia Telecomunicaciones
(Telecom) to Telefonos de Mexico (Telmex), according to an AP
WorldStream report. The decision came after Comptroller General
Antonio Hernandez, who is in charge of auditing government
books, advised Telecom to reject the deal, in which Telmex would
invest US$350 million and about $3 billion more during the next
15 years to take a 50% plus one share stake in Telecom.
Faulting the deal for lack of transparency and calling it unduly
generous toward Telmex, the Comptroller General sent a letter to
the board of the Colombian company on Monday, urging it to say
no. He said his office planned to review the legality of the
deal in the coming days.
Responding to Hernandez in a letter Wednesday, Telecom's board
of directors said it "will be waiting to receive this analysis,"
and that in the meantime the deal is "suspended."
The agreement was supposed to be formalized as early as Friday.
Meanwhile, Colombian fixed line operator ETB is studying whether
to offer US$350 million for 50% plus two shares in Telecom and
become its strategic partner. Bogota's comptroller Oscar
Gonzalez said ETB has a strong enough financial position to make
this proposal for Telecom.
===================
C O S T A R I C A
===================
RICA FOODS: Majority Shareholder to Commence Tender Offer
---------------------------------------------------------
Rica Foods, Inc. (Amex: RCF) ("Rica" or the "Company") announced
Wednesday that its Board of Directors was provided written
notice that Avicola Campesinos, Inc., the Company's majority
shareholder ("Avicola"), intends to commence an all-cash tender
offer to purchase all of the outstanding common stock of the
Company.
A special committee of the Company's Board of Directors
comprised of independent directors (the "Special Committee") has
been formed to evaluate the proposal.
The proposed offer may be completed only in accordance with
applicable state and federal laws, including the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as
amended. A tender offer for the outstanding shares of the
Company's common stock has not yet commenced.
If a tender offer commences, each security holder of the Company
should read the tender offer statement when it becomes available
because it will contain important information about the tender
offer.
If Avicola commences a tender offer, within ten business days
from the date of such commencement, the Company will file a
solicitation/recommendation statement with the Securities and
Exchange Commission (the "SEC"), which will advise shareholders
of the Company's position regarding the offer, and state its
reasons for such position. The Company's shareholders, and its
customers, suppliers and employees, are strongly advised to
carefully read the tender offer statement and the
solicitation/recommendation statement, if and when it becomes
available, because it will contain important information. Free
copies of the tender offer statement and the
solicitation/recommendation statement would be available at the
SEC's website at http://www.sec.gov,or at the Company's website
at http://www.ricafoods.com,and would also be available,
without charge, by directing requests to the Company's Investor
Relations Department.
CONTACT: RICA FOODS, INC.
Tel: +1-305-858-9480
E-mail: mmarenco@ricafoods.com
=============
J A M A I C A
=============
KPMG: Unit Explains Distinctions Regarding Parent's Fraud Case
--------------------------------------------------------------
The Jamaican unit of international auditing firm KPMG said it is
not part of the fraud case brought against the American
operation by the US Department of Justice, the Observer Business
Reporter relates. In a press statement, the unit said that the
situation "has no effect on KPMG International member firms
outside the United States."
According to The Troubled Company Reporter, the Department of
Justice has been investigating certain tax services that KPMG
offered from 1996 to 2002. This is part of a larger tax shelter
investigation into the role of accounting firms, law firms,
large banks and taxpayers who participated in the development,
promotion and implementation of tax shelters.
On July 9, 2002, the Justice Department, on behalf of the
Internal Revenue Service, filed a lawsuit in the U.S. District
Court for the District of Columbia (Dist. D.C. Case No. 1:02-mc-
00295) against KPMG LLP. In that the proceeding, the Government
asked the court to compel the public accounting firm to disclose
to the IRS information about all tax shelters it marketed since
1998. On Sept. 7, 2004, the DOJ and KPMG advised Judge Hogan
that the accounting firm had produced all of the documents
sought by the IRS. Robert S. Bennett, Esq., and Kenneth W.
Gideon, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, and
John M. Bray, Esq., at King & Spaulding LLP, represent KPMG in
this civil proceeding.
On Monday, KPMG reached an agreement with the DOJ, under which
the US government agreed not to prosecute the firm as a legal
entity, but would pursue its case against the nine executives
allegedly involved in alleged tax shelter activities.
As part of the settlement with the US attorney's office for the
southern district of New York and the IRS, KPMG agreed to pay
US$456 million and to dismantle the tax sheltering operation.
KPMG LLP is a global network of professional services firms
providing Audit, Tax and Advisory services. It operates in 148
countries and has around 6,500 partners, 70,000 client service
professionals, and 17,000 administration and support staff
working in member firms around the world.
The Jamaican operation of KPMG is one of the largest auditing
firms in the country, along with PricewaterhouseCoopers, another
American-based firm.
===========
M E X I C O
===========
ASARCO: Court Authorizes Maintaining Insurance Agreements
---------------------------------------------------------
In the normal course of operating its business and preserving
its properties, ASARCO LLC maintains various liability insurance
policies through multiple insurance carriers. The Insurance
Policies include coverage for automobile claims, fiduciary
liability claims, crime claims, professional liability claims,
pollution claims, cargo and railcar claims, certain general
liability claims, and various property-related liabilities. The
third-party claims that are covered by the Insurance Policies
are not unusual either in amount or in number in relation to the
Debtor's business operations.
To maximize savings from economies of scale, three of the
Insurance Policies -- excess umbrella, property, and cargo --
are purchased by the Debtor's ultimate parent company, Grupo
Mexico, S.A. de C.V. These policies provide coverage to the
Debtor, as well as to its affiliated companies.
The premium for each policy is allocated to each affiliate,
including ASARCO, based on these criteria:
(i) property policy -- allocation based on relative size of
insured assets;
(ii) cargo policy -- allocation based on estimated yearly
sales; and
(iii) excess umbrella policy -- allocation based on historical
risk of litigation.
The premiums associated with the Insurance Policies were paid or
financed by the Debtor in various manners. With respect to
those Insurance Policies providing coverage related to crime,
breach of fiduciary duties, special accidents, and professional
liability, the Debtor historically has paid the entire premium
before the Petition Date in the ordinary course of business.
The Debtor has financed the premiums relating to the remaining
Insurance Policies -- excess umbrella, cargo and rail cars,
property, auto, and the pollution liability policy.
Most of the Financed Policies were financed directly with the
insurance carrier. Other Financed Policies were financed
through an unrelated third party, AICCO, Inc.
A schedule of the amount and timing of the various installments
for the Financed Policies is available at no charge at:
http://bankrupt.com/misc/Financed_Policies_Schedule.pdf
Each of the Insurance Policies is essential to the ongoing
operation of the Debtor's business.
By this motion, the Debtor seeks the Court's authority to
continue making all payments necessary to maintain the Financed
Policies and enter into additional agreements to finance the
premiums of Insurance Policies in the ordinary course of
business.
If the Debtor fails to make timely payments on account of its
Financed Policies, the lender likely will move immediately for
relief from the stay to terminate the policy, Karen C. Paul,
Senior Assistant General Counsel of ASARCO, explains. Under the
agreements, each lender has the right to terminate the policy
and apply any surrendered cash value to the outstanding amount
due to the lender.
Because it is undisputed that the Debtor needs to maintain the
insurance coverage at all times, the Debtor will then be forced
to locate replacement coverage. This result is not beneficial
to
the Debtor, its estate, or any party-in-interest.
Ms. Paul notes that the policies cannot be allowed to lapse or
the Debtor would be exposed to substantial liability for
resulting damages. Moreover, the guidelines of the Office of
the United States Trustee require the Debtor to maintain its
insurance program.
Ms. Paul informs Judge Schmidt that ASARCO would otherwise be
authorized to enter into future financing agreements for
Insurance Policies without Court approval under Section 364(a)
of the Bankruptcy Code, but for the fact that financing
agreements are typically secured by the cash value of the policy
that is being financed. In the event that the Debtor fails to
make its financing payments, the financing agreements permit the
lender to cancel the policy, Ms. Paul explains.
Because the policy has been paid in full -- from the insurer's
point of view -- Ms. Paul says early cancellation of the policy
results in the return of unearned premiums. Under the typical
financing agreement, the lender then applies the unearned
premiums towards the outstanding amount due to it. Any excess
is returned to the Debtor.
Additionally, the Debtor seeks to continue the practice of
jointly participating in certain insurance policies with its
parent company. Grupo Mexico is able to obtain policies for
excess umbrella, property, and cargo coverage much more
efficiently than ASARCO could do on its own, according to Ms.
Paul.
Court's Ruling
The Court grants ASARCO's request. Judge Schmidt authorizes the
Debtor to make all payments necessary to maintain its insurance
policies.
In the event the Debtor identifies additional Financed Policies
that it seeks to finance, the Debtor will notify in writing the
counsel for any official committees appointed in the case and
the U.S. Trustee. Unless the Committee or the U.S. Trustee
files an objection with the Court, the Debtor is authorized to
execute and enter into the insurance financing agreement without
the need for further Court order.
Headquartered in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining,
smelting and refining company. Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent. The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble,
Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the
Debtor in its restructuring efforts. When the Debtor filed for
protection from its creditors, it listed $600 million in total
assets and $1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-
20521 thru 05-20525). They are Lac d'Amiante Du Quebec Ltee,
CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos Of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005. ASARCO has asked
that the five subsidiary cases be jointly administered with its
chapter 11 case. (ASARCO Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ASARCO: Court Modifies Stay to Allow Owens-Illinois Action
----------------------------------------------------------
Owens-Illinois asks the U.S. Bankruptcy Court for the Southern
District of Texas to lift the automatic stay so it may assert a
third-party claim against Lac d'Amiante Du Quebec Ltee, a
debtor-subsidiary of ASARCO LLC. Owens-Illinois wants to include
Lac d'Amiante Du Quebec on the jury verdict form in a state
court action for purposes of apportioning fault.
On June 16, 2004, Arletta Pippen, Executrix of the Estate of the
deceased Verna Watts, along with Charles Watts, Jr., Executor of
the Estate of the deceased Charles Watts, Sr., filed a suit
against Owens-Illinois in the Superior Court of the State of
Delaware, New Castle County, C.A. No. 02C-03-220, alleging
injury caused by asbestos exposure. Owens-Illinois denied
exposure and negligence.
Lac d'Amiante Du Quebec has settled with the Plaintiffs. In the
event Owens-Illinois is found liable to the Plaintiffs, then it
seeks contribution and apportionment of fault pursuant to 10
Del. C. Section 6302, et. seq.
Pursuant to Section 6304 of Title 10 of the Delaware Code, a
release by the injured person of one joint tort-feasor reduces
the claim against the other tort-feasors in the amount of the
consideration paid for the release. In other words, once the
plaintiff settles with a defendant, and executes a general
release, the remaining defendants are entitled to a reduction of
any claim by the amount of consideration paid.
Furthermore, pursuant to 10 Del. C. Section 6304(6), the release
provides for a reduction, to the extent of the pro rata share of
the released tort-feasor, of the injured person's damages
recoverable against all of the other tort-feasors or the pro-
rata share of fault assigned by the jury, whichever is greater.
Owens-Illinois points out that since the Plaintiffs executed a
Covenant Not to Sue Release and Indemnification Agreement, Lac
d'Amiante Du Quebec has no liability to the plaintiffs and will
not be held liable to the co-defendants for any contribution or
indemnification claims as a matter of contract and law.
If Owens-Illinois is precluded from pursuing a third-party claim
against Lac d'Amiante Du Quebec, judgment may be rendered
against Owens-Illinois. It may be required to pay a
disproportionate share for any potential liability. This result
is in direct contravention of the purpose behind Delaware's
statute. The prejudice suffered by Owens-Illinois greatly
outweighs any potential harm to Lac d'Amiante Du Quebec's
estate.
Owens-Illinois assures Judge Schmidt that Lac d'Amiante Du
Quebec will require no significant time commitment from its
bankruptcy counsel or any employees who might be centrally
involved in the bankruptcy case. Therefore, there would be no
prejudice to Lac d'Amiante Du Quebec if the third-party claim
for contribution was permitted.
Court's Ruling
Judge Schmidt modifies the automatic stay to permit Owens-
Illinois to include Lac d'Amiante Du Quebec on the jury verdict
form for purposes of apportioning fault under 10 Del. C. Section
6302. Neither Owens-Illinois nor any other party may assert any
claims for affirmative relief in the suit against Lac d'Amiante
Du Quebec or any other party benefiting from the injunction,
including all the protected parties.
Owens-Illinois will indemnify and hold harmless Lac d'Amiante Du
Quebec and all protected parties against any claim that arises
out of the events in the State Court Suit.(ASARCO Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
ASARCO: Chapter 11 Prompts Moody's Ratings Withdrawal
-----------------------------------------------------
Moody's Investors Service withdrew Asarco LLC's debt ratings.
This action follows Asarco's August 10, 2005 voluntary petition
for Chapter 11 reorganization in the United States Bankruptcy
Court in Corpus Christi, Texas.
Ratings withdrawn are:
Asarco LLC:
* Ca rated debentures, Ca rated Industrial Revenue Bonds
(Troubled Company Reporter, Sep. 1, 2005,
Vol. 9, No. 207)
BALLY TOTAL: Bondholders Waive Covenant Default Until Nov. 30
-------------------------------------------------------------
Bally Total Fitness Holding Corporation (NYSE: BFT) received
consents from holders of a majority of its outstanding 10-1/2%
Senior Notes due 2011 and 9-7/8% Senior Subordinated Notes due
2007 to an extension through Nov. 30, 2005, of the waiver of the
financial reporting covenant default under the indentures
governing the notes.
Bally received consents from holders of approximately 97.39% of
its outstanding Senior Notes, who will receive a one-time
consent fee of $15.00 in cash per $1,000 principal amount of
Senior Notes as to which consent was delivered.
As reported last week, Bally has entered into a consent
agreement with holders of approximately 52.2% of its outstanding
Subordinated Notes and will commence promptly a new consent
solicitation in order to permit all holders of Subordinated
Notes to receive the consideration payable under the agreement.
Pursuant to the consent agreements, Bally agreed to pay to the
holders of Senior Subordinated Notes who are "accredited
investors" under applicable securities laws and who consent to
the waiver, at the holder's election, either:
-- 9.2308 shares of the Company's common stock, which will
not be registered under federal or state securities laws;
or
-- $20.00 in cash for each $1,000 principal amount of Senior
Subordinated Notes as to which consent is delivered.
Holders of at least 43% of the Senior Subordinated Notes have
agreed under the terms of the Consent Agreement to receive
shares of common stock as their consent payment. In addition,
Bally has the option to sell additional shares of common stock
for cash to one of the holders of the Senior Subordinated Notes
to fund all or part of payments to other holders of Senior
Subordinated Notes who receive their consent payment in cash.
Bally Total Fitness is the largest and only nationwide
commercial operator of fitness centers, with approximately four
million members and 440 facilities located in 29 states, Mexico,
Canada,
Korea, China and the Caribbean under the Bally Total Fitness(R),
Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R),
Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands.
With an estimated 150 million annual visits to its clubs, Bally
offers a unique platform for distribution of a wide range of
products and services targeted to active, fitness-conscious
adult consumers.
* * *
As reported in the Troubled Company Reporter on Aug. 11, 2005,
Moody's Investors Service affirmed the Caa1 corporate family
(formerly senior implied) rating and debt ratings of Bally Total
Fitness Holding Corporation. The affirmation reflects continued
high risk of default and Moody's estimate of recovery values of
the various classes of debt in a default scenario. The ratings
outlook remains negative.
Moody's affirmed these ratings:
* $175 million senior secured term loan B facility due 2009,
rated B3
* $100 million senior secured revolving credit facility
due 2008, rated B3
* $235 million 10.5% senior unsecured notes (guaranteed)
due 2011, rated Caa1
* $300 million 9.875% senior subordinated notes due 2007,
rated Ca
* Corporate family rating, rated (Troubled Company Reporter,
Sep. 1, 2005, Vol. 9, No. 207)
BALLY TOTAL: Lenders Amend Credit Pact to Allow Payment
-------------------------------------------------------
Bally Total Fitness Holding Corporation (NYSE: BFT) entered into
an amendment and waiver to its existing senior secured credit
agreement with a consortium of lenders led by JPMorgan Chase
Bank as agent. The amendment and waiver, among other things:
(i) permits payment of the consent fees to the holders of
the 10-1/2% Senior Notes due 2011 and the 9-7/8% Senior
Subordinated Notes due 2007;
(ii) permits certain expenses to be added back to the
Company's EBITDA in connection with financial covenant
calculations under the Credit Agreement;
(iii) excludes certain consent fees from interest expense in
calculating the EBITDA to interest expense ratio under
the Credit Agreement;
(iv) reduces the EBITDA to interest expense ratio to 1.65x
from 1.70x for the quarter ending March 31, 2006; and
(v) limits revolver borrowings and requires repayment of
revolver borrowings under the Credit Agreement if
Bally's unrestricted cash exceeds certain levels.
As reported last week, Bally has entered into a consent
agreement with holders of approximately 52.2% of its outstanding
Subordinated Notes and will commence promptly a new consent
solicitation in order to permit all holders of Subordinated
Notes to receive the consideration payable under the agreement.
Pursuant to the consent agreements, Bally agreed to pay to the
holders of Senior Subordinated Notes who are "accredited
investors" under applicable securities laws and who consent to
the waiver, at the holder's election, either:
-- 9.2308 shares of the Company's common stock, which will not
be registered under federal or state securities laws; or
-- $20.00 in cash for each $1,000 principal amount of Senior
Subordinated Notes as to which consent is delivered.
Holders of at least 43% of the Senior Subordinated Notes have
agreed under the terms of the Consent Agreement to receive
shares of common stock as their consent payment. In addition,
Bally has the option to sell additional shares of common stock
for cash to one of the holders of the Senior Subordinated Notes
to fund all or part of payments to other holders of Senior
Subordinated Notes who receive their consent payment in cash.
BALLY TOTAL FITNESS HOLDING CORPORATION is a borrower under a
credit agreement dated as of Nov. 18, 1997 (as amended),
arranged by JPMORGAN CHASE BANK, N.A., as agent, DEUTSCHE BANK
SECURITIES, INC., as Syndication Agent, and LASALLE BANK
NATIONAL ASSOCIATION, as Documentation Agent for a consortium of
lenders who are signatories to the Second Amendment, a copy of
which is available at http://ResearchArchives.com/t/s?13aat no
charge. (Troubled Company Reporter, Sep. 1, 2005,
Vol. 9, No. 207)
GRUPO IUSACELL: To Launch New Products, Services to Remedy Debts
----------------------------------------------------------------
Mexican cellular phone company Iusacell will launch new products
and services in hopes of plucking itself out from under a pile
of debt, Reuters reports. Through these efforts, the Company
aims to increase network reach and boost its client base.
Besides launching new products, Iusacell also plans to embark on
a debt-restructuring plan. Iusacell has struggled for the past
two years to renegotiate close to US$800 million in debt. The
Company did not disclose when it could reach a deal with its
creditors.
Iusacell is currently trying to keep itself from being delisted
from the Mexican Stock Exchange. The cellular provider had been
notified on July 8 that it was trading below the US$5 million
minimum capitalization level required for public companies.
Controversial owner Ricardo Salinas, who faces fraud charges in
the United States for his involvement in a debt deal at another
of his companies, had pulled the Company from Wall Street in May
along with retailer Elektra and broadcaster TV Azteca, citing
cost concerns.
The Company's American Depositary Receipts are in the process of
being delisted from the New York Stock Exchange.
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
SATMEX: Local Bankruptcy Proceedings Face Delay
-----------------------------------------------
Satellite operator Satmex may not be able to commence bankruptcy
proceedings under Mexican law until next week as the transport
and communications ministry SCT has not yet selected a case
supervisor for its bankruptcy case. According to Business News
Americas, the SCT is waiting for Judge Refugio Ortega to issue
an official request for SCT to select an expert.
After the issuance, SCT head Pedro Cerisola will then need time
to assemble a commission to interview the five candidates: Maru
Sidaoui, Rafael Buerba, Dionisio Ramos, as well as Tomas Heather
of law firm White & Case, and Ruben Goldberg of Rothschild bank.
Satmex is going ahead with its bankruptcy case in Mexico under a
process known locally as concurso mercantil after US creditors
claiming at least US$379 million of defaulted debt agreed to
withdraw a forced chapter 11 filing in the US.
Once chosen, the case supervisor will have up to 30 days to
study the case before launching a fresh negotiation process, and
the aim is for Satmex to make a financial restructuring proposal
to the US creditors by October 31.
Headquartered in Mexico, Satmex derives over 50% of its revenues
from United States business, and all of the Company's over
US$500 million in debt was issued in the United States and is
governed by New York law. The Company's largest shareholder,
Loral Space & Communications Ltd., is a United States public
company also undergoing a Chapter 11 reorganization in the U.S.
Bankruptcy Court for the Southern District of New York.
The Company was forced into chapter 11 by a group of secured and
unsecured noteholders on May 25, 2005 (Bankr. S.D.N.Y. Case No.
05-13862). The noteholders are represented by Wilmer Cutler
Pickering Hale and Dorr LLP and Akin Gump Strauss Hauer & Feld
LLP. Evercore Partners is the financial advisor to the Senior
Secured Floating Rate Noteholders. Chanin Capital Partners is
the financial advisor to the 10-1/8% Senior Noteholders.
On June 29, 2005, the Company filed a voluntary concurso
mercantile to restructure under Mexican laws, and later moved to
dismiss the involuntary Chapter 11 petition in the U.S. As of
May 31, 2005, Satmex reports US$900 million in total assets and
US$688 million in total debts.
SICARTSA: Strike Predicted to Resolve Soon
------------------------------------------
Mexico's mining and metal workers union STMMRM is about to reach
an agreement with Grupo Villacero steel unit Sicartsa, a move
that would bring a four-week-old strike to an end. Dow Jones
Newswires reports that STMMRM Secretary General Napoleon Gomez
Urrutia, following a meeting with labor authorities and Sicartsa
officials late Tuesday, said a proposal would be drawn up with
agreements reached. The proposal will be submitted before the
end of week to the union chapter in Lazaro Cardenas, Michoacan
state, where 2,000 steel workers have been on strike since
August 1.
The union head said that the dispute over whether Grupo
Villacero workers at a facility in Monterrey should be included
in the union will be settled by an independent study to be
conducted by a university or engineering college, and that both
sides would abide by its decision.
Sicartsa has registered losses of more than US$87 million and
145,000t of production since the beginning of the strike.
Sicartsa director general Sergio Villareal warned earlier that
mounting losses could result to a permanent closure of the
plant, leaving some 10,000 workers without jobs.
VITRO: Fitch Downgrades Ratings
-------------------------------
Fitch Ratings has downgraded and removed from Rating Watch
Negative the international and national scale ratings of Vitro,
S.A. de C.V. (Vitro) and subsidiaries as follows:
Vitro S.A. de C.V.
-- Senior unsecured local and foreign currency ratings to
'CCC' from 'B';
-- US$225 million 11 3/4% notes due 2013 to 'CCC' from 'B-';
-- National short-term to 'F3 (mex)' from 'F2 (mex)';
-- National long-term to 'BB (mex)' from 'BBB (mex)'.
SOFIVSA (VICAP)
-- US$250 million (US$18 million outstanding) 11 3/8% notes
due 2007 to 'CCC' from 'B-'.
Vitro Envases Norteamerica, S.A. de C.V. (Vena)
-- US$250 million 10 3/4% due 2011 senior guaranteed notes to
'B-' from 'B+'.
The Rating Outlook for the Vena bonds is Stable.
The rating actions reflect the company's lack of ability to
strengthen credit protection measures, which have continued to
deteriorate as a result of profitability pressures and high
leverage. Operating margins remain pressured by increased levels
of competition in the domestic market and higher than expected
energy and packaging costs, which the company has not been able
to pass on to its customers. The EBITDA margin for the first six
months of 2005 declined to 14.6% from 16.4% during 2004. The
operating environment is expected to remain extremely
challenging due to persistently high energy costs and recently
announced capacity increases in Mexico from competitors.
Higher refinancing risk and the excessive concentration of debt
at the holding company level have increased probability of
default particularly at the holding level. The new rating of
'CCC' for the senior unsecured obligations of Vitro S.A. de C.V.
reflect that the capacity for meeting financial commitments is
solely reliant on sustained, favorable business and financial
conditions, including the reduction of debt.
The company has made, and continues to make, efforts to divest
assets and non-core operations to ensure timely payment of its
debt commitments. Notwithstanding, leverage has remained high
following these asset sales. In addition, Vitro has increasingly
relied on secured debt borrowing at the operating company level,
particularly at the glass containers business, which further
reduces financial flexibility and adds to structural
subordination at the holding company level. Free cash flow
generation over the next several months will continue to be
pressured by upcoming debt maturities totaling approximately
US$395 million for the next 12 months and $700 million over the
next 24 months. For the 12 months ended June 30, 2005, the ratio
of total debt to EBITDA reached 4.1 times (x) and the ratio of
EBITDA to interest expense was 1.7x.
On July 27, 2005, Vitro announced that it began negotiations
with its partner Libby Inc. for the sale of the company's 51%
stake in Vitrocrisa, the glassware business. Fitch believes that
the completion of this transaction will secure liquidity to meet
the company's short-term debt obligations, but that its effect
on Vitro's financial structure and debt leverage will be
limited. Vitro has publicly announced that its primary goal is
the reduction of debt at a consolidated level and, importantly,
at the holding company level. It recently engaged Credit Suisse
First Boston to complete a strategic review of refinancing
alternatives, which it expects to present to the market within a
period of three to six months.
Vitro is the leading producer of flat glass, glass containers
and glassware in Mexico. The company exports products to more
than 70 countries, and serves the construction, automotive,
beverage, retail, and service industries. Vitro's revenue base
is diversified among its main divisions: flat glass (48%), glass
containers (40%), and glassware (10%). In 2004, the company had
sales of $2.3 billion, EBITDA of $353 million, exports of $637
million, and foreign sales by subsidiaries of $642 million.
CONTACT: Alberto Moreno +5281-8335-7179, Monterrey
Giovanna Caccialanza, CFA +1-212-908-0898, New York
MEDIA RELATIONS: Brian Bertsch +1-212-908-0549, New York
=============
U R U G U A Y
=============
ANCAP: Rating Reflects Uruguay's Tough Economic Environment
-----------------------------------------------------------
Rationale
The rating on Administracion Nacional de Combustibles Alcohol y
Portland (ANCAP) reflects the risks inherent in operating as a
single-asset refiner, the challenging economic environment of
Uruguay, the ownership by the Republic of Uruguay, and the
potential effects of the deregulation of the Uruguayan fuels
market. The rating also incorporates Standard & Poor's Ratings
Services' expectations that ANCAP will maintain its dominant
market position in Uruguay.
ANCAP's credit quality remains linked to that of the Republic of
Uruguay, its 100% owner. First, ANCAP is highly influenced by
the Uruguayan government, particularly in the budget-approval
process, indebtedness authorization, price adjustments, and tax
payments. Second, as ANCAP's operations are concentrated in
Uruguay, the country's financial system developments and growth
prospects also affect the company. Nevertheless, because in the
past the government gave the company appropriate financial
management autonomy, the ratings on ANCAP will not necessarily
follow the exact rating trajectory of the sovereign.
ANCAP currently benefits from its protected position as the
nation's sole petroleum importer, refiner, and supplier of
refined products to Uruguay's distributors. We believe
deregulation will eventually take place. In that scenario, ANCAP
will need to restructure its operations so as not to become
seriously vulnerable to intra-Mercosur import competition.
Nevertheless, in the short-to-medium term, the company is
expected to continue to enjoy the benefits of the monopoly.
ANCAP's revenues come mainly from the refined products division.
Given ANCAP's need to import 100% of its crude oil, the company
is heavily reliant on its ability to pass through fluctuations
in oil prices and exchange rates to its customers. Such price
adjustments are not automatic, but need to be approved by the
government, which makes ANCAP an important tool to minimize the
impact of crude oil price volatility and potential economic
crises. This reduces the company's ability to adjust prices to
reflect the international swings of the refining business.
Nevertheless, we expect ANCAP's pricing strategy to reflect the
swings of the international markets at or close to import parity
levels.
As of March 31, 2005, ANCAP had approximately $90 million in
financial debt that represented a moderate 15.9% of total
capitalization. Improved economic conditions in Uruguay, coupled
with a favorable price environment and an increase in total
volumes sold, led to a significant improvement in ANCAP's
financial performance during 2004 and 2005. This also reflects
the sharp increase in refining margins-driven partly by strong
crude oil prices-which the company has been allowed to pass
through to domestic prices. In addition, a significant slowdown
in capital expenditures after the completion of the upgrade of
La Teja's refinery allowed ANCAP to generate positive free cash
flow to reduce debt. In this context, funds from operations-to-
total debt and EBITDA interest coverage ratios reached 76% and
8.9x, respectively, in fiscal 2004, from 21.3% and 4.1x in 2003.
These metrics compare favorably for the rating category, and the
company was able to extend part of its maturity profile during
2004, refinancing some facilities at one- or two-year tenors.
Nevertheless, a still relatively concentrated maturity schedule,
coupled with limited access to international capital markets for
Uruguayan corporations, results in an aggressive financial
profile. We expect ANCAP to continue improving credit metrics as
it applies positive free operating cash flows-from higher
production at higher prices-to debt reduction.
Liquidity
We consider ANCAP's liquidity position to be adequate for the
rating category, with cash holdings of about $38 million as of
June 30, 2005, covering approximately 76% of short-term debt.
The company has been restructuring obligations, terming out
trade payables into financial debt backed by future sales.
ANCAP's short-term maturities as of June 30, 2005, include a $20
million revolving credit facility with Banco Repoblica (that
should be renewed) and about $30 million in other maturities,
which ANCAP is expected to pay down.
Nevertheless, potential cash requirements from the government to
finance the public deficit, or the potential use of ANCAP's
commercial policy to control inflation in the country, could
jeopardize the company's financial position. In addition, due to
the extremely negative environment for the fuel retail business
in Argentina, ANCAP might continue providing financial
assistance to PCSA (during 2004, capital contributions to this
subsidiary reached approximately $16 million).
In addition, ANCAP guarantees a syndicated loan for an original
amount of $50 million-now approximately $25 million, after
pesification-taken by its 83.4% owned Argentine subsidiary
Petrolera del Cono Sur S.A. (PCSA). We believe PCSA will not be
able to meet its obligation and therefore ANCAP will be called
upon to cover the guarantee. The terms of the guarantee,
specifically the pesification of the guarantee according to
Argentine regulations, is being disputed in Argentine courts. In
case of an unfavorable ruling overturning the obligation's
pesification, the required assistance to PCSA might pressure
ANCAP's liquidity. We believe that ANCAP's ability to refinance
part of that obligation in the domestic market coupled with its
strong cash generation in the current pricing environment offset
the risks at the current rating category.
ANCAP would not face significant capital expenditure
requirements in the next couple of years, and therefore no
additional debt would be required in the medium term. As is the
practice in most Latin American countries, the company does not
have committed credit lines.
Outlook
The stable outlook indicates the linkage of ANCAP's credit
quality to the sovereign's financial health. The outlook also
incorporates a successful extension of the company's maturity
profile that has partly alleviated its financial profile. The
rating upside is conditioned by the improvement of the economic
environment in Uruguay. Failure to successfully accommodate the
maturity profile or excessive pressure of the guarantee on
PCSA's obligations on the financial profile might trigger a
negative review.
Primary Credit Analyst: Luciano Gremone, Buenos Aires (54) 11-
4891-2143; luciano_gremone@standardandpoors.com
Secondary Credit Analyst: Pablo Lutereau, Buenos Aires (54) 114-
891-2125; pablo_lutereau@standardandpoors.com
UTE: Revises Location Plans on Two 100MW Gas-Fired Projects
-----------------------------------------------------------
State power company UTE has decided to modify its proposed
location for two 100MW gas-fired thermoelectric projects,
reports Business News Americas. UTE had proposed to build the
first of the plants in the Melilla area near Montevideo. But
neighbors and local industries protested against the proposal on
pollution concerns.
Authorities will decide next week on a new location for the
plants. Options include other locations in Montevideo and San
Jose departments.
US company GE will build the plants under an US$80-million EPC
contract signed with UTE. GE has 180 days from the time of
signing the contract to install the first plant and 300 days to
install the second. The plants are designed to be used in
emergency situations only.
The plants, designed to be used in emergency situations only,
must be ready to start operations by mid-2006 and will be able
to use either fuel oil or natural gas.
***********
S U B S C R I P T I O N I N F O R M A T I O N
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