/raid1/www/Hosts/bankrupt/TCRLA_Public/051223.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, December 23, 2005, Vol. 6, Issue 254
Headlines
A R G E N T I N A
ACINDAR: Local Fitch Maintains 'D(arg)' Rating $100M of Bonds
BENITO EDUARDO: Files for Bankruptcy
FACOMAR S.R.L.: Court OKs Creditor's Bankruptcy Request
PABLO MARIO: Court Approves Concurso Motion
METROGAS: Extends Debt Offer Deadline
TELEFONICA DE ARGENTINA: Buys Alcatel's ADSL Modems for $2M
B O L I V I A
AES COMMUNICATIONS: Scrutinizes Plan to Avert Liquidation
B R A Z I L
BANCO BRADESCO: Rating Unaffected by Acquisition by BEC
BANCO ITAU: To Distribute Complementary Interest on Capital
BANCO ITAU: Presents Proposal for Managing Algoas' Accounts
BEC: Sold to Banco Bradesco for BRL700 Mln
BRASKEM: Ratings Reflect Exposure to Its Home Market of Brazil
CEMIG: Directors Decide to Pay Interest on Equity
MRS LOGISTICA: Ratings Raised to 'BB'; Outlook Revised to Stable
PARANA BANCO: S&P Assigns 'B' Senior Unsecured Debt Rating
VARIG: Gets to Keep Fleet Until Jan. 12
VARIG: New York Court Approves Gecas Accord
* BRAZIL: Strengthens Creditworthiness - S&P
C A Y M A N I S L A N D S
CIBELES RV: To Lay Winding Up Accounts Before Jan. 16 Meeting
COROMANDEL INTERNATIONAL: Sets Final General Meeting for Jan. 12
COROMANDEL TREND: Winding Up Accounts to be Presented Jan. 2
CYDONIA CAPITAL: Winding Up Accounts to be Presented Jan. 13
HI CAYMAN: To Present Account on Wind Up to Members Jan. 6
KINGS POINT: To Lay Accounts on Liquidation Jan. 13
PERU PRIVATISATION: To Report on Wind Up Process Jan. 26
THE MACRO: To Show Manner of Liquidation to Members Jan. 27
D O M I N I C A N R E P U B L I C
* DOMINICAN REPUBLIC: Fitch Monitoring Domestic Bonds
E L S A L V A D O R
BANCO SALVADORENO: Ratings Reflect Vulnerable Asset Quality
J A M A I C A
AIR JAMAICA: Seeks to Extend Flying Time
TOUCHPOINT CENTRES: Goes Belly Up, Taps Receiver to Oversee Sale
M E X I C O
BALLY TOTAL: Revisions Do Not Impact 2005 Financial Statements
CALPINE CORP: Files Chapter 11 to Facilitate Restructuring
CALPINE CORP: Fitch Downgrades IDR to 'D' on Bankruptcy Filing
DESC: Tight Financial Flexibility Prompts S&P Ratings
P U E R T O R I C O
CENTENNIAL COMMUNICATIONS: Completes $550M Senior Notes Offering
T R I N I D A D & T O B A G O
BWIA: Operating Expenses Widen on Rising Fuel Costs
- - - - - - - -
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A R G E N T I N A
=================
ACINDAR: Local Fitch Maintains 'D(arg)' Rating $100M of Bonds
-------------------------------------------------------------
Fitch Argentina Calificadora de Riesgo S.A. maintained the
'D(arg)' rating given to a total of US$100 million of corporate
bonds issued by long steelmaker Acindar Industria Argentina de
Aceros.
Comision Nacional Valores(CNV), the country's securities
regulator, relates that the rating action was based on the
Company's finances as of Sep. 30, 2004.
The bonds, which matured in February 16 last year, are described
as "Obligaciones Negociables simples, no 5.8.96."
The Company is involved in the production of non-flat steel
products such as steel pipe, cable, hot-rolled and cold-drawn
steels for concrete, forged bars and blocks for distributors of
steel products, other steel companies, manufacturers of original
equipment for several industrial sectors including the
automotive and the oil and gas industries and end users, mainly
in the construction and agricultural sectors of the economy. Its
principal market is Argentina, although it exports its products
to Brazil, Chile and the United States, Bolivia and Uruguay
through its sales office, said the Financial Times.
CONTACT: Acindar Industria Argentina de Aceros S.A.
2739 Estanislao Zeballos Beccar
Buenos Aires
Argentina B1643AGY
Phone: +54 11 4719 8500
Fax: +54 11 4719 8501
Web site: http://www.acindar.ar.com
BENITO EDUARDO: Files for Bankruptcy
------------------------------------
Court No. 16 of Buenos Aires' civil and commercial tribunal is
studying the bankruptcy petition of Benito Eduardo Gomez, says
La Nacion.
The report adds that that the Company filed the petition
following cessation of debt payments on Nov. 15, 2005.
The city's Clerk No. 31 assists the court on this case.
CONTACT: Benito Eduardo Gomez, Trustee
Jose Marti 1074
Buenos Aires
FACOMAR S.R.L.: Court OKs Creditor's Bankruptcy Request
-------------------------------------------------------
Facomar S.R.L. entered bankruptcy after Court No. 25 of Buenos
Aires' civil and commercial tribunal approved a bankruptcy
motion filed by Obra Social de los Empleados de Comercio y
Actividades Civiles, reports La Nacion. The Company's failure to
pay $2,176 in debt prompted the creditor to file the petition.
Working with the city's Clerk No. 50, the court assigned Mr.
Miguel Tregob as trustee for the bankruptcy process. The
trustee's duties include the authentication of the Company's
debts and the preparation of the individual and general reports.
Creditors are required to present their proofs of claim to the
trustee before March 7, 2006.
The Company's assets will be liquidated at the end of the
bankruptcy process to repay creditors. Payments will be based on
the results of the verification process.
CONTACT: Facomar S.R.L.
C. Pellegrini 27
Buenos Aires
Mr. Miguel Tregob, Trustee
Lima 287
Buenos Aires
PABLO MARIO: Court Approves Concurso Motion
-------------------------------------------
Court No. 6 of Buenos Aires' civil and commercial tribunal
approved a petition for reorganization filed by Pablo Mario
Vazquez, according to a report from Argentine daily La Nacion.
Trustee Juan Villoldo will verify claims from the Company's
creditors until March 13, 2006. After verification period, the
trustee will submit the individual and general reports in court.
Dates for submission of these reports are yet to be disclosed.
The city's Clerk No. 12 assists the court on the case.
CONTACT: Pablo Mario Vazquez
Posadas 1376
Buenos Aires
Mr. Juan Villoldo, Trustee
Uruguay 651
Buenos Aires
METROGAS: Extends Debt Offer Deadline
-------------------------------------
Natural gas distributor Metrogas (MGS) announced Wednesday that
it is extending until 5:00 p.m., New York City time, on December
27, 2005, its new solicitation (the "APE Solicitation") from
holders of its 9-7/8% Series A Notes due 2003 (the "Series A
Notes"), its 7.375% Series B Notes due 2002 (the "Series B
Notes") and its Floating Rate Series C Notes due 2004 (the
"Series C Notes" and, together with the Series A Notes and the
Series B Notes, the "Existing Notes") and its other unsecured
financial indebtedness (the "Existing Bank Debt" and, together
with the Existing Notes, the "Existing Debt") aggregating
approximately the equivalent of U.S.$ 436.9 million principal
amount of Existing Debt as of September 30, 2005, subject to
certain eligibility requirements, of powers of attorney
authorizing the execution on behalf of the holders of its
Existing Notes of, and of support agreements committing holders
of its Existing Bank Debt to execute, an acuerdo preventivo
extrajudicial ("APE") until 5:00 p.m., New York City time, on
December 27, 2005, unless further extended by the Company .
The Company determined to extend the solicitation period because
a significant number of holders of Existing Debt that have
expressed verbally their wish to participate in the APE
Solicitation were unable to complete prior to the original
expiration date of the APE Solicitation (December 20, 2005) the
technical steps that are required to permit them to execute and
deliver their powers of attorney and support agreements.
APE Solicitation
As of 5:00 p.m., New York City time, on December 20, 2005, the
Company had received powers of attorney and support agreements,
together with the necessary supporting documentation, with
respect to the equivalent of approximately U.S.$ 325.4 million
principal amount of Existing Debt. In addition, as of such time
and date, the Company had also received powers of attorney and
support agreements, but was awaiting the receipt of the
necessary supporting documentation, with respect to the
equivalent of an additional U.S.$ 55.9 million principal amount
of Existing Debt.
The APE Solicitation will remain in all respects subject to all
terms and conditions described in the Company's Solicitation
Statement dated November 9, 2005, as the same may be modified.
The Settlement Agent for the APE Solicitation outside Argentina
is:
J.P. Morgan Chase Bank
Tel: +1 (212) 623-5136
Fax: +1 (212) 623-6216
The Settlement Agent for the APE Solicitation inside Argentina
is:
J.P. Morgan Chase Bank N.A., Sucursal Buenos Aires
Tel: (54 11)-4348-3475
Fax: (54 11)-4325-8046
CONTACT: METROGAS, S.A.
Gregorio Araoz de Lamadrid 1360
Buenos Aires
Argentina
CPA C 1267
Phone: +54 11 4309 1010
Fax: +54 11 4309 1025
Web site: http://www.metrogas.com.ar
TELEFONICA DE ARGENTINA: Buys Alcatel's ADSL Modems for $2M
-----------------------------------------------------------
Telefonica de Argentina (TAR) has spent US$2 million on ADSL
modems made by French equipment supplier Alcatel, Business News
Americas reports.
TAR took the amount used to purchase the ADSL modems from the
US$910 million the Telefonica Group has allotted for goods and
services this year. The budget has increased 19% from last year.
With a view to covering the increasing demand for TAR's ADSL
service Speedy, Alcatel will produce all the equipment in its
integration and service center in Buenos Aires.
Alcatel's Argentina facility integrates USB modems in a joint
project with Thomson Multimedia.
=============
B O L I V I A
=============
AES COMMUNICATIONS: Scrutinizes Plan to Avert Liquidation
---------------------------------------------------------
Cash-strapped telecoms operator AES Communications (AXS) is now
carefully planning its strategy to circumvent liquidation,
Business News Americas reports, citing AXS spokesperson Maria
Fernanda Benitez.
A final report by government-appointed receiver Federico Yanez
revealed that the AXS board has until January 11 to satisfy
telecoms regulator Sittel's demands, which include fully paying
off all outstanding debts with operators and interconnected
parties, long and short-term social security obligations and tax
obligations, as well as workers' current and back salaries.
Failure to comply with these demands will lead to AXS's
dissolution.
Sittel placed AXS under government intervention in mid-October
to ensure continuity of service. The intervention was supposed
to run for 90 days.
Recently, however, Sittel Director Jose Morales suspended the
measure after Yanez presented AXS with a plan to normalize its
economic situation.
===========
B R A Z I L
===========
BANCO BRADESCO: Rating Unaffected by Acquisition by BEC
-------------------------------------------------------
Standard & Poor's Ratings Services said Wednesday that the
acquisition of 89.2% of Banco do Estado do Ceara's (BEC) total
shares by Banco Bradesco S.A (Bradesco; BBpi/--/--) for around
$300 million (approximately Brazilian reais [BrR] 700 million at
an exchange rate of BrR2.34 per $1) will not have an immediate
effect on its rating on Bradesco. The acquisition and its
goodwill will not affect Bradesco's creditworthiness given its
strong financials and liquidity. BEC's total assets of
approximately BrR1.7 billion and capital of BrR0.4 billion are
not relevant in comparison with Bradesco's figures and do not
cause significant improvement on a nationwide basis, but will
increase Bradesco's presence in the Ceara state, adding 70
branches to the bank (approximately 19% share in terms of branch
network in the state). In addition, BEC's acquisition should
bring additional cross-selling opportunities to Bradesco coming
from the exclusivity in managing the state employees' account up
to 2010.
Primary Credit Analyst: Tamara Berenholc, Sao Paulo
(55) 11-5501-8950; tamara_berenholc@standardandpoors.com
Secondary Credit Analyst: Daniel Araujo, Sao Paulo
(55) 11-5501-8939; daniel_araujo@standardandpoors.com
BANCO ITAU: To Distribute Complementary Interest on Capital
-----------------------------------------------------------
Banco Itau Holding Financeira S.A. informed its Stockholders
that at a meeting of the Board of Directors held on December 15,
2005, it was decided to distribute complementary interest on
capital in addition to the mandatory dividend for 2005, bearing
in mind the maximum attributable fiscal limit for 2005, as
follows:
1. the payment will be made by April 28, 2006, in the amount of
BRL0.33 per share, less 15% income tax at source, resulting in
net interest of BRL0.2805 per share, with the exception of legal
entity stockholders demonstrating immunity or exemption from
such tax;
2. this complementary interest on capital amounts to
approximately 16 times the interest on capital paid on a monthly
basis;
3. payment calculation will be based on the stockholding
position as at December 26, 2005, although the respective credit
entries will be accounted to the company's books on December 30,
2005 on an individual stockholder basis.
At the time of the approval of the financial statements of 2005,
the Board of Directors may declare to the Stockholders a further
distribution of complementary interest on capital on the basis
of the result reported for the 2005 fiscal year.
CONTACT: Banco Itau Holding Financeira S.A.
Investor Relations
Mr. Geraldo Soares
Investor Relations Superintendency
Praca Alfredo Egydio de Souza Aranha 100
Torre Conceicao - 11 04344-902
Sao Paulo
Phone: +5511 5019-1549
Fax: +5511 5019-1133
BANCO ITAU: Presents Proposal for Managing Algoas' Accounts
-----------------------------------------------------------
Banco Itau Holding Financeira S.A. (Ita£ Holding) announced to
the market that at a public tender bid held on December 19,
Banco Itau S.A. (Itau) presented the best financial proposal for
providing payroll services for active and retired State of
Alagoas civil service employees over a five-year period. These
services will involve the paying out of monthly amounts of
approximately BRL90 million in addition to the payment of state
suppliers and creditors, the centralization of the collection of
all state tax revenues as well as the handling of payroll debits
in settlement of personal credit lines.
As a result of the tender bid, the bank is to make cash payment
of BRL68.1 million, higher than the minimum price of BRL42
million. With the conclusion of this operation, Itau will
increase its customer base in the state of Alagoas four fold to
63,800, 74% of which being located in the state capital, Maceio.
In line with customary practice, this payment will be registered
as an "Anticipated Expense" and recognized proportionally over
the life of the contract. The contract is currently in the
preparatory phase prior to adjudication and ratification by the
State.
Itau is to offer banking products and services, and insurance
and retirement policies to the state civil service employees
thus generating additional business volume for the bank's branch
network in the state of Alagoas. Itau is expanding its business
in the Northeast Region of Brazil with an enhanced branch
network in Maceio as well as all areas of the State through the
installation of new points of service in the eight leading
upcountry cities.
"With the conclusion of this operation, Itau underscores its
strategy of sustainable growth, expanding its focus in the
personal credit segment. We shall be generating important
additional resources for the development of Alagoas as well as
opening up new areas of business in the State, and contributing
to the generation of wealth in the region," says Ronald Anton de
Jongh, Itau's executive vice president.
Alagoas' civil service employees will enjoy the most
comprehensive package of products and services available
anywhere in the market together with the convenience that Itau
provides through its network of more than three thousand points
of sale and more than 21,000 ATMs throughout Brazil and
competitive Bankfone and Bankline services.
CONTACT: Banco Itau Holding Financeira S.A.
Investor Relations
Mr. Geraldo Soares
Investor Relations Superintendency
Praca Alfredo Egydio de Souza Aranha 100
Torre Conceicao - 11 04344-902
Sao Paulo
Phone: +5511 5019-1549
Fax: +5511 5019-1133
URL: www.itau.com.br
BEC: Sold to Banco Bradesco for BRL700 Mln
------------------------------------------
Banco Bradesco, the country's largest private bank, on Wednesday
emerged the winner in the auction of state-owned bank Banco do
Estado do Ceara (BEC) with a BRL700 million (US$304 million)
bid.
In the auction, 89,459,053 shares were sold, representing 89.17%
of BEC's capital. The minimum price for BEC had been set at
BRL543 million (US$232 million).
Bradesco beat out three other institutions to buy BEC. They were
Banco GE Capital Banco (GEX.XX), Banco Itau (ITU) and Unibanco
(UBB).
BEC operates 70 branches in the Northeastern state of Ceara and
has 278,000 customers. According to the tender for the sale, the
institution administers assets of more than BRL1.7 billion and
has total equity of BRL242.3 million. It posted a profit of
BRL65.8 million in 2004.
BRASKEM: Ratings Reflect Exposure to Its Home Market of Brazil
--------------------------------------------------------------
Rationale
The ratings on Braskem S.A. reflect price risk relative to the
company's main feedstock, naphtha, which remains volatile and at
record high levels (making working capital management somewhat
more challenging); exposure to its home market of Brazil for
EBITDA and sales generation; and growing competition with the
consolidation and expansion of other players. These risks are
partly offset by Braskem's leading business and market position
in the Latin American petrochemical industry; economies of scale
and some level of geographic diversification; increasing
technological expertise; and efficiency improvement initiatives
making the company more resilient to the petrochemical cycle.
Braskem is the largest petrochemical company in Latin America,
with net sales and EBITDA of $4.51 billion and $882.4 million in
the 12 months ended Sept. 30, 2005, respectively. Total debt
amounted to $2.35 billion in the same period.
Braskem has improved its ability to face a challenging operating
environment by strengthening its capital structure, extending
debt maturities, and reinforcing its liquidity. Several
initiatives to improve working capital management have been
developed (including a revolving credit facility and other
credit lines with its relationship banks that are currently
fully available), allowing the company to adequately finance its
incremental working capital needs in the form of inventories and
receivables. While we believe that these initiatives provide the
company with some flexibility to manage further pressures (and
that the company was successful in managing peak pressure in the
third quarter by managing domestic and foreign suppliers), we
also highlight that working capital management will remain a
challenging factor for the company, given the substantial
amplitude and volatility of the naphtha cost in past quarters
(with naphtha price jumping to $522 per ton in third-quarter
2005 from $378 per ton in 2004) and projected for the near
future.
Braskem's domestic volume sales grew by 21% in the first nine
months of 2005 compared with the same period of last year (with
boosting performance in polypropylene), but the company
continues facing an adverse domestic market environment and raw
material cost pressures. Indeed, EBITDA margin has been
substantially compressed in the quarter (down to 13% from 20% in
previous quarters), a negative effect that has been greatly
offset by equally historically high petrochemical prices and
consequently wider spreads between raw material and end-product
prices on a dollar-per-ton basis (allowing for overall cash
flows to remain adequate relative to total debt levels). We
believe that these market fundamentals will continue allowing
Braskem to report adequate cash flows and financial ratios,
comfortably placing the company in its current rating category.
In our analysis, we expect Braskem's funds from operations-to-
total debt ratio to hover around 30%-40%; total debt to EBITDA
to remain below 2.5x; and EBITDA interest coverage to stay above
4x in a "through-the-cycle" perspective (those ratios were
29.1%, 2.6x, and 3.7x, respectively, for the 12 months ended
Sept. 30, 2005). While financial ratios temporarily fell below
target levels in third-quarter 2005 and may remain at those
levels in the next couple of quarters due to profitability
compression, we foresee positive fundamentals in the medium
term, as the domestic economic environment gradually strengthens
(as evidenced by improving orders and more balanced stocks
throughout the industry's production chain), and especially if
naphtha cost volatility also gradually reduces in the next
quarters.
Liquidity
Liquidity remains strong. Braskem's cash reserves amounted to
$873 million in September 2005, favorably comparing with short-
term debt maturities of $358.3 million through September 2006.
Short-term maturities include primarily working capital loans,
export prepayment amortization, and loans from government
agencies and the Brazilian Development Bank (BNDES), apart from
$65 million of MTNs due in October 2005 that have already been
liquidated. After refinancing its $250 million Trikem bond,
Braskem's remaining sizable maturity consists of debentures with
convertible clause with Odebrecht (which mirror an identical
obligation by Odebrecht with BNDES) of Brazilian reais (BrR) 931
million (approximately $418.9 million at the foreign exchange
rate of Sept. 30, 2005) in 2007; in 2008 the third tranche of
its MTNs ($275 million) comes due, followed by BrR300 million in
domestic debentures maturing in 2010. Other longer maturities
include Braskem's fourth tranche of its MTNs of $250 million due
2014 and its $150 million new notes due 2015.
As expected, Braskem has been ramping up capital expenditures in
debottlenecking (having invested $238 million the 12 months
ended Sept. 30, 2005), and this should continue in 2006 as the
company starts investing in Paul¡nia polypropylene plant and
other efficiency improvements, and marginal capacity expansion
initiatives. The Brazilian Supreme Court of Justice decided in
November 2005 against a fiscal claim relative to an IPI export
benefit in which Braskem also takes part; all defendants can
still appeal against this decision. In the worst-case scenario
in which all the defendants exhaust all appealing procedures and
the decision is still against them, Braskem believes that its
potential liability would be limited to $222 million, an amount
that has already been provisioned in previous periods. We do not
believe that this specific potential obligation, if ever
materialized, would alone have a negative effect on our opinion
about the company's overall credit quality.
Outlook
The stable outlook reflects our expectations that Braskem will
sustain a prudent financial profile and manageable debt levels
even under a market scenario of depressed domestic demand and
raw material cost pressure. Braskem has been successful in
strengthening its capital structure, liquidity, and resilience
to the petrochemical cycle in the past two years, which should
continue in a positive, though more gradual pace. Potential
credit quality improvement for Braskem in the medium term may
arise from continuing efforts to extend debt tenors, decrease
overall debt leverage, and reduce its cost of debt; the pace of
these improvements has nevertheless been constrained by
unfavorable market conditions in the past quarters (as today
profitability and cash flow are somewhat constrained by high
costs and working capital has to be cautiously managed). The
ratings can be raised if Braskem is able to further strengthen
its financial profile and improve business fundamentals to
weather volatile petrochemical conditions, keeping track of its
debt profile improvement despite stressful market conditions. On
the other hand, a negative revision could result from Braskem
not being able to cope with raw material volatility and working
capital pressures (coupled with depressed profitability),
resulting in significant compression of free operating cash
flows and material, and difficult-to-reverse increasing short-
term debt pressures.
Primary Credit Analyst: Reginaldo Takara, Sao Paulo
(55) 11-5501-8932; reginaldo_takara@standardandpoors.com
Secondary Credit Analyst: Beatriz Degani, Sao Paulo
(55) 11-5501-8933; beatriz_degani@standardandpoors.com
CEMIG: Directors Decide to Pay Interest on Equity
-------------------------------------------------
The Board of Directors of Companhia Energetica De Minas Gerais -
Cemig decided in a meeting held Wednesday to pay interest on
equity in respect of the year 2005, in accordance with Section 9
of Law 9249/95 of December 26, 1995, which shall be taken into
account and offset in the calculation of the obligatory
dividend, in accordance with Clause 29, Paragraph 2 of the
Bylaws, in the amount of BRL157,000,000.00, which corresponds to
BRL0,9686294208 per thousand shares. This amount will be paid in
two equal parts, the first on or before June 30, 2006 and the
second on or before December 30, 2006.
All stockholders whose names are on the company's Nominal Share
Register on January 2, 2006 will have the right to this payment,
on which tax at 15% will be withheld at source of payment, other
than for stockholders that are exempt from this withholding
under current legislation.
The shares will trade with the exclusion of this benefit on
January 3, 2006.
Stockholders were reminded of the importance of updating
registration information. This can be done by visiting any
branch of Banco Itau S.A. (the institution which administers
Cemig's system of registered nominal shares), taking their
personal documents with them.
CONTACT: Companhia Energetica De Minas Gerais - CEMIG
Investor Relations:
Phone: 31 3299-3930
31 3299-4015
URL: www.cemig.com.br
E-Mail: ri@cemig.com.br
Fax: 31 3299-3934
31 3299-3933
MRS LOGISTICA: Ratings Raised to 'BB'; Outlook Revised to Stable
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its local and foreign
currency corporate credit ratings on MRS Logistica S.A. (MRS) to
'BB' from 'BB-'. The outlook is revised to stable from positive.
"The rating action reflects consistent strengthening of MRS'
cash flow protection measures, an improved debt profile with
extended tenors and reduced currency mismatches (after the
repayment of its senior notes), and our expectations that MRS
will continue to increase its transported volumes, adding new
cargos and keeping firm control over its costs and asset
efficiency with the objective of improving operating
profitability," said Standard & Poor's credit analyst Beatriz
Degani.
The rating action also considers the prospects of strong demand
for seaborne iron ore in the medium term and the maintenance of
capital expenditures at manageable levels, allowing the company
to continue increasing volumes without jeopardizing its
currently more conservative financial profile, despite some
expected increase in dividend distribution.
The ratings on MRS reflect some client concentration with
reliance on iron ore captive cargoes, limited scope of its
assets (comparatively a short railroad), and the capital-
intensive nature of the railroad business, in the context of the
fast-growing strategy developed in recent years. The company's
relatively high financial leverage (as adjusted to include the
net present value of operating leases and concession
obligations, which in September 2005 added US$602 million to
MRS' total debt) is also a risk factored into the ratings. These
aspects are partially offset by the long-term nature of its debt
profile (21 years for the concession payments) and MRS'
favorable tariff model with its main captive-cargo clients,
which allows the company to pass on cost increases and maintain
strong profitability and cash flows to perform its capital
expenditure program and service its debt. Moreover, the company
has continuously improved its operational efficiency by reducing
costs and investing in new systems to increase capacity,
allowing for growing volumes despite its already high traffic
density.
The strong demand for seaborne iron ore is expected to continue
indirectly benefiting MRS' results. The company's total volume
has been increasing consistently, with a projected 108 million
tons in 2005, 11% higher than the previous year (reaching 106.7
million tons in the past 12 months ended September 2005). In
spite of the growing diversification of the transported cargo,
MRS should remain concentrated on iron ore transportation
(representing 71% of the total volume in the nine months ended
September 2005) during the next several years.
In addition to volume growth, the company's profitability has
remained quite strong in the past several years due to its
tariff agreement with captive customers and the company's
efforts to control costs and investments to improve asset
efficiency. While the company faced significant cost increases
in 2005 (mainly fuel, due to higher transported volumes and a
pickup in oil prices), it reported an OLA-adjusted EBITDA margin
of 55.2% in the past 12 months ended September 2005, in line
with 56.6% average in the past years, driven by a significant
increase in revenues combined with productivity gains. Even
though Standard & Poor's believes that most of these gains
(which translate into enhanced profitability) will be preserved
in the future, the reduction of the company's leverage and
increasing cargo diversification could gradually make the tariff
agreement less crucial for the company's results; a potential
revision of the tariff model could result in lower nominal
margins, but Standard & Poor's believes that even so, MRS would
still manage to report strong free cash flows.
The stable outlook reflects the expectations that MRS will
sustain its improved cash flow credit measures (with EBITDA
coverage above 3x and FFO to total debt of 25%-30%), strong
profitability, and the fact that its favorable market position
in iron ore transportation will permit the maintenance of this
positive cash flow trend, which is a key factor for financing
its investment strategy and maintaining low indebtedness levels.
The outlook could be changed to positive if the company manages
to strongly diversify its cargo and clients, together with a
more conservative financial profile on a concession-adjusted
basis. On the other hand, a reversal in the trend of cash flow
protection measures due to incremental debt, reduction in the
company's cargo transportation, or other negative developments
involving shareholders, captive customers, or the tariff model
could put negative pressure on the company's ratings. The
ratings do not factor in any acquisitions in the context of the
reorganization of the railroad sector in Brazil; therefore,
acquisitions that would imply increasing leverage and/or a
deterioration of the company's business fundamentals could also
place downward pressure on the ratings.
Primary Credit Analyst: Beatriz Degani, Sao Paulo
(55) 11-5501-8933; beatriz_degani@standardandpoors.com
Secondary Credit Analyst: Reginaldo Takara, Sao Paulo
(55) 11-5501-8932; reginaldo_takara@standardandpoors.com
PARANA BANCO: S&P Assigns 'B' Senior Unsecured Debt Rating
----------------------------------------------------------
Standard & Poor's Ratings Services has assigned its 'B' foreign-
currency short-term senior unsecured debt rating to Parana Banco
S.A.'s $15.5 million notes issued in two tranches: $9.5 million
issued on Nov. 10, 2005, and maturing in 15 months, and $6
million to be issued on Dec. 23, 2005, maturing in 18 months.
The ratings assigned to Parana Banco S.A. (B/Stable/B)
incorporate the intrinsic risks to a very small bank with high
product concentration operating in an environment marked by
fierce competition; the bank's challenge to diversify further
its funding base and become less dependent on the group's
resources; and the potential margin pressures in the medium-to-
long term that could affect profitability. In addition, the bank
faces the challenge to increase the scale of its operations
while maintaining adequate asset quality. "These risks are
tempered by the bank's good profitability levels; better-than-
average operating efficiency; and adequate and improving asset
quality ratios," said Standard & Poor's credit analyst Daniel
Araujo.
Parana Banco is a small niche bank, positioned 71st in Brazil,
with assets of Brazilian reais (BrR) 464 million ($209 million)
as of September 2005-less than 1% of total bank assets in the
Brazilian banking industry.
Parana Banco's niche is payroll discount lending, representing
about 98% of its credit operations, primarily to public-sector
employees. The bank is a relevant part of a broader conglomerate
(J. Malucelli) and represented around 30% of the group's
consolidated net income of BrR94 million in 2004. We do not
assign ratings to any company in the J. Malucelli group, and the
ratings assigned to the bank do not incorporate potential
support from shareholders.
The stable outlook reflects our expectations that Parana Banco
will maintain its core competencies in the medium term, with
profitability at current satisfactory levels and asset-quality
ratios in a positive trend (mainly by adding lower-risk assets-
INSS loans-to its portfolio). The bank is also expected to
maintain efficiency indicators at good levels, with the ratio of
nonfinancial expenses to revenues between 40% and 50%.
The outlook may be changed to positive or ratings may be raised
if the bank shows superior growth in its niche operations in
payroll-discount loans with consistent returns, stronger-than-
anticipated improvements in asset quality indicators, the
maintenance of a stable and more diversified funding base, and
less dependence on the Group's resources. On the other hand, the
ratings may be lowered or the outlook may be revised to negative
if there is a significant worsening in asset quality to levels
higher than 5%; if profitability (ROAA) levels drop drastically;
and if funding and liquidity becomes problematic to support the
bank's operations.
Primary Credit Analyst: Beatriz Degani, Sao Paulo
(55) 11-5501-8933; beatriz_degani@standardandpoors.com
Secondary Credit Analyst: Tamara Berenholc, Sao Paulo
(55) 11-5501-8950; tamara_berenholc@standardandpoors.com
VARIG: Gets to Keep Fleet Until Jan. 12
---------------------------------------
A New York bankruptcy court ruled Wednesday Brazil's flagship
airline, Viacao Aerea Riograndense SA (Varig), will be able to
keep its fleet intact until at least Jan. 12 so long as it makes
payments to aircraft leasing companies this month.
Judge Robert Drain of the Bankruptcy Court of the Southern
District of New York turned down requests from AWAS Aviation
Services Inc., GATX Corp. and Wells Fargo & Co. to order Varig
to return planes for non-payment of leases, "cannibalization" of
parts, and delays in Varig's Brazilian bankruptcy proceedings.
"I see the need to move with speed here, which is why it's being
extended today only by roughly three weeks," Drain said,
scheduling another hearing for Jan. 12.
Judge Drain's ruling requires Varig to make US$18.3 million of
payments to the leasing companies before the next hearing. All
of Varig's 77 aircraft are operated under some form of lease,
according to court documents filed by Varig Dec. 19.
VARIG: New York Court Approves Gecas Accord
-------------------------------------------
Varig has secured approval from a New York bankruptcy court on
its agreement to pay US$6.46 million to GE Commercial Aviation
Services LLC (Gecas).
According to Dow Jones Newswires, Gecas, a unit of General
Electric Co (GE), and Varig have previously disagreed over how
the funds in an escrow account held at JPMorgan should be paid
out.
The recent agreement states that cash received before Varig
filed for bankruptcy on June 17 should be paid to Gecas to
settle debts run up by the airline through leasing contracts
with the U.S. firm. Any money paid into an escrow account held
at JPMorgan should be paid to Varig.
The New York court said Varig must seek ratification from the
8th Commercial Court of the City of Rio de Janeiro, which is
managing the airline's bankruptcy process.
Gecas has previously said that Varig acknowledged debts of about
US$100 million in 2004, some of which have since been repaid.
Gecas said it no longer leases any aircraft to Varig.
* BRAZIL: Strengthens Creditworthiness - S&P
--------------------------------------------
Standard & Poor's Ratings Services has issued a commentary that
finds that the creditworthiness of the Federative Republic of
Brazil (BB-/Positive/B foreign, BB/Positive /B local currency
sovereign credit ratings) has strengthened over the past several
years due to a strong external performance that has surpassed
expectations and to the consolidation of fiscal dynamics, but
that strong policy backing is still required.
The article, entitled "Improving Creditworthiness in Brazil
Still Needs Strong Policy Backing In 2006" also reviews economic
projections for 2006. While Standard & Poor's expects key
indicators in Brazil to continue to strengthen over the course
of the next several years, this assumes a continued, firm
commitment on behalf of current and future governments.
According to Standard & Poor's credit analyst Lisa M.
Schineller, politics will dominate the discourse on Brazil in
2006. "Given allegations of corruption within the governing
coalition, the opposition has a greater opportunity to win the
presidency in October 2006," said Ms. Schineller. "Therefore
debate within the Partido dos Trabalhadores over the appropriate
policy stance has intensified, and is expected to continue to be
intense in the run-up to the election," she added. However, Ms.
Schineller noted that since President Inacio Lula da Silva
remains a competitive candidate, there will also be intense
political exchange between the government and the opposition
throughout the electoral period.
Preelection spending pressure generally impacts fiscal
performance in any democratic political system, and Standard &
Poor's expects Brazil's fiscal outturn in 2006 to be much closer
to, but not below, the established primary target. Although the
composition of spending is likely to deteriorate at the margin,
Standard & Poor's ratings and positive outlook assume no
imprudent policy actions by the Lula Administration.
Ms. Schineller explained that boosting exports and investment
would enhance Brazil's medium-term growth prospects, as would
less rigidity in the country's fiscal accounts and a
rationalization of current spending-which would support a faster
decline in real interest rates. "Electoral politicking, however,
essentially precludes progress on such fiscal policy measures
over the near term," noted Ms. Schineller. "A key challenge for
the next administration will be another reform of social
security for the private sector, as these accounts continue to
be pressured by increases in the minimum wage. In the meantime,
sound policy by the Lula Administration is key to insulating the
economy from political pressures ahead of the 2006 election and
to keep creditworthiness on an improving track," she concluded.
Primary Credit Analyst: Lisa M Schineller, New York
(1) 212-438-7352; lisa_schineller@standardandpoors.com
Media Contact: David Wargin, New York
(1) 212-438-1579; david_wargin@standardandpoors.com
===========================
C A Y M A N I S L A N D S
===========================
CIBELES RV: To Lay Winding Up Accounts Before Jan. 16 Meeting
-------------------------------------------------------------
CIBELES RV FUND
(In Voluntary Liquidation)
(The "Company")
The Companies Law (2004 Revision)
Pursuant to section 145 of the Companies Law (2004 Revision),
the final general meeting of the shareholder of this Company
will be held at the offices of Deloitte, Fourth Floor, Citrus
Grove, P.O. Box 1787, George Town, Grand Cayman, on 16th January
2006 at 10:00 am.
Business:
1. To lay accounts before the meeting showing how the winding up
has been conducted and how the property has been disposed of to
the date of the final winding up on 16th January 2006.
2. To authorize the liquidators to retain the records of the
Company for a period of five years from the dissolution of the
Company, after which they may be destroyed.
Proxies: Any person who is entitled to attend and vote at this
meeting may appoint a proxy to attend and vote in his stead. A
proxy need not be a member or creditor.
CONTACT: STUART SYBERSMA
Joint Voluntary Liquidator
Contact for enquiries: Nicole Ebanks, Deloitte
P.O. Box 1787 GT, Grand Cayman
Cayman Islands
Telephone: (345) 949-7500
Facsimile: (345) 949-8258
COROMANDEL INTERNATIONAL: Sets Final General Meeting for Jan. 12
----------------------------------------------------------------
COROMANDEL INTERNATIONAL LIMITED
(In Voluntary Liquidation)
Companies Law (2004 Revision)
Pursuant to section 145 of the Companies Law (2004 Revision),
the final general meeting of the above-mentioned company will be
held at the offices of RSM Cayman Islands, at 7 Dr. Roy's
Drive, Commerce House, Second Floor, George Town, Grand Cayman,
on 12th January 2005, for the purpose of presenting to the
members an account of the winding up of the company and giving
any explanation thereof and to authorize the liquidator to
retain the records of the Company for a period of five years
from the dissolution of the Company after which they may be
destroyed. Any person who is entitled to attend and vote at this
meeting may appoint a proxy to attend and vote on their behalf.
Such proxy need not be a member or a creditor. In the event you
cannot attend in person and wish to attend in proxy, please
contact the Liquidator at the below noted address to arrange for
a proxy.
CONTACT: KENNETH KRYS
Voluntary Liquidator
Contact for enquiries: Kenneth Krys & Simone Tomkins
P.O. Box 1370 GT
Grand Cayman, Cayman Islands
Telephone: (345) 949-7100
Facsimile: (345) 949-7120
COROMANDEL TREND: Winding Up Accounts to be Presented Jan. 2
------------------------------------------------------------
COROMANDEL TREND FUND LIMITED
(In Voluntary Liquidation)
Companies Law (2003 Revision)
Pursuant to section 145 of the Companies Law (2003 Revision),
the final general meeting of the above-mentioned company will be
held at the offices of The Firm, at The Firm's office, George
Town Street, George Town, Grand Cayman, on the 2nd January 2005
for the purpose of presenting to the members an account of the
winding up of the company and giving any explanation thereof and
to authorize the liquidator to retain the records of the Company
for a period of five years from the dissolution of the Company
after which they may be destroyed. Any person who is entitled to
attend and vote at this meeting may appoint a proxy to attend
and vote on their behalf. Such proxy need not be a member or a
creditor. In the event you cannot attend in person and wish to
attend in proxy, please contact the Liquidator at the below
noted address to arrange for a proxy.
CONTACT: KENNETH KRYS
Voluntary Liquidator
Contact for enquiries: Kenneth Krys & Simone Tomkins
P.O. Box 1370 GT, Grand Cayman
Cayman Islands
Telephone: (345) 949-7100
Facsimile: (345) 949-7120
CYDONIA CAPITAL: Winding Up Accounts to be Presented Jan. 13
------------------------------------------------------------
CYDONIA CAPITAL, LTD.
(In Voluntary Liquidation)
The Companies Law (2004 Revision)
NOTICE is hereby given pursuant to Section 145 of the Companies
Law (2004 Revision) that the final general meeting of the sole
shareholder of the above-named company will be held at Williams
House, 20 Reid Street, Hamilton HM 11, Bermuda, on 13th January
2006, at 11:00 am, for the purpose of presenting to the members
an account of the winding up of the Company and for hearing any
explanation thereof.
CONTACT: OLYMPIA CAPITAL (CAYMAN) LIMITED, Voluntary Liquidator
Williams House, 20 Reid Street
Hamilton HM 11, Bermuda
HI CAYMAN: To Present Account on Wind Up to Members Jan. 6
----------------------------------------------------------
HI Cayman GP Ltd.
(In Voluntary Winding Up)
The Companies Law (2004 Revision)
Section 145
NOTICE is hereby given pursuant to Section 145 of the Companies
Law that the final general meeting of HI Cayman GP Ltd. will be
held at 200 Crescent Court, Suite 1600, Dallas, Texas 75201, on
January 6, 2006 at 10:00 a.m. for the purpose of presenting to
the members an account of the winding up of the Company and
giving any explanation thereof.
CONTACT: Mr. David W. Knickel, Voluntary Liquidator
c/o Stuarts Walker Hersant, Attorneys-at-Law
P.O. Box 2510GT, Cayman Financial Centre
36A Dr. Roy's Drive, George Town
Grand Cayman, Cayman Islands
KINGS POINT: To Lay Accounts on Liquidation Jan. 13
---------------------------------------------------
Kings Point International Fund Ltd.
(In Voluntary Liquidation)
The Companies Law (As Amended)
Pursuant to Section 145 of the Companies Law (as amended), the
final meeting of the shareholders of the Company will be held at
the registered office of the Company on January 13, 2006 at 1:30
p.m.
Business:
To lay accounts before the meeting, showing how the winding up
has been conducted and how the property has been disposed of, as
at final winding up on January 13, 2006.
To authorize the liquidators to retain the records of the
Company for a period of five years from the dissolution of the
Company, after which they may be destroyed.
Proxies: Any person who is entitled to attend and vote at this
meeting may appoint a proxy to attend and vote in his stead. A
proxy need not be a member or a creditor.
CONTACT: John Cullinane and Derrie Boggess
Joint Voluntary Liquidators
c/o Walkers SPV Limited
Walker House, P.O. Box 908
George Town, Grand Cayman
PERU PRIVATISATION: To Report on Wind Up Process Jan. 26
--------------------------------------------------------
Peru Privatisation Fund Advisory Services Company Limited
(In Voluntary Liquidation)
The Companies Law (2004 Revision)
Pursuant to section 145 of the Companies Law (2004 Revision),
the final general meeting of the shareholders of Peru
Privatisation Fund Advisory Services Company Limited will be
held at the offices of Deloitte, Fourth Floor, Citrus Grove,
P.O. Box 1787, George Town, Grand Cayman, on January 26, 2006 at
10:00 a.m.
Business:
1. To lay accounts before the meeting showing how the winding up
has been conducted and how the property has been disposed of to
the date of the final winding up on January 26, 2006.
2. To authorize the liquidators to retain the records of the
Company for a period of five years from the dissolution of the
Company, after which they may be destroyed.
Proxies: Any person who is entitled to attend and vote at this
meeting may appoint a proxy to attend and vote in his stead. A
proxy need not be a member or creditor.
CONTACT: Mr. Stuart Sybersma, Joint Voluntary Liquidator
Joshua Taylor, Deloitte
P.O. Box 1787 GT, Grand Cayman
Cayman Islands
Telephone: (345) 949-7500
Facsimile: (345) 949-8258
THE MACRO: To Show Manner of Liquidation to Members Jan. 27
-----------------------------------------------------------
The Macro Fund Limited
(In Voluntary Liquidation)
The Companies Law (2004 Revision)
Pursuant to section 145 of the Companies Law (2004 Revision),
the final general meeting of the shareholders of The Macro Fund
Limited will be held at the offices of Deloitte, Fourth Floor,
Citrus Grove, P.O. Box 1787, George Town, Grand Cayman, on
January 27, 2006 at 10:00 a.m.
Business:
1. To lay accounts before the meeting showing how the winding up
has been conducted and how the property has been disposed of to
the date of the final winding up on January 27, 2006.
2. To authorize the liquidators to retain the records of the
Company for a period of five years from the dissolution of the
Company, after which they may be destroyed.
Proxies: Any person who is entitled to attend and vote at this
meeting may appoint a proxy to attend and vote in his stead. A
proxy need not be a member or creditor.
CONTACT: Mr. Stuart Sybersma, Joint Voluntary Liquidator
Joshua Taylor, Deloitte
P.O. Box 1787 GT, Grand Cayman
Cayman Islands
Telephone: (345) 949-7500
Facsimile: (345) 949-8258
===================================
D O M I N I C A N R E P U B L I C
===================================
* DOMINICAN REPUBLIC: Fitch Monitoring Domestic Bonds
-----------------------------------------------------
Fitch Ratings commented Wednesday on the repayment situation of
the Dominican Republic's peso-denominated 104-99 bonds issued
domestically. Fitch rates the Dominican Republic as follows:
--Foreign Currency Issuer Default Rating 'B-';
--Local Currency Issuer Default Rating 'B';
--Rating Outlook Stable.
In 1999, the Dominican government issued DOP3.7 billion of peso-
denominated bonds for a term of six years at an annual interest
rate of 7%, payable quarterly, to repay official debt owed to
government suppliers and contractors, as well as other
liabilities. While the quarterly interest payments were paid,
with occasional delays, principal repayment upon maturity on
Nov. 9, 2005 was delayed due to administrative constraints.
According to the authorities, the clearing and settlement system
was not efficient enough to pay the large volume of bondholders
outstanding, which prompted them to issue a schedule of
repayment depending upon the series of bond held, spread over a
one-month period beginning on Nov. 9, 2005 and ending on Dec. 9,
2005.
Furthermore, although the current administration only included
the necessary financial resources to pay back 50% of the bonds
outstanding in its 2005 budget and local bond issuance to cover
the remaining 50% (120-05 bonds) with an authorized issuance
date in December, the authorities have assured Fitch that given
the better than budgeted fiscal performance, sufficient
liquidity exists to pay this entire obligation. Although the law
approved for the issuance of these bonds does not explicitly
state a grace period for payment of interest and principal, it
does clearly state that any unpaid interest and principal can be
used against the payment of fiscal liabilities. Moreover, Fitch
understands that most purchasers of the bonds when issued in
1999 understood that at least part of the debt service would be
made in this manner.
The repayment situation has been complicated further by a recent
judicial order to stop payment on DOP568 million of 104-99 bonds
issued during the presidential transition period (between May
16, 2004 and Aug. 16, 2004) pending a criminal investigation. In
addition, private agents have, through a judge, issued
restraining or withholding payment orders on the payment of
approximately DOP200 million of these bonds. Neither the state-
owned bank, Banco de Reservas, or the Finance Ministry can make
payment until these orders are lifted; however, the Finance
Ministry has the financial resources for the payment of these
bonds in a special account at Banco de Reservas. Furthermore,
according to local sources, bondholders have the option of
resolving the non-payment situation by utilizing the Dominican
legal process and requesting a judge to lift the stop payment
order, an option that to date has been utilized by only a
limited number of bondholders. As of Dec. 12, the government has
paid all bondholders that have claimed their payment at Banco de
Reservas and were not affected by the judicial orders, as well
as DOP9 million to bondholders that have been authorized by the
District Attorney to lift the stop payment, as they were able to
prove that they acquired their bonds in the secondary market
with no knowledge of the problem involved.
CONTACT: Theresa Paiz Fredel +1-212-908-0534, New York
MEDIA RELATIONS: Christopher Kimble, New York
Tel: +1 212-908-0226
=====================
E L S A L V A D O R
=====================
BANCO SALVADORENO: Ratings Reflect Vulnerable Asset Quality
-----------------------------------------------------------
Rationale
Standard & Poor's Ratings Services' ratings on Banco Salvadoreno
S.A. are constrained by its vulnerable asset quality and low
reserve coverage of NPAs, which is also the case for other banks
in the country. The ratings are also constrained by the
relatively small size and limited diversification of El
Salvador's economy and strong competition. The ratings are
supported by the bank's satisfactory market position,
diversified portfolio, adequate performance, and lower exposure
to real state-related loans than that of peers.
Asset quality is regarded as vulnerable due to the risk of
operating in a relatively small and undiversified economy and
the shortage of provisions to fully cover loans that have proven
problematic. Although historically the bank has reported
adequate indicators of nonperforming loans (NPLs), standing at
1.9% as of September 2005, the balance of NPAs is high. NPAs are
comprised of NPLs, restructured loans, repossessed assets, and
Ficafe, and reached 11.4% of total loans at September 2005.
Nevertheless, Banco Salvadoreno has a lower exposure to real
estate-related loans, including mortgages and construction
loans; however, the bank has a higher exposure than its peers to
foreclosed assets. We maintain our concern regarding Banco
Salvadoreno's reserve shortage to fully cover potential losses
related to the significant balance of NPAs. In this context,
although reserves fully covered delinquent loans and foreclosed
assets are more than 50% covered, the ratio of total reserves to
total NPAs weakens to 24%. Under market turmoil, asset quality
could be pressured further, affecting operating performance.
Although Banco Salvadoreno faces important competition, mainly
from the two largest banks in the country-Banco Agr¡cola and
Banco Cuscatl n, it has been able to maintain its position as
the third-largest commercial bank in El Salvador with a 17%
market share in terms of deposits and loans. There have been
important organizational changes to address the main challenges
that the bank faces and improve the financial profile of the
bank. A new president was hired in 2004, sending a clear message
of an advance on division of functions, decreasing foreclosed
assets and the necessity of improving asset quality. In
addition, there was a capital increase of $11.2 million in 2004
in the bank to strengthen capitalization and of $16.5 million
injected into the holding company. In our opinion, Banco
Salvadoreno has the challenge of differentiating itself from its
peers while strengthening its originating and underwriting
processes to avoid losing market share.
Banco Salvadoreno's loan portfolio is adequately diversified by
industry. Slow economic growth in El Salvador has slowed down
the bank's credit expansion, particularly in the commercial
segment. To compensate that, the bank has focused on increasing
its consumer business. In our view, slow loan growth will
continue since the economy is expected to expand moderately.
Profitability is adequate for the rating level, as ROA has been
sustained at about 1% in the past three years despite decreasing
net interest margins by increasing fees and commissions;
however, it remains lower than that of its closest peers. A more
conservative policy toward provisioning the balance of
problematic assets could result in lower profitability levels.
Another opportunity area for the bank to maintain profitability
levels is efficiency, an area the bank is working on. In our
opinion, the bank has to work harder to maintain its position in
the market given a more competitive environment.
The bank has historically maintained capitalization levels
slightly above regulatory requirements. As of August 2005,
capital was at 12.66%, which is similar to that of peers, while
the adjusted common equity-to-asset ratio stood at 9.89%, which
is also similar to that of peers. Given slow expected loan
growth and reported ROEs of 10%, internal capital generation
should finance future growth.
Outlook
The outlook reflects our opinion that the bank's strategies and
adequate operations should maintain profitability at adequate
levels in a stable economic environment. An economic downturn or
the continuation of slow growth in the Salvadorian economy,
however, could affect the bank's overall performance, putting
pressure on the ratings. Market share loss or deterioration of
the bank's financial stand could also pressure the ratings. The
ratings could go up if there is a strong development in economic
conditions, along with a sustainable improvement in asset
quality (including restructured loans and repossessed assets)
and profitability, and if capital ratios are higher than those
of its closest peers.
Primary Credit Analyst: Leonardo Bravo, Mexico City
(52)55-5081-4406; leonardo_bravo@standardandpoors.com
Secondary Credit Analyst: Francisco Suarez, Mexico City
(52) 55-5081-4474; francisco_suarez@standardandpoors.com
=============
J A M A I C A
=============
AIR JAMAICA: Seeks to Extend Flying Time
----------------------------------------
Air Jamaica is trying to come up with a revised business plan
that would expand plane routes and boost flying time, states the
Observer Reporter.
On December 16, 2005, Air Jamaica's recently appointed chairman
O K Melhado signaled a review of the business model crafted only
months ago.
To better amortize the investment in the aircraft, the Company
is seeking for ways to keep its planes flying longer hours.
According to the chairman, the Company's completely realistic
objective is to fly the planes up to 12 hours a day.
"What it means is a lot of rethinking of our schedules - finding
ways to add frequency of routes that we are on, and expanding.
That requires proper research before you do these things,"
Melhado said.
Malhado informed that Air Jamaica intends to unveil a revised
business plan in the first quarter of 2005.
Senior executives including new chief executive officer Mike
Conway were unavailable for comment at the weekend.
Melhado's announcement of a review surprised analysts, coming so
soon after Dr. Vin Lawrence's departure from the job he assumed
last December to step down as executive chairman. Melhado, a
long-time Air Jamaica board member, was elevated to the
chairman's seat in October to replace Lawrence.
Under Lawrence, Air Jamaica announced that it would cut its
fleet to 14 and as a consequence, slashed several routes. More
than 100 flight attendants and several pilots also lost their
jobs. Most service frills were to be cut in the slimmed down
carrier.
Simultaneously, the government announced that it would provide
US$30 million a year to Air Jamaica to meet specific debt
payments. The airline was able to raise a US$300 million
government-backed bond to write-down debt and meet operating
costs.
Lawrence had several times pointed out that the airline has
stabilized, saying that it had settled on its business plan,
around which it has structured its fleet.
However, a year of downsizing and job cuts in a bid to squeeze
itself into profitability did not help the Company from averting
a loss of over $8 billion this year.
In 2004, Air Jamaica lost $6.25 billion (US$99 million).
According to Sunday Observer sources, the airline is projecting
another $8.1 billion (US$130 million) in red ink this year.
Melhado attributed the big chunk of this year's loss to the
Jamaica Civil Aviation Authority's (CAA) grounding of half of
the Company's then 20-lane fleet for maintenance at the prodding
of America's Federal Aviation Administration (FAA).
The government reacquired the carrier in December 2004 after a
decade of AJAG private control with the expressed mandate to
formulate a plan to slash losses and place Air Jamaica on a
route to profitability.
When Gordon "Butch" Stewart's AJAG owned a 75% share in Air
Jamaica, the Company accumulated losses of US$800 million.
Stewart blamed these primarily on problems early on.
The Americans, dissatisfied with Jamaica's ability to regulate
its civil aviation, had limited Air Jamaica's ability to fly new
planes or to open new routes in the USA. There was also the
post-9/11 fall-out in the aviation industry that sent several
major carriers into bankruptcy.
Air Jamaica normally flies 14 planes. However, its fleet is
currently 17, including an Airbus A321 jet it had sub-leased to
an Irish charter company, but which it was forced to take back
temporarily because of the Irish firm's inability to meet its
business projections because of soft winter traffic.
It is expected that the aircraft will be returned from Ireland
in May next year. In the meantime, the plane is primarily used
for flights to Canada.
Because the plain is reconfigured for operation in Europe
including having all its setting in metric, it is flown by Irish
crews, who are based in Jamaica. Jamaican crews are not
certified to fly the aircraft. The financial arrangement
covering this was not immediately clear.
TOUCHPOINT CENTRES: Goes Belly Up, Taps Receiver to Oversee Sale
----------------------------------------------------------------
Touchpoint Centres International Jamaica Limited is now in
receivership, according to The Jamaica Observer. The Company's
main creditor, the National Investment Bank of Jamaica (NIBJ),
confirmed the receivership, saying that Touchpoint collapsed
after it lost a major client and failed to secure another to
replace the revenue stream.
"Touchpoint Centres International (Jamaica) Limited lost its
major client in September 2005 and decided to close its
operations," said NIBJ President Rex James.
James revealed Ken Tomlinson of Business Recovery Services
Limited has been appointed receiver and will oversee the sale of
Touchpoint's assets to interested parties.
Touchpoint bought the assets of the defunct IT firm NetServ in
2002. According to reports, Touchpoint had made a down payment
of $27 million and had secured a loan from NIBJ, payable over
seven years at 4.25% per year as the basis for the acquisition
of the NetServ operation.
The NIBJ had required Touchpoint to make the cash down payment
in order to clear NetServ's $28.2-million (US$600,000) debt to
the American computer supplier, Activelink, which had supplied
it with computer equipment.
It is not clear how much of the debt to NIBJ, Touchpoint paid
during the three years that it operated the IT center. The debt
should have been paid off between September 2002 and September
2009.
However, a review of NIBJ's financial statements up to March
2004, (the most recent available) did not mention any payments
made except for $229,000 in 2003.
===========
M E X I C O
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BALLY TOTAL: Revisions Do Not Impact 2005 Financial Statements
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Bally Total Fitness Corporation, (NYSE:BFT), stated Wednesday
that it filed Tuesday an amendment to its third quarter 10-Q for
the period ended September 30, 2005. This amendment did not
change the previously reported consolidated balance sheets,
statements of operations, statements of cash flows or the
related notes as filed with the SEC on November 30, 2005.
This amended filing corrected the amount of cash collections of
membership revenue cited in Management's Discussion and Analysis
of Financial Condition and Results of Operations for the three
months ended September 30, 2005, which had inadvertently
included personal training revenue. The cash collections of
membership revenue described in Management's Discussion and
Analysis of Financial Condition and Results of Operations for
the nine-month period ended September 30, 2005 reported in the
10-Q was and remains correct.
Bally Total Fitness is the largest and only nationwide
commercial operator of fitness centers in the U.S., with nearly
440 facilities located in 29 states, Mexico, Canada, Korea,
China and the Caribbean under the Bally Total Fitness(R), Crunch
Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally
Sports Clubs(R) and Sports Clubs of Canada (R) brands. Bally
offers a unique platform for distribution of a wide range of
products and services targeted to active, fitness-conscious
adult consumers.
CONTACT: Bally Total Fitness
Janine Warell (Investors)
Phone: 773-864-6897
or
Matt Messinger (Media)
Phone: 773-864-6850
CALPINE CORP: Files Chapter 11 to Facilitate Restructuring
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Calpine Corporation (OTC Pink Sheets: CPNL) announced Tuesday
that, in order to allow continued operations at its power plants
and facilities in the U.S., Canada, and Mexico, strengthen its
balance sheet, protect its assets, and enhance the value of its
business, the company and many of its subsidiaries, including
Calpine Generating Company, LLC, filed voluntary petitions to
restructure under Chapter 11 of the U.S. Bankruptcy Code in the
U.S. Bankruptcy Court for the Southern District of New York in
Manhattan.
The Company also announced Tuesday that certain of its direct
and indirect subsidiaries and affiliates in Canada intend to
file for creditor protection under the Companies' Creditors
Arrangement Act ("CCAA").
In conjunction with the filing, Calpine has received commitments
for up to $2 billion of secured debtor-in-possession (DIP)
financing from Deutsche Bank and Credit Suisse First Boston,
joint lead arrangers and joint bookrunners. The financing
includes a $1 billion revolving credit facility and a $1 billion
term loan. Upon Court approval, the financing, combined with
cash from operations, will be used to fund post-petition
operating expenses, including employee and supplier obligations.
Calpine emphasized that normal operations will continue during
the restructuring process. "Our plan calls for power plants to
remain available for operation to provide reliable supplies of
electricity," said Robert P. May, Calpine's Chief Executive
Officer. "We intend to move through this restructuring process
as quickly as possible to regain our financial health and to
take the necessary steps to become a stronger and more
competitive energy provider. With our new financing we will have
additional financial flexibility and sufficient liquidity to
meet our obligations going forward."
"We believe that Calpine needs to change its business model in
light of the ongoing evolution of competitive power markets and
our current financial condition," May said. "Although the
company has taken numerous steps to reduce its debt and
strengthen its balance sheet through asset sales and other
means, these actions were not sufficient to offset the cost of
Calpine's substantial debt obligations.
"After careful consideration of all available alternatives,
Calpine's Board of Directors determined that a Chapter 11 filing
was a necessary and prudent step and the best way to obtain the
financing necessary to maintain regular operations, and allow
for a successful restructuring," said May. "Calpine has a strong
foundation in place, with high quality assets and a professional
and experienced workforce. Chapter 11 protection will provide us
with the ability to address our financial challenges without
disrupting our ability to continue to provide reliable power
supplies to the markets in which we operate."
As a routine matter, Calpine has asked the Court for
authorization to continue paying employee wages and salaries,
providing benefits without interruption, and expects the Court
to grant that request. During the restructuring process, Calpine
will continue to evaluate all opportunities to strengthen its
balance sheet and enhance operating cash flow, including asset
sales and reductions in operating and overhead costs.
In addition, Calpine has petitioned the court to reject certain
of its contracts, including power sales agreements in which the
price paid to Calpine for electricity is significantly below its
cost or market prices. The company expects its power plants will
continue to be available to meet the needs of electricity
consumers in all of its service areas.
The Chapter 11 filing does not affect the tender offer to
purchase up to $400 million of the outstanding 9-5/8% First
Priority Senior Secured Notes due in 2014 (the "Offer") that
commenced on December 1, 2005. As previously announced, the
Offer will remain open until 12:00 midnight, New York City Time,
on December 29, 2005, unless extended or earlier terminated.
The company has established a toll-free restructuring
information line for employees, suppliers, customers, investors
and other interested parties, 1-866-504-6370. More information
on Calpine's restructuring is also available on the company's
web site, http://www.calpine.com.For access to Court documents
and other general information about the Chapter 11 cases, please
visit http://www.kccllc.net/calpine.
A major power company, Calpine Corporation supplies customers
and communities with electricity from clean, efficient, natural
gas-fired and geothermal power plants. Calpine owns, leases and
operates integrated systems of plants in 21 U.S. states and in
three Canadian provinces. Its customized products and services
include wholesale and retail electricity, gas turbine components
and services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services. Calpine was founded in 1984.
CONTACT: Calpine Corporation
Katherine Potter
Tel: +1-408-792-1168
E-mail: kpotter@calpine.com
Kent Robertson
Tel: +1-408-794-2416
E-mail: kentr@calpine.com
CALPINE CORP: Fitch Downgrades IDR to 'D' on Bankruptcy Filing
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Fitch Ratings has downgraded Calpine Corp.'s (CPN) issuer
default rating (IDR) to 'D' from 'CC' following the company's
filing of Chapter 11 bankruptcy on Dec. 20, 2005. The Negative
Rating Outlook is removed. Ratings on CPN and unit Calpine
Canada Energy Finance ULC (senior unsecured debt guaranteed by
CPN) remain unchanged as follows:
--First-priority secured notes 'B/RR1';
--Second-priority secured notes 'B-/RR1';
--Senior unsecured and convertible notes 'CC/RR5'.
The debt instrument ratings and recovery ratings reflect Fitch's
analysis of the ultimate recovery prospects of individual
creditor classes following the bankruptcy process. The recovery
analysis for CPN was published by Fitch on Dec. 1, 2005. Based
on this analysis, Fitch estimates strong recovery prospects in
the range of 90% to 100% of par value for the First-priority and
Second-priority secured notes, and rather weak recovery
prospects, in the range of 11% to 30% of par, for the senior
unsecured and convertible note holders.
CPN's decline has been over a protracted period of time and
Fitch expects little disruption to the power markets from its
demise. At the same time, with approximately 28,000 megawatts of
net generating capacity in operation, CPN remains a major
supplier of power in certain regions such as Texas and
California and a large counterparty to many utilities and
municipal, cooperative and public power entities. Many of CPN's
power sales agreements are at prices significantly below market
and already California has petitioned the FERC to compel CPN to
continue to supply power in accordance with the original terms.
Fitch will continue to monitor the credit and market
implications of CPN's bankruptcy
CONTACT: Hugh Welton +1-212-908-0746, New York
Glen Grabelsky +1-212-908-0577, New York
Justin Bowersock +1-312-368-3151, Chicago
MEDIA RELATIONS: Brian Bertsch, New York, Tel: +1 212-908-0549
DESC: Tight Financial Flexibility Prompts S&P Ratings
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Rationale
The ratings on Desc S.A. de C.V. (Desc) are limited by its tight
financial flexibility due to its debt's terms and conditions,
the continued weakness of its auto parts business, and the
inherent risks of commodity price volatility across its core
business lines. The ratings are supported by the favorable
operating environment for chemical producers in North America
and the success of the company's asset sale program. The rating
also benefits from the positive performance of Desc's food
business, which is expected to build on the improvements made
during the past two years.
Desc is a diversified holding company and one of the largest
companies in Mexico. Through its subsidiaries, it participates
in the auto parts, chemical, food, and real estate sectors.
Standard & Poor's Ratings Services anticipates that Desc will
continue with its asset sale program, particularly in the auto
parts and real estate business, in order to strengthen its
financial position and financial flexibility, as evidenced by
the company's recent announcement that it has signed a letter of
agreement to sell its piston business, Pistones Moresa S.A. de
C.V., to Kolbenschmidt Pierburg AG. Along with the recent
announcement that it has signed a letter of intent to acquire
Dana Corp.'s 49% stake in the manual transmission businesses, as
well as the joints and seals aftermarket businesses, while
selling to Dana its 51% stake in the axle, propeller shaft,
gear, and forging businesses, as well as its 67% stake in the
foundry business. These transactions are expected to close
during the first quarter of 2006. We expect the company to use
the majority of the funds resulting from such transactions
toward debt payment and the strengthening of its main
businesses.
A stronger balance sheet could set the stage for a new business
strategy aimed at pursuing growth opportunities in Mexico's
industrial sector; nevertheless, in light of Desc's modest free
operating cash flow generation, we do not anticipate any major
investments over 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.
Desc's consolidated results reflect the progress of the
company's efforts to improve its operating performance and
strengthen its financial position. Through the successful
completion of a capital increase of $2.7 billion pesos (about
$240 million) and other sources of liquidity, the company has
reduced its total debt by $400 million since year-end 2003. The
aforementioned has had a positive impact on Desc's key financial
ratios. For the past 12 months as of the end of the third
quarter of 2005, the company posted EBITDA interest coverage,
total debt-to-EBITDA, and FFO-to-total debt ratios of 2.4x,
3.2x, and 23.2%, respectively, which compare favorably to the
2.0x, 4.2x, and 2.7% posted in the same period a year before.
However, weakness in the automotive sector results continues to
weigh on the company's operating and financial performance, and
the outlook, like that of other auto parts producers in North
America, remains challenging. The food sector is expected to
build on the improvement trend in place since 2003, and the
expectation for further positive performance also reflects the
continued growth in the packaged and prepared foods business in
Mexico.
The aforementioned, coupled with the positive environment for
the chemical industry in North America, should offset the
continued weakness in the company's auto parts business, which
along with planned asset sales should allow the company to
continue to reduce its debt and improve its financial
performance. We believe that by year-end 2005, Desc could post
EBITDA interest coverage, total debt-to-EBITDA, and FFO-to-total
debt ratios of about 3.0x, 3.0x, and 35%, respectively.
Nevertheless, weakness in the company's top line and asset sales
program could prevent the expected improvements in Desc's
financial performance.
Liquidity
Desc's liquidity has improved. The company's liquidity is
supported by $50 million, $61 million in cash, and a comfortable
debt maturity profile of $52 million for the next 12 months as
of the end of the third quarter. Liquidity should also be
supported by the continued success of the company's asset sale
program.
The company recently completed the refinancing of its bank debt
through a $375 million syndicated loan, representing almost 60%
of Desc's total consolidated debt, significantly improving its
debt profile, with the next significant debt maturity of $134
million until 2009. However, the issuer's ability to tap new
sources of liquidity is limited given the heavy liens on the
company's assets under its syndicated facilities. The company is
currently in compliance with its financial covenants, and
covenant headroom should improve as its debt reduction plans
move forward.
Outlook
The stable outlook reflects Standard & Poor's expectations of a
moderate improvement in Desc's operating performance and debt
reduction through asset sales that should result in an improved
cash flow generation. The aforementioned, if coupled with an
improvement in the company's liquidity, particularly its debt
maturity schedule and a release of liens, could lead to a
positive rating action. Deterioration in the company's key
financial ratios (particularly if its EBITDA interest coverage
ratio moves below 2.0x and its total debt-to-EBITDA ratio
approaches 4.0x) and/or further weakness in the company's
liquidity would lead to a negative rating action.
Primary Credit Analyst: Federico Mora, Mexico City
(52) 55-5081-4436; federico_mora@standardandpoors.com
Secondary Credit Analyst: Jose Coballasi, Mexico City
(52)55-5081-4414; jose_coballasi@standardandpoors.com
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P U E R T O R I C O
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CENTENNIAL COMMUNICATIONS: Completes $550M Senior Notes Offering
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Centennial Communications Corp. (NASDAQ: CYCL) ("Centennial")
announced Wednesday that it has completed its offering of $550
million in aggregate principal amount of senior notes due 2013.
The senior notes were issued in two series consisting of (i)
$350 million of floating rate notes that will bear interest at
three-month LIBOR plus 5.75% and mature in January 2013 and (ii)
$200 million of fixed rate notes that will bear interest at 10%
and mature in January 2013.
As previously disclosed, Centennial will use the net proceeds
from the offering, together with a portion of its available
cash, to pay a special cash dividend of $5.52 per share to
Centennial's common stockholders and prepay approximately $39.5
million of borrowings under its senior secured credit facility.
Centennial's board of directors has approved and declared the
special cash dividend of $5.52 per share to Centennial's common
stockholders of record as of the close of business on December
30, 2005. The payment date for the special cash dividend is
expected to be on January 5, 2006.
In connection with the completion of the senior notes offering,
Centennial received an amendment to its senior secured credit
facility to permit, among other things, the issuance of the
senior notes and payment of the special cash dividend.
For U.S. federal income tax purposes, Centennial expects that no
more than 10% of the special cash dividend will be taxable as a
dividend. The remainder will be treated first as a tax-free
return of capital up to each stockholder's tax basis in the
Company's common stock (determined on a per share basis) with
any excess generally being treated as a capital gain.
The senior notes offering was conducted pursuant to Rule 144A
under the Securities Act of 1933, as Amended (the "Securities
Act"), and outside the United States in accordance with
Regulation S under the Securities Act. The issuance of the
senior notes was not registered under the Securities Act and the
senior notes may not be offered or sold in the United States
absent registration or an applicable exemption from registration
requirements. This press release shall not constitute an offer
to sell or a solicitation of an offer to buy, any securities,
nor shall there be any sale of securities mentioned in this
press release in any state in which such offer, solicitation or
sale would be unlawful prior to registration or qualification
under the securities laws of any such state.
Centennial Communications (NASDAQ: CYCL), based in Wall, NJ, is
a leading provider of regional wireless and integrated
communications services in the United States and the Caribbean
with over 1.3 million wireless subscribers and 326,400 access
lines and equivalents. The U.S. business owns and operates
wireless networks in the Midwest and Southeast covering parts of
six states. Centennial's Caribbean business owns and operates
wireless networks in Puerto Rico, the Dominican Republic and the
U.S. Virgin Islands and provides facilities-based integrated
voice, data and Internet solutions. Welsh, Carson, Anderson &
Stowe and an affiliate of the Blackstone Group are controlling
shareholders of Centennial.
CONTACT: Centennial Communications Corp.
Steve E. Kunszabo
Director, Investor Relations
Phone: 732-556-2220
URL: http://www.centennialwireless.com/
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T R I N I D A D & T O B A G O
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BWIA: Operating Expenses Widen on Rising Fuel Costs
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National airline BWIA saw its operating expenses widen from
US$71.9 million to US$78.9 million from July to September due to
a US$6.2 million increase in fuel costs, according to Peter
Clarke, West Indies Stock Exchange chief executive officer.
As a result, BWIA's operating profit dropped 80%, from US$4.1
million to US$830,000.
Clarke also revealed that the value of BWIA's stocks also fell
during the third quarter, possibly because investors were
uncertain what the Trinidad and Tobago government intended to do
to rescue the airline.
In October, the government agreed to inject US$250 million into
the cash-strapped airline on condition the Company be
restructured. Last month, the carrier appointed a new board and
chief executive officer.
"If the new board implements stringent cost-cutting measures,"
the airline could begin its turnaround in mid-2006, Clarke said.
CONTACT: BRITISH WEST INDIES AIRWAYS (BWIA)
Phone: + 868 627 2942
E-mail: mail@bwee.com
Home Page: http://www.bwee.com
***********
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
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Maryland USA. John D. Resnick, Edem Psamathe P. Alfeche and
Sheryl Joy P. Olano, Editors.
Copyright 2005. All rights reserved. ISSN 1529-2746.
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