/raid1/www/Hosts/bankrupt/TCRLA_Public/060810.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
Thursday, August 10, 2006, Vol. 7, Issue 158
Headlines
A R G E N T I N A
BANCO PIANO: Moody's Assigns E+ Bank Financial Strength Rating
GANADERA DEL PLATA: Claims Verification Deadline Is on Oct. 2
IMC GROUP: Verification of Proofs of Claim Is Until Sept. 14
INTRAMED SRL: Ceballos Named as Trustee for Bankruptcy Case
LIBERIAN SRL: Claims Verification Deadline Is Set for Sept. 21
SOLANA HERMANOS: Trustee Verifies Proofs of Claim Until Sept. 4
SUR TRADE: Last Day for Verification of Claims Is on Dec. 15
TELEFONICA DE ARGENTINA: S&P Affirms B Corporate Credit Rating
TELEFONICA HOLDING: S&P Affirms B Long-Term Corp. Credit Rating
B A H A M A S
PINNACLE ENTERTAINMENT: S&P Affirms B+ Corporate Credit Rating
B E R M U D A
FOSTER WHEELER: Raymond Milchovich Continues as Pres. & CEO
B O L I V I A
* BOLIVIA: Railway System with Peru to Cut Transport Cost by 70%
B R A Z I L
ALERIS INT'L: Texas Pacific Acquires Firm's Stock for US$1.7 Bln
ALERIS INT'L: Reports Net Income of US$102.6MM in Second Quarter
ALERIS INT: Texas Pacific Merger Cues Moody's to Review Ratings
CEMIG DISTRIBUCAO: Moody's LatAm Rates BRL250MM Debentures at B1
COMPANHIA FOCA: Revenues Up 23% in First Five Months of 2006
COMPANHIA SIDERURGICA: Fitch Assigns BB+ Foreign Issuer Rating
DRESSER-RAND: Reports Net Income of US$10.7MM in Second Quarter
PETROLEO BRASILEIRO: Discloses Manati Drilling Test Results
PETROLEO BRASILEIRO: Plans US$12.1 Billion in Investments Abroad
TAM S.A.: Releases Operating Data for July 2006
TAM SA: Fitch Assigns BB Foreign & Local Currency Issuer Ratings
VARIG: Expanding Fleet to 45 Airplanes by Year-End, Volo Says
C A Y M A N I S L A N D S
ACTIVE FUND: Creditors Have Until Aug. 28 to Submit Claims
ARKLET LIMITED: Will Hold Final Shareholders Meeting on Aug. 28
CLOVA LIMITED: Holding Final Shareholders Meeting on Aug. 28
FINGLAS LIMITED: Last Shareholders Meeting Is Set for Aug. 28
HARPOON (ADVISORS): Proofs of Claim Must be Submitted by Sept. 1
HARPOON (HOLDINGS): Claims Filing Deadline Is Set for Sept. 1
HARPOON PARALLEL: Last Day to File Proofs of Claim Is on Sept. 1
INCOME PARTNERS: Final Shareholders Meeting Is Set for Aug. 28
ORACLE DELTA: Creditors Must File Proofs of Claim by Aug. 28
PROSEN LIMITED: Last Shareholders Meeting Is Set for Aug. 28
RUBICON ASIA MASTER: Last Day to File Proofs of Claim Is Aug. 28
RUBICON ASIA OFFSHORE: Proofs of Claim Must be Filed by Aug. 28
RUBICON AUSTRALIA MASTER: Proofs of Claim Must Be In by Aug. 28
RUBICON AUSTRALIA OFFSHORE: Proofs of Claim Filing Ends Aug. 28
VIAD EQUITY: Last Day to File Proofs of Claim Is on Aug. 28
VIAD EQUITY INVESTMENTS: Proofs of Claim Filing Is Until Aug. 28
VIAD INVESTMENTS: Filing of Proofs of Claim Is Until Aug. 28
VIAD LTD: Creditors Have Until Aug. 28 to File Proofs of Claim
C H I L E
AES CORP: Ratings Reflect Exposure to Merchant Power Markets
ARAMARK CORP: Declares US$0.07 Per Share Quarterly Cash Dividend
ARAMARK CORP: Inks US$8.3 Billion Merger Pact with Investors
ARAMARK CORP: Fitch Downgrades Issuer & Sr. Debt Ratings to BB-
ARAMARK CORP: S&P Lowers Corp. Credit Rating to BB+ from BBB-
C O L O M B I A
* COLOMBIA: Private Pension Posts COP38.0 Trillion Assets in May
C O S T A R I C A
BAC SAN JOSE: Posts CRC5.53-Bil. Earnings in First Half of 2006
* COSTA RICA: Domestic Production to Increase 6.8% in 2006
C U B A
* CUBA: Minister Says Sugar Sector Will Meet Target This Year
D O M I N I C A N R E P U B L I C
FALCONBRIDGE LTD: Board Recommends Xstrata Offer to Shareholders
* DOMINICAN REPUBLIC: Merchants Ask Gov't to Import Sugar
E C U A D O R
PETROECUADOR: Inks Energy Cooperation Accord with Enap
* ECUADOR: Congress Approves Reforms on Electric Power Law
* ECUADOR: Port Authority Resumes Guayaquil Port Development
J A M A I C A
AIR JAMAICA: Must Adapt to Global Changes, Michael Conway Says
DIGICEL LTD: Launches Home Fixed Line Service in Jamaica
M E X I C O
BALLY TOTAL: Moody's Affirms Low B & Junk Credit Ratings
CINEMARK INC: To Buy All of Century Theatres' Outstanding Stock
CINEMARK INC: Century Buy Cues S&P to Place Ratings on NegWatch
HIPOTECARIA SU: Moody's Rates Class B Certificates at Ba2
N I C A R A G U A
* NICARAGUA: Crisis in Energy Sector Gets Worse
P A N A M A
CHIQUITA BRANDS: Banana Purchase Cut Leads to Growers' Losses
CORPORACION UBC: Ratings Constrained by Competition, S&P Says
KANSAS CITY SOUTHERN: Theodore Prince Named VP Sales & Marketing
P A R A G U A Y
* PARAGUAY: State Telecom Firm to Launch Broadband Services
P E R U
DOE RUN: 2nd Quarter Stockholders' Deficit Narrows to US$112 Mil
* PERU: Mobile Users Grew 21% to 6.75MM in First Half of 2006
* PERU: ProInversion Will Award Airports Concession on August 18
P U E R T O R I C O
RENT-A-CENTER: Offers US$10.65 Per Share to Acquire Rent-Way
RENT-A-CENTER: Rent-Way Buy May Prompt Moody's to Lower Ratings
RENT-A-CENTER: Rent-Way Buy Cues S&P to Put Ratings on NegWatch
SAFETY-KLEEN: Completes Major Recapitalization of Company
U R U G U A Y
* URUGUAY: State Firm to Launch Voice & Data Services Through TV
V E N E Z U E L A
CITGO PETROLEUM: Sulfur Recovery Unit Breaks Down
* VENEZUELA: Reports 62.9% Increase in Export Revenues
- - - - -
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A R G E N T I N A
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BANCO PIANO: Moody's Assigns E+ Bank Financial Strength Rating
--------------------------------------------------------------
Moody's Investors Service has assigned first-time ratings to
Banco Piano S.A. These are the bank financial strength rating
of E+ and the long- and short-term global local-currency deposit
ratings of B2 and Not Prime. Moody's also assigned long- and
short-term global foreign-currency deposit ratings of Caa1 and
Not Prime to Banco Piano. First-time national scale ratings for
local-currency deposits of A1.ar and Ba1.ar for foreign-currency
deposits were also awarded. The outlooks on all of these
ratings are stable.
Moody's said that the bank financial strength rating for Banco
Piano reflects the bank's focused operation as a retail lender,
which ensures a greater degree of granularity in its lending
book. Banco Piano provides loans to retirees to which it pays
their pensions. The bank's ratings are supported by
management's expertise in the consumer finance market, as well
as by Piano's good profitability (as measured by preprovision
profits as a percentage of average total assets). This reflects
high-yielding loan book. Piano's rating is also underpinned by
its franchise as a foreign-exchange house -- one present in the
market since 1944.
The bank's asset-quality indicators compare poorly with the
median of its peers; the bank had occupied an intrinsically
riskier target market, but management has shifted towards lower-
risk products in its portfolio. Moody's noted that loan-
origination and risk- management policies will be the key to
reducing credit costs and to maintaining healthy capitalization.
The rating agency stated that any potential for ratings upgrades
would depend on Banco Piano acquiring a larger presence in the
local lending market, while maintaining superior asset quality
and profitability in a scenario of increasing competition.
Banco Piano is the main business of its shareholders, which
leads Moody's to assume that they would be forthcoming in
providing liquidity and capital assistance if the bank faces
stress. In a systemic-risk scenario, however, Moody's does not
assign a high probability of regulatory support to Piano's
local-currency deposits, given the small size of the franchise
in terms of deposits within the system.
The foreign-currency deposit ratings are constrained by the
Argentine country ceiling. The foreign-currency national scale
rating is much lower than the rating for the local- currency
national scale because it reflects foreign currency
transferability and convertibility risks, which continue to be
high in Argentina's case.
Headquartered in Buenos Aires, Argentina, Banco Piano S.A. is a
specialized retail bank owned by the Piano family. As of March
2006, the bank had ARS303.6 million in assets (approximately
US$98.6 million) and ARS193.1 million in deposits (approximately
US$62.7 million).
These ratings were assigned to Banco Piano S.A.:
-- Bank Financial Strength Rating: E+, stable outlook,
-- Long- Term Global Local-Currency Deposits: B2, stable
outlook,
-- Short- Term Global Local Currency Deposits: Not Prime,
stable outlook,
-- Long -Term Foreign-Currency Deposits: Caa1, stable
outlook,
-- Short -Term Foreign-Currency Deposits: Not Prime, stable
outlook,
-- National Scale Rating for Local-Currency Deposits: A1.ar,
stable outlook, and
-- National Scale Rating for Foreign-Currency Deposits:
Ba1.ar, stable outlook.
GANADERA DEL PLATA: Claims Verification Deadline Is on Oct. 2
-------------------------------------------------------------
Graciela Alicia Dulbecco, the court-appointed trustee for
Ganadera del Plata S.A.'s bankruptcy proceeding, will verify
creditors' proofs of claim until Oct. 2, 2006.
Ms. Dulbecco will present the validated claims in court as
individual reports on Nov. 14, 2006. A court in La Plata,
Buenos Aires, will determine if the verified claims are
admissible, taking into account the trustee's opinion and the
objections and challenges raised by Ganadera del Plata and its
creditors.
Inadmissible claims may be subject for appeal in a separate
proceeding known as an appeal for reversal.
A general report that contains an audit of Ganadera del Plata's
accounting and banking records will follow on Feb. 2, 2007.
Ms. Dulbecco is also in charge of administering Gadar's assets
under court supervision and will take part in their disposal to
the extent established by law.
The debtor can be reached at:
Ganadera del Plata S.A.
Montevideo y Calle 66, Berisso
Buenos Aires, Argentina
The trustee can be reached at:
Graciela Alicia Dulbecco
Calle 50 Numero 408, La Plata
Buenos Aires, Argentina
IMC GROUP: Verification of Proofs of Claim Is Until Sept. 14
------------------------------------------------------------
Ruben Angel Scaletta, the court-appointed trustee for IMC Group
S.A.'s bankruptcy case, will verify creditors' proofs of claim
until Sept. 14, 2006.
Argentine bankruptcy law requires Mr. Scaletta to present the
validated claims in court as individual reports. Court No. 17
in Buenos Aires will determine if the verified claims are
admissible, taking into account the trustee's opinion and the
objections and challenges raised by IMC Group and its creditors.
Inadmissible claims may be subject for appeal in a separate
proceeding known as an appeal for reversal.
Mr. Scaletta will also present a general report that contains an
audit of IMC group's accounting and banking records. The report
submission dates have not been disclosed.
The company was declared bankrupt at the request of Diseno
Grafico Sociedad de Hecho, which it owes US$26,239.12.
Clerk No. 33 assists the court in the proceeding.
The debtor can be reached at:
IMC Group S.A.
Florida 826
Buenos Aires, Argentina
The trustee can be reached at:
Ruben Angel Scaletta
Piedras 1077
Buenos Aires, Argentina
INTRAMED SRL: Ceballos Named as Trustee for Bankruptcy Case
-----------------------------------------------------------
A court in Cordoba appointed Adriana Beatriz Ceballos to
supervise the bankruptcy proceeding of Intramed S.R.L. Under
bankruptcy protection, control of the company's assets is
transferred to Ms. Ceballos.
As trustee, Ms. Mases will:
-- verify creditors' proofs of claim;
-- prepare and present individual and reports in court after
the claims are verified; and
-- administer Intramed's assets under court supervision and
take part in their disposal to the extent established by
law.
The debtor can be reached at:
Intramed S.R.L.
Urquiza 184, Ciudad de Cordoba
Cordoba, Argentina
The trustee can be reached at:
Adriana Beatriz Ceballos
27 de Abril 564, Ciudad de Corodoba
Cordoba, Argentina
LIBERIAN SRL: Claims Verification Deadline Is Set for Sept. 21
--------------------------------------------------------------
Angel Vello Vazquez, the court-appointed trustee for Liberian
S.R.L.'s insolvency case, will verify creditors' proofs of claim
until Sept. 21, 2006.
Argentine bankruptcy law requires Mr. Vazquez to present the
validated claims in court as individual reports. Court No. 17
in Buenos Aires will determine if the verified claims are
admissible, taking into account the trustee's opinion and the
objections and challenges raised by Liberian and its creditors.
Inadmissible claims may be subject for appeal in a separate
proceeding known as an appeal for reversal.
Mr. Vazquez will also present a general report that contains an
audit of Liberian's accounting and banking records. The report
submission dates have not been disclosed.
On March 27, 2007, Liberian's creditors will vote on a
settlement plan that the company will lay on the table.
Court No. 17 approved Liberian's petition to reorganize its
petition after defaulting on its obligations. Clerk No. 33
assists the court in the proceeding.
The debtor can be reached at:
Liberian S.R.L.
J. Salguero 3172
Buenos Aires, Argentina
The trustee can be reached at:
Angel Vello Vazquez
Sarmiento 1586
Buenos Aires, Argentina
SOLANA HERMANOS: Trustee Verifies Proofs of Claim Until Sept. 4
---------------------------------------------------------------
Raul Alberto Vallese, the court-appointed trustee for Solana
Hermanos S.H.'s bankruptcy case, verifies creditors' proofs of
claim until Sept. 4, 2006.
Mr. Vallese will present the validated claims in court as
individual reports on Nov. 6, 2006. A court in Mercedes, Buenos
Aires will then determine if the verified claims are admissible,
taking into account the trustee's opinion and the objections and
challenges raised by Solana Hermanos and its creditors.
Inadmissible claims may be subject for appeal in a separate
proceeding known as an appeal for reversal.
A general report that contains an audit of Solana Hermanos'
accounting and banking records will follow on Dec. 4, 2006.
Mr. Vallese is also in charge of administering Solana Hermanos'
assets under court supervision and will take part in their
disposal to the extent established by law.
The debtor can be reached at:
Solana Hermanos S.H.
Ruta Nacional Numero 8 Km. 98 Solis
Partido de San Andres de Giles
Buenos Aires, Argentina
The trustee can be reached at:
Raul Alberto Vallese
Calle 11 Numero 388, Mercedes
Buenos Aires, Argentina
SUR TRADE: Last Day for Verification of Claims Is on Dec. 15
------------------------------------------------------------
Mario D. Atri, the court-appointed trustee for Sur Trade S.A.'s
reorganization proceeding, will verify creditors' proofs of
claim until Dec. 15, 2006.
Mr. Atri will present the validated claims in court as
individual reports on March 8, 2007. A court in Mar del Plata,
Buenos Aires, will determine if the verified claims are
admissible, taking into account the trustee's opinion and the
objections and challenges raised by Sur Trade and its creditors.
Inadmissible claims may be subject for appeal in a separate
proceeding known as an appeal for reversal.
A general report that contains an audit of Sur Trade's
accounting and banking records will follow on April 24, 2007.
On June 16, 2007, Sur Trade's creditors will vote on a
settlement plan that the company will lay on the table.
The debtor can be reached at:
Sur Trade S.A.
Avenida Edison 1040 Mar del Plata
Buenos Aires, Argentina
The trustee can be reached at:
Mirta Ana Calfun de Bendersky
Humahuaca 4165
Buenos Aires, Argentina
TELEFONICA DE ARGENTINA: S&P Affirms B Corporate Credit Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' long-term
foreign currency corporate credit rating on the Argentine
telecom incumbent Telefonica de Argentina S.A., following the
company's announcement of a proposal from its Board of Directors
of a capital reduction of ARS1,048 million (equivalent to
approximately US$340 million) to optimize its capital structure.
This transaction is subject to the approval of the Argentine
Stock Exchange and the Securities Exchange Commission (Comision
Nacional de Valores). The outlook is stable.
"Despite this capital reduction, we expect TASA's financial
profile to remain adequate due to the fact that a rather
important portion of this transaction would be funded with cash
holdings and future cash generation," said Standard & Poor's
credit analyst Ivana Recalde.
As a result, by the end of 2006 we expect TASA to reach
financial debt levels slightly lower than the US$910 million
registered as of December 2005 and credit metrics similar to the
ones exhibited in fiscal 2005 (debt-to-EBITDA and funds from
operations-to-debt ratios amounted to 1.6x and 54.6%,
respectively, in 2005). In the short-to-medium term, we do not
expect additional capital reductions. In addition, we expect
the company to continue to gradually reduce debt starting in
2007.
The ratings on TASA reflect the financial and regulatory
challenges of operating in the Argentine environment and the
exposure to currency mismatch risks, as a great portion of the
company's debt is foreign currency-denominated while cash
generation is in Argentine pesos. The company's good market
position, efficient operations, and strengthened financial
performance partially mitigate these negative factors.
Although there was some recent progress in contract
renegotiation, regulatory risks remain high. In February 2006,
TASA signed a memorandum of understanding with the government
regarding contract renegotiations. Among other nontariff-
related elements, the agreement includes the possibility of
raising international incoming calling rates and the
equalization of the off-peak time for local and long-distance
calls (this would extend peak time by one hour and result in
lower rate discounts), which should increase TASA's revenues by
about $20 million or 2%. The changes proposed in the memorandum
are expected to have a limited effect on the company's credit
quality, and we do not expect other tariff increases for the
telecom industry. Implementation of the agreement is on hold
pending additional legal requirements. In addition, TASA's
shareholder would have to withdraw the lawsuit filed in the
World Bank's international arbitration court against the
Argentine government in case it reaches a final agreement.
TASA is one of two incumbent telephone companies in Argentina,
formed in 1990 after the privatization of state
telecommunications. Holding approximately 53% of the more than
eight million lines in service in Argentina, TASA currently
provides basic telecommunication services (local, national, and
international long distance and broadband Internet services)
throughout the country. The Spanish telecommunication operator
Telefonica S.A. (BBB+/Negative/A-2) directly and indirectly owns
98% of TASA's shares.
The stable outlook reflects our expectations that the company's
good competitive position and a relatively stable economic
scenario will allow it to maintain its financial performance
even if conditions in Argentina become more challenging.
Standard & Poor's expects the company to maintain a prudent
financial policy so as not to jeopardize its current financial
position. Rating upside is somewhat limited by the current
business environment in Argentina, especially with regard to
regulatory risk and the persistence of currency mismatch risks.
The ratings could be revised if the company becomes more
aggressive than expected or tariff inflexibility persists under
a higher-than-expected inflationary and exchange rate scenario.
TELEFONICA HOLDING: S&P Affirms B Long-Term Corp. Credit Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' long-term
corporate credit rating on Argentine holding company Telefonica
Holding de Argentina S.A. or THA. The outlook is stable.
"The rating actions follow a similar action taken on the ratings
on Telefonica de Argentina S.A., THA's only significant asset,"
said Standard & Poor's credit analyst Ivana Recalde.
The affirmation follows TASA's announcement of a proposal from
its Board of Directors of a capital reduction of ARS1,048
million (equivalent to approximately US$340 million) to optimize
its capital structure. This transaction is subject to the
approval of the Argentine Stock Exchange and Securities Exchange
Commission (Comision Nacional de Valores). Despite this capital
reduction, Standard & Poor's expects TASA's financial profile to
remain adequate due to the fact that a rather important portion
of this transaction would be funded with cash holdings and
future cash generation.
The rating on THA is based on its indirect stake of 32.4% in
TASA, an Argentine-based integrated telecom incumbent provider
that has about a 53% fixed-line share throughout the country.
Given that THA's main asset is its stake in TASA, we view the
credit quality of both entities as intrinsically intertwined.
The ratings on TASA reflect the financial and regulatory
challenges of operating in the Argentine environment and the
exposure to currency mismatch risks, as a significant portion of
the company's debt is foreign currency-denominated while cash
generation is in Argentine pesos. The company's good market
position, efficient operations, and strengthened financial
performance partially mitigate these negative factors.
Although there was some recent progress in the license contract
renegotiation (pending since 2002), regulatory risks remain
high. In February 2006, TASA signed a memorandum of
understanding with the government. Among other nontariff-
related elements, the agreement includes the possibility of
raising international incoming calling rates and the
equalization of the off-peak time for local and long-distance
calls (this would extend peak time by one hour and result in
lower rate discounts), which should increase TASA's revenues by
about US$20 million or 2% per year. The changes proposed in the
memorandum are expected to have a limited effect on the
company's credit quality, and we do not expect other tariff
increases for the telecom industry. Implementation of the
agreement is on hold pending additional legal requirements. In
addition, TASA's shareholder would have to withdraw the lawsuit
filed in the World Bank's international arbitration court
against the Argentine government in case it reaches a final
agreement.
The stable outlook on THA reflects the close link with TASA's
credit quality. The stable outlook on TASA reflects
expectations that the company's good competitive position and a
relatively stable economic scenario should allow TASA to
maintain its financial performance even if conditions in
Argentina become more challenging. Standard & Poor's expects
the company to maintain a prudent financial policy so as not to
jeopardize its current financial position. Rating upside is
somewhat limited by the current business environment in
Argentina, especially with regard to regulatory risk and the
persistence of currency mismatch risks. The ratings could be
revised if the company becomes more aggressive than expected or
if tariff inflexibility persists under a higher-than-expected
inflationary and exchange-rate scenario.
=============
B A H A M A S
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PINNACLE ENTERTAINMENT: S&P Affirms B+ Corporate Credit Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on Las
Vegas-based casino owner and operator Pinnacle Entertainment
Inc., including its 'B+' corporate credit rating. In addition,
ratings were removed from CreditWatch with positive implications
where they were placed on Jan. 6, 2006.
"The ratings affirmation reflects our assessment that the
company's aggressive growth strategy, which is centered around
expanding its asset portfolio through development opportunities
and acquisitions, will continue during the intermediate term,"
said Standard & Poor's credit analyst Michael Scerbo. "As a
result of this strategy, and despite the significant improvement
in credit measures that has occurred during the past several
quarters due to continued good operating performance, credit
measures are likely to be maintained at a level that we would
consider to be more consistent with the current rating and
provide cushion for the pursuit of additional opportunities,"
Mr. Scerbo added.
The outlook is stable. Total debt outstanding at June 30, 2006,
was about US$637 million.
=============
B E R M U D A
=============
FOSTER WHEELER: Raymond Milchovich Continues as Pres. & CEO
-----------------------------------------------------------
Foster Wheeler Ltd. disclosed that Raymond J. Milchovich,
chairman, president and chief executive officer of Foster
Wheeler Ltd., has signed a new agreement, effective
Aug. 11, 2006, to continue to lead the company. Mr. Milchovich
joined Foster Wheeler in October 2001.
"The Foster Wheeler Board is extremely pleased with the
leadership that Ray has demonstrated over the past five years,"
said Joseph J. Melone, deputy chairman, chairman of the
compensation committee and lead outside director of the Board of
Foster Wheeler Ltd. "We are all very proud of the tremendous
achievements that have been made during Ray's tenure and are
delighted that we are able to provide Foster Wheeler's
stakeholders with senior leadership continuity at this exciting
time for the company."
"I am very pleased that the Foster Wheeler Board and I have been
able to agree to terms that will extend my tenure with the
company," said Raymond J. Milchovich. "I am delighted to
continue in a role which I enjoy tremendously and to work with
my motivated and talented senior management team to maximize
enterprise value for our shareholders."
About Foster Wheeler
Headquartered in Hamilton, Bermuda, Foster Wheeler Ltd.
-- http://www.fwc.com/-- is a global company offering, through
its subsidiaries, a broad range of engineering, procurement,
construction, manufacturing, project development and management,
research and plant operation services. Foster Wheeler serves
the refining, upstream oil and gas, LNG and gas-to-liquids,
petrochemical, chemicals, power, pharmaceuticals, biotechnology
and healthcare industries.
At Dec. 31, 2005, Foster Wheeler's balance sheet showed a
US$341,796,000 equity deficit compared to a US$525,565,000
equity deficit on Dec. 31, 2004.
* * *
Standard & Poor's Ratings Services assigned on Aug. 2, 2006, its
'BB-' bank loan rating and '1' recovery rating on Foster Wheeler
Ltd.'s proposed five-year, US$350 million senior secured credit
facilities due 2011, reflecting a high expectation of full
recovery of principal (100%) in the event of a payment default.
* * *
Moody's Investors Service assigned on Aug. 2, 2006, a Ba3 rating
to Foster Wheeler LLC's proposed US$350 million senior secured
domestic credit facility subject to final documentation. The
credit facility is expected to consist of a five-year
US$200 million revolving credit facility and a five-year US$150
million synthetic letter of credit facility.
=============
B O L I V I A
=============
* BOLIVIA: Railway System with Peru to Cut Transport Cost by 70%
----------------------------------------------------------------
A planned railway system connecting Bolivia to Peru would reduce
transport costs by 70%, Ruben Caceres -- an infrastructure
analyst -- told the Peruvian press.
Business News Americas reports that Peru's President Alan Garcia
disclosed the creation of a port in Tacna, consisting a highway
and a railway system that would connect Tacna to La Paz,
Bolivia, to encourage the landlocked nation to transport its
foreign trade through the region.
The report says that the projects would have private investment,
provided through concessions. However, the amounts needed for
the construction are yet to be determined.
According to BNamericas, Mr. Caceres said the railway system
would be constructed from the Peru's southern region Tacna to La
Paz, Bolivia. The railway would decrease the unitary transport
costs.
Mr. Caceres told BNamericas that the current average cost of
transporting one ton per kilometer (t/km) on highways is
US$0.07. Transport by train would cost US$0.02 per t/km.
Railway systems are more durable than highways, which demand
maintenance works every five years, BNamericas relates, citing
Mr. Caceres.
The railway system transports 10 times more than a highway.
While road capacities become saturated at an annual 8-10Mt,
railway systems can transport up to 100Mt and about 1.5 million
passengers per year, Juan de Dios Olaechea, a railway specialist
in Peru, told BNamericas.
* * *
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
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B R A Z I L
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ALERIS INT'L: Texas Pacific Acquires Firm's Stock for US$1.7 Bln
----------------------------------------------------------------
Aleris International, Inc., has entered into a definitive merger
agreement under which Texas Pacific Group will acquire all of
the outstanding stock of the company for approximately US$1.7
billion plus the assumption of or repayment of approximately
US$1.6 billion of debt.
Under the terms of the agreement, Aleris stockholders will
receive US$52.50 in cash for each share of Aleris common stock
they hold, representing a premium of 27% to Aleris's closing
share price on Aug. 7, 2006.
The board of directors of Aleris has unanimously approved the
merger agreement and has resolved to recommend that Aleris's
stockholders adopt the agreement.
Steven J. Demetriou, Aleris's Chairman and Chief Executive
Officer, said, "After careful analysis, our board of directors
has unanimously endorsed this transaction as being in the best
interests of our stockholders."
Pending the receipt of stockholder approval and expiration of
the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as well as satisfaction of other
customary closing conditions, including regulatory approvals,
the transaction is expected to be completed early in 2007. The
transaction will be financed through a combination of equity
contributed by TPG and debt financing that has been committed by
Deutsche Bank.
The Company's global headquarters will remain in Beachwood,
Ohio. Citigroup Global Markets Inc. is acting as financial
advisor to Aleris, while Fried, Frank, Harris, Shriver &
Jacobson LLP is acting as legal advisor to the Company.
Deutsche Bank is acting as financial advisor to TPG and Cleary
Gottlieb Steen & Hamilton LLP is acting as their legal advisor.
About Aleris International
Headquartered in Beachwood, Ohio, a suburb of Cleveland, Aleris
International, Inc. -- http://www.aleris.com/-- manufactures
rolled aluminum products and is a global leader in aluminum
recycling and the production of specification alloys. The
company also manufactures value-added zinc products that include
zinc oxide, zinc dust and zinc metal. The Company operates 42
production facilities in the United States, Brazil, Germany,
Mexico and Wales, and employs approximately 4,200 employees.
* * *
As reported in the Troubled Company Reporter on July 18, 2006,
Standard & Poor's Ratings Services affirmed its 'BB-' corporate
credit rating on Aleris International Inc. and removed it from
CreditWatch, where it was placed with negative implications on
March 21, 2006. The CreditWatch placement followed Aleris'
announcement that it would acquire the downstream aluminum
assets of Corus Group PLC (BB/Stable/B) for US$880 million in
cash and assumed debt. S&P said the outlook is negative.
At the same time, Standard & Poor's assigned its 'BB-' and '2'
recovery ratings to the company's proposed US$650 million senior
secured term loan B. The '2' recovery rating indicates the
expectation of a substantial recovery of principal in the event
of a payment default. The ratings are based on preliminary
terms and conditions and are predicated on the completion of the
Corus transaction and related financings substantially in the
form currently anticipated.
As reported in the Troubled Company Reporter on July 12, 2006,
Moody's Investors Service confirmed Aleris International, Inc.'s
B1 corporate family rating. In a related rating action, Moody's
assigned a Ba3 rating to the company's proposed 7 year senior
secured guaranteed term loans aggregating US$650 million, which
Aleris is issuing to partially finance its EUR691 million
acquisition of certain aluminum assets from Corus Group plc and
refinance its existing debt.
Moody's confirmed the B2 rating on the 10-3/8% senior secured
notes and the B3 rating on the 9% senior unsecured notes. The
ratings for the proposed financings assume that the tender offer
will be successful, the desired consents obtained and that the
acquisition and associated financing transactions will close as
contemplated. At such time, Moody's ratings for Aleris's
existing debt will be withdrawn. The ratings outlook is
negative.
ALERIS INT'L: Reports Net Income of US$102.6MM in Second Quarter
----------------------------------------------------------------
Aleris International, Inc., reported record results for the
second quarter of 2006 and for the six months ended
June 30, 2006.
Highlights
-- Operating income increased to a quarterly record of
US$102.6 million for the second quarter of 2006 from last
year's US$30.8 million, an increase of US$71.8 million,
or 233%.
-- Second quarter net income was a record US$55.4 million, or
US$1.75 per share, at an estimated tax rate of 36.9%,
compared with reported net income of US$18.9 million, or
US$0.60 per share, in the second quarter of 2005, based on
an estimated tax rate of 9.8%. Last year's reported
second quarter earnings per share would have been US$0.42
using the 2006 estimated tax rate.
-- Adjusted earnings per share was a record US$1.40 in the
second quarter of 2006 at the estimated tax rate of
36.9%, compared with adjusted earnings per share of
US$0.96 in the prior year's second quarter using an
adjusted effective 2005 tax rate of 8.75%. Adjusted to
the estimated 2006 tax rate, last year's adjusted
earnings per share would have been US$0.65.
-- Sequentially, adjusted earnings per share increased 51%
to US$1.40 per share in the second quarter of 2006
compared with US$0.93 per share in the first quarter of
2006.
-- Net debt to EBITDA excluding special items on a
last-twelve-month basis decreased to 2.1x at
June 30, 2006 compared with 2.8x at year end, due
primarily to significantly higher second quarter EBITDA.
-- Merger-related synergies from the Commonwealth acquisition
and companywide productivity initiatives aggregated US$15
million for the quarter while synergies related to the
2005 acquisitions totaled approximately US$11 million,
exceeding the Company's expectations.
-- The Company is raising its estimate of merger-related
synergies from the Commonwealth acquisition and
company-wide productivity initiatives to be realized
within 18 to 24 months of the merger to US$65 million
from US$50 million.
-- On August 1, 2006, Aleris closed the acquisition of the
downstream aluminum business of Corus Group plc for a
purchase price of EUR695 million (US$887 million).
Simultaneously, the Company entered into new credit
agreements, the proceeds from which were used to fund the
acquisition and refinance substantially all of the
Company's existing indebtedness. The Company expects to
incur charges in the third quarter of approximately
US$53.5 million related to the refinancing.
Three Months Ended Six Months Ended
June 30 June 30
2006 2005 2006 2005
(amounts in millions, except per share data)
Volume
Recycling & alloys lbs
processed 881 838 1,755 1,670
Rolled products lbs
shipped 291 238 566 498
Revenue $1,012.8 $603.6 $1,860.4 $1,248.6
Net income 55.4 18.9 83.6 48.0
Earnings per
share* 1.75 0.60 2.64 1.54
Adjusted earnings
per share* 1.40 0.96 2.33 2.29
EBITDA 117.8 43.7 192.5 100.2
EBITDA excluding
special items 99.9 55.3 176.6 123.8
Aleris resulted from the December 9, 2004, merger of IMCO
Recycling Inc. and Commonwealth Industries, Inc. During the
last half of 2005, the Company made several acquisitions,
including Tomra Latasa Reciclagem, which closed in August, ALSCO
Holdings, Inc., which closed in October, and Alumitech, Inc.,
and the acquisition of selected assets of Ormet Corporation,
both of which closed in December. The Company's reported
results for 2006 include these acquisitions, but 2005 has not
been recast on a comparable basis and represents 2005 results as
reported.
Second Quarter 2006 Operating Results
Aleris reported second quarter 2006 revenues of US$1.01 billion
and net income of US$55.4 million, or US$1.75 per share. Results
for 2006 are reported using a 36.9% estimated tax rate. These
results include US$0.35 per share of favorable impact from
special items attributable to a US$12.5 million unrealized gain
on currency hedges related to a portion of the euro purchase
price for the downstream aluminum operations of Corus Group plc
and US$5.5 million of non-cash mark-to-market FAS 133 unrealized
metal hedge gains. The Company completed the Corus Aluminum
acquisition August 1, 2006.
For the second quarter of 2005, Aleris reported revenues of
US$603.6 million and net income of US$18.9 million, or US$0.60
per diluted share, using an effective tax rate of approximately
9.8%. These results include US$0.36 per share of unfavorable
special items, including US$9.5 million of mark-to-market FAS
133 metal hedge losses, US$1.1 million related to the non-cash
cost of sales impact of the write-up of rolled products assets
to fair value at the date of purchase, and US$1.0 million of
restructuring and asset impairment charges. Last year's
reported second quarter earnings per share would have been
US$0.42 using the 2006 estimated tax rate.
Second quarter 2006 adjusted earnings per share was US$1.40
compared with US$0.96 in the comparable year-ago period. Prior-
year adjusted EPS would have been US$0.65 on a comparable tax
rate basis. EBITDA excluding special items totaled US$99.9
million in the second quarter of 2006, an increase of 81%
compared with US$55.3 million in the second quarter of 2005.
The Company's improved results were driven primarily by
continued improvements in both the aluminum recycling and zinc
businesses, the impact of 2005 acquisitions, as well as
synergies and productivity gains companywide.
Steven J. Demetriou, Chairman and Chief Executive Officer of
Aleris, said, "We are extremely pleased with the record results
we achieved for the second quarter of 2006 with operating income
increasing more than 200% from the prior-year period. The
results not only exceeded our expectations but also reaffirmed
the strength of our businesses. Our rolled products business
benefited from acquisitions, strengthened margins from improved
scrap spreads, the favorable FIFO impact of the rising London
Metal Exchange on a year- over-year basis and continued
productivity improvements. Aluminum recycling increased the
momentum begun over the last several quarters, while zinc
continued to generate record earnings. We are particularly
pleased with the impact of the acquisitions we made in 2005
which are contributing substantially to our increased
profitability."
Year-to-date Operating Results
For the first half of 2006, Aleris reported revenues of US$1.86
billion and net income of US$83.6 million or US$2.64 per share.
These results include US$0.31 per share of favorable impact from
special items, including the US$12.5 million Corus Aluminum
acquisition-related unrealized currency hedge gain, US$4.7
million of non-cash mark-to-market FAS 133 unrealized metal
hedge gains and US$0.3 million related to adjustments to reduce
a restructuring accrual, offset partially by US$1.6 million of
non-cash cost of sales impact related to the writeup of acquired
assets to fair value. For the comparable 2005 period, the
Company reported revenues of US$1.25 billion and net income of
US$48.0 million, or US$1.54 per share. Those results included
US$0.75 per share of special items, including US$13.1 million of
mark-to-market FAS 133 metal hedge losses, US$6.7 million
related primarily to the non-cash cost of sales impact of the
write-up of rolled products inventory to fair value at date of
purchase, and US$3.8 million of asset impairment charges.
First half 2006 adjusted earnings per share of US$2.33 compare
to US$2.29 per share in 2005, or US$1.57 using the 2006 tax rate
of 36.9%. EBITDA excluding special items was US$176.6 million in
the first half of 2006 compared with US$123.8 million for the
prior-year period. The improved results for 2006 were largely
the result of 2005 acquisitions and continued gains from
synergies and productivity improvements.
Net debt decreased by US$36.3 million since December 31, 2005,
resulting in net debt to EBITDA excluding special items on a
last-twelve-month basis declining to 2.1x at June 30, 2006
compared with 2.8x at year end.
Rolled Products
Rolled products shipments totaled 291 million pounds in the
second quarter of 2006, including approximately 68 million
pounds from acquisitions. This compared with shipments of 238
million pounds for the comparable period in 2005. Excluding
acquisitions, rolled products shipments were down approximately
6% compared with the 2005 second quarter as customers continued
to delay orders due to high LME prices and as the Company
continued to focus on profitability rather than volume. Rolled
products segment income was US$52.4 million in the second
quarter of 2006, compared with segment income of US$38.3 million
in the prior-year period. Increased income was driven primarily
by the 2005 acquisitions of ALSCO and certain assets of Ormet,
favorable scrap spreads, improved productivity and the favorable
FIFO impact of the rising LME, which more than offset expected
declines in rolling margins and volume as well as inflation in
freight, energy and other conversion costs.
Excluding acquisitions, material margins for the second quarter
improved to US$0.481 per pound, compared with US$0.460 in the
year-earlier period as improving scrap spreads and the favorable
FIFO impact of the rising LME more than offset an expected
decline in rolling margins. Sequentially, material margins
excluding acquisitions declined US$0.052 due to the significant
favorable impact of the rising LME on first quarter results,
partially offset by improving scrap spreads in the second
quarter. Including acquisitions, material margins were US$0.513
per pound as ALSCO products have higher material margins than
the underlying rolled products business. Including
acquisitions, cash conversion costs were US$0.223 per pound.
Sequentially, cash conversion costs declined US$0.026 per pound
during the second quarter of 2006 due to higher volumes and
continued productivity improvements.
During the second quarter 2006, the rolled products business
segment completed the closure of its Carson, California, plant
which ceased production on March 31, 2006 and realized US$2.6
million in synergies from the closure.
Year-to-date rolled products shipments totaled 566 million
pounds compared with 498 million pounds reported in the first
half of 2005. Excluding acquisitions, material margins for the
first half of 2006 improved to US$0.507 per pound, compared with
US$0.474 in the first half of 2005 as the favorable FIFO impact
of the rising LME, favorable scrap spreads and improved
productivity more than offset an expected decline in rolling
margins. Including acquisitions, material margins were US$0.524
per pound in the first half of 2006 while cash conversion costs
were US$0.236 per pound. Segment income was US$94.8 million for
the first half of 2006 compared with US$87.8 million in the
comparable prior-year period. Contributing to the earnings
increase were the 2005 acquisitions of both ALSCO and certain
assets of Ormet, which drove shipped pounds higher, as well as
widening scrap spreads and the favorable FIFO impact of the
rising LME. In addition, the rolled products segment has
achieved excellent results in its Six Sigma and productivity
initiatives. These factors have more than offset decreases in
legacy business volumes primarily due to the high LME, slightly
lower rolling margins and increases in freight, paint and
certain conversion costs such as labor and natural gas.
Aluminum Recycling
Aluminum recycling segment income improved to US$22.5 million in
the second quarter of 2006 from US$8.7 million in the second
quarter of 2005. Second quarter 2006 processing volume of 524
million pounds compared with the 510 million pounds processed in
the year-earlier second quarter. Increased volume related to
the acquisition of Alumitech and certain assets of Ormet was
partially offset by lower volume due to the shift of management
responsibility for certain recycling facilities to rolled
products beginning in 2006. The almost three-fold increase in
segment income was driven by the capture of synergies and
operational improvements, the Alumitech acquisition, increased
volume and higher scrap spreads.
Year-to-date 2006 processing volume was 1.03 billion pounds
compared with 1.02 billion pounds reported in the first half of
2005. Segment income in the first half of 2006 was US$38.2
million compared with US$12.9 million for the year- earlier
period. This improvement was due to synergy capture, higher
scrap spreads and the Alumitech acquisition.
International
International processing volume of 290 million pounds for the
second quarter of 2006 was 7% higher than the 272 million pounds
processed in the prior year period. Second quarter 2006 segment
income of US$7.7 million was US$4.5 million higher than the
US$3.2 million reported in the 2005 second quarter. Improved
results at the Company's German recycling operations and the
2005 acquisition of Tomra Latasa accounted for the majority of
the increase. Sequentially, segment income improved 221% from
the first quarter of 2006 as issues related to the startup of
the Deizisau, Germany, recycling facility were resolved and
expected margin improvements at the Company's German recycling
operations were realized.
Year-to-date international processing volume of 605 million
pounds was 12% higher than the 539 million pounds processed in
the first half of 2005. Segment income on a year-to-date basis
was US$10.1 million in 2006 compared with US$7.7 million for the
comparable period a year ago due primarily to the acquisition of
Tomra Latasa.
Zinc
Zinc segment income of US$19.2 million for the second quarter of
2006 quadrupled from the US$4.8 million reported for the same
period in 2005. Second quarter 2006 processing volume of 67
million pounds was up from the 56 million pounds processed in
the second quarter of 2005 due to throughput improvements in
zinc metal. The substantial increase in zinc segment income was
due primarily to the unprecedented rise in LME zinc prices which
has occurred this year, with the average LME price of zinc at
US$1.49 per pound in the second quarter of 2006 compared with
US$0.58 per pound in the comparable period of 2005.
Year-to-date segment income of US$34.3 million compared with
US$10.1 million for the first half of 2005, while year-to-date
processing volume of 125 million pounds compared with 113
million pounds reported for the first six months of 2005.
Corporate Expense
Corporate expense includes primarily corporate general and
administrative expense and interest expense. In addition, in
order to simplify understanding of ongoing segment operations,
corporate expense includes all restructuring and asset
impairment charges as well as non-cash adjustments associated
with mark-to-market FAS 133 accounting for hedging activity. In
the second quarter of 2006, Aleris recorded US$18.0 million of
unrealized hedge gains, US$12.5 million of which were related to
hedging a portion of the purchase price paid to acquire Corus
Aluminum. The balance of this amount was non-cash mark-to-
market FAS 133 unrealized metal hedge gains. In addition, the
Company reduced an accrual for restructuring costs related to
the closure of the Carson, California, plant by US$0.3 million.
In the same period of 2005, Aleris recorded US$9.5 million of
non-cash mark-to-market FAS 133 unrealized metal hedge losses
and US$1.0 million of restructuring and other charges.
Corporate G&A increased 38% to US$19.2 million in the second
quarter of 2006 from the comparable 2005 period due to increased
incentive compensation expense, higher stock-based compensation
expense partially resulting from the adoption of FAS 123R, and
the Company's centralization of certain functions. However, as
a percentage of revenues, corporate G&A expense decreased to
1.9% in the second quarter of 2006 from 2.3% in the second
quarter of 2005. Interest expense for the second quarter of 2006
increased to US$13.7 million from US$9.9 million in the second
quarter of 2005 due to borrowings associated with the 2005
acquisitions and higher interest rates.
On a year-to-date basis, corporate G&A increased 24% to US$34.6
million from US$28.0 million in the comparable 2005 period due
to increased incentive compensation and higher stock-based
compensation expense and the centralization of certain
functions. However, as a percentage of revenues, corporate G&A
expense decreased to 1.9% in the first half of 2006 from 2.2% in
the first half of 2005. Interest expense for year-to-date 2006
increased to US$27.7 million from the US$20.3 million in the
prior-year period because of higher rates and higher borrowings
related to the 2005 acquisitions.
Capital expenditures were US$14.8 million for the second quarter
of 2006, compared with US$13.1 million for the previous year's
quarter. The increase primarily resulted from expansions at the
Company's rolled products facilities in Lewisport, Kentucky, and
Uhrichsville, Ohio. Year-to-date capital expenditures were
US$25.8 million compared with US$22.0 million in the first half
of 2005.
Outlook
Mr. Demetriou said, "We are particularly pleased to have
completed the Corus acquisition, which should strengthen our
product portfolio, expand our global capabilities and contribute
significantly to our future profitability. We welcome all 4,600
former Corus employees onto the Aleris team and look forward to
building a world-class global aluminum company. In addition, we
remain focused on achieving maximum benefit from the original
Commonwealth merger and are again raising our estimated synergy
target to US$65 million from US$50 million to be achieved within
18 to 24 months of the original merger."
About Aleris International
Headquartered in Beachwood, Ohio, a suburb of Cleveland, Aleris
International, Inc. -- http://www.aleris.com/-- manufactures
rolled aluminum products and is a global leader in aluminum
recycling and the production of specification alloys. The
company also manufactures value-added zinc products that include
zinc oxide, zinc dust and zinc metal. The Company operates 42
production facilities in the United States, Brazil, Germany,
Mexico and Wales, and employs approximately 4,200 employees.
* * *
As reported in the Troubled Company Reporter on July 18, 2006,
Standard & Poor's Ratings Services affirmed its 'BB-' corporate
credit rating on Aleris International Inc. and removed it from
CreditWatch, where it was placed with negative implications on
March 21, 2006. The CreditWatch placement followed Aleris'
announcement that it would acquire the downstream aluminum
assets of Corus Group PLC (BB/Stable/B) for US$880 million in
cash and assumed debt. The outlook is negative.
At the same time, Standard & Poor's assigned its 'BB-' and '2'
recovery ratings to the company's proposed US$650 million senior
secured term loan B. The '2' recovery rating indicates the
expectation of a substantial recovery of principal in the event
of a payment default. The ratings are based on preliminary
terms and conditions and are predicated on the completion of the
Corus transaction and related financings substantially in the
form currently anticipated.
As reported in the Troubled Company Reporter on July 12, 2006,
Moody's Investors Service confirmed Aleris International, Inc.'s
B1 corporate family rating. In a related rating action, Moody's
assigned a Ba3 rating to the company's proposed 7 year senior
secured guaranteed term loans aggregating US$650 million, which
Aleris is issuing to partially finance its EUR691 million
acquisition of certain aluminum assets from Corus Group plc and
refinance its existing debt.
Moody's confirmed the B2 rating on the 10-3/8% senior secured
notes and the B3 rating on the 9% senior unsecured notes. The
ratings for the proposed financings assume that the tender offer
will be successful, the desired consents obtained and that the
acquisition and associated financing transactions will close as
contemplated. At such time, Moody's ratings for Aleris's
existing debt will be withdrawn. The ratings outlook is
negative.
ALERIS INT: Texas Pacific Merger Cues Moody's to Review Ratings
---------------------------------------------------------------
Moody's Investors Service placed Aleris International Inc's
ratings (B1 corporate family rating) under review for possible
downgrade. This review is prompted by the company's
announcement yesterday of a merger agreement with Texas Pacific
Group. The agreement provides for TPG to acquire Aleris in a
transaction valued at roughly US$3.3 billion, including existing
debt to be assumed or repaid of US$1.6 billion.
These ratings are placed under review for possible downgrade:
On Review for Possible Downgrade:
Aleris Deutschland Holding GMBH
-- Senior Secured Bank Credit Facility: Ba3,
Aleris International, Inc.
-- Corporate Family Rating: B1, and
-- Senior Secured Bank Credit Facility: Ba3.
All ratings outlook have been changed to rating under review
from negative.
Moody's review will focus on the capital structure of Aleris
post merger, the additional debt that might be incurred to
finance the transaction and the company's debt servicing
capabilities. Moody's review will also focus on the strategic
business impact that might result and the growth objectives of
the company going forward. The transaction, which remains
subject to regulatory, shareholder and other approvals, is not
expected to close until early 2007.
Aleris, headquartered in Beachwood, Ohio, had revenues of US$2.4
billion in 2005. LTM March 31, 2006 pro-forma revenues for the
acquisitions made by Aleris in late 2005 and for the acquisition
of select aluminum assets of Corus Group plc were US$4.7
billion.
CEMIG DISTRIBUCAO: Moody's LatAm Rates BRL250MM Debentures at B1
----------------------------------------------------------------
Moody's America Latina assigned a B1 global local currency
rating and a Baa2.br National Scale Rating to Cemig Distribucao
S.A.'s proposed issuance of approximately BRL250 million senior
unsecured debentures due 2014 guaranteed by Companhia Energetica
de Minas Gerais -- Cemig, in exchange for the outstanding senior
unsecured debentures issued by Cemig in June 2004.
Simultaneously, Moody's has placed the ratings of Cemig on
review for possible upgrade.
The placement of the ratings under review for possible upgrade
reflects Moody's view of Cemig's improved corporate governance
and strengthened credit metrics on a consolidated basis as a
result of its stronger cash flow generation, improved debt
maturity profile and liquidity position. The review of Cemig's
ratings will focus on the company's ability to sustain its
current cash flow metrics over the next few years.
In line with the regulatory framework that requires integrated
energy utilities to separate the distribution business from the
generation and transmission operations, on January 1, 2005,
Cemig transferred its energy distribution assets to a newly
created subsidiary CEMIG-D, while the power generation and
transmission assets were transferred to Cemig Geracao e
Transmissao S.A., with Cemig ending up as an investment holding
company.
The transfer of Cemig's distribution assets was previewed in the
indenture of the debentures issued in 2004, which included a
provision of mandatory exchange for new debentures with
identical terms and conditions to be issued by the new
operational subsidiary, with the guarantee of Cemig. The
exchange was subject to the previous formal approval by the
regulator ANEEL of the transfer of the concession contract to
CEMIG-D, which happened in October 2005.
The Baa2.br National Scale Rating assigned to CEMIG-D's
debentures reflects the standing of the company's credit quality
relative to its domestic peers. Moody's NSRs are intended as
relative measures of creditworthiness among debt issues and
issuers within a country, enabling market participants to better
differentiate relative risks. NSRs in Brazil are designated by
the ".br" suffix. NSRs differ from global scale ratings in that
they are not globally comparable to the full universe of Moody's
rated entities, but only with other rated entities within the
same country.
With 51% of its voting shares directly and indirectly owned by
the Government of the State of Minas Gerais, CEMIG is a
government-related issuer in accordance with Moody's rating
methodology entitled "The Application of Joint Default Analysis
to Government-Related Issuers". Moody's methodology for GRIs
systematically incorporates into the rating the company's stand-
alone credit risk profile or Baseline Credit Assessment as well
as the likelihood that a government would provide extraordinary
support to that company's debt obligations. The rating of CEMIG
results from the application of a joint-default analysis of the
company's BCA, the B2, positive outlook rating of the State of
Minas Gerais, and Moody's view of dependence (the likelihood
that both entities would default at the same time), and the
probability of extraordinary support from the controlling
shareholder. The BCA of a GRI is expressed on a 1-21 scale or
as a range within the 1-21 scale, according to the issuer's
preference, where 1 represents the equivalent risk of a Aaa, 2 a
Aa1, 3 a Aa2 and so forth. Cemig's ratings incorporate a BCA
that is currently 14.
Headquartered in Belo Horizonte, Brazil, Companhia Energetica de
Minas Gerais -- Cemig is a holding company with investments in
companies engaged in electricity generation, transmission and
distribution. Its subsidiary Cemig Distribuicao holds the
concession to distribute electric energy in about 96% of the
territory of the state of Minas Gerais, the third largest state
in Brazil by GDP. Cemig reported consolidated net revenues of
BRL8,284 million (US$3,569 million) in the last twelve months
ended March 31, 2006.
COMPANHIA FOCA: Revenues Up 23% in First Five Months of 2006
------------------------------------------------------------
The consolidated gross operating revenue of Companhia Foca E Luz
Cataguazes-Leopoldina rose by 23% in the first five months of
2006 as compared to the same period last year, reaching BRL936.5
million. The best results were recorded by the subsidiaries:
-- Energipe, whose revenue rose by 23.3%;
-- CELB with increase in revenue of 21.6%; and
-- Saelpa, whose revenue rose by 28.7%
due to the higher energy consumption by the residential and
commercial classes. Of the amount of revenue recorded, BRL51.6
million obtained from the use of the transmission and
distribution system or TUSD by free consumers, as compared with
BRL29.8 million in the same period in the prior year. If the
demand by free consumers is considered, the consumption of
electricity in the first five months of 2006 in the concession
areas of the companies comprising the Sistema Cataguazes-
Leopoldina amounts to 2,861 GWh, reflecting an increase of 5.3%
in comparison to the demand recorded in the same period in 2005.
On June 18, 2006, the National Electric Energy Agency -- Aneel
ratified the annual adjustment to the electric energy supply
tariffs charged by Cataguazes-Leopoldina and its subsidiary
Companhia de Eletricidade de Nova Friburgo or CENF of 19.43% and
7.44% respectively, with immediate effect. The monetary
correction on the uncontrollable costs was 13.42% for CFLCL and
5.94% for CENF.
In continuation of the vertical disintegration process, on June
28, 2006, the Board of Directors unanimously authorized Energipe
to cancel its listed company status. It accordingly authorized
Energipe to acquire all of its shares in circulation on the
market, amounting to 132 shares, that is, just 0.12% of its
total capital. Energipe management has applied to the CVM -
Brazilian Securities Commission for permission to adopt the
procedures to make the share acquisition offering and to waive
the requirement to make a public offering to acquire said
shares, as provided by article 34 of CVM Directive 361/2002.
The other terms of the share acquisition offering are being
examined by the CVM and will be disclosed to the shareholders
and the market in due course.
* * *
As reported by Troubled Company Reporter on Nov. 9, 2005,
Standard & Poor's Ratings Services assigned its 'B+' foreign and
local currency corporate credit rating to Brazil-based electric
distribution company Companhia Forca e Luz Cataguazes-Leopoldina
in its global scale. The company's rating in Brazil national
scale is 'brBBB+'. The outlook is negative.
COMPANHIA SIDERURGICA: Fitch Assigns BB+ Foreign Issuer Rating
--------------------------------------------------------------
Fitch Ratings views the proposed merger of Companhia Siderurgica
Nacional's or CSN North American operations with those of
Wheeling-Pittsburgh Corporation or WPSC to be neutral to CSN's
credit quality. Fitch's rating of CSN include:
-- Foreign currency Issuer Default Rating: 'BB+';
-- Local currency IDR: 'BBB-';
-- National scale rating: 'AA (bra)';
-- Senior unsecured notes 'BB+'; and
-- Brazilian Real denominated debentures: 'AA (bra)'.
According to the announced agreement, CSN will contribute its
cold rolling and galvanizing lines in Indiana and WPSC will
contribute its U.S. operations. CSN will also provide US$225
million of financing that will be used to increase the new
entities galvanizing and hot rolling capacity. On a pro-forma
basis, the new company will have 2.8 million tons of crude steel
capacity, 4 million tons of hot-rolling capacity, 900,000 tons
of cold-rolling capacity and 700,000 tons of galvanizing
capacity.
The announced agreement is subject to the expiration of a 'right
to bid' period that is held by the United Steelworkers through
their collective bargaining agreement and the approval of
Wheeling-Pittsburgh's shareholders at their annual meeting on
Nov. 17, 2006. If these two steps occur, Wheeling-Pittsburgh's
shareholders would own 50.5% of the new company, while CSN's
shareholders would own 49.5%. If CSN's US$225 million loan is
converted into equity, contingent upon the approval of the USW,
CSN's ownership of the new company would increase to 64%.
Strategically, Fitch views the proposed transaction as positive
for CSN, as it should improve the company's ability to export
slabs to the U.S. market. Increased access to the U.S. market
is crucial to CSN, as it plans to increase slab production by 6
million tons per year within the next five years. The new
company will also be able to provide CSN's Indiana rolling mill
with hot-rolled steel. From a credit perspective, the
transaction is slightly leveraging to CSN's overall credit
profile, as the new entity will have about US$400 million of
existing WPSC debt and assuming CSN's US$225 million loan to the
new company will be converted to equity within the next three
years. Conversion of the loan into equity, and thus the
financial consolidation of the new entity, remains uncertain.
As of March 31, 2006, CSN had BRL8.8 billion (US$4.0 billion) of
total debt and BRL5.0 billion (US$2.3 billion) of cash in
marketable securities. During the first quarter of 2006, the
company generated BRL948 million of EBITDA, a sharp decline from
BRL1.4 billion of EBITDA during the first quarter of last year.
The fall in the CSN's cash generation was a result of an
accident at one of the company's blast furnaces in January 2006.
This accident will also affect the company's second quarter
results and will result in its 2006 EBITDA dropping
substantially from BRL4.6 billion (about US$1.9 billion) in
2005. While the company expects to recover most of the loss
profit through insurance settlements, to date, only about US$100
million has been received.
Within the next four years CSN's credit profile will come under
pressure due to an aggressive capital expenditure program. This
program includes US$3.6 billion of investments in four new blast
furnaces that will be capable of producing 6 million tons of
steel slabs annually and USD1.5 billion for the expansion of the
company's iron ore mine to 53 million tons per year from 12
million tons, the construction of two pelletizing plants and the
expansion of the company's port facilities at Sepetiba. Absent
extremely robust iron ore and steel prices, CSN will need to
take measures such as selling part of its iron ore business to a
partner, decreasing dividends and share repurchases to maintain
its existing ratings.
With annual production capacity of 5.8 million tons of crude
steel, CSN ranks as one of the largest steel producers in Latin
America. The company's fully integrated steel operations,
located in the state of Rio de Janeiro in Brazil, produce steel
slabs and hot- and cold-rolled coils and sheets for the
automobile, construction and appliance industries, among others.
CSN also holds leading market shares in the galvanized and tin-
mill products segments.
DRESSER-RAND: Reports Net Income of US$10.7MM in Second Quarter
---------------------------------------------------------------
Dresser-Rand Group Inc. disclosed net income of US$10.7 million,
or US$0.13 per diluted share, for the second quarter 2006. This
compares to a net loss of US$1.5 million, or US$0.03 per diluted
share, for the second quarter 2005.
Second quarter 2006 earnings included a non-cash, stock-based
compensation expense for the vesting of exit units of
approximately US$0.14 per diluted share, net of tax. In
connection with the acquisition of the Company in 2004 by
Dresser-Rand Holdings, LLC, Holdings issued "exit units" to
certain members of management that permitted them to participate
in appreciation of the Company's common stock. In connection
with the recent sale of the Company's common stock by Holdings,
the Company was required under SEC rules to recognize non-cash,
stock-based compensation expense related to these "exit units".
The expense had no effect nor will it have any effect in the
future on the Company's cash or common stock.
Vincent R. Volpe, Jr., President and Chief Executive Officer of
Dresser- Rand, said, "Our second quarter 2006 results were in-
line with the guidance we previously provided and were solid in
terms of bookings and backlog. Revenues increased 40%,
operating income doubled (excluding the exit unit expense) and
our backlog grew 20% over the year ago period. We continue to
benefit from strong industry fundamentals, a leading market
position and the positive effects of operating leverage from
higher volume and improving prices for our equipment, parts and
services."
Revenues for the second quarter 2006 of US$424.0 million
increased US$121.5 million or 40% compared to US$302.5 million
for the second quarter 2005. Total operating income for the
second quarter 2006 was US$27.2 million including US$16.8
million non-cash expense for the exit units mentioned above.
This compares to operating income of US$20.8 million for the
second quarter 2005. Second quarter 2006 operating income
increased from the year ago quarter due to volume leverage and
improved pricing.
Bookings for the second quarter 2006 were US$434.1 million,
which was US$137.4 million or 46% higher than the second quarter
2005. Bookings for the twelve months ended June 30, 2006 were a
record level of US$1,498.5 million compared to US$1,337.1
million for the twelve months ended June 30, 2005. The backlog
at the end of June 2006 was a record US$1,013.1 million or 20%
higher than the backlog at the end of June 2005.
Provision for Income Taxes
The provision for income taxes was US$8.2 million and US$14.4
million for the three months and the six months ended June 30,
2006, respectively. The income tax provision for the three
months ended June 30, 2006 resulted from the difference between
the required provision for the six months ended June 30, 2006,
and that previously provided for the three months ended March
31, 2006. The US$16.8 million non-cash, stock based
compensation expense was not included in calculating the
effective tax rate of 33.3% used in the first quarter 2006. The
effective tax rate for the three and six months ended June 30,
2006 of 43.5% and 38.5%, respectively, was higher than the U.S.
federal statutory rate primarily because the stock-based
compensation expense for the vesting of exit units was not tax
deductible.
New Units
New unit revenues for the second quarter 2006 of US$248.3
million increased US$100.1 million from the second quarter 2005.
Continued strength in worldwide demand for rotating equipment
contributed to the increase in revenue compared to the
corresponding period in 2005.
New unit operating income was US$14.6 million for the second
quarter 2006 compared to operating income of US$2.4 million for
the second quarter 2005. This segment's operating margin was
5.9% compared to 1.6% for the second quarter 2005. The increase
from the corresponding period in 2005 was attributable to
operating leverage from higher volume and higher pricing.
Bookings for the three months ended June 30, 2006 of US$232.2
million were 64% higher than the bookings for the corresponding
period in 2005. The record backlog at June 30, 2006 of US$739.5
million was 8% above the US$682 million backlog at June 30,
2005. This increase was due to continuing strong worldwide
demand for rotating equipment.
The refinery market has been strong in recent years and, because
of the current high utilization rates and planned capacity
increases, this market is expected to continue to grow.
Dresser-Rand was recently selected as the sole source supplier
of compression equipment for Shell's Motiva refinery expansion
project. This represents approximately US$100 million of
equipment orders to be released the latter part of this year and
early next year. None of these orders are currently in our
backlog.
Aftermarket Parts and Services
Aftermarket parts and services revenues for the second quarter
2006 was US$175.7 million compared to US$154.3 for the second
quarter 2005.
Aftermarket operating income for the second quarter 2006 was
US$45.5 million compared to US$30.9 million for the second
quarter 2005. This segment's operating margin of approximately
25.9% compared to 20.1% for the second quarter 2005. The
increase from the corresponding period in 2005 was attributable
to operating leverage from higher volume and higher pricing for
parts and services.
Bookings for the three months ended June 30, 2006 of US$201.9
million were 30% above bookings for the corresponding period in
2005. The backlog at June 30, 2006 of US$273.6 million was 71%
above the US$160.3 million backlog at June 30, 2005.
Liquidity and Capital Resources
As of June 30, 2006, cash and cash equivalents totaled US$49.0
million and borrowing availability under the US$350 million
revolving credit portion of the Company's senior credit facility
was US$174.5 million, as US$175.5 million was used for
outstanding letters of credit.
In first six months of 2006, cash provided by operating
activities was US$6.9 million, which compared to US$188.4
million for the corresponding period in 2005. The decrease of
US$181.5 in net cash provided by operating activities was
principally from changes in working capital. In the first six
months of 2006, capital expenditures totaled US$8.7 million,
approximately 1.2% of total revenues. As of June 30, 2006,
total debt was US$553.0 million and total debt net of cash and
equivalents was approximately US$504.0 million. The Company
anticipates that during the second half of 2006, operations will
generate strong cash flows.
On June 13, 2006, Moody's Investors Service upgraded 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 subordinated notes from B3 to B2, with a
stable ratings outlook. In its news release, Moody's said "the
ratings are supported by a degree of cyclical dampening provided
by the after-market parts and services, DRC's long-standing
client alliances, and the mission critical nature of its
products and services. The ratings also reflect other
conditions supportive of the demand for DRC's products and
services. These include supportive oil prices at least through
2006, rising compression and other equipment orders for the
downstream refining segment of the industry that should be less
sensitive to oil and gas prices, and new product lines
responding to the secular demand for quieter, environmentally
sensitive, more energy efficient equipment."
Board of Directors
As a result of the sale of the Company's common stock by
Holdings, an affiliate of First Reserve Corporation, Holdings is
no longer a controlling entity. As a result, the Company is no
longer a controlled company under applicable rules of the New
York Stock Exchange and the Securities Exchange Commission. In
connection with compliance with director independence rules of
the NYSE and the SEC, the Company made the following changes to
its board and related committees.
The Company recently named Jean-Paul Vettier as a new
independent member of the Company's Board of Directors,
effective July 24, 2006.
Thomas J. Sikorski has been a member of the Company's Board of
Directors since the acquisition in October 2004 and has served
on the nominating and corporate governance committees. Mr.
Sikorski is a Managing Director of First Reserve and resigned
from the Company's Board effective August 1, 2006.
Kenneth W. Moore has also been a member of the Company's Board
of Directors since the acquisition in October 2004 and served on
the audit and compensation committees. Mr. Moore is a Managing
Director of First Reserve and will remain on the Company's Board
but stepped down from the audit and compensation committees
effective August 1, 2006.
Mark A. McComiskey has also been a member of the Company's Board
of Directors since the acquisition in October 2004 and served on
the audit and compensation committees. Mr. McComiskey is a
Managing Director of First Reserve and will remain on the
Company's Board and the audit and compensation committees but
has stepped down as Chairman of the compensation committee
effective August 1, 2006.
Philip R. Roth, who has been a member of the Company's Board of
Directors since December 2005 and serves as a member of the
Board's audit committee, joined the nominating and corporate
governance committee and serve as Chairman, also effective
August 1, 2006.
Louis A. Raspino, who has served as a member of the Company's
Board of Directors and audit committee since December 2005, has
been appointed to the compensation committee and will serve as
Chairman of that committee.
Vincent R. Volpe, Jr., the Company's President and Chief
Executive Officer and a Director, has resigned from the
compensation committee and nominating and corporate governance
committee, effective on August 1, 2006.
As a result of these changes, the Board of Directors consists of
eight members including four independent directors, and each of
the audit, compensation, and nominating and corporate governance
committees will be comprised of a majority of independent
directors.
Outlook
Demand for rotating equipment and aftermarket parts and services
continue to be strong. The backlog of orders has continued to
increase to record levels. At June 30, 2006, 46% of the backlog
at June 30, 2006 of US$1,013.1 million is scheduled to ship
during 2007.
The Company expects third quarter 2006 earnings per share to be
in the range of US$0.25 to US$0.27. This assumes no further
vesting of exit units, no debt prepayments and an effective tax
rate of 38.5%.
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.
PETROLEO BRASILEIRO: Discloses Manati Drilling Test Results
-----------------------------------------------------------
The first two wells Petroleo Brasileiro S.A. aka Petrobras and
its partners have drilled at the Manati Field, in the Camamu
Basin, Southern Bahia, have together resulted in a flow of
approximately 1,800,000 cubic meters of natural gas and 60 cubic
meters of oil condensate a day.
The first production tests confirmed the major potential of the
Sergi Formation reservoirs, where the field is located.
Petrobras, in a consortium with Queiroz Galvao and Rio das
Contas (belonging to the Norwegian Norse Energy group), operates
the project.
The Manati field is expected to start producing in September.
Initially, the first two wells will contribute with about
2,000,000 cubic meters of gas a day, while in the future, they
may reach a maximum capacity of 3,000,000 cubic meters a day.
The Manati Project foresees drilling a total of seven wells and
is predicted to produce some 6,000,000 cubic meters of natural
gas a day as of 2007, decisively contributing to consolidating
the gas market in Northeastern Brazil.
In order for the field to go into operation, a fixed shallow-
water production platform, 125 km of gas pipelines, and a gas
treatment station are being installed in the Sao Francisco do
Conte municipality. The construction work is in its final phase.
Headquartered in Rio de Janeiro, Brazil, Petroleo Brasileiro
S.A. aka Petrobras was founded in 1953. The company explores,
produces, refines, transports, markets, distributes oil and
natural gas and power to various wholesale customers and retail
distributors in the country.
* * *
Petroleo Brasileiro SA's long-term corporate family rating is
rated Ba3 by Moody's and its foreign currency long-term debt is
rated BB- by Fitch.
* * *
As reported in the Troubled Company Reporter on April 26, 2006,
in conjunction with the roll out of Issuer Default Ratings and
Recovery Ratings for Latin America Corporates, Fitch Ratings has
taken rating actions on Petroleo de Brasileiro SA. These
ratings were affected:
Foreign Currency:
-- Previous Rating: 'BB-'
-- New RR: 'BB', Rating Outlook Positive
US$2.5 billion, Senior Unsecured Notes due 2008, 2013, 2014
and 2018:
-- Previous Rating: 'BB-'
-- New IDR: 'BB+'
PETROLEO BRASILEIRO: Plans US$12.1 Billion in Investments Abroad
----------------------------------------------------------------
Petroleo Brasileiro aka Petrobras' International Area Director,
Nestor Cervero, presented the company's international
performance business strategies, investment plans, and corporate
goals as foreseen in the company's 2007-2011 Business Plan to
the Brazilian and the foreign press.
According to Mr. Cervero, between 2007 and 2011, Petrobras will
invest US$12.1 billion abroad, US$5.4 billion more than the
2006-2010 plan had foreseen. The Exploration & Production
activities abroad will get 70,2% of the investments.
"The International Area will focus on Western Africa
(particularly Nigeria and Angola), and on the Gulf of Mexico,
because of the deep water exploration perspectives in those
regions," highlighted the director.
The second biggest part of the investments -- 24.8% -- will be
directed to the refining and marketing activities. Mr. Cervero
said the plan also foresees investments in the petrochemicals,
distribution, and in the gas & energy segments.
Of the US$12.1 billion,
-- 28% (US$3.3 billion) will be allocated in Latin America,
-- 23% (US$2.8 billion) in North America,
-- 16% (US$2 billion) in Africa, and
-- 33% (US$4 billion) in new projects.
Petrobras' corporate strategy in its 2007-2011 Business Plan is
to achieve leadership in the oil, natural gas, byproduct, and
biofuel market in Latin America, performing as an integrated
energy company with selective expansion in petrochemicals,
renewable energy, and in international activities.
So far as Bolivia is concerned, Mr. Cervero said the company's
plan determines continuing fulfilling the take-or-pay agreement
for natural gas imports, which expires in 2019. The plan
foresees the purchase of a daily volume of 24,000,000 cubic
meters, which may even go as high as 30,000,000 cubic meters a
day.
The corporate goals for the International Area project is to
produce 568,000 barrels of oil equivalent a day by 2011, a
growth of nearly 119% compared to the 2005 results. Currently,
Petrobras is producing 259,000 boe.
Headquartered in Rio de Janeiro, Brazil, Petroleo Brasileiro
S.A. aka Petrobras was founded in 1953. The company explores,
produces, refines, transports, markets, distributes oil and
natural gas and power to various wholesale customers and retail
distributors in the country.
* * *
Petroleo Brasileiro SA's long-term corporate family rating is
rated Ba3 by Moody's and its foreign currency long-term debt is
rated BB- by Fitch.
* * *
As reported in the Troubled Company Reporter on April 26, 2006,
in conjunction with the roll out of Issuer Default Ratings and
Recovery Ratings for Latin America Corporates, Fitch Ratings has
taken rating actions on Petroleo de Brasileiro SA. These
ratings were affected:
Foreign Currency:
-- Previous Rating: 'BB-'
-- New RR: 'BB', Rating Outlook Positive
US$2.5 billion, Senior Unsecured Notes due 2008, 2013, 2014
and 2018:
-- Previous Rating: 'BB-'
-- New IDR: 'BB+'
TAM S.A.: Releases Operating Data for July 2006
------------------------------------------------
TAM S.A. reports operating data for July 2006, as disclosed by
the National Civil Aviation Agency or ANAC. According to the
ANAC, TAM registered a 21.6% growth in domestic RPK (demand)
compared to the same period last year, and a 18.8% increase in
domestic ASK (supply). In July, market demand decreased by 0.9%
and market supply decreased by 2.7%. In the international
market, TAM registered a 38.2% growth in RPK and 32.3% in ASK,
compared to July 2005.
TAM's domestic load factor was 81.2%, representing 1.8 p.p.
growth compared to July 2005 and higher than the 80.2% market
average. Regarding the international load factor, TAM reached
85.2%, a 3.7 p.p. growth, higher than the market average 81.2%.
TAM registered a domestic market share (RPK) of 51.2%, a 9.5
p.p. growth compared to the same period in 2005 and 3.6 p.p.
compared to June 2006. Regarding the international market, the
company reached a market share of 52.6%, representing a 31.9
p.p. growth year on year and 14.7 p.p. compared to June 2006.
The domestic scheduled yield in July is aligned with 1Q06.
Operating data Jul-2006 Jul-2005 Var. %
Domestic Market
ASK (millions) - Supply 2,301 1,936 18.8%
RPK (millions) - Demand 1,867 1,536 21.6%
Load Factor 81.2% 79.3% 1.8 p.p.
Market share 51.2% 41.8% 9.5 p.p.
International Market
ASK (millions) - Supply 831 629 32.3%
RPK (millions) - Demand 708 512 38.2%
Load Factor 85.2% 81.5% 3.7 p.p.
Market share 52.6% 20.7% 31.9 p.p.
About TAM
TAM S.A. -- http://www.tam.com.br/-- operates regular flights
to 47 destinations throughout Brazil. It serves 72 different
cities in the domestic market through regional alliances.
Additionally, it maintains code-share agreements with
international airline companies that allow passengers to travel
to a large number of destinations throughout the world. TAM was
the first Brazilian airline company to launch a loyalty program.
Currently, the program has over 3.3 million subscribers and has
awarded more than 3.6 million tickets.
* * *
Fitch assigned on Aug. 8, 2006, foreign currency and local
currency Issuer Default Ratings of 'BB' to TAM S.A. Fitch has
also assigned a national scale rating of 'A+' (bra)' to TAM.
Fitch said the Rating Outlook is Stable.
TAM SA: Fitch Assigns BB Foreign & Local Currency Issuer Ratings
----------------------------------------------------------------
Fitch has assigned foreign currency and local currency Issuer
Default Ratings of 'BB' to TAM S.A. Fitch has also assigned a
national scale rating of 'A+' (bra)' to TAM. The Rating Outlook
is Stable.
The ratings reflect the company's market leading position in the
Brazilian air passenger transportation sector, adequate leverage
indicators and positive free cash flow generation. The ratings
also reflect the company's exposure to fluctuations in jet fuel
prices and exchange rates, the strong correlation of its
activities with the performance of the domestic economy, high
operating leverage and competitive threats. The ratings
incorporate TAM's fleet expansion plans and the company's
intention to maintain conservative leverage ratios.
The Brazilian passenger air transportation market has undergone
significant changes over the past several years, underpinned by
the recovery of demand for air travel services, the financial
difficulties of Varig S.A. and the collapse of Viacao Aerea Sao
Paulo or VASP. Taking advantage of the inefficiencies of these
operators, TAM has captured market-share and consolidated its
leading position without surrendering profitability and
discipline in its capital structure. The company has also
changed strategic focus from a traditional 'premium service' to
a lower-cost operator, while maintaining service quality and
fare differentiation against its main competitor in the domestic
market. As part of these changes, TAM reformulated its fleet to
incorporate newer more efficient aircraft, concentrated efforts
on operating cost-reduction and improved yield management. Over
the next several years, TAM will face new challenges, as it will
need to maintain market leadership in a strongly competitive
environment with a main competitor that has a lower cost
structure and has announced an aggressive fleet expansion
program.
Over the past several years, revenues have grown strongly,
profit margins have improved and the company has maintained
positive cash generation. Revenue growth has been supported by
the exit from the market of other operators, market share loss
by Varig and the recovery of the Brazilian passenger air travel
market. During 2005, the number of passengers transported by
TAM increased by 45% and the company's load factor reached
70.6%, well above the break-even load factor of 65%. TAM has
been able to enhance its cost structure by raising the capacity
utilization rate, operating new aircraft with lower maintenance
costs and fuel consumption and reducing commercial expenses.
The RASK (revenue per available seat kilometer) - CASK (cost per
available seat kilometer) spread improved to BRL1.6 in 2005 from
BRL0.80 cents in 2003. Excluding the effects of fuel costs, the
CASK fell by 16% in 2005 from 2004. In 2005, cash generation
measured by EBITDAR reached BRL1.1 billion, up from BRL702.2
million in 2003.
The company has a moderate capital structure compared to the
industry average. At Dec. 31, 2005, total on-balance sheet debt
reached BRL641.3 million, primarily related to long-term
equipment leases and working capital. Total adjusted debt
including operating leases reached BRL5.7 billion as the entire
aircraft fleet is leased. For the year ended Dec. 31, 2005 the
ratio of total adjusted debt to EBITDAR ratio was 5.1x and the
ratio of EBITDAR to interest and lease expenses was 1.9x, levels
that are consistent with the rating category.
TAM's expansion plan contemplates the incorporation of 31 new
aircraft between 2006 and 2010, all of which will be leased.
The company's strategy to lease all its aircraft allows it to
limit cash disbursements, maintain financial flexibility and
adjust rapidly to changes in passenger demand. TAM has a
contract outstanding with Airbus for the delivery of 29 A319/320
aircraft by 2010 with an option to another 20. In addition, it
also has a preliminary agreement for the delivery of 37
additional A319/320/330 aircraft by 2010. The company currently
operates a fleet of 86 aircraft with an average life of 7.5
years, comprised of 22 Fokker 100, 54 A319/320 and 10 A330.
Over the next several years, total adjusted debt is expected to
grow as TAM incorporates new capacity under long-term lease
contracts. On balance-sheet debt should increase by the end of
2006 in connection with the issuance of debentures in the
domestic market for BRL500 million and an IFC loan for BRL32
million that is expected to close by the end of the year.
Proceeds from these transactions will be used to finance
aircraft maintenance. Total adjusted debt to EBITDAR should
range between 3.5x and 4.5x over the next few years as higher
debt is offset by expected increases in EBITDAR.
TAM seeks to maintain a cash position of approximately three
times monthly revenue (equivalent to approximately BRL1.4
billion) to cover itself against short term refinancing risk and
sector volatility. At March 31, 2006 the company had a balance
of cash and marketable securities of BRL 1.2 billion, of which
BRL593.5 million was related to the proceeds of the Initial
Public Offering of TAM's shares in the domestic market during
July 2005 and March 2006, which the company plans to keep in
cash.
TAM is a holding company that operates through its subsidiaries
TAM Linhas Aereas and TAM Mercosur. The company offers regular
air passenger transportation services in Brazil and abroad. It
covers the entire territory of Brazil, serving 47 national
destinations directly and an additional 26 destinations through
regional alliances with other airline companies. TAM also
serves 11 international destinations and offers connections to
several cities outside Brazil through agreements with American
Airlines and Air France.
VARIG: Expanding Fleet to 45 Airplanes by Year-End, Volo Says
-------------------------------------------------------------
Brazil's ailing local flagship airline Varig SA intends to
expand its depleted fleet to 45 airplanes from 12 by the end of
year, a representative for Volo do Brasil, the company's new
owner, said late Thursday, according to the Estado newswire.
The company will start with 1,700 workers but this figure could
rise to 5,400 by the end of the year, Estado quoted Marco
Antonio Audi, director of the Volo investment group, which
includes U.S. investment fund Matlin Paterson.
On Friday, Varig announced it would cut 5,500 of the airline's
9,485 staff in Brazil with limited redundancy payments.
Currently it is only operating a small portion of its routes.
Volo, which is also owner of Varig's former cargo subsidiary
VarigLog, bought Varig at auction last month, rescuing the
former flagship airline from possible bankruptcy. Volo has
pledged US$500 million to allow the company to pay operating
debts.
Mr. Audi told Estado that the company is studying the
possibility of leasing planes from Airbus and Brazil's Embraer.
Currently, Varig has an all-Boeing fleet. He said Varig would
fly between Brazil's main cities and internationally to Buenos
Aires, Caracas and Frankfurt routes. Later, Varig would look at
once again flying to London and Milan.
The sale to Volo must still be approved by the National Civil
Aviation Authority. Local airline representatives have
questioned the deal because of the involvement of Matlin
Paterson. Under Brazilian law, foreign investors can own no
more than 20% of local airlines.
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.
===========================
C A Y M A N I S L A N D S
===========================
ACTIVE FUND: Creditors Have Until Aug. 28 to Submit Claims
----------------------------------------------------------
Active Fund's creditors are required to submit proofs of claim
by Aug. 28, 2006, to the company's liquidators:
David A.K. Walker
Lawrence Edwards
PricewaterhouseCoopers
Strathvale House, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Aug. 28 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Active Fund's shareholders agreed on July 6, 2006, for the
company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Miguel M. Brown
P.O. Box 258, George Town
Grand Cayman, Cayman Islands
Tel: (345) 914 8665
Fax: (345) 949 4590
ARKLET LIMITED: Will Hold Final Shareholders Meeting on Aug. 28
---------------------------------------------------------------
Arklet Limited's final shareholders meeting will be at 10:00
a.m. on Aug. 28, 2006, at:
Walker House
Mary Street, 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:
Liquidation Services (Cayman) Limited
Walker House, Mary Street
P.O. Box 908GT, George Town
Grand Cayman, Cayman Islands
CLOVA LIMITED: Holding Final Shareholders Meeting on Aug. 28
------------------------------------------------------------
Clova Limited's final shareholders meeting will be at 10:00 a.m.
on Aug. 28, 2006, at:
Walker House
Mary Street, 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:
Liquidation Services (Cayman) Limited
Walker House, Mary Street
P.O. Box 908GT, George Town
Grand Cayman, Cayman Islands
FINGLAS LIMITED: Last Shareholders Meeting Is Set for Aug. 28
-------------------------------------------------------------
Finglas Limited's final shareholders meeting will be at 10:00
a.m. on Aug. 28, 2006, at:
Walker House
Mary Street, George Town
Grand Cayman, Cayman Islands
These 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:
Liquidation Services (Cayman) Limited
Walker House, Mary Street
P.O. Box 908GT, George Town
Grand Cayman, Cayman Islands
HARPOON (ADVISORS): Proofs of Claim Must be Submitted by Sept. 1
----------------------------------------------------------------
Harpoon Offshore Advisors, Inc.'s creditors are required to
submit proofs of claim by Sept. 1, 2006, to the company's
liquidator:
Phil Cooper
P.O. Box 265GT, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 1 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Harpoon Offshore's shareholders agreed on Aug. 7, 2006, for the
company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Robert Gardner
P.O. Box 265GT, George Town
Grand Cayman, Cayman Islands
Tel: 345 914-6332
Fax: 345 814-8332
HARPOON (HOLDINGS): Claims Filing Deadline Is Set for Sept. 1
-------------------------------------------------------------
Harpoon Offshore Holdings Advisors, Inc.'s creditors are
required to submit proofs of claim by Sept. 1, 2006, to the
company's liquidator:
Phil Cooper
P.O. Box 265GT, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 1 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Harpoon Offshore's shareholders agreed on Aug. 7, 2006, for the
company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Robert Gardner
P.O. Box 265GT, George Town
Grand Cayman, Cayman Islands
Tel: 345 914-6332
Fax: 345 814-8332
HARPOON PARALLEL: Last Day to File Proofs of Claim Is on Sept. 1
----------------------------------------------------------------
Harpoon Parallel Fund SPV Advisors, Inc.'s creditors are
required to submit proofs of claim by Sept. 1, 2006, to the
company's liquidator:
Phil Cooper
P.O. Box 265GT, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 1 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Harpoon Parallel's shareholders agreed on Aug. 7, 2006, for the
company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Robert Gardner
P.O. Box 265GT, George Town
Grand Cayman, Cayman Islands
Tel: 345 914-6332
Fax: 345 814-8332
INCOME PARTNERS: Final Shareholders Meeting Is Set for Aug. 28
--------------------------------------------------------------
Income Partners Asian Securitised Assets Fund's shareholders
will convene for a final meeting at 10:00 a.m. on Aug. 28, 2006,
at:
Suites 3311 - 3313
Two International Finance Centre
8 Finance Street, Central, Hong Kong
Accounts on the company's liquidation process will be presented
during the meeting.
The liquidator can be reached at:
Francis Tjia
Suites 3311-3313
Two International Finance Centre
8 Finance Street, Central, Hong Kong
ORACLE DELTA: Creditors Must File Proofs of Claim by Aug. 28
------------------------------------------------------------
Oracle Delta Funding's creditors are required to submit proofs
of claim by Aug. 28, 2006, to the company's liquidators:
Piccadilly Cayman Limited
c/o BNP Paribas Bank & Trust Cayman Limited
P.O. Box 10632 APO
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Aug. 28 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Oracle Delta's shareholders agreed on July 19, 2006, for the
company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Jonathan Dietz
c/o BNP Paribas Bank & Trust Cayman Limited
3rd Floor Royal Bank House
Shedden Road, George Town
Grand Cayman, Cayman Islands
Tel: 345 945-9208
Fax: 345 945-9210
PROSEN LIMITED: Last Shareholders Meeting Is Set for Aug. 28
------------------------------------------------------------
Prosen Limited's final shareholders meeting will be at 10:00
a.m. on Aug. 28, 2006, at:
Walker House
Mary Street, 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:
Liquidation Services (Cayman) Limited
Walker House, Mary Street
P.O. Box 908GT, George Town
Grand Cayman, Cayman Islands
RUBICON ASIA MASTER: Last Day to File Proofs of Claim Is Aug. 28
----------------------------------------------------------------
Rubicon Asia Master Fund Limited's creditors are required to
submit proofs of claim by Aug. 28, 2006, to the company's
liquidators:
David A.K. Walker
Lawrence Edwards
PricewaterhouseCoopers
Strathvale House, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Aug. 28 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Rubicon Asia's shareholders agreed on Dec. 23, 2005, for the
company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Richard Mottershead
P.O. Box 258, George Town
Grand Cayman, Cayman Islands
Tel: (345) 914-8656
Fax: (345) 949-4590
RUBICON ASIA OFFSHORE: Proofs of Claim Must be Filed by Aug. 28
---------------------------------------------------------------
Rubicon Asia Offshore Fund Limited's creditors are required to
submit proofs of claim by Aug. 28, 2006, to the company's
liquidators:
David A.K. Walker
Lawrence Edwards
PricewaterhouseCoopers
Strathvale House, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Aug. 28 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Rubicon Asia's shareholders agreed on Dec. 23, 2005, for the
company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Richard Mottershead
P.O. Box 258, George Town
Grand Cayman, Cayman Islands
Tel: (345) 914-8656
Fax: (345) 949-4590
RUBICON AUSTRALIA MASTER: Proofs of Claim Must Be In by Aug. 28
---------------------------------------------------------------
Rubicon Australia Master Fund Limited's creditors are required
to submit proofs of claim by Aug. 28, 2006, to the company's
liquidators:
David A.K. Walker
Lawrence Edwards
PricewaterhouseCoopers
Strathvale House, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Aug. 28 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Rubicon Australia's shareholders agreed on Dec. 23, 2005, for
the company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Richard Mottershead
P.O. Box 258, George Town
Grand Cayman, Cayman Islands
Tel: (345) 914-8656
Fax: (345) 949-4590
RUBICON AUSTRALIA OFFSHORE: Proofs of Claim Filing Ends Aug. 28
---------------------------------------------------------------
Rubicon Australia Offshore Fund Limited's creditors are required
to submit proofs of claim by Aug. 28, 2006, to the company's
liquidators:
David A.K. Walker
Lawrence Edwards
PricewaterhouseCoopers
Strathvale House, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Aug. 28 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Rubicon Australia's shareholders agreed on Dec. 23, 2005, for
the company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Richard Mottershead
P.O. Box 258, George Town
Grand Cayman, Cayman Islands
Tel: (345) 914-8656
Fax: (345) 949-4590
VIAD EQUITY: Last Day to File Proofs of Claim Is on Aug. 28
-----------------------------------------------------------
Viad Equity Limited's creditors are required to submit proofs of
claim by Aug. 28, 2006, to the company's liquidator:
Westport Services Ltd.
P.O. Box 1111
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Aug. 28 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Viad Equity's shareholders agreed on July 27, 2006, for the
company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Ica Eden
P.O. Box 1111
Grand Cayman, Cayman Islands
Tel: 345 949-5122
Fax: 345 949-7920
VIAD EQUITY INVESTMENTS: Proofs of Claim Filing Is Until Aug. 28
----------------------------------------------------------------
Viad Equity Investments Limited's creditors are required to
submit proofs of claim by Aug. 28, 2006, to the company's
liquidator:
Westport Services Ltd.
P.O. Box 1111
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Aug. 28 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Viad Equity's shareholders agreed on July 27, 2006, for the
company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Ica Eden
P.O. Box 1111
Grand Cayman, Cayman Islands
Tel: 345 949-5122
Fax: 345 949-7920
VIAD INVESTMENTS: Filing of Proofs of Claim Is Until Aug. 28
------------------------------------------------------------
Viad Investments Limited's creditors are required to submit
proofs of claim by Aug. 28, 2006, to the company's liquidator:
Westport Services Ltd.
P.O. Box 1111
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Aug. 28 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Viad Investments' shareholders agreed on July 27, 2006, for the
company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Ica Eden
P.O. Box 1111
Grand Cayman, Cayman Islands
Tel: 345 949-5122
Fax: 345 949-7920
VIAD LTD: Creditors Have Until Aug. 28 to File Proofs of Claim
--------------------------------------------------------------
Viad Limited's creditors are required to submit proofs of claim
by Aug. 28, 2006, to the company's liquidator:
Westport Services Ltd.
P.O. Box 1111
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Aug. 28 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Viad Limited's shareholders agreed on July 27, 2006, for the
company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Ica Eden
P.O. Box 1111, Grand Cayman, Cayman Islands
Tel: 345 949-5122
Fax: 345 949-7920
=========
C H I L E
=========
AES CORP: Ratings Reflect Exposure to Merchant Power Markets
------------------------------------------------------------
Standard & Poor's Ratings Services assigned these ratings on AES
Corp:
-- Long-term foreign issuer credit rating: BB-, and
-- Long-term local issuer credit rating: BB-,
The ratings on AES Corp. reflect its reliance on substantive
distributions from jurisdictions with considerable regulatory
and operating uncertainties and its exposure to merchant power
markets, most notably through its AES Eastern Energy L.P.
(BB+/Stable/--) subsidiary. The ratings also reflect
significant leverage at the parent, which is serviced by
residual distributions from project investments and dividends
from operating subsidiaries. Partly mitigating these weaknesses
are benefits of regional and operational diversification, which
helps to reduce the company's exposure to any one regulatory
regime or commodity. Weaknesses are also offset to an extent by
meaningful reduction of parent-level leverage and resultant
lower interest expense, which mitigates Standard & Poor's
Ratings Services' concern about the distribution stream at the
rating level.
AES still has material weaknesses in its accounting controls
that it needs to address, and although future restatements are
not out of the question, Standard & Poor's believes that the
company has likely resolved its major problems. The company is
assigned a business risk profile score of '8'. (Utility business
risk profiles are categorized from '1' (excellent) to '10'
(vulnerable)).
As of June 30, 2006, the Arlington, Va.-based company had about
US$4.8 billion of recourse debt.
AES's credit ultimately derives from the total quality of the
residual distributions from its subsidiaries and the company's
ability to meet its financial obligations from this diverse
portfolio of energy assets. Standard & Poor's has made this
analytical judgment based on AES' extensive use of nonrecourse
project financing, limited interdependency between the
individual business units, and AES' history of abandoning its
equity investments when the economics of the stand-alone
business unit dictate this course of action. Notwithstanding
the diversification, some of AES' distributions could be highly
variable, given that 2005 distributions included US$107 million
from C.A. La Electricidad de Caracas (B/Stable/--) in Venezuela
and US$85 million from Eastern Energy. Together, these
subsidiaries continue to represent about 20% of distributions
and could be rather volatile.
AES benefits from a stable base of cash flow coming from its
contractual generation businesses and its North American
regulated utility (Indianapolis Power & Light Co.), as well as
from a history of strong operations at its generation and
distribution businesses. Standard & Poor's expects future
investments to be mainly in the contracted or regulated space,
and not as much in the competitive supply business, but for some
of these to possibly be in developing economies or risky
political environments.
AES' 2005 parent-level cash flow (defined by Standard & Poor's
as distributions less operating expenses, development expenses,
and cash taxes) to interest ratio is about 2.1x for the 12-
months ended June 2006, up from 1.6x in June 2005, due primarily
to lower interest expense resulting from debt reduction. Still,
interest coverage improvement has been slower than expected. The
ratio of recourse debt to parent-level capitalization is about
55% as of June 30, 2006, down from 65% as of June 30, 2005.
Parent-level cash flow to recourse debt was nearly 18% in June
2006, up from 16.9% reported in December 2005.
Liquidity
AES' parent-level liquidity stood at about US$645 million, down
from the US$1 billion in March 2006, but higher than levels
through 2005. The increase was largely the result of larger
availability under its credit facilities. In the past, AES
supported AES Eastern's liquidity needs (for LOCs posted to
support its hedging activity), which caused fairly large swings
in liquidity and peaked toward the end of third-quarter 2005 in
the wake of the hurricanes. Standard & Poor's expects the
liquidity requirement at AES to decline as a hedge financing
facility of US$350 million has been exclusively placed to
support the needs of AES Eastern in the future. AES has stated
that it will target about US$500 million of available liquidity
AES' liquidity facilities contain no rating triggers. AES' bank
loans do contain a number of financial covenants, including
parent operating cash flow to corporate charges, as well as
recourse debt to cash flow coverage ratios. As of March 31,
2006, AES was in compliance with these financial covenants.
At the parent level, AES has no debt due in 2006 and 2007, and
repayments are in the range of US$400 million to US$450 million
for 2007 through 2010. In addition, AES' revolving credit
facility matures in 2010.
AES needs to invest in new businesses to maintain and increase
its dividend stream, and continues to maintain an active
development pipeline of potential growth opportunities. The
company's growth project backlog as of March 31, 2006 totaled
2,150 MW and a total investment requirement of about US$2.6
billion. In addition, the company looks to participate in
alternative energy markets such as liquefied natural gas
regasification and wind power generation and has announced plans
to invest US$1 billion over the next three years. Standard &
Poor's expects AES to fund these investments with a judicious
mix of debt (recourse and nonrecourse), equity, and through
monetization of some assets consistent with its portfolio
management strategy. In 2006, AES sold its 50% interest in a
power project in Canada for US$110 million and 7.6% of its
shares in affiliate AES Gener for US$123 million.
Recovery analysis
Standard & Poor's opinion on bankruptcy recovery prospects
reflects in the differentials between the debt ratings and the
corporate credit ratings. Standard & Poor's does not rate AES'
secured bank debt (revolving credit facility and term loan), and
makes no representation regarding its recovery prospects.
Including undrawn bank debt, AES currently has about US$850
million of first-lien debt. AES has capacity for a total of
US$350 million of additional secured (first- or second-lien)
debt. The collateral package consists of 100% of AES' equity
interests in its domestic businesses and 65% of the equity in
its foreign businesses.
Standard & Poor's 'BB-' rating on AES' second-priority notes
reflects that priority debt (i.e., senior secured) is not
substantial enough to warrant a notch down from the corporate
credit rating, but available collateral does not give Standard &
Poor's enough confidence in 100% recovery to warrant an upgrade.
Standard & Poor's 'B' rating on all classes of unsecured debt
(i.e., two notches below the corporate credit rating) and on
AES' trust-preferred securities reflect the large amount of
secured debt that would have priority in recovery in a
bankruptcy scenario.
Outlook
The stable outlook on AES reflects Standard & Poor's expectation
of consistent performance over the next 18 months to 24 months.
Positive ratings momentum would be driven by improving,
sustainable cash distributions to the parent or further debt
reduction. On the other hand, substantial deterioration in cash
flow distributions from a major contributor or the inability to
resolve its accounting issues and related material weaknesses
could lead to a negative outlook.
ARAMARK CORP: Declares US$0.07 Per Share Quarterly Cash Dividend
----------------------------------------------------------------
ARAMARK Corp. has declared a quarterly cash dividend of US$0.07
per share on its Class A and Class B common stock. The dividend
will be payable on Sept. 8, 2006, to ARAMARK shareholders of
record at the close of business on Aug. 18, 2006.
About ARAMARK
Headquartered in Philadelphia, ARAMARK Corp. --
http://www.aramark.com/-- is a leader in professional services,
providing food services, facilities management, and uniform and
career apparel to health care institutions, universities and
school districts, stadiums and arenas, and businesses around the
world. It has approximately 240,000 employees serving clients
in 20 countries, including Mexico, Brazil and Chile.
* * *
Standard & Poor's Ratings Services lowered on Aug. 8, 2006, its
ratings on Philadelphia-based ARAMARK Corp. and its subsidiary,
ARAMARK Services Inc., including its corporate credit rating to
'BB+' from 'BBB-'.
Fitch has downgraded on Aug. 8, 2006, the Issuer Default Rating
and senior unsecured debt ratings for both ARAMARK Corporation
and its wholly owned subsidiary, ARAMARK Services, Inc., to 'BB-
' from 'BBB'. The ratings remain on Rating Watch Negative.
ARAMARK CORP: Inks US$8.3 Billion Merger Pact with Investors
------------------------------------------------------------
ARAMARK Corp. has signed a definitive merger agreement under
which Joseph Neubauer and investment funds managed by GS Capital
Partners, CCMP Capital Advisors and J.P. Morgan Partners, Thomas
H. Lee Partners and Warburg Pincus LLC will acquire ARAMARK in a
transaction valued at approximately US$8.3 billion, including
the assumption or repayment of approximately US$2.0 billion of
debt.
Under the terms of the agreement, ARAMARK stockholders will
receive US$33.80 in cash for each share of ARAMARK common stock
they hold.
The Board of Directors of ARAMARK, on the unanimous
recommendation of a special committee comprised entirely of
independent directors, has approved the agreement and will
recommend that ARAMARK's stockholders approve the merger.
The transaction is expected to be completed by late 2006 or
early 2007, subject to receipt of stockholder approval and
regulatory approvals, as well as satisfaction of other customary
closing conditions. In addition to the vote required under
Delaware law, the transaction will be subject to an additional
affirmative approval of stockholders in which each share owned
by Joseph Neubauer will have only one vote, rather than the ten
votes to which they are entitled. As a result, Mr. Neubauer's
voting power will be less than 5% of the total possible vote.
Joseph Neubauer, ARAMARK Chairman and Chief Executive Officer,
said, "We are proud to partner with this distinguished group of
private equity firms, all of which have outstanding reputations
and proven records of success. They are committed to working
with us in building long-term solutions that deliver the most
value for our clients and customers. They understand our
business, share our mindset, and will be strong partners moving
forward."
Commenting further on the transaction, Mr. Neubauer said, "Our
success is driven by the ongoing efforts of our 240,000
employees around the world. I want to thank them for their
efforts and assure them we will remain focused on sustaining
profitable growth by delivering outstanding environments,
experiences and outcomes for our clients."
The transaction will be financed through a combination of equity
contributed by Joseph Neubauer and investment funds managed by
GS Capital Partners, CCMP Capital Advisors and J.P. Morgan
Partners, Thomas H. Lee Partners and Warburg Pincus LLC, and
debt financing provided by JP Morgan Chase Bank, N.A., J.P.
Morgan Securities, Inc. and Goldman Sachs Credit Partners L.P.
There is no financing condition to the obligations of the group
of investors led by Joseph Neubauer to consummate the
transaction.
Credit Suisse Securities (USA) LLC is acting as financial
advisor to the special committee and Shearman & Sterling LLP is
acting as legal advisor to the special committee. Credit Suisse
has delivered a fairness opinion to the special committee.
Goldman, Sachs & Co. and J.P. Morgan Securities Inc. are acting
as financial advisors to the private equity investors. Simpson
Thacher & Bartlett LLP, Sullivan & Cromwell LLP and Wachtell,
Lipton, Rosen & Katz are acting as legal advisors to the private
equity investors and Joseph Neubauer.
About ARAMARK
Headquartered in Philadelphia, ARAMARK Corp. --
http://www.aramark.com/-- is a leader in professional services,
providing food services, facilities management, and uniform and
career apparel to health care institutions, universities and
school districts, stadiums and arenas, and businesses around the
world. It has approximately 240,000 employees serving clients
in 20 countries, including Mexico, Brazil and Chile.
* * *
Standard & Poor's Ratings Services lowered on Aug. 8, 2006, its
ratings on Philadelphia-based ARAMARK Corp. and its subsidiary,
ARAMARK Services Inc., including its corporate credit rating to
'BB+' from 'BBB-'.
Fitch has downgraded on Aug. 8, 2006, the Issuer Default Rating
and senior unsecured debt ratings for both ARAMARK Corporation
and its wholly owned subsidiary, ARAMARK Services, Inc., to 'BB-
' from 'BBB'. The ratings remain on Rating Watch Negative.
ARAMARK CORP: Fitch Downgrades Issuer & Sr. Debt Ratings to BB-
---------------------------------------------------------------
Fitch has downgraded the Issuer Default Rating and senior
unsecured debt ratings for both ARAMARK Corporation and its
wholly owned subsidiary, ARAMARK Services, Inc., to 'BB-' from
'BBB'. The ratings remain on Rating Watch Negative.
The company announced that its board of directors agreed to
accept a management buyout offer from a group of investors led
by chairman and CEO, Joseph Neubauer, for US$33.80 per share in
cash. The deal is still subject to stockholder approval and
regulatory approval. Per previous company statements, the
transaction is to be financed through equity commitments by the
investors, as well as approximately US$6.3 billion of debt
financing led by Goldman Sachs Credit Partners L.P. and J.P.
Morgan Securities, Inc. The transaction is valued at
approximately US$8.3 billion, including the assumption of
approximately US$2.0 billion in debt.
Given the information available at this time, Fitch believes the
rating will be no higher than 'BB-' and could likely be
downgraded further; a multiple-notch downgrade upon closing of
the transaction is possible. The resolution of Fitch's Rating
Watch will be determined by an evaluation of the ultimate
financing of the purchase price, overall mix of securities in
the capital structure, and free cash flow generating ability of
the post-acquired entity. As part of its rating evaluation,
Fitch anticipates reviewing the company's financial and
operating strategies with ARAMARK's management. As this
transaction demonstrates, existing language in the 2002
indenture does not protect bondholders from a change-in-control
event and does not limit the company's ability to incur
additional indebtedness. The indentures do have covenants that
have limitations on secured debt provisions.
ARAMARK CORP: S&P Lowers Corp. Credit Rating to BB+ from BBB-
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
Philadelphia-based ARAMARK Corp. and its subsidiary, ARAMARK
Services Inc., including its corporate credit rating to 'BB+'
from 'BBB-'.
All ratings remain on CreditWatch with negative implications
where they were placed on May 1, 2006, following an announcement
that ARAMARK's board of directors had received a proposal from a
group of investors led by its Chairman and CEO, Joseph Neubauer,
to acquire all of the outstanding shares of the company, for
US$32 per share in cash. This proposal included commitments
from certain investment banking firms stating that they were
confident about raising the approximately US$6.25 billion of
debt financing necessary to complete the transaction.
The downgrade reflects our assessment that ARAMARK no longer
possesses an investment-grade financial policy following today's
announcement that it has signed a definitive merger agreement
under which a group of investors including Joseph Neubauer will
acquire ARAMARK for US$33.80 per share, plus the assumption or
repayment of approximately US$2.0 billion of debt in a
transaction valued at approximately US$8.3 billion. The
CreditWatch listing reflects our expectation that leverage for
ARAMARK will increase substantially after effecting the
acquisition. While financing details have yet to be disclosed,
a significant amount of the transaction is likely to be financed
with debt, and the corporate credit rating is likely to fall to
the 'B' rating category. The transaction, which is expected to
be completed by late 2006 or early 2007, is subject to receipt
of stockholder and regulatory approvals, as well as satisfaction
of other customary closing conditions.
To resolve the CreditWatch listing, Standard & Poor's will:
-- continue to monitor developments,
-- meet with management to discuss financial policies and
operating strategies, and
-- evaluate the ultimate financing and terms of this
going-private transaction, including the implications
to ARAMARK's existing senior unsecured debt rating.
===============
C O L O M B I A
===============
* COLOMBIA: Private Pension Posts COP38.0 Trillion Assets in May
----------------------------------------------------------------
The private pension system in Colombia reported COP38.0 trillion
combined assets under management at the end of May, Business
News Americas reports, citing regulator Superfinanciera.
Superfinanciera told BNamericas that the assets in May 2006 were
30.5% higher than in May 2005.
According to BNamericas, 47% of the assets were invested in
government securities.
The six private pension managers in Colombia are:
-- Porvenir, managing 26.6% of the system's total assets
and 27.3% of total affiliates;
-- Proteccion with 24.8%;
-- BBVA Horizonte with 17.5%;
-- Colfondos with 14.9%;
-- Santander with 12.4%; and
-- Skandia with 3.7%.
Affiliates in the Colombian pension system increased 10.7% to
6.65 million at the end of May 2006, compared with the same
month last year. About 51.6% of them contribute to the system,
Superfinanciera 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.
===================
C O S T A R I C A
===================
BAC SAN JOSE: Posts CRC5.53-Bil. Earnings in First Half of 2006
---------------------------------------------------------------
Figures from Sugef, Costa Rica's financial sector regulator,
indicate that BAC San Jose SA's earnings increased 22.6% to
CRC5.53 billion in the first half of 2006, compared with the
CRC4.51 billion recorded in the same period of 2005, Business
News Americas reports.
BAC San Jose posted these results in the first half of 2006:
-- Return on Equity increased 35.3% from 33.1%;
-- net interest income rose 69% to CRC10.2 billion;
-- net fee revenues increased 30% to CRC7.28 billion;
-- administrative costs grew 25% to CRC10.6 billion;
-- performing loans rose 39% to CRC239 billion at the end
of the June 2006, compared to the same time in 2005;
-- financial investments increased 12% to CRC44.4 billion;
-- assets grew 36% to CRC390 billion;
-- interest bearing liabilities rose 26% to CRC280
billion;
-- non-interest bearing liabilities increased 88% to
CRC73.5 billion; and
-- bank equity grew 46% to CRC35.9 billion at the end of
June 2006.
BAC San Jose had a market share of 7.5% at the end of June,
BNamericas relates.
BAC San Jose, created in 1968, is a wholly owned unit of
financial group Corporacion Tenedora BAC San Jose aka Grupo
Financiero BAC San Jose.
* * *
As reported in the Troubled Company Reporter on Dec. 22, 2005,
Standard & Poor's Ratings Services assigned these ratings to
Banco BAC San Jose S.A.:
-- Local currency credit rating: BB+/Stable/B
-- Foreign currency credit rating: BB/Stable/B
* COSTA RICA: Domestic Production to Increase 6.8% in 2006
----------------------------------------------------------
Costa Rica's domestic production will grow 6.8% this year,
surpassing early estimates, Inside Costa Rica reports.
Francisco Gutierrez, the chairperson of the Costa Rican central
bank, disclosed to the press a review of the monetary program
for 2006-2007, which contained the economic projections, goals
and policies of the institution for this period.
Inside Costa Rica relates that the Gross Domestic Product or GDP
has increased above 5% in the last three years, which is
expected to continue this year.
Studies conducted by the central bank show that Costa Rica's
productive structure allows for a steady annual 4.5% average
rate of growth, according to Inside Costa Rica.
Mr. Gutierrez told Inside Costa Rica that the average citizen
doesn't experience the growth, as the national gross income --
which does not include the income that foreign firms abroad --
grows less than the GDP.
The monetary program shows that prices will keep on rising,
analysts told Inside Costa Rica.
* * *
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, and
-- Local Currency LT Debt Ba1.
Fitch assigned these ratings to Costa Rica:
-- Foreign currency long-term debt, BB,
-- Local currency long-term debt, BB, and
-- 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, and
-- Local Currency ST Debt B.
=======
C U B A
=======
* CUBA: Minister Says Sugar Sector Will Meet Target This Year
-------------------------------------------------------------
Ulises Rosales, the sugar minister of Cuba, told Prensa Latina
that the sector would be able to tell Cuba's President Fidel
Castro on the latter's birthday on Dec. 2 that the sector met
its goal of planting over 310,000 acres of sugar.
Prensa Latina reports that due to depressed market process that
did not justify sustained expansion, Cuba' sugar production
declined from 100 to 60 active mills a few years ago.
However, the sugar industry is gradually recovering, Prensa
Latina states.
About 100,000 workers would perform voluntary work on Aug. 13 to
show support for President Castro, Prensa Latina relates, citing
Minister Rosales.
The sugar sector would aim to excel in quality and efficiency by
varying production with ethanol, if the world market prices stay
at 15.6 cents, Minister Rosales told Prensa Latina.
* * *
Moody's assigned these ratings to Cuba:
-- CC LT Foreign Bank Depst, Caa2
-- CC LT Foreign Curr Debt, Caa1
-- CC ST Foreign Bank Depst, NP
-- CC ST Foreign Curr Debt, NP
-- Issuer Rating, Caa1
===================================
D O M I N I C A N R E P U B L I C
===================================
FALCONBRIDGE LTD: Board Recommends Xstrata Offer to Shareholders
----------------------------------------------------------------
The Board of Directors of Falconbridge Limited recommends that
Falconbridge shareholders tender their shares to the offer made
by the Anglo-Swiss mining company, Xstrata plc.
Under the terms of its offer amended July 19, 2006, Xstrata
offered to purchase all of the outstanding common shares of
Falconbridge it does not already own for CDN$62.50 per
Falconbridge share. The offer expires at 8:00 p.m. (Toronto
time) on August 14, 2006, and among other things, remains
conditional on approval from Xstrata shareholders.
With the termination of the Support Agreement between Inco and
Falconbridge, Falconbridge's Board of Directors examined
alternatives for the Company, including the possibility of other
potential acquirers of Falconbridge. The Board is satisfied
that it is unlikely that an offer more attractive than Xstrata's
will emerge.
"Xstrata currently owns 24.5% of Falconbridge and since its
offer is for any or all shares of Falconbridge, it appears
likely that it will attract sufficient shares to gain effective
control of Falconbridge on August 14," said Derek Pannell,
Falconbridge's Chief Executive Officer. "Although Xstrata has
consistently stated its desire to own 100% of Falconbridge,
there can be no assurance that shareholders who do not accept
the Xstrata offer on or before August 14, 2006, will be able to
sell their shares to Xstrata for cash at CDN$62.50 at some later
date. Accordingly, the Falconbridge Board of Directors
recommends that shareholders tender their shares to this offer
in order to realize the value of their Falconbridge shares."
"Furthermore, I believe Xstrata is a well-run company that
values both the physical assets and the human expertise within
Falconbridge," said Pannell. "The commitments Xstrata announced
on July 25 relating to locating Xstrata Nickel as well as copper
and zinc offices in Toronto, job protection, research and
development and continued investment in Canada are reassuring to
Falconbridge employees."
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 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 CDN$150 million 5% convertible and callable
bonds due April 30, 2007, carry Standard & Poor's BB+ rating.
* DOMINICAN REPUBLIC: Merchants Ask Gov't to Import Sugar
---------------------------------------------------------
The DR1 Newsletter states that the National Federation of
Merchants and Businessmen or FENACERD has asked the government
of the Dominican Republic to authorize an import quota on sugar.
DR1 relates that the organization is complaining about a
shortage of sugar in the local market.
FENACERD proposed that the sugar import be funded 50/50 by the
sugar growers and merchants, according to DR1.
The current 90/10 split of import payments seemed to reward "the
sugar growers' inefficiencies" and restricts any price slash on
the crap, Antonio Cruz Rojas, the head of FENACERD, told DR1.
Mr. Rojas insisted for a quota to be assigned to the merchants,
as this would bring a decrease in prices in retail markets, 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: Inks Energy Cooperation Accord with Enap
------------------------------------------------------
Petroecuador, the state-run oil firm of Ecuador, said in a
statement that it signed an energy cooperation accord with Enap,
its Chilean counterpart.
A spokesperson of Petroecuador said in a statement that the
company will start talks with Enap for specific agreements
within 60 days.
Business News Americas relates that Petroecuador aims to develop
contracts to buy refined products like:
-- liquefied petroleum gas,
-- gasoline, and
-- diesel.
Meanwhile, Enap will buy Oriente crude for its refineries. It
also plans to purchase Napo crude in the future for the hydro-
treatment plants it is planning to construct.
The Petroecuador spokesperson told BNamericas that the firm will
call for the tender of crude derivative supplies in September.
Napo crude has an average API grade 19 and has been sold through
March 2007. Oriente crude has an average API grade 24.
Petroecuador could tender its supply to Enap for one-year
periods, BNamericas reports, citing the spokesperson.
The spokesperson said in a statement that the two companies also
signed an extension of the "specific services" contract held
since 2002 between Enap's and Petroecuador's respective
subsidiaries Sipec and Petroproduccion.
BNamericas underscores that as part of the accord, Chile will
invest US$36 million on:
-- the drilling of five development wells;
-- an advanced well,
-- an injector well;
-- facilities; and
-- environmental protection in Mauro Davalos Cordero field
in Orellana.
The spokesperson told BNamericas that the extension is aimed at
increasing combined crude production of 13,000-14,000 barrels a
day (b/d) on the Mauro Davalos Cordero field by an additional
3,000b/d.
The contract provides 90% of crude production to Petroproduccion
and 10% for Sipec, according to the spokesperson's statement.
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.
* ECUADOR: Congress Approves Reforms on Electric Power Law
----------------------------------------------------------
The Ecuadorean congress ratified reforms on the nation's
electric power law, Dow Jones Newswires reports.
As reported in the Troubled Company Reporter-Latin America on
Aug. 7, 2006, the congress started the final debate on a reform
in the power sector last week, having only four days to ratify,
alter or reject the proposal or the bill would automatically
become a law upon being published in the official newspaper.
The executive branch drafted the legislation, which proposed
that the government cover a fiscal gap amounting to US$1.23
billion among 19 state-run distributors through the end of the
year. The state distributors had been obliged since 1999 to
charge tariffs that do not cover their operating costs. The
distributors had failed meet the demands from generators,
causing investments to be suspended. The reform proposed that
the government make bond issuances in the local market and draw
on a credit line from the Andean Development Corp. of US$250
million. The state would pay the generators using the money
raised in the issuance. The generators must clear obligations
to Petroecuador, which has provided the generators with fuel.
The congressional economic commission suggested to the congress
the state be prohibited from taking on any distributors' debt
resulting from mismanagement or corruption. The creation of a
fund was also proposed to guarantee payment to the generators
that supply low-cost energy and to state-run generators that
replace their current management through open, transparent
selections based on technical skills and merit.
However, Dow Jones relates that the reforms, due to a
technicality in the way they were passed, might conflict with
another law that prevents Ecuador from providing guarantees to
the private sector.
According to Dow Jones, congressional lawyers are studying the
texts to find out if the state payments can be considered
guarantees otherwise, the country's President Alfredo Palacio
might have to partially veto the law.
Representative Rafael Davila, a member of the congress' economic
commission, told Dow Jones that Ecuador's total liability may be
as much as US$1.25 billion. The final amount, after accounts
are settled along with the supply chain, is expected to be
almost US$200 million.
Dow Jones relates that the reforms are expected to lead to debt
settlements in the electricity sector through the end of this
year. However, it won't resolve the issue on subsidized energy
prices. It would be the next administration, which takes office
in January, to decide on end-consumer energy prices.
* * *
Fitch assigned these ratings on Ecuador:
Rating Rating Date
------ -----------
Country Ceiling B- Aug. 29, 2005
Long Term IDR B- Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
* ECUADOR: Port Authority Resumes Guayaquil Port Development
------------------------------------------------------------
Walter Martinez -- a concession official of Autoridad Portuaria
de Guayaquil or APG, a port authority in Guayaquil -- told
Business News Americas that APG has resumed the process for the
concession.
The Guayaquil port handles 70% of Ecuador's shipped cargo. It
generates about US$30 million in revenues per year.
The concession process was postponed in July, BNamericas
relates, citing Mr. Martinez. He said that the data room phase
was due to begin on July 31, but was postponed at the request of
bidders. At a meeting held on Aug. 7, the phase finally
started.
Rumors say that a project Spain's Alianza Internacional
Portuaria or Alinport caused the delay of the concession
process. Mr. Martinez rejected the proposal, which was on the
construction of a deepwater port at Posorja, located at the
entrance to the gulf of Guayaquil, BNamericas says.
However, Mr. Martinez told BNamericas, "The deepwater port would
be complementary, judging from what [Alinport] says. We have
not seen the project."
BNamericas notes that Mr. Martinez said the Ecuadorian
authorities still has to review the proposal.
Mr. Martinez told BNamericas that the data room phase would last
for 30 days.
BNamericas underscores that after the data room phase, final
documents will be released and APG will ask the approval of the
governing bodies of the concession. APG will publish the
concession rules in September. Pre-qualified bidders will be
invited in the tender process.
Pre-qualified bidders are:
-- local company Transagent joined with Chilean company
Inversores Cosmos and German firm HHLA Containers
Terminals;
-- Chilean air and port services company SAAM;
-- Philippine-Singaporean consortium Ictsi-PSA;
-- Chilean group Empresas Navieras;
-- Danish group AP Moller Finance;
-- consortium Andrade Gutierrez & Wilson Sons; and
-- Argentine firm Corporacion America.
According to BNamericas, Corporacion America and Empresas
Navieras did not pre-qualify to run the Guayaquil port. They
may not participate directly in the process. They are, however,
allowed to participate as investors.
The report says that Empresas Navieras negotiating with other
bidders to join their proposals.
The Guayaquil concession will be awarded in the middle of
October, BNamericas reports. The concession to manage and
upgrade Guayaquil port's container and multi-purpose terminals
will need an investment of US$150 million.
* * *
Fitch assigned these ratings on Ecuador:
Rating Rating Date
------ -----------
Country Ceiling B- Aug. 29, 2005
Long Term IDR B- Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
=============
J A M A I C A
=============
AIR JAMAICA: Must Adapt to Global Changes, Michael Conway Says
--------------------------------------------------------------
Michael Conway, Air Jamaica Ltd.'s chief executive officer, told
the Jamaica Gleaner that adaptation to changes in the
international community would make the airline more competitive
and profitable.
The Gleaner relates that Mr. Conway said Air Jamaica has to
change the way it does business.
"Air Jamaica needs to adopt its operations to effectively
compete in the rapidly-changing airline environment. We must
have an open mind to change and have the resolve to implement
change where required," The Gleaner reports, citing Mr. Conway.
"Air Jamaica must optimize its geographic positioning as an
ideal gateway throughout the Caribbean region, and as an ideal
transit point between North and South America."
While there are very few airlines in the world that are earning
a profit, Air Jamaica has the potential to be a viable concern,
Mr. Conway told The Gleaner.
* * *
On July 21, 2006, Standard & Poor's Rating Services assigned B
long-term foreign issuer credit rating on Air Jamaica Ltd.,
which is equal to the long-term foreign currency sovereign
credit rating on Jamaica, is based on the government's
unconditional guarantee of both principal and interest payments.
DIGICEL LTD: Launches Home Fixed Line Service in Jamaica
--------------------------------------------------------
Digicel Ltd. has launched a home fixed line service that offers
the convenience of a cellular phone with the ability to pick up
calls in areas with low signal strength, the Jamaica Observer
reports.
The Observer relates that Digicel introduced the new phone
during the Denbigh Agricultural show in Clarendon last weekend.
Hundreds of rural residents attended the event.
Patria-Kaye Aarons, the communication and marketing executive of
Digicel, told The Observer, "It's a convenient alternative to
the landline. It is a fixed line that looks like your general
landline at your home, but gives you the convenience of both a
cell phone and the landline all in one."
The new phone can be used to send text messages, The Observer
notes, citing Ms. Aarons.
Ms. Aarons admitted to The Observer that Digicel chose to
introduce the phone at the farm show due to the number of
farmers who attended.
"There was a time when the farmer went out and no one knew what
was happening to him until he came home. Now, this is another
way for them to communicate from their homes," Ms. Aarons told
The Observer.
According to The Observer, Digicel is obviously trying to grab
market share form rival Cable & Wireless.
However, Ms. Aarons told The Observer that the introduction of
the phone has been introduced in response to requests from
clients who have no landlines or have problems receiving signals
on their cell phones.
"Customers have been asking for it. There are a lot of persons
in rural Jamaica who still don't have cell coverage or they
don't have land lines at all; so we sat down with our team and
we actually decided to offer a Digicel at home service," Ms.
Aarons told The Observer.
Citing Ms. Aarons, The Observer states, "Maybe you live in a
valley; with the instrument, when you put it down, the reach of
it is far stronger than an actual cell phone. It's because of
the way it's built, it's stationary and it's a bigger instrument
so it can take in a stronger signal, so the range of it is
wider, if you make a call with it, it's absolutely crisp and
clear."
Without giving figures, Ms. Aarons told The Gleaner that sales
of the instrument had been going well at Denbigh.
The Gleaner underscores that Ms. Aarons said Digicel, in another
month, would use a series of roadshows -- particularly in
communities with no landlines -- to promote the new service
"After that, it will be available in Digicel and electronic
stores around the island," The Gleaner says, citing Ms. Aarons.
Ms. Aarons said that clients will be able to choose between
post-paid and pre-paid services, The Gleaner reports.
Digicel Limited is a wireless services provider in the Caribbean
region founded in 2000, and controlled by Denis O'Brien. The
company started operations in Jamaica in April 2001 and now
offers GSM mobile services in 13 countries of the Caribbean
including Jamaica, St. Lucia, St. Vincent, Aruba, Grenada,
Barbados, Cayman, and Curacao among others. Digicel finished
FY2005 with 1.722 million total subscribers -- 97% pre-paid --
estimated market share of 67% and revenues and EBITDA of US$478
million and US$155 million, respectively.
* * *
On July 12, 2006, Moody's Investors Service assigned a B3 senior
unsecured rating to the US$150 million add-on Notes offering of
Digicel Limited and affirmed Digicel's existing B3 senior
unsecured and B1 Corporate Family Ratings. The outlook has been
changed to stable from positive.
Fitch Ratings assigned on July 14, 2006, a 'B' rating to Digicel
Limited's proposed add-on offering of US$150 million 9.25%
senior notes due 2012. These notes are an extension of the
US$300 million notes issued in July 2005. In addition, Fitch
also affirms Digicel's foreign currency Issuer Default Rating
and the existing US$300 million senior notes due 2012 at 'B'.
Fitch said the Rating Outlook is Stable.
===========
M E X I C O
===========
BALLY TOTAL: Moody's Affirms Low B & Junk Credit Ratings
--------------------------------------------------------
Moody's Investors Service affirmed all the credit ratings of
Bally Total Fitness Holding Corp. The rating outlook remains
negative.
Moody's affirmed these ratings:
-- US$143 million senior secured term loan B facility due
2009: B3,
-- US$100 million senior secured revolving credit facility
due 2008: B3,
-- US$235 million 10.5% senior unsecured notes (guaranteed)
due 2011: Caa1.
-- US$300 million 9.875% senior subordinated notes due
2007: Ca; and
-- Corporate family rating: Caa1.
The rating action reflects:
(1) significant near term debt maturities and a probable need
for a recapitalization or sale of the company;
(2) negative free cash flow generation;
(3) litigation and regulatory risks; and
(4) extensive material weaknesses in internal controls.
The ratings also reflect the company's recent filing of
financial statements through the first quarter of 2006 with the
Securities and Exchange Commission and business model changes
implemented to address flat revenues and weak profitability.
The negative rating outlook reflects Moody's expectation that,
absent a sale of the company, Bally may need to restructure its
debt to stabilize its capital structure.
The outlook could be changed to stable or positive if:
(i) the senior subordinated notes are refinanced on
reasonable terms prior to April 15, 2007;
(ii) adequate availability is maintained under the revolving
credit facility;
(iii) regulatory and legal risks are substantially reduced;
(iv) material progress is made in remediating internal
control weaknesses; and
(v) positive free cash flows are expected to be sustained.
The rating could be downgraded if:
(i) efforts to sell the company and refinance near term debt
maturities are not successful and the probability of
default increases or
(ii) continued negative free cash flow generation results in a
decrease in Moody's assessment of Bally's enterprise
value at default.
Bally, through its wholly owned subsidiaries, is one of the
largest publicly traded commercial operators of fitness centers
in North America. Revenues for the 12 month period ended
March 31, 2006, were US$1.1 billion.
CINEMARK INC: To Buy All of Century Theatres' Outstanding Stock
---------------------------------------------------------------
Cinemark USA, Inc., inked a definitive purchase agreement to
acquired all of the outstanding stock of Century Theatres, Inc.,
for a combination of cash and stock of Cinemark's parent
company.
"The real winners here are people around the country who love
movies," said Lee Roy Mitchell, Chairman and CEO. "Customers of
Cinemark theatres enjoy the best available presentation of
movies in an environment that is fun, comfortable and exciting.
This heritage will continue with the addition of Century
Theatres into our enterprise given the high standards of
customer service and quality that the Syufy family insisted on
at Century."
"This transaction establishes the premier international movie
theatre circuit, empowered with extraordinary employees at every
level," said Raymond Syufy, Chairman, Century Theatres. "My
brother Joe and I are very proud that our customers will
continue to enjoy the high quality presentation and movie going
experience that has earned such wonderful loyalty over the
years. We are very pleased to be playing an important role in
the creation of such an exciting, international enterprise in
entertainment."
Upon closing of the acquisition, Cinemark's stockholders will
include Lee Roy Mitchell, its founder and Chief Executive
Officer, Syufy Enterprises, LP, Quadrangle Capital Partners and
Madison Dearborn Capital Partners, which will remain the
controlling shareholder.
The combined enterprise will exhibit movies to over 200 million
patrons annually in approximately 391 theatres with 4,395,
screens in 37 states and 13 countries. Lee Roy Mitchell will
remain the Chairman of the Board and Chief Executive Officer of
the Company. Raymond Syufy and Joseph Syufy will join the Board
of Directors, representing Syufy Enterprises, LP.
The acquisition will be financed with a senior credit facility
led by an affiliate of Lehman Brothers Inc. and an affiliate of
Morgan Stanley & Co. Incorporated. The merger will not
constitute a change of control for purposes of Cinemark, Inc.'s
9-3/4% Senior Discount Notes or Cinemark's 9% Senior
Subordinated Notes. A portion of the new credit facility will
be used to repay Century's outstanding indebtedness under its
existing credit facility.
Lehman Brothers Inc. served as financial advisor to Cinemark.
Kirkland & Ellis LLP, and Akin Gump Strauss Hauer & Feld LLP
served as legal counsel to Cinemark. Morgan Stanley & Co.
Incorporated served as financial advisor to Century and its
shareholders. Morrison & Foerster LLP represented Century.
Completion of the acquisition is subject to the satisfaction of
customary closing conditions for transactions of this type,
including antitrust approval and completion of financing.
About Century Theatres, Inc.
Headquartered in California, Century Theatres currently operates
78 theaters with 994 screens in 12 western states. The company
was founded in 1941 by Raymond J. Syufy and is now led by his
sons, Raymond W. Syufy and Joseph Syufy. Since 1996, the company
has added 641 screens and has expanded into 8 additional states.
In 2000, it launched its CineArts division, with screens in
California and Illinois.
About Cinemark Inc.
Cinemark Inc., -- http://www.cinemark.com/-- a leader in the
theatre exhibition industry operates 202 theatres and 2,469
screens in 34 states in the United States and operates 112
theatres and 932 screens internationally in 13 countries, mainly
Mexico, South and Central America. Cinemark was founded in 1987
by its Chief Executive Officer and Chairman of the Board, Lee
Roy Mitchell. In 2004 a controlling interest in Cinemark was
sold to Madison Dearborn Capital Partners. Cinemark was among
the first theatre exhibitors to offer advanced real-time
Internet ticketing at its own website.
* * *
Standard & Poor's Ratings Services placed on Aug. 8, 2006, all
its ratings on Cinemark Inc. and subsidiary company Cinemark USA
Inc., which are analyzed on a consolidated basis, including the
'B+' corporate credit ratings, on CreditWatch with negative
implications.
The CreditWatch listing follows the company's announcement that
it will be financing the acquisition of Century Theatres Inc.
(B+/Negative/--) with a senior credit facility. Cinemark had
US$1 billion in debt and US$846 million in present value of
operating leases as of March 31, 2006.
CINEMARK INC: Century Buy Cues S&P to Place Ratings on NegWatch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed all its ratings on
Cinemark Inc. and subsidiary company Cinemark USA Inc., which
are analyzed on a consolidated basis, including the 'B+'
corporate credit ratings, on CreditWatch with negative
implications.
The CreditWatch listing follows the company's announcement that
it will be financing the acquisition of Century Theatres Inc.
(B+/Negative/--) with a senior credit facility. Cinemark had
US$1 billion in debt and US$846 million in present value of
operating leases as of March 31, 2006.
"Although Century's theaters are comparable to Cinemark's venues
and the acquisition could produce some opportunities for cost
reductions, we are concerned that credit statistics could worsen
as a result of the debt-financed transaction," said Standard &
Poor's credit analyst Tulip Lim.
Also, Standard & Poor's is concerned about secular issues in
this sector, including entertainment alternatives to moviegoing
and shortening intervals between theatrical and DVD releases of
movies.
Standard & Poor's will resolve the CreditWatch listing after
evaluating the new capital structure and future business
strategies, including the potential for cost savings as a result
of the acquisition.
HIPOTECARIA SU: Moody's Rates Class B Certificates at Ba2
---------------------------------------------------------
Moody's de Mexico, S.A. de C.V. assigned a Aaa.mx rating on the
Mexican national scale and a Baa1 rating on the global local
currency scale to the Class A certificates and a A2.mx rating on
the Mexican national scale and a Ba2 rating on the global
currency scale to the Class B certificates of Hipotecaria Su
Casita, S.A. de C.V. in the aggregate amount of 279,864,300
UDIS, issued by Banco J.P. Morgan, S.A. Grupo Financiero,
Division Fiduciaria acting solely in its capacity as trustee.
This is the fourth issuance under a five billion Mexican Pesos
program. Securities issued under this program may be
denominated in Pesos or UDIs.
The Class A certificates, Class B certificates and residual
certificates are backed by a pool of mortgage loans for the
purchase of low income homes originated by Su Casita. Interest
and principal payments to certificate holders are primarily
payable from the cash flow arising from the securitized pool of
mortgage loans.
The ratings of the Class A and Class B certificates are based
upon:
-- The credit quality of the pool, which is comprised of
UDI-denominated, fixed-rate, first-lien mortgage loans
secured by low-income houses located in Mexico, and has a
weighted average initial loan-to-value of 86.87% and a
current loan-to-value of 81.72%.
-- An initial 11% credit enhancement for the Class A
certificates in the form of 10% subordination represented
by the Class B certificates and 1% initial
overcollateralization. This initial overcollateralization
is expected to grow until it reaches a target
overcollateralization of 3.2%, based on outstanding
performing collateral.
-- The payment structure in which all excess cash flow coming
from principal proceeds of the collateral will be used to
amortize Class A certificates until it represents 86.8% of
the collateral value. Once that level is reached, all
excess cash flow will be used to amortize Class B so it
maintains a value equivalent to 10% of the collateral
value.
-- The Unidades de Inversion -- UDI minimum wage salary swap
provided by Sociedad Hipotecaria Federal or SHF.
-- A first loss mortgage insurance from Genworth Mortgage
Insurance Co. (Genworth) provided to 97.07% of the total
outstanding amount of the pool, covering, as a weighted
average, approximately 24.27% of the outstanding balance
plus unpaid interest of any loan covered, that may default
over the life of the transaction.
-- The ability of Su Casita (rated SQ2 by Moody's) to
adequately service the loans.
-- The isolation of the assets in the trust through
well-established Mexican laws and regulations for
securitizations.
The complete rating action is as follows:
Issuer: Banco J.P. Morgan, S.A. Institucion de Banca
Multiple, J.P. Morgan Grupo Financiero, Division
Fiduciaria.
-- Class A 251,595,200 UDIS fixed rate Certificates --
Certificados Bursatiles BRHSCCB 06-3U: Aaa.mx and Baa1,
-- Class B 28,269,100 UDIS fixed rate Certificates --
Certificados Bursatiles BRHSCCB 06-4U: A2.mx and Ba2.
=================
N I C A R A G U A
=================
* NICARAGUA: Crisis in Energy Sector Gets Worse
-----------------------------------------------
The energy crisis in Nicaragua has worsened, with power outages
up to eight hours daily and increasing prices of gasoline,
Prensa Latina reports.
Prensa Latina relates that about 150 communities in 13 provinces
of Nicaragua were affected by the outage from 6:00 a.m. to 2:00
p.m.
According to Prensa Latina, Spanish Union Fenosa, which controls
electricity distribution in Nicaragua, disclosed power cuts
early this week, saying that a deficit in energy production
resulted from technical faults in one of the plants that
generate electricity.
The hydroelectric plant in Apanas, in particular, has low
generating capacity due to the low level of waters in the lake
Apanas, Fenosa Union told Prensa Latina.
* * *
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
===========
CHIQUITA BRANDS: Banana Purchase Cut Leads to Growers' Losses
-------------------------------------------------------------
Chiquita Brands International Inc.'s decision to decrease banana
purchases is causing losses to independent growers in Panama,
Prensa Latina reports.
Prensa Latina relates that Chiquita Brands reduced its purchases
by 30% due to saturation in the European market.
Authorities told Prensa Latina that the reduction of Chiquita
Brands' purchases, the growers lost about US$400,000, or some
110,000 crates of banana.
Banana workers unions threatened to hold demonstrations if
Chiquita Brands do not free the contract of exclusivity and
allow the sale of bananas to other traders, the report says.
Prensa Latina notes that banana growers are suing Chiquita
Brands for monopoly.
The unions requested executive intervention to avoid further
losses, Prensa Latina states.
Chiquita Brands International is a Cincinnati, Ohio-based
producer and distributor of bananas and other produce, under a
variety of subsidiary brand names, collectively known as
Chiquita. Chiquita is the successor to the United Fruit Company
and is the leading distributor of bananas in the United States.
The company also owns a German produce distribution company,
Atlanta AG, which it acquired in 2003. It markets, produces and
distributes fresh fruits, processed fruits and vegetable
products.
On June 15, 2006, Standard & Poor's Ratings Services affirmed
its ratings on Cincinnati, Ohio-based Chiquita Brands
International Inc., including the 'B+' corporate credit rating.
S&P said the rating outlook is negative.
CORPORACION UBC: Ratings Constrained by Competition, S&P Says
-------------------------------------------------------------
Standard and Poor's Ratings Services assigned these ratings to
Corporacion UBC Internacional S.A. y Subsidiarias:
-- long-term foreign issuer credit rating: BB-,
-- long-term local issuer credit rating: BB-,
-- short-term foreign issuer credit rating: B, and
-- short-term local issuer credit rating: B.
Standard & Poor's Ratings Services' ratings on Corporacion UBC
Internacional S.A. y Subsidiarias or UBCI, a holding company
incorporated in Panama, are constrained by the company's
increased presence in markets that have a lower risk rating than
that on El Salvador, such as Guatemala and Costa Rica, and by
strong banking competition in Panama. The ratings are
underpinned by Banco Cuscatlan S.A.'s brand expansion in Central
America and the good earnings-generation capacity of UBCI's
subsidiaries. The ratings incorporate the holding company's
structural subordination to its subsidiaries.
Although UBCI and its subsidiaries have adequate standards in
loan origination and prudent management of provisions, the large
portion of foreclosed and nonperforming assets from Cuscatlan
negatively affects UBCI's asset quality indicators. In
addition, UBCI is entering banking markets, namely in Costa Rica
and Guatemala, that Standard & Poor's views as economically more
volatile than El Salvador's market. Risks in those countries
include high foreign exchange exposure for the banking industry
on the loan book, as most loans in the banking system are
granted in U.S. dollars to borrowers with limited or nonexistent
dollar income. Nevertheless, UBCI's dollar exposure in those
countries is currently lower than the industry average and is
not a significant risk in the group's total asset portfolio.
UBCI has investments in banking and other financial subsidiaries
in:
-- El Salvador,
-- Panama,
-- Guatemala,
-- Costa Rica, and
-- Honduras.
These subsidiaries operate under the Cuscatlan brand name, of
which the largest operations are in El Salvador, where the group
originated. On a consolidated basis, UBCI had total assets of
US$5.2 billion at March 2006, making it the second-largest
financial conglomerate in Central America and Panama. The
ratings assigned to the holding company, one notch below those
on its main subsidiary, Banco Cuscatlan S.A. (BB/Stable/B) in El
Salvador, reflect the structural subordination of the holding
company to its largest operating subsidiary.
Banco Cuscatlan and its intermediate holding company,
Inversiones Financieras Cuscatlan, represent most of the loans
and profits at UBCI, at 41%, as of March 2006. The group's
future strategy is to enhance its presence in Central America.
Sandard & Poor's expects the holding company's reliance on its
Salvadorian operation to be further reduced as operations in
other countries eventually grow, but this reliance on El
Salvador will remain predominant. The group's growth is
expected to come from additional acquisitions and organic
expansion. If another significant acquisition takes place in
the short term, the rating agency expects UBCI's shareholders to
inject capital to meet additional capital needs.
Since its inception, UBCI has exhibited ROAs between 1% and
1.7%, which are increasingly comparable levels to those of other
financial institutions. In Standard & Poor's view, UBCI's
financial standing is improving and increasingly diverging from
that of Banco Cuscatlan de El Salvador as a result of
diversification. The mix of revenues has improved significantly
as fee income from banking and other financial services have
increased its participation. Geographic expansion has also
helped mitigate the reduction in margins in El Salvador;
branches in other countries have higher margins. As of March
2006, almost 60% of total profits were generated outside El
Salvador, compared with 26% in 2002.
UBCI has followed an adequate approach to integrate its
subsidiaries, incorporating the Cuscatlan culture and policies.
The group has established operating limits that shape and manage
these risks well. Nevertheless, challenges remain to fully
integrate all operations under the same credit risk policies and
technological platform.
As of March 2006, total capital was US$612 million. This
capital shaped a 9.5% adjusted equity-to-adjusted assets ratio
that is similar to those of other Latin American financial
institutions. UBCI is expected to generate sufficient capital
from earnings to maintain ratios at current levels before
considering further acquisitions. UBCI has been successful in
raising capital by increasing its shareholder base outside El
Salvador, and additional capital needs should be met if UBCI
makes another acquisition.
Outlook
The stable outlook reflects our expectation that the group will
be successful in strengthening its position in Central America
and that its increasing diversification will mitigate country-
specific risks. Standard & Poor's expects the group to maintain
adequate earnings and not allow asset quality to deteriorate.
The ratings could be pressured, however, if the regional economy
deteriorates, hurting the banking environment, or if ratings on
its largest core operating subsidiary are modified. Although
its reliance on its El Salvador subsidiary's operations will be
reduced further as a result of risk diversification by country,
the group to date continues to generate significant earnings
there, and the El Salvador unit therefore remains a key element
in the ratings on the holding company.
KANSAS CITY SOUTHERN: Theodore Prince Named VP Sales & Marketing
----------------------------------------------------------------
Kansas City Southern appointed Theodore Prince as vice president
sales and marketing intermodal and international business unit,
effective September 1. His primary responsibility will be
development of intermodal business in KCS' International
Intermodal Corridor. Michael J. Smith, vice president sales and
marketing automotive business unit, will focus exclusively on
developing KCS' emerging automotive business.
"Intermodal and automotive are both significant growth
opportunities for our company, especially as we develop the
International Intermodal Corridor between Lazaro Cardenas and
the southeastern U.S.," said Daniel W. Avramovich, KCS executive
vice president sales and marketing. "It made sense to split the
intermodal and automotive business unit into two areas of
concentration, taking advantage of Ted's nearly 30 years of
diverse intermodal expertise and Michael's nearly 20 years of
transportation and automotive experience."
Mr. Prince joins KCS from Optimization Alternatives Ltd., Inc.,
where he has served as senior vice president marketing and
sales. For more than a decade, he held a variety of senior
level operating positions with "K" Line America, Inc., including
senior vice president and chief operating officer. Prior to
that, he spent nine years with Consolidated Rail Corporation in
a variety of positions throughout its intermodal organization.
Currently, he serves on the board of directors of the Intermodal
Association of North America and the University of Denver's
Intermodal Transportation Institute. He is also a member of the
U.S. Department of Transportation's Marine Transportation System
National Advisory Council. He is a frequent guest speaker at
universities and industry events and a regularly published
author on the transportation industry.
Headquartered in Kansas City, Missouri, Kansas City Southern
(NYSE: KSU) - http://www.kcsi.com/-- is a transportation
holding company that has railroad investments in the U.S.,
Mexico and Panama. Its primary U.S. holding is The Kansas City
Southern Railway Company, serving the central and south central
U.S. Its international holdings include KCSM, serving
northeastern and central Mexico and the port cities of L zaro
Cardenas, Tampico and Veracruz, and a 50 percent interest in
Panama Canal Railway Company, providing ocean-to-ocean freight
and passenger service along the Panama Canal. KCS' North
American rail holdings and strategic alliances are primary
components of a NAFTA Railway system, linking the commercial and
industrial centers of the U.S., Canada and Mexico.
* * *
As reported in the Troubled Company Reporter on May 22, 2006,
Standard & Poor's Ratings Services lowered its preferred stock
ratings on Kansas City Southern to 'D' from 'C' and removed the
ratings from CreditWatch where they were initially placed on
March 23, 2006; ratings were previously lowered on April 4 and
May 1 and maintained on CreditWatch with negative implications.
Standard & Poor's other ratings on Kansas City Southern,
including its 'B' corporate credit rating, remain on CreditWatch
with negative implications, where they were initially placed
April 4, 2006. Ratings were lowered on April 10 and maintained
on CreditWatch.
===============
P A R A G U A Y
===============
* PARAGUAY: State Telecom Firm to Launch Broadband Services
-----------------------------------------------------------
Copaco, a Paraguayan state-owned telecom firm, will launch
broadband services in some urban areas this month, La Nacion
reports.
Business News Americas relates that Copaco will start offering
the service to almost 12,000 users in:
-- Asuncion,
-- Ciudad del Este,
-- Encarnacion, and
-- Coronel Oviedo.
Copaco will offer a dial-up connection. In the short term,
broadband Asymmetric Digital Subscriber Line service will be
offered, Copaco executives told BNamericas.
The report says that Copaco, in order to offer Internet
services, has linked up about 22 connectivity points to fiber
optic networks across Paraguay, which will provide connectivity
within a 4-kilometer radius of each station.
Hugo Sosa, the broadband department assistant manager of Copaco,
reportedly said that the firms expects to offer subscribers low
connection rates to boost government plans to expand Internet
use all over Paraguay.
* * *
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
=======
DOE RUN: 2nd Quarter Stockholders' Deficit Narrows to US$112 Mil
----------------------------------------------------------------
The Doe Run Resources Corp. filed its second fiscal quarter
ended April 30, 2006, with the US Securities and Exchange
Commission on Aug. 7, 2006.
Financials
Doe Run reported US$46,550,000 of net income on US$380,221,000
of net sales for the second fiscal quarter ended April 30, 2006,
compared with US$5,875,000 of net income on US$247,716,000 of
net sales for the same period in 2005.
At April 30, 2006, Doe Run's balance sheet showed US$626,093,000
in total assets and US$708,006,000 in total liabilities,
resulting in a US$112,189,000 shareholders' deficit, as compared
to higher shareholders' deficit of US$167,905,000 at April 30,
2005.
Doe Run's April 30, 2006, balance sheet also showed strained
liquidity with US$354,745,000 in total current assets available
to pay US$378,490,000 in total current liabilities coming due
within the next 12 months.
Doe Run is highly leveraged and has significant commitments both
in the U.S. and Peru for environmental matters and for
Environmental Remediation and Management Program expenditures,
including the financial guarantee, that require it to dedicate a
substantial portion of cash flow from operations to the payment
of these obligations, which will reduce funds available for
other business purposes.
These factors also increase the Company's vulnerability to
general adverse conditions, limit the Company's flexibility in
planning for, or reacting to, changes in its business and
industry, and limit Doe Run's ability to obtain financing
required to fund working capital and capital expenditures and
for other general corporate purposes.
An unfavorable outcome to certain contingencies, would have a
further adverse effect on the Company's ability to meet its
obligations when due. Doe Run's ability to meet its obligations
is also dependent upon future operating performance and
financial results, which are subject to financial, economic,
political, competitive and other factors affecting Doe Run, many
of which are beyond the Company's control.
Doe Run Peru Going Concern Doubt
Doe Run Peru has significant capital requirements under
environmental commitments and guarantees and substantial
contingencies related to taxes and has significant debt service
obligations under the revolving credit facility, each of which,
if not satisfied, could result in a default under Doe Run Peru's
credit agreement and collectively raise substantial doubt about
Doe Run Peru's ability to continue as a going concern.
Management believes that the price improvements seen through
fiscal year 2005 and in the first two quarters of fiscal year
2006, the potential revenues and cash flow enhancements from the
new ferrite project and the approval obtained on May 29, 2006,
to extend certain Environmental Remediation and Management
Program projects, will enable Doe Run Peru to continue as a
going concern. However, there can be no assurance that these
actions will achieve the desired results.
Doe Run Peru continues to have substantial cash requirements in
the future, including the maturity of the revolving credit
facility on Sept. 22, 2006, and significant capital requirements
under environmental commitments. In addition, there are
substantial contingencies related to taxes.
Net unused availability at April 30, 2006, under the Doe Run
Peru Revolving Credit Facility was approximately US$200. In
addition to the availability under its revolving credit
facility, the cash balance of Doe Run Peru was US$22,840 at
April 30, 2006. Doe Run Peru has reached and maintained its
maximum borrowing level under the Doe Run Peru Revolving Credit
Facility due in part to the higher metal prices resulting in
higher outlays for concentrate purchases and higher Value-Added
Tax payments funded by cash from operations.
The Doe Run Peru Revolving Credit Facility expires on Sept. 22,
2006, and will require negotiations to extend its terms. There
can be no assurance that Doe Run Peru will be successful in
extending the existing credit agreement or negotiating a new
agreement, or if it is successful, that the extended or new
credit agreement would be at terms that are favorable to Doe Run
Peru.
Any default under the requirements of the Environmental
Remediation and Management Program could result in a default
under the Doe Run Peru Revolving Credit Facility. A default
under the requirements of the Doe Run Peru Revolving Credit
Facility results in defaults under the Doe Run Revolving Credit
Facility and the indenture governing the bonds.
Recent Events
On May 29, 2006, the Peruvian Ministry of Energy and Mines
approved the extension of certain Environmental Remediation and
Management Program (PAMA) projects through Oct. 31, 2009.
Pursuant to the terms of the Modified PAMA, Doe Run Peru is now
required to complete the acid plant projects for the lead
circuit and the copper circuit by Sept. 30, 2008, and
Oct. 31, 2009, respectively and Doe Run Peru remains obligated
under the original PAMA to implement nine projects at its La
Oroya smelter by Dec. 31, 2006:
-- Upgrade the acid plant for the zinc circuit;
-- Construct a treatment plant for the copper refinery
effluent;
-- Construct an industrial wastewater treatment plant for the
smelter and refinery;
-- Improve the slag handling system;
-- Improve Huanchan lead and copper slag deposits;
-- Construct an arsenic trioxide deposit;
-- Improve the zinc ferrite disposal site;
-- Construct domestic wastewater treatment and domestic waste
disposal; and
-- Construct a monitoring station.
The Modified PAMA also requires Doe Run Peru to comply with
certain special measures not previously required. These
measures include, but are not limited to:
-- implementation of projects to reduce stack and fugitive
emissions, which are designed to meet certain air quality
objectives, and
-- a continuing improvement provision that provides for
additional pollution controls to address the shortfalls in
meeting objectives or to further reduce risks and certain
measures regarding protection of public health, including,
among others:
* actions for the reduction of lead in blood levels, and
* special health programs for children and expectant
women.
The Ministry of Energy and Mines has also required that the cost
of a planned replacement of the oxy-fuel reverberatory furnace
with a submerged lanced reactor furnace that will reduce gas
volume while enriching sulfurous gas feed to the copper circuit
sulfuric acid plant be included as part of the cost of the
Modified PAMA acid plant projects. The estimated cost of this
reactor furnace is US$57,000, which brings the total remaining
investment needed to build the sulfuric acid plants to
approximately US$152,590.
Additional PAMA projects required for fiscal year 2006 include
an upgrade of the ventilation system in the Sinter plant,
completion of the enclosure work around the lead and dross
furnace, the enclosure of the anode residue plant along with the
elimination of its nitrous gases, and the reduction of fugitive
emissions from the copper and lead beds. The total cost of the
currently remaining Modified PAMA projects as of April 30, 2006,
was approximately US$175,000 of which US$31,500 remains to be
spent in the 2006 calendar year.
Doe Run Peru's ability to complete the required projects by the
specific deadlines depends in large part upon the availability
of sufficient funds. Doe Run Peru believes that sufficient
funds will be available on a timely basis, but the availability
of sufficient funds is largely dependent upon the results of its
business operations and the possibility of additional financing;
therefore, there can be no assurance that sufficient funds will
be available for these projects.
Doe Run Peru had obtained a ten-year tax stabilization agreement
with the Peruvian government, which provides for Peruvian
taxation based on tax statutes and regulations prevailing on
Nov. 6, 1997, beginning with the Peruvian tax year ending on
Dec. 31, 1997, through Dec. 31, 2006. On Dec. 30, 1997, Doe Run
Peru signed a Contract of Guarantees and Measures to Promote
Investments with the government of Peru. This contract, which
has been modified various times through 2006, committed Doe Run
Peru to making certain investments related to the improvements
of its facilities in order to receive certain tax benefits.
This contract provided that if the investments were completed
according to the schedule by Dec. 31, 2006, Doe Run Peru would
receive an additional tax stability agreement covering the
period beginning Jan. 1, 2007, and ending Dec. 31, 2021. Doe
Run Peru will be unable to complete the required investments and
as a result Doe Run Peru will not receive the benefits of the
additional tax stabilization agreement through 2021.
Doe Run received a notice from the U.S Environmental Protection
Agency of a potential unilateral order concerning transportation
matters under the Resource Conservation and Recovery Act of
1976, section 7003 on July 5, 2006. It included an offer to
negotiate the terms to a voluntary agreement. The Company is
evaluating the issues presented in the letter and has arranged
to meet with the agency to explore the matter. It is too early
to understand any impact such an agreement will have.
On June 19, 2006, Doe Run Peru, the Ministry of Health and the
Regional Government of Junin signed a cooperation agreement for
the implementation of the plan to reduce contamination at La
Oroya. This agreement is an extension of a previous one signed
between Doe Run Peru and the Ministry of Health in 2003.
In the agreement Doe Run Peru commits to support the Ministry of
Health's environmental health clinic, supplemental educational
program, family environmental health training, and community
cleaning programs. Doe Run Peru will continue to make certain
building space and equipment available and provide specified
professional and support personnel.
On July 31, 2006, the majority warrant holders exercised their
right to require Doe Run to repurchase all of the warrants as
promptly as practicable in the manner specified by the Warrant
Agreement dated Oct. 29, 2002, between Doe Run and State Street
Bank and Trust, as Warrant Agent. Doe Run is in the process of
engaging an appraiser to value the warrants.
Full-text copies of Doe Run's second quarter financials are
available for free at http://ResearchArchives.com/t/s?f3a
About The Doe Run Resources Corp.
The Doe Run Resources Corp. is one of the world's providers of
premium lead and associated metals and services. The Company is
the largest integrated lead producer in North America and the
largest primary lead producer in the western world.
Doe Run operates an integrated primary lead operation and a
recycling operation located in Missouri, referred to as Buick
Resource Recycling.
Fabricated Products, Inc., a wholly owned subsidiary of Doe Run,
operates a lead fabrication operation located in Arizona and a
lead oxide business located in Washington.
Doe Run Peru S.R.L., an indirect Peruvian subsidiary, operates a
smelter in La Oroya, Peru, one of the largest polymetallic
processing facilities in the world, producing an extensive
product mix of non-ferrous and precious metals, including
silver, copper, zinc, lead and gold. Doe Run Peru also has a
copper mining and milling operation in Cobriza, Peru in the
region of Huancavelica, which is approximately 200 miles
southeast of La Oroya in Peru.
* PERU: Mobile Users Grew 21% to 6.75MM in First Half of 2006
-------------------------------------------------------------
Data from Osiptel, the Peruvian telecoms regulator, show that
mobile users in Peru has increased 21% to 6.75 million in the
first half of 2006, compared with the 5.58 million recorded at
the end of 2005, Business News Americas reports.
According to BNamericas, the data from Osiptel indicate that
Movistar Peru, the local unit of Spain's Telefonica Moviles, led
the market with 3.97 million subscribers and a 71% market share.
The company increased its client base by 16.4%.
Claro, a unit of Mexico's America Movil, reported 2.48 million
subscribers and a 44% market share. Its client base increased
27.3% in the first half of 2006, BNamericas relates.
BNamericas notes that Nextel Peru -- owned by NII Holdings, a
digital trunking service provider in Latin America -- recorded
had 296,494 users, a 5.3% market share, and an 18.8% subscriber
growth in the first half of 2006.
Prepaid users were 81.7% of Movistar's total client base, 89.6%
of Claro, and 17.2% of Nextel Peru at the end of June 2006,
BNamericas 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
* PERU: ProInversion Will Award Airports Concession on August 18
----------------------------------------------------------------
A source from ProInversion, the Peruvian private investment
promotion agency, told Business News Americas that it will award
the concession of Peru's nine regional airports on Aug. 18.
BNamericas says that bidders are given until Aug. 16 to submit
their offers.
Aeropuertos Unidos del Peru and Swissport GBH-Aeropuertos are
the two pre-qualified bidders for the concession, BNamericas
states.
The nine airports to be concessioned are:
-- Huaraz,
-- Cajamarca,
-- Chachapoyas,
-- Iquitos,
-- Tumbes,
-- Pucallpa,
-- Talara,
-- Tarapoto, and
-- Trujillo.
Officials may include airports Piura, Pisco and Chiclayo in the
concession at a later date once a number of legal aspects
regarding their concession have been resolved, BNamericas
relates, citing the ProInversion source.
According to BNamericas, ProInversion expects the concession to
attract up to US$120 million private investments, which will
produce savings of US$50 million to the government.
The report underscores that the concessionaire will handle:
-- design,
-- construction,
-- improvement,
-- maintenance works, and
-- operation of the airports.
Peru aims to upgrade its regional airports to meet global
standards, BNamericas 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
=====================
RENT-A-CENTER: Offers US$10.65 Per Share to Acquire Rent-Way
------------------------------------------------------------
Rent-A-Center, Inc., entered into a definitive agreement
pursuant to which it will acquire Rent-Way common stock for
US$10.65 per share, in cash.
The agreement also provides that each holder of options of Rent-
Way will receive an amount equal to the difference between
US$10.65 and the exercise price of the option. The transaction
is valued at approximately US$567 million, which includes the
acquisition of all outstanding common stock and options
discussed above, net debt and other liabilities of Rent-Way, as
well as the redemption of all outstanding convertible preferred
stock.
"We are very excited about this transaction with Rent-Way,"
commented Mark E. Speese, the Company's Chairman of the Board
and Chief Executive Officer. "Bill Morgenstern and his
management team have built a successful rent-to-own operation as
demonstrated by the fact that Rent-Way has accomplished eleven
positive same store sales quarters out of the last twelve.
"Given our track record of successfully integrating acquisitions
and implementing our proven business model, we believe that this
transaction will create additional value for our stockholders.
Giving effect to Rent-Way's forecasted 2006 EBITDA of
approximately US$60 million and the full realization of cost
savings through leveraging our existing infrastructure and
scale, pro-forma EBITDA of US$85 million should be achieved,
with further growth continuing from the execution of our
business model. In fact, we believe we will be able to build on
Rent-Way's success as evidenced by our 2003 acquisition of 295
Rent-Way stores. With our national brand and advertising
driving customer traffic and our broad selection of high
quality, brand-name merchandise, we believe we can grow both
revenue and store operating income to nearly comparable results
to our core stores," continued Mr. Speese.
"Furthermore, we expect to realize these cost savings in
advertising, merchandise purchases and general and
administrative expenses. As a result, following an initial six-
month transition period and the realization of cost savings in
the last half of the year, we believe the transaction will be
accretive to our 2007 diluted earnings per share by
approximately one to two cents, accelerating in 2008 and 2009 to
approximately US$0.20 and US$0.35 diluted earnings per share,
respectively. I want to point out that our diluted earnings per
share accretion of approximately one to two cents in 2007 and
approximately US$0.20 in 2008 is after the negative impact of
approximately US$0.11 and US$0.06 diluted earnings per share,
respectively, due to the amortization of intangible assets
related to the customer and non-compete agreements. These are
assets we must record and amortize in connection with the
acquisition, but they roll off quickly resulting in higher
levels of accretion in the future," Mr. Speese said.
Mr. William Morgenstern, Chairman of the Board of Rent-Way
stated, "I have known Mark Speese for many years and believe he
and his strong management team have a vision for Rent-A-Center
that our team can embrace. We believe that our customers will be
well served by this transaction and that it will provide
additional growth opportunities for our nearly 4,000 talented
associates.
"As a co-founder of Rent-Way 25 years ago, I have great pride in
our collective accomplishments over the years achieved by the
dedication and commitment of the fine Rent-Way team which have
now culminated with the sale of our business to a first-class
industry leader," Mr. Morgenstern added.
Rent-A-Center intends to fund the acquisition primarily with an
increase in its senior credit facility. The acquisition, which
is expected to be completed in the fourth quarter of 2006, is
conditioned upon customary closing conditions for a transaction
of this nature, including the receipt of requisite regulatory
approval and approval of Rent-Way's shareholders.
In connection with this transaction, Rent-A-Center was advised
by Bear, Stearns & Co. Inc. and Rent-Way was advised by
Citigroup Global Markets Inc.
About Rent-Way
Rent-Way offers quality, brand name home entertainment
equipment, furniture, computers, major appliances and jewelry at
approximately 784 rental-purchase stores in 34 states.
Established in 1981, Rent-Way is headquartered in Erie,
Pennsylvania, and employs approximately 4,000 associates.
About Rent-A-Center
Based in Plano, Texas, Rent-A-Center, Inc. (Nasdaq:RCII)
-- 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.
* * *
As reported in the Troubled Company Reporter on June 29, 2006,
Standard & Poor's Ratings Services assigned 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 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.
As reported in the Troubled Company Reporter on June 23, 2006,
Moody's Investors Service assigned 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 reflected 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.
RENT-A-CENTER: Rent-Way Buy May Prompt Moody's to Lower Ratings
---------------------------------------------------------------
Moody's Investors Service placed all ratings of Rent-A-Center,
Inc. under review for possible downgrade. The review is
prompted by the announcement that the company intends to
purchase Rent-Way, Inc (corporate family rating of B3) in a debt
financed transaction.
These ratings are placed under review for possible downgrade:
-- US$725 million secured bank loan: Ba2,
-- US$300 million 7.5% senior subordinated notes (2010): Ba3,
and
-- Corporate family rating of Ba2.
Moody's review will focus on the challenges in achieving planned
operating efficiencies from the newly purchased Rent-Way stores,
keeping in mind that Rent-A-Center has successfully integrated
several previous acquisitions, and the potentially adverse
impact of additional debt on the company's credit metrics and
financial flexibility. Moody's also will consider the company's
position within the competitive rent-to-own segment of
retailing, the impact of high energy prices on consumer
disposable income, the profitability of the ongoing business
line expansion into financial services, and Rent-A-Center's
future financial policies given its history of using virtually
all operating cash flow for share repurchases, capital
investment, and acquisitions. If the transaction does not take
place, then the ratings could be confirmed at current levels.
Rent-A-Center, Inc, with headquarters in Plano, Texas operates
the largest chain of consumer rental purchase 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 June 30, 2006 was
about US$2.3 billion.
RENT-A-CENTER: Rent-Way Buy Cues S&P to Put Ratings on NegWatch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its debt ratings,
including its 'BB+' corporate credit rating, on Plano, Texas-
based Rent-A-Center Inc. on CreditWatch with negative
implications.
At the same time, Standard & Poor's placed its ratings,
including the 'B+' corporate credit rating, on Erie, Pa.-based
Rent-Way Inc. on CreditWatch with positive implications.
The rating actions follow Rent-A-Center's announcement that it
had reached a definitive agreement to acquire Rent-Way, a major
competitor, for about US$567 million. The acquisition will be
funded with an increase in Rent-A-Center's senior credit
facility. Based on Rent-Way's estimated EBITDA of US$60 million
for 2006, the purchase price represents an approximate 9.5x
multiple of EBITDA.
"Although Rent-A-Center anticipates significant cost savings
from the acquisition, we believe the transaction will weaken
Rent-A-Center's financial profile," said Standard & Poor's
credit analyst Robert Lichtenstein. Moreover, Rent-Way, with
US$530 million in revenue and US$49 million in EBITDA, has been
experiencing declining operating trends over the past 18 months.
Standard & Poor's will consider the impact of the acquisition on
Rent-A-Center's credit profile, including:
-- the integration of poorer performing stores,
-- the elimination of a significant competitor,
-- the opportunity for cost savings through the elimination
of redundant expenses and store closures, and
-- an increase in debt leverage.
Standard & Poor's expects that any downgrade of the acquiring
company will still leave the rating above the current rating for
Rent-Way.
SAFETY-KLEEN: Completes Major Recapitalization of Company
---------------------------------------------------------
As part of a plan to significantly reduce Safety-Kleen's annual
interest expense and enhance the company's capital structure,
Safety-Kleen HoldCo., Inc., has completed a major
recapitalization of the company.
Under the recapitalization, which included a US$100 million
rights offering to purchase the company's common stock and a
new, six-year US$395 million debt facility, Safety-Kleen
eliminated its senior subordinated debt, repaid its current bank
credit facilities issued in 2005, and redeemed its preferred
stock. The new debt facilities significantly increase the
company's financial flexibility and reduce interest obligations
going forward.
"This is a very significant step in enhancing Safety-Kleen's
current financial strength and future profitability," said
Frederick J. Florjancic, Jr., the company's President and Chief
Executive Officer. "This transaction restructures our long-term
debt, which saves US$27 million annually in interest, and allows
us to continue increasing our profitability and consider
acquisitions as part of our growth strategy."
Florjancic noted that 97 percent of the holders of the company's
common stock elected to participate in the rights offering and
purchase additional equity in the company.
"We see that as a strong vote of confidence in Safety-Kleen's
future," Florjancic said.
The new financial package includes:
-- US$230 million term loan;
-- US$65 million letter of credit facility;
-- US$100 million revolving credit facility, with no money
drawn at closing; and,
-- US$100 million expansion feature.
"The company's improving operational results over the past 24
months have allowed us to refinance our debt on two occasions,"
said Dennis McGill, Safety-Kleen's Executive Vice President and
Chief Financial Officer. "That has eliminated approximately
US$45 million in annual interest obligations, which now gives us
access to up to US$200 million for strategic growth
opportunities."
"Our ability to complete this recapitalization, which was
enhanced by the solid credit ratings recently issued to Safety-
Kleen by Standard & Poor's and Moody's, is a very clear
indicator that this company is getting healthier and stronger
every quarter," McGill added.
Standard & Poor's and Moody's issued "BB-" and "B1" ratings,
respectively, to Safety-Kleen in June, and noted that the
ratings are stable.
JP Morgan Securities and Credit Suisse Securities were co-lead
arrangers of the Safety-Kleen refinancing.
About Safety-Kleen
Safety-Kleen, a privately held company, is North America's
premier provider of industrial oil collection and re-refining,
parts cleaner services, and industrial waste management.
Safety-Kleen offers its customers a complete set of responsible
re-refining, cleaning, and environmental solutions through its
fully integrated branch network designed to collect, process,
recycle, re-refine, and dispose of a wide range of both
hazardous and non-hazardous waste streams. The company has
approximately 4,500 employees serving hundreds of thousands of
customers in the United States, Canada and Puerto Rico.
* * *
Standard & Poor's Ratings Services assigned on June 17, 2006,
its 'BB-' corporate credit rating and stable outlook to Plano,
Texas-based parts cleaning, oil recycling and re-refining, and
industrial waste management company Safety-Kleen Systems Inc.
At the same time, Standard & Poor's assigned its 'BB-' bank loan
rating and recovery rating of '3' to Safety-Kleen's US$395
million senior secured credit facility.
Moody's Investors Service assigned on June 13, 2006, B1 ratings
to the proposed senior secured credit facilities of Safety-Kleen
Systems, Inc., an indirect, wholly-owned subsidiary of Safety-
Kleen HoldCo., Inc. Concurrently, Moody's assigned a B1
Corporate Family Rating to HoldCo. The outlook for the ratings
is stable. The transaction is in connection with the
refinancing of the company's capital structure through a
combination of equity and debt financing.
=============
U R U G U A Y
=============
* URUGUAY: State Firm to Launch Voice & Data Services Through TV
----------------------------------------------------------------
Edgardo Carvalho -- the vice president of Antel, Uruguay's
state-owned telecommunications firm -- told the local press
that, in a bid to increase its clients, the company will launch
voice and data services using television.
Antel currently has almost 1 million customers.
"We are planning a pilot program for the end of 2006 to offer
voice, image and data services through the fixed line connected
to a TV," Mr. Carvalho told Business News Americas.
Antel will look for a partner with a private content provider,
BNamericas reports, citing Mr. Carvalho. According to him,
Antel is not interested in providing its own content.
If current income seen in 2006 continues, Antel predicts sales
to increase 23.7% to almost US$600 million by the end of the
year from that of last year, according to the local press.
* * *
Fitch Ratings assigned these ratings on Uruguay:
Rating Rating Date
------ -----------
Country Ceiling BB- Mar. 7, 2005
Long Term IDR B+ Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB- Mar. 7, 2005
=================
V E N E Z U E L A
=================
CITGO PETROLEUM: Sulfur Recovery Unit Breaks Down
-------------------------------------------------
Representatives of Citgo Petroleum Corp. sent a report to local
regulatory bodies saying that the sulfur recovery unit at its
Corpus Christi refinery was damaged, El Universal reports.
Reuters relates that Citgo told the Texas Department of
Environmental Quality that the unit started malfunctioning early
on Monday until Tuesday.
El Universal notes that a trader in the Gulf Mexico said Citgo
was trying to stabilize the unit.
A Citgo spokesperson told El Universal that he could not comment
on the firm's daily operations or policies.
Headquartered in Houston, Texas, CITGO Petroleum Corporation
-- http://www.citgo.com/-- is owned by PDV America, an
indirect, wholly owned subsidiary of Petroleos de Venezuela
S.A., the state-owned oil company of Venezuela.
PDVSA is Venezuela's state oil company in charge of the
development of the petroleum, petrochemical and coal industry,
as well as planning, coordinating, supervising and controlling
the operational activities of its divisions, both in Venezuela
and abroad.
* * *
As reported in the Troubled Company Reporter on Feb. 16, 2006,
Standard and Poor's Ratings Services assigned a 'BB' rating on
CITGO Petroleum Corp.
* VENEZUELA: Reports 62.9% Increase in Export Revenues
------------------------------------------------------
The Bolivarian Republic of Venezuela's export revenues grew
62.9% in the first half of 2006, compared with the same period
in 2005, El Universal reports, citing a report from the official
National Statistics Institute.
INE president Elias Eljuri stressed in the report that the
positive performance of Venezuelan sales abroad was attributable
to the sustained economic growth over the last 10 quarters, El
Universal quotes.
January-June 2005 exports amounted to US$4.6 billion, while in
the same period this year, exports amounted to US$7.5 billion,
an increase of US$2.9 billion, the same report states. Exported
products include iron ore, crude oil and byproducts sold by the
public sector.
Venezuelan exports to Colombia, Ecuador, Mexico and the United
States amount for 81.2% of total sales in the first half.
Notably, exports to Mexico grew 73.1%, the Venezuelan official
news agency ABN reported.
* * *
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
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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.
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