/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/060726.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Wednesday, July 26, 2006, Vol. 7, Issue 147 Headlines A R G E N T I N A BRICOLAGE DE ARGENTINA: Seeks Approval to Restructure Debts COLEGIO DE FAMILIA: Claims Verification Deadline Is on Oct. 11 COMPANIA DE ALIMENTOS: Fitch Arg Affirms US$120M Debt's D Rating CREDIT BAIL: Trustee Verifies Proofs of Claim Until Sept. 22 CURVASUR SRL: Enters Bankruptcy on Court Orders DROGUERIA MAGNA: Moody's LatAm Puts C Rating on US$5-Mil. Notes ELECTRICIDAD ARGENTINA: S&P Junks Corporate Credit Rating EDIFICADORA Y CONSTRUCTORA: Claims Verification Ends on Sept. 27 ENVAPOL SA: Individual Reports Due in Court on Aug. 7 EUROMAYOR SA: Moody's LatAm Puts C Rating on US$10-Million Debt FASTAMP SA: Verification of Proofs of Claim Is Until Sept. 25 FIDEICOMISO UBS: Fitch Argentina Puts Junk Ratings on Two Debts FUCCI HNOS: Seeks Court Approval to Reorganize Business PERSONAL SERVICIOS: Reorganization Proceeds to Bankruptcy UNILAB SA: Deadline for Verification of Claims Is on Sept. 11 VERARDO HERMANOS: Trustee Delivers Individual Reports on Aug. 3 * ARGENTINA: 100,000 Italian Creditors Will File Suit Next Month * ARGENTINA: Will Explore for Oil in Venezuela's Orinoco Belt * ARGENTINA: Neuquen Province Moves Bond Issuance to August B A H A M A S COMPLETE RETREATS: Files Chap. 11 Reorganization in Connecticut COMPLETE RETREATS: Case Summary & 50 Largest Unsecured Creditors B E R M U D A REFCO INC: Six Creditors Withdraw Nine Proofs of Claim B O L I V I A * BOLIVIA: Chile Willing to Hold Talks on Joint Energy Projects B R A Z I L BANCO NACIONAL: Inks MOU With US Trade & Development Agency BRASKEM SA: Administrative Council Approves Politeno Acquisition COMPANHIA PARANAENSE: Could Activate Araucaria Plant in Sept. CIA. SIDERURGICA: In Partnership Talks with Wheeling-Pittsburgh DRESSER-RAND: Jean-Paul Vettier Named New Independent Director SADIA SA: Moody's Affirms Ba2 Global Local Currency Rating SADIA SA: S&P Affirms BB Long-Term Corporate Credit Rating VARIG S.A.: Preliminary Injunction Continued to September 14 VARIG S.A.: Will Appoint New Chief Executive Officer This Week * BRAZIL: Agencia Nacional Aims to Double Area for Auction * BRAZIL: Telecom Agency Issues Tender Rules for WiMax Services C A Y M A N I S L A N D S ALMA HOLDINGS: Shareholders Final Meeting Set for Aug. 11 ALTEDGE ADVISORS: Last Shareholders Meeting Is Set for Aug. 11 BCP GLOBAL: Final Shareholders Meeting Is Scheduled for Aug. 11 FOCUS ALLOCATION: Final Shareholders Meeting Is Set for Aug. 11 FOCUS GLOBAL: Final Shareholders Meeting Set for Aug. 11 FOCUS STRATEGIC: Will Hold Final Shareholders Meeting on Aug. 11 FOCUS STRATEGIC II: Final Shareholders Meeting Is on Aug. 11 INTEGRO HOLDINGS: Final Shareholders Meeting Is on Aug. 11 MERRILL LYNCH: Final Shareholders Final Meeting on Aug. 11 NIRVANA CAPITAL: Last Shareholders Meeting Is Set for Aug. 11 PAPA BOB: Schedules Final Shareholders Meeting on Aug. 11 SPIKE LIMITED: Shareholders Meet for a Final Meeting on Aug. 11 C O L O M B I A * COLOMBIA: Awarding Design of Project with Panama in September * COLOMBIA: Fitch Rates US$1-Bil. Global Bond Due 2017 at BB * COLOMBIA: Oil Sector Posts US$331M from Foreign Investments C O S T A R I C A * COSTA RICA: Bill on State Power Firm's Upgrade Expected in Aug * COSTA RICA: Foreign Investment to Exceed Central Bank Estimate * COSTA RICA: Comptroller General to Probe Ericsson Contract D O M I N I C A N R E P U B L I C FALCONBRIDGE LTD: Board Reaffirms Support for Inco's Offer FALCONBRIDGE: Net Income Up 260% to US$728MM in Second Quarter * DOMINICAN REPUBLIC: Puerto Plata Operations Moved to Haina * DOMINICAN REPUBLIC: Retailers Group Criticizes Fuel Pricing E C U A D O R PETROECUADOR: Will Launch Tender for Block 15 Production E L S A L V A D O R BANCO SALVADORENO: Fitch Places BB Rating on Positive Watch MILLICOM INT'L: Revenues Up 39% to US$362MM in Second Quarter G U A T E M A L A BANCO DEL CAFE: Five Banks Expected to Present Bids for Firm BANCO INDUSTRIAL: Moody's Changes Ba3 Rating Outlook to Positive * GUATEMALA: Moody's Revises Ba2 Rating Outlook to Positive J A M A I C A SUGAR COMPANY: Government Close to Reaching New Financial Deal M E X I C O CORPORACION GEO: Posts Strong Results for Second Quarter of 2006 FORD MOTOR: Reports Net Loss of US$123MM in Second Quarter FORD MOTOR: S&P Cuts Corporate Credit Rating to B+ from BB- LG.PHILIPS: Chapter 7 Trustee Wants to Abandon Mexican Assets MERIDIAN AUTOMOTIVE: Judge Walrath Approves Solicitation Process N I C A R A G U A * NICARAGUA: Impels Venezuela to Keep Promise of Pardoning Debt * NICARAGUA: Opens Managua International Airport Terminal * NICARAGUA: Launches US$4.8MM Facility for Call Center Services P A N A M A PRIMER BANCO: Fitch Places Low B Ratings on Watch Positive * PANAMA: Creates Ad Hoc Commission to Man Waterway Expansion * PANAMA: Awarding Design of Project with Colombia in September P A R A G U A Y * PARAGUAY: Eager to Forge Bilateral Ties Outside Mercosur P E R U * PERU: Posts 2,060 Gigawatt-Hours Electricity Output in June P U E R T O R I C O ADELPHIA COMMS: Inks Plan Agreement With Creditors Committees FIRST BANCORP: Appoints Fernando Scherrer as New CFO and EVP RENT-A-CENTER: Reports US583.6-Mil. Revenues in Second Quarter SANTANDER BANCORP: Could Up Mortage Market Share, Analysts Say T R I N I D A D & T O B A G O DELTA AIR: Adds Nonstop Flights to Trinidad & Tobago MIRANT CORP: Litigation Trust Gets More Time to Object to Claims MIRANT: Litigation Trust Battles Troutman Over Subpoena Power U R U G U A Y * URUGUAY: Exploring Orinoco Oil Belt with Argentina & Venezuela * URUGUAY: Interested in Forging Bilateral Ties Outside Mercosur V E N E Z U E L A * PETROLEOS DE VENEZUELA: Gets Aid in Orinoco Oil Exploration * VENEZUELA: Nicaragua Urges Pres. to Pardon Debt as Promised - - - - - ================= A R G E N T I N A ================= BRICOLAGE DE ARGENTINA: Seeks Approval to Restructure Debts ----------------------------------------------------------- Court No. 18 in Buenos Aires is studying the merits of Bricolage de Argentina S.A.'s petition to restructure its debts after it has defaulted on its payments. The petition, once approved by the court, will allow Bricolage de Argentina to negotiate a settlement with its creditors in order to avoid a straight liquidation. Clerk No. 35 assists the court in the proceeding. The debtor can be reached at: Bricolage de Argentina S.A. Lavalle 1430 Buenos Aires, Argentina COLEGIO DE FAMILIA: Claims Verification Deadline Is on Oct. 11 -------------------------------------------------------------- Court-appointed trustee Jose Scheinkoff will verify creditors' proofs of claim against bankrupt company Colegio de Familia S.R.L. until Oct. 11, 2006. Creditors who fail to present their proofs of claims won't receive any post-liquidation distribution that Mr. Scheinkoff will make. Mr. Scheinkoff will submit the verified claims in court as individual reports on Dec. 6, 2006. He will also present a general report that contains an audit of Colegio de Familia's accounting and banking records. The filing date of the general repor was not disclosed. The trustee can be reached at: Jose Scheinkoff Avenida Pueyrredon 468 Buenos Aires, Argentina COMPANIA DE ALIMENTOS: Fitch Arg Affirms US$120M Debt's D Rating ---------------------------------------------------------------- The Argentine arm of Fitch Ratings affirms the D rating given to the Obligaciones Negociables for US$120 million issued by Compania de Alimentos Fargo SA. The rate was given because the company has not paid the interests of its Obligaciones Negociables since February 2002. The strong weakness in the funds of the company and the strong devaluation of the peso affected the capacity of the company to meet its financial commitments in international currency. In order to preserve the amount of funds available, Fargo presented concurso de acreedores June 28, 2002. The proceeding is still ongoing. Despite the growing trend in the levels of income from the private sector, there still exists a high degree of uncertainty in relation to the concurso of the company. Fargo is Argentina's largest producer and distributor of packaged bread with a 51% market share, according to Fitch Ratings Argentina. It is also the sole bread supplier for McDonald's in the country. Fargo is controlled by the Mexican investor Chico Pardo (70%) and the Bimbo group (30%). The company has a debt of US$185 million, from which US$120 million belong to Obligaciones negociables. CREDIT BAIL: Trustee Verifies Proofs of Claim Until Sept. 22 ------------------------------------------------------------ Court-appointed trustee Nancy Edith Gonzalez will verify creditors' proofs of claim against bankrupt company Credit Bail S.A. until Sept. 22, 2006. Creditors who fail to present their proofs of claims won't receive any post-liquidation distribution that Ms. Gonzalez will make. After the claims are verified, Ms. Gonzalez will present in court individual reports and a general report that contains an audit of Credit Bail's accounting and banking records. The report submission dates have not been disclosed. The trustee can be reached at: Nancy Edith Gonzalez Lavalle 1290 Buenos Aires, Argentina CURVASUR SRL: Enters Bankruptcy on Court Orders ----------------------------------------------- Curvasur S.R.L. enters bankruptcy protection after a court in Lomas de Zamora, Buenos Aires, ordered for the company's liquidation. The order transfers control of the company's assets to a court-appointed trustee who will supervise the liquidation proceedings and verify creditors' proofs of claim. Argentine bankruptcy law requires the trustee to provide the court with individual reports on the forwarded claims and a general report containing an audit of Curvasur's accounting and business records. The report submission dates have not been disclosed. The debtor can be reached at: Curvasur S.R.L. Avenida Larroque y Cno. Pte. Peron Edificio Tribunales Colegio de Abogados Casillero 6328, Banfield, Partido de Lomas de Zamora Buenos Aires, Argentina DROGUERIA MAGNA: Moody's LatAm Puts C Rating on US$5-Mil. Notes --------------------------------------------------------------- Drogueria Magna S.A.'s Obligaciones Negociables Simples for US$5,000,000 is rated C by Moody's Latina Americana. The rating action is based on the company's financial status at Apr. 30, 2006. ELECTRICIDAD ARGENTINA: S&P Junks Corporate Credit Rating --------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'CCC+' corporate credit rating to the Argentine holding company Electricidad Argentina S.A. aka EASA, 51% owner of the largest Argentine electric distributor, Empresa Distribuidora y Comercializadora Norte S.A. or Edenor (CCC+/Stable/--), following the formal completion of its debt restructuring process through the issuance of two new series of bonds in exchange for its defaulted debt. The outlook is stable. At the same time, Standard & Poor's affirmed the 'CCC-' ratings on the new bonds issued by the company. "The 'CCC+' corporate credit rating on EASA reflects the company's full dependence on fees and dividends from Edenor to honor its financial debt, meaning that its debt repayment capacity strongly depends on Edenor's credit quality," said Standard & Poor's credit analyst Sergio Fuentes. The 'CCC-' ratings on the new bonds reflect structural subordination of creditors at the holding company level with regard to debt recovery in a liquidation scenario. For speculative-grade companies, when total debt at the subsidiary level is higher than 30% of total consolidated assets, the holding company's debt is rated two notches below the corporate credit rating on the company. The stable outlook mainly reflects the significant reduction of its consolidated debt and significant extension of debt maturities. The outlook does not account for the potential tariff increase for Edenor that is incorporated into the preliminary agreement with Unidad de Renegociacion y Analisis de Contratos de Servicios Publicos, the entity created by the government to renegotiate the concessions for public service companies. This increase would significantly improve Edenor's profitability and cash flow as well as result in dividend payments to EASA by 2008. Ratings could be lowered, however, if Edenor's financial performance is weaker than projected or if there is no significant progress with regard to tariffs and the global renegotiation of its concession contract by mid-2007. EDIFICADORA Y CONSTRUCTORA: Claims Verification Ends on Sept. 27 ---------------------------------------------------------------- Ernesto Garcia, the court-appointed trustee for Edificadora y Constructora Becla S.R.L.'s bankruptcy case, will verify creditors' proofs of claim until Sept. 27, 2006. Creditors who fail to present proofs of their claims won't receive any post-liquidation distribution that Mr. Garcia will make. Court No. 5 in Buenos Aires declared Edificadora y Constructora bankrupt at the behest of Cirilo Ainza, whom it owes US$6,397.85. Clerk No. 10 assists the court in this case. The debtor can be reached at: Edificadora y Constructora Becla S.R.L. Echeverria 2498 Buenos Aires, Argentina The trustee can be reached at: Ernesto Garcia Sarmiento 1587 Buenos Aires, Argentina ENVAPOL SA: Individual Reports Due in Court on Aug. 7 ----------------------------------------------------- Marcelo Gabriel Dborkin, the court-appointed trustee for Envapol S.A.'s bankruptcy case, will present individual reports in court on Aug. 7, 2006. A general report that contains an audit of the company's accounting and banking records will follow on Sept. 19, 2006. Mr. Dborkin verified creditors' proofs of claim against Envapol until June 9, 2006. Court No. 25 in Buenos Aires declared Envapol bankrupt at the behest of Muehlstein Argentina S.R.L., which it owes US$6,967.19. Clerk No. 50 assists the court in the proceeding. The debtor can be reached at: Envapol S.A. Viamonte 2506 Buenos Aires, Argentina The trustee can be reached at: Marcelo Gabriel Dborkin Callao 295 Buenos Aires, Buenos Aires EUROMAYOR SA: Moody's LatAm Puts C Rating on US$10-Million Debt --------------------------------------------------------------- Euromayor S.A. de Inversiones' First Series for US$10 million included under its global program is rated C by Moody's Latina America. The debt became due on Apr. 28, 2003. The rating action is based on the company's financial status at Apr. 30, 2006. FASTAMP SA: Verification of Proofs of Claim Is Until Sept. 25 ------------------------------------------------------------- Mario Daniel Krasnansky, the court-appointed trustee for Fastamp S.A.'s bankruptcy proceeding, will verify creditors' proofs of claim until Sept. 25, 2006. Creditors who fail to present their proofs of claims won't receive any post-liquidation distribution that Mr. Krasnansky will make. The verified claims will be submitted in court as individual reports on Nov. 14, 2006. A general report that contains an audit of Fastamp's accounting and banking records will follow on Feb. 9, 2007. The trustee can be reached at: Mario Daniel Krasnansky Viamonte 1785 Buenos Aires, Argentina FIDEICOMISO UBS: Fitch Argentina Puts Junk Ratings on Two Debts --------------------------------------------------------------- Fideicomiso Financiero UBS Brinson Forestal I's debts are rated by the Argentine arm of Fitch ratings: -- Titulos de deuda, CCC; and -- Certificados de Participacion, CC. For the period ended Mar. 31, 2006, sales reached US$5.3 million, which means an important recovery if compared to the previous year. On Mar. 31, 2006, the debt of the Fideicomiso reached US$53.6 million. The support for this debt is done through plantations of trees and lands. Banco CMF S.A. & Global Forest Partners LP integrated this Fideicomiso. The owners of GFP are the members of UBS Timber Investors. In Feb. 1999, the Fideicomiso issuded Titles of debt and certificados de participacion for US$21,415,000, that will come due in 10 years and to be extended for 5 more. The proceeds were used to acquire and administer forest plantations. During the first five years, the money can be used to pay services of the titles of debt or to cancel certificados de participacion. After five years, the money will be used for cancelling titles. FUCCI HNOS: Seeks Court Approval to Reorganize Business ------------------------------------------------------- A court in Buenos Aires is studying the merits of Fucci Hnos. S.R.L.'s petition to reorganize its business after it has defaulted on its obligations. The petition, once approved by the court, will allow Fucci Hnos. to negotiate a settlement with its creditors in order to avoid a straight liquidation. The debtor can be reached at: Aeropago S.A. Lavalle 1578 Buenos Aires, Argentina PERSONAL SERVICIOS: Reorganization Proceeds to Bankruptcy --------------------------------------------------------- A court in Buenos Aires ordered that Personal Servicios Empresarios S.R.L.'s insolvency case must be converted into a bankruptcy proceeding. Control of the company's assets will be transferred to a court- appointed trustee who will supervise the liquidation of Personal Servicios' assets. The trustee will also distribute the proceeds of the sale to the company's creditors. The trustee, after the claims verification period, will prepare individual reports for presentation in court. The trustee will then submit to the court a general report that contains an audit of the company's accounting and banking records. UNILAB SA: Deadline for Verification of Claims Is on Sept. 11 ------------------------------------------------------------- Court-appointed trustee Marcela Adriana Mazzoni will verify creditors' proofs of claim against bankrupt company Unilab S.A. until Sept. 11, 2006. Creditors who fail to present their proofs of claims won't receive any post-liquidation distribution that Ms. Mazzoni will make. Ms. Mazzoni will present in court individual reports and a general report that contains an audit of Unilab's accounting and banking records after the claims are verified. The report submission dates have not been disclosed The trustee can be reached at: Marcela Adriana Mazzoni Alfredo Bufano 2198 Buenos Aires, Argentina VERARDO HERMANOS: Trustee Delivers Individual Reports on Aug. 3 --------------------------------------------------------------- Graciela Mabel Arevalo, the court-appointed trustee for Verardo Hermanos S.A.'s bankruptcy case, will present individual reports in court on Aug. 3, 2006. A general report that contains an audit of the company's accounting and banking records will follow on Sept. 18, 2006. Ms. Arevalo verified creditors' proofs of claim against Verardo Hermanos until June 6, 2006. The debtor can be reached at: Verardo Hermanos S.A. Calle 120 Numero 21, La Plata Buenos Aires, Argentina The trustee can be reached at: Graciela Mabel Arevalo Calle 12 Numero 883, La Plata Buenos Aires, Argentina * ARGENTINA: 100,000 Italian Creditors Will File Suit Next Month ---------------------------------------------------------------- More than 100,000 Italian bondholders will file next month a demand against Argentina in order to claim US$5.5 million in public titles that are in default as a result of the country financial crisis a few years back. This was reported by Task Force Argentina, a group formed by creditors with bonds that have not been paid. The creditors will file their suit in Washington in August. The head of the Task Force, Nicola Stock, said he is very satisfied by the major step taken. They want Buenos Aires to pay the Italian bondholders. Meanwhile, Banco Cooperativo Area Pratese has offered 150 clients to exchange their bonds in default for Obligaciones Negociables that will come due in 15 years. * * * 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 * ARGENTINA: Will Explore for Oil in Venezuela's Orinoco Belt ------------------------------------------------------------- Enarsa, the Argentine state oil firm, will collaborate with Uruguay's state-run Ancap and Petroleos de Venezuela, the Venezuelan state oil firm, to explore Venezuela's Orinoco Belt for oil, Merco Press reports. Merco Press says that an agreement was signed during the Mercosur summit in Cordoba, Argentina on Friday by: -- Rafael Ramirez, Venezuela's Energy Minister; -- Julio De Vido, Argentina's Planning Minister; and -- Raul Sendic, a representative of Uruguay's government owned oil company. Merco Press relates that the agreement allows the joint exploitation of Block Six of the Mariscal Ayachucho region of the Orinoco Belt, a region rich in heavy and extra-heavy crude oil plus tar sands. According to the agreement, Petroleos de Venezuela will hold 51% of all the crude extracted from Orinoco. Enarsa and Ancap will split the remaining 49%, Merco Press states. The project had been in the works for months and the original partner was supposed to be Chile instead of Argentina, Daniel Martinez, the president of Ancap, told Merco Press. Preliminary estimates in Block Six indicate that Uruguay could have some 50,000 barrels daily, Merco Press says, citing Mr. Martinez. Meanwhile, Minister De Vido told Merco Press that Enarsa will have access to the crude through subsidiary accords with private firms that will invest in developing the oilfields with the approval of Petroleos de Venezuela. However, it is likely that it will take four years before oil starts flowing from Block Six, Merco Press states. * * * 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 * ARGENTINA: Neuquen Province Moves Bond Issuance to August ----------------------------------------------------------- The government of the Argentine province of Neuquen has postponed its issuance of US$250 million in bonds, Nosis reports. The delay, according to Nosis, is caused by external factors. One of which is the interest rate of the Federal Reserve of the United States. The proceeds from the issuance will be used by the province to fund infrastructure projects. The province plans to build a water pipe for different areas, four hospitals and a highway. * * * 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 A H A M A S ============= COMPLETE RETREATS: Files Chap. 11 Reorganization in Connecticut --------------------------------------------------------------- Complete Retreats, LLC, fdba as Tanner & Haley Resorts, and its affiliates filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code. The Chapter 11 filing was made on July 23, 2006, in the U.S. Bankruptcy Court for the District of Connecticut in Bridgeport, Connecticut. Tanner & Haley has taken this action to enhance its ability to meet its financial obligations, modify its business model and position the company for long-term stability. In connection with the financial reorganization, Tanner & Haley has obtained a commitment from its principal pre-petition lenders, The Patriot Group, LLC, and Beal Bank, S.S.B., for interim debtor-in-possession financing of $10 million. This interim financing and the company's pre-petition credit facilities will be replaced in due course by a permanent credit facility of up to $85 million. The purpose of this financing, which is subject to court approval, is to help ensure Tanner & Haley's ability to continue to operate in the ordinary course, such as meeting its employee payroll and post-petition vendor obligations during the reorganization process. Tanner & Haley remains in operation and is continuing to serve its members. The company intends to continue to meet substantially all travel commitments previously made to members and to continue to provide members with a wide range of destinations and services. Chief Restructuring Officer Appointment Tanner & Haley also reported that Holly Felder Etlin, a Principal at XRoads Solutions Group LLC, has been named Chief Restructuring Officer, a new position. In this capacity she will work with the company's existing management team in overseeing day-to-day operations, financial matters and strategic planning. Ms. Etlin has more than 25 years of experience providing restructuring and reorganization services to companies and their creditors in the retail, distribution, consumer products, and health care industries. Most recently she served as turnaround advisor to Winn-Dixie Stores, Inc., Chief Restructuring Officer at Impath, Inc. and Chief Restructuring Officer of San Francisco Music Box and The Museum Company. "We deeply regret any impact the Chapter 11 filing may have on our Members and other creditors," Rob McGrath, founder and Chief Executive Officer of Tanner & Haley, said. "Now, as always, we appreciate the interest and support of our Members, employees, vendors and other business partners. Together, we hope to position the company for continued leadership in the hospitality industry for many years to come." In a letter sent to its Members, Tanner & Haley said that its financial difficulties were largely attributable to a business model that proved to be unsustainable, with revenues unable to keep pace with the costs associated with its "members-first" approach. Among other things, the company in the past rarely refused a Member's travel request, and if a desired property in the company's portfolio was unavailable when requested, the company would commonly enter into a costly short-term lease with a third party. In addition, many destination club members received their memberships at a deep discount and/or locked in extremely low annual dues and daily usage fees. The company also pursued various business and real estate ventures that it believed to be synergistic but that ultimately proved unsuccessful. The factors, coupled with increasingly stiff competition in its industry, made it difficult for the company to pay its bills, make planned improvements on existing properties and invest in new properties. Accordingly, the company intends to use the Chapter 11 process to stabilize its finances and develop a more viable business model. "As part of the Chapter 11 process, we will be reviewing and, where appropriate, revising Tanner & Haley's business model so that, upon completion of the financial reorganization, the company will be better positioned to achieve long-term strength, stability, profitability and growth," Ms. Etlin said. "We are also committed to having the company emerge from the process with greatly enhanced corporate governance and financial transparency." First-Day Motions The Company filed several first day motions in the Connecticut bankruptcy court to support its ongoing U.S. operations, including requests for interim approval of the DIP facility and for permission to pay employees and continue employee benefit programs during the reorganization process, both of which are expected to be approved. Tanner & Haley's legal counsel with regard to its financial reorganization is Dechert LLP. About Complete Retreats Complete Retreats, LLC, Preferred Retreats, LLC, and their subsidiaries were founded in 1998. Owned by Robert McGrath and four minority owners, the companies operate a five-star hospitality and real estate management business and are a pioneer and market leader of the "destination club" industry. Under the trade name "Tanner & Haley Resorts," Complete Retreats, et al.'s destination clubs have numerous individual and company members. Destination club members pay up-front membership deposits, annual dues, and daily usage fees. In return, members and their guests enjoy the use of first-class private residences, and receive an array of luxurious services and amenities in certain exotic vacation destinations in the United States and locations around the world, including: Abaco, Bahamas; Cabo San Lucas, Mexico; Nevis, West Indies; Telluride, Colorado; and Jackson Hole, Wyoming. COMPLETE RETREATS: Case Summary & 50 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Complete Retreats, LLC fdba Tanner & Haley Resorts fdba Tanner & Haley Worldwide Resorts fdba Tanner & Haley Worldwide fdba Tanner & Haley Destination Clubs fdba A & K Destinations fdba Abercrombie & Kent Destinations fdba Abercrombie & Kent Destination Clubs 285 Riverside Avenue, Suite 310 Westport, CT 06880 Tel: (203) 291-5500 Bankruptcy Case No.: 06-50245 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Preferred Retreats, LLC 06-50246 LR Management Company, LLC 06-50247 New Retreats Holding Co., LLC 06-50248 T&H Villas, LLC 06-50249 Town Clubs, LLC 06-50250 Preferred Aviation, LLC 06-50251 Preferred Retreats Travel Company, LLC 06-50252 Preferred Retreats Design Group, LLC 06-50253 Private Retreats, LLC 06-50254 European Retreats, LLC 06-50255 Distinctive Retreats, LLC 06-50256 DR MGM I, LLC 06-50257 DR MGM II, LLC 06-50258 DR MGM III, LLC 06-50259 DR MGM IV, LLC 06-50260 Private Retreats Steamboat, LLC 06-50261 Private Retreats Steamboat II, LLC 06-50262 Private Retreats Telluride I, LLC 06-50263 Private Retreats Kamalani, LLC 06-50264 Private Retreats Tortuga, LLC 06-50265 Private Retreats Whitewing, LLC 06-50266 Private Retreats Belfair, LLC 06-50267 Private Retreats Cabin 4, LLC 06-50268 Private Retreats Cabin 8, LLC 06-50269 Private Retreats Colinas, LLC 06-50270 Private Retreats Yacht Club Tortola, LLC 06-50271 Private Retreats Yacht Club Mediterranean, LLC 06-50272 Private Retreats Teton I, LLC 06-50273 Private Retreats Snake River I, LLC 06-50274 Private Retreats Snake River II, LLC 06-50275 Private Retreats Stowe II, LLC 06-50276 Private Retreats Stowe III, LLC 06-50277 Private Retreats Preserve Way, LLC 06-50278 Private Retreats Highpoint, LLC 06-50279 Private Retreats Tortola, LLC 06-50280 Private Retreats Pinecone 305, LLC 06-50281 Private Retreats Deer Valley I, LLC 06-50282 Private Retreats Tahoe I, LLC 06-50283 Private Retreats Tahoe II, LLC 06-50284 Private Retreats Tahoe III, LLC 06-50285 Private Retreats Belize, LLC 06-50286 Private Retreats Hospitality, LLC 06-50287 Private Retreats Powell II, LLC 06-50288 Private Retreats Powell III, LLC 06-50289 PR Esperanza II, LLC 06-50290 PR Esperanza III, LLC 06-50291 Olde Cypress I PR, LLC 06-50292 Olde Cypress II PR, LLC 06-50293 PR Vegas III, LLC 06-50294 A&K Destinations, LLC 06-50295 A&K Luxury Automobiles, LLC 06-50296 Bermuda Cliffs, LLC 06-50297 Private Retreats II, LLC 06-50298 Private Retreats Nevis, LLC 06-50299 Distinctive Retreats II, LLC 06-50300 Legendary Retreats, LLC 06-50301 Private Retreats Casa Dorada, LLC 06-50302 Private Retreats Summit, LLC 06-50303 P180, LLC 06-50304 DR Cerezas, LLC 06-50305 Preferred Brokerage, LLC 06-50306 Type of Business: Founded in 1998, the Debtors operate five-star hospitality and real estate management businesses and are pioneers and market leaders of the destination club industry. The Debtors operate under the trade name Tanner & Haley Resorts. See http://www.akdestinations.com/ and http://www.tannerandhaley.com/ In addition to their mainline destination club business, the Debtors also operate an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. See http://www.tannerandhaleyjets.com/and http://www.tannerandhaleyvillas.com/ Chapter 11 Petition Date: July 23, 2006 Court: District of Connecticut (Bridgeport) Judge: Alan H.W. Shiff Debtors' Counsel: Nicholas H. Mancuso, Esq. Jeffrey K. Daman, Esq. Dechert LLP 90 State House Square Hartford, Connecticut 06103 Tel: (860) 524-3950 Fax: (860) 524-3930 -- and -- Joel H. Levitin, Esq. David C. McGrail, Esq. Richard A. Stieglitz Jr., Esq. Dechert LLP 30 Rockefeller Plaza New York City 10112 Tel: (212) 698-3500 Fax: (212) 698-3599 Debtors' Financial and Restructuring Advisor: XRoads Solutions Group, LLC 1821 East Dyer Road, Suite 225 Santa Ana, California 92705 Tel: (949) 567-1600 Fax: (949) 567-1655 http://www.xroadsllc.com/ Estimated Assets: Unknown Total Debts: US$308,000,000 Debtors' Consolidated List of their 50 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Janine Schlierf Litigation Claim Unknown 59 Bob Hill Road Ridgefield, CT 06877 c/o Koskoff, Koskoff & Bieder 350 Fairfield Avenue Bridgeport, CT 06604 Tel: (203) 336-4421 Fax: (203) 368-3244 Gregory Wendt Membership Deposit US$1,300,000 1 Market Street Stuart Tower 1800 San Francisco, CA 94105-1409 Tel: (415) 393-7161 Scott Walchek Membership Deposit US$1,300,000 295 Barrington Lane Alamo, CA 94507 Tel: (925) 297-1212 Wil Vanloh Membership Deposit US$1,300,000 3208 Locke Lane Houston, TX 77019 Ignacio Torras Membership Deposit US$1,300,000 777 Post Oak Boulevard Suite 650 Houston, TX 77056 Tel: (713) 963-0066 Nick Thakore Membership Deposit US$1,300,000 11 Cranmore Road Wellesley, MA 02481 Greg Newman Membership Deposit US$1,300,000 389 South Avenue Alamo, CA 94507 Tel: (925) 820-1218 Peter Lowe Membership Deposit US$1,300,000 1370 South Ocean Boulevard Manalasan, FL 33462 Len J. Lauer Membership Deposit US$1,300,000 2927 Verona Road Mission Hills, KS 66208 Stephen Kaplan Membership Deposit US$1,300,000 434 Marguerita Santa Monica, CA 90402 Mark Houghton-Berry Membership Deposit US$1,300,000 Corner Green, South Drive Virginia Water Surrey GU 25 4JS John Harvey Membership Deposit US$1,300,000 6805 Avondale Oklahoma City, OK 73116 Tel: (405) 848-3560 Alan Fox Membership Deposit US$1,300,000 12411 Ventura Boulevard Studio City, CA 91604 Tel: (818) 519-6666 Boyd Fellows Membership Deposit US$1,300,000 32 Shady Lane Ross, CA 94957 Tel: (415) 456-4900 Richard Cornelius Membership Deposit US$1,300,000 8 Camargo Pines Lane Cincinnati, OH 45243 Tel: (513) 984-9440 Chris Stevens Membership Deposit US$750,000 1816 Tribute Road Sacramento, CA 95815 Tel: (916) 643-1444 Piper Rudnick Gray Cary Legal Services US$671,651 Douglas A. Rappaport, Esq. 1251 Avenue of the Americas New York City, NY 10020 Tel: (212) 835-6000 Fax: (212) 835-6001 Intagio Media Services US$655,974 Roger Juntilla, Esq. Steven Lewicky, Esq. 22 Fourth Street, Suite 1120 San Francisco, CA 94103 Tel: (415) 247-9500 Fax: (415) 284-5366 Abercrombie & Kent Sales & Marketing US$532,462 1520 Kensington Road Services Oak Brook, IL 60523 Tel: (800) 323-7308 Fax: (630) 954-3324 Double AA Builders Trade Debt US$503,883 Geoffrey E. Schwan, Esq. Holden Brodman, Esq. 6040 East Thomas Road Scottsdale, AZ 85251 Vickie Sanders Membership Deposit US$479,500 319 8th Avenue West Kirkland, WA 98033 Tel: (425) 889-8218 Patricia Sullivan Membership Deposit US$477,250 5445 Harbortown Circle Prospect, KY 50059 Tel: (502) 228-5059 Guy Bond Membership Deposit US$475,000 2929 Allen Parkway, Suite 1530 Houston, TX 77019 Tel: (713) 526-4848 Carl Bufka Membership Deposit US$475,000 8735 Lapalama Lane Naples, FL 34108 Tel: (239) 594-9129 Chad Carpenter Membership Deposit US$475,000 42366 North 111th Place Scottsdale, AZ 85262 Tel: (480) 488-0301 Fred Gould Membership Deposit US$475,000 60 Cutter Mill Road Great Neck, NY 11021 Tel: (516) 773-2747 William Green Membership Deposit US$475,000 14 Bluewater Hill Westport, CT 06880 Tel: (203) 222-7890 Richard Korpan Membership Deposit US$475,000 31483 Morning Star Evergreen, CO 80439 Tel: (303) 679-1708 Randy Heady Membership Deposit US$474,805 5320 Spring Valley Road Suite 220 Dallas, TX 75254 Tel: (972) 661-1606 Tom Fallon Membership Deposit US$474,415 95 Patricia Drive Atherton, CA 94027 Tel: (650) 839-1050 Joseph Cusimano Membership Deposit US$472,644 800 North Michigan Avenue Apartment 4601 Chicago, IL 60611 Tel: (312) 867-0271 Jess Mogul Membership Deposit US$470,839 347 West 87th Street, Suite 1 New York City, NY 10024 Tel: (212) 875-9793 James Gray Membership Deposit US$460,000 3420 Oyster Bay Court Cincinnati, OH 45244 Tel: (513) 561-7943 Steve Sadek Membership Deposit US$460,000 7855 North Pehasant Lane River Hills, WI 53217 Tel: (414) 540-9510 Raymond Dee Membership Deposit US$452,895 938 Spanish Moss Trail Naples, FL 34108 Tel: (239) 591-0161 Michael George Membership Deposit US$450,925 108 Quail Lane Wayne, PA 19087 Tel: (610) 688-8145 Dennis Kavelman Membership Deposit US$450,473 557 Hemingway Place Waterloo, N2TI24 Tel: (519) 885-8223 Bruce T. Bishop Membership Deposit US$450,450 1405 South Veaux Loop Norfolk, VA 23509 Tel: (757) 628-5573 Paul Dietz Membership Deposit US$450,000 1025 East Maple, Suite 200 Birmingham, MI 48009 Tel: (248) 644-9163 John Georgius Membership Deposit US$450,000 466 Fenton Place Charlotte, NC 28207-1918 Tel: (704) 333-9547 William Graham Membership Deposit US$450,000 4435 University Boulevard Dallas, TX 75205 Tel: (340) 776-2287 George Greenwald Membership Deposit US$450,000 9504 East Rising Sun Drive Scottsdale, AZ 85262 Tel: (970) 954-6379 Scott Rechler Membership Deposit US$450,000 2255 Broadhollow Road Melville, NJ 11747 Tel: (631) 622-6622 James Verdorn Membership Deposit US$450,000 9203 Victoria Drive Eden Prairie, MN 55347 Tel: (952) 906-0497 Tom White Membership Deposit US$450,000 2801 Van Dam Street Lincoln, NE 68502 Tel: (402) 421-1604 David Whiting Membership Deposit US$450,000 P.O. Box 1108 Tustin, CA 92781-1108 Tel: (949) 499-4678 Jim Gilbert Membership Deposit US$448,635 9 Alden Road Wellesley, MA 02481 Tel: (781) 237-6502 Keith Schumann Membership Deposit US$448,635 101 Laurel Keep Williamsburg, VA 23185 Tel: (757) 220-8743 Arthur Epker Membership Deposit US$448,375 31 Candleberry Lane Weston, MA 02493 Tel: (617) 526-8992 Brad Daugherty Membership Deposit US$447,903 1239 Cane Creek Road Fletcher, NC 28732 Tel: (828) 277-7526 ============= B E R M U D A ============= REFCO INC: Six Creditors Withdraw Nine Proofs of Claim ------------------------------------------------------ Six creditors withdraw nine proofs of claim filed against Refco Inc., and its debtor-affiliates on the basis that the Claims have been satisfied: The Claimants are: Creditor Claim No./s Amount Debtor -------- ----------- ------ ------ AT&T Corp. 46 US$215,054 Refco, Inc. Henning & Carey Trading Co. - 77,708 Refco, LLC Massachusetts Department - 10,000 Refco Capital, of Revenue LLC Kent Consulting Engineers 52 - Refco, Inc. 51 - Refco, LLC Alps Construction, Inc. 53 - Refco, Inc. 50 - Refco, LLC Griswold, Heckel & Kelly 74 - Refco, Inc. Associates, Inc. 52 - Refco, LLC About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). (Refco Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945- 7000). ============= B O L I V I A ============= * BOLIVIA: Chile Willing to Hold Talks on Joint Energy Projects --------------------------------------------------------------- Chile is eager to hold talks on joint energy projects with Bolivia, the former's President Michelle Bachelet said in a statement. President Bachelet, however, said she was not referring specifically to gas as her country still struggles to satisfy demand for the product and is worried on the reliability of the gas supply from Argentina, Business News Americas relates. The Chilean leader told BNamericas that she would instruct Karen Poniachik, Chile's mining and energy minister, to get in touch with Andres Soliz -- the hydrocarbons minister of Bolivia -- to start studying projects of common interest on the border between the two nations. The mining and energy ministry of Chile gave no further information regarding potential projects due to the preliminary nature of prospective discussions, BNamericas states. Bolivia and Chile have not had diplomatic ties since 1978. Relations have been tense since the 19th century, when Chile defeated Bolivia and annexed its mineral-rich coastline. In 2003, former Bolivian president Gonzalo Sanchez de Lozada was forced out of office after proposing gas exports via Chile. * * * Fitch Ratings assigned 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 =========== BANCO NACIONAL: Inks MOU With US Trade & Development Agency ----------------------------------------------------------- Demian Fiocca, Banco Nacional de Desenvolvimento Economico e Social aka BNDES' president, signed July 18 a memorandum of understanding with the general director of the United States Trade and Development Agency or USTDA, Thelma Askeuy. The purpose of the agreement, which will be in effect for two years, is to allow BNDES and USTDA to operate jointly in expanding the trade interchange between the two countries. The memorandum establishes that both institutions should seek opportunities to operate jointly, providing credit to infrastructure projects. * * * 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. BRASKEM SA: Administrative Council Approves Politeno Acquisition ---------------------------------------------------------------- The Administrative Council of Economic Defense or CADE unanimously approved on July 19, 2006, Braskem S.A.'s acquisition of Politeno. This marks an important step towards the Brazilian petrochemical consolidation process. CADE members made the decision based on the understanding that the relevant market for the petrochemical sector has an international scope and therefore the operation does not represent any threat to competition. Politeno, which holds the 2002 National Quality Award, is an important producer of polyethylene and EVA in Camacari, Bahia, and its integration with Braskem confirms the latter's position as a leader in this market. CADE's decision ratified the terms of the ruling adopted by the same Commission in September of 2005 when it approved the operation that led to the creation of Braskem in 2002, which stemmed from the integration of six companies. About Braskem 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. * * * Fitch Ratings upgraded these ratings of Braskem S.A. on July 1, 2006: -- Foreign Currency IDR: To BB+ Rating with Stable Outlook, from BB Rating with Positive Outlook; -- US$525 million Sr. Unsecured notes due 2008, 2014: To BB+, from BB; -- US$350 million Perpetual Bonds: To BB+, from BB; -- National Long-term Rating: To 'AA(bra)' from 'AA-(bra)'; and -- BRL600 million 12th and 13th Debenture Issuances due 2009 and 2010: To 'AA(bra)' from 'AA-(bra)'. These rating actions followed Fitch's upgrade of the long-term foreign and local currency IDRs of the Federative Republic of Brazil to BB, from BB- on June 29, 2006. COMPANHIA PARANAENSE: Could Activate Araucaria Plant in Sept. ------------------------------------------------------------- The 480-megawatt gas-fired Araucaria power plant of Companhia Paranaense de Energia aka Copel could start operating in September, according to news service Agencia Estado. Agencia Estado underscores that tests will be conducted in August this year. The report states that the operational start of the plant would help boost power supply in the drought-stricken southern region of Brazil. Business News Americas relates that a drought in the southern region has exhausted reservoirs of local hydro plants and has made the region more dependent on thermo generation and power imports from other regions. Though the Brazilian government says the situation is under control, Araucaria is seen as an important way to raise power supply in the southern region, BNamericas states. At full capacity, the plant burns some 2.5 million cubic meters of natural gas daily. State-run Copel is also investing BRL11 million to solve technical problems. It plans to start an initiative by 2007, BNamericas reports. Headquartered in Parana, Brazil, COPEL aka Companhia Paranaense de Energia SA -- http://www.copel.com/-- transmits and distributes electricity to more than 3 million customers in the state of Paran and has a generating capacity of nearly 4,600 MW, primarily from hydroelectric plants. COPEL also offers telecommunications, natural gas, engineering, and water and sanitation services. The company restructured its utility operations in 2001 into separate generation, transmission, and distribution subsidiaries to prepare for full privatization, which has been indefinitly postponed. In response, COPEL is re-evaluating its corporate structure. The government of Parana controls about 59% of COPEL. * * * Copel's BRL100,000,000 debentures due March 1, 2007, is rated Ba3 by Moody's. CIA. SIDERURGICA: In Partnership Talks with Wheeling-Pittsburgh --------------------------------------------------------------- Companhia Siderurgica Nacional aka CSN told Sao Paulo's stock exchange -- Bolsa de Valores do Estado de Sao Paulo -- that talks for an alliance between the company and US firm Wheeling- Pittsburgh are at an advanced stage. CSN told Business News Americas that a partnership is beneficial to both companies due to: -- integration of global production know-how, -- guaranteed and sustainable long-term access to key raw materials, through a slabs supply and other deals, and -- alliance would enhance CSN's products portfolio in the North American market. BNamericas relates that the alliance negotiations between CSN and Wheeling-Pittsburg were disclosed on May 5, 2006. About Wheeling-Pittsburgh Wheeling-Pittsburgh operates solely in the United States, producing hot rolled, cold rolled, galvanized, pre-painted and tin mill sheet products. About CSN Companhia Siderurgica Nacional aka CSN produces, sells, exports and distributes steel products, like hot-dip galvanized sheets, tin mill products and tinplate. The company also runs its own iron ore, manganese, limestone and dolomite mines and has strategic investments in railroad companies and power supply projects. * * * On Jan. 26, 2006, Standard and Poor's Rating Services assigned a 'BB' corporate credit rating on Brazilian flat carbon steelmaker Companhia Siderurgica Nacional. The 'BB' corporate credit rating on CSN reflects the company's exposure to volatile demand and price cycles, increasing competition in its home and predominant market of Brazil, aggressive dividend policy and capital investment plan, and sizable gross-debt position. These risks are partly offset by CSN's privileged cost position and sound operating profile, favorable market position in Brazil, strong export capabilities to offset occasional domestic demand sluggishness, and increasing business diversification. DRESSER-RAND: Jean-Paul Vettier Named New Independent Director -------------------------------------------------------------- Dresser-Rand Group Inc. named Jean-Paul Vettier as a new independent member of its Board of Directors, effective July 24, 2006. This appointment brings the number of directors on the company's Board to nine. Mr. Vettier has been appointed to the Compensation, Nominating and Corporate Governance Committees of the Board. "We are pleased to have Mr. Vettier join our Board," said Vincent R. Volpe, Jr., President and Chief Executive Officer of Dresser Rand. "Jean-Paul brings significant business experience and industry expertise to our company. He is widely respected and brings added strength to our Company as we continue our focus on profitable growth and creating value for our stockholders." Mr. Vettier has extensive energy industry experience. He was formerly Chairman and Chief Executive Officer of Total Refining & Marketing, a position he held from 1993 to 2000 with this multinational energy company (4th largest publicly traded integrated oil & gas company in the world). Between 1992 and 1996, he was non-executive Chairman of Total Petroleum North America in Denver, Colorado. During two terms, from 1998 to 2004, he chaired Europia, the European oil industry association. Prior to joining Total in 1990 as Executive Vice President of Refining and Marketing, Mr. Vettier was employed by Rhone-Poulec for 16 years. He held positions in legal, strategy & planning and its fiber intermediates division. In 1987, he joined Orkem as General Manager of the Petrochemical Division and a member of the Executive Committee. Mr. Vettier is currently on the Board of Institut Francais du Petrole and of Eiffage. He received his degree in Public Law and Economics Sciences from the University of Paris. He is Knight of the French National Order of Merit and of the French Legion of Honour. Dresser-Rand is among the largest suppliers of rotating equipment solutions to the worldwide oil, gas, petrochemical, and process industries. It operates manufacturing facilities in the United States, France, Germany, Norway, India, and Brazil, and maintains a network of 24 service and support centers covering 105 countries. * * * Moody's Investors Service upgraded on June 13, 2006, Dresser- Rand Group, Inc.'s ratings, including its corporate family rating from B1 to Ba3, its senior secured bank debt from B1 to Ba3, and its senior subordinate notes from B3 to B2, with a stable ratings outlook. SADIA SA: Moody's Affirms Ba2 Global Local Currency Rating ---------------------------------------------------------- Moody's affirmed the Ba2 global local currency scale corporate family rating of Sadia S.A. and changed the rating outlook to stable from developing, following the company's announcement to definitively revoke its tender offer for the acquisition of more than 50% of Perdigao S.A.'s shares. On July 17, Sadia announced a tender offer for the acquisition of at least 50% plus one share and up to 100% of the shares of Perdigao, one of Brazil's largest animal protein companies. On July 20th, Sadia's management announced its decision to definitively revoke its tender offer for Perdigao's shares after Perdigao rejected both Sadia's original offer of BRL27.88 per Perdigao share and its subsequent increased counter-offer of BRL29 per share. Sadia, headquartered in Sao Paulo, Brazil, exports over 1,000 different products to approximately 100 countries and is the largest slaughterer and distributor of poultry and pork products, as well as the leading refrigerated and frozen protein products company in Brazil. For the last twelve months ending in 2005, the company had net sales of BRL7.3 billion (about US$3 billion) with approximately 50% of revenues derived from exports. SADIA SA: S&P Affirms BB Long-Term Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' long-term corporate credit rating on Brazil-based Sadia S.A., following the company's announcement to definitely revoke its takeover offer for Perdigao S.A. (not rated). The ratings were also removed from CreditWatch, where they were placed with negative implications on July 17, 2006. The outlook is stable. The decision to revoke the takeover bid followed the refusal by shareholders of the controlling group of Perdigao to accept Sadia's second offer of BRL29.00 per share of Perdigao, which valued 100% of Perdigao at BRL3.87 billion (US$1.75 billion). The stable outlook on the ratings reflects our expectations that Sadia will maintain its strong export profile and its leadership in Brazil, factors that will mitigate the risks associated with its operations. A positive change of the ratings or outlook would depend on Sadia's consistent ability to reach higher operating margins and achieve a more diversified, value-added product mix for its exports. Conversely, the ratings would suffer downward pressure if the performance of the local economy lagged amid depressed local demand and consumption levels, and international markets did not offer a profitable sales alternative. In addition, an escalation of the number of animal-disease cases in Brazil or worldwide could affect Sadia's long-term credit fundamentals and trigger a review of the ratings or outlook. VARIG S.A.: Preliminary Injunction Continued to September 14 ------------------------------------------------------------ The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York continues the Preliminary Injunction in effect in VARIG S.A. and its debtor affiliates' case through and including Sept. 14, 2006, subject to these conditions: a. The Foreign Debtors' implementation of the Contingency Plan for the return of leased any aircraft, engines or other equipment; b. Qualified and authorized lessor representatives being provided access to the Aircraft to monitor the: -- maintenance of the Aircraft; and -- process of returning the Aircraft pursuant to the Contingency Plan, if applicable; c. The Foreign Debtors' obligation not to remove or permit the removal of parts from the Aircraft other than for maintenance reasons or for purposes of returning parts to their proper airframe in accordance with the Contingency Plan; and d. The Foreign Debtors' compliance with judicial relief granted by other United States courts with respect to the return of Aircraft. The Bankruptcy Court directs the Foreign Debtors to continue to use their best efforts to promptly implement the Contingency Plan, including by removing from commercial service and grounding the Aircraft within 10 days of the earlier of: * July 21, 2006; or * receipt of a formal written demand for the return by: Pillsbury Winthrop Shaw Pittman LLP, 1540 Broadway, New York, New York 10036 Attn: Rick B. Antonoff, Esq., unless the lessor or secured party has (i) otherwise obtained judicial relief with respect to the return of the Aircraft, in which case, the other judicial relief will supersede the Preliminary Injunction Order; (ii) agreed to other treatment of the Aircraft; or (iii) not formally demanded the return of the Aircraft by serving a written demand. The Court will hold a hearing on Sept. 13 at 10:00 a.m., to consider: -- a further extension the Preliminary Injunction; or -- the entry of a Permanent Injunction. About VARIG Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's largest air carrier and the largest air carrier in Latin America. VARIG's principal business is the transportation of passengers and cargo by air on domestic routes within Brazil and on international routes between Brazil and North and South America, Europe and Asia. VARIG carries approximately 13 million passengers annually and employs approximately 11,456 full-time employees, of which approximately 133 are employed in the United States. The Company, along with two affiliates, filed for a judicial reorganization proceeding under the New Bankruptcy and Restructuring Law of Brazil on June 17, 2005, due to a competitive landscape, high fuel costs, cash flow deficit, and high operating leverage. The Debtors may be the first case under the new law, which took effect on June 9, 2005. Similar to a chapter 11 debtor-in-possession under the U.S. Bankruptcy Code, the Debtors remain in possession and control of their estate pending the Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de Advocacia Sergio Bermudes, represents the carrier in Brazil. Each of the Debtors' Boards of Directors authorized Vicente Cervo as foreign representative. In this capacity, Mr. Cervo filed a Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury Winthrop Shaw Pittman LLP represents Mr. Cervo in the United States. As of March 31, 2005, the Debtors reported BRL2,979,309,000 in total assets and BRL9,474,930,000 in total debts. (VARIG Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) VARIG S.A.: Will Appoint New Chief Executive Officer This Week -------------------------------------------------------------- VARIG S.A. is set to announce a new chief executive officer to replace Marcelo Bottini this week, Bloomberg News reports, citing O Estado de Sao Paulo. Bloomberg says Maria Silvia Bastos Marques has been offered the CEO position at the airline. Ms. Marques, Estado noted, is a partner at investment firm MS & CR2 Financas Corporativas in Rio de Janeiro, Brazil. She is the former chief executive officer of Cia. Siderurgica Nacional, Brazil's third-largest steelmaker, Estado said. About VARIG Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's largest air carrier and the largest air carrier in Latin America. VARIG's principal business is the transportation of passengers and cargo by air on domestic routes within Brazil and on international routes between Brazil and North and South America, Europe and Asia. VARIG carries approximately 13 million passengers annually and employs approximately 11,456 full-time employees, of which approximately 133 are employed in the United States. The Company, along with two affiliates, filed for a judicial reorganization proceeding under the New Bankruptcy and Restructuring Law of Brazil on June 17, 2005, due to a competitive landscape, high fuel costs, cash flow deficit, and high operating leverage. The Debtors may be the first case under the new law, which took effect on June 9, 2005. Similar to a chapter 11 debtor-in-possession under the U.S. Bankruptcy Code, the Debtors remain in possession and control of their estate pending the Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de Advocacia Sergio Bermudes, represents the carrier in Brazil. Each of the Debtors' Boards of Directors authorized Vicente Cervo as foreign representative. In this capacity, Mr. Cervo filed a Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury Winthrop Shaw Pittman LLP represents Mr. Cervo in the United States. As of March 31, 2005, the Debtors reported BRL2,979,309,000 in total assets and BRL9,474,930,000 in total debts. (VARIG Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) * BRAZIL: Agencia Nacional Aims to Double Area for Auction ---------------------------------------------------------- Brazil's hydrocarbons regulator Agencia Nacional do Petroleo wants to double the area to be offered inthe eighth hydrocarbons licensing round that would take place in November, Business News Americas reports. Agencia Nacional aims to increase the area to 400,000 sq km from 194,651 sq km offered in last year's seventh round, BNamericas says. As previously reported, the licensing round, scheduled for August 28, was postponed to allow the hydrocarbons regulator and oil companies to prepare for the bidding. The new schedule, BNamericas says, needs to take into account political issues such as the October presidential, congressional and governatorial elections. * * * Fitch Ratings assigned these ratings on Brazil: Rating Rating Date ------ ----------- Country Ceiling BB- Nov. 18, 2004 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 * BRAZIL: Telecom Agency Issues Tender Rules for WiMax Services --------------------------------------------------------------- Brazil's telecommunications regulator, Anatel, issued tender rules for licenses in the 3.5GHz and 10.5GHz frequency bands that may be used for offering WiMax wireless broadband services, Brazilian newspapers reported. The government will auction the 15-year licenses later this year. Bids must be submitted by Sept. 4. There are currently 4.5 million broadband users in Brazil and this figure could reach 10 million by 2010, Business News Americas reports, citing Anatel. Anatel prohibits fixed-line operators Telefonica, Telemar and Brasil Telecom to bid for blocks of spectrum in areas where they already have fixed line concession licenses, BNamericas states. The new licenses will be divided across three Brazilian regions. A telecom analyst quoted by BNamericas said that while Anatel tries to encourage competition and keep prices low, incumbent providers in the past have found way to circumvent such restrictions. * * * Fitch Ratings assigned these ratings on Brazil: Rating Rating Date ------ ----------- Country Ceiling BB- Nov. 18, 2004 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 =========================== C A Y M A N I S L A N D S =========================== ALMA HOLDINGS: Shareholders Final Meeting Set for Aug. 11 --------------------------------------------------------- Alma Holdings' shareholders will convene for a final meeting on July 17, 2006, at: Citco Trustees (Cayman) Limited Windward One, Regatta Office Park West Bay Road Grand Cayman, Cayman Islands Accounts on the company's liquidation process will be presented during the meeting. The liquidator can be reached at: CDL Company Ltd. P.O. Box 31106 SMB Grand Cayman, Cayman Islands ALTEDGE ADVISORS: Last Shareholders Meeting Is Set for Aug. 11 -------------------------------------------------------------- Altedge Advisors Limited's shareholders will gather for a final meeting at 10:00 a.m. on Aug. 11, 2006, at: Ogier, Queensgate House South Church Street Grand Cayman, Cayman Islands These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidator can be reached at: Xavier Himmer Attn: Susan Taylor c/o Ogier P.O. Box 1234, George Town Grand Cayman, Cayman Islands Tel: (345) 949-9876 Fax: (345) 949-9877 BCP GLOBAL: Final Shareholders Meeting Is Scheduled for Aug. 11 --------------------------------------------------------------- BCP Global Wise Fund's final shareholders meeting will be at 9:00 a.m. on Aug. 11, 2006, at the company's registered office. These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidator can be reached at: Richard L. Finlay Attention: Krysten Lumsden P.O. Box 2681, George Town Grand Cayman, Cayman Islands Tel: (345) 945-3901 Fax: (345) 945-3902 FOCUS ALLOCATION: Final Shareholders Meeting Is Set for Aug. 11 --------------------------------------------------------------- Focus Allocation Fund, Ltd.'s final shareholders meeting will be at 9:00 a.m. on Aug. 11, 2006, at the company's registered office. These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidator can be reached at: Richard L. Finlay Attn: Krysten Lumsden P.O. Box 2681, George Town Grand Cayman, Cayman Islands Tel: (345) 945-3901 Fax: (345) 945-3902 FOCUS GLOBAL: Final Shareholders Meeting Set for Aug. 11 -------------------------------------------------------- Focus Global Long Short Fund Ltd.'s shareholders will convene for a final meeting at 9:00 a.m. on Aug. 11, 2006, at the company's registered office. These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidator can be reached at: Richard L. Finlay Attn: Krysten Lumsden P.O. Box 2681, George Town Grand Cayman, Cayman Islands Tel: (345) 945-3901 Fax: (345) 945-3902 FOCUS STRATEGIC: Will Hold Final Shareholders Meeting on Aug. 11 ---------------------------------------------------------------- Focus Strategic Fund's shareholders will meet for a final meeting at 9:00 a.m. on Aug. 11, 2006, at the company's registered office. These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidator can be reached at: Richard L. Finlay Attn: Krysten Lumsden P.O. Box 2681, George Town Grand Cayman, Cayman Islands Tel: (345) 945-3901 Fax: (345) 945-3902 FOCUS STRATEGIC II: Final Shareholders Meeting Is on Aug. 11 ------------------------------------------------------------ Focus Strategic Fund II's final shareholders meeting will be at 9:00 a.m. on Aug. 11, 2006, at the company's registered office. These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidator can be reached at: Richard L. Finlay Attn: Krysten Lumsden P.O. Box 2681, George Town Grand Cayman, Cayman Islands Tel: (345) 945-3901 Fax: (345) 945-3902 INTEGRO HOLDINGS: Final Shareholders Meeting Is on Aug. 11 ---------------------------------------------------------- Integro Holdings Ltd.'s final shareholders meeting will be at 10:00 a.m. on Aug. 11, 2006, at: Century Yard, Cricket Square Hutchins Drive, George Town Grand Cayman, Cayman Islands These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidator can be reached at: William P. Costantini c/o P.O. Box 2681, George Town Grand Cayman, Cayman Islands Tel: (212) 295-5750 Fax: (212) 295-5751 MERRILL LYNCH: Final Shareholders Final Meeting on Aug. 11 ---------------------------------------------------------- Merrill Lynch QA Merger Arbitrage Master Fund Limited's shareholders will gather for a final meeting at 9:00 a.m. on Aug. 11, 2006, at the company's registered office. These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidators can be reached at: John Cullinane Derrie Boggess c/o Walkers SPV Limited, Walker House P.O. Box 908, George Town Grand Cayman, Cayman Islands NIRVANA CAPITAL: Last Shareholders Meeting Is Set for Aug. 11 ------------------------------------------------------------- Nirvana Capital Limited's final shareholders meeting will be at 3:00 p.m. on Aug. 11, 2006, at: Ferrier Hodgson Limited 14th Floor, Hong Kong Club Building 3A Chater Road, Central These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidators can be reached at: Roderick John Sutton Desmond Chung Seng Chiong Attn: Nick Robinson P.O. Box 265GT, George Town Grand Cayman, Cayman Islnads Tel: (345) 914-4216 Fax: (345) 814-8216 PAPA BOB: Schedules Final Shareholders Meeting on Aug. 11 --------------------------------------------------------- Papa Bob Ltd.'s final shareholders meeting will be at 10:00 a.m. on Aug. 11, 2006, at the company's registered office. These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidators can be reached at: Robert N. Wiviott c/o Campbells 4th Floor, Scotia Centre P.O. Box 884, George Town Grand Cayman, Cayman Islands SPIKE LIMITED: Shareholders Meet for a Final Meeting on Aug. 11 --------------------------------------------------------------- Spike Limited's final shareholders meeting will be at 10:00 a.m. on Aug. 11, 2006, at: Ferrier Hodgson Limited 14th Floor, Hong Kong Club Building 3A Chater Road, Central These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidator can be reached at: Roderick John Sutton Attn: Nick Robinson P.O. Box 265GT, George Town Grand Cayman, Cayman Islnads Tel: (345) 914-4216 Fax: (345) 814-8216 =============== C O L O M B I A =============== * COLOMBIA: Awarding Design of Project with Panama in September --------------------------------------------------------------- An official from Interconexion Electrica SA aka ISA, Colombia's state transmission firm, told Business News Americas that the contract to draft basic engineering and pre-design studies for the interconnection project between Colombia and Panama could be awarded by the end of September 2006. BNamericas relates that the winner of the contract would revise and complement existing work and draft detailed electrical studies and technical specifications for the project's tender. The official told BNamericas that by the July 18 deadline, ISA received a large number of expressions of interest, most of them from international companies. The official did not tell BNamericas the number and the names of the entities that are interested in the contract. The project, which costs US$230 million, entails the construction of a 600km power line, according to preliminary information. Colombia, says BNamericas, has surplus power that could be used by Panama at 33% less cost than the latter's local generation. BNamericas emphasizes that ISA manages the project with Etesa, the Panamanian state power transmission firm. The project is funded by the Inter-American Development Bank is financing the studies conducted for the project. ISA expects a report from the winner of the contract in six months after the agreement is finalized, the official told BNamericas. * * * On May 30, 2005, Fitch Ratings affirmed Colombia's ratings as: -- Long-term foreign currency 'BB'; -- Country ceiling 'BB'; -- Local currency 'BBB-'; -- Short-term 'B'. Fitch said the Rating Outlook is Stable. * COLOMBIA: Fitch Rates US$1-Bil. Global Bond Due 2017 at BB ------------------------------------------------------------ Fitch rates the Republic of Colombia's US$1 billion issue of fixed-rate Global Bonds maturing January 27, 2017, 'BB'. The rating is in line with Fitch's long-term foreign currency rating on Colombia. The Rating Outlook is Positive. Fitch revised the Outlook on Colombia's long-term foreign currency Issuer Default Rating to Positive from Stable last month based on improvements in key public and external solvency indicators over the past two years and the expectation that recent trends will improve going forward, albeit more slowly. "Authorities have taken advantage of a favorable external environment to reduce the vulnerability of public debt to exchange rate risk, repaying external debt and raising the proportion owed in local currency to 68% while maintaining a relatively long five-year average maturity primarily at fixed rates," Morgan C. Harting, Fitch Senior Director and lead sovereign analyst for Colombia, said. "In view of the weakness in the Colombian peso over the past several months, these adjustments appear to have been particularly well-timed. The issuance of 2017 appears to mark the beginning of a return to more balance between local and external financing." Net external debt declined from 133% of CXR in 2003 to 72% of CXR in 2005, though it is still a good deal higher than the 44% of CXR 'BB' peer median. Vulnerability of the economy as a whole to external shocks has also fallen as Colombian firms have gained international competitiveness and as a longer track record of low and stable inflation may now allow the potential for some counter-cyclical monetary policy. External financing needs have come down but are still higher than peers relative to broad exports, and these requirements come disproportionately from the public sector. But authorities have accumulated significant assets that would serve as a buffer in the event that international markets cooled to the Andean country for some time and the 2017 issuance will add to this position. "Because most public and external debt ratios are still generally above peers, Fitch's assessment that Colombia's creditworthiness is trending toward 'BB+' therefore rests on a superior qualitative assessment of debt tolerance and credibility," Mr. Harting said. The first Uribe administration moved to contain deteriorating public debt dynamics with a pension reform and a temporary asset tax. Mr. Harting also said that "Because his coalition gained a majority in the March congressional elections and he won by a wide margin on May 25, President Uribe now has a strong mandate and a second term should bode well for economic growth and fiscal management. Fitch expects economic policy to focus on consolidating recent improvements." A free trade agreement with the U.S., tax reform and an extension of caps on transfers to local and regional governments are all expected to come to a vote before Congress this term, and prospects for passage appear favorable. These policies should help keep public and external debt ratios on declining trends going forward, though none of them is particularly path- breaking. Should the Colombian administration choose to take advantage of its strong electoral mandate to include another round of pension reform among its economic priorities, this would be particularly beneficial for the credit because shortfalls in the retirement program are a key source of fiscal weakness. Positive momentum in the credit could stall or reverse if the government fails to gain passage of its economic agenda or if confidence deteriorates significantly. A sharp reversal in global risk appetite could also have adverse effects on Colombia's creditworthiness because of its higher than average external financing requirements. * COLOMBIA: Oil Sector Posts US$331M from Foreign Investments ------------------------------------------------------------- Colombia's oil sector posted US$331 million in direct foreign investment or DFI in the first quarter of 2006, according to state news service SNE. The amount, says SNE, is about 69.7% higher than the one recorded in the first quarter of 2005. As indicated by figures from Banco de la Republica, DFI in the oil sector increased US$1.24 billion last year, SNE relates. The report states that for 2006, ANH -- the hydrocarbons regulator -- expects DFI to reach US$1.50 billion. DFI in all sectors increased 6.8% to US$978 million in the first quarter of 2006, Business News Americas reports. * * * On May 30, 2005, Fitch Ratings affirmed Colombia's ratings as: -- Long-term foreign currency 'BB'; -- Country ceiling 'BB'; -- Local currency 'BBB-'; -- Short-term 'B'. Fitch said the Rating Outlook is Stable. =================== C O S T A R I C A =================== * COSTA RICA: Bill on State Power Firm's Upgrade Expected in Aug ---------------------------------------------------------------- A bill on the modernization of Instituto Costarricense de Electricidad, Costa Rica's state-run power firm, is expected to be ready in August, local press states, citing Roberto Dobles -- the country's environment and energy minister. Minister Dobles told the press that the bill is yet being drafted by Costa Rica's executive branch. Business News Americas reports that Minister Dobles said the bill aims to make ICE more competitive. BNamericas underscores that one of the bill's components would tackle ICE's assumption of debt for working capital and investments. The bill would allow ICE to take on debt without authorization from the executive branch, central bank or any other external entity. It would have a 20% annual debt growth limit. The bill, says BNamericas, would consider year-end debt and Gross Domestic Product growth to reach a maximum debt level. The Universidad de Costa Rica and workers have suggested limiting the amount at 60% of the assets of ICE. According to BNamericas, there had been claims that the project would favor converting ICE into a private company, which the minister denied. Minister Dobles told BNamericas, "ICE will continue to be a public company and what this bill will do is provide the institution with sufficient autonomy to continue being successful through a system by which many state companies operate in the world." The bill will be submitted to the legislative assembly, BNamericas states, citing Minister Dobles. * * * Costa Rica is rated by Moody's: -- CC LT Foreign Bank Depst Ba2 -- CC LT Foreign Curr Debt Ba1 -- CC ST Foreign Bank Depst NP -- CC ST Foreign Curr Debt NP -- Foreign Currency LT Debt Ba1 -- Local Currency LT Debt Ba1 Fitch assigned these ratings to Costa Rica: -- Foreign currency long-term debt, BB -- Local currency long-term debt, BB -- Foreign currency short-term debt, B Costa Rica carries these ratings from Standard & Poor's: -- Foreign Currency LT Debt BB -- Local Currency LT Debt BB+ -- Foreign Currency ST Debt B -- Local Currency ST Debt B * COSTA RICA: Foreign Investment to Exceed Central Bank Estimate ---------------------------------------------------------------- This year's direct foreign investment in Costa Rica is expected to exceed Central Bank's early estimates, Inside Costa Rica reports. Inside Costa Rica relates that the central bank had predicted that investment from other countries would amount to US$664 million this year. However, Scotia Bank's purchasing of local Interfin Bank alone is expected to amount more than US$293 million, according to Inside Costa Rica. The amount of foreign investment is likely to reach US$1 billion for the very first time. The largest amount had been that of last year, which reached US$877 million, Inside Costa Rica states. * * * Costa Rica is rated by Moody's: -- CC LT Foreign Bank Depst Ba2 -- CC LT Foreign Curr Debt Ba1 -- CC ST Foreign Bank Depst NP -- CC ST Foreign Curr Debt NP -- Foreign Currency LT Debt Ba1 -- Local Currency LT Debt Ba1 Fitch assigned these ratings to Costa Rica: -- Foreign currency long-term debt, BB -- Local currency long-term debt, BB -- Foreign currency short-term debt, B Costa Rica carries these ratings from Standard & Poor's: -- Foreign Currency LT Debt BB -- Local Currency LT Debt BB+ -- Foreign Currency ST Debt B -- Local Currency ST Debt B * COSTA RICA: Comptroller General to Probe Ericsson Contract ------------------------------------------------------------ The comptroller general of Costa Rica has ordered Instituto Costarricense de Electricidad, the country's state-owned telecoms monopoly, to conduct an internal investigation on its contract with Ericsson, La Nacion reports. La Nacion relates that the comptroller wanted to know why ICE accepted an incomplete delivery of mobile network infrastructure from Ericsson. Business News Americas relates that ICE has to present to the comptroller in 22 days a summary of the actions it plans to take against Alberto Herrera -- the administrator of the contract -- and Fernando Murillo, the project director. Mr. Herrera and Mr. Murillo both received the delivered network infrastructure in December 2005 before Ericsson had set up the last 16 base stations, BNamericas states. Ericsson was unable to install nine of those stations as ICE had not secured the needed construction sites. According to BNamericas, Mr. Herrera and Mr. Murillo refused to accept the network at first but reconsidered, thinking it was commercially viable. However, ICE discovered that the signal strength was not enough in 83% of the high traffic places that it tested, with similar signal strength faults found in 54% of low traffic sites, BNamericas says. The comptroller still blamed ICCE for testing coverage in 129 of the 384 localities served, and for failing to test along the seven highways included in the contract, BNamericas reports. According to BNamericas, ICE intends to hire a consultant to determine the amount of a fine it should impose on Ericsson. The contract, for installation of 600,000 GSM mobile lines, was worth US$130 million and officials of ICE have called for a fine of up to US$32 million. Teofilo de la Torre, the chief executive of ICE, told BNamericas that the company expects to have a consultant within two weeks. According to him, the expert -- who will be required to make a report within 30 days -- will be paid CRC5 million for his service. * * * Costa Rica is rated by Moody's: -- CC LT Foreign Bank Depst Ba2 -- CC LT Foreign Curr Debt Ba1 -- CC ST Foreign Bank Depst NP -- CC ST Foreign Curr Debt NP -- Foreign Currency LT Debt Ba1 -- Local Currency LT Debt Ba1 Fitch assigned these ratings to Costa Rica: -- Foreign currency long-term debt, BB -- Local currency long-term debt, BB -- Foreign currency short-term debt, B Costa Rica carries these ratings from Standard & Poor's: -- Foreign Currency LT Debt BB -- Local Currency LT Debt BB+ -- Foreign Currency ST Debt B -- Local Currency ST Debt B =================================== D O M I N I C A N R E P U B L I C =================================== FALCONBRIDGE LTD: Board Reaffirms Support for Inco's Offer ---------------------------------------------------------- Falconbridge Limited disclosed that its Board of Directors has reaffirmed its unanimous support for the Inco offer of CDN$18.50 cash per share and 0.55676 of an Inco share per Falconbridge share, assuming full pro-ration. Excluding the recently- announced special dividend of CDN$0.75 per common share, the implied value of the Inco offer was CDN$64.40 at close of business on July 24, 2006, while Falconbridge shares were trading at CDN$62.45, ex-dividend, or a premium of CDN$1.95. The shareholders of Falconbridge have until midnight, Vancouver time on July 27, 2006, to tender their shares to the Inco offer. The Board reaffirmed its recommendation in the context of its review of Xstrata plc's revised offer of CDN$62.50 in cash per Falconbridge share. The Xstrata offer, currently expiring on August 14, 2006, remains subject to approvals by Investment Canada and Xstrata shareholders. "After reviewing the financial and legal aspects of the two offers, the market fundamentals for both nickel and copper and the recent performance of the Inco and Falconbridge share prices, the Falconbridge Board has reaffirmed its conclusion that the Inco offer is more attractive for the shareholders of Falconbridge," said Derek Pannell, Falconbridge's Chief Executive Officer. "Our view is that combining with Inco creates an unrivalled base-metals mining company with tremendous potential for value creation." Inco and Falconbridge have reported record-breaking financial results for the second quarter of 2006, with net earnings in accordance with Canadian generally accepted accounting principles of US$472 million and net earnings of US$728 million, respectively. "One of the primary reasons for the Falconbridge Board reaffirming this recommendation is the forecast of extremely solid market fundamentals, especially for nickel and copper, which will continue to underpin a very positive metals pricing environment. Against this backdrop, both Inco and Falconbridge have delivered and are expected to continue to deliver outstanding short- and medium-term earnings," Mr. Pannell said. "The US$550-million of synergies that can be realized from the combination of Inco and Falconbridge are unique to these two companies and will provide a further positive impact. Conversely, Xstrata's all-cash offer will not allow Falconbridge shareholders to participate in this future earnings potential." "In addition, Inco has received all requisite regulatory approvals. This provides a higher completion certainty," Mr. Pannell added. Finally, assuming completion of the proposed Phelps Dodge offer to Inco, former Falconbridge shareholders would receive a further premium, including additional cash. The Directors' Circular was filed yesterday, July 25, 2006. About Xstrata Xstrata plc (LSE: XTA) -- http://www.xstrata.com/-- is a major global diversified mining group, listed on the London and Swiss stock exchanges. The Group is and has approximately 24,000 employees worldwide, including contractors. Xstrata does business in six major international commodities markets: copper, coking coal, thermal coal, ferrochrome, vanadium and zinc, with additional exposures to gold, lead and silver. The Group's operations and projects span four continents and nine countries: Australia, South Africa, Spain, Germany, Argentina, Peru, Colombia, the U.K. and Canada. About Inco Headquartered in Sudbury, Ontario, Inco Limited (TSX, NYSE:N) -- http://www.inco.com/-- is the world's #2 producer of nickel, which is used primarily for manufacturing stainless steel and batteries. Inco also mines and processes copper, gold, cobalt, and platinum group metals. It makes nickel battery materials and nickel foams, flakes, and powders for use in catalysts, electronics, and paints. Sulphuric acid and liquid sulphur dioxide are produced as byproducts. The company's primary mining and processing operations are in Canada, Indonesia, and the UK. About Falconbridge Headquartered in Toronto, Ontario, Falconbridge Limited (TSX:FAL.LV)(NYSE: FAL) -- http://www.falconbridge.com/-- is a leading copper and nickel company with investments in fully integrated zinc and aluminum assets. Its primary focus is the identification and development of world-class copper and nickel orebodies. It employs 14,500 people at its operations and offices in 18 countries. The Company owns nickel mines in Canada and the Dominican Republic and operates a refinery and sulfuric acid 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 CDNUS$150 million 5% convertible and callable bonds due April 30, 2007, carries Standard & Poor's BB+ rating. FALCONBRIDGE: Net Income Up 260% to US$728MM in Second Quarter -------------------------------------------------------------- Falconbridge Limited reported second quarter 2006 net income of US$728 million (earnings per share of US$1.94 basic; US$1.91 diluted). This compares with second quarter 2005 net income of US$202 million (earnings per share of US$0.62 basic; US$0.61 diluted). "We are extremely pleased with the outstanding financial results we are reporting this quarter," Derek Pannell, Chief Executive Officer of Falconbridge, said. "Our operations have stayed focused on producing metal, giving impressive results quarter after quarter. This strong performance continues to reflect both the ability of our operations to capitalize on high metals prices and to generate very substantial levels of cash. In the first half of the year, income from operating assets almost reached US$2 billion, demonstrating Falconbridge's true earnings potential." The Falconbridge Board of Directors is reviewing the terms of the offers from Inco and Xstrata and will provide Falconbridge shareholders with a recommendation shortly. Q2 2006 Highlights -- Revenues almost doubled to US$3.95 billion from Q2 2005; -- Achieved income from operating assets of US$1.24 billion, a 168% increase from Q2 2005; -- Realized net income of US$728 million, a 260% increase from Q2 2005; -- Q2 2006 realized prices were significantly higher (vs. Q2 2005): copper was up 116%, nickel up 18%, zinc up 146%, aluminum up 39%; -- In light of strong cash generation, redeemed remaining outstanding US$750 million of Junior Preference Shares; -- Announced special dividend of CDN$0.75 per common share; and -- Completed 28 Six Sigma projects during Q2 2006 for total annualized benefit of US$8.2 million at an average savings value of US$293,000 per project. Corporate Developments Inco Offer for Falconbridge On October 11, 2005, Inco Limited announced an offer to acquire all outstanding common shares of Falconbridge. The offer was comprised of part cash and part Inco common shares, which when pro-rated subject to the maximum amounts offered would provide CDN$7.50 and 0.524 Inco shares for each Falconbridge common share. On May 13, 2006, Inco announced an improved offer that when subject to proration would provide Falconbridge shareholders with CDN$12.50 in cash and 0.524 of an Inco share. Following the Phelps Dodge Corporation offer to acquire Inco Limited that was announced on June 26, 2006, Inco subsequently revised its offer on June 26, 2006 to CDN$17.50 and 0.55676 Inco shares on the pro-rated basis and again on July 16 to CDN$18.50 and 0.55676 Inco shares on the pro-rated basis. The Inco offer remains open for acceptance to July 27, 2006. Inco has obtained regulatory clearances from the Canadian Competition Bureau and U.S. Department of Justice and subsequent to the end of the quarter, Inco received regulatory clearance from the E.U. competition authorities. There are no further clearances required by the Inco offer and the offer can be transacted. The regulatory clearance agreements reached with the U.S. Department of Justice and the European Commission determined that the proposed remedy was acceptable to allow the proposed Inco and Falconbridge transaction to proceed. The remedy consists of the sale of the Nikkelverk refinery in Norway and the Falconbridge marketing and custom feed organizations that procure third-party feed materials and market and sell the refined products to LionOre Mining International Ltd. The sale would include an agreement to supply up to 60,000 tons of nickel in matte annually, approximately equivalent to the current volume of feed provided by Falconbridge's operations to this refinery, for up to ten years. The sale of the Nikkelverk refinery and the Falconbridge marketing and custom feed organizations is conditional upon the completion of the Inco and Falconbridge combination. Phelps Dodge Offer for Inco On June 26, 2006, Phelps Dodge Corporation announced in conjunction with Inco and Falconbridge that the three companies have agreed to combine in a transaction that would create one of the world's largest mining companies. The new company would be named Phelps Dodge Inco Corporation and would be headquartered in Phoenix, Arizona, with the nickel, zinc and aluminum division to be headquartered in Toronto. The Phelps Dodge transaction offers to acquire all of the outstanding common shares of Inco for a combination of cash and shares. Each Inco shareholder would receive 0.672 Phelps Dodge shares and CDN$17.50 in cash for each Inco common share on a pro-rated basis. Phelps Dodge subsequently revised its offer on July 16, 2006 to CDN$20.25 and 0.672 Phelps Dodge shares on a pro-rated basis. The Phelps Dodge offer to Inco shareholders would also be available to all Falconbridge common shareholders, upon the successful take up of Falconbridge shares by Inco under the terms of the separate Inco offer to Falconbridge common shareholders, for any Inco common shares received pursuant to the Inco offer. Phelps Dodge supports Inco's offer for Falconbridge, but the Phelps Dodge transaction with Inco is not conditioned upon the completion of the Inco and Falconbridge combination. Xstrata Offer On May 18, 2006, Xstrata plc made its offer to purchase for cash all of the outstanding common shares of Falconbridge at an offered price of CDN$52.50 per share. On July 11, 2006, Xstrata announced its intention to increase its all cash offer price to CDN$59.00 per share. On July 21, 2006, Xstrata increased its offer for Falconbridge to CDN$62.50 per common share in cash and that waived the minimum tender condition. The revised Xstrata offer will expire on August 14, 2006, and is subject to approval from Xstrata shareholders and Investment Canada. Declaration of Special Dividend On July 16, 2006, Falconbridge declared a special dividend of Cdn$0.75 per common share payable on August 10, 2006, to shareholders on record at the close of business on July 26, 2006. The special dividend will be paid regardless of the outcome of the offers to acquire the common shares of the Company. Redemption of Junior Preference Shares On April 26, 2006, Falconbridge redeemed a total of 20 million shares, or US$500 million, of its outstanding Junior Preference Shares, based upon shareholders of record on March 22, 2006. Falconbridge utilized existing cash balances to fund the redemption. On June 28, 2006, Falconbridge redeemed the remaining balance of its 9,999,701 outstanding Junior Preference Shares for a total of approximately US$250 million utilizing internal cash resources. Upon redemption, Falconbridge had no Junior Preference Shares outstanding. Falconbridge Offer to Acquire Outstanding Novicourt Inc. Shares On June 22, 2006, Falconbridge announced that it would offer to acquire by way of a takeover bid all of the outstanding common shares of its subsidiary Novicourt Inc. that it did not already own. Falconbridge presently holds approximately 62.1% of the outstanding common shares of Novicourt. The offer is a cash offer of CDN$2.30 per Novicourt common share. The offer circular was issued on June 26, 2006 and the offer is expected to close on August 9, 2006. Financial Results Revenues for the second quarter of 2006 were US$3.95 billion, 93% higher than revenues of US$2.05 billion in the same period of 2005. The increase was mainly due to higher realized metal prices and higher copper and zinc sales volumes and increased revenue contribution from by-product molybdenum. Business unit revenues were 137% higher for copper, 20% higher for nickel, 192% higher for zinc and 35% higher for aluminum. Operating expenses totaled US$2.71 billion in the second quarter, compared to US$1.59 billion in the same period last year, primarily due to the higher value of raw material feeds. Mining, processing and refining costs increased to US$825 million from US$643 million in the second quarter of 2005 due to increased mined and refined copper production, higher refined zinc production, increased primary and rolled aluminum production, higher energy and supplies/consumables costs, and the impact of a weaker U.S. dollar on operating costs at all Canadian and South American operations. The average value of the Canadian dollar increased 11% to US$0.89 from US$0.80 during the second quarter of 2005. The value of raw material feed purchases was US$1,723 million, 116% higher than US$799 million in 2005 due mostly to higher metal prices and increased custom feed processing at the Horne copper smelter and CCR copper refinery. Higher purchased raw materials values are recovered at the time of sale of the metals contained in the materials treated and are generally hedged at the time of purchase. Depreciation, amortization and accretion expense increased to $159 million from US$147 million a year ago. Net interest expense increased to US$45 million from US$37 million in the second quarter of last year due to the redemption premium of US$8 million paid to holders at the time of the early redemption of US$750 million of junior preference shares in the second quarter of 2006. Minority interest in earnings of subsidiaries decreased to US$3 million from US$55 million largely as a result of the elimination of the former Falconbridge minority share ownership. Tax expenses recorded increased to US$406 million from US$133 million during the second quarter of 2005, due to the overall increase in profitability. Income generated by operating assets for the second quarter was US$1,241 million, 168% higher than US$463 million in the second quarter of 2005. Income generated by operating assets increased 324% to $857 million in the copper business, increased 18% to US$235 million in the nickel business, increased US$126 million to US$151 million in the zinc business and increased 109% to US$73 million in the aluminum business. Net income totaled US$728 million, (basic earnings per share of US$1.94; diluted of US$1.91) for the second quarter 2006, 260% higher than net income of US$202 million (basic earnings per share of US$0.62; diluted of US$0.61) in the same period of 2005. Higher net income reflects higher realized metal prices, increased copper, zinc and molybdenum sales and higher treatment and refining charges received at copper smelters and refineries. Consolidated assets totaled US$13.2 billion as at June 30, 2006, compared with US$12.4 billion at the end of 2005. The increase is primarily due to the investment of additional capital in advancing brownfield and greenfield expansion development projects and higher working capital levels due to increased metals. Minority interest increased from US$54 million at the 2005 to US$243 million as at June 30, 2006. The increase is attributable to consolidating the Koniambo Nickel joint venture that was formed during the second quarter of 2006. Falconbridge owns 49% of the net assets of the joint venture and the minority interest represents the 51% of the net assets that are owned by our partner, SMSP. Supplemental Performance Measures The press release contains a number of measures that are not defined by generally accepted accounting principles. The measures, as calculated by the Company, may not be comparable to similar measures presented by other issuers. Income generated from operating assets is defined as follows: -- net income before interest expense, net; -- corporate and general administration; -- research, development and exploration; -- minority interest in earnings of subsidiaries; -- gain, net of restructuring costs and other; and -- tax expense. Liquidity and Capital Initiatives Falconbridge maintains long-term credit arrangements and relationships with a variety of financial institutions and investors in order to facilitate its ongoing access to domestic and international financial markets to meet its funding needs. Falconbridge's future financial requirements related to debt maturities, operating costs, the projects currently under development and other capital investments will be funded primarily from a combination of existing cash balances, committed bank lines, operating cash flows, project financing and new long- and short-term borrowings. The company's committed bank facilities currently total US$780 million and expire in 2010, or 90 days following a change of control. At June 30, 2006, these lines were essentially undrawn. Cash generated from operations, before the net change in accounts receivables, payables and inventories, was US$1,002 million during the second quarter of 2006. Non-cash working capital increased by US$308 million during the quarter due to higher accounts receivable and inventory values resulting from higher metal prices. Total liquidity remains strong, with approximately US$1.4 billion of cash and undrawn lines at June 30, 2006. Long-term debt was US$2.5 billion at quarter end excluding preferred share liabilities. Falconbridge's net-debt- to-capitalization ratio stood at 26.7% at the end of the quarter, a reduction from 36.6% at the end of 2005. On April 26, 2006, Falconbridge redeemed a total of 20 million shares, or $500 million, of its outstanding Junior Preference Shares, from shareholders of record on March 22, 2006. On June 28, 2006, Falconbridge redeemed the remaining balance of its 9,999,701 outstanding Junior Preference Shares for a total of approximately US$250 million. The Junior Preference Shares were redeemed utilizing internal cash resources. Upon redemption, Falconbridge had no Junior Preference Shares outstanding. Investments in new production capacity such as the Nickel Rim South and Koniambo nickel projects totaled US$234 million during the second quarter. For 2006, the Company's projected capital investments are approximately US$315 million for sustaining capital expenditures and other smaller projects and approximately US$435 million in new copper and nickel investments. Development Projects Update Copper Projects Collahuasi, Chile Following the start-up of the mill expansion, the focus of management has been on the continued optimization of the current facilities with the objective of expanding the sulphide concentrator throughput (150,000 to 180,000 tonnes per day). Several areas where bottlenecks exist have been identified and various initiatives are being implemented to eliminate the bottlenecks. Work is also continuing on evaluation of the Rosario West resource and optimum development plan for exploitation of the resource. Antamina, Peru Engineering studies for the addition of a pebble crushing circuit continued. The addition of the circuit would increase the overall grinding capacity and concentrate production. Studies are also underway on extension of the mine life by exploitation of additional ore bodies. Lomas Bayas Expansion, Chile Plans for optimizing output from the existing Lomas Bayas mine have been completed and work is progressing on the preparation of the feasibility study to increase output from the existing orebody. Subsequent to the end of the quarter, Falconbridge made the final US$15 million payment required under the original purchase agreement to secure the adjacent Fortuna de Cobre property. Work is progressing on the study of expanding operations at Lomas Bayas into the adjacent Fortuna de Cobre deposit. A prefeasibility study for the expansion into the Fortuna de Cobre deposit is expected to be completed later this year. El Pachon, Argentina During the second quarter, an engineering contractor was selected to prepare the pre-feasibility study for the project. Work commenced on the study during May and is expected to be completed at the end of 2007. Preparations were underway for a geological and geotechnical drilling program to commence later this year during the fourth quarter. Development of relations with communities in the project areas were advanced during the quarter. El Morro, Chile The summer drilling program was completed during May and work is in progress on analysis of the core sample results. Work has started on driving an exploration tunnel to obtain bulk samples for future test programs. The development of the pre- feasibility study for the project is continuing. Kidd Mine D Project, Canada Work on the shaft bottom and lateral development was completed in the second quarter of 2006. Production from block three is expected to begin in the third quarter of 2006, with project completion expected by the end of 2006. Nickel Projects Raglan Mine Optimization, Canada The second phase of Raglan's optimization will focus on utilizing increased mill capacity by expanding site infrastructure and ore production to allow for the mining, milling and processing of 1.3 million tons of ore annually, resulting in approximately 30,500 tons of annual contained nickel production. Scoping study work has been initiated on mining aspects. To facilitate this program, the accommodation complex requires expansion. The phased program is expected to be completed late in 2008. Nickel Rim, Canada Vent shaft sinking, which began in February 2005, is now at 1,332 metres, and is ahead of schedule. Main shaft sinking began in April 2005 and is now at 965 metres. Underground horizontal development on the 1280 level continues ahead of schedule. The definition phase of the project is on schedule for completion in 2008 with production ramp up in 2009. Koniambo, New Caledonia Falconbridge continued to advance the Koniambo ferronickel project in New Caledonia, a joint venture between Falconbridge and SMSP (the development arm of the North Province of New Caledonia). The current focus is on the advancement of detailed engineering and on early construction activities with a focus on site preparation. Discussions continue with government authorities to refine the necessary operating and construction permits. Koniambo Nickel will produce 60,000 tons of nickel with start-up expected in 2009/2010. Kabanga, Tanzania The Kabanga deposit is a joint venture between Falconbridge and Barrick Gold in Tanzania. By mutual agreement of the joint venture partners, the companies continued to upgrade the resource to measured and indicated categories to support the work plan. Systematic exploration of the under-explored Kabanga licence continues and select regional targets are being evaluated. Engineering studies are limited in this phase and concentrate primarily on a geotechnical and hydrology program, metallurgical testing and baseline environmental, health and safety studies. Upon completion of the initial US$49.5 million in expenditures on this project, Falconbridge has an opportunity to determine if it wishes to continue to the next phase of this project. Zinc Projects Perseverance, Canada The feasibility study has been completed on this zinc and copper project located in northern Quebec. A decision to proceed is currently under consideration with a decision expected later this year. Exploration Update Raglan The 2006 exploration program is in progress, employing six diamond drills. To date, two new lenses have been discovered at Zone 5-8, located approximately 4 kilometers east of the concentrator. Hole 714-3, one of the better holes, intersected 25.1 meters of 4.77% nickel and 1.27% copper at a depth of 620 meters. Brazil Exploration of the Araguaia nickel laterite properties continues with the objective of having the Serra do Tapa and Vale dos Sonhos mineral deposits enter the Corporation's project development Stage Gate process if merited during the fourth quarter of this year. Suspension of Dividend Re-Investment Plan The Corporation has suspended its Dividend Re-Investment Plan as under the terms of the Support Agreement between Inco and Falconbridge the Corporation is not permitted to issue any additional shares (other than in respect of existing options and other convertible securities). Common shareholders will continue to receive their dividends in cash. Shareholder Rights Plan On March 21, 2006, the Company enacted a new shareholder rights plan, designed to prevent a creeping takeover of the Company and preserve its ability to obtain the best value for all shareholders. The rights plan will not prevent an offer made to all shareholders for all of their shares. Under an order issued by Ontario Securities Commission on June 30, 2006, the shareholder rights plan shall cease to have an effect on the earlier of i) the date Xstrata plc takes up under its outstanding offer over fifty per cent of the outstanding Falconbridge common shares that it does not already own, and ii) July 28, 2006. Shares Outstanding and Declared Dividends Shares outstanding (as at July 21, 2006): ---------------------------------------------------------------- Trading Shares Name of Falconbridge Security Symbol Outstanding ---------------------------------------------------------------- Common Shares(1) FAL 376,150,148 ---------------------------------------------------------------- Preferred Shares, Series 1 N/A 89,835 ---------------------------------------------------------------- Preferred Shares, Series 2 FAL.PR.A 4,787,283 ---------------------------------------------------------------- Preferred Shares, Series 3 FAL.PR.B 3,122,822 ---------------------------------------------------------------- Preferred Shares, Series F FAL.PR.F 3,246,057 ---------------------------------------------------------------- Preferred Shares, Series G FAL.PR.G 8,753,943 ---------------------------------------------------------------- Preferred Shares, Series H FAL.PR.H 6,000,000 ---------------------------------------------------------------- Falconbridge Limited Consolidated Statements Of Income (US$ millions, unaudited) Six Months ended Second Quarter June 30 -------------------------------------- 2006 2005 2006 2005 -------------------------------------- Revenues $ 3,948 $ 2,052 $ 6,806 $ 3,946 -------------------------------------- Operating expenses Mining, processing and refining costs 825 643 1,568 1,238 Purchased raw materials 1,723 799 2,930 1,521 Depreciation, amortization and accretion 159 147 328 265 -------------------------------------- 2,707 1,589 4,826 3,024 -------------------------------------- Income generated by operating assets 1,241 463 1,980 922 Interest expense, net 45 37 77 65 Corporate and general administration 39 19 63 36 Research, development and exploration 16 16 27 27 Minority interest in earnings of subsidiaries 3 55 5 149 -------------------------------------- Income before undernoted 1,138 336 1,808 645 Other expense (income) 4 1 (10) 10 Tax expense 406 133 628 257 -------------------------------------- Net income $ 728 $ 202 $ 1,190 $ 378 Dividends on preferred shares 6 4 12 7 -------------------------------------- Net Income attributable To common shares $ 722 $ 198 $ 1,178 $ 371 -------------------------------------- Net income per common share Basic $ 1.94 $ 0.62 $ 3.17 $ 1.20 -------------------------------------- Diluted $ 1.91 $ 0.61 $ 3.12 $ 1.19 -------------------------------------- Basic weighted average number of shares - 000s 372,750 322,566 372,243 309,782 Diluted weighted average number of shares - 000s 380,048 329,262 379,161 316,552 Falconbridge Limited Consolidated Balance Sheets (US$ millions, unaudited) Jun. 30 Dec. 31 2006 2005 ------------------------ Assets Current assets Cash and cash equivalents $ 661 $ 886 Accounts receivable 1,673 1,007 Metals and other inventories 2,196 1,708 ------------------------ 4,530 3,601 Operating capital assets 5,909 6,803 Development projects 1,836 1,707 Investments and other assets 423 307 Goodwill 529 - ------------------------ $ 13,227 $ 12,418 ------------------------ Liabilities and Equity Current Liabilities Accounts and taxes payable $ 2,202 $ 1,691 Debt due within one year 351 353 ------------------------ 2,553 2,044 Long-term debt 2,516 2,598 Preferred share liabilities 132 876 Future income taxes 941 1,156 Asset retirement obligation, pension and other provisions 669 659 Stockholders' interests: Interests of other shareholders 243 54 Shareholders' equity 6,173 5,031 ------------------------ $ 13,227 $ 12,418 ------------------------ About Falconbridge Headquartered in Toronto, Ontario, Falconbridge Limited (TSX:FAL.LV)(NYSE: FAL) -- http://www.falconbridge.com/-- is a leading copper and nickel company with investments in fully integrated zinc and aluminum assets. Its primary focus is the identification and development of world-class copper and nickel orebodies. It employs 14,500 people at its operations and offices in 18 countries. The Company owns nickel mines in Canada and the Dominican Republic and operates a refinery and sulfuric acid 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 CDNUS$150 million 5% convertible and callable bonds due April 30, 2007, carries Standard & Poor's BB+ rating. * DOMINICAN REPUBLIC: Puerto Plata Operations Moved to Haina ------------------------------------------------------------ The operations of the Dominican Republic's Puerto Plata port have been rumored to be moved to the Port of Haina, the DR1 Newsletter reports. According to El Caribe, there is an ongoing project that would transfer most of the dock operations from Puerto Plata to Haina. The rumors started when operations at the Puerto Plata port were shut down due to suspicions on illegal immigrants being moved through the port, DR1 relates. DR1 states that the rumor got the industrialists worried. A transfer of operations would be near catastrophic for the businesses and industrial zones due to the high cost of ground shipping in the country, El Caribe states, citing businessmen and industrialists. A source told DR1 that if avoiding illegal immigrants or stowaways is what the government wanted, all that has to be done is increase security and surveillance inside the port. About 8,000 containers move through the port of Puerto Plata every year. Local industrialists save an average of two days delivery time by shipping out of Puerto Plata, DR1 states. * * * The Troubled Company Reporter-Latin America reported on May 9, 2006, that Fitch Ratings upgraded these debt and issuer Default Ratings of the Dominican Republic: -- Long-term foreign currency Issuer Default Rating to B from B-; -- Country ceiling upgraded to B+ from B-; -- Foreign currency bonds due 2006 to B-/RR4 from CCC+/RR4; -- Foreign currency Brady bonds due 2009 to B/RR4 from B-/RR4; -- Foreign currency bonds due 2011 to B/RR4 from B-/RR4; -- Foreign currency bonds due 2013 to B-/RR4 from CCC+/RR4; -- Foreign currency bonds due 2018 to B/RR4 from B-/RR4; and -- Foreign currency collateralized Brady bonds due 2024 to B+/RR3 from B/RR3. Fitch also affirmed these ratings: -- Long-term local currency Issuer Default Rating: B; and -- Short-term Issuer Default Rating: B. Additionally, Fitch assigned a debt and Recovery Rating to this issue: -- Foreign currency bonds due 2027: B/RR4. Fitch said the rating outlook for the long-term foreign and local currency IDRs is Stable. * DOMINICAN REPUBLIC: Retailers Group Criticizes Fuel Pricing ------------------------------------------------------------- Juan Ignacio Espaillat, the head of the National Gasoline Retailer's Association, has criticized the government's way of raising and lowering the price of gasoline and diesel, the DR1 Newsletter reports. There was a lack of transparency and the Hydrocarbon Law should be modified to require contracts, rather than spot buys, Mr. Espaillat told Hoy. The National Gasoline sees the Dominican Republic as a "kidnapped victim" due to the method of using stock market prices as basis in setting the pricing of local fuel, DR1 relates, citing Mr. Espaillat. Mr. Espaillat claimed that the government's way of pricing does not show the real value of the fuel, according to DR1. He said that if the current trend of price raises were to go on, he there would be serious problems for the Dominican Republic. A National Gasoline spokespernson had asked the government to decrease the amount of taxes imposed on each gallon of fuel sold, DR1 states. * * * The Troubled Company Reporter-Latin America reported on May 9, 2006, that Fitch Ratings upgraded these debt and issuer Default Ratings of the Dominican Republic: -- Long-term foreign currency Issuer Default Rating to B from B-; -- Country ceiling upgraded to B+ from B-; -- Foreign currency bonds due 2006 to B-/RR4 from CCC+/RR4; -- Foreign currency Brady bonds due 2009 to B/RR4 from B-/RR4; -- Foreign currency bonds due 2011 to B/RR4 from B-/RR4; -- Foreign currency bonds due 2013 to B-/RR4 from CCC+/RR4; -- Foreign currency bonds due 2018 to B/RR4 from B-/RR4; and -- Foreign currency collateralized Brady bonds due 2024 to B+/RR3 from B/RR3. Fitch also affirmed these ratings: -- Long-term local currency Issuer Default Rating: B; and -- Short-term Issuer Default Rating: B. Additionally, Fitch assigned a debt and Recovery Rating to this issue: -- Foreign currency bonds due 2027: B/RR4. Fitch said the rating outlook for the long-term foreign and local currency IDRs is Stable. ============= E C U A D O R ============= PETROECUADOR: Will Launch Tender for Block 15 Production -------------------------------------------------------- Petroecuador, the state-run oil firm of Ecuador, said in a statement that it will launch an international tender for eight months of production from six lots on block 15, each producing 12,000 barrels a day (b/d) of crude. According to the statement firms are allowed to bid on up to two of the six crude lots. Bids must be submitted by July 27. Business News Americas relates that the supply period will start in August. About 50 firms have been pre-qualified to participate, BNamericas states. These include state companies from nations that have signed strategic alliances or bilateral cooperation accords in the hydrocarbons sector with Ecuador. State firms invited to make their bidding are: -- Uruguay's Ancap, -- Colombia's Ecopetrol, -- Chile's Enap, -- Finland's Fortum Oil and Gas, -- PMI Trading subsidiary of Mexico's Pemex, -- Brazil's Petrobras, -- Nicaragua's Petronic, -- PDVSA Trading subsidiary of Venezuela's Petroleos de Venezuela, -- Peru's Petroperu, -- Trinidad & Tobago's Petrotrin, -- Norway's Statoil, -- Costa Rica's Recope, and -- Jamaica's PCJ. Petroecuador, according to published reports, is faced with cash-problems. The state-oil firm has no funds for maintenance has no funds to repair pumps in diesel, gasoline and natural gas refineries, and has no capacity to pay suppliers and vendors. The government refused to give the much-needed cash alleging that Petroecuador has been inefficient and non-transparent in its accounts. ===================== E L S A L V A D O R ===================== BANCO SALVADORENO: Fitch Places BB Rating on Positive Watch ----------------------------------------------------------- Fitch Ratings has placed on Rating Watch Positive the ratings of Grupo Banistmo's banking subsidiaries in Panama and El Salvador, following the announcement that HSBC will make a cash tender offer to acquire all outstanding shares of Banistmo. The ratings placed on Watch Positive are: Primer Banco del Istmo: -- Long-term Issuer Default Rating: 'BB+'; -- Short-term 'B'; and -- Support rating '5'. Banco Salvadoreno -- Long-term IDR 'BB'; At the same time, the Rating Outlook on the national-scale ratings of Banistmo's subsidiaries in El Salvador, Costa Rica and Honduras was revised to Positive from Stable (local regulations do not consider the use of Rating Watch on National ratings), as follows: Banco Salvadoreno -- National-scale long-term rating 'AA-(slv)' Inversiones Financieras Bancosal -- National-scale long-term rating 'AA-(slv)' Banco Banex -- National-scale long-term rating 'AA-(cri)' Banco Grupo el Ahorro Hondureno (BGA) -- National-scale long-term rating 'AA-(hnd)' After receiving regulatory approval, HSBC will move to acquire all outstanding shares of Banistmo, needing at least 65% ownership to complete the transaction, a level Fitch expects will be achieved. Upon conclusion of the offer, Banistmo's subsidiaries will benefit from the strong potential support of the new and highly rated shareholder HSBC (rated 'AA' by Fitch) in case of need. With a successful closing of the proposed transaction, estimated to take place before the end of this year, PBI's and Salvadoreno's IDRs will likely be upgraded to the level of Panama's and El Salvador's country ceilings, which are 'BBB' and 'BB+', respectively. Salvadoreno's support rating already reflects perceived support from Banistmo, and remains at '3,' while PBI's support rating will also improve to reflect the potential support from HSBC. PBI's and Salvadoreno's individual ratings remain at 'C/D' and 'D', respectively. In Fitch's view, the agreement is consistent with HSBC's worldwide strategy to strengthen its presence in emerging markets. The acquisition of Central America's largest financial group would provide HSBC with a unique and leading position in a region with adequate overall prospects and increasing economic integration. When the acquisition is completed, Banistmo's operations will be increasingly integrated with HSBC's Mexican subsidiary, Grupo Financiero HSBC, which owns a small Panamanian bank under the HSBC brand. Management of the acquired entity will be in the hands of a combined executive team, under the leadership of the CEO of HSBC Mexico. Since Banistmo will not be legally or financially merged into HSBC's Mexican subsidiaries, the ratings of HSBC Mexico are highly unlikely to be affected by this transaction. Banistmo operates as a universal bank in Panama and its main foreign markets. In addition to PBI, Banistmo's banking regional franchise includes: -- Corporacion Banex (Costa Rica), -- Banco Grupo el Ahorro Hondureno or BGA (Honduras), -- Banistmo Colombia (Colombia), -- Banistmo Nicaragua (Nicaragua) and -- Inversiones Financieras Bancosal (El Salvador), Salvadoreno's parent company, where Banistmo holds a 56% stake. In turn, Banistmo's insurance operations include: -- Compania Nacional de Seguros or CONASE (Panama), -- Compania de Seguros El Ahorro Hondureno or SEAHSA (Honduras) and -- Internacional de Seguros (El Salvador). At March 2006, Banistmo reported consolidated assets and equity of US$9 billion and US$803 million, respectively, and was the largest financial conglomerate in Central America in terms of assets. These international-scale ratings were affirmed: Primer Banco del Istmo: -- Individual rating 'C/D'. Banco Salvadoreno -- Short-term 'B'; -- Support rating '3'; and -- Individual rating 'D'. MILLICOM INT'L: Revenues Up 39% to US$362MM in Second Quarter ------------------------------------------------------------- Millicom International Cellular S.A. announces results for the quarter ended June 30, 2006. Highlights for the second quarter of 2006 include: -- Quarterly total subscriber increase for Q2 06 of 51%, bringing total subscribers to 10.9 million; -- 39% increase in revenues for Q2 06 to US$362 million (Q2 05: US$261 million); -- 28% increase in EBITDA for Q2 06 to US$157 million (Q2 05: US$122 million); -- Profit for Q2 06 of US$34 million (Q2 05: US$5 million); -- Earnings per common share for Q2 06 of US$0.34 (Q2 05: US$(0.05)); -- 29% increase in revenues for the First Half of 2006 to US$684 million (2005: US$529 million); -- 20% increase in EBITDA for the First Half of 2006 to US$299 million (2005: US$249 million); -- Profit for the First Half of 2006 of US$67 million (2005: Loss of US$6 million); and -- Basic Earnings per common share of US$0.67 for the First Half of 2006 (2005: Loss per share of US$0.06). Chief Executive Officer's Review: -- Increasing growth momentum with second quarter 2006 Pro forma revenues and EBITDA up respectively by 54% and 53% year on year; -- EBITDA margin of 44%; -- 62% year-on-year increase in pro forma total subscribers; -- 10.9 million subscribers recorded at June 30, 2006; -- Capex of US$146 million in Q2 06; -- Record cash upstreaming of US$113 million in the First Half of 2006. Marc Beuls, Chief Executive, comments: "Underlying pro forma revenues for the second quarter grew by 54% which is an outstanding performance and doubly so as it was matched by pro forma EBITDA growth of 53%. The primary drivers of this growth have been the 78% increase in revenues in Central America, 54% increase in South America and 52% increase in Africa. EBITDA margins were 52% in Central America, 44% in South America and encouragingly 40% in Africa, despite the heavy start up costs in building out the new network in Congo." "Millicom is today reaping the benefits of past investment in its networks and distribution in Latin America and the successful roll out of the Tigo brand in these markets. We believe that our current investment programme will enable us to replicate this successful model in other markets. At Q1 we stated that our 2006 capex target would exceed US$500 million for the year. At the half year we have already invested US$241 million which does not include over US$100 million of investment to be made in building out the new Congo network during the second half. We are now likely to exceed US$600 million of capex for the year which should further enhance our growth prospects. We have now launched the Tigo brand in five African countries, Senegal, Ghana, Tanzania, Sierra Leone and Chad, and expect to see the benefits over many years. Following our successful Investor Relations trip to Central America last year we are planning an analyst and investor trip to Ghana and Senegal in November when we will be able to show how well our African businesses are developing." "On a pro forma basis Millicom has grown its subscribers by 62% in the last year and growth is accelerating in Q2 2006, up 15% from the previous quarter. Today Africa is the market with the fastest subscriber growth within Millicom but Latin America is still growing above the average rate, so showing that good subscriber growth is sustainable as penetration rates rise." "The excellent half year results show clearly that the operational management of Millicom remained focused on growing our operations during a period when the Board was conducting a Strategic Review of the business. This Strategic Review started on January 19, 2006 and ended on July 3, 2006 when the Board decided to terminate all discussions concerning a potential sale of the entire share capital of the company. The company had been in prolonged discussions and due diligence with one potential purchaser but the Board concluded on July 3, 2006, that this purchaser would not be in a position within an acceptable timeframe to make a binding offer that would have been suitably attractive, given the current strong performance of the business, or would have been sufficiently certain of closing." "During the second quarter, Millicom sold its loss-making Pakcom operation in Pakistan. This disposal will improve EBITDA and, more so, net income by eliminating roughly US$30 million of annual interest and amortization expense on the Pakcom license obligations. From a balance sheet perspective, US$246 million of Pakcom liabilities have been eliminated as a result of the sale, consisting mainly of the Pakcom license obligations. As part of this transaction Millicom transferred 10% of Paktel to its former partner in Pakcom. Today in Pakistan, Millicom has just one business into which it is making significant investments to improve the quality and coverage of the network which is a key requirement in such a competitive market place." "In July 2006, Millicom finalised the acquisition of the remaining 4% minority holding in its Paraguay operation which follows the earlier buyouts of minorities in Tanzania, Sierra Leone, Ghana and Senegal." "In August 2006, Millicom will repay its mandatory exchangeable debt with the Tele2 shares that it holds. This will relieve us of over US$350 million of corporate debt and roughly US$26 million in annual interest expense." Millicom International Cellular S.A. -- http://www.millicom.com/ -- is a global telecommunications investor with cellular operations in Asia, Latin America and Africa. It currently has cellular operations and licenses in 16 countries. The Group's cellular operations have a combined population under license of approximately 391 million people. The Central America Cluster comprises Millicom's operations in El Salvador, Guatemala and Honduras. The population under license in Central America at December 2005 is 26.4 million. The South America Cluster comprises Millicom's operations in Bolivia and Paraguay. The population under license in South America at December 2005 is 15.2 million. * * * Millicom International's 10% senior notes due 2013 carry Moody's B3 rating and Standard & Poor's B- rating. * * * Standard & Poor's Ratings Services affirmed on July 4, 2006, its 'B+' long-term corporate credit and 'B-' senior unsecured debt ratings on Millicom International Cellular S.A. The ratings were removed from CreditWatch with developing implications, where they had been placed on Jan. 20, 2006, on the initiation of a strategic review that could have led to a transaction such as the sale of all or part of the company. The outlook is stable. ================= G U A T E M A L A ================= BANCO DEL CAFE: Five Banks Expected to Present Bids for Firm ------------------------------------------------------------ Guatemala's Banco del Cafe aka Bancafe is expecting up to five bids from other banks, Business News Americas reports, citing sources familiar with the deal. BNamericas relates that Citigroup is conducting the sale process. It has invited interested banks to present their bids. The banks will not be bidding for the offshore operation. Banco Agromercantil, says BNamericas, is among those interested in participating. A senior executive of Agromercantil told BNamericas, "It is part of our strategy to grow through acquisitions." The senior executive said that Agromercantil is one of the potential buyers, BNamericas staets. The sources told BNamericas that other interested entities are Canada's Scotiabank and UK banking group HSBC. The banks have finished due diligence at Bancafe and are preparing to submit bids for the company in the next coming weeks. Both Bancafe and Scotiabank refused to give comments to BNamericas. Bancafe was formed by the merging of Bancafe assets and part of Granahorrar, a local mortgage bank, in March 2005. To save them from bankruptcy when the country was hit by financial crisis in the late 90s, the government had taken control of the banks. BANCO INDUSTRIAL: Moody's Changes Ba3 Rating Outlook to Positive ---------------------------------------------------------------- Moody's Investors Service has changed to positive from stable the outlook on Banco Industrial S.A.'s long-term foreign- currency deposit rating of Ba3. The rating action is in line with Moody's change in outlook of Guatemala's Ba3 foreign-currency country ceiling for bank deposits. * GUATEMALA: Moody's Revises Ba2 Rating Outlook to Positive ----------------------------------------------------------- Moody's Investors Service has changed the outlook on the government of Guatemala's Ba2 foreign-currency bond rating to positive from stable in light of a strengthening balance-of- payments position and prospects for continued economic growth. This rating decision is also consistent with Moody's view on the need to more closely align foreign and domestic currency government bond ratings. An outlook change to positive from stable was also made to Guatemala's Ba1 foreign currency country ceiling for bonds and the Ba3 ceiling for foreign currency bank deposits Moody's Vice President Mauro Leos said, "A narrowing of the current account deficit has been supported by a sharp rise in emigrant remittances which reported a marked increase going to US$3 billion in 2005 from US$600 million in 2001, accounting for more than 35% of total current account revenues while covering 55% of Guatemala's trade deficit. In addition, there has been a marked improvement in the country's foreign currency debt-to- exports and debt-to-GDP ratios since 2004." Leos noted that the Central American Free Trade Agreement or CAFTA with the U.S., which went into effect on July 1, represents an unequivocal positive development for Guatemala as it will consolidate existing trade preferences and will bring about additional benefits, including prospects of increased foreign direct investment that should reinforce Guatemala's medium-term growth and export prospects. Guatemala's credit perspective continues to face important challenges including those derived from the presence of regional capital inflows that could accelerate domestic credit creation by the banking system. Moody's said it will monitor how the government deals with the challenges posed by a less benign international economic environment, including such things as higher energy prices, higher world interest rates and a possible deceleration in world economic growth. If the government continues to pursue reasonably coherent fiscal, monetary and exchange rate policies, then the foreign currency ratings might go on review for upgrade. The outlook on the government's Ba1 local-currency bond rating remains stable. The outlook also remains stable on Guatemala's A3 local currency deposit ceiling and on the A3 local currency guideline, the highest possible rating that could be assigned to obligors and obligations denominated in local currency within the country. ============= J A M A I C A ============= SUGAR COMPANY: Government Close to Reaching New Financial Deal -------------------------------------------------------------- The Jamaican government is allegedly nearing a new financial accord for the Sugar Company of Jamaica, Radio Jamaica reports. Roger Clarke, the minister of agriculture in Jamaica, told Financial Report that talks with financiers are at a "delicate" phase. Radio Jamaica relates that uncertainty has been hanging over the Sugar Company since it was reported in may that the National Commercial Bank would no longer support the company financially. Dr. Omar Davies, the country's finance minister, is working out solutions to the Sugar Company's financial problems, Minister Clarke told Radio Jamaica. Sugar Company of Jamaica registered a net loss of almost US$1.1 billion for the financial year ended Sept. 30, 2005, 80% higher than the US$600 million reported in the previous financial year. Sugar Company blamed its financial deterioration to the reduction in sugar cane production. =========== M E X I C O =========== CORPORACION GEO: Posts Strong Results for Second Quarter of 2006 ---------------------------------------------------------------- Corporacion Geo, S.A. de C.V., reports its second quarter 2006 earnings results. The highlights of the second quarter of 2006 include: -- growth in all lines of the income statement according to estimates, -- a new historic best in accounts receivables to sales ratio, -- a new historic best in the return on equity indicator, -- a solid financial structure, combined with positive free cash flow generation and -- a quarter over quarter reduction in the net debt level of the company. Luis Orvananos, Chairman of the Board of Directors of Geo, commented, "With the results obtained in the first half of 2006, Geo is well on its way to reaching its expected goals for the year. We feel very proud and satisfied for having fulfilled our healthy and sustainable growth expectations, reaffirming the tendency of our business model. At Geo, we are working hard to achieve the complete institutionalization of the company based on our four fundamental values: Skilled People, Product Quality, Service Excellence, and Optimum Profitability." For the 20th consecutive quarter, operating results observed solid increases in all lines of P&L and a more solid Balance Sheet. Units sold grew 13.9%, totaling 9,252 homes sold during the quarter, while Revenues grew 21.1% year-over-year, reaching US$2,810.2 million pesos. In addition, Gross Profit increased by 21.7% with a Gross Margin of 27.1% compared to 26.9% in the 2Q2005. Operating Profit increased 22.1% with an Operating Margin of 17.2% versus 17.1% in 2Q2005. At the same time, EBITDA increased 16.9% in comparison to 2Q2005, with a margin of 24.3% compared to 25.2% in 2Q2005, mainly because of theproduct mix. Finally, Net Profit grew by 27.4% totaling MXN299.5 million compared to MXN235.1 million in 2Q2005, with a Net Margin of 10.7% in 2Q2006. Regarding Financial Structure, quarterly Free Cash Flow generation in 2Q2006 totaled MXN270.4 million, an increase of 122.7% compared to MXN121.4 million in 2Q05. Accumulated Free Cash Flow generation presented a decrease of MXN176.8 million over last year, having passed from MXN-750.6 million in 2005 to MXN-927.4 million in June of this year. With the intention of obtaining the greatest fiscal benefits possible, Geo increased its land bank reserve by MXN1,060.2 million last year, being the main reason why the level of Inventories in the second quarter presented an increase of MXN1,367.6 million compared to June 2005. As a result of the implementation of strategies to improve the Company's management of Working Capital, the Accounts Receivable to Sales ratio reached a new historic level of 36.43% versus the 42.07% in 2Q05. The accounts receivable to sales level was also a result of the commercial strategy of addressing the sales to the products with the fastest collection. Financial Liabilities presented an increase of 21.3% equivalent to MXN663.7 million compared to 2Q05. The level of Cash and Cash Equivalents showed an increase of 41.1% when compared to 2Q05, from MXN1,398.7 million to MXN1,973.1 million. This increase was mainly because of: -- the company's operating growth, -- the better performance at the collection level, and -- the Board of Directors' precautionary decision to have enough liquidity in case of any possible or eventual volatility during the political year. Lastly, Net Debt presented an increase of 5.2%, standing at MXN1,806.2 million versus MXN1,716.9 million in 2Q2005, and quarter over quarter presented an important decrease of 13.5%, moving from MXN2,089.0 million in 1Q06 to MXN1,806.2 million this quarter, while Net Debt to Capitalization ratio observed a decrease over 2Q2005 moving from 27.7% to 23.7% in the 2Q2006. Finally, the debt risk profile significantly improved during the quarter, especially considering the fact that US dollar debt exposure is less than 3.1% of total financial liabilities, that the composition of the debt is 64.0% short term and 36.0% long term, and that Geo was able to reach a leverage level without deferred taxes of 0.71 versus 0.81 showed in the 2Q2005. Important to mention is the notable increase in the Return on Equity indicator, moving from 25.9% in 2Q2005 to 28.0% in 2Q2006, an increase of 3.8 percentage points, achieving an historic best for Geo and maintaining leadership in the industry. Corporacion Geo's land bank of homes to be developed and collected reached a total of 253,067 units as a consequence of the combination of Geo-owned land, options agreements, outsourcing scheme and joint venture with Prudential Real Estate Investors. With an estimated 15% annual growth rate in units, Geo controls enough land bank for 4.5 years of production with a low financial cost and limited ownership risk considering its owned land, outsourcing agreements and Joint Venture with PREI. Public and complimentary version of the earnings release is available for the entire investment community at the company's Web Site at http://www.casasgeo.com. Corporacion Geo, S.A. de C.V. -- http://www.casasgeo.comor http://www.g-homes.com.mx-- specializes in the construction of affordable low-income housing. As reported in the Troubled Company Reporter on March 16, 2006, Standard & Poor's Ratings Services assigned a 'BB' corporate credit rating on Corporacion GEO S.A. de C.V. The outlook is stable. FORD MOTOR: Reports Net Loss of US$123MM in Second Quarter ---------------------------------------------------------- Ford Motor Company reported a net loss of 7 cents per share, or US$123 million, for the second quarter of 2006. This compares with net income of 47 cents per share, or US$946 million, in the second quarter of 2005. Ford's second-quarter loss from continuing operations, excluding special items, was 3 cents per share, or US$48 million, compared with a profit of 47 cents per share, or US$936 million, in the same period a year ago. Ford's second-quarter total sales and revenue was US$42 billion, down US$2.5 billion from a year ago. Earnings per share from continuing operations, excluding special items, is calculated on a basis that includes pre-tax profit and provision for taxes and minority interest. "We've seen an improvement in North America results in the second quarter, but the external factors we face aren't going to get any easier," Chairman and Chief Executive Officer Bill Ford said. "Mark Fields (executive vice president and president - The Americas) and his team have been working on plans to accelerate their efforts. Within the next 60 days, we'll be in a position to discuss the additional actions we will be taking." Special items reduced earnings by 4 cents per share in the second quarter. The pre-tax effect of these items included: -- A favorable adjustment of US$146 million, or 5 cents per share, to the previously announced first-quarter US$1.7 billion special charge pertaining to expected layoff and jobs bank benefits and voluntary termination packages. This adjustment is based on recent agreements at the Atlanta Assembly Plant and the St. Louis Assembly Plant for buyouts and employee relocation. -- A charge of US$171 million, or 6 cents per share, associated with additional personnel reduction programs at facilities other than those being idled, as well as a related charge of US$315 million, or 11 cents per share, associated with pension curtailments related to second- quarter buyouts. The pension curtailment charge represents the impact of earlier retirements, enhanced benefits, and the accelerated recognition of future service costs associated with our U.S. hourly pension plan. -- Other gains of US$148 million, or 8 cents per share, primarily associated with our equity interest in a non- recurring gain that Mazda realized on the transfer of its pension liabilities back to the Japanese government. Year-to-date highlights included: -- Continued strong performance of Ford Fusion, Mercury Milan and Lincoln Zephyr in North America. -- Significant warranty enhancements to our 2007-model Ford, Lincoln and Mercury vehicles sold in the United States and Canada , as well as increased standardization of customer- valued safety features. -- Court approval of the U.A.W.-Ford health care agreement. -- Successful introduction of the all-new S-MAX, new Galaxy, and new Transit in Europe. -- Successful launch of the all-new Jaguar XK Coupe and Convertible, continued strong global sales growth at Land Rover and Aston Martin, and positive initial reception of the new Volvo S80 sedan. -- Continued strong year-to-date sales growth in major international markets, including a 100 percent increase in China , and a 75 percent increase in India . Executive Vice President and Chief Financial Officer Don Leclair said, "Although we've made progress on a number of fronts, clearly we have more to do. This includes maintaining our focus on improving our quality, reducing our costs and maintaining our strong liquidity as we respond to the tougher operating environment we face." Automotive Sector On a pre-tax basis, worldwide Automotive sector losses in the second quarter were US$808 million. This compares with a pre- tax loss of US$245 million during the same period a year ago. Worldwide automotive sales for the second quarter declined to US$37.7 billion from US$38.7 billion in the same period last year. Worldwide vehicle unit sales in the quarter were 1,732,000, up from 1,718,000 a year ago. Total cash, including cash equivalents, marketable securities and loaned securities, at June 30, 2006, was US$23.6 billion, down from US$23.7 billion at the end of the first quarter. The Americas For the second quarter, The Americas reported a pre-tax loss of US$702 million, compared with a pre-tax loss of US$819 million in the same period a year ago. North America In the second quarter, Ford's North America automotive operations reported a pre-tax loss of US$797 million, compared with a pre-tax loss of US$907 million a year ago. The improvement is more than explained by cost reductions in most areas of the business, partially offset by a mix shift from trucks to passenger cars, higher incentives and adverse foreign currency exchange. Sales were US$19.2 billion, down from US$19.9 billion for the same period a year ago. South America Ford's South America automotive operations reported a second- quarter pre-tax profit of US$95 million, an improvement from a pre-tax profit of US$88 million a year ago. The improvement was more than explained by higher industry volume. Sales for the second quarter improved to US$1.3 billion from US$1 billion in 2005. International Operations In the second quarter, International Operations reported a pre- tax loss of US$21 million, compared with a pre-tax profit of US$176 million in second quarter 2005. Ford Europe And Premier Automotive Group (PAG) The combined second-quarter pre-tax loss for Ford Europe and PAG automotive operations was US$57 million, compared with a pre-tax profit of US$83 million in the same period a year ago. Ford Europe Ford Europe's second-quarter pre-tax profit was US$105 million compared with a pre-tax profit of US$66 million during the 2005 period. The improvement was explained by cost reductions, primarily in material costs. Unfavorable market mix of vehicle sales and lower net pricing were partial offsets. During the second quarter, Ford Europe's sales were US$7.4 billion, compared with US$7.9 billion during second quarter 2005. Premier Automotive Group (PAG) PAG reported a pre-tax loss of US$162 million for the second quarter, compared with a pre-tax profit of US$17 million for the same period in 2005. The decline is more than explained by the impact of the expiration of favorable hedges that were put in place in previous years, adjustments to warranty accruals for prior models, and lower market share at Volvo in advance of new model introductions. These factors were partially offset by favorable product and market mix, driven largely by the success of new products at Land Rover, Jaguar and Aston Martin. Second- quarter sales for PAG were US$7.8 billion, compared with US$7.9 billion a year ago. Asia Pacific and Africa/Mazda In the second quarter, Asia Pacific and Africa/Mazda reported a combined pre-tax profit of US$36 million, compared with a pre- tax profit of US$93 million in 2005. Asia Pacific and Africa For the second quarter, Asia Pacific and Africa reported a pre- tax profit of US$4 million, compared with a pre-tax profit of US$36 million a year ago. Lower Ford Falcon volumes and weaker industry volumes in traditional markets were partially offset by cost reductions. Sales were US$1.8 billion, compared with US$2 billion in 2005. Mazda During the second quarter of 2006, Ford's share of Mazda pre-tax profits and associated operations was US$32 million, compared with US$57 million during the same period a year ago. The decline is more than explained by the non-recurrence of gains during the second quarter of 2005 on our investment in Mazda's convertible bonds, which have now been entirely converted to equity. Other Automotive Second-quarter results included a pre-tax loss of US$85 million in Other Automotive, compared with a profit of US$398 million a year ago. The year-over-year decline is more than explained by the non-recurrence of tax-related interest adjustments, partially offset by higher interest income from the company's cash portfolio reflecting higher short-term interest rates and higher average cash balances. Financial Services Sector For the second quarter, Financial Services sector earned a pre- tax profit of US$646 million, compared with pre-tax profits of US$1.3 billion a year ago. Ford Motor Credit Company Ford Motor Credit Company reported net income of US$441 million in the second quarter of 2006, down US$299 million from earnings of US$740 million a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned US$656 million in the second quarter, compared with US$1.2 billion in the previous year. The decrease in earnings primarily reflected higher borrowing costs, the impact of lower average receivable levels, lower credit loss reserve reductions and higher depreciation expense. "Our sustained focus on strong business fundamentals has generated high-quality assets and solid results," said Mike Bannister, chairman and CEO. "We continue to support Ford Motor Company with profits and dividends." On June 30, Ford Motor Credit's on-balance sheet net receivables totaled US$136 billion, compared with US$132 billion on December 31, 2005. Managed receivables were US$151 billion, compared with US$150 billion on December 31. Ford Motor Credit paid dividends of US$400 million during the quarter. On June 30, managed leverage was 11.5 to 1. Third-Quarter Production Volumes North America third-quarter production is projected at 670,000 units, down 58,000 units on a year-over-year basis, and 40,000 units less than what was previously announced. This change from the prior level is more than explained by lower truck production, reflecting our intention to maintain appropriate dealer inventory levels. Ford Europe production is projected at 410,000 units, up 38,000 units from last year, primarily reflecting the timing of vacation shutdowns. PAG production is projected at 150,000 units, down 3,000 units from last year. TOTAL COMPANY 2006 SECOND QUARTER INCOME FROM CONTINUING OPERATIONS COMPARED WITH NET INCOME Second Quarter Earnings After-Tax Pre-Tax Per Share* Profit Profit (Mils.) (Mils.) Income/(Loss) from Continuing Operations Excluding Special Items $(0.03) $(48) $(162) Special Items - Jobs Bank/Employee Separation Programs $0.05 $95 $146 - Additional Personnel Reduction Programs (0.06) (111) (171) - Pension Curtailment Charges (0.11) (205) (315) - Other Gains (Primarily Mazda Pension Adjustment) 0.08 144 148 Total Special Items $(0.04) $(77) $(192) Income/(Loss) from Continuing Operations $(0.07) $(125) $(354) Total Net Income/(Loss) $(0.07) $(123) Consolidated Statement Of Income For the Periods Ended June 30, 2006 and 2005 (in millions, except per share amounts) Second Quarter First Half 2006 2005 2006 2005 (unaudited) (unaudited) Sales and revenues Automotive sales $37,747 $38,685 $74,732 $78,017 Financial Services revenues 4,218 5,863 8,288 11,667 Total sales and revenues 41,965 44,548 83,020 89,684 Costs and expenses Automotive cost of sales 35,964 36,713 72,638 72,271 Selling, administrative and other expenses 4,631 6,127 9,223 12,217 Interest expense 2,178 1,719 4,197 3,683 Financial Services provision for credit and insurance losses 61 (17) 96 168 Total costs and expenses 42,834 44,542 86,154 88,339 Automotive interest income and other non-operating income/ (expense), net 310 651 525 804 Automotive equity in net income/(loss) of affiliated companies 205 69 284 126 Income/(loss) before income taxes (354) 726 (2,325) 2,275 Provision for/(benefit from) income taxes (248) (301) (1,091) 13 Income/(loss) before minority interests (106) 1,027 (1,234) 2,262 Minority interests in net income/(loss) of subsidiaries 19 84 78 142 Income/(loss) from continuing operations (125) 943 (1,312) 2,120 Income/(loss) from discontinued operations 2 3 2 38 Net income/(loss) $(123) $946 $(1,310) $2,158 Amounts Per Share Of Common And Class B Stock Basic income/(loss) Income/(loss) from continuing operations $(0.07) $0.51 $(0.70) $1.16 Income/(loss) from discontinued operations - - - 0.02 Net income/(loss) $(0.07) $0.51 $(0.70) $1.18 Diluted income/(loss) Income/(loss) from continuing operations $(0.07) $0.47 $(0.70) $1.05 Income/(loss) from discontinued operations - - - 0.01 Net income/(loss) $(0.07) $0.47 $(0.70) $1.06 Cash dividends $0.10 $0.10 $0.20 $0.20 Ford Motor Company And Subsidiaries Consolidated Balance Sheet (in millions) June 30, December 31, 2006 2005 (unaudited) ASSETS Cash and cash equivalents $27,985 $28,406 Marketable securities 12,600 10,672 Loaned securities 33 3,461 Finance receivables, net 106,554 105,975 Other receivables, net 9,194 8,522 Net investment in operating leases 31,884 27,099 Retained interest in sold receivables 1,150 1,420 Inventories 12,116 10,271 Equity in net assets of affiliated companies 2,751 2,579 Net property 41,639 40,706 Deferred income taxes 6,879 5,881 Goodwill and other intangible assets 6,392 5,945 Assets of discontinued/held-for-sale operations - 5 Other assets 17,945 18,534 Total assets $277,122 $269,476 LIABILITIES AND STOCKHOLDERS' EQUITY Payables $23,595 $22,813 Accrued liabilities and deferred revenue 78,444 72,977 Debt 153,478 154,332 Deferred income taxes 5,800 5,275 Total liabilities 261,317 255,397 Minority interests 1,054 1,122 Stockholders' equity Capital stock Common Stock, par value $0.01 per share (1,837 million shares issued) 18 18 Class B Stock, par value $0.01 per share (71 million shares issued) 1 1 Capital in excess of par value of stock 4,636 4,872 Accumulated other comprehensive income/(loss) (262) (3,562) Treasury stock (420) (833) Earnings retained for use in business 10,778 12,461 Total stockholders' equity 14,751 12,957 Total liabilities and stockholders' equity $277,122 $269,476 About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Company -- http://www.ford.com/-- is the world's third largest automobile manufacturer. The company manufactures and distributes automobiles in 200 markets across six continents. Ford Motor has two assembly plants and an engine plant in Mexico. With more than 324,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive- related services include Ford Motor Credit Company and The Hertz Corporation. * * * Fitch downgraded on June 10, 2006, long-term ratings for both Ford Motor Company and Ford Motor Credit Company with a Negative Rating Outlook, and assigned these Recovery Ratings: Ford: -- Issuer Default Rating to 'B+' from 'BB' -- Senior unsecured to 'BB-/RR3' from 'BB' FMCC: -- Issuer Default Rating to 'B+' from 'BB' Fitch also affirms FMCC's senior unsecured debt at 'BB/RR2'. * * * Standard & Poor's Ratings Services lowered on June 28, 2006, its corporate credit rating on Ford Motor Co. and related units to 'B+' from 'BB-' and affirmed its 'B-2' short-term rating. The ratings were removed from CreditWatch, where they were placed on May 25, 2006, with negative implications. FORD MOTOR: S&P Cuts Corporate Credit Rating to B+ from BB- ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Ford Motor Co. and related units to 'B+' from 'BB-' and affirmed its 'B-2' short-term rating. The ratings were removed from CreditWatch, where they were placed on May 25, 2006, with negative implications. The outlook is negative. Ford's consolidated debt outstanding totaled $151 billion at March 31, 2006. FCE Bank PLC's 'BB-' rating was not lowered and remains on CreditWatch, pending completion of Standard & Poor's evaluation of the potential for FCE to be rated slightly higher than its parent, Ford Motor Credit Co. However, FCE's CreditWatch implications are revised to negative from developing because if the rating agency concludes that FCE warrants a higher rating than that on Ford Credit, that differential is likely to be limited to one notch. FCE's 'B-2' short-term rating was affirmed and removed from CreditWatch. "The downgrade reflects our view that 2006 will be a more difficult year for Ford than previously anticipated," said Standard & Poor's credit analyst Robert Schulz. Notwithstanding its multiyear plan to turn around the performance of its North American automotive operations, Standard & Poor's expects the company's financial profile to weaken further during 2006 -- a period when the Unisted States economy and light-vehicle sales are robust. Standard & Poor's is concerned about the degree of weakness in its midsize SUV segment. Explorer sales, which represent about 9% of Ford-brand sales, were down 27.1% for the first five months of 2006. The rating agency also remains concerned about the very important full-size pickup market, which accounts for about 33% of Ford-brand sales and, we believe, far more in profitability. F-Series sales were down 0.3% for the first five months of 2006, versus 5.6% for the full-size pickup segment. But the evolving competitive dynamics of the full- size pickup market -- including upcoming new models from General Motors Corp. and Toyota Motor Corp. -- and the resiliency of demand for full-size pickups in the face of persistently high gas prices are its chief concerns for this segment. The expected erosion in Ford's financial profile during 2006 will reduce Ford's cash balances and leave the company more exposed to potential adverse market developments during the next two years, such as a decline in currently robust industry sales. Even so, Standard & Poor's does not believe that worsening financial performance in 2006 will push the company near a point where it could ultimately need to restructure its obligations (including its debt and contractual obligations) in the near term, given its substantial liquidity. In fact, Ford has so far suffered less meaningful market share erosion in the U.S. than in 2005 -- its U.S. light-vehicle share was 18.3% for the first five months of 2006, the same as at the end of 2005, partly due to high levels of fleet sales. Still, despite concerted efforts to improve the appeal of its product offerings and minimize the use of incentives, the company has experienced marked deterioration of its product mix, given precipitous weakening of sales of its midsize and large SUVs, products that had been highly disproportionate contributors to Ford's earnings. This product mix deterioration has occurred despite the launch of some refreshed SUV models such as the Explorer. The rating outlook on Ford is negative. Prospects for Ford's use of cash in North American automotive operations remains Standard & Poor's primary concern. The ratings could be lowered further if the rating agency came to expect that Ford's cash use was to worsen significantly due to further setbacks, whether Ford-specific or stemming from market conditions. Ford would need to reverse its current financial and operational trends, and sustain such a reversal, before Standard & Poor's would revise its outlook to stable. Ford Motor Company, headquartered in Dearborn, Michigan, U.S.A., is the world's third largest automobile manufacturer. It has operations all over the world including India. Headquartered in Dearborn, Michigan, Ford Motor Company -- http://www.ford.com/-- is the world's third largest automobile manufacturer. The company manufactures and distributes automobiles in 200 markets across six continents. Ford Motor has two assembly plants and an engine plant in Mexico. With more than 324,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive- related services include Ford Motor Credit Company and The Hertz Corp. LG.PHILIPS: Chapter 7 Trustee Wants to Abandon Mexican Assets ------------------------------------------------------------- Jeoffrey L. Burtch, Esq., the Chapter 7 trustee overseeing the liquidation of LG.Philips Displays USA Inc., asks the U.S. Bankruptcy Court for the District of Delaware for permission to abandon the Debtor's assets in Mexico. The Trustee tells the Court that the Debtor's production facility at Gomez Palacio in Coahuila, Mexico, is under a contract known as a maquiladora with the Debtor's affiliate, LG.Philips Displays Mexico, S. A. de C. V. Under the Maquiladora, the Debtor owns all of the equipment, inventory, and raw materials used in the manufacture of its products. LPD Mexico owns the land and factory facilities. The Mexican Assets include robotic equipment, measuring equipment, and spare parts. According to the Trustee, during the Debtor's chapter 11 case, all or most of the Mexican inventory were liquidated or utilized. To date, the property of the estate includes some equipment, and miscellaneous inventory, raw materials and other personality still located at the Mexico Facility. The Trustee emphasizes that abandoning the Mexican Assets will cost less than liquidating them. Specifically, the Trustee points out that: a) if a purchaser were to purchase the Mexico Facility, the value of the Mexican Assets in connection with the sale would be approximately US$500,000; b) if the Mexican Assets were to be removed from the Mexico Facility for liquidation in Mexico separate from a sale of the Mexican Facility, the cost of removing the Mexican Assets would exceed US$500,000; and c) if the Mexican Assets were to be removed from the Mexico Facility for liquidation in the United States, the cost of removing the Mexican Assets would be in excess of US$3,000,000. Additionally, the Trustee discloses that the Mexican Assets serve as cash collateral securing the Debtor's obligation to JPMorgan Chase Bank N.A. (Hong Kong). Hence, the Mexican Assets have inconsequential value and do not benefit the estate, the Trustee contends. Further, the Trustee notes that to liquidate the Mexican Assets without incurring removal costs would require a sale of the Mexican Facility. Consequently, the Mexican Facility is not property of the estate, and the Trustee does not have the right to sell that asset or otherwise control the sale process, if any, of the Mexican Facility. Headquartered in San Diego, California, LG.Philips Displays USA, Inc., is an indirect American affiliate of LG.Philips Displays Holding B.V. The company manufactures cathode ray tubes that are incorporated into television sets and computer monitors. The company filed for chapter 11 protection on Mar. 15, 2006 (Bankr. D. Del. Case No. 06-10245). Adam Hiller, Esq., at Pepper Hamilton LLP represents the Debtor in its restructuring efforts. Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., and Bonnie Glantz Fatell, Esq., at Blank Rome LLP represented the Official Committee of Unsecured Creditors. The Court converted the Debtor's case to a chapter 7 liquidation on May 25, 2006. Jeoffrey L. Burtch, Esq., serves as the Debtor's chapter 7 trustee, and is represented by Cooch & Taylor. When the Debtor sought protection from its creditors, it listed debts of more than US$100 million and assets between US$50 to US$100 million. MERIDIAN AUTOMOTIVE: Judge Walrath Approves Solicitation Process ---------------------------------------------------------------- Judge Mary Walrath of the U.S. Bankruptcy Court for the District of Delaware approved Meridian Automotive Systems, Inc., and its debtor-affiliates' proposed procedures for the solicitation and tabulation of votes to accept the Revised Third Amended Joint Plan of Reorganization, with certain modifications. Judge Walrath authorizes the Debtors to distribute or cause to be distributed, no later than July 28, 2007, the Voting Solicitation Packages by first class mail to all Holders of Claims in Classes 3 through 7. Record Date Judge Walrath established July 21, 2006, as the record date for purposes of determining Holders of Claims and Meridian Prepetition Interests entitled to receive the Voting Solicitation Package, the Unimpaired Notice of Non-Voting Status of the Rejecting Class Notice and determining which Holders of Claims are entitled to vote on the Revised Third Amended Plan. Voting Deadline The Court rules that the original ballots must be properly executed and completed and returned to the Voting Agent no later than 4:00 p.m. Eastern Time, on Sept. 1, 2006. Ballot Tabulation The Court will convene a hearing on Aug. 28, 2006, to consider Rule 3018(c) Motions, if any, seeking to temporarily allow a claim for purposes of voting on the Third Amended Plan. The Debtors will have until Aug. 18, 2006, to file objections to Claims for purposes of voting on the Plan. Judge Walrath rules that with regards to the numerosity requirement of Section 1126(c) of the Bankruptcy Code, separate Claims held by a single creditor in a particular Class will be treated as separate Claims for purposes of voting on the Plan and the votes related to the Claims will be counted separately. Claims in Classes 3, 4 and 5 will be allowed temporarily for voting purposes in the amount described in the Plan or the respective ballot. Confirmation Objection Deadline To permit the Debtors adequate time to respond to objections to confirmation of the Plan, the Court fixes Sept. 1, 2006, at 4:00 p.m. Eastern Time, as the last date for filing and serving the written objections. Confirmation Hearing The Confirmation Hearing on the Debtors' Plan will be held before the Court on Sept. 13, 2006, which may be adjourned from time to time by an announcement of adjournment at the Confirmation Hearing or subsequent confirmation hearings. Judge Walrath directs the Debtors to cause the Confirmation Hearing Notice to be published in The Detroit Free Press, USA Today and the national edition of The Wall Street Journal no later than Aug. 14, 2006. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed US$530 million in total assets and approximately US$815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000) ================= N I C A R A G U A ================= * NICARAGUA: Impels Venezuela to Keep Promise of Pardoning Debt --------------------------------------------------------------- Nicaragua's President Enrique Bolanos urged Hugo Chavez, his Venezuelan counterpart, to keep the latter's promise of pardoning the US$31.6 million foreign debt of Nicaragua, Vheadline reports. Vheadline relates that President Bolanos told President Chavez, "You promised to pardon me the debt since you don't know where to throw your money away ... and once pardoned, you could lend me money to build roads and buy oil." According to Vheadline, President Bolanos alleged that President Chavez promised to pay Nicaragua's debt as soon as it entered the World Bank's Heavily Indebted Poor Countries Initiative. President Bolanos claimed that every time he asks President Chavez about pardoning Nicaragua's loan, the latter replies that he won't due to the foreign debt problem, Vheadline states. Vheadline emphasizes that President Bolanos particularly disapproved of the Venezuelan government's cheap oil accord on May 25 with Mayors who were members of the Sandinista National Liberation Front. President Bolanos told Vheadline that Daniel Ortega, the leader of the group, has lied to the citizens of Nicaragua by stating since September 2005 that cheap Venezuelan oil was on its way. The Albanic company has not yet requested the use of tanks and oil facilities to administer the deal, the report says, citing President Bolanos. Albanic runs the cheap oil project. Petroleos de Venezuela and the Nicaraguan Mayors Association own it. * * * Moody's Investor Service assigned these ratings to Nicaragua: Rating Rating Date ------ ----------- Long Term Caa1 June 30, 2003 Senior Unsecured Debt B3 June 30, 2003 * NICARAGUA: Opens Managua International Airport Terminal --------------------------------------------------------- Nicaragua's President Enrique Bolanos has launched a new passenger terminal at the international airport of Managua, according to a report posted in the presidential Web site. The report says that the project cost about US$52 million. However, Business News Americas states that President Bolanos had said it needed an investment of more than US$52 million. BNamericas emphasizes that other than the new terminal, the Nicaraguan government also invested US$7.9 million to equip the airport with: -- a new radar control system, -- a control tower, and -- a fire station. The US$7.9 million was acquired from the government of Spain, BNamericas says. President Bolanos, since becoming president in 2002, has made the development of the airport a high priority, calling for its upgrade to meet international standards. The airport administration was able to renegotiate its debt and ask new financing for upgrade projects in the last few years, BNamericas reports. Moody's Investor Service assigned these ratings to Nicaragua: Rating Rating Date ------ ----------- Long Term Caa1 June 30, 2003 Senior Unsecured Debt B3 June 30, 2003 * NICARAGUA: Launches US$4.8MM Facility for Call Center Services ---------------------------------------------------------------- Corporacion de Zonas Francas, a governmental organization in Nicaragua, has launched a US$4.8 million facility to house call center offering services to US companies, Business Latin America reports. According to Business Latin, the center is part of a move to diversify free-zone operations away from garment stitching into activities that are of higher value. Nicaragua is endorsing itself as a place for outsourcing. Business Latin relates that Almori, the country's only call center, reportedly pays its 100 workers eight times the average wage in the garment sector. T26, another outsourcing company from Denmark, will launch services by September. However, the low availability of bilingual personnal limits the potential of outsourcing operations in Nicaragua, Business Latin states. Moody's Investor Service assigned these ratings to Nicaragua: Rating Rating Date ------ ----------- Long Term Caa1 June 30, 2003 Senior Unsecured Debt B3 June 30, 2003 =========== P A N A M A =========== PRIMER BANCO: Fitch Places Low B Ratings on Watch Positive ---------------------------------------------------------- Fitch Ratings has placed on Rating Watch Positive the ratings of Grupo Banistmo's banking subsidiaries in Panama and El Salvador, following the announcement that HSBC will make a cash tender offer to acquire all outstanding shares of Banistmo. The ratings placed on Watch Positive are: Primer Banco del Istmo: -- Long-term Issuer Default Rating: 'BB+'; -- Short-term 'B'; and -- Support rating '5'. Banco Salvadoreno -- Long-term IDR 'BB'; At the same time, the Rating Outlook on the national-scale ratings of Banistmo's subsidiaries in El Salvador, Costa Rica and Honduras was revised to Positive from Stable (local regulations do not consider the use of Rating Watch on National ratings), as follows: Banco Salvadoreno -- National-scale long-term rating 'AA-(slv)' Inversiones Financieras Bancosal -- National-scale long-term rating 'AA-(slv)' Banco Banex -- National-scale long-term rating 'AA-(cri)' Banco Grupo el Ahorro Hondureno (BGA) -- National-scale long-term rating 'AA-(hnd)' After receiving regulatory approval, HSBC will move to acquire all outstanding shares of Banistmo, needing at least 65% ownership to complete the transaction, a level Fitch expects will be achieved. Upon conclusion of the offer, Banistmo's subsidiaries will benefit from the strong potential support of the new and highly rated shareholder HSBC (rated 'AA' by Fitch) in case of need. With a successful closing of the proposed transaction, estimated to take place before the end of this year, PBI's and Salvadoreno's IDRs will likely be upgraded to the level of Panama's and El Salvador's country ceilings, which are 'BBB' and 'BB+', respectively. Salvadoreno's support rating already reflects perceived support from Banistmo, and remains at '3,' while PBI's support rating will also improve to reflect the potential support from HSBC. PBI's and Salvadoreno's individual ratings remain at 'C/D' and 'D', respectively. In Fitch's view, the agreement is consistent with HSBC's worldwide strategy to strengthen its presence in emerging markets. The acquisition of Central America's largest financial group would provide HSBC with a unique and leading position in a region with adequate overall prospects and increasing economic integration. When the acquisition is completed, Banistmo's operations will be increasingly integrated with HSBC's Mexican subsidiary, Grupo Financiero HSBC, which owns a small Panamanian bank under the HSBC brand. Management of the acquired entity will be in the hands of a combined executive team, under the leadership of the CEO of HSBC Mexico. Since Banistmo will not be legally or financially merged into HSBC's Mexican subsidiaries, the ratings of HSBC Mexico are highly unlikely to be affected by this transaction. Banistmo operates as a universal bank in Panama and its main foreign markets. In addition to PBI, Banistmo's banking regional franchise includes: -- Corporacion Banex (Costa Rica), -- Banco Grupo el Ahorro Hondureno or BGA (Honduras), -- Banistmo Colombia (Colombia), -- Banistmo Nicaragua (Nicaragua) and -- Inversiones Financieras Bancosal (El Salvador), Salvadoreno's parent company, where Banistmo holds a 56% stake. In turn, Banistmo's insurance operations include: -- Compania Nacional de Seguros or CONASE (Panama), -- Compania de Seguros El Ahorro Hondureno or SEAHSA (Honduras) and -- Internacional de Seguros (El Salvador). At March 2006, Banistmo reported consolidated assets and equity of US$9 billion and US$803 million, respectively, and was the largest financial conglomerate in Central America in terms of assets. These international-scale ratings were affirmed: Primer Banco del Istmo: -- Individual rating 'C/D'. Banco Salvadoreno -- Short-term 'B'; -- Support rating '3'; and -- Individual rating 'D'. * PANAMA: Creates Ad Hoc Commission to Man Waterway Expansion ------------------------------------------------------------- An Ad Hoc commission was created to manage the implementation of the Panama Canal expansion, Inside Costa Rica reports. Inside Costa Rica relates that the group has seven members. The commission would be made up of several civil organizations, including a member of the National Assembly and a representative from the Executive committee, official sources told Inside Costa Rica. According to the report, the decision of the proposed construction of three locks, which cost US$5.2 billion, will be made in an Oct. 22 referendum. The 28 Bill, which entails the modernization of the canal, states that the commission will receive quarterly reports of the process of public contracting and development of works, to evaluate and formulate observations and recommendations. Panama's President Martin Torrijos has already signed the bill, Inside Costa Rica states. * * * 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 * PANAMA: Awarding Design of Project with Colombia in September --------------------------------------------------------------- An official from Interconexion Electrica SA aka ISA, Colombia's state transmission firm, told Business News Americas that the contract to draft basic engineering and pre-design studies for the interconnection project between Colombia and Panama could be awarded by the end of September 2006. BNamericas relates that the winner of the contract would revise and complement existing work and draft detailed electrical studies and technical specifications for the project's tender. The official told BNamericas that by the July 18 deadline, ISA received a large number of expressions of interest, most of them from international companies. The official did not tell BNamericas the number and the names of the entities that are interested in the contract. The project, which costs US$230 million, entails the construction of a 600km power line, according to preliminary information. Colombia, says BNamericas, has surplus power that could be used by Panama at 33% less cost than the latter's local generation. BNamericas emphasizes that ISA manages the project with Etesa, the Panamanian state power transmission firm. The project is funded by the Inter-American Development Bank is financing the studies conducted for the project. ISA expects a report from the winner of the contract in six months after the agreement is finalized, the official told BNamericas. * * * 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: Eager to Forge Bilateral Ties Outside Mercosur ---------------------------------------------------------- Paraguay has shown interest in entering bilateral trade agreements with nations that are not members of the Mercosur trade bloc, Dow Jones Newswires reports. Mercosur is formally known as the Common Market of the South. It was founded in 1991 by Argentina, Brazil, Paraguay and Uruguay. Venezuela was made a full member earlier this month. Uruguayan and Paraguayan leaders have expressed in recent months their interest in one-on-one free trade agreements with the United States, which angered officials of Mercosur, Dow Jones relates. The Mercosur trade integration has made few advances and because of this, integration needs to improve rapidly, Dow Jones states, citing Leila Rachid, the Paraguayan Foreign Minister. "Or we will continue to bilateral accords that are the real seed of Mercosur destruction," Minister Rachid told Dow Jones. * * * 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 E R U ======= * PERU: Posts 2,060 Gigawatt-Hours Electricity Output in June ------------------------------------------------------------- The energy and mines ministry of Peru told Dow Jones Newswire that the country's electricity production was 2,060 gigawatt- hours in June 2006, increasing 7.2% from the same month in 2005. Dow Jones relates that Peru's electricity demand has increased along with the country's expanding economy. Electroperu was the largest producer of electricity, according to the report. Its production in June 2006 increased 5% to 583.19 gigawatt-hours from June 2005. The ministry said in a statement that hydroelectric generators represented about 69.7% of the total output in June 2006. Electricity from natural gas was 18.7%, and the rest came from other fuels. The gross domestic product of Peru, which increased 6.45% in 2005, is expected to increase about 5.0% in 2006, Dow Jones states. * * * Fitch Ratings assigned these ratings on Peru: Rating Rating Date ------ ----------- Country Ceiling BB Nov. 18, 2004 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 U E R T O R I C O ===================== ADELPHIA COMMS: Inks Plan Agreement With Creditors Committees ------------------------------------------------------------- In a major step forward in its four-year bankruptcy case, Adelphia Communications Corporation and Committees representing most of the Company's major bondholders and trade creditors, including the Official Committee of Unsecured Creditors, as well as significant individual creditors have agreed upon the framework for a plan of reorganization intended to result in a fourth quarter 2006 emergence from Chapter 11 bankruptcy. The agreement, reached on Friday, July 21, enjoys widespread support among Adelphia's major unsecured creditors, but several major constituencies including the pre-petition bank lenders and certain bondholders have not signed the agreement. The Company's obligations under the agreement and the reorganization plan envisioned by the agreement are subject to approval by the U.S. Bankruptcy Court for the Southern District of New York. "This agreement will help pave the way toward a new, modified Plan of Reorganization that will be subject to court approval, and we're pleased that after lengthy negotiations a significant majority of our unsecured creditors are satisfied with the outcome and supportive of this settlement," said Bill Schleyer, chairman and CEO of Adelphia. "In addition, we're thankful for the role Court-appointed Monitor Judge Cecilia Morris played in bringing these parties together," added Schleyer. "Our intention now is to seek a resolution of outstanding differences with the holders of bank and other claims and emerge from bankruptcy sometime in the fourth quarter of 2006." The agreement reflects a compromise among several important creditor groups under which approximately US$1.08 billion in value will be transferred from certain unsecured creditors of various Adelphia subsidiaries to certain unsecured senior and trade creditors of the Adelphia Communications parent corporation, subject, in some cases, to reimbursement from contingent sources of value, including the proceeds of a litigation trust to be established under the plan to pursue claims against third-parties that are alleged to have damaged Adelphia. The plan outlined in the agreement is conditioned on, among other things, the closing of the anticipated sale of substantially all of the Company's assets to Time Warner and Comcast. Adelphia intends to soon file a revised Plan of Reorganization and accompanying Disclosure Statement with the bankruptcy court embodying the terms of the agreement. The expected July 31, 2006, closing date for the sale of Adelphia's assets and joint venture interests to Time Warner Cable and Comcast remains in effect. A full-text copy of the Plan Agreement between the Company and Creditors Committees is available for free at: http://ResearchArchives.com/t/s?e4e Until now, disputes among creditors over how to distribute proceeds from the sale to Time Warner Cable and Comcast have delayed resolution of the Adelphia Bankruptcy case, which was filed in June 2002 and is one of the largest and most complex in U.S. history. About Adelphia Communications Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly adminsitered under Adelphia Communications and its debtor-affiliates chapter 11 cases. FIRST BANCORP: Appoints Fernando Scherrer as New CFO and EVP ------------------------------------------------------------ The Board of Directors of First BanCorp appointed Fernando Scherrer as Executive Vice President and Chief Financial Officer, effective July 24, 2006. Mr. Scherrer, 38, brings over 15 years of financial and accounting experience in the financial services, insurance, retail and education industries. He joins First BanCorp from Scherrer Hernandez, PSC, a public accounting and consulting firm which Mr. Scherrer co-founded, and where he served as Managing Partner and Head of the firm's Audit and Consulting practices. Scherrer Hernandez, PSC has been assisting First BanCorp in its on-going process of preparing restated financial statements. Prior to founding Scherrer Hernandez, Mr. Scherrer served as a CPA for 10 years with PricewaterhouseCoopers LLP, where he audited financial institutions and insurance companies. Mr. Scherrer's experience also includes mergers and acquisitions, due diligence procedures and reviews of internal controls. During his career, he has also been an expert witness and consultant on various litigation matters involving accounting and financial issues. Mr. Scherrer is a member of the American Institute of Certified Public Accountants, the Institute of Internal Auditors and the Puerto Rico Society of Certified Public Accountants. He holds an MBA in Finance from the University of North Carolina at Chapel Hill and a Bachelor's Degree in Business Administration with concentration in Accounting from Washington University in St. Louis. "Fernando Scherrer brings a unique combination of financial, investment and industry experience to First BanCorp. His skills and integrity are tremendous assets from which our shareholders, employees and customers will benefit," said Luis M. Beauchamp, First BanCorp President and CEO. "Fernando's focus on financial discipline and controls will contribute significantly to the many facets of developing and executing our business." Mr. Scherrer succeeds Luis M. Cabrera, First BanCorp's Executive Vice President and Chief Investment Officer, who was appointed interim Chief Financial Officer on Sept. 30, 2005. Senior VP and Treasurer Appointment First BanCorp also appointed Victor M. Barreras-Pellegrini to the role of Senior Vice President and Treasurer. Mr.Barreras- Pellegrini, 38, joins First BanCorp from Banco Popular, where he spent over 14 years. As the Fixed-Income Portfolio Manager of the Popular Asset Management division, he managed institutional fixed-income portfolios, including Puerto Rico mutual funds. As an Investment Officer within Banco Popular's Treasury division, he was responsible for the purchase and sale of securities and money market instruments. He has taught finance at the University of Puerto Rico. Mr. Barreras-Pellegrini is a CFA charterholder. He holds a Masters of Science in Finance degree from Boston College and a Bachelor of Science in Business Administration from Syracuse University. Restated Financial Statements First BanCorp is in the process of preparing restated financial statements. First BanCorp anticipates it will file an amended annual report for 2004 this summer, and then its financial statements for the interim periods of 2005 and the first two quarters of 2006, and its annual report for 2005. About First BanCorp First BanCorp (NYSE: FBP) is the parent corporation of FirstBank Puerto Rico, a state chartered commercial bank with operations in Puerto Rico, the Virgin Islands and Florida; of FirstBank Insurance Agency; and of Ponce General Corporation. First BanCorp, FirstBank Puerto Rico and FirstBank Florida, formerly UniBank, the thrift subsidiary of Ponce General, all operate within U.S. banking laws and regulations. * * * As reported in the Troubled Company Reporter on March 22, 2006, Fitch Ratings affirmed the ratings and Outlook for First Bancorp and FirstBank Puerto Rico: long-term Issuer Default Rating 'BB'/short-term 'B'. The Rating Outlook remains Negative. RENT-A-CENTER: Reports US583.6-Mil. Revenues in Second Quarter -------------------------------------------------------------- Rent-A-Center, Inc., disclosed revenues and net earnings for the quarter ended June 30, 2006. Second Quarter 2006 Results Rent-A-Center reported total revenues for the quarter ended June 30, 2006 of US$583.6 million, a US$3.0 million increase from US$580.6 million for the same period in the prior year. This increase of 0.5% in revenues was primarily driven by a 1.1% increase in same store sales plus an increase in incremental revenues generated in new and acquired stores, offset by the revenue lost from stores that were closed or sold during the previous twelve months. Reported net earnings for the quarter ended June 30, 2006, were US$39.8 million, or US$0.56 per diluted share, representing an increase of 7.7% from the US$0.52 per diluted share, or net earnings of US$39.6 million for the same period in the prior year, when excluding the benefit of the 2005 tax audit reserve credit discussed below. The increase in reported net earnings per diluted share is primarily attributable to the increase in same store sales, as well as the reduction in the number of the Company's outstanding shares, offset by increases in normal operating costs, such as utility and fuel costs, and expenses related to stock options. When including the 2005 tax audit reserve credit discussed below, reported net earnings per diluted share for the quarter increased 1.8% from the US$0.55 per diluted share, or reported net earnings of US$41.7 million for the same period in the prior year. Reported net earnings per diluted share also increased as a result of a US$2.0 million insurance reserve credit resulting from the use of certain company specific loss development factors developed by independent actuaries, rather than the general industry loss development factors previously used by the company. The US$2.0 million insurance reserve credit had an approximate US$0.02 per diluted share benefit in the quarter ended June 30, 2006. "Our second quarter same store sales continued a positive trend in 2006," Mark E. Speese, the Company's Chairman and Chief Executive Officer, commented. "Our same store sales increased 1.1% for the quarter, which is primarily related to changes in our promotional activities as well as an increase in the number of units on rent," Mr. Speese continued. "In addition, we believe our customer has adjusted to the current level of fuel costs. As a result of these factors, we are raising our fiscal 2006 guidance to US$2.08 to US$2.15 diluted earnings per share from US$2.00 to US$2.10," Mr. Speese stated. Six Months Ended June 30, 2006 Results Total reported revenues for the six months ended June 30, 2006 increased to US$1.191 billion, a 0.8% increase from US$1.182 billion for the same period in the prior year. Same store revenues for the six month period ending June 30, 2006 increased 1.4%. Reported net earnings for the six months ended June 30, 2006, were US$80.2 million, or US$1.14 per diluted share, representing an increase of 5.6% from the US$1.08 per diluted share, or net earnings of US$82.3 million for the same period in the prior year, when excluding the benefit of the 2005 tax audit reserve and litigation reversion credits discussed below. When including these benefits in 2005, reported net earnings per diluted share for the six months ended June 30, 2006, decreased 3.4% from the US$1.18 per diluted share, or reported net earnings of US$89.4 million for the same period in the prior year. Through the six month period ended June 30, 2006, the Company generated cash flow from operations of approximately US$35.0 million, while ending the quarter with US$41.2 million of cash on hand. During the six month period ended June 30, 2006, the Company repurchased 202,800 shares of its common stock for US$4.7 million in cash under its common stock repurchase program and has utilized a total of US$360.8 million of the US$400 million authorized by its Board of Directors since the inception of the plan. Operations Highlights During the second quarter of 2006, the company opened 9 new rent-to-own store locations, acquired 16 stores as well as accounts from 15 additional locations, consolidated 19 stores into existing locations, and sold 12 stores, for a net reduction of six stores and an ending balance of 2,749 stores. During the second quarter of 2006, the Company added financial services to 21 existing rent-to-own store locations and ended the quarter with a total of 77 stores providing these services. Through the six month period ending June 30, 2006, the company opened 19 new rent-to-own store locations, acquired 18 stores as well as accounts from 20 additional locations, consolidated 33 stores into existing locations, and sold 15 stores, for a net reduction of 11 stores. Through the six-month period ending June 30, 2006, the Company added financial services to 38 existing rent-to-own store locations and consolidated one store with financial services into an existing location, for a net addition of 37 stores providing these services. Since June 30, 2006, Rent-A-Center has opened 1 new rent-to-own store location and acquired 1 store, as well as accounts from 4 additional locations. The Company has added financial services to 4 existing rent-to-own store locations since June 30, 2006. 2005 Reserve Adjustment Credits 2005 Tax Audit Reserve Credit During the second quarter of 2005, the Company recorded a US$2.0 million tax audit reserve credit associated with the examination and favorable resolution of the company's 1998 and 1999 federal tax returns. The tax audit reserve credit increased diluted earnings per share in the second quarter of 2005 by US$0.03, from US$0.52 per diluted earnings per share to the reported diluted earnings per share of US$0.55. 2005 Litigation Reversion Credit In addition, the Company recorded an US$8.0 million pre-tax credit in the first quarter of 2005 associated with the settlement of the Griego/Carrillo litigation. This pre-tax litigation reversion credit increased diluted earnings per share for the six month period ended June 30, 2005, by US$0.07. The litigation reversion credit, combined with the tax audit reserve credit in the second quarter of 2005, increased diluted earnings per share for the six month period ended June 30, 2005, by US$0.10 to the reported diluted earnings per share of US$1.18. Third Quarter 2006 Guidance Revenues -- The company expects total revenues to be in the range of US$584 million to $592 million. -- Store rental and fee revenues are expected to be between US$528 million and US$534 million. -- Total store revenues are expected to be in the range of US$575 million to US$583 million. -- Same store sales are expected to be in the 2.5% to 3.5% range. -- The company expects to open 5-15 new rent-to-own store locations. -- The company expects to add financial services to 20-30 rent-to-own store locations. Expenses -- The company expects cost of rental and fees to be between 21.7% and 22.1% of store rental and fee revenue and cost of merchandise sold to be between 73% and 78% of store merchandise sales. -- Store salaries and other expenses are expected to be in the range of 58.5% to 60.0% of total store revenue. -- General and administrative expenses are expected to be between 3.6% and 3.8% of total revenue. -- Net interest expense is expected to be approximately US$12.0 million, depreciation of property assets to be approximately US$13.5 million and amortization of intangibles is expected to be approximately US$1.1 million. -- The effective tax rate is expected to be approximately 37.0% of pre-tax income. -- Diluted earnings per share are estimated to be in the range of US$0.46 to US$0.50. -- Diluted shares outstanding are estimated to be between 70.5 million and 71.5 million. Fiscal 2006 Guidance Revenues -- The company expects total revenues to be in the range of US$2.360 billion and US$2.380 billion. -- Store rental and fee revenues are expected to be between US$2.100 billion and US$2.118 billion. -- Total store revenues are expected to be in the range of US$2.318 billion and US$2.338 billion. -- Same store sales are expected to be in the 1.0% to 2.0% range. -- The company expects to open 60-70 new store locations. -- The company expects to add financial services to 100-120 rent-to-own store locations. Expenses -- The company expects cost of rental and fees to be between 21.6% and 22.0% of store rental and fee revenue and cost of merchandise sold to be between 70% and 75% of store merchandise sales. -- Store salaries and other expenses are expected to be in the range of 57.5% to 59.0% of total store revenue. -- General and administrative expenses are expected to be between 3.6% and 3.8% of total revenue. -- Net interest expense is expected to be between US$43.0 million and US$48.0 million, depreciation of property assets is expected to be between US$52.0 million and US$57.0 million and amortization of intangibles is expected to be approximately US$4.0 million. -- The effective tax rate is expected to be approximately 37.0% of pre-tax income. -- Diluted earnings per share are estimated to be in the range of US$2.08 to US$2.15. -- Diluted shares outstanding are estimated to be between 70.0 million and 71.5 million. Rent-A-Center, Inc. and Subsidiaries Statement Of Earnings Highlights (In Thousands of Dollars, Three Months Ended June 30, except per share data) ------------------------------------ 2006 2005 2005 ------------------------------------ Before Tax After Tax Audit Audit Reserve Reserve Credit Credit ------------------------------------ Total Revenue $583,623 $580,578 $580,578 Operating Profit 75,193 72,988 72,988 Net Earnings 39,843 39,620 41,742 Diluted Earnings per Common Share $0.56 $0.52 $0.55 EBITDA $89,670 $88,414 $88,414 Reconciliation to EBITDA: Reported earnings before Income taxes 63,291 63,553 63,553 Add back: Interest expense, net 11,902 9,435 9,435 Depreciation of property assets 13,527 13,271 13,271 Amortization of intangible 950 2,155 2,155 ------------------------------------ EBITDA $89,670 $88,414 $88,414 Six Months Ended June 30, ------------------------------------ 2006 2005 2005 ------------------------------------ Before Tax After Tax Audit Audit Reserve Reserve and and Litigation Litigation Credits Credits ------------------------------------ Total Revenue $1,190,598 $1,182,387 $1,182,387 Operating Profit 150,677 150,980 158,980 Net Earnings 80,171 82,305 89,411 Diluted Earnings per Common Share $1.14 $1.08 $1.18 EBITDA $179,507 $181,966 $181,966 Reconciliation to EBITDA: Reported earnings before income taxes 127,212 132,079 140,079 Add back: Litigation Reversion -- -- (8,000) Interest expense, net 23,465 18,901 18,901 Depreciation of property assets 26,994 26,534 26,534 Amortization of intangibles 1,836 4,452 4,452 ----------------------------------- - EBITDA $179,507 $181,966 $181,966 Selected Balance Sheet Data: June 30, June 30, (in Thousands of Dollars) 2006 2005 ---------- ---------- Cash and cash equivalents $41,174 $25,119 Prepaid expenses and other asse 34,133 52,566 Rental merchandise, net On rent 633,749 574,080 Held for rent 178,667 197,639 Total Assets 2,006,846 1,930,793 Senior debt 417,155 364,500 Subordinated notes payable 300,000 300,000 Total Liabilities 1,091,096 1,041,531 Stockholders' Equity 915,750 889,262 Rent-A-Center, Inc. and Subsidiaries Consolidated Statements Of Earnings (In Thousands of Dollars, except per share data) Three Months Ended June 30, ------------------- 2006 2005 --------- --------- Unaudited Store Revenue Rentals and Fees $527,076 $526,639 Merchandise Sales 38,428 37,498 Installment Sales 5,728 6,618 Other 3,254 997 --------- --------- 574,486 571,752 Franchise Revenue Franchise Merchandise Sales 7,892 7,443 Royalty Income and Fees 1,245 1,383 --------- --------- Total Revenue 583,623 580,578 Operating Expenses Direct Store Expenses Cost of Rental and Fees 114,733 114,068 Cost of Merchandise Sold 28,403 28,225 Cost of Installment Sales 2,398 2,750 Salaries and Other Expenses 333,113 332,939 Franchise Operation Expenses Cost of Franchise Merchandise Sales 7,580 7,163 --------- --------- 486,227 485,145 General and Administrative Expenses 21,253 20,290 Amortization of Intangibles 950 2,155 --------- --------- Total Operating Expenses 508,430 507,590 --------- --------- Operating Profit 75,193 72,988 Interest Income (1,399) (1,351) Interest Expense 13,301 10,786 --------- --------- Earnings before Income Taxes 63,291 63,553 Income Tax Expense 23,448 21,811 --------- --------- NET EARNINGS 39,843 41,742 ========= ========= BASIC WEIGHTED AVERAGE SHARES 69,545 74,747 ========= ========= BASIC EARNINGS PER COMMON SHARE $0.57 $0.56 ========= ========= DILUTED WEIGHTED AVERAGE SHARES 70,640 76,001 ========= ========= DILUTED EARNINGS PER COMMON SHARE $0.56 $0.55 ========= ========= Rent-A-Center, Inc. and Subsidiaries Consolidated Statements Of Earnings (In Thousands of Dollars, except per share Six Months Ended data) June 30, ----------------------- 2006 2005 ----------- ----------- Unaudited Store Revenue Rentals and Fees $1,047,459 $1,045,261 Merchandise Sales 102,591 100,268 Installment Sales 11,579 13,202 Other 6,540 2,075 ----------- ----------- 1,168,169 1,160,806 Franchise Revenue Franchise Merchandise Sales 19,973 18,787 Royalty Income and Fees 2,456 2,794 ----------- ----------- Total Revenue 1,190,598 1,182,387 Operating Expenses Direct Store Expenses Cost of rental and fees 227,500 226,536 Cost of Merchandise Sold 72,533 70,292 Cost of Installment Sales 4,821 5,613 Salaries and Other Expenses 671,884 666,980 Franchise Operation Expenses Cost of Franchise Merchandise Sales 19,136 18,029 ----------- ----------- 995,874 987,450 General and Administrative Expenses 42,211 39,505 Amortization of Intangibles 1,836 4,452 Litigation Reversion -- (8,000) ----------- ----------- Total Operating Expenses 1,039,921 1,023,407 ----------- ----------- Operating Profit 150,677 158,980 Interest Income (2,859) (2,753) Interest Expense 26,324 21,654 ----------- ----------- Earnings before Income Taxes 127,212 140,079 Income Tax Expense 47,041 50,668 ----------- ----------- NET EARNINGS 80,171 89,411 =========== =========== BASIC WEIGHTED AVERAGE SHARES 69,401 74,653 =========== =========== BASIC EARNINGS PER COMMON SHARE $1.16 $1.20 =========== =========== DILUTED WEIGHTED AVERAGE SHARES 70,445 76,036 =========== =========== DILUTED EARNINGS PER COMMON SHARE $1.14 $1.18 =========== =========== Headquartered in Plano, Texas, Rent-A-Center, Inc. -- http://www.rentacenter.com/--operates the largest chain of consumer rent-to-own stores in the U.S. with 2,751 company operated stores located in the U.S., Canada, and Puerto Rico. The company also franchises 297 rent-to-own stores that operate under the "ColorTyme" and "Rent-A-Center" banners. Revenue for the twelve months ending March 31, 2006, was about US$2.3 billion. * * * Standard & Poor's Ratings Services assigned on June 26, 2006, its 'BB+' rating to Rent-A-Center Inc.'s US$725 million credit facility. It also assigned a recovery rating of '4' to the facility, indicating the expectation for marginal (20%-50%) recovery of principal in the event of a payment default. The loan comprised: -- a US$400 million revolving credit facility due in 2011, -- a US$200 million term loan A due in 2011, and -- a US$125 million term loan B due in 2012. The corporate credit rating on Rent-A-Center Inc. is 'BB+' with a negative outlook. * * * Moody's Investors Service assigned on June 24, 2006, a Ba2 rating to the bank loan of Rent-A-Center, Inc., and affirmed the Ba2 corporate family as well as the senior subordinated note issue at Ba3. The continuation of the positive outlook reflects Moody's opinion that ratings could be upgraded over the medium- term once the company establishes a lengthier track record of sales improvement and Moody's becomes more comfortable with the company's financial policy. SANTANDER BANCORP: Could Up Mortage Market Share, Analysts Say -------------------------------------------------------------- Santander Bancorp (NYSE: SBP), Puerto Rico's third largest bank, could expand its mortgage loan market share to 15% in 4-5 years through organic growth, according to analysts quoted by Business News Americas. "It certainly is achievable, though there may be challenges," Fitch Ratings director Ileana Cervantes told BNamericas. According to BNamericas, the mortgage loan market in Puerto Rico is dominated by Doral Financial (NYSE: DRL), R&G Financial Corp. (NYSE: RGF) and Popular (Nasdaq: BPOP), which have fairly established mortgage operations in place and represent over 50% of the market combined. "Of the other local banks that have become more active in this market, Santander Bancorp is probably best positioned. However, mortgage activity has slowed and I'm not certain what effect the current economic turmoil on the island will have on mortgage origination," Mr. Cervantes explained to BNamericas. "I can see Santander Bancorp gaining over a 15% share of the mortgage market as Doral loses out given its current mortgage accounting problems. Santander Bancorp will be a prime beneficiary of this," Sterne Agee analyst Thomas Monaco told BNamericas. BNamericas relates that the accounting problems of Doral, R&G and several other Puerto Rican banks have shaken investor faith in the island's banking sector and prompted analysts to forecast an upcoming wave of M&A. "I suspect that Santander Bancorp is hoping to capitalize on all the disruption in the Puerto Rican market, especially with Doral and R&G. This disruption does allow for some opportunities," Fitch's analyst told BNamericas. "I see Santander Bancorp as neither buyer nor seller in Puerto Rico at this time due to the recent sizable Island Finance transaction it still needs to integrate. Island Finance made the bank become a decent mortgage originator on its own," Sterne Agee's analyst told BNamericas. Santander BanCorp is a publicly held financial holding company that is traded on the New York Stock Exchange (SBP) and on Latibex (Madrid Stock Exchange) (XSBP). About 91% of the outstanding common stock of Santander BanCorp is owned by Banco Santander Central Hispano, S.A aka Santander. The company has four wholly owned subsidiaries -- Banco Santander Puerto Rico, Santander Securities Corporation, Santander Financial Services and Santander Insurance Agency. * * * As reported in the Troubled Company Reporter on May 30, 2006, Fitch affirmed the Individual ratings of Santander Bancorp and Banco Santander Puerto Rico at 'C'. ================================= T R I N I D A D & T O B A G O ================================= DELTA AIR: Adds Nonstop Flights to Trinidad & Tobago ---------------------------------------------------- Delta Air Lines is adding new nonstop flights to Trinidad and Tobago, effective Dec. 9, 2006. These flights will be made available: -- Atlanta and Santiago de Los Caballeros, Dominican Republic; -- New York-JFK and Punta Cana, Dominican Republic; and -- Atlanta and Port of Spain, Trinidad and Tobago. With the new flights, Delta will offer customers more than 250 weekly flights to 21 Caribbean destinations -- increasing more than 30% from the number of destinations offered at the same time last year. Bob Cortelyou, the vice president of Network Planning at Delta Air, said, "Delta continues to be the fastest growing airline in the Caribbean and we are pleased to add three more exciting routes that make the Caribbean even more accessible. Our customers will have more options for travel to the leisure and financial capitals of the Caribbean this winter than at any time in our history thanks to the 13 new routes we've added to the Caribbean in the last year." Delta, to celebrate its global expansion, is offering special low fares for travel on its newest Caribbean routes. Delta's upcoming expansion to Dominican Republic marks the fifth increase in service to the growing island since summer 2004 when Delta inaugurated its first flights between New York and Santo Domingo. With the winter 2006 schedule, Delta will offer seven daily departures between the United States and the Dominican Republic with daily nonstop service between Atlanta and New York-JFK and Santiago de Los Caballeros, Santo Domingo and Punta Cana, in addition to new daily nonstop service between Atlanta and Puerto Plata, effective Dec. 15. The Dominican Republic is one of the fastest growing destinations in the Caribbean due to its picturesque white-sand beaches, lively colonial cities and large centers of commerce. The country sits on the second-largest island in the Caribbean and is the home of the oldest colonial city in the New World, Santo Domingo. Port of Spain will be a new Delta destination, providing improved access to global customers traveling to one of the Caribbean's leading commercial centers. In addition to a growing tourism industry, Trinidad and Tobago is known as the Caribbean's leading producer of oil and gas and boasts one of the most prosperous economies in the region. Culturally, the island is famous as the birthplace of calypso music and for the development of one of the only new instruments created in the 20th century -- the steel pan. Delta's newest flights to the Caribbean will be operated with 150-seat Boeing 737-800 and 142-seat Boeing MD-88 aircraft. Customers traveling between Delta's newest Caribbean destinations and the Atlanta and New York-JFK hubs will have access to the world's most extensive schedule of connecting flights. With the winter 2006 schedule, Delta and the Delta Connection carriers will offer nonstop service to more than 230 worldwide destinations aboard more than 1,000 daily departures from the airline's largest hub in Atlanta. At New York-JFK, Delta will offer more than 165 peak day flights to more than 70 destinations. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta Air offers customers more weekly flights between the United States and destinations across Europe, India and Israel than any other global airline, including service on 11 new transatlantic routes launched since March. Delta Air also is a major carrier to Mexico, South and Central America and the Caribbean, with nearly 40 new routes announced in the last year. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the company's balance sheet showed US$21.5 billion in assets and US$28.5 billion in liabilities. MIRANT CORP: Litigation Trust Gets More Time to Object to Claims ---------------------------------------------------------------- MC Asset Recovery, LLC, the designated litigation trust of Reorganized Mirant Corporation and its debtor-affiliates, obtained an order from the U.S. Bankruptcy Court for the Northern District of Texas extending the time within which it can file objections to 67 proofs of claim asserted by 34 claimants: Claimant Claim Numbers Extension Date -------- ------------- -------------- A.D. Correll 8435 Indefinite A.W. Dahlberg 8436 Indefinite Barney Rush 8427 Indefinite Carlos Ghosn 8432 Indefinite Couch White, LLP 5255-5258, 5286 & 5287 Indefinite Curtis A. Morgan 8437 Indefinite Daniel Streek 8426 Indefinite David J. Lesar 8431 Indefinite Douglas Linn Miller 8424 Indefinite Edwin Adams 8421 Indefinite Frederick D. Kuester 8419 Indefinite Gary J. Morsches 8438 Indefinite Harvey A. Wagner 8425 Indefinite James Ward 8417 Indefinite James F. McDonald 8429 Indefinite John Ragan 8423 Indefinite Loyd A. Warnock 8439 Indefinite Marce S. Fuller 8433 Indefinite Mike Olson, Tax Collector for Pasco County 5797 July 17, 2006 Niagara Mohawk Power Corp. 7726 July 7, 2006 Old Mongaup Corporation 8497, 8501, 8505, 8509, 513, 8514 Indefinite Pacific Gas & Electric Company 6502 & 6505 July 30, 2006 Patricia Croissant 8496, 8499, and 8507 Indefinite Ray M. Robinson 8428 Indefinite Raymond Dunlap Hill 8418 Indefinite Robert F. McCullough 8430 Indefinite Stuart E. Eizenstat 8434 Indefinite Swinging Bridge, Inc. 8498, 8502, 8506, 8510 Indefinite The Shaw Group, Stone & 7073, 7068, Webster Inc., and 7065, 7071, Affiliated Companies and 7067 July 28, 2006 Troutman Sanders LLP 6058-6064 Dec. 30, 2007 United Water New York 5783 July 31, 2006 Vance N. Booker 8422 Indefinite William Croissant 8495, 8500, 8503, 8504, 8508, 8511, and 8512 Indefinite William Holden 8420 Indefinite About Mirant Corp. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590), and emerged under the terms of a confirmed Second Amended Plan on January 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed US$20,574,000,000 in assets and US$11,401,000,000 in debts. (Mirant Bankruptcy News, Issue Nos. 95 & 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on July 17, 2006, Moody's Investors Service downgraded the ratings of Mirant Corporation and its subsidiaries Mirant North America, LLC and Mirant Americas Generation, LLC. The Ba2 rating for Mirant Mid- Atlantic, LLC's secured pass through trust certificates was affirmed. Additionally, Mirant's Speculative Grade Liquidity rating was revised to SGL-2 from SGL-1. The rating outlook is stable for Mirant, MNA, MAG, and MIRMA. Moody's downgraded Mirant Americas Generation, LLC's Senior Unsecured Regular Bond/Debenture, to B3 from B2. Moody's also downgraded Mirant Corporation's Corporate Family Rating, to B2 from B1, and Speculative Grade Liquidity Rating, to SGL-2 from SGL-1. Mirant North America, LLC's Senior Secured Bank Credit Facility, was also downgraded to B1 from Ba3 and its Senior Unsecured Regular Bond/Debenture, to B2 from B1. As reported in the Troubled Company Reporter on July 13, 2006, Fitch Ratings placed the ratings of Mirant Corp., including the Issuer Default Rating of 'B+', and its subsidiaries on Rating Watch Negative following its announced plans to buy back stock and sell its Philippine and Caribbean assets. Ratings affected are Mirant Corp.'s 'B+' Issuer Default Rating and Mirant Mid-Atlantic LLC's 'B+' Issuer Default Rating and the Pass-through certificates' 'BB+/Recovery Rating RR1'. Fitch also placed Mirant North America, Inc.'s Issuer Default Rating of 'B+', Senior secured bank debt's 'BB/RR1' rating, Senior secured term loan's 'BB/RR1' rating, and Senior unsecured notes' 'BB-/RR1' rating on Rating Watch Negative. Mirant Americas Generation, LLC's Issuer Default Rating of 'B+' and Senior unsecured notes' 'B/RR5' rating was included as well. Standard & Poor's Ratings Services also placed the 'B+' corporate credit ratings on Mirant Corp. and its subsidiaries, Mirant North American LLC, Mirant Americas Generating LLC, and Mirant Mid-Atlantic LLC, on CreditWatch with negative implications. MIRANT: Litigation Trust Battles Troutman Over Subpoena Power ------------------------------------------------------------- MC Asset Recovery, LLC, is the litigation trust entity New Mirant Corp. established to own all rights, titles and interests to pursue claims against Troutman Sanders LLP, The Southern Company, and others. MCAR believes that Troutman has been and is using Mirant's confidential and privileged information to assist Southern to defend the action Mirant filed against Southern, now being pursued by MCAR. John A. Lee, Esq., at Andrews Kurth LLP, in Houston, Texas, asserts that if an investigation proves MCAR correct, Troutman's actions; -- would violate Georgia State Bar Rules of professional conduct; -- potentially prejudice MCAR's case against Southern; and -- could give rise to claims against Troutman. Pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure and Local Bankruptcy Rule 2004, MCAR asks Judge Lynn to: (a) direct Troutman to expeditiously produce certain documents; and (b) authorize oral examination of Troutman's partners, members, counsel, associates and employees on certain topics. A list of the documents to be produced and the topics for the oral examination is available for free at: http://ResearchArchives.com/t/s?e07 Troutman Sanders Objects Troutman Sanders LLP asks Judge Lynn to deny MC Asset Recovery, LLC's discovery request because it: * was filed post-Plan confirmation; * was not pending on the Effective Date; * is not seeking to investigate prepetition causes of action; and * intimately relates to the defense of The Southern Company Causes of Action for which the reference was withdrawn and venue was transferred to the United States District Court in Atlanta. Hence, the Bankruptcy Court lacks the jurisdiction to grant MCAR's Rule 2004 Motion, Frank Hill, Esq., at Hill Gilstrap, P.C., in Fort Worth, Texas, asserts. In addition, the Court should abstain even if it has jurisdiction, Mr. Hill contends. MCAR's discovery, if it is to be sought at all, should be sought in its pending case against Southern to which Troutman's sought-after communications pertain, Mr. Hill says. Mr. Hill further argues that: -- the use of Rule 2004 of the Federal Rules of Bankruptcy Procedure is improper in the face of the pending Southern litigation; -- MCAR lacks standing to seek that discovery. MCAR's standing is limited to asserting designated avoidance actions, including its claim against Southern. MCAR does not have standing to assert postpetition or post- confirmation "ethics" concerns; and -- Southern has not waived privilege or work product protection. In the event that the Bankruptcy Court grants MCAR's request, Troutman reserves the position that any resulting subpoena must be served in Georgia under and pursuant to the geographical limits of Rule 65 of the Federal Rules of Civil Procedure. New Mirant Replies Rather than disclose the true nature and extent of its activities, Troutman has sought to side-step the jurisdiction of the Court by asserting "frivolous" standing and jurisdiction arguments, John A. Lee, Esq., at Andrews Kurth LLP, in Houston, Texas, argues. Given the core bankruptcy issues that appear to be implicated by Troutman's actions, including matters under the Crimes and Criminal Procedures Code, Mr. Lee asserts that the Bankruptcy Court is the only court with jurisdiction to hear and grant MCAR's Rule 2004 Motion. MCAR's investigation and an important potential estate cause of action could be badly compromised if the Bankruptcy Court: -- elects to abstain; and -- rules that the discovery be conducted in Georgia. Thus, MCAR asks Judge Lynn to approve its Rule 2004 request. Parties Agree to Discovery To resolve their dispute, MCAR and Troutman entered into an agreement governing the conduct of Rule 2004 examination. A full-text copy of the Agreement on MCAR's Motion to Conduct Rule 2004 Examination of Troutman Sanders is available for free at http://ResearchArchives.com/t/s?e08 In accordance with the terms of the Agreement, Judge Lynn directs Troutman to produce the documents and provide deposition testimony required. The Bankruptcy Court retains jurisdiction with respect to any dispute arising from the interpretation of the Agreement or from MCAR's or Troutman's compliance with its terms. About Mirant Corp. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590), and emerged under the terms of a confirmed Second Amended Plan on January 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed US$20,574,000,000 in assets and US$11,401,000,000 in debts. (Mirant Bankruptcy News, Issue Nos. 95 & 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on July 17, 2006, Moody's Investors Service downgraded the ratings of Mirant Corporation and its subsidiaries Mirant North America, LLC and Mirant Americas Generation, LLC. The Ba2 rating for Mirant Mid- Atlantic, LLC's secured pass through trust certificates was affirmed. Additionally, Mirant's Speculative Grade Liquidity rating was revised to SGL-2 from SGL-1. The rating outlook is stable for Mirant, MNA, MAG, and MIRMA. Moody's downgraded Mirant Americas Generation, LLC's Senior Unsecured Regular Bond/Debenture, to B3 from B2. Moody's also downgraded Mirant Corporation's Corporate Family Rating, to B2 from B1, and Speculative Grade Liquidity Rating, to SGL-2 from SGL-1. Mirant North America, LLC's Senior Secured Bank Credit Facility, was also downgraded to B1 from Ba3 and its Senior Unsecured Regular Bond/Debenture, to B2 from B1. As reported in the Troubled Company Reporter on July 13, 2006, Fitch Ratings placed the ratings of Mirant Corp., including the Issuer Default Rating of 'B+', and its subsidiaries on Rating Watch Negative following its announced plans to buy back stock and sell its Philippine and Caribbean assets. Ratings affected are Mirant Corp.'s 'B+' Issuer Default Rating and Mirant Mid-Atlantic LLC's 'B+' Issuer Default Rating and the Pass-through certificates' 'BB+/Recovery Rating RR1'. Fitch also placed Mirant North America, Inc.'s Issuer Default Rating of 'B+', Senior secured bank debt's 'BB/RR1' rating, Senior secured term loan's 'BB/RR1' rating, and Senior unsecured notes' 'BB-/RR1' rating on Rating Watch Negative. Mirant Americas Generation, LLC's Issuer Default Rating of 'B+' and Senior unsecured notes' 'B/RR5' rating was included as well. Standard & Poor's Ratings Services also placed the 'B+' corporate credit ratings on Mirant Corp. and its subsidiaries, Mirant North American LLC, Mirant Americas Generating LLC, and Mirant Mid-Atlantic LLC, on CreditWatch with negative implications. ============= U R U G U A Y ============= * URUGUAY: Exploring Orinoco Oil Belt with Argentina & Venezuela ---------------------------------------------------------------- Ancap, the Uruguayan state oil company, will collaborate with Argentine state-run Enarsa and Petroleos de Venezuela, the Venezuelan state oil firm, to explore Venezuela's Orinoco Belt for oil, Merco Press reports. Merco Press says that an agreement was signed during the Mercosur summit in Cordoba, Argentina on Friday by: -- Rafael Ramirez, Venezuela's Energy Minister; -- Julio De Vido, Argentina's Planning Minister; and -- Raul Sendic, a representative of Uruguay's government- owned oil company. Merco Press relates that the agreement allows the joint exploitation of Block Six of the Mariscal Ayachucho region of the Orinoco Belt, a region rich in heavy and extra-heavy crude oil plus tar sands. According to the agreement, Petroleos de Venezuela will hold 51% of all the crude extracted from Orinoco. Enarsa and Ancap will split the remaining 49%, Merco Press states. The project had been in the works for months and the original partner was supposed to be Chile instead of Argentina, Daniel Martinez, the president of Ancap, told Merco Press. Preliminary estimates in Block Six indicate that Uruguay could have some 50,000 barrels daily, Merco Press says, citing Mr. Martinez. Meanwhile, Minister De Vido told Merco Press that Enarsa will have access to the crude through subsidiary accords with private firms that will invest in developing the oilfields with the approval of Petroleos de Venezuela. However, it is likely that it will take four years before oil starts flowing from Block Six, Merco Press states. * * * Fitch Ratings assigns 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 * URUGUAY: Interested in Forging Bilateral Ties Outside Mercosur ---------------------------------------------------------------- Danilo Astori, Uruguay's economy ministery, told reporters that his country is interested in entering bilateral agreements with nations that are not members of the Mercosur trade block. However, Uruguay did not make any formal diplomatic request to do so, Minister Mantega told the reporters. Mercosur is formally known as the Common Market of the South. It was founded in 1991 by Argentina, Brazil, Paraguay and Uruguay. Venezuela was made a full member earlier in July. Uruguayan and Paraguayan leaders have expressed in recent months their interest in one-on-one free trade agreements with the United States, which angered officials of Mercosur, Dow Jones Newswires relates. * * * Fitch Ratings assigns 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 ================= * PETROLEOS DE VENEZUELA: Gets Aid in Orinoco Oil Exploration ------------------------------------------------------------- Petroleos de Venezuela, the state oil company of Venezuela, will collaborate with Enarsa, the Argentine state oil firm, will collaborate with Uruguay's state-run Ancap to explore Venezuela's Orinoco Belt for oil, Merco Press reports. Merco Press says that an agreement was signed during the Mercosur summit in Cordoba, Argentina on Friday by: -- Rafael Ramirez, Venezuela's Energy Minister; -- Julio De Vido, Argentina's Planning Minister; and -- Raul Sendic, a representative of Uruguay's government owned oil company. Merco Press relates that the agreement allows the joint exploitation of Block Six of the Mariscal Ayachucho region of the Orinoco Belt, a region rich in heavy and extra-heavy crude oil plus tar sands. According to the agreement, Petroleos de Venezuela will hold 51% of all the crude extracted from Orinoco. Enarsa and Ancap will split the remaining 49%, Merco Press states. The project had been in the works for months and the original partner was supposed to be Chile instead of Argentina, Daniel Martinez, the president of Ancap, told Merco Press. Preliminary estimates in Block Six indicate that Uruguay could have some 50,000 barrels daily, Merco Press says, citing Mr. Martinez. Meanwhile, Minister De Vido told Merco Press that Enarsa will have access to the crude through subsidiary accords with private firms that will invest in developing the oilfields with the approval of Petroleos de Venezuela. However, it is likely that it will take four years before oil starts flowing from Block Six, Merco Press states. Petroleos de Venezuela SA 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, 2006, 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. Fitch said the Rating Outlook is Stable. Both rating actions followed Fitch's November 2005 upgrade of Venezuela's sovereign rating. * VENEZUELA: Nicaragua Urges Pres. to Pardon Debt as Promised ------------------------------------------------------------- Nicaragua's President Enrique Bolanos has demanded that Venezuela's President Hugo Chavez keep his promise of pardoning the US$31.6 million foreign debt of Nicaragua, Vheadline reports. Vheadline relates that President Bolanos told President Chavez, "You promised to pardon me the debt since you don't know where to throw your money away ... and once pardoned, you could lend me money to build roads and buy oil." According to Vheadline, President Bolanos alleged that President Chavez promised to pay Nicaragua's debt as soon as it entered the World Bank's Heavily Indebted Poor Countries Initiative. President Bolanos claimed that every time he asks President Chavez about pardoning Nicaragua's loan, the latter replies that he won't due to the foreign debt problem, Vheadline states. Vheadline emphasizes that President Bolanos particularly disapproved of the Venezuelan government's cheap oil accord on May 25 with Mayors who were members of the Sandinista National Liberation Front. President Bolanos told Vheadline that Daniel Ortega, the leader of the group, has lied to the citizens of Nicaragua by stating since September 2005 that cheap Venezuelan oil was on its way. The Albanic company has not yet requested the use of tanks and oil facilities to administer the deal, the report says, citing President Bolanos. Albanic runs the cheap oil project. Petroleos de Venezuela and the Nicaraguan Mayors Association own it. Venezuela's foreign currency long-term debt is rated B1 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 Troubled Company Reporter - Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Marjorie C. Sabijon, Sheryl Joy P. Olano, Stella Mae Hechanova, and Christian Toledo, Editors. Copyright 2006. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. 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