/raid1/www/Hosts/bankrupt/TCRLA_Public/060424.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
Monday, April 24, 2006, Vol. 7, Issue 80
Headlines
A R G E N T I N A
BANCO HIPOTECARIO: Posts Issuance of US$250 Million in Bonds
GROKOP DE BLUMENKRATZ: Deadline for Claims Submission Is May 16
INTECA S.A.: Last Day for Submission of Claims Is May 19
REDLUJO ENTERTAINMENT: Seeks Reorganization Approval from Court
REPSOL YPF: Retains Majority Stake in Argentine Unit
SAPEGO S.A.: Trustee Stops Accepting Claims After May 2
* ARGENTINA: Finnish Minister Cancels Visit Due to Mill Conflict
* ARGENTINA: Pres. Seeks Additional 90-Day Construction Delay
* ARGENTINA: Wants Oil & Gas Companies to Increase Reserves
B E R M U D A
PXRE GROUP: COO Guy Hengesbaugh Leaving Company by July
B O L I V I A
BANCO MERCANTIL: Expects Merger with Banco Santa Cruz by Yearend
COMIBOL: Argues with British Firm Over Control of Minera Huanuni
B R A Z I L
ABN AMRO REAL: Incorporating Bandepe Under Real Banner by May 2
BANCO NACIONAL: Approves BRL497.1 Mil. Financing to Volkswagen
BANCO NACIONAL: Grants BRL20.5 Million Loan to Agua Doce
BANCO SCHAHIN: Earns BRL38.4 Million in Fiscal Year 2005
BRASIL TELECOM: Projects 50,000 Customers Switching to Flat Rate
BRASKEM: Inks Accord with Suzano Petroquimica to Buy Politeno
BRASKEM SA: Cautioned by Analysts on Joint Venture with Pequiven
CENTRAIS ELECTRICAS: Expanding Power Supply Program Abroad
COMPANHIA FORCA: Raises US$46 Mil. from Voting Shares Issuance
COMPANHIA VALE: Chinese Association Criticizes 24% Price Hike
NOSSA CAIXA: Moves Auction of Savings Bonds Unit to May 17
PETROLEO BRASILEIRO: Announces Supplementary Pension Plan
PETROLEO BRASILEIRO: Board Okays Petroquisa Shares Incorporation
* BRAZIL: May Tap on Hydroelectric Reserves Due to Gas Reduction
C A Y M A N I S L A N D S
ALMATIS DEBT 2: Liquidator Will Present Report on May 8
ALMATIS DEBT 3: Shareholders' Final Meeting Scheduled for May 8
ALMATIS DEBT 4: Liquidator to Present Wind Up Accounts on May 8
BREADFRUIT INVESTMENTS: Sets July 17 as Claims Filing Deadline
CAYMAN ASSET: Final Shareholders General Meeting Set for May 3
C H I L E
FALCONBRIDGE: Projects 475,000 Tons of Copper Output for 2006
C O L O M B I A
BANCAFE: Government Will Form New Firm Out of State Bank
C O S T A R I C A
* COSTA RICA: Faces Complaints on Oil Program in Puntarenas
D O M I N I C A N R E P U B L I C
AES CORP: Latin America Units Contribute US$1B to 2005 Profits
E C U A D O R
* ECUADOR: Works on Salvaging Free Trade Deal with U.S.
G U A T E M A L A
* GUATEMALA: Plans to Implement Daylight Saving Time Until Sept.
H A I T I
* HAITI: Government Plans to Join Venezuela's PetroCaribe
J A M A I C A
KAISER ALUMINUM: Asks Court to Okay AIG Settlement Agreement
KAISER: District Court Sets Confirmation Hearing for May 11
* JAMAICA: Government May Quit Jamaica Public Service Company
M E X I C O
DIRECTV: Sets Apr. 25 Tender Offer Deadline for US$300M Notes
NUEVO LEON: Moody's Upgrades Local Currency Issuer Rating to Ba3
P A N A M A
* PANAMA: Expansion of Waterway Expected to Create 240 Jobs
P A R A G U A Y
* PARAGUAY: Will be Asked to Drop Claims Against US Trade Deal
P U E R T O R I C O
AOL LATIN: Files Monthly Operating Report for March 2006
OCA INC: Court Okays KPMG's Retention as Tax Accountants
OCA INC: Has Interim Access to Bank of America's Cash Collateral
MUSICLAND HOLDING: Donlin Approved as Panel's Information Agent
T R I N I D A D & T O B A G O
DIGICEL: Supports Arbitration Panel's Jurisdiction on Rates
U R U G U A Y
* URUGUAY: US$300M Bond Initial Offering Raised to US$500M
V E N E Z U E L A
CITGO PETROLEUM: Holds Meeting with Recipients of Discounted Oil
PETROLEOS DE VENEZUELA: Inks Joint Venture with 16 Oil Firms
PETROLEOS DE VENEZUELA: Appoints Mixed Co. Staff on Efficiency
* VENEZUELA: Seniat Will Bill Orinoco Oil Projects In 3 Months
* VENEZUELA: Seeks Congressional Approval on US$1.4B Bond Sale
* VENEZUELA: Withdraws from South American Trade Bloc
- - - - -
=================
A R G E N T I N A
=================
BANCO HIPOTECARIO: Posts Issuance of US$250 Million in Bonds
------------------------------------------------------------
Banco Hipotecario, an Argentine mortgage bank, reported to local
securities regulator CNV that it issued US$250 million in
10-year bonds, Business News Americas reports.
According to BNamericas, the company issued the series 5 bonds
at 99.217% of their nominal value and will yield a 9.75% nominal
annual interest rate.
BNamericas reveals that the issue forms part of a larger US$1.2
billion bond program, which started on April 3. The ADR program
was launched to begin trading stocks on the over-the-counter or
OTC market to raise the liquidity of Banco Hipotecario's shares
as well as its visibility among international investors.
BNamericas states that analysts were positive that the bank
could replace up to 55% of a US$1 billion debt restructured in
January 2004 if the bond issue and a recently launched tender to
repurchase up to US$165 million of its US dollar and euro-
denominated bonds in cash are successful.
* * *
On Jan. 25, 2006, Standard & Poor's Ratings Services assigned
'B-' foreign currency senior unsecured debt rating to Banco
Hipotecario S.A.'s $100 million issuance. The issuance
constituted the second tranche of BH's Series IV notes due Nov.
16, 2010, issued under the $1.2 billion senior unsecured global
MTN program. With this issuance, the series (whose first
tranche was rated 'B-' on Nov. 16, 2005) will total US$250
million. At the same time, Standard & Poor's affirmed its
ratings on the Argentine bank's outstanding debt and its 'B-
/Stable/--' counterparty credit ratings. S&P said the outlook
is stable.
* * *
As reported in the Troubled Company Reporter on March 28, 2006,
Standard & Poor's Ratings Services raised the foreign and local
currency counterparty credit ratings on Banco Hipotecario S.A.
At the same time, Standard & Poor's placed the ratings on
several Argentine entities on CreditWatch with positive
implications. These rating actions follow the upgrade on the
Republic of Argentina.
S&P raised the global foreign and local currency ratings on
Argentina to 'B' from 'B-' and the ratings on the national scale
to 'raAA-' from 'raA', reflecting Argentina's improved external
and fiscal flexibility.
The outlook on the sovereign rating is stable.
S&P's transfer and convertibility risk assessment for Argentina
was raised to 'BB-', two notches higher than Argentina's foreign
currency rating.
S&P raised the rating on Banco Hipotecario one notch to
'B/Stable/--', in tandem with the sovereign upgrade on
Argentina, reflecting the close linkage between the credit
quality of the sovereign and that of its financial system.
* * *
As reported in the Troubled Company Reporter on April 12, 2006,
Standard & Poor's Argentine arm placed a raD rating on Banco
Hipotecario S.A.'s US$500,000,000 Series in default include
under the global program of Cedulas Hipotecarias.
GROKOP DE BLUMENKRATZ: Deadline for Claims Submission Is May 16
---------------------------------------------------------------
Creditors against Grokop de Blumenkratz Clara are required to
submit proofs of claim by May 16, 2006, Infobae reports. The
claims will undergo a verification phase. Claims that are
verified will then be submitted in court as individual reports
on June 29, 2006.
A general report, which will contain the company's audited
business records as well as a summary of events pertaining to
the liquidation, will be presented in court on August 25, 2006.
Grokop De Blumenkratz was declared bankrupt by a Buenos Aires
court. Francisco Jose Matias Costa was appointed as trustee.
The trustee can be reached at:
Francisco Jose Matias Costa
Sarmiento 1562
Buenos Aires, Argentina
INTECA S.A.: Last Day for Submission of Claims Is May 19
--------------------------------------------------------
The last day for the submission of creditors' proofs of claim
against Inteca S.A., whose reorganization progressed into
bankruptcy, is on May 19, 2006, Infobae reports. Adelma Elena
Paez, the court-appointed trustee, will verify the claims.
The San Miguel de Tucuman court ordered the trustee to prepare
individual reports after the verification process is completed,
and have them ready by Aug. 1, 2006. A general report on the
bankruptcy process is expected on Sep. 26, 2006.
The trustee can be reached at:
Adelma Elena Paez
San Martin 650
San Miguel de Tucuman, Tucuman
REDLUJO ENTERTAINMENT: Seeks Reorganization Approval from Court
---------------------------------------------------------------
Buenos Aires' Court No. 6 is currently reviewing the merits of
the reorganization petition filed by Redlujo Entertainment S.A.
Argentine daily La Nacion reports that the company filed the
request after defaulting on its debt payments since April 11,
2006.
The reorganization petition, if granted by the court, will allow
Redlujo Entertainment to negotiate a settlement with its
creditors in order to avoid a straight liquidation. Clerk No.
12 assists the court on this case.
The debtor can be reached at:
Redlujo Entertainment
Santa Fe 830
Buenos Aires, Argentina
REPSOL YPF: Retains Majority Stake in Argentine Unit
----------------------------------------------------
Repsol YPF S.A. will retain a majority stake in its YPF unit,
Chairman Antonio Brufau was quoted by Dow Jones Newswires as
saying.
According to Dow Jones, Mr. Brufau informed Argentine employees
that the company will always retain an ample majority stake in
the Argentine unit even if it will accept partners through the
sale of some assets or a minority stake in the YPF unit.
A spokesman also confirmed reports that Repsol will not
dissociate the Argentine unit.
Dow Jones states that the chairman also said both Repsol and YPF
units will continue to operate under the Grupo Repsol-YPF
holding.
The company is studying an option to float a small YPF stake in
the Argentine markets, Mr. Brufau told Dow Jones.
* * *
On June 20, 2005, Moody's Investors Service upgraded the ratings
of Spanish-Argentine oil company Repsol YPF's local subsidiary
YPF S.A. Moody's upgraded YPF's senior unsecured rating to Ba3
from B1 and the unit's domestic currency issuer rating to Baa2
from Baa3.
YPF's foreign currency issuer rating of Caa1 remained unchanged,
as it is constrained by the sovereign ceiling of Argentina.
YPF's Corporate Family Rating (formerly known as the senior
implied rating) is aligned with the foreign currency issuer
rating at Caa1.
SAPEGO S.A.: Trustee Stops Accepting Claims After May 2
-------------------------------------------------------
Elisa Esther Tomattis, trustee appointed by the Buenos Aires
court for the bankruptcy of Sapego S.A., will no longer accept
claims that are submitted after May 2, 2006, Infobae reports.
Creditors whose claims are not validated will be disqualified
from receiving any payment that the company will make.
Individual reports on the validated claims will be presented in
a Buenos Aires court on June 14, 2006. The submission of the
general report will follow on Aug. 9, 2006.
The debtor can be reached at:
Sapego S.A.
15 de Noviembre de 1889
Numero 1695
Buenos Aires, Argentina
* ARGENTINA: Finnish Minister Cancels Visit Due to Mill Conflict
----------------------------------------------------------------
Finland's Foreign Trade and Development Minister -- Paula
Lehtomaki -- has cancelled her scheduled visit to Buenos Aires
due to the pulp mill conflict between Argentina and Uruguay,
Merco Press reports.
Merco Press states that Ms. Lehtomaki's scheduled visit next
week was set a long time ago. The visit was aimed at further
developing the economic relations between Finland and Argentina.
However, the visit was called off when Argentine President
Nestor Kirchner claimed that Finland is not making any effort to
solve the pulp mill conflict, Merco Press relates. According to
an official Finnish release, there is a feeling that the Ms.
Lehtomaki is not welcome.
Merco Press recalls that the Argentine president accused Finland
of not doing anything when Finnish company Botnia refused to
halt construction of the pulp mill for 90 days. Argentina had
requested the halt to make way to an assessment on the pulp
mill's environmental impact.
The Finnish government insisted that the disagreement between
Argentina and Uruguay has overshadowed the positive purposes of
the visit, Merco Press states.
Ms. Lehtomaki will be visiting Chile, Peru and Uruguay, to
promote economic relations, trade and investments. She is also
scheduled to visit the Botnia pulp mill plant under construction
in the river Uruguay, Merco Press relates.
* * *
Fitch Ratings assigned these ratings on Argentina:
Rating Rating Date
------ -----------
Country Ceiling RD Dec. 14, 2005
Long Term IDR B Dec. 14, 2005
Short Term IDR B- Jun. 3, 2005
Local Currency
Long Term Issuer
Default Rating B Jun. 3, 2005
* * *
Fitch Ratings assigned these ratings on Uruguay:
Rating Rating Date
------ -----------
Country Ceiling BB- Mar. 7, 2005
Long Term IDR B+ Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB- Mar. 7, 2005
* ARGENTINA: Pres. Seeks Additional 90-Day Construction Delay
-------------------------------------------------------------
Another 90-day suspension on the construction of the Argentine-
Uruguayan pulp mills has been called by Argentina's President
Nestor Kirchner, Merco Press reports.
President Kirchner revealed to Merco Press that an environmental
impact assessment must be made on the plants so that the
conflict between his country and Uruguay could be put to rest.
Firms Botnia of Finland and Ence of Spain, who are responsible
for the construction, has been once again asked to halt
construction activities.
"I'm only asking for 90 days to give time for an environment
impact report," President Kirchner told Merco Press.
However, a Botnia spokesperson informed Merco Press that the
construction will continue and described Argentina's request for
suspension as unfounded and not justified since the plant is
abiding by the most advanced technological and environmental
standards.
The spokesperson revealed to Merco Press that halting the
construction would lead to serious damages not only to the
company, which has contracts to honour, but also to the
Uruguayan economy and the 2,000 plus workers at the plant. The
environmental impact assessment report could be completed with
the pulp mill functioning.
According to Merco Press, Botnia believes in dialogue and that
it will be handing all the information required by the Argentine
government as construction advances.
"We have no contacts with the Argentine government but there's a
fluid exchange with Finland's representatives both in Buenos
Aires and Montevideo," the company told Merco Press.
* * *
Fitch Ratings assigned these ratings on Argentina:
Rating Rating Date
------ -----------
Country Ceiling RD Dec. 14, 2005
Long Term IDR B Dec. 14, 2005
Short Term IDR B- Jun. 3, 2005
Local Currency
Long Term Issuer
Default Rating B Jun. 3, 2005
* * *
Fitch Ratings assigned these ratings on Uruguay:
Rating Rating Date
------ -----------
Country Ceiling BB- Mar. 7, 2005
Long Term IDR B+ Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB- Mar. 7, 2005
* ARGENTINA: Wants Oil & Gas Companies to Increase Reserves
-----------------------------------------------------------
The Argentine government will demand oil and gas companies to
increase their reserves, the Merco Press quoted Planning
Minister Julio de Vido as saying.
The minister and one of President Kirchner's closest aides
specifically mentioned Repsol-YPF, Petrobras and Chevron Corp.
"We're convinced that geologically Argentina has a greater
potential capacity than that shown by the reserves of the
companies. There must be an increase in exploration resources to
expand production," Mr. de Vido said in an interview with Buenos
Aires daily Pagina.
"Repsol-YPF, Petrobras and Chevron reserves must increase their
reserves," contrary to other oil and gas companies operating in
Argentina such as Total, Pan American Enerby, Wintershall and
Oxy, "which have increased their reserves," Mr. de Vido told
Pagina. "If some can manage it, the others must also. We're not
going to tolerate asymmetries. Several companies have reacted
to Argentina's economic growth recovering reserves, but others
haven't."
Mr. De Vido emphasized that these companies will have to improve
their management, technology and investment, "because they are
compelled to do so according to contract."
Merco Press says that the minister recalled several companies in
four years managing to increase reserves by as much as 52%,
while others dropped 20%, "and this happened in neighbouring
fields, which obviously means more investment is needed."
Finally, Minister De Vido forecasted that Argentina will not
face energy shortages this coming winter and "there will be no
repeat of the 2004 crisis," Merco Press relates.
"In energy terms there's nothing to spare but we'll face winter
with the same calm as in 2005. We managed the last three years,
the 2006 summer with record energy consumption, so I'm convinced
the system will resist, even with another year with the economy
expanding 9%," Mr. de Vido said.
* * *
Fitch Ratings assigned these ratings on Argentina:
Rating Rating Date
------ -----------
Country Ceiling RD Dec. 14, 2005
Long Term IDR B Dec. 14, 2005
Short Term IDR B- Jun. 3, 2005
Local Currency
Long Term Issuer
Default Rating B Jun. 3, 2005
=============
B E R M U D A
=============
PXRE GROUP: COO Guy Hengesbaugh Leaving Company by July
-------------------------------------------------------
PXRe Group Ltd. disclosed that its chief operating officer, Guy
Hengesbaugh, has given notice that he'll leave the company in
the next three months, the Royal Gazette reports.
The downgrades of PXRe's credit ratings due to hurricane losses
in 2005, resulted to the loss of about one-third of its
customers, the Gazette says.
In a regulatory filing, the PXRe didn't disclose any reason for
Mr. Hengesbaugh's decision to quit.
In January, the company's chief financial officer John Modin
also resigned.
Under the terms of a January agreement that renewed Mr.
Hengesbaugh's contract for two years, he is due to receive two
times his US$425,000 salary if he leaves for good cause, the
Gazette relates.
Also under that agreement, Mr. Hengesbaugh's stock awards will
vest immediately, and he could still get a bonus and continue to
receive employee benefits and housing allowance for a year after
he quits, the Gazette says.
With operations in Bermuda, Europe and the United States, PXRE
-- http://www.pxre.com/-- provides reinsurance products and
services to a worldwide marketplace. The Company's primary
focus is providing property catastrophe reinsurance and
retrocessional coverage. The Company also provides marine,
aviation and aerospace products and services. The Company's
shares trade on the New York Stock Exchange under the symbol
"PXT."
* * *
PXRE carries Standard & Poor's and A.M. Best's BB- credit
ratings. The Company's senior unsecured debt has a BB rating
from Fitch.
=============
B O L I V I A
=============
BANCO MERCANTIL: Expects Merger with Banco Santa Cruz by Yearend
----------------------------------------------------------------
Bolivia's Banco Mercantil expects its merger with Banco Santa
Cruz to occur at the end of 2006, Alfonso Alvarez -- head of the
Santa Cruz media relations told Business News Americas.
Under the Bolivian banking law, a bank can acquire another bank
only if it aims to merge the two institutions.
As reported in the Troubled Company Reporter on April 20, 2006,
Banco Mercantil purchased a 96.7% stake in Banco Santa Cruz from
Spanish banking group Santander for US$38 million.
Mr. Alvarez informed BNamericas that the merger must be done
gradually and that it requires time for the process to be
completed.
No brand for the new institution has been decided, BNamericas
relates. However, Mr. Alvarez said that a new unified brand is
likely to emerge as Banco Mercantil wants to maintain both
brands -- as they are well known and respected in Bolivia.
BNamericas states that the new bank will become the largest bank
in Bolivia with about US$1 billion worth of assets.
* * *
As reported in the Troubled Company Reporter on April 5, 2006,
Moody's Investors Service upgraded the long-term global local-
currency deposit ratings of Banco Mercantil S.A. to B2 from
Caa1; and the national scale rating for local currency deposits
to Aa2.bo from A1.bo. All ratings have a stable outlook.
COMIBOL: Argues with British Firm Over Control of Minera Huanuni
----------------------------------------------------------------
Bolivia's state mining company Corporacion Minera de Bolivia
aka Comibol and British RBG Resources Plc are arguing over
control of Minera Huanuni, a Bolivian tin producer, Business
News Americas reports.
BNamericas relates that the conflict is centered on the plan of
Playa Verde, a mining cooperative, to purchase US$1.7 million
worth of shares in Minera Huanuni that RGB owns through the firm
Grand Thorton.
A Comibol official told BNamericas, "This is an irregular deal
between the mining cooperative and the British company, which
went bankrupt and had a joint venture contract with Comibol to
mine the deposit."
BNamericas recalls that Huanuni was surrendered to British
Allied Deals in 1999 in a joint venture accord. However, the
shares were transferred to its subsidiary RBG Resources due to
legal problems.
Local press states that when the new RBG Bolivian subsidiary --
RBG Minera Huanuni -- was created, it was discovered that 99% of
the joint venture firm's shares went to the subsidiary.
Comibol, according to reports, was not consulted about the
change in share structure and there was no written approval for
the deal.
BNamericas relates that Comibol currently holds Huanuni due to
court intervention while RGB is facing a case for failing to
make the stipulated investments.
On June 2004, a ruling by a high court based in London closed
down RBG when fraud accusations went public, BNamericas states.
Now RBG is allegedly selling its 99% share through Thorton.
An official from the Bolivian mining ministry revealed to
BNamericas that a judge's resolution regarding the legal return
of Huanuni to Comibol and the validity the Thorton accord with
the Playa Verde cooperative would be disclosed. The judge is
yet to make a decision.
However, there is no deadline for the lawsuit, nor is there a
timeline for a resolution that would authorize Comibol to work
in Huanuni, Pascual Huarachi -- president of mining cooperative
Fencomin aka Federacion de Cooperativas Mineras -- told
BNamericas.
The director was quoted by BNamericas saying that Comibol could
not work as the case goes on. He also said that if work
continues at Huanuni, it automatically has to be a joint venture
with the cooperatives.
* * *
Fitch Ratings assigns these ratings on Bolivia:
Rating Rating Date
------ -----------
Country Ceiling B- Jun. 17, 2004
Long Term IDR B- Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating B- Dec. 14, 2005
===========
B R A Z I L
===========
ABN AMRO REAL: Incorporating Bandepe Under Real Banner by May 2
---------------------------------------------------------------
Banco ABN Amro Real S.A. -- the Brazilian unit of ABN Amro Bank
-- will incorporate its regional banking unit Banco de
Pernambuco SA aka Bandepe under its Banco Real banner as of May
2, local press was quoted by Business News Americas.
The incorporation will cost 15 million reals (US$6.93 million),
according to the papers.
Bandepe was the former state bank of Pernambuco, which was
privatized in 1998 after the Dutch company bought it.
"We are opening eight branches in the north and northeast this
year," local financial daily Valor Economico quoted Banco Real's
executive for the two regions, Carlo Mantovani, as saying.
"The north and northeast accounted for 15% of ABN Amro's
earnings in Brazil last year. We want to grow 25% in the regions
this year," Mr. Mantovani said.
ABN Amro Real's net profits nationwide reached 1.44 billion
reals in 2005, 16% above the previous year.
ABN Amro also controls local bank Sudameris SA.
* * *
On Oct. 19, 2005, Moody's Investors Service upgraded Banco ABN
Amro Real S.A.'s long-term foreign currency deposit rating to B1
from B2. Moody's maintained a positive outlook on the rating.
This action followed Moody's upgrade of Brazil's foreign
currency ceiling for deposits to B1, from B2, and the foreign
currency country ceiling for bonds and notes to Ba3, from B1.
The country ceilings have a positive outlook.
BANCO NACIONAL: Approves BRL497.1 Mil. Financing to Volkswagen
--------------------------------------------------------------
The board of Banco Nacional de Desenvolvimento Economico e
Social or BNDES approved a financing of BRL497.1 million to
Volkswagen do Brasil. The funds, which correspond to 54% of
total investments of BRL920.9 million, will be destined to
expand the production of Fox and CrossFox vehicles, to update
the model designs and to improve the productive process at the
plants in Anchieta, Taubate and Sao Carlos, in the state of Sao
Paulo.
The production of Fox vehicles at the plants in Sao Jose dos
Pinhais and in Sao Bernardo do Campo is destined to the domestic
market and exports to Latin America and Europe. The project on
plant improvements includes investments in Volkswagen do
Brasil's production line of motors, in order to meet the
environmental law.
Volkswagen's investments financed by BNDES throughout recent
years allowed an expansion in exports of Brazilian vehicles,
including trucks and buses, thereby increasing the domestic car
industry presence in the international market. The vehicles
present high nationalization rates. The project and development
of Fox and new Gol models have been carried out by Brazilian
professionals.
Volkswagen began its activities in Brazil over 50 years ago.
Presently, it owns five operating units installed in the states
of Sao Paulo, Rio de Janeiro and Parana, with capacity to
produce over 1 million vehicles annually. Having about 22
thousand employees, it produced 645 thousand vehicles in 2005,
of which 266 thousand were destined to exports. The company,
which ranks fifth among Brazilian exporters, accounted for 3.2%
of Brazilian trade surplus for last year.
Throughout the 90's decade, carmakers invested in Brazil about
US$16.5 billion, which allowed a significant increase in the
productive capacity installed, presently estimated at 3.2
million annually. In 2005, the production of vehicles reached
2.3 million units, an increase of 10.5% in relation to 2004.
Such expansion was due to 5% increase in the domestic demand and
25% growth in exports.
* * *
As reported in the Troubled Company Reporter on March 3, 2006,
Standard & Poor's Ratings Services raised its foreign currency
counterparty credit rating on Banco Nacional de Desenvolvimento
Economico e Social S.A. aka BNDES to 'BB' with a stable outlook
from 'BB-' with a positive outlook. The company's local
currency credit rating was also shifted to 'BB+' with a stable
outlook from 'BB' with a positive outlook.
BANCO NACIONAL: Grants BRL20.5 Million Loan to Agua Doce
--------------------------------------------------------
Bnamericas reports that Banco Nacional de Desenvolvimento Economico
e Social SA aka BNDES granted Agua Doce a BRL20.5 million loan for
the establishment of the 90-MW wind power project in southern
Brazil.
The project's site is in Santa Catarina. Local wind power firm
Central Nacional de Energia Ealicia is the one developing the
project, which has an estimated total investment of BRL29.2
million.
A power incentive program called Proinfa by the federal
government was established and the project is said to be
included in the program. Under a 20-year contract, the power
generated will be sold to the state power holding company
Eletrobas.
Commercial operations for Agua Doce are scheduled to start in
October. Aneel disclosed that this project is one of fourteen
wind projects that are scheduled to come online for this year.
The fourteen projects total to 548 MW in capacity, all are under
the Proinfa program.
However, only five projects were cleared to go online, which
only has a combined capacity of 208 MW.
* * *
As reported by Troubled Company Reporter on March 3, 2006,
Standard & Poor's Ratings Services raised its foreign currency
counterparty credit rating on Banco Nacional de Desenvolvimento
Economico e Social S.A. aka BNDES to 'BB' with a stable outlook
from 'BB-' with a positive outlook. The company's local
currency credit rating was also shifted to 'BB+' with a stable
outlook from 'BB' with a positive outlook.
BANCO SCHAHIN: Earns BRL38.4 Million in Fiscal Year 2005
--------------------------------------------------------
Brazilian bank Banco Schahin earned BRL38.4 million in 2005, a
111% increase compared to the BRL18.2 million earnings in 2004.
The bank attributed the increase on strong retail loan growth.
The bank's loan portfolio topped BRL1.2 billion for the year,
51% above 2004.
Retail loans -- including personal loans, auto loans and payroll
loans -- accounted for 54% of the bank's loan portfolio, up from
34% in 2004.
Loans to businesses fell to 46% of all loans compared to 66% in
2004.
Return on equity for last year came in at 22% and total assets
topped BRL1.26 billion, up 31% from 2004.
Business News Americas says that last week, the bank began a
US$15 million bond issue on the international capital markets.
Schahin started issuing short-term notes in 2004 and has since
raised US$100 million.
* * *
As reported on Jan. 31, 2006, Standard & Poor's Ratings Services
assigned on Jan. 26, 2006, its 'B' foreign-currency long-term
senior unsecured debt rating to Banco Schahin S.A.'s US$20
million notes to be issued on Jan. 30, 2006, under the US$100
million short-term note program. The issue matures in two years
with semiannual payments.
"The counterparty credit rating on Banco Schahin S.A.
(B/Stable/B) reflects the intrinsic risks of a small bank facing
the challenge of growing its business while maintaining adequate
funding in the increasingly competitive banking market; the weak
credit quality of its remaining wholesale portfolio that,
despite improvement, is still worse than that of its major
peers; and like all the banks that operate in the same market,
the margin pressure related to retail lending," said Standard &
Poor's credit analyst Tamara Berenholc.
BRASIL TELECOM: Projects 50,000 Customers Switching to Flat Rate
----------------------------------------------------------------
Brazil's third largest fixed line operator Brasil Telecom
Participacoes SA expects 50,000 of its 1.2 million dial-up
Internet customers to switch to its new Internet All Hours
service, broadband and data communications manager Ildeu Borges
told Business News Americas.
Mr. Borges sees that the overall dial-up figure of 1.2 million
users is likely to drop slightly or remain about the same in
2006. "There is some migration to broadband, but this is
compensated by new dial-up customers," BNamericas relates.
BNamericas says that on the broadband side, Brasil Telecom
expects to end 2006 with 1.4 million users, up 40% compared to
the 1 million users registered at year-end 2005.
"It is a difficult task to increase penetration, which in Brazil
is low due to the social conditions of the country. Only 15% of
the population are socioeconomic class A and B, the natural
target for broadband," Mr. Borges told BNamericas. "Compared to
some European countries such as Spain we have already reached a
high level of penetration within this target market. Now we are
trying to reach the upper level of class C."
Mr. Borges believes that in order to achieve his company's goal
this year, they could either lower prices and lower costs, or
increase PC penetration across Brazil, BNamericas relates.
When asked by BNamericas about broadband competition, Mr. Borges
said that the company faces little competition from Net
Servicos.
While Brasil Telecom offers Internet access to 1,200 cities and
lower-income clients, Net focuses on wealthier clients in a
small number of cities.
* * *
Brasil Telecom SA is controlled by Brasil Telecom Participacoes
SA which is the publicly-listed holding company for 10 fixed-
line operating companies located in the western, central, and
southern regions of Brazil and in the Federal District region.
Brasil Telecom Participacoes' local currency long-term debt
carries Fitch's BB+ rating.
BRASKEM: Inks Accord with Suzano Petroquimica to Buy Politeno
-------------------------------------------------------------
Braskem SA inked an agreement with Suzano Petroquimica, Sumitomo
Chemical and Itochu to acquire Politeno Industria e Comercio SA
for an initial value of US$111 million, Business News Americas
reports.
Politeno is located in the Camacari petrochemicals complex in
the northeastern state of Bahia, close to some of Braskem's
operations.
BNamericas relates that the final value of the transaction will
be defined within 18 months depending on Politeno's commercial
performance.
Braskem currently holds a 35% stake in Politeno. Once the
purchase is complete, Braskem will have 100% voting-right stake.
Of the agreed price, Suzano will keep about US$60.6 million
while the Japanese companies will divide US$50.7 million,
according to the companies' statements.
Braskem sees the acquisition paving an increase in the range of
petrochemicals products it produces in the country and is in
line with the company's expansion program.
BNamericas relates that Politeno has capacity to produce 360,000
tons a year of medium-density polyethylene but has been
operating at 88% of its full capacity. Braskem already has
plans to increase plant operation to 100% of capacity and invest
US$10 million to expand output capacity to 400,00t/y.
Suzano said in a statement that the sale reaffirms the company's
commitment to invest in Brazil's fast-growing petrochemicals
sector. It has recently concluded the acquisition of 100%
control of polypropylene producer Polibrasil and has a 33% stake
in Rio Polimeros, a 540,000t/y polypropylene plant.
BNamericas says that the announcement of Braskem's acquisition
comes a few days after federal energy company Petroleo
Brasileiro decided not to exercise its option to increase its
stake in Braskem in exchange for handing over other assets to
the private company.
Braskem will pay for Politeno's control using some of the
proceeds from a US$200 million perpetual bond issued this month.
Braskem -- http://www.braskem.com.br/-- is a thermoplastic
resins producer in Latin American, and is among the three
largest Brazilian-owned private industrial companies. The
company operates 13 manufacturing plants located throughout
Brazil, and has an annual production capacity of 5.8 million
tons of resins and other petrochemical products.
* * *
As reported in the Troubled Company Reporter on April 10, 2006,
Fitch Ratings and Standard& Poor's Ratings Services assigned
these ratings to Braskem S.A.:
Fitch Ratings Services:
-- BB- on the proposed offering of US$200 million senior
unsecured perpetual bonds to be issued.
Standard & Poor's Ratings Services:
-- BB on local- and foreign-currency corporate credit
ratings; and
-- BB on forthcoming US$200 million perpetual bonds.
BRASKEM SA: Cautioned by Analysts on Joint Venture with Pequiven
----------------------------------------------------------------
Analysts have cautioned Braskem SA on its plans to establish a
petrochemical complex with Petroquimica de Venezuela, S.A., aka
Pequiven, Dow Jones Newswires reports.
Dow Jones relates that the joint venture is estimated to cost
between US$1.5 billion to US$2 billion.
As reported in the Troubled Company Reporter on April 19, 2006,
the proposed project, the Jose Olefins Complex, contemplates the
construction of an ethylene cracker that will use natural gas as
its primary raw material and will have a globally competitive
scale with an annual production capacity in excess of 1.2
million tons, as well as the integrated production of
polyethylene and other second-generation petrochemicals.
According to Merrill Lynch analyst Frank McGann, the project
could serve as a vehicle for a longer-term growth at Braskem and
probably be cost competitive due to Venezuela's low natural gas
prices.
However, Mr. McGann also told Dow Jones the company still faces
risks that could offset the good points of the project. He said
that one obvious risk is the current turmoil with many
international projects in Venezuela.
Dow Jones states that the Venezuelan government has been tough
on foreign companies. It has imposed steep conditions and
contract overhauls on them. The foreign companies were forced
to move dozens of production contracts to new ones, which give
state oil firm PDVSA a majority stake. An incident of the
government's tough enforcement was when it ordered the temporary
closing of Mexican cement company Cemex for bookkeeping
irregularities.
Braskem's proposed venture with Pequiven could set an example
for other foreign companies to play by Venezuela's rules. Dow
Jones relates that Pequiven originally teamed up with Exxon
Mobile for this project but switched to Braskem after Exxon
expressed displeasure on Venezuela's ne oil policies. Pequiven
dropped Exxon for not meeting project timetables.
Chief executive Jose Grubisich of Braskem rejected apprehensions
on Venezuela's business situation, Dow Jones reports. Mr.
Grubisich has said that the advantages are bigger than the
risks. He added that all countries with cheap raw materials for
petrochemicals are more prone to risks than more stable
companies.
Despite his concerns on Braskem's venture with Pequiven, Mr.
McGann recommended a sell for Braskem's stock, adding that it
probably will show that it is as nimble as anybody in
negotiating in the irregular Venezuelan business environment,
Dow Jones relates.
Bear Stearns, on the other hand, said in a research note that
Braskem's controlling shareholder Odebrecht has already
established investments in Venezuela, hence, it is ready to take
on the project.
However, minority shareholders think that this project imposes a
higher risk than the proposed petrochemical project between
Brazil's state oil firm Petrobras and Ultra, a petrochemical
company that is a unit of Ultrapar Participacoes S.A., Dow Jones
states.
According to Dow Jones, Petrobras and Ultra plan to establish a
150,000-barrel-a-day day refinery that is to produce
petrochemicals using heavy oil as a base, while Braskem's base
is natural gas.
Petrobras' US$3.5 billion project, which is to be situated near
Rio de Janeiro, will start operations by 2011 or 2012, while
that of Braskem is expected to be operational by 2010 or 2011.
According to Bear Stearns, Braskem's project would have an edge
over that of Petrobras if it manages to operate before the
latter.
The target of Braskem's petrochemical project is directed
chiefly at exports to North America, Mr. Grubisich told Dow
Jones. He also added that this project does not signify that
the company is terminating its plans for another project with
Petrobras, which is a US$1.5 billion petrochemical complex
situated at the Brazil-Bolivia complex.
Another analyst at the Agora Senior brokerage in Rio de Janeiro,
Mr. Luiz Broad, told Dow Jones that if Braskem were able to find
another private sector partner and to make sure that Pequiven
had no majority stake in the project, then it would be able to
downplay the risks.
Braskem -- http://www.braskem.com.br/-- is a thermoplastic
resins producer in Latin American, and is among the three
largest Brazilian-owned private industrial companies. The
company operates 13 manufacturing plants located throughout
Brazil, and has an annual production capacity of 5.8 million
tons of resins and other petrochemical products.
* * *
As reported in the Troubled Company Reporter on April 10, 2006,
Fitch Ratings and Standard& Poor's Ratings Services assigned the
following ratings to Braskem S.A.:
Fitch Ratings Services:
-- BB- on the proposed offering of US$200 million senior
unsecured perpetual bonds to be issued.
Standard & Poor's Ratings Services:
-- BB on local- and foreign-currency corporate credit
ratings; and
-- BB on forthcoming US$200 million perpetual bonds.
CENTRAIS ELECTRICAS: Expanding Power Supply Program Abroad
----------------------------------------------------------
Business News Americas reports that Centrais Eletricas
Brasileiras SA aka Eletrobras plans to expand its power supply
expansion program outside of Brazil to other Latin American
nations.
The program known as the Power for Peace program, will be based
on the federal government's 9.5 billion-real (US$4.5 billion)
Light for All program, which aims to expand power supply to 10
million people in poor rural areas in Brazil by 2008, a company
spokesperson told BNamericas.
Under the proposed project, Eletrobras would manage and disburse
funds from the Inter-American Development Bank to power
distribution companies that would be responsible for laying the
extra power cables.
The Brazilian company estimates that each new connection in
Latin America could cost some US$2,000, Valor Economico
newspaper reported.
In Brazil, Eletrobras transfers subsidized funds and offers
subsidized loans to power distribution companies to carry out
the Light for All program. Aside from subsidies, companies
invest 15-30% of the program's value from their own resources
and also obtain tax breaks and subsidies from state governments,
BNamericas explains.
According to BNamericas, Eletrobras manages the whole program
for Brazil's federal government, negotiating everything from
loan conditions to the cost of each connection, which in Brazil
ranges from some 3,000-5,000 reals.
So far 2.5 million people in poor rural areas have received new
connections, according to the mines and energy ministry, as
quoted by BNamericas.
Eletrobras awaits congressional approval before implementing the
project outside of the country.
* * *
As reported on Nov. 15, 2005, Standard & Poor's Ratings Services
assigned its 'BB-' rating to Eletrobras - Centrais Eletricas
Brasileiras S.A.'s US$300 million unsecured and unsubordinated
notes due in 2015. The global scale corporate credit ratings at
'BB-' foreign currency and 'BB' local currency were also
affirmed. S&P said the outlook is positive.
COMPANHIA FORCA: Raises US$46 Mil. from Voting Shares Issuance
--------------------------------------------------------------
Brazilian power company Companhia Forca E Luz Cataguazes-
Leopoldina aka CFLCL realized 96.8 million reals (US$45.5
million) from a capital increase subscribed to by the company's
shareholders, the company said in a statement.
On February 21, the company issued 43.8 billion new voting right
shares to carry out the capital increase, of which shareholders
bought 42.5 billion shares.
The issuance raised the company's market cap to 380 million
reals from 280 million reals.
The additional capital will be used to pay the company's 300
million reals debts with banks.
Business News Americas relates that the company's total debt
stands at around 1 billion reals. Companhia Forca has been
restructuring its debt in the past two years, a program that
includes the sale of assets and replacement of old debt for new,
cheaper debt.
CFLCL controls five power distribution companies throughout the
country and a 50% stake in the 83MW Juiz de Fora gas-fired power
plant.
BNamericas says that this year, CFLCL plans to invest 250
million reals, mainly in expansion and maintenance of power
distribution operations of its five power distribution
subsidiaries.
* * *
As reported by Troubled Company Reporter on Nov. 9, 2005,
Standard & Poor's Ratings Services assigned its 'B+' foreign and
local currency corporate credit rating to Brazil-based electric
distribution company Companhia Forca e Luz Cataguazes-Leopoldina
in its global scale. The company's rating in Brazil national
scale is 'brBBB+'. The outlook is negative.
COMPANHIA VALE: Chinese Association Criticizes 24% Price Hike
-------------------------------------------------------------
China Iron and Steel Association has criticized the 24% price
increase for iron ore proposed by Companhia Vale do Rio Doce aka
CVRD, JR WU at Dow Jones reports.
According to Dow Jones, China's top steel association described
the price increase as inappropriate and that it was not in line
with standard ore-negotiation principles.
Shanghai Baosteel Group Corp. and other Chinese buyers are in
talks with suppliers BHP Billiton Ltd., Rio Tinto PLC and CVRD.
Last year, the iron-ore prices rose to 71.5%. Analysts say that
it is likely for the prices to go up another 20% in the
approaching contract year.
The Chinese association tagged CVRD's proposed price raise as
unacceptable, and commented that the price disclosure should
only be released after at least one agreement between an iron-
ore provider and a steelmaker has been reached, Dow Jones
relates.
The association also disclosed to Dow Jones that there is a slow
growth in the steel industry and low demand for iron ore. These
are evidenced by the overcapacity and oversupply in China's
steelmaking industry since the second half of 2005.
The slow growth in the industry is brought about by its shift
towards a balance after recent years of tightness when suppliers
expanded their output, which was consolidated with high prices
and profits in previous years, the association told Dow Jones.
Consideration of the interests of both parties is a very
important factor in achieving annual price negotiations for iron
ore. Chinese Premier Wen Jiabao said in reports that it is the
market that should set the prices, and should be set according
to commercial negotiations between the sellers and the buyers.
Reports circulated that the Chinese government has plans of
intervening in the iron-ore price talks and setting restrictions
on the price of iron-ore imports, Dow Jones says.
Headquartered in Rio de Janeiro, Brazil, Companhia Vale do Rio
Doce -- http://www.cvrd.com.br/-- engages primarily in mining
and logistics businesses. It engages in iron ore mining, pellet
production, manganese ore mining, and ferroalloy production, as
well as in the production of nonferrous minerals, such as
kaolin, potash, copper, and gold.
* * *
On Jan. 5, 2006, Fitch Ratings assigned a long-term foreign
currency rating of 'BB' to Vale Overseas Limited's proposed
US$300 million issuance due 2016. Vale Overseas is a wholly
owned subsidiary of Companhia Vale do Rio Doce, a large
diversified mining company located in Brazil. The notes are
unsecured obligations of Vale Overseas and are unconditionally
guaranteed by CVRD. The obligation to guarantee the notes
rank pari passu with all of CVRD's other unsecured and
unsubordinated debt obligations. Fitch expects the proceeds of
this issuance to be used for general corporate purposes and
primarily to pay down US$300 million of Vale Overseas' 9.0%
guaranteed notes due 2013.
Fitch also maintains these ratings for CVRD and CVRD Finance
Ltd., a wholly owned subsidiary of CVRD:
-- CVRD foreign currency rating: 'BB', Outlook Positive;
-- CVRD local currency rating: 'BBB' Outlook Stable;
-- CVRD national scale rating: 'AAA(bra)', Outlook Stable;
-- CVRD Finance Ltd.: series 2000-1 and series 2000-3:
'BBB';
-- CVRD Finance Ltd., series 2000-2 and series 2003-1: 'AAA'.
NOSSA CAIXA: Moves Auction of Savings Bonds Unit to May 17
----------------------------------------------------------
Nossa Caixa, Sao Paulo's state bank, has moved the auction of
the 51% stake in its savings bonds unit to May 17 from April 26
as advised by insurance regulator Susep, Business News Americas
reports.
BNamericas recalls that Susep had asked Nossa to delay the
auction to allow more time for the finalists -- local units of
Mapfre and Metlife -- to fulfill the minimum capital
requirements as set by Susep. Of the three named finalists,
only Icatu Hartford qualified.
The auction would start with a minimum price of BRL23.9 million,
BNamericas relates. After the auction, an additional offering
of up to 6% with a price per share depending on the size of the
winning bid for the 51% stake will be made to Nossa Caixa
shareholders.
Mapfre has asked the regulator to reconsider the decision it
made on the firm, according to local press.
A Mapfre spokesperson told BNamericas that the firm has no idea
why it was disqualified by Susep.
BNamericas relates that Mapfre, who holds a license to sell P&C
policies through Nossa Caixa branches, paid about BRL226 million
last May for a 51% stake in Nossa's life and pension unit -- 46%
above the minimum asking price.
The spokesperson was quoted by BNamericas saying that there has
been a misunderstanding due to a mix-up with the paperwork filed
with Susep.
Local press states that the Brazilian leftwing Workers' Party
aka PT intends to stop the auction. It has filed a suit in
federal court, claiming that the auction is unconstitutional.
Nossa, who had yet to receive any official document from the
court, made no comments, BNamericas reports.
* * *
On Oct. 19, 2005, Moody's Investors Service upgraded Banco Nossa
Caixa S.A.'s long-term foreign currency deposit rating to B1
from B2 with a positive outlook.
At the same time, the ratings agency upgraded Banco Nossa
Caixa's long-term foreign currency debt rating to Ba1 with a
stable outlook.
The action followed Moody's upgrade of Brazil's foreign currency
ceiling for deposits to B1, from B2, and the foreign currency
country ceiling for bonds and notes to Ba3, from B1. Moody's
said the country ceilings have a positive outlook.
PETROLEO BRASILEIRO: Announces Supplementary Pension Plan
---------------------------------------------------------
Petroleo Brasileiro SA aka Petrobras, a Brazilian international
energy company, reported that following meetings with labor
union representatives to reach an agreement on the company's
Supplementary Pension Plan, the Executive Board has made a
proposal designed to provide a fair solution for the current
Petros Plan as well as the implementation of a New Plan. Any
eventual solution as an outcome to negotiations will be subject
to the Board of Directors' approval.
The company's Executive Board has presented to the employee and
assisted participants the proposal, together with factors
contingent to its feasibility and effective implementation:
1) Agreement with labor union representatives aiming at the
settlement and extinguishment of the matters raised in
the legal proceedings, notably the Civil Action, on the
questions involving the Petrobras Group's supplementary
pension plan.
The claims with respect to the matters to be extinguished
in the legal proceedings, under the proposal, would be
resolved through the calculation of their actuarial
value, Petrobras assuming amortization of this value over
20 years, contingent on the Plan's liquidity conditions.
2) Revision of the method for supporting the cost of the
Petros Plan, based on the contributory parity criterion,
transforming the contributions of the Sponsoring
Companies into values equal to those collected as
contributions from employee and assisted members.
3) Negotiation of a financial incentive to employees and
assisted participants pursuant to demands from the labor
union representatives, as a quid pro quo for the
transaction which provides for the renegotiation of the
current Plan with respect to the readjustment in
benefits.
The current stage of negotiations does not allow any
definition of whether there will be material changes in
actuarial liabilities and results posted in Petrobras'
financial statements. The impacts will be evaluated,
recognized in the accounts and notified to the market
once the proposal as been finalized.
For Petrobras to make these actions and commitments feasible and
effective, these conditions are mandatory:
a) implementation of the new Petros Plan-2 adopting the
variable contribution standard; and
b) overwhelming individual acceptance on the part of
members, with the object of achieving full adhesion,
among employee and assisted members, concerning:
-- renegotiation of the Petros Plan Regulations, with
respect to the manner of the readjustment of benefits
and retirement pensions and pensions; and
-- extinguishment and settlement of litigation with
respect to the matters related to judicial agreements
in question.
The New Supplementary Pension Plan is based on the Variable
Contribution -- VC model, with the capitalization of funds
through individual accounts. Retirement pensions are
established as a function of the balance in the account in
addition to providing coverage for social security risks --
disability and death during active employment -- and options for
payment of lifetime benefits, with a provision for transferring
certain pension rights to dependents upon the death of the
principal member, or in accordance with a fixed term system.
Should the foregoing conditional elements be accepted, the
proposal will offer the opportunity to:
a) settle Petros Plan's current technical liability;
b) extinguish current legal proceedings
c) improve the financial robustness of the Petros Plan; and;
d) implement a new supplemental social security plan.
The proposal seeks, through a combined effort, to strengthen the
company's Supplementary Pension Plan and that the once
negotiated and presented to the employees, the proposed plan
must be submitted and approved by the Board of Directors, and
appropriate authorities.
For Petrobras, the proposed adjustment of this Model is
fundamental for its future administration to remain attractive,
self-sustaining and strengthened as a key instrument in the
management of staff in the Group's companies.
Established in 1970, on December 31 2005, the Petros Plan
reported an unfounded technical liability of BRL4.5 billion --
BRL5.2 billion in 2004 -- in the balance sheet of Fundacao
Petros.
This deficit reflects the difference between Petro's actuarial
obligations and its guarantees and was reduced in 2005 as result
of the yield of its assets exceeding its actuarial target.
Petrobras continues to pursue an active hiring program, to date,
representing 13,000 admissions since 2002. These new hirings
are not registered with the supplementary pension plan, but are
covered by a group life insurance policy, the cost of which is
borne by the company. In addition, Petrobras plans to hire a
further 9,000 employees over the next three years, in line with
its strategies for 2015, thus making the implementation of the
new plan increasingly necessary.
Headquartered in Rio de Janeiro, Brazil, Petroleo Brasileiro
S.A. aka Petrobras was founded in 1953. The company explores,
produces, refines, transports, markets, distributes oil and
natural gas and power to various wholesale customers and retail
distributors in the country.
* * *
Petroleo Brasileiro SA's long-term corporate family rating is
rated Ba3 by Moody's and its foreign currency long-term debt is
rated BB- by Fitch.
* * *
Fitch assigned these ratings on Petroleo Brasileiro's senior
unsecured notes:
Maturity Date Amount Rate Ratings
------------- ------ ---- -------
April 1, 2008 $400,000,000 9% BB-
July 2, 2013 $750,000,000 9.125% BB-
Sept. 15, 2014 $650,000,000 7.75% BB-
Dec. 10, 2018 $750,000,000 8.375% BB-
PETROLEO BRASILEIRO: Board Okays Petroquisa Shares Incorporation
----------------------------------------------------------------
The Board of Directors of Petroleo Brasileiro SA aka Petrobras
has approved the conditions for the operation of incorporation
of the shares of Petrobras Quimica S.A. aka Petroquisa, with the
agreement of the latter's board.
The directors also authorized the convening of an Extraordinary
General Meeting aka EGM of the shareholders of both firms for
approving the matter on May 22, 2006.
About 1% of Petroquisa's capital stock is dispersed among
minority shareholders, with Petrobras holding the remaining 99%.
The main objective of the share incorporation is to encourage
the alignment of the strategic interests of both companies,
anticipating potential conflicts and fomenting the
rationalization and optimization of investment plans.
The companies expect these benefits to accrue from the share
incorporation:
(i) merging of the capital structure;
(ii) enhanced capital capacity, increasing the range of
alternative sources of capital which can be called
upon; and
(iii) greater flexibility for new investments, greater
efficiency in the corporate structure and in
the execution of strategic decisions.
The companies foresee these advantages:
(i) access to a dividend policy characterized by financial
flexibility, transparency and minimization of risks to
the shareholders;
(ii) greater liquidity of investments since PETROBRAS'
shares are traded on the Sao Paulo Stock Exchange aka
Bovespa, where they have a leading position on the
Ibovespa, and the New York Stock Exchange, their
American Depositary Receipts aka ADRs ranking among the
most heavily traded among all ADRs listed on that stock
exchange; and
(iii) entry into a company with an investment grade rating.
The exchange ratio of the common and preferred shares issued by
Petroquisa for preferred shares issued by Petrobras will be
effected on the basis of an economic-financial evaluation
elaborated by ING BANK N.V, duly hired by Petrobras to evaluate
the company and Petroquisa, using the discounted cash flow
methodology as at Dec. 31 2005, attributing 3.487 preferred
shares issued by Petrobras for each lot of 1,000 common or
preferred shares issued by Petroquisa.
The share incorporation shall result in the increase in
Petrobras' capital stock, through the transfer to its assets of
shares issued by Petroquisa currently trading in the market, on
the basis of their equity value, according to the balance sheet
as at Dec. 31, 2005.
For the purposes of the share incorporation, 687,646 new
Petrobras nominative preferred shares with no par value will be
issued, article 4 of Petrobras' bylaws being changed to reflect
the increase of the capital stock and the number of shares into
which it is divided.
The preferred shares of Petrobras issued in favor of
Petroquisa's shareholders as a consequence of the incorporation
of shares, shall be entitled to all the rights pursuant to
Petrobras' bylaws with respect to the shares of that same type.
Preferred shareholders shall participate fully in any dividends
or interest on shareholders' equity that may be declared by
Petrobras as from the date of Petrobras' Extraordinary General
Meeting, which approves the incorporation of Petroquisa's
shares.
Petrobras shall not issue common shares as a result of this
share incorporation.
Fractions of shares arising from the substitution of the
position of each Petroquisa shareholder, shall be rounded down
to the next full number and the difference paid in cash by
Petrobras within 30 business days as from the receipt of the
funds raised by Petrobras, from the sale on the Sao Paulo Stock
Exchange of the corresponding shares of this sum total of the
share fractions.
The fractions of shares resulting from the substitution of the
position of each Petroquisa shareholder shall be grouped in full
share amounts for subsequent sale by auction on the Sao Paulo
Stock Exchange in accordance with the notice to shareholders to
be published following the holding of the EGMs of both Companies
approving the share incorporation.
Petroquisa's shareholders with a shareholding participation that
is insufficient for entitlement to at least one Petrobras share,
may complete the difference in cash necessary to obtain one
Petrobras share.
In order to comply with the alternative criteria pursuant to
article 264 of Law 6,404/76, ERNST & YOUNG AUDITORES
INDEPENDENTES S/S was selected and duly hired by Petrobras to
evaluate the company and Petroquisa on the basis of the book
value of both companies as at the base date of Dec. 31 2005,
resulting in the substitution ratio of 4.496 preferred shares
issued by Petrobras per lot of 1,000 common shares or per lot of
1,000 preferred shares issued by Petroquisa.
In full compliance with the provisions to article 252, paragraph
1 and 2 of Law 6,404/76, withdrawal rights shall be granted to
shareholders of the ordinary shares of PETROBRAS and the holders
of common and preferred shares of Petroquisa that dissent from
the decision approving the Share Incorporation.
Similarly, withdrawal rights will be granted to those
shareholders that do not participate in the pertinent
Extraordinary General Meeting and expressly declare the
intention to exercise their right of withdrawal within 30 days
as from the publication of the minutes of the Extraordinary
General Meetings of both companies that approve the share
incorporation.
Payment of the respective reimbursement shall depend on the
effective completion of the operation pursuant to article 230 of
Law 6,404/76, and shall be made up to the fifth business day
following the date of conclusion of the operation, to the
shareholders that substantiate their entitlement on April 17,
2006. The dissenting shareholder failing to exercise withdrawal
rights within the established period shall forgo these rights
pursuant to article 137, paragraph 4 of Law 6404/76.
The shareholders of preferred shares of Petrobras shall not be
entitled to withdrawal rights given the shares dispersed nature
and liquidity, pursuant to clause II of article 137 of Law
6,404/76.
The dissenting shareholders of Petrobras' common shares shall be
entitled to the reimbursement of their shares at the value of R$
18.39956115 per share according to the approved balance sheet as
at Dec. 31, 2005.
For the purposes of withdrawal rights, Petroquisa's dissenting
shareholders shall have the right to reimbursement of their
shares, at the economic value, entitling them to BRL153.47 per
lot of 1,000 preferred or common shares issued by Petroquisa.
In addition, the incorporation of Petroquisa's shares by
Petrobras is subject to the opinion of the Fiscal Councils of
the two firms, in accordance with clause III of article 163 of
the Corporate Law.
All information and documents with respect to the share
incorporation process including the operation's protocol and
justification instrument, reports, opinions and financial
statements shall be made available to shareholders at a place to
be determined at the time of publication of the convening notice
for the companies' EGMs for the purposes of approving the
incorporation of shares.
Headquartered in Rio de Janeiro, Brazil, Petroleo Brasileiro
S.A. aka Petrobras was founded in 1953. The company explores,
produces, refines, transports, markets, distributes oil and
natural gas and power to various wholesale customers and retail
distributors in the country.
* * *
Petroleo Brasileiro SA's long-term corporate family rating is
rated Ba3 by Moody's and its foreign currency long-term debt is
rated BB- by Fitch.
* * *
Fitch assigned these ratings to Petroleo Brasileiro's senior
unsecured notes:
Maturity Date Amount Rate Ratings
------------- ------ ---- -------
April 1, 2008 $400,000,000 9% BB-
July 2, 2013 $750,000,000 9.125% BB-
Sept. 15, 2014 $650,000,000 7.75% BB-
Dec. 10, 2018 $750,000,000 8.375% BB-
* BRAZIL: May Tap on Hydroelectric Reserves Due to Gas Reduction
----------------------------------------------------------------
The government of Brazil may tap on hydroelectric reserves to
make up for the decrease in natural gas delivery, Bloomberg
reports. The reserves have increased due to the seasonal
rainfall.
According to Bloomberg, the Energy Ministry limited on April 7
the deliveries of natural gas to power generators and fuel
distributors after a heavy rainfall damaged the Bolivian
pipeline, which supplies half of Brazil's gas needs. Supplies
to distribution firms were cut to 12% while supplies to
generators were reduced to 72%.
However, Mr. Altino Ventura -- a partner at Orion Consultores
and the former president of Itaipu Nacional, the world's largest
hydroelectric power station -- was reported by Bloomberg saying
that the reductions will not likely upset the economic growth in
the country because water supplies are sufficient.
Mr. Ventura explained to Bloomberg that there is almost no
chance that the gas cut will have any impact on Brazil's ability
to generate electricity nor will it hurt economic activity
because most of Brazil's power comes from hydro and the
reservoirs have more than enough to make up the shortfall.
According to ONS on its Web site, Brazil's southeast region have
reservoirs up to 86% full. The industrialized region with
Brazil's three largest cities, mostly depend on the Bolivian
natural gas to energize power plants, which are utilized to add
electricity during peak periods.
The Energy Ministry said in a statement that Petroleo Brasileiro
is prompted to cut the natural gas use by 51% in its refineries
in order to raise supplies.
It is far more difficult to determine the effect of rationing
natural gas on individual generators since it would primarily
depend on the amount of time in rationing and specifics of the
contract of each generator, Mr. Ventura said. He added that it
would be improbable at this time to determine the impression on
each generator in effect of the rationing.
Bloomberg tried calling Eletrobas SA, the state-controlled
holding company that has investments in gas-fired generators,
for comments. Eletrobras, however, gave no answers.
State-run Petrobras revealed in a statement that heavy rainfall
caused flooding and landslides in Bolivia on April 4. The
damage caused an 800-meter stretch of the pipeline to be
unearthed.
According to Petrobras, repairs on the pipeline were delayed due
to roadblocks set up by demonstrators, in protest of the
government's policies for gas rationing. The roadblocks were
removed on April 8.
Pipeline output dropped by about 7 million cubic meters a day,
which comprise 14% of Brazil's daily use. Deliveries fell about
19 million cubic meters a day compared to the usual 26 million
cubic meters, Petrobras told Bloomberg.
* * *
As reported on April 6, 2006, Fitch assigned these ratings to
Brazil:
-- Foreign currency Issuer Default Rating (IDR) 'BB-';
-- Local currency Issuer Default Rating (IDR) 'BB-';
Fitch said the rating outlook is positive.
===========================
C A Y M A N I S L A N D S
===========================
ALMATIS DEBT 2: Liquidator Will Present Report on May 8
-------------------------------------------------------
The sole shareholder of Almatis Debt 2 Limited will have a final
meeting with Westport Services Limited, the company's
liquidator, on May 8, 2006, at 12:30 p.m. at the company's
registered office.
Accounts on the company's liquidation process will be presented
during the meeting. The shareholders will also authorize the
liquidators to retain the records of the company for a period of
six years, starting from the dissolution of the company.
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.
For inquiries, the liquidator can be reached at:
Westport Services Limited
Attention: Patricia Tricarico
P.O. Box 1111
Grand Cayman, Cayman Islands
Tel: (345) 949-5122
Fax: (345) 949-7920
ALMATIS DEBT 3: Shareholders' Final Meeting Scheduled for May 8
---------------------------------------------------------------
Shareholders of Almatis Debt 3 Limited will hold a final
general meeting on May 8, 2006, at 12:45 p.m. at the company's
registered office.
Accounts on the company's liquidation process will be presented
during the meeting. The shareholders will also authorize the
liquidators to retain the records of the company for a period of
six years, starting from the dissolution of the company.
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.
The company's liquidator can be reached at:
Westport Services Limited
Attention: Patricia Tricarico
P.O. Box 1111
Grand Cayman, Cayman Islands
Tel: (345) 949-5122
Fax: (345) 949-7920
ALMATIS DEBT 4: Liquidator to Present Wind Up Accounts on May 8
---------------------------------------------------------------
Westport Services Limited, the liquidator of Almatis Debt 4
Limited will present accounts on the company's liquidation
during a final meeting on May 8, 2006, at 1:00 p.m. at the
company's registered office.
During the meeting, the shareholders will also authorize the
liquidator to retain the records of the company for a period of
six years, starting from the dissolution of the company.
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.
The company's liquidator can be reached at:
Westport Services Limited
Attention: Patricia Tricarico
P.O. Box 1111
Grand Cayman, Cayman Islands
Tel: (345) 949-5122
Fax: (345) 949-7920
BREADFRUIT INVESTMENTS: Sets July 17 as Claims Filing Deadline
--------------------------------------------------------------
Creditors of Breadfruit Investments Ltd., which is being
voluntarily wound up, are required on or before July 17, 2006,
to present proofs of claim to Leif Sorensen, the company's
liquidator.
Breadfruit Investments started liquidating assets on March 15,
2006.
Creditors are required to present proofs of claim personally or
through their solicitors at the time and place that the
liquidator will specify. Failure to present claims would mean
exclusion from the benefit of any distribution that the company
will make.
The liquidator can be reached at:
Leif Sorensen
c/o Woodward Terry & Company
Suite # 10, 2nd Floor
Jack & Jill Building
19 Fort Street
c/o P.O. Box 822, George Town
Grand Cayman, Cayman Islands
Tel: (345) 945-2800
Fax: (345) 945-2727
CAYMAN ASSET: Final Shareholders General Meeting Set for May 3
--------------------------------------------------------------
Shareholders of Cayman Asset Finance Limited will convene
on May 3, 2006, at 9:30 a.m. for an extraordinary final general
meeting at the company's registered office.
Accounts on the company's liquidation process will be presented
during the meeting. The shareholders will also authorize the
liquidators to retain the records of the company for a period of
five years, starting from the dissolution of the company.
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.
The company's liquidator can be reached at:
S.L.C. Whicker
K.D. Blake
Attention: Michael Schulz
P.O. Box 493, George Town
Grand Cayman, Cayman Islands
Tel: (345) 949-4355
Fax: (345) 949-7164
=========
C H I L E
=========
FALCONBRIDGE: Projects 475,000 Tons of Copper Output for 2006
-------------------------------------------------------------
Falconbridge Ltd. is maintaining its copper output forecast for
2006 at 475,000 tons, despite an expected shortfall at the giant
Collahuasi copper mine in Chile of which it is part owner,
Reuters reports.
Falconbridge President Aaron Regent also said he was confident a
proposed merger with the Canadian nickel giant Inco Ltd. would
be approved by regulators, although he could not say if either
company would have to divest assets, Reuters says.
"I'm confident it will get approved but the question about what
remedy is required or not is still something being discussed,"
Mr. Regent told a reporter from Reuters at the company's office
in Santiago, Chile, after the CRU Group consulting company's
World Copper Conference.
As previously reported, Inco's takeover offer for Falconbridge
-- in a bid to create the world's largest nickel miner -- awaits
approval from antitrust regulators in the United States and in
Europe amid concerns the new company would control too much of
the market.
Mr. Regent informed Reuters that both the European Commission
and the U.S. Department of Justice continue to review the deal
but declined to comment on whether there was an agreement in
place for either miner to divest any assets.
"We've been working in parallel with both the Department of
Justice and the European Commission about the 'no remedy'
solution versus the 'remedy' solution and those discussions are
ongoing," Mr. Regent explained to Reuters.
Headquartered in Toronto, Ontario, Falconbridge Limited --
http://www.falconbridge.com/-- produces nickel products. It
owns nickel mines in Canada and the Dominican Republic. It
operates a refinery and sulfuric acid (used in refining) plant
in Norway. It is also a major producer of copper (38% of
sales) through its Kidd mine in Canada and its stake in Chile's
Collahuasi mine and Lomas Bayas mine. Its other products
include cobalt, platinum group metals, and zinc.
* * *
Falconbridge's CDN$150 million 5% convertible and callable bond
due April 30, 2007, carries Standard & Poor's BB+ rating.
===============
C O L O M B I A
===============
BANCAFE: Government Will Form New Firm Out of State Bank
--------------------------------------------------------
As previously reported, the Colombian government hired U.K.
investment bank Rothschild to decide the fate of Bancafe bank.
Control of Bancafe was taken by the government in the late 1990s
to save it from bankruptcy.
According to Dow Jones Newswires, Rothschild has recommended to
sell Bancafe before September. In the meantime, the Colombian
government plans to form a new bank that will specialize on
microfinance out of Bancafe.
Andres Florez -- president of the government agency that insures
bank deposits (Fogafin) -- told Dow Jones that several foreign
and local banks expressed interest in acquiring banks in
Colombia and that the current situation for the banking business
could not possibly get better.
Mr. Florez was quoted by Dow Jones as saying that before selling
the state bank, the government will split part of its assets to
create a new bank, which could be called Banco de las
Oportunidades.
The new bank will focus on Colombia's low-income population,
providing micro-lending to small businesses and individuals, Mr.
Florez informed Dow Jones.
Dow Jones states that government officials have reiterated that
Bancafe is in a list of assets to be sold.
"If we don't sell it soon, foreign banks may decide to start up
a bank from scratch instead," Mr. Florez told Dow Jones.
Mr. Florez, says Dow Jones, said the council of ministers will
have to make the final decision and that he will recommend
Bancafe to be sold.
Mr. Florez did not reveal to Dow Jones the amount that the
Colombian government expects to raise form the sale as well as
the names of the banks interested in buying Bancafe.
* * *
On Aug. 4, 2005, Moody's Investors Service withdrew all of its
ratings for Bancafe S.A. for business reasons. These ratings
were withdrawn:
-- Long Term Foreign Currency Deposit Rating: Ba3, with
negative outlook;
-- Short Term Foreign Currency Deposit Rating: Not Prime,
with negative outlook; and
-- Bank Financial Strength Rating: E+, with stable outlook.
Moody's said that the action does not reflect a change in
Bancafe's creditworthiness.
===================
C O S T A R I C A
===================
* COSTA RICA: Faces Complaints on Oil Program in Puntarenas
-----------------------------------------------------------
The pilot ethanol project program that Refinadora Costarricense
de Petroleo aka RECOPE, Costa Rica's state national gasoline
refinery, launched last month in the province of Puntarenas has
received complaints, Inside Costa Rica reports.
Inside Costa Rica states that the US$15 million program was
implemented at 63 gas stations in Puntarenas alone. It was
funded in part by Brazilian oil company Petrobras.
The program aims to bring down the country's oil costs -- which
rose 45% between 2004 and 2005 -- by adding 7.5% ethanol aka
ethyl alcohol to gasoline. If results are positive, it will
eventually be expanded across Costa Rica, Inside Costa Rica
relates.
According to Inside Costa Rica, RECOPE assures that there is
little difference between regular and the ethanol mix but the
process is less dependent on oil, costs less and burns cleaner.
Inside Costa Rica states that ethanol, which is made from a
sugar by-product, is mixed with gasoline to reduce pollution and
lower prices.
Inside Costa Rica reveals that critics are asking why is the
ethanol mix sold at the same price of regular and consumers who
prefer not to use ethanol are forced to purchase the super
gasoline. Also, gasoline stations are not telling customers
that the regular gasoline they think they are purchasing is
ethanol.
Drivers also complained on poor performance and engine problems.
Many vacationers during Semana Santa complained to their
mechanic of car problems but since the product is only sold in
the Puntarenas, those from other parts of the country are not
aware of the program.
* * *
As reported in the Troubled Company Reporter on Mar. 10, 2006,
Fitch rated Costa Rica's foreign and local currency issuer
default ratings 'BB' and 'BB+', respectively. Fitch said the
Rating Outlook is Negative.
===================================
D O M I N I C A N R E P U B L I C
===================================
AES CORP: Latin America Units Contribute US$1B to 2005 Profits
--------------------------------------------------------------
Business News Americas reports that the Latin American
operations of AES Corp. contributed US$1.09 billion to its
pre-tax income for 2005, nearly double the US$617 million in
2004.
Latin American operations pre-tax income made up 75% of the
company's US$1.46 billion total pre-tax income, which increased
77% from the previous year, the company said in a statement.
Latin America revenues increased to US$6.42 billion in 2005, up
25% from US$5.14 billion in 2004.
The company attributes the increase in revenues to favorable
foreign currency exchange rates, especially in Brazil, and
tariff increases in Brazilian and Argentine operations.
AES' total revenue reached US$11.1 billion in 2005, up 17%
compared to 2004.
AES registered global net income of US$630 million in 2005
compared to US$298 million in 2004.
AES Corporation -- http://www.aes.com/-- is a global power
company. The Company operates in South America, Europe, Africa,
Asia and the Caribbean countries. Generating 44,000 megawatts
of electricity through 124 power facilities, the Company
delivers electricity through 15 distribution companies.
AES's Latin America business group is comprised of generation
plants and electric utilities in Argentina, Brazil, Chile,
Colombia, Dominican Republic, El Salvador, Panama and Venezuela.
Fuels include biomass, diesel, coal, gas and hydro. The group
also pursues business development activities in the region. AES
has been in the region since May 1993, when it acquired the CTSN
power plant in Argentina.
* * *
As reported in the Troubled Company Reporter on March 31, 2006,
Standard & Poor's Ratings Services raised its corporate credit
rating on diversified energy company The AES Corp. to 'BB-' from
'B+'. S&P said the outlook is stable.
As reported in the Troubled Company Reporter on Jan. 11, 2006,
Moody's affirmed the ratings of The AES Corporation, including
its Ba3 Corporate Family Rating and the B1 rating on its senior
unsecured debt. Moody's said the rating outlook remains stable.
=============
E C U A D O R
=============
* ECUADOR: Works on Salvaging Free Trade Deal with U.S.
-------------------------------------------------------
Ecuador is trying to come up with a way to advance the free
trade deal with US that was stalled due to the new oil tax law
designed to cut into foreign windfall crude profits, the
Associated Press reports.
AP recalls that Ecuadorian Trade Minister Jorge Illingworth said
he met with US officials in Quito in recent days to try to
resume talks. However, no new date had been set.
According to AP, Ecuador's ambassador in Washington -- Luis
Gallegos -- returned to Quito to meet with Foreign Minister
Francisco Carrion and Ecuador's chief negotiator, Manuel
Chiriboga, and discuss ways on overcoming an impasse with
negotiators of the free trade.
Upon his arrival, Mr. Gallegos told reporters that his purpose
is to aid the negotiating team.
"We have come to work on a strategy to continue a relationship
of friendship and strength with the United States," Mr. Gallegos
was quoted by AP saying.
As reported in the Troubled Company Reporter on April 10, 2006,
negotiations for a Free Trade Agreement aka FTA between Ecuador
and the US have stopped due to Ecuador's hydrocarbon law reform.
Prensa Latina relates that US firms in Ecuador have rejected the
new law, which authorizes the redistribution of oil profits due
to the high oil prices. The US government, siding with the
firms, stopped FTA negotiations on services and environment.
The US will not continue the dialogue unless a change would be
implemented in the hydrocarbon law, Vinicio Baquero -- FTA
negotiating team member -- said to Prensa Latina.
As reported in the Troubled Company Reporter on April 4, 2006,
Ecuador's Congress passed a bill reforming the country's law on
hydrocarbons. Under the new bill, contracts with foreign oil
producers will be revised giving the government a 60% split of
profits whenever oil market prices exceeds what's established in
existing contracts.
The old contracts give the state about 20% of profits, while
prices were pegged at US$15 per barrel.
Rene Ortiz -- president of the Hydrocarbon Industries
Association aka HIA -- had said that the will of the parties
reflected in the contracts could not be changed by a law.
According to him, the National Congress and the Executive would
be violating the basic principles of a contractual relationship
if they would approve the new law.
According to the HIA, existing contracts can only be changed
through renegotiations between the partiers involved -- not
unilaterally through a new law.
* * *
Fitch Ratings assigned these ratings on Ecuador:
Rating Rating Date
------ -----------
Country Ceiling B- Aug. 29, 2005
Long Term IDR B- Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
=================
G U A T E M A L A
=================
* GUATEMALA: Plans to Implement Daylight Saving Time Until Sept.
----------------------------------------------------------------
The government of Guatemala plans to implement a daylight saving
time starting April 30 through the end of September, according
to local reports. This is due to rising oil prices.
Daylight saving time aka DST is a system of adjusting the
official local time forward -- usually one hour -- from its
official standard time for the summer months, to provide a
better match between the hours of daylight and the active hours
of work and school.
Kyodo News states that governments often consider it as an
energy conservation measure. It allows more effective use of
sunlight in summer time. Because there is less darkness in the
waking day, there is less use of electric lights.
Some opponents however rejected this argument, Kyodo News
relates.
According to papers, the measure will cut fuel costs for
generating electricity. The Ministry of Energy and Mines of
Guatemala estimated that up to US$16.5 million will be saved in
the five-month period.
The Guatemalan ministry will yet decide if the measure will be
adopted yearly, Kyodo News reports.
* * *
Fitch Ratings assigned these ratings on Guatemala:
Rating Rating Date
------ -----------
Country Ceiling BB+ Feb. 22, 2006
Long Term IDR BB+ Feb. 22, 2006
Short Term IDR B Feb. 22, 2006
Local Currency
Long Term Issuer
Default Rating BB+ Feb. 22, 2006
Fitch also rated Guatemala's senior unsecured bonds:
Maturity Date Amount Rate Ratings
------------- ------ ---- -------
Aug. 3, 2007 $150,000,000 8.5% BB+
Nov. 8, 2011 $325,000,000 10.25% BB+
Aug. 1, 2013 $300,000,000 9.25% BB+
Oct. 6, 2034 $330,000,000 8.125% BB+
=========
H A I T I
=========
* HAITI: Government Plans to Join Venezuela's PetroCaribe
---------------------------------------------------------
The government of Haiti is planning to join PetroCaribe, the
country's President-elect Rene Preval told the Associated Press
after returning from Cuba, where he discussed with President
Fidel Castro Cuban aid to his impoverished nation.
Mr. Preval, who takes power next month, told reporters that
Haiti will soon become a part of PetroCaribe. He has met with
Venezuela's ambassador to Cuba and discussed Haiti's desire to
join the PetroCaribe pact.
According to AP, Haiti would join 13 Caribbean nations that
entered the oil-supply agreement in 2005.
AP states that the accord requires Caribbean countries to pay a
portion of the cost up front but allows them to fund the
remainder through low-interest loans over 25 years.
* * *
As reported in the Troubled Company Reporter on April 12, 2006,
president-elect Preval appealed for urgent international help to
spur development in the Western Hemisphere's poorest country and
called on all Haitians to join in a national dialogue to promote
peace, democracy and stability.
President Preval said during a speech to a high-level meeting of
the United Nations Security Council, that the massive voter
turnout in the February 7 election which he won was "an eloquent
demonstration" of the Haitian people's commitment to live in
peace and take part in national reconstruction.
"Poverty, widespread unemployment, the state of dilapidation of
basic infrastructures that are necessary for development,
chronic insecurity - these are all the major challenges to be
faced by the next government," President Preval was quoted by
the AP as saying.
President Preval explained that increased international
assistance is "indispensable" to Haiti's economic recovery, to
create conditions for investment and job creation, to improve
social services, and to reform democratic institutions including
parliament, municipalities, the judicial system, and the
national police, the AP relates.
=============
J A M A I C A
=============
KAISER ALUMINUM: Asks Court to Okay AIG Settlement Agreement
------------------------------------------------------------
AIG Member Companies issued certain insurance policies insuring
Kaiser Aluminum & Chemical Corporation. These policies are at
issue in a products coverage action and a premises coverage
action KACC instituted against certain insurers in the Superior
Court of California for the County of San Francisco in 2000.
The insurance coverage at issue in the Products Coverage Action
spans the period from 1959 to 1985 and involves more than 300
insurance policies. In the Products Coverage Action, KACC seeks
a declaratory judgment that the Insurers are obligated to cover
the asbestos-related bodily injury products liability claims
that have been asserted against KACC. The Products Coverage
Action also seeks damages for breach of contract and breach of
the covenant of good faith and fair dealing against several of
the Insurers. If successful, the Products Coverage Action would
establish KACC's rights, and the Insurers obligations, with
respect to the Asbestos Products Claims and would allow KACC to
recover its costs from the Insurers in connection with the
defense and settlement of the Asbestos Products Claims.
In general, a product claim is a claim for injury resulting from
a product KACC manufactured or sold, while a premises claim is a
claim for injury resulting from exposure to an allegedly
hazardous product or condition at a facility KACC owned and
operated.
The AIG Parties issued certain other policies, which are not at
issue in the Coverage Actions.
KACC and the AIG Parties have reached a settlement that resolves
all claims against the AIG Parties with respect to the Subject
Policies, including coverage for Channeled Personal Injury
Claims, as well as other present and future liabilities, and all
Tort Claims against the AIG Parties with respect to the Other
AIG Parties Policies.
The principal terms of the Settlement Agreement are:
(a) The AIG Member Companies will pay 37.5% of trust expenses
and the liquidation values of Asbestos Personal Injury
Claims liquidated by the PI Asbestos Trust and Silica
Personal Injury Claims liquidated by the PI Silica Trust,
subject to (i) certain quarterly caps and associated
rollover provisions, and (ii) an aggregate cap of
$567,885,590. The AIG Member Companies will pay the
Settlement Amount to the Funding Vehicle Trust.
(b) The AIG Parties have specifically contracted to receive
all of the benefits of being designated as Settling
Insurance Companies in the Plan, including, but not
limited to, the PI Channeling Injunctions.
(c) KACC Parties agree to release all of their rights under
the Subject Policies and certain other rights under the
Other AIG Parties Policies and to dismiss each of the AIG
Member Companies from the Coverage Actions.
(d) The Settlement Agreement covers all claims that might be
covered by the Subject Policies. KACC will sell the
Subject Policies back to the AIG Member Companies, and
the AIG Member Companies will buy back the Subject
Policies, free and clear of all liens, claims or
interests, with the AIG Member Companies' payment of the
Settlement Amount constituting the consideration for the
buy-back.
(e) If any claim is brought against any of the AIG Parties
that is subject to a PI Channeling Injunction, the
Funding Vehicle Trust will exercise its reasonable best
efforts to establish that those claims are enjoined as to
the AIG Parties by the PI Channeling Injunction.
(f) The AIG Parties will not seek reimbursement of any
payments that the AIG Member Companies are obligated to
make under the Settlement Agreement.
A full-text copy of the AIG Settlement Agreement is available
for free at http://bankrupt.com/misc/kaiser_AIGsettlement.pdf
The effect of the Settlement Agreement is to:
(a) eliminate KACC's continuing costs of prosecuting the
Coverage Actions against the AIG Member Companies;
(b) eliminate uncertainty regarding future payments by the
AIG Member Companies; and
(c) secure the payment over time of a substantial aggregate
amount from the AIG Member Companies without further
delay and cost to KACC.
Thus, the Debtors ask the Court to:
-- approve the Settlement Agreement;
-- authorize the sale of the Subject Policies to the AIG
Member Companies free and clear of liens, claims,
interests and other encumbrances; and
-- enjoin all Claims against the AIG Parties relating to or
attributable to the Subject Policies, including, but not
limited to, any Claims in the nature or sounding in tort,
contract, warranty or any other theory of law, equity or
admiralty.
About Kaiser Aluminum
Headquartered in Foothill Ranch, California, Kaiser Aluminum
Corporation -- http://www.kaiseraluminum.com/-- is a leading
producer of fabricated aluminum products for aerospace and high-
strength, general engineering, automotive, and custom industrial
applications. The Company, along with its Jamaican subsidiaries
-- Alpart Jamaica Inc. and Kaiser Jamaica Corporation -- filed
for chapter 11 protection on February 12, 2002 (Bankr. Del. Case
No. 02-10429), and has sold off a number of its commodity
businesses during course of its cases. Corinne Ball, Esq., at
Jones Day, represents the Debtors in their restructuring
efforts. On June 30, 2004, the Debtors listed $1.619 billion in
assets and $3.396 billion in debts. (Kaiser Bankruptcy News,
Issue No. 94; Bankruptcy Creditors' Service, Inc., 215/945-7000)
KAISER: District Court Sets Confirmation Hearing for May 11
-----------------------------------------------------------
The District Court has set a hearing for May 11, 2006, to
consider confirmation of the Second Amended Joint Plan of
Reorganization of Kaiser Aluminum Corporation, Kaiser Aluminum &
Chemical Corporation and certain of their debtor-affiliates.
The Plan, therefore, will not become effective and the Debtors
will not be able to emerge from bankruptcy before the May 11,
2006, maturity date of the Replacement Financing Facility and
expiration of the Exit Facilities Commitment.
To preserve the Debtors' current access to postpetition
financing until the Plan becomes effective, the Debtors and the
Lenders stipulate and agree to:
(a) extend the May 11, 2006, maturity date of the Replacement
Financing Facility to May 17, 2006,
(b) extend the May 11, 2006, termination date of the Exit
Facilities Commitment to May 17, 2006, and
(c) extend the May 11, 2006, date for payment of the
supplemental termination fee in the Amended and Restated
Fee Letter to May 17, 2006.
The Court approved the parties' stipulation.
According to Daniel DeFranceschi, Esq., at Richards Layton &
Finger, the Debtors have also negotiated with the Lenders for an
extension of the maturity Date of the Replacement Financing
Facility to Aug. 31, 2006, as memorialized in the Second
Amendment to the credit agreement.
A full-text copy of the Second Amendment is available for free
at http://bankrupt.com/misc/kaiser_2ndDIPamendment.pdf
As consideration for entering into the Second Amendment, upon
emergence and closing of the Exit Revolving Credit Facility, the
Debtors will pay certain fees.
At the Debtors' request, The CIT Group/Business Credit, Inc.,
and JPMorgan Chase Bank, National Association, have agreed to
extend the termination date of the commitment to provide the
Exit Facilities to August 31, 2006.
The Debtors seek the Court's authority to enter into the Second
Amendment and pay related fees.
Mr. DeFranceschi asserts that the Second Amendment is necessary
to meet the Debtors' ongoing working capital and general
business financing requirements while the Debtors remain in
Chapter 11. "It is essential to the ongoing operation of the
Debtors' businesses that the Debtors continue to have access to
adequate postpetition financing to continue their ordinary
course business operations and maintain the confidence of the
Debtors' vendors, suppliers and customers."
Fee Letters are Confidential
The Debtors signed amended fee letters in connection with the
Second Amendment to the Replacement Financing Facility.
Mr. DeFranceschi asserts that the confidentiality provisions of
each Fee Letter preclude the Debtors from:
(a) filing either letter with the Court unless it is filed
under seal, and
(b) disclosing the substance of the Fee Letters except to
certain of the Debtors' principal creditor constituencies
that agree, and are obligated, to keep the terms of the
Fee Letters confidential.
Accordingly, the Debtors seek the Court's authority to file the
Fee Letters under seal. To the extent a hearing is held on the
Replacement Financing Motion that requires the disclosure of the
terms of the Fee Letters, the Debtors ask Judge Fitzgerald to
conduct those portions of the hearing in camera.
About Kaiser Aluminum
Headquartered in Foothill Ranch, California, Kaiser Aluminum
Corporation -- http://www.kaiseraluminum.com/-- is a leading
producer of fabricated aluminum products for aerospace and high-
strength, general engineering, automotive, and custom industrial
applications. The Company, along with its Jamaican subsidiaries
-- Alpart Jamaica Inc. and Kaiser Jamaica Corporation -- filed
for chapter 11 protection on February 12, 2002 (Bankr. Del. Case
No. 02-10429), and has sold off a number of its commodity
businesses during course of its cases. Corinne Ball, Esq., at
Jones Day, represents the Debtors in their restructuring
efforts. On June 30, 2004, the Debtors listed $1.619 billion in
assets and $3.396 billion in debts. (Kaiser Bankruptcy News,
Issue No. 94; Bankruptcy Creditors' Service, Inc., 215/945-7000)
* JAMAICA: Government May Quit Jamaica Public Service Company
-------------------------------------------------------------
The government of Jamaica is thinking of pulling out of the
Jamaica Public Service Company aka JPS, the Jamaica Gleaner
reports.
The Gleaner states the government is planning to sell its
remaining 20% stake in the company to workers and the public.
"The shareholders agreement with the government allows
government to sell its share if it so chooses and we'd be happy
to partner with whoever buys them," Sam Davis, JPS head of
Government and Regulatory Affairs, told the Gleaner.
Minister of Industry, Commerce, Science and Technology, Phillip
Paulwell told the Gleaner that the potential JPS offering would
provide some cash and would give citizens a stake in the
business. It would facilitate some level of employee
participation and encourage greater loyalty.
On the other hand, Audley Shaw -- the opposition spokesman on
finance -- said to the Gleaner that the Jamaica Labour Party
would need to think about the government's plan before
commenting.
* * *
On Feb. 23, 2006, Moody's put its B rating on Jamaica.
"The outlook for all ratings is stable, reflecting a balance
between ongoing efforts at fiscal consolidation and the
vulnerability of the country to external shocks," Moody's said.
The agency points to Jamaica's strengths as a commitment to
fiscal discipline, proven ability to face severe shocks and
comparatively low external Government debt ratios.
Among the challenges which Jamaica faces, according to the
rating agency, is a closely managed exchange rate that is
subject to severe recurrent pressures and a large public sector
debt burden with growing exposure to international capital
markets.
The agency notes that the economy as well as the fiscal and
external positions remain sensitive to external and domestic
shocks. It further observes that, "they remain supported by the
Government's commitment to return to a balanced budget position
and by a constitutional provision mandating debt-service
payments as the first expenditure priority."
Moody's, which influences the behaviour of international
institutional investors, says despite Jamaica's recent adverse
external developments and a downturn in the local business
sentiment, "confidence in the medium-term programme and in the
ability of the policymakers has remained somewhat intact, as
evidenced by the relative stability of the foreign exchange
market, notwithstanding some bouts of pressure."
===========
M E X I C O
===========
DIRECTV: Sets Apr. 25 Tender Offer Deadline for US$300M Notes
-------------------------------------------------------------
Innova, a satellite-television joint venture between Mexican
broadcaster Grupo Televisa SA and DirecTV Group Inc., said it
has increased the size of a debt buyback offer and is now
tendering for all US$300 million of its 9 3/8% notes due 2013.
Innova increased the amount of the offer from US$195 million,
and has extended the deadline to April 25 from April 11.
By April 7, Innova had received tenders for about US$281 million
of the notes. The company will finance the buyback with bank
loans and cash.
Innova operates satellite television in Mexico under the Sky
brand.
The company, owned 53% by Televisa and 47% by DirecTV, will
finance the buyback with a new bank facility, along with cash or
other financing sources.
The DIRECTV Group, Inc., formerly Hughes Electronics
Corporation, headquartered in El Segundo, California, is a
world-leading provider of multi-channel television
entertainment, and broadband satellite networks and services.
The DIRECTV Group, Inc. with sales in 2004 of
approximately $11.4 billion is 34% owned by Fox Entertainment
Group, Inc., which is owned by News Corporation. DIRECTV is
currently available in Latin American countries: Argentina,
Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador,
Guatemala, Honduras, Mexico, Nicaragua, Panama, Puerto Rico,
Trinidad & Tobago, Uruguay, Venezuela and several Caribbean
island nations.
* * *
Moody's Investor Service assigned on June 8, 2005, a Ba2 rating
on DirecTV Group Inc.'s US$1.0 billion senior unsecured notes.
NUEVO LEON: Moody's Upgrades Local Currency Issuer Rating to Ba3
----------------------------------------------------------------
Moody's Investors Service has raised the issuer ratings of the
State of Nuevo Leon to A1.mx (Mexico National Scale) and Ba1
(Global scale, local currency) from A3.mx and Ba3, respectively.
The upgrade takes note of a consistent record of strong
operating results that contribute to above average financial
flexibility; these circumstances reflect notably sound budgetary
management. Also noted is the state's reliably positive
liquidity position. Although the state's debt-to-revenue ratio
is expected to increase in 2006 after a period of decline, debt
service costs are expected to be kept at manageable levels.
Over the medium term, the state has consistently achieved
positive operating results and a favorable financial position.
In the last six years from 2000 to 2005, Nuevo Leon recorded
operating margins averaging 16% of operating revenues,
significantly better than the 9.5% performance for Mexican
states rated by Moody's. The positive margins allowed the state
to self-finance a major share of its increasing investment in
capital projects. The results have been achieved with sound
budgeting and spending practices, as well as a fair amount of
own source revenues (13% of the total) compared to the average
for other Mexican states (7.2%). The challenge on the
expenditure side is personnel costs, which absorb about 35% of
total spending, primarily for education.
When capital expenditures are included, in three of the last six
fiscal years the state recorded financing deficits that were
managed either with borrowing or cash on hand, as in 2005 when
the deficit was covered with cash generated by the previous
year's Monterrey-Cadereyta toll road transaction. The state's
liquidity position has been consistently good in recent years,
with the ratio of net working capital to total expenditures
hovering between 2% and 6%, which is above average for Mexican
states rated by Moody's.
Nuevo Leon's key debt ratios had been trending down over the
medium term, as total direct debt dropped to almost 29% of
revenues in 2005 from a peak of 36% in 1998, due in large part
to revenue growth. However, this ratio is expected to return to
the previous peak in 2006 with a planned borrowing by the
state's Institute for Vehicular Control. Despite the relatively
high debt burden, debt service has been manageable and is
expected to remain so. After the ICV borrowing and a planned
refinancing of a major share of the state's direct debt, total
debt service costs are projected to hover around 2.5%-3.0% of
state revenues.
Although Nuevo Leon's pension costs are high, they are
predictable and are being appropriately funded on an annual
basis. A pension reform in 1993 provided defined-contribution
accounts for employees hired after that date, instead of
enrollment in the former defined benefit system. This ended the
growth of ISSTELEON's actuarial deficit and left the state
responsible for making employer contributions for all employees
and for providing a subsidy to ISSSTELEON needed to meet pension
payments under the old system that are not fully covered by
contributions. According to the latest actuarial study in 2005,
the state will devote approximately 6.5% of its spending to
pension contributions and ISSSTELEON subsidy over the next ten
years.
Nuevo Leon's economy is among the most dynamic in Mexico, with
state GDP per capita at approximately 180% of the national
level. An important part of its economic base consists of
industrial conglomerates and multinational corporations, which
reduces the volatility evident in other border states with
higher shares of maquila industries.
===========
P A N A M A
===========
* PANAMA: Expansion of Waterway Expected to Create 240 Jobs
-----------------------------------------------------------
The expansion of the Panama Canal that the government is
planning is expected to create about 240,000 jobs, a canal
official told EFE News Service.
EFE relates that there are about 150,000 Panamanians currently
unemployed. Manuel Benitez -- the waterway's No.2 administrator
-- said that the expansion could create possibly more than
240,000 additional jobs, direct and indirect positions included.
The construction, which was proposed by the Panama Canal
Authority aka ACP, would be self-financed through higher tolls.
Mr. Benitez was quoted by reporters saying that users would pay
for the expansion if the project was approved.
Mr. Benitez, says EFE, explained that the Treasury would not
have to pay for the project and that ACP does not call for the
central government to take on any type of debt to fund the
construction.
Construction of the third set of locks foreseen in the project
would start within 18-24 months after the expansion is approved,
Mr. Benitez revealed to EFE. The new locks are needed to
accommodate the larger ships now in operation around the world.
Mr. Benitez told EFE that the construction of the canal would
take about five years.
Under the Panamanian Constitution, the expansion of the waterway
will be decided by the people in a referendum, according to EFE.
Panama plans to hold a referendum later this year.
* * *
Fitch Ratings assigned these ratings on Panama:
Rating Rating Date
------ -----------
Country Ceiling BBB Apr. 8, 2005
Long Term IDR BB+ Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB+ Dec. 14, 2005
===============
P A R A G U A Y
===============
* PARAGUAY: Will be Asked to Drop Claims Against US Trade Deal
--------------------------------------------------------------
The United States and some Caribbean nations will ask Paraguay
to withdraw its complaints on the Caribbean Basin Initiative, a
trade deal provided by Washington to Central American and
Caribbean countries, Guyana's Foreign Trade Minister Clement
Rohee told the Associated Press.
Paraguay complained to the World Trade Organization aka WTO that
it was not offered duty-free market access to the US that the
Caribbean Basin promises to offer. The country further claimed
that it did not benefit from the deal.
The Caribbean Basin offers 24 countries access to the US market,
duty-free, for most goods. The initiative, according to Mr.
Rohee, accounts for more than US$1 billion in annual trade under
the policies of the WTO.
Officials from the US and from some Caribbean nations will try
to meet with Paraguay to resolve the dispute, the trade minister
informed AP. He however did not state the date of the meeting.
* * *
Moody's assigned these ratings on Paraguay:
-- CC LT Foreign Bank Deposit, Caa2
-- CC LT Foreign Curr Debt, Caa1
-- CC ST Foreign Bank Deposit, NP
-- CC ST Foreign Currency Debt, NP
-- LC Currency Issuer Rating, Caa1
-- FC Curr Issuer Rating, Caa1
-- Local Currency LT Debt, WR
* * *
Standard & Poor's assigned these ratings on Paraguay:
-- Foreign Currency LT Debt B-
-- Local Currency LT Debt B-
-- Foreign Currency ST Debt C
-- Local Currency ST Debt C
=====================
P U E R T O R I C O
=====================
AOL LATIN: Files Monthly Operating Report for March 2006
--------------------------------------------------------
America Online Latin America aka AOLA and its subsidiaries --
AOL Puerto Rico Management Services, Inc., AOL Caribbean Basin,
Inc., and AOL Latin America Management LLC -- filed on April 18,
2006, their consolidated monthly operating report for March 2006
with the United States Bankruptcy Court for the District of
Delaware.
As previously reported, AOLA and the above-listed debtor-in-
possession subsidiaries each filed voluntary petitions for
relief under Chapter 11 of the United States Bankruptcy Code in
the United States Bankruptcy Court for the District of Delaware
on June 24, 2005.
For the month ending March 31, 2006, the Company's Income
Statement shows:
Net Income/
Revenue (Net Loss)
------- ------------
America Online Latin $0 $112
America, Inc.
AOL Latin America Management, $173,070 ($275,841)
LLC
AOL Puerto Rico Management $43,870 ($106,300)
Services, Inc.
America Online Caribbean Basin, $310,536 $392,615
Inc.
At March 31, 2006, the Company's balance sheet shows:
America Online Latin America, Inc.
----------------------------------
Current Assets $17,403,284
Total Assets 611,240,093
Current Liabilities 6,130,621
Total Liabilities 166,130,621
Total Stockholders' Equity [$445,110,472]
AOL Latin America Management, LLC
---------------------------------
Current Assets $12,979,467
Total Assets 13,030,399
Current Liabilities 27,139,768
Total Liabilities 27,139,768
Total Stockholders' Deficit ($14,109,369)
AOL Puerto Rico Management Services, Inc.
-----------------------------------------
Current Assets $16,436
Total Assets 27,437
Current Liabilities 6,663,764
Total Liabilities 6,676,431
Total Stockholders' Deficit [($6,548,994)]
America Online Caribbean Basin, Inc.
------------------------------------
Current Assets $21,813,126
Total Assets 21,833,450
Current Liabilities 215,421
Total Liabilities 215,421
Total Stockholders' Equity [$21,618,030]
A full-text copy of America Online Latin America, Inc., and its
debtor-affiliates' Monthly Operating Report for the month ended
March 31, 2006, is available at no charge at:
http://researcharchives.com/t/s?6e2
Headquartered in Fort Lauderdale, Florida, America Online
LatinAmerica, Inc. -- http://www.aola.com/-- offers AOL-branded
Internet service in Argentina, Brazil, Mexico, and Puerto Rico,
as well as localized content and online shopping over its
proprietary network. Principal shareholders in AOLA are
Cisneros Group, one of Latin America's largest media firms,
Brazil's Banco Itau, and Time Warner, through America Online.
The Company and its debtor-affiliates filed for Chapter 11
protection on June 24, 2005 (Bankr. D. Del. Case No. 05-11778).
Pauline K. Morgan, Esq., and Edmon L. Morton, Esq., at Young
Conaway Stargatt & Taylor, LLP and Douglas P. Bartner, Esq., at
Shearman & Sterling LLP represent the Debtors in their
restructuring efforts. When the Debtors filed for protection
from their creditors, they listed total assets of $28,500,000
and total debts of $181,774,000.
OCA INC: Court Okays KPMG's Retention as Tax Accountants
--------------------------------------------------------
OCA Inc. and its debtor-affiliates sought and obtained authority
from the U.S. Bankruptcy Court for the Eastern District of
Louisiana to employ and retain KPMG LLP as their tax accountants
and advisors.
KPMG LLP is expected to:
a. prepare or review federal and state corporate income tax
returns and supporting schedules together with any loss
carryback returns that may be necessary;
b. provide tax advisory services in connection with the
completion of a loss carryback claim and related tax
research and consultation;
c. provide tax-consulting services relative to any existing
or future IRS, stat and legal tax examinations;
d. provide accounting support related to tax advisory
services; and
e. provide any other tax advice and assistance as may be
requested from time to time by the Debtors.
Raymond J. Jeandron, Jr., a certified public accountant and
partner at KPMG LLP, tells the Court that the Firm's
professionals
bill:
Professional Hourly Rate
------------ -----------
Partners/Principals $500 - $750
Senior Managers/Managers $375 - $500
Senior/Staff Consultants $175 - $350
Paraprofessionals $120
Mr. Jeandron assures the Court that the Firm is "disinterested"
as that term is defined in Section 101(14) of the Bankruptcy
Code.
Based in Metairie, Louisiana, OCA, Inc. -- http://www.ocai.com/
-- provides a full range of operational, purchasing, financial,
marketing, administrative and other business services, as well
as capital and proprietary information systems to approximately
200 orthodontic and dental practices representing approximately
almost 400 offices. The Company's client practices provide
treatment to patients throughout the United States and in Japan,
Mexico, Spain, Brazil and Puerto Rico.
The Company and its debtor-affiliates filed for Chapter 11
protection on March 14, 2006 (Bankr. E.D. La. Case No.
06-10179). William H. Patrick, III, Esq., at Heller Draper
Hayden Patrick & Horn, LLC, represents the Debtors. When the
Debtors filed for protection from their creditors, they listed
$545,220,000 in total assets and $196,337,000 in total debts.
OCA INC: Has Interim Access to Bank of America's Cash Collateral
----------------------------------------------------------------
The Hon. Jerry A. Brown of the U.S. Bankruptcy Court for the
Eastern District of Louisiana authorized OCA, Inc., and its
debtor-affiliates to use cash collateral securing repayment of
their prepetition obligations to a group of lenders, represented
by Bank of America as administrative and collateral agent.
The lender group provided the Debtors with original term loans
in the aggregate principal amount of $25 million and a revolving
credit facility totaling $100 million under a credit agreement
dated Jan. 2, 2003.
As of the petition date, the Debtors owed the lender group
approximately $91.7 million, plus accrued and unpaid interest of
at least $501,688. The Debtors obligations to the lender group
are secured by a fully perfected, first priority priming lien on
and senior security interest in all of their assets.
The Debtors need access to the lender group's cash collateral to
meet their cash requirements for working capital and general
corporate needs. The Debtors tell the Bankruptcy Court that
access to the cash collateral will allow for the continued flow
of supplies and services necessary to sustain their operations
and enhance their prospects for a successful restructuring.
Second-Priority Liens
As adequate protection for the use of the cash collateral, the
Debtors grant the lender group a perfected, second-priority
postpetition security interests in and liens on all of their
assets. The junior liens secure an amount equal to the
diminution in the value of the lender group's cash collateral.
In addition, the lender group is also granted a superpriority
administrative claim, junior only to the superpriority claim
held by their DIP lenders, Bank of America and Silver Point
Finance, LP.
Interim DIP Order
The Debtors also sought authority from the Bankruptcy Court to
enter into a postpetition financing agreement with Silver Point,
Bank of America and certain other financial institutions.
Silver Point and Bank of America's DIP loan will allow the
Debtors to obtain cash advances, and other extensions of credit,
on term and revolving credit bases, in an aggregate principal
amount of up to $106.7 million
Pending final authorization to enter into the DIP financing
agreement, the Bankruptcy Court authorized the Debtors to:
-- initially obtain $3 million for the week ending
March 20, 2006;
-- borrow $7 million in the second week ending March 27,
2006; and
-- obtain the maximum amount outstanding in a non-public
Budget for the remaining weeks, but not in excess
of $7 million.
Obligations arising under the DIP financing agreement will be
secured by:
-- a fully perfected, first priority lien on and senior
security interest on all of the Debtors' assets;
-- a fully perfected, first priority priming lien on and
senior security interest in all of the Debtors' assets;
and
-- a fully perfected, junior lien on and junior security
interest in all assets subject to a higher lien.
Judge Brown will convene a hearing at 2:00 p.m. on April 26,
2006, to consider final approval of the Debtors' request to
obtain postpetition financing and use cash collateral.
The Official Committee of Unsecured Creditors has until April
20, 2006, to object to the Debtors financing requests. The
United States Trustee appointed an official committee on March
24, 2006. The Committee's hired Mark K. Thomas, Esq., at Jenner
& Block, LLP, as lead counsel; William E. Steffes, Esq., at
Steffes Vingiello & McKenzie LLC, as local counsel; and Mohsin
Y. Meghji at Loughlin Meghji + Company as its financial advisor.
Based in Metairie, Louisiana, OCA, Inc. -- http://www.ocai.com/
-- provides a full range of operational, purchasing, financial,
marketing, administrative and other business services, as well
as capital and proprietary information systems to approximately
200 orthodontic and dental practices representing approximately
almost 400 offices. The Company's client practices provide
treatment to patients throughout the United States and in Japan,
Mexico, Spain, Brazil and Puerto Rico.
The Company and its debtor-affiliates filed for Chapter 11
protection on March 14, 2006 (Bankr. E.D. La. Case No.
06-10179). William H. Patrick, III, Esq., at Heller Draper
Hayden Patrick & Horn, LLC, represents the Debtors. When the
Debtors filed for protection from their creditors, they listed
$545,220,000 in total assets and $196,337,000 in total debts.
MUSICLAND HOLDING: Donlin Approved as Panel's Information Agent
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gave the Official Committee of Unsecured Creditors of Musicland
Holding Corp. and its debtor-affiliates authority to retain
Donlin, Recano & Company, Inc., as its information agent, nunc
pro tunc to Feb. 9, 2006.
As reported in the Troubled Company Reporter on Mar. 17, 2006,
Donlin Recano will:
(a) provide access to information for the Committee's
constituents through web-based technology developed by
Donlin Recano, which include certain information:
* General case information including case dockets,
access to docket filings, composition of the
Committee, their counsel, and the date, place and time
of the Section 341 meeting;
* Answers to frequently asked questions, discussing a
general overview of the Chapter 11 process, the role
of the Committee, the responsibility of committee
members, and the filing of a proof of claim;
* A Committee reports section providing monthly
operating reports filed by the debtor and monthly
Committee written reports summarizing recent
proceedings, events and public financial information;
* A password protected confidential information access
section whereby creditors who have executed a
confidentiality agreement may retrieve confidential
information;
* A case calendar section which will include case
matters of relevance to the unsecured creditors;
* A section providing the creditor the ability to e-mail
a question and receive a response;
* Press releases issued by each of the Committee and the
Debtors;
* Highlights of significant events in the cases;
* Links to other relevant Web sites; and
* Any other information to be posted at the direction of
the Court, the Committee or its counsel.
(b) solicit and receive comments form the unsecured
creditors through the Committee Web site and the ability
of the creditors to e-mail comments and questions;
(c) establish and maintain a telephone number and call
center for unsecured creditors to call with questions;
(d) provide notice to the unsecured creditors as to the
existence of the Committee Web site; and
(e) provide other services as required by the Court, the
Committee or its counsel to assist the Committee in
complying with the requirements of Section 1102(b)(3) of
the Bankruptcy Code.
The Debtors will pay Donlin Recano for its services in these
amounts:
Category Amount
-------- ------
Monthly Base Fee $150 per month
Posting Documents to Web site $50 per document
Web site Maintenance and Monitoring $115 to $250 per
hour
Data Entry $35 per hour
Imaging/Storage $0.18 per image
Facsimile Noticing $0.12 per page
Photocopying & Laser Printing $0.10 per page
E-mail Transmission (attachments only) $0.015 per kilobyte
Out-of-Pocket Expenses At Cost
Louis A. Recano, a principal at Donlin Recano, assured the Court
that the firm and its employees are disinterested as that term
is defined in Section 101(14) of the Bankruptcy Code.
About Musicland Holding
Headquartered in New York, New York, Musicland Holding Corp., is
a specialty retailer of music, movies and entertainment-related
products. The Debtor and 14 of its affiliates filed for chapter
11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No.
06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis,
represents the Debtors in their restructuring efforts. Mark T.
Power, Esq., at Hahn & Hessen LLP, represents the Official
Committee of Unsecured Creditors. When the Debtors filed for
protection from their creditors, they estimated more than $100
million in assets and debts. (Musicland Bankruptcy News, Issue
No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000)
=================================
T R I N I D A D & T O B A G O
=================================
DIGICEL: Supports Arbitration Panel's Jurisdiction on Rates
-----------------------------------------------------------
The Trinidad & Tobago Express reports that Digicel Limited has
backed the Telecommunications Authority of Trinidad and Tobago's
arbitration panel's jurisdiction to decide on interconnection
rates.
As previously reported, the panel was unable to issue interim
interconnection rates as a result of a stay issued by the
nation's High Court at the behest of the Telecommunication
Services of Trinidad and Tobago -- TSTT.
TSTT questions the panel's jurisdiction with regards to the
interconnection rates.
The panel is comprised of Rory Mc Millan, a UK-based lawyer who
also practises in the US and Canada, economist and
Telecommunications Authority of Trinidad and Tobago directors
Dr. Ronald Ramkissoon and Dr. Shahid Hussain. Interim
interconnection rates were supposedly issued on April 18 between
Digicel and TSTT.
Digicel currently operates in Trinidad and allowed access to
TSTT's network without additional costs.
TSTT's communications manager Camille Salandy told the Daily
Express that the company will meet the panel today in Court to
discuss the matter.
Digicel's chief executive officer, Stephen Brewer, told the
Daily Express, that he wished the issue would be settled quickly
so Digicel "could offer better rates than we have already."
Digicel Limited is a wireless services provider in the Caribbean
region founded in 2000, and controlled by Denis O'Brien. The
company started operations in Jamaica in April 2001 and now
offers GSM mobile services in 13 countries of the Caribbean
including Jamaica, St. Lucia, St. Vincent, Aruba, Grenada,
Barbados, Cayman, and Curacao among others. Digicel finished
FY2005 with 1.722 million total subscribers -- 97% pre-paid --
estimated market share of 67% and revenues and EBITDA of US$478
million and US$155 million, respectively.
* * *
On Mar. 10, 2006, Fitch affirmed the 'B' rating of Digicel
Limited, senior unsecured debt, including the US$300 million
senior notes due 2012, following the announcement that it is in
the process of acquiring Bouygues Telecom Caraibe. Fitch said
the Outlook for the Ratings is Stable.
=============
U R U G U A Y
=============
* URUGUAY: US$300M Bond Initial Offering Raised to US$500M
----------------------------------------------------------
The Financial Times reports that Uruguay's initial offering of
US$300 million bond, which matures in 30 years and was five
times oversubscribed, was raised to US$500 million.
According to the Financial Times, the issuing of the US$300
million bond was successful. The country is now taking
advantage of overwhelming demands that coincided with the lowest
spreads that the country has seen in the last 15 years.
"It was a magnificent operation," said Finance Minister Danilo
Astori in an interview with the Financial Times. "This is a
sign of very great confidence in Uruguay," he said.
Financial Times relates that another reason for having pulled
off the issue of the bond is the similar experience of other
low-rated countries that were able to borrow big from the market
in recent months. Some of the countries include:
-- Brazil with a three times oversubscribed 30-year bond;
-- Panama, which exchanged US$1.06 billion of old bonds for
US$1.36 billion new 30-year bond;
-- Turkey;
-- Indonesia; and
-- Pakistan.
According to JPMorgan's EMBI+ index, which is widely followed,
the spread that emerging market issuers have to pay in interest
fell from an average of 10 percentage points over US Treasury
rates in October 2002 to less than the current two points.
Investors have still granted the issuance of bonds for the
emerging markets even if their yields are low. This is mainly
part of the general appetite for any available pick-up in
yields, which further drives yields to lower.
Uruguay is proud of its relatively corrupt-free government. It
has also cautioned itself from borrowing too much. Hence, it
has earned a good reputation in the markets.
"Our image as a serious country that pays its debts is very
important to us," Mr. Astori told the Financial Times. "Uruguay
is a country that is greatly respected all over the world. We
never fail to fulfill our obligations."
Financial Times states that Uruguay prides itself in having
defaulted only twice -- in 1913 and in 1933. It has avoided
default in 2003 when it decided to restructure its debt.
"Uruguay still has a high level of debt, even though financing
is not a major constraint in the short run," said Sebastian
Briozzo, Standard & Poor's sovereign ratings analyst for
Uruguay. "But as long as the fiscal situation stays in order,
there are reassuring prospects for the medium term," he said,
adding that the economic team is doing a "good job".
Mr. Astori said that the country is maintaining its status of:
-- economic growth of 6% in 2005;
-- export increase at a rate of 15%; and
-- primary budget surplus above 3.5%.
Mr. Briozzo commented that the issue was a good liability
management since Uruguay has strong liquidity and low yields
available. The issue covers finances for 2006 and part of 2007.
"They aren't using this beneficial environment to increase
expenditure dramatically. Instead, they are refinancing
maturities they have for upcoming years and improving the
profile and structure of their debt," Mr. Briozzo said, and
added, "But they are not the only ones who have known how to
take advantage of an exceptional external environment. Uruguay
is not an exception - it is really the rule."
* * *
Fitch Ratings assigned these ratings on Uruguay:
Rating Rating Date
------ -----------
Country Ceiling BB- Mar. 7, 2005
Long Term IDR B+ Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB- Mar. 7, 2005
=================
V E N E Z U E L A
=================
CITGO PETROLEUM: Holds Meeting with Recipients of Discounted Oil
----------------------------------------------------------------
El Universal reports that Citgo Petroleum Corporation met with
more than 200 groups in New York. The groups were beneficiaries
of a program that was sponsored by Venezuela to provide
discounted heating oil to the poor in the United States.
Citgo's Chief Executive Felix Rodriguez told TV Channel
Venezolana de Television that the meeting was held to review the
outcome of the energy program and to assess the needs of the
beneficiaries.
"We are in the Bronx, a place with a great meaning for this
plan, as (Venezuelan) President (Hugo) Chavez visited this area
some months ago and vowed both Citgo and the Venezuelan
Government would supply oil to the poor," Mr. Rodriguez was
quoted by news agency ABN saying.
Mr. Rodriguez disclosed to ABN that during the meeting, many
Citgo representatives received a number of opinions encouraging
them to strengthen the said program. They believed that it is a
way of fostering integration among the peoples.
The program to supply discounted heating oil to the poor in the
US started in November 2005 in Boston. The project then spread
to:
-- New York,
-- Maine,
-- Rhode Island,
-- Vermont,
-- Delaware,
-- Connecticut, and
-- Philadelphia.
Citgo Petroleum Corporation is the refining arm of Petroleos de
Venezuela S.A., the state-controlled oil giant.
PDVSA is Venezuela's state oil company in charge of the
development of the petroleum, petrochemical and coal industry,
as well as planning, coordinating, supervising and controlling
the operational activities of its divisions, both in Venezuela
and abroad.
* * *
As reported on Feb. 16, 2006, Standard and Poor's Ratings
Services assigned a 'BB' rating on CITGO Petroleum Corp.
Standard & Poor's 'BB' rating on CITGO is higher than the 'B+'
corporate credit rating on PDVSA, because of the relative
strength of the refiner's financial profile and the asset
protection afforded to CITGO creditors, if CITGO defaults for
PDVSA-specific reasons, for example, a Venezuela sovereign
default. Nevertheless, CITGO could be challenged by events
surrounding PDVSA.
PETROLEOS DE VENEZUELA: Inks Joint Venture with 16 Oil Firms
------------------------------------------------------------
Petroleos de Venezuela SA signed joint venture accords with
sixteen private oil firms.
Under the joint ventures, PDVSA has at least 60% ownership of
each oil field operated by the 16 companies.
The 16 companies that signed agreements with PDVSA were:
* Spain's Repsol YPF,
* UK's BP,
* Japanese firm Teikoku,
* local unit of Canada's PetroFalcon Vinccler Oil & Gas,
* Suelopetrol,
* Inemaka
* Open,
* Petroleo Brasileiro SA,
* China's CNPC,
* Chevron Corp.,
* Anglo-Dutch major Shell (NYSE: RDS-B),
* Argentina's CGC,
* Tecpetrol,
* France's Perenco,
* Harvest and
* France's Hocol.
These companies produce a combined 200,000b/d of crude in
Venezuela. The largest operation is Chevron's BoscAn field with
100,000b/d of production, mostly for asphalt manufacture.
Three firms refused to sign the joint venture agreements --
Total, Eni and Statoil. They said they were not satisfied with
the terms.
"We declined to sign, the terms didn't please us," a Total
official told Business News Americas.
As a result PDVSA has seized control of Total's Jusepin field in
Monagas state. Jusepin produces some 31,000 barrels of oil a
day. Total had been operating Jusepin for more than a decade.
PDVSA also terminated Eni's operating service contract on the
Dacion field.
"Eni will comply with PDVSA's request by ensuring activities are
handed over in a professional way and at an agreed time.
However, Eni believes this action by PDVSA is a violation of
Eni's contract rights," Eni said in a statement.
Petroleos de Venezuela SA aka PDVSA is Venezuela's state oil
company in charge of the development of the petroleum,
petrochemical and coal industry, as well as planning,
coordinating, supervising and controlling the operational
activities of its divisions, both in Venezuela and abroad.
* * *
On Jan. 23, 2005, Fitch Ratings upgraded the local and foreign
currency ratings of Petroleos de Venezuela S.A. aka PDVSA to
'BB-' from 'B+'. The rating of PDVSA's export receivable
future flow securitization, PDVSA Finance Ltd, was also upgraded
to 'BB+' from 'BB'. In addition, Fitch has assigned PDVSA a
'AAA(ven)' national scale rating. The Rating Outlook is
Stable. Both rating actions follow Fitch's November 2005
upgrade of Venezuela's sovereign rating.
PETROLEOS DE VENEZUELA: Appoints Mixed Co. Staff on Efficiency
--------------------------------------------------------------
Staff rendering services to private operators transferred to
Mixed Companies is only selected according to efficiency
criteria and in full respect of its labor rights, president of
Corporacion Venezolana de Petroleo or CVP and PDVSA Internal
Director, Eulogio Del Pino warned.
Mr. Del Pino explained that an organizational structure based on
a reduction in production costs will be implemented by means of
Mixed Companies.
"If costs arising from operative agreements were far too high,
now we must focus on a more efficient plan within Mixed
Companies which must definitely embrace the Human Resource
Department. While an oil barrel comprised within operative
agreements cost US$20, within Mixed Companies it will be priced
at less than US$5. Every feature influences the selection
process of Mixed Companies' staff. We will not reproduce the
immense bureaucracy that characterized the old PDVSA," Mr. Del
Pino stated.
PDVSA Internal Director pointed out that migration of staff from
private operators to Mixed Companies has been carried out
pursuant to a legal framework and as part of a transparent
dialogue between parties involved.
Mr. Del Pino said, "PDVSA has followed a dialogue process with
private operators with the purpose of getting information about
staff status in terms of job positions, compensations, and
experience. This data, currently under analysis, will be use in
the decision-making process."
Mr. Del Pino also reminded that PDVSA has direct contact with
workers who are currently at different oil fields managed by
private enterprises. PDVSA has explained to them that migration
process will be done in compliance with not only their labor
rights but also the legal framework provided in the Constitution
of the Bolivarian Republic of Venezuela and in the Organic Labor
Law.
Mr. Del Pino emphasized that workers under the Oil Collective
Bargaining Agreement will migrate to Mixed Companies complying
to the same terms and conditions provided by the abovementioned
legal document. On the other hand, the managerial payroll would
be subject to PDVSA regulations in terms of compensation, job
positions, plans and benefits, considering that Mixed Companies
will become PDVSA's subsidiaries.
The Internal PDVSA Director said that some political
representatives have intended to cloud the staff migration
process to Mixed Companies through a lack-of information
campaign. Mixed Companies will give Venezuelan State full right
over production obtained from 32 oil fields.
Petroleos de Venezuela SA aka PDVSA is Venezuela's state oil
company in charge of the development of the petroleum,
petrochemical and coal industry, as well as planning,
coordinating, supervising and controlling the operational
activities of its divisions, both in Venezuela and abroad.
* * *
On Jan. 23, 2005, Fitch Ratings upgraded the local and foreign
currency ratings of Petroleos de Venezuela S.A. aka PDVSA to
'BB-' from 'B+'. The rating of PDVSA's export receivable
future flow securitization, PDVSA Finance Ltd, was also upgraded
to 'BB+' from 'BB'. In addition, Fitch has assigned PDVSA a
'AAA(ven)' national scale rating. The Rating Outlook is
Stable. Both rating actions follow Fitch's November 2005
upgrade of Venezuela's sovereign rating.
* VENEZUELA: Seniat Will Bill Orinoco Oil Projects In 3 Months
--------------------------------------------------------------
Venezuela's tax authority -- Seniat -- plans to deliver tax
bills to all heavy crude upgrading projects operating in the
Orinoco river within three months, Dow Jones Newswires reports.
Jose Vielma Mora said at a press briefing that a tax review of
all four heavy oil upgraders in Venezuela is ongoing, "but we
don't expect big tax bills" as a result.
"In three months or less we will begin billing (the rest of the)
Orinoco projects," for unpaid taxes, Mr. Vielma said.
Seniat officials recently billed:
-- Sincor, a total of 1.5 billion bolivars (US$698,000) in
undeclared income taxes for the year 2001.
-- French company Total SA,
-- Norway's Statoil ASA and
-- Petroleos de Venezuela.
Dow Jones says that the review of Orinoco region upgraders is
the second phase in Venezuela's campaign to collect unpaid taxes
from foreign oil companies. The first phase covered the 32
operating contracts run by 22 oil companies.
* * *
Venezuela's foreign currency long-term debt is rated B2 by
Moody's, B+ by Standard & Poor's, and BB- by Fitch.
* VENEZUELA: Seeks Congressional Approval on US$1.4B Bond Sale
--------------------------------------------------------------
Venezuela's Finance Ministry asked congress to authorize it to
sell as much as US$1.4 billion of domestic or international
debt, congressman Ricardo Sanguino told Bloomberg News.
The bonds will be denominated in bolivars, dollars or euros.
Bloomberg says that Venezuela may sell a euro- or dollar-
denominated bond in the domestic market as part of a plan to
refinance some of its US$16 billion of local-currency debt, a
Finance Ministry official said last month. The government may
also offer a swap, giving investors bonds with longer maturities
in exchange for securities maturing over the next three years.
About three-fourths of the government's local currency debt
matures by 2008. Finance Minister Nelson Merentes said on March
1 that he wants to extend those maturities out to as long as
2015 to lighten up the debt load over the next few years,
Bloomberg relates.
Venezuela's foreign currency long-term debt is rated B2 by
Moody's, B+ by Standard & Poor's, and BB- by Fitch.
* VENEZUELA: Withdraws from South American Trade Bloc
-----------------------------------------------------
Venezuela it is quitting the Andean Community Nations, the South
American trade bloc, Venezuelan President Hugo Chavez told BBC
News.
BBC News relates that President Chavez announced the withdrawal
of Venezuela during a summit held in Paraguay.
The Andean Community of Nations is made up of Bolivia, Colombia,
Ecuador and Peru and is headed by President Chavez.
According to News.nabou.com, the Venezuelan president said that
the free trade agreements between Peru, Colombia and the United
States have made the Andean Community obsolete, saying that the
group now served international elites.
President Chavez accused Andean Community members of being
overly aligned with the US and claimed that the free trade deals
are unfair to developing nations, BBC News reports.
* * *
Venezuela's foreign currency long-term debt is rated B2 by
Moody's, B+ by Standard & Poor's, and BB- by Fitch.
***********
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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Copyright 2006. All rights reserved. ISSN 1529-2746.
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