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T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, August 16, 2006, Vol. 7, Issue 162
Headlines
A R G E N T I N A
TRANSENER: Incurs ARS1.3-Mil. Loss in Six Months Ended June 30
TRANSPORTES RUDAEFF: Trustee Verifies Claims Until Sept. 2
YUTY CONSTRUCCIONES: Claims Verification Deadline Is on Oct. 10
B A H A M A S
COMPLETE RETREATS: Club Ex-Members Want Refund Payment Secured
COMPLETE RETREATS: Panel Says DIP Loan Is Low Risk & Oversecured
WINN-DIXIE: Wants to Sell Seven Florida Stores & Equipment
WINN-DIXIE: Wants to Sell Harahan Warehouse Facility to Ackel
B E L I Z E
ANDREW CORP: Earns Lower Net Income for Third Quarter 2006
B E R M U D A
IMPEX COMPANY: Creditors Must File Proofs of Claim by Sept. 8
INTELSAT LTD: Incurs US$42.7MM Net Loss in Quarter Ended June 30
INTERNATIONAL SPACE: First Creditors Meeting Is on Aug. 18
INTERNATIONAL SPACE: First Shareholders Meeting Is on Aug. 18
POOLE INVESTMENTS: Final General Meeting Is Set for Sept. 28
REFCO: Chapter 11 Trustee Hires Conyers Dill as Bermuda Counsel
REFCO: Chap. 7 Trustee Has Until Sept. 12 to Decide on Contracts
SEATON INSURANCE: Proofs of Claim Filing Is Until August 25
SPARX LONG-SHORT: Last Day to File Proofs of Claim Is on Aug. 25
B O L I V I A
* BOLIVIA: Hydrocarbons Nationalization Suspension Raises Doubts
* BOLIVIA: Posts 6.38% Growth in Natural Gas Output in Jan-May
B R A Z I L
BANCO NACIONAL: Approves BRL50-Mil. Financing to Magazine Luiza
BANCO BMG: Moody's Rates US$150 Mil. Sr. Unsecured Notes at Ba3
COMPANHIA PARANAENSE: First Semester Revenues Reach BRL2.6 Bil.
COMPANHIA SIDERURGICA: USW Opposes Deal With Wheeling-Pittsburgh
DURA AUTOMOTIVE: Incurs US$131 Mil. Net Loss in Second Quarter
KLABIN: Secures BRL1.74BB from BNDES to Increase Prod'n Capacity
PETROLEO BRASILEIRO: Using Nansulate in Maintenance Program
VARIG SA: Plans to Purchase 50 Planes to Increase Fleet
* BRAZIL: IDB Approves US$600,000 Grant to Ecologica Institute
C A Y M A N I S L A N D S
ADMIRAL CBO: S&P Puts BB- Rating on Class A-2 Notes on WatchPos.
AHFP CUMBERLAND: Holding Final Shareholders Meeting on Sept. 7
AHFP DECCAN: Invites Shareholders for Final Meeting on Sept. 7
BROWNIE FUNDING: Final Shareholders Meeting Is Set for Sept. 7
CLASSY CAYMAN: Will Hold Final Shareholders Meeting on Sept. 7
CT BONDS: Holding Final Shareholders Meeting on Sept. 7
GANNET ONE: Schedules Final Shareholders Meeting on Sept. 7
GLOBAL TRADING: Proofs of Claim Filing Is Until Sept. 7
GLOBAL TRADING (II): Creditors Must File Claims by Sept. 7
KFC LIMITED: Final Shareholders Meeting Is Scheduled for Sept. 7
LAPUTA V: Shareholders Convene for a Final Meeting on Sept. 7
ML/ZWEIG DIMENNA: Last Shareholders Meeting Is Set for Sept. 7
POETIC CAYMAN: Final Shareholders Meeting Is Set for Sept. 7
SHINSEI SALES: Last Day to File Proofs of Claim Is on Sept. 7
SPN III: Deadline for Proofs of Claim Filing Is on Sept. 7
TRINITY FINANCE: Final Shareholders Meeting Set for Sept. 7
C H I L E
AES CORP: Joins Plug-In Hybrid Development Consortium
C O L O M B I A
CA INC: To Cut 1,700 Jobs to Achieve US$200M Annualized Savings
ECOPETROL: Government Begins 20% Stake Sale Procedures
C O S T A R I C A
* COSTA RICA: Will Ink Free Trade Bilateral Protocol with Panama
D O M I N I C A N R E P U B L I C
FALCONBRIDGE LTD: Xstrata Shareholders Approve Increased Offer
* DOMINICAN REPUBLIC: Fitch Says Liquidity Constrains Ratings
* DOMINICAN REPUBLIC: Gov'l Utility Subsidies Can't be Removed
E L S A L V A D O R
* EL SALVADOR: Mayors Aim to Implement Venezuelan Fuel Accord
G U A T E M A L A
* GUATEMALA: Japan Grants JPY1,733M Aid for Economic Development
* GUATEMALA: Six Months Gas Consumption Reaches 3.60MM Barrels
H O N D U R A S
* HONDURAS: President Will Ink Free Trade Accord with Taiwan
J A M A I C A
AIR JAMAICA: Reaches No Agreement with Union After Wage Meeting
KAISER ALUMINUM: Reports US$2.5 Mil. Net Loss in Second Quarter
* JAMAICA: Gov't Allegedly Mishandles Sugar Factory Divestment
M E X I C O
CINEMARK INC: To Buy Century Theatres' Equity for US$681 Million
ENESCO GROUP: Appoints Roger Odell to Board of Directors
MOVIE GALLERY: Hires Turnaround Experts Amidst Flagging Sales
PENN OCTANE: Amends and Restates Lease Agreement with Seadrift
SONIC CORP: S&P Assigns BB- Ratings on Proposed US$775M Debts
N I C A R A G U A
* NICARAGUA: Financial System Posts 614MM Nio First Half Profits
P A R A G U A Y
* PARAGUAY: State Firm's Monopoly Slows Broadband Penetration
P A N A M A
* PANAMA: Will Ink Free Trade Bilateral Protocol with Costa Rica
P E R U
IMPSAT FIBER: Posts US$69.4 Mil. Second Quarter 2006 Revenues
* PERU: Posts US$311MM First Half Steel & Metallurgical Exports
P U E R T O R I C O
ADELPHIA COMMS: Can Implement Post-Closing Incentive Program
ADELPHIA: Court Okays Local Franchising Settlement Procedures
DORAL FINANCIAL: Delays Filing of Form 10-Q for Second Quarter
MAXXAM INC: June 30 Balance Sheet Upside-Down by US$704 Million
T R I N I D A D & T O B A G O
BRITISH WEST: Confirms Mechanical Problems with Airbus Plane
U R U G U A Y
* URUGUAY: Fitch Says Dollarized Financial System Will Remain
* URUGUAY: Private Banks Post UYU874MM January-July 2006 Profit
V E N E Z U E L A
CITGO PETROLEUM: Intent to Sell Texas Refinery to Lyondell
PETROLEOS DE VENEZUELA: Wants to Offer Cheap Oil to Indians
* Large Companies with Insolvent Balance Sheets
- - - - -
=================
A R G E N T I N A
=================
TRANSENER: Incurs ARS1.3-Mil. Loss in Six Months Ended June 30
--------------------------------------------------------------
Transener SA, Argentina's major electrical distributor, has
reported a loss of ARS1,324,543 for the six months ended
June 30, 2006. Given that the utility company's first quarter
loss of ARS7.9 million was unchanged, it incurred about ARS6.5
million loss during the second quarter.
Transener said that during the second quarter net income
increased up to ARS204.96 million, 25.4% more than during the
same period of the previous exercise.
Operating costs increased 8.1% to ARS158.1 million.
The company's balance sheet showed a ARS1,081,793,574
shareholders' equity at June 30.
About Transener
Compania de Transporte de Energia Electrica en Alta Tension aka
Transener owns the national network of high-voltage power
transmission lines, which consist of nearly 8,800km of lines
together with the approximately 5,500km in its Transba
subsidiary's network.
On Feb. 23, 2006, Standard & Poor's Ratings Services raised its
local and foreign currency ratings on Argentina's largest
electricity transmitter, Compania de Transporte de Energia
Electrica en Alta Tension Transener S.A. aka Transener to 'B-'
from 'CCC+', and removed the ratings from CreditWatch with
positive implications.
TRANSPORTES RUDAEFF: Trustee Verifies Claims Until Sept. 2
----------------------------------------------------------
Ruben Acosta, the court-appointed trustee for Transportes
Rudaeff S.R.L.'s bankruptcy case, verifies creditors' proofs of
claim until Sept. 2, 2006.
Under Argentine bankruptcy law, Mr. Acosta is required to
present the validated claims in court as individual reports.
Court No. 15 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 Transportes Rudaeff
and its creditors.
Inadmissible claims may be subject for appeal in a separate
proceeding known as an appeal for reversal.
Mr. Acosta will also submit a general report that contains an
audit of Transportes Rudaeff's accounting and banking records.
The report submission dates have not been disclosed.
Transportes Rudaeff was forced into bankruptcy at the behest of
Nestor Bentancurt, whom it owes US$30,000.
Clerk No. 29 assists the court in the case.
The debtor can be reached at:
Transportes Rudaeff S.R.L.
Manzanares 1831
Buenos Aires, Argentina
The trustee can be reached at:
Ruben Acosta
Tucuman 1545
Buenos Aires, Argentina
YUTY CONSTRUCCIONES: Claims Verification Deadline Is on Oct. 10
---------------------------------------------------------------
Gustavo Ariel Fizman, the court-appointed trustee for Yuty
Construcciones S.R.L.'s bankruptcy proceeding, verifies
creditors' proofs of claim until Oct. 10, 2006.
Under Argentine bankruptcy law, Mr. Fizman is required to
present the validated claims in court as individual reports.
Court No. 19 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 Yuty Construcciones
and its creditors.
Inadmissible claims may be subject for appeal in a separate
proceeding known as an appeal for reversal.
Mr. Fizman will also submit a general report that contains an
audit of Yuty Construcciones' accounting and banking records.
The report submission dates have not been disclosed.
Yuty Construcciones was plunged into bankruptcy at the request
of Juan Antonio Godoy Benitez, whom it owes US$9,350.70.
Clerk No. 37 assists the court in the case.
The debtor can be reached at:
Yuty Construcciones S.R.L.
Bilinghurst 621
Buenos Aires, Argentina
The trustee can be reached at:
Gustavo Ariel Fizman
Acevedo 237
Buenos Aires, Argentina
=============
B A H A M A S
=============
COMPLETE RETREATS: Club Ex-Members Want Refund Payment Secured
--------------------------------------------------------------
An ad hoc committee of former members in Complete Retreats LLC
and its debtor-affiliates' destination clubs contends that the
Debtors are in default of their obligation to refund membership
deposits.
The Ad Hoc Committee of Withdrawn Members consists of more than
100 members who had resigned prior to the Debtors' bankruptcy
filing, but did not obtain refunds as required by their
membership agreements.
The current members of the Ad Hoc Committee are:
1. Christopher Swann,
2. Natasha Swann,
3. Frank Bomher,
4. W. Michael Reichert,
5. Michael Shalett,
6. Robert Higgins,
7. Vince Walls,
8. Chad Carpenter,
9. Steven F. Maier,
10. Michael G. Knox,
11. Tom Gruber,
12. George Greenwald,
13. Gilmore S. Haynie,
14. Amy George, and
15. Guy Bond.
Harris B. Winsberg, Esq., at Troutman Sanders LLP, in Atlanta,
Georgia, tells the U.S. Bankruptcy Court for the District of
Connecticut that the Ad Hoc Committee does not object to the
Debtors obtaining postpetition financing. However, the Ad Hoc
Committee is concerned that the Debtors are burning through cash
to support services for the current members at an unsustainable
economic level.
"Simply put, the Debtors are providing services to current
members at a significant loss to the detriment of the members
who have withdrawn," Mr. Winsberg asserts.
Mr. Winsberg notes that as reflected in their Budget, the
Debtors will burn approximately US$8,400,000 over the course of
the next 10 weeks, which is US$120,000 per day. The Debtors
project US$2,100,000 in revenues versus US$10,500,000 in
expenses over the next couple of months.
Accordingly, drastic action is needed to either increase fees or
to slash costs, Mr. Winsberg contends.
About Complete Retreats
Complete Retreats, LLC, Preferred Retreats, LLC, and their
subsidiaries were founded in 1998. Owned by Robert McGrath and
four minority owners, the companies operate a five-star
hospitality and real estate management business and are a
pioneer and market leader of the "destination club" industry.
Under the trade name "Tanner & Haley Resorts," Complete
Retreats, et al.'s destination clubs have numerous individual
and company members.
Destination club members pay up-front membership deposits,
annual dues, and daily usage fees. In return, members and their
guests enjoy the use of first-class private residences, and
receive an array of luxurious services and amenities in certain
exotic vacation destinations in the United States and locations
around the world, including: Abaco, Bahamas; Cabo San Lucas,
Mexico; Nevis, West Indies; Telluride, Colorado; and Jackson
Hole, Wyoming.
Complete Retreats and its debtor-affiliates filed for chapter 11
protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245
through 06-50306). Nicholas H. Mancuso, Esq., Jeffrey K. Daman,
Esq., Joel H. Levitin, Esq., David C. McGrail, Esq., Richard A.
Stieglitz Jr., Esq., at Dechert LLP, are representing the
Debtors in their restructuring efforts. Xroads Solutions Group,
LLC, is the Debtors financial and restructuring advisor. When
the Debtors filed for chapter 11 protection, they listed total
debts of US$308,000,000. (Complete Retreats
Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service,
Inc., 215/945-7000, http://bankrupt.com/newsstand/).
COMPLETE RETREATS: Panel Says DIP Loan Is Low Risk & Oversecured
----------------------------------------------------------------
The Official Committee of Unsecured Creditors in Complete
Retreats LLC and its debtor-affiliates' chapter 11 cases asks
the U.S. Bankruptcy Court for the District of Connecticut to
deny the Debtors' request for a short-term debtor-in-possession
financing to the extent that it:
(a) seeks to condition any refinancing of the DIP Loan upon
repayment of the Existing Loans; and
(b) constrains the Debtors' and the Committee's ability to
seek and obtain alternative DIP Financing to repay the
DIP Loan without contemporaneously repaying the Existing
Loans.
The Troubled Company Reporter on July 28, 2006 noted that the
Court gave the Debtors interim authority to borrow up to
US$4,900,000 of the DIP financing pledged by The Patriot Group,
LLC, as lender and agent, and LPP Mortgage, Ltd.
In the loan agreement, The Patriot agreed to provide the Debtors
with a US$10,000,000 postpetition revolving line of credit to
give them some time to secure a longer-term DIP financing
arrangement.
The Committee asserts that the DIP Loan, which provides up to a
meager US$8,500,000 advance, is a low risk short-term investment
that appears to be substantially oversecured.
The benefit of the DIP Loan to the Debtors' estates is as meager
as the risk to the Lenders, Jonathan B. Alter, Esq., at Bingham
McCutchen LLP, in Hartford, Connecticut, contends.
"The DIP Loan provides the Debtors with a small amount of cash
to cover the bare bones operation of [their] business for up to
two months in [C]hapter 11," Mr. Alter asserts. "In contrast,
the burden to the Debtors' estates and their other creditors is
substantial, as are the benefits that inure exclusively to the
Lenders."
Mr. Alter argues that the DIP Credit Agreement and the proposed
orders approving the DIP Loan:
-- prohibit the Debtors and the Creditors Committee from
seeking any alternative long term DIP financing solution
other than one provided by the Lenders or one that pays
all of the Lenders' purported US$63,000,000 claims;
-- significantly limit the Creditors Committee's ability to
investigate the Existing Loans and the propriety of the
Debtors' admissions to the validity, amount, liens and
priority of the Existing Loans and the Debtors' broad
releases of any defense or claim against the Lenders with
respect to the Existing Loans. The DIP Loan provides
virtually no funding for any Investigation;
-- seek to mandate that the investigation take place on a
highly expedited basis to be completed no later than two
months from the date of the Committee's formation;
-- attempts to divest the Committee of its right to exercise
any discovery rights under Rule 2004 of the Federal Rules
of Bankruptcy Procedure or otherwise in connection with
any investigation, leaving the investigation dependent
upon the Lenders' "informal" cooperation.
Consequently, the DIP Loan and the Orders prevent the Debtors
and the Committee from complying with their fiduciary duties to
unsecured creditors and other stakeholders of the estates, Mr.
Alter maintains.
The Existing Loans refer to the US$53,000,000 prepetition
secured loan the Debtors borrowed from The Patriot Group LLC and
LPP Mortgage, Ltd.
While the DIP Credit Agreement and the Orders contemplate that
the Committee could file an "Objection" if it finds a basis to
challenge the Existing Loans, the documents provide that any
action by the Committee to actually prosecute any challenge is
an "Event of Default" under the DIP Credit Agreement requiring
immediate "full and indefeasible payment" of both the DIP Loan
and the Existing Loans and lifting the automatic stay to permit
the Lenders to liquidate the Debtors' business and assets, Mr.
Alter tells Judge Shiff.
Mr. Alter also points out that the DIP Credit Agreement seek a
number of extraordinary items, including:
(1) a waiver of all rights to surcharge the Lenders'
collateral for the cost incurred by the Debtors' estates
to preserve the collateral under Section 506(c) of the
Bankruptcy Code;
(2) an attempt to insulate the US$1,480,000 postpetition
payment to Patriot relating to the Existing Loans from
challenge by declaring the payment to be "indefeasible in
all respects";
(3) seeking to limit any claims by "creditors and security
holders" of the Debtors against the Lenders to "direct
damages," even in the case of meritorious claims for
willful misconduct by the Lenders; and
(4) a cross-default provision in the DIP Credit Agreement
that provides that any default under the Existing Loans
will constitute an Event of Default.
The DIP Loan seeks to inextricably link itself to the Existing
Loans and provide the Lenders with disproportionate benefits
that far outweigh the benefits provided to the Debtors and their
creditors, Mr. Alter argues. "In this regard, the DIP Loan is
little more than a disguised 'roll up' of the Existing Loans."
The Committee does not seek to prejudice the Lenders' rights as
secured lenders under the Existing Loans, Mr. Alter explains.
It simply seeks to maintain a fair balance in the bankruptcy
proceedings to permit it and the Debtors a reasonable
opportunity to reorganize the Debtors' affairs.
The Committee objects to several other provisions of the DIP
Credit Agreement and the Proposed Final Order. The Committee
also asks the Court to include these changes in the Final Order:
(1) The Professional Fee Carve Out is insufficient to permit
the Debtors' and the Committee's counsel to perform the
tasks necessary for both to satisfy their fiduciary
duties;
(2) The Investigation Rights provided under the Order must be
expanded to authorize and reserve all rights with respect
to any claim or cause of action that creditors or the
estates may have against the Lenders related to the
Existing Loans and their relationship and conduct with
respect to the Debtors;
(3) The Committee's investigation rights under the Orders
should be expanded to a period of at least 90 days,
subject to further extension for good cause shown, and
clarified that all transfers, payments, adequate
protection granted to the Lenders and other transactions
related to the Existing Loans remain subject to the
Committee's rights of investigation and, if warranted
after the investigation, potential recovery, disgorgement
or other appropriate relief;
(4) The Committee's investigation rights should not exclude
the right to employ formal discovery pursuant to
Bankruptcy Rule 2004 or otherwise;
(5) The DIP Credit Agreement should not contain a cross-
default to the Existing Loans. The terms of the Existing
Loans have not been disclosed in the DIP Motion.
Moreover, the Existing Loans are presumably already in
default due to the Debtors' Chapter 11 filings;
(6) The DIP Loan collateral should not include any avoidance
actions under Chapter 5 of the Bankruptcy Code;
(7) The Debtor's waiver of Section 506(c) rights should be
limited to the DIP Loan collateral, not any collateral
securing the Existing Loans;
(8) Section 10.5 of the DIP Credit Agreement should be
disapproved to the extent that it seeks to limit the
rights and potential claims of creditors and other
stakeholders;
(9) The provisions of the order relating to Events of
Default, the Lenders' enforcement rights and automatic
stay relief should be modified to provide at least five
business days notice to the Court, the Committee and
other parties through a court filed document that
describes in reasonable detail the basis for any claimed
default. Moreover, the DIP order should provide the
Committee and the Debtors with the right to seek an
emergency hearing to contest the existence of any event
of default and to seek affirmative relief;
(10) The payment of accrued interest as adequate protection
for the Existing Loans should be clarified to be interest
at the "non-default rate" under the Existing Loans;
(11) The Committee's counsel should receive contemporaneous
copies of all notices, disclosure and reports provided to
or received from the Lenders pursuant to the DIP Credit
Agreement or the Court's Final Order;
(12) Certain Event of Default notice and cure periods under
the DIP Credit Agreement should be extended to a more
reasonable period; and
(13) Section 5.09 of the DIP Credit Agreement should be
clarified to not limit the right of the Debtors or the
Committee to seek relief under Section 365 of the
Bankruptcy Code.
"The Lenders have not provided DIP financing sufficient to
provide the Debtors with a reasonable possibility of
reorganization," Mr. Alter says. "They have only provided
sufficient financing to explore whether there is an opportunity
to refinance their claims as quickly as possible, while at the
same time neutralizing the automatic stay and other bankruptcy
risks attendant to their liquidation of the Debtors' estate
through foreclosure."
Lastly, Mr. Alter relates that the Committee was appointed
recently and has not had a reasonable opportunity to explore
other DIP financing structures but it is possible that given the
appearance of collateral value underlying the Existing Loans, a
new DIP lender may be willing to provide financing to repay the
DIP Loan on a non-priming basis secured by liens junior to
existing liens on the Debtors' assets. "Unsecured creditors,
including those who deposited more than US$300,00,000 for
memberships with the Debtors, should not be precluded from
pursuing that option."
About Complete Retreats
Complete Retreats, LLC, Preferred Retreats, LLC, and their
subsidiaries were founded in 1998. Owned by Robert McGrath and
four minority owners, the companies operate a five-star
hospitality and real estate management business and are a
pioneer and market leader of the "destination club" industry.
Under the trade name "Tanner & Haley Resorts," Complete
Retreats, et al.'s destination clubs have numerous individual
and company members.
Destination club members pay up-front membership deposits,
annual dues, and daily usage fees. In return, members and their
guests enjoy the use of first-class private residences, and
receive an array of luxurious services and amenities in certain
exotic vacation destinations in the United States and locations
around the world, including: Abaco, Bahamas; Cabo San Lucas,
Mexico; Nevis, West Indies; Telluride, Colorado; and Jackson
Hole, Wyoming.
Complete Retreats and its debtor-affiliates filed for chapter 11
protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245
through 06-50306). Nicholas H. Mancuso, Esq., Jeffrey K. Daman,
Esq., Joel H. Levitin, Esq., David C. McGrail, Esq., Richard A.
Stieglitz Jr., Esq., at Dechert LLP, are representing the
Debtors in their restructuring efforts. Xroads Solutions Group,
LLC, is the Debtors financial and restructuring advisor. When
the Debtors filed for chapter 11 protection, they listed total
debts of US$308,000,000. (Complete Retreats Bankruptcy News,
Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000,
http://bankrupt.com/newsstand/).
WINN-DIXIE: Wants to Sell Seven Florida Stores & Equipment
----------------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates seek
authority from the U.S. Bankruptcy Court for the Middle District
of Florida to sell the Additional Stores and assume and assign
the applicable leases for the highest or best offer, which the
Debtors receive and find acceptable at or before the Auction on
Aug. 29, 2006, at 10:00 a.m.
D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP,
in New York, tells the Court that to date, the Debtors have sold
or rejected more than 361 leases. The Debtors have now
determined that seven additional stores located in Florida
should be closed and the leases either sold or rejected.
The Debtors have extensively marketed the Additional Stores
through The Food Partners and DJM Asset Management. These
brokers have directly contacted more than 2,500 potential
purchasers.
On July 27, 2006, the Debtors posted information on the
Additional Stores on an Internet Web site as part of their
efforts to market the Additional Stores. Potential purchasers
who have signed a confidentiality agreement may access the
Merrill Site. The Merrill Site includes financial performance
information, copies of the applicable leases and amendments, a
site and fixture plan for each store, a summarized environmental
assessment, a form asset purchase agreement, and, when
available, real property title information.
The Debtors propose to pay the cure amounts related to the
assumed leases.
Proposed
Store No. Location Cure
--------- -------- --------
124 2910 Kerry Forest Parkway, Tallahassee US$8,915
162 14286 Beach Boulevard, Jacksonville 8,410
202 13841 Wellington Trace, West Palm Beach 6,685
380 12141 Pembroke Road, Pembroke Pines 24,908
565 400 North Navy Boulevard, Pensacola 0
605 1199 East Bay Drive, Largo 15,466
2308 2820 Doyle Road, Deltona 50,932
If no bid is received for any one or more of the Additional
Stores, upon notice to the Creditors' Committee, the Debtors
will ask the Court to approve the Debtors' rejection of those
leases effective on the Rejection Date and to establish a claims
bar date for any rejection damage claims at 30 days after the
Rejection Date.
The Debtors will comply with the Court-approved bidding
procedures. Bids for any one or more of the Additional Stores
must be submitted by 5:00 p.m. E.T. on Aug. 23, 2006. A
qualified bidder must execute an asset purchase agreement, which
provides for the assumption and assignment of the relevant lease
to the Purchaser.
Landlords who dispute the proposed cure amount for their lease
are required to file with the Court and serve on the Debtors an
objection on or before August 23, 2006.
The Debtors will hold the Auction at the Omni Hotel, 225 Water
Street, Jacksonville, Florida 32202, for any of the Additional
Stores on which the Debtors have received an acceptable bid.
At the conclusion of the Auction, the Debtors will determine,
after consultation with the DIP Lender Agent Representatives and
the Committee's Professionals, which, if any, is the highest or
best offer for any particular store or group of stores.
A hearing to approve the Successful Bid(s) will be held at 1:00
p.m. E.T. on Sept. 7, 2006.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14,
2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840).
D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and
Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King
& Spalding LLP, represent the Debtors in their restructuring
efforts. Paul P. Huffard at The Blackstone Group, LP, gives
financial advisory services to the Debtors. Dennis F. Dunne,
Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B.
Macdonald, Esq., at Akerman Senterfitt give legal advice to the
Official Committee of Unsecured Creditors. Houlihan Lokey &
Zukin Capital gives financial advisory services to the
Committee. When the Debtors filed for protection from their
creditors, they listed US$2,235,557,000 in total assets and
US$1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News,
Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000,
http://bankrupt.com/newsstand/).
WINN-DIXIE: Wants to Sell Harahan Warehouse Facility to Ackel
-------------------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Middle District of Florida to authorize
Winn-Dixie Logistics, Inc., to sell its fee simple title in a
warehouse facility located in Jefferson Parish, Louisiana --
Harahan Warehouse Facility -- to Ackel Real Estate, LLC, and
John Georges, subject to higher and better offers.
Before the Petition Date, the Debtors used the Harahan Warehouse
Facility to supply stores located in Louisiana. Since the
Petition Date, the Debtors have consolidated their warehouse
operations for this area into their Hammond, Louisiana Facility
and no longer need the Harahan Warehouse Facility.
Since filing for bankruptcy, the Debtors have marketed the
Harahan Warehouse Facility extensively through DJM Asset
Management, Inc. DJM sent over 2,500 sale notices for the
Harahan Warehouse Facility to potential purchasers. Through
DJM's efforts, the Debtors have received four offers, including
the offer by Ackel for US$6,750,000. According to the Debtors,
Ackel's offer is the highest or otherwise best offer for the
Harahan Warehouse Facility.
On Aug. 3, 2006, WD Logistics and Ackel entered into a Facility
Agreement, which provides, among other things, that:
-- Ackel has deposited US$2,000,000 in escrow;
-- The assets will be transferred free and clear of any
liens, claims, interests and encumbrances other than the
Permitted Encumbrances;
-- The initial minimum overbid that may be accepted by the
Debtors at any auction must have a value of at least
US$6,952,500; and
-- WD Logistics has agreed to pay Ackel a termination fee of
US$50,000 for Ackel's expenses in the event Ackel is not
the successful bidder at the Auction for the Assets.
A full-text copy of the Facility Agreement is available for free
at http://ResearchArchives.com/t/s?f87
Bids must be sent to James Avallone at DJM, 445 Broadhollow
Road, Suite 417, Melville, NY 11747, with a copy to the Debtors'
counsel, no later than 12:00 p.m. (prevailing Eastern Time) on
August 21, 2006.
To qualify as a competing bid, the offer must net the Debtors'
estates at least US$6,952,500 and be accompanied by a certified
check made out to Smith, Gambrell & Russell, LLP, as Escrow
Agent, in an amount not less than US$2,000,000.
If the Debtors receive a higher or better offer for the Assets,
they will conduct an auction for the Assets in accordance with
the Court-approved Bidding Procedures. The Auction will take
place at 10:00 a.m. (prevailing Eastern Time) at the offices of
Smith Hulsey & Busey, 225 Water Street, Suite 1800,
Jacksonville, Florida, on Tuesday, August 23, 2006.
The Debtors will conduct the Auction in consultation with the
Official Committee of Unsecured Creditors and their DIP Lender.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14,
2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840).
D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and
Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King
& Spalding LLP, represent the Debtors in their restructuring
efforts. Paul P. Huffard at The Blackstone Group, LP, gives
financial advisory services to the Debtors. Dennis F. Dunne,
Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B.
Macdonald, Esq., at Akerman Senterfitt give legal advice to the
Official Committee of Unsecured Creditors. Houlihan Lokey &
Zukin Capital gives financial advisory services to the
Committee. When the Debtors filed for protection from their
creditors, they listed US$2,235,557,000 in total assets and
US$1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News,
Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000,
http://bankrupt.com/newsstand/).
===========
B E L I Z E
===========
ANDREW CORP: Earns Lower Net Income for Third Quarter 2006
----------------------------------------------------------
For the third quarter ended June 30, 2006, Andrew Corp. reported
net income of US$7 million, compared to net income of US$13
million in the same period last year.
Andrew Corp.'s total sales for the third quarter of 2006
increased 13% to US$551 million from US$487 million in the prior
year quarter.
Commenting on the results, Ralph Faison, the Company's president
and chief executive officer, said, "[o]ur third quarter
financial results reflect positive operational improvement. Our
price surcharges on cable products have now been implemented
across all customers in all geographic regions. Despite an
unfavorable product mix in Base Station Subsystems and
approximately US$3.0 million of filter product line transition
costs, gross margin for the company increased 150 basis points
versus the prior quarter."
Mr. Faison continued, "[o]verall global demand trends have
continued to be positive for the wireless infrastructure
industry as demonstrated by record sales and orders for the
company during the third quarter. We believe our industry-
leading product portfolio and globally diversified customer base
provides the company with a strategic ability to benefit from
network upgrades and expansions that are occurring in each major
region around the globe."
Balance Sheet and Cash Flow Highlights
Andrew Corp.'s cash and cash equivalents at June 30, 2006, were
US$116 million compared to US$155 million at March 31, 2006 and
US$189 million at Sept. 30, 2005.
Accounts receivable were US$539 million and days' sales
outstanding were 85 days at June 30, 2006, compared to US$478
million and 83 days at March 31, 2006 and US$471 million and 76
days at Sept. 30, 2005.
Inventories were US$391 million and inventory turns were 4.4x at
June 30, 2006, compared to US$369 million and 4.1x at
March 31, 2006 and US$353 million and 4.6x at Sept. 30, 2005.
The acquisition of Precision in April 2006 added approximately
US$17 million of accounts receivable and US$9 million of
inventory.
Total debt outstanding and debt to capital were US$302 million
and 16.1% at June 30, 2006, compared to US$313 million and 16.7%
at March 31, 2006 and US$303 million and 16.3% at
Sept. 30, 2005.
Cash flow from operations was US$24.5 million for the third
quarter, compared to cash flow from operations of US$13.4
million in the prior quarter and cash flow from operations of
US$27.2 million in the prior year quarter. Capital expenditures
were US$17.7 million for the third quarter, compared to US$20.8
million in the prior quarter and US$16.2 million in the prior
year quarter.
About Andrew
Headquartered in Westchester, Illinois, Andrew Corporation
(NASDAQ: ANDW) -- http://www.andrew.com/-- designs,
manufactures and delivers innovative and essential equipment and
solutions for the global communications infrastructure market.
The company serves operators and original equipment
manufacturers from facilities in 35 countries including, among
others, these Latin American countries: Argentina, Bahamas,
Belize, Barbados and Bermuda. Andrew is an S&P 500 company
Founded in 1937.
* * *
As reported in yesterday's Troubled Company Reporter, Standard &
Poor's Ratings Services revised its CreditWatch implications on
Andrew Corp. to negative from developing. The 'BB' corporate
credit rating and other ratings on the company were placed on
CreditWatch developing on Aug. 7, 2006.
=============
B E R M U D A
=============
IMPEX COMPANY: Creditors Must File Proofs of Claim by Sept. 8
-------------------------------------------------------------
Impex Company Ltd.'s creditors are given until Sept. 8, 2006, to
prove their claims to Nicholas Hoskins, the company's
liquidator, or be excluded from receiving any distribution or
payment.
Creditors are required to send by the Sept. 8 deadline their
full names, addresses, the full particulars of their debts or
claims, and the names and addresses of their lawyers, if any, to
Mr. Hoskins.
A final general meeting will be held at the liquidator's place
of business on Sept. 15, 2006, at 11:00 a.m., or as soon as
possible.
Impex Company's shareholders will determine during the meeting,
through a resolution, the manner in which the books, accounts
and documents of the company and of the liquidator will be
disposed.
Impex Company's shareholders agreed on July 19, 2006, to place
the company into voluntary liquidation under Bermuda's Companies
Act 1981.
The liquidator can be reached at:
Nicholas Hoskins
Wakefield Quin
Chancery Hall, 52 Reid Street
Hamilton, Bermuda
INTELSAT LTD: Incurs US$42.7MM Net Loss in Quarter Ended June 30
----------------------------------------------------------------
Intelsat, Ltd., reported results for the three-month and six-
month periods ended June 30, 2006.
Results for both periods include Intelsat, Ltd., and its
subsidiaries, referred to as Intelsat or the company. Results
do not reflect the company's July 3, 2006, acquisition of
PanAmSat Holding Corporation, which it renamed Intelsat Holding
Corporation.
Intelsat, Ltd., reported revenue of US$310.5 million and a net
loss of US$42.7 million for the quarter ended June 30, 2006.
The company also reported EBITDA, or Intelsat, Ltd. earnings
before interest, taxes and depreciation and amortization, for
the quarter of US$221.6 million, or 71 percent of revenue, and
the company also reported Sub Holdco Adjusted EBITDA for the
same period of US$241.0 million, or 78 percent of revenue. Sub
Holdco Adjusted EBITDA less the benefit of a one-time channel
termination fee of US$20.6 million recognized in the second
quarter was US$220.4 million, or 76 percent of revenue.
For the six months ended June 30, 2006, Intelsat reported
revenue of US$591.0 million, a net loss of US$132.8 million, and
EBITDA of US$401.7 million, or 68 percent of revenue. Sub
Holdco Adjusted EBITDA for the six month period was US$447.7
million, or 76 percent of revenue. Sub Holdco Adjusted EBITDA
less the benefit of the one-time channel termination fee of
US$20.6 million described above was US$427.1 million, or 75
percent of revenue.
Intelsat generated strong free cash flow from operations of
US$123.5 million through the second quarter of 2006. Free cash
flow from operations is defined as net cash provided by
operating activities, less payments for satellites and other
property, plant and equipment and associated capitalized
interest.
"The second quarter featured solid performance at Intelsat and
concluded with the closing of the PanAmSat transaction, a deal
that has created the new global leader in satellite-based
communications services," said Intelsat Chief Executive Officer,
Dave McGlade. "Intelsat's core lease services and
GlobalConnex(SM) managed solutions, up 8 percent and 26 percent
respectively as compared to the year-ago quarter, continued to
lead our business performance, driven by demand for corporate
data and Voice Over IP applications. With the benefits of our
controls over operating expense now demonstrated by the
expansion in our margins, we are ready to enhance our global
operations through continuing to execute a disciplined
integration of PanAmSat."
"The integration is on track and proceeding as planned," McGlade
added. "By making key integration decisions early on, we have
been able to focus as one company on customers and the
marketplace. Recent orders such as Intelsat General's contract
in support of the German Military Satellite program validate
that effort and position us to create 2007 revenue momentum."
Integration Process Highlights
Intelsat's integration process includes four primary thrusts
-- sales and marketing, staffing, operations and facilities.
The sales and marketing organizations were integrated shortly
after closing, with near term objectives that include network
optimization in order to increase marketable capacity. Staffing
decisions are largely complete. Intelsat expects total headcount
to reduce from approximately 1,350 at deal close to a steady-
state headcount of approximately 1,000 by mid-year 2008. Most
facility closures and integration of back office functions are
expected to be completed by mid-2007. Intelsat expects to
conclude much of the satellite fleet and operations center
integration in 2007, with the process fully complete by the end
of 2008.
Intelsat expects to realize approximately US$92 million in
annualized operating cost savings by the end of 2008. In order
to achieve these expected savings, Intelsat believes it will
incur approximately US$180 million in one time expenditures,
approximately half of which are expected to be incurred in the
second half of 2006 and substantially all of the balance in
2007. Integration expenses include approximately US$40 million
to US$45 million in capital expenditures.
Three Months Ended June 30, 2006
Total revenue increased US$20.7 million, or 7%, for the three
months ended June 30, 2006, from US$289.8 million for the three
months ended June 30, 2005, driven by strong results from lease,
channel, and managed solutions service offerings.
Lease services revenue increased US$13.9 million, or 8 percent,
to US$196.9 million as compared to US$183.0 million in the same
period in 2005, primarily due to increased demand from Network
Services and Telecom customers in North America, Africa, and the
Middle East.
Channel revenue increased US$9.5 million to US$66.7 million for
the three months ended June 30, 2006 from US$57.2 million for
the three months ended June 30, 2005. The increase was
primarily attributable to the previously mentioned one-time fee
of US$20.6 million, offset by the continuing decline in legacy
channel services revenue.
Mobile Satellite Services, or MSS, and other revenue declined by
US$9.9 million, or 45 percent, to US$12.0 million for the three
months ended June 30, 2006, as compared to US$21.9 million in
the prior-year period, primarily due to reduced usage of mobile
satellite services sold to customers of Intelsat General. These
declines were partially offset by increases in managed solutions
revenue, which increased by US$7.2 million, or 26 percent, to
US$34.9 million from US$27.7 million in the year-ago period,
driven primarily by increased demand for trunking and private
line solutions for Network Services and Telecom customers.
Total operating expenses for the three months ended
June 30, 2006 declined US$7.1 million to US$231.8 million, from
US$238.9 million in the same period in 2005. Depreciation and
amortization expense increased US$4.8 million, or 3 percent, to
US$148.6 million for the three months ended June 30, 2006, from
US$143.8 million for the same period in 2005, primarily due to
the accelerated depreciation of certain retiring non-satellite
assets.
Direct cost of revenue declined by US$13.9 million, or 23
percent, to US$46.1 million for the period from US$60.0 million
for the same period in 2005, primarily due to the reduction in
third party capacity costs related to the decline in MSS and
lease service sales to customers of Intelsat General and lower
insurance costs. Selling, general and administrative expense
for the second quarter of 2006 was US$37.1 million, an increase
of US$2.0 million from US$35.1 million in the three months ended
June 30, 2005, due primarily to lower bad debt expense for the
period in 2005.
Net loss of US$42.7 million for the three months ended
June 30, 2006 reflected a decrease of US$10.7 million from
US$53.4 million of net loss for the three months ended
June 30, 2005. The net loss decrease resulted primarily from
the higher revenues and lower costs described above, offset
somewhat by higher interest expense.
Interest expense increased US$8.9 million to US$108.3 million
for the three months ended June 30, 2006, from US$99.5 million
for the same period in 2005. Current period interest expense
included US$14.9 million in non-cash expenses associated with
the amortization and accretion of discounts recorded on existing
debt.
EBITDA of US$221.6 million, or 71% of revenue, for the three
months ended June 30, 2006, reflected an increase of US$27.1
million, or 14 percent, from US$194.5 million, or 67 percent of
revenue, for the same period in 2005. This increase was
primarily due to the higher revenues and lower costs described
above. Sub Holdco Adjusted EBITDA increased US$33.8 million to
US$241.0 million, or 78 percent of revenue, for the three months
ended June 30, 2006 from US$207.2 million, or 71 percent of
revenue, for the same period in 2005. Sub Holdco Adjusted EBITDA
less the benefit of the one-time channel termination fee was
US$220.4 million, or 76 percent of revenue.
Six Months Ended June 30, 2006
Total revenue increased US$8.0 million, or 1 percent, to
US$591.0 million for the six months ended June 30, 2006 from
US$583.0 million for the six months ended June 30, 2005, driven
by increases in sales of lease and managed solutions service
offerings.
Lease services increased US$14.6 million, or 4 percent, to
US$386.7 million as compared to US$372.1 million in the same
period in 2005, due to increased demand from Network Services
and Telecom customers in Africa, the Middle East and North
America.
Channel revenue decreased US$2.2 million to US$115.4 million for
the six months ended June 30, 2006 from US$117.6 million for the
six months ended June 30, 2005 due to the continuing decline in
the use of legacy channel services. MSS and other revenue
declined by US$17.2 million to US$22.7 million for the six
months ended June 30, 2006, as compared to US$39.9 million in
the prior-year period, primarily due to reduced usage of mobile
satellite services sold to customers of Intelsat General. These
declines were partially offset by increases in managed solutions
revenue, which increased by US$12.8 million to US$66.2 million
for the six months ended June 30, 2006 from US$53.4 million for
the year-ago period, driven by increased demand for trunking and
private line solutions for Network Services and Telecom
customers.
Total operating expenses for the six months ended June 30, 2006
declined US$114.9 million to US$481.4 million, from US$596.3
million for the same period in 2005, which included a US$69.2
million satellite impairment charge due to the failure of our
IS-804 satellite in January 2005.
Depreciation and amortization expense increased US$24.2 million,
or 9 percent, to US$303.2 million for the six months ended
June 30, 2006, from US$279.0 million for the same period in
2005, primarily due to purchase accounting treatment following
the Acquisition and accelerated depreciation for retiring non-
satellite assets, as well as to our IA-8 satellite, which
entered service in July 2005.
Direct costs of revenue declined by US$29.6 million, or 23
percent, to US$101.2 million for the first half of 2006 from
US$130.8 million for the same period in 2005, primarily due to
the reduction in third party capacity costs related to the
decline in MSS and lease service sales to customers of Intelsat
General.
Selling, general and administrative expense for the first half
of 2006 was US$77.0 million, a decline of US$40.0 million from
US$117.0 million in the six months ended June 30, 2005. The
decrease was due primarily to lower professional fees of US$40.8
million as compared to the first six months of 2005, incurred
mainly in connection with the Acquisition, offset by recovery of
previously written-off bad debts of US$7.3 million in 2005.
Net loss of US$132.8 million for the six months ended June 30,
2006 reflected a decrease of US$72.3 million from US$205.1
million of net loss for the six months ended June 30, 2005.
This decrease was primarily due to the IS-804 impairment charge
and professional fees associated with the Acquisition that were
incurred in 2005, and the higher revenues and lower costs in
2006 described above.
EBITDA of US$401.7 million, or 68 percent of revenue, for the
six months ended June 30, 2006 reflected an increase of US$135.8
million from US$265.9 million, or 46 percent of revenue, for the
same period in 2005. This increase was primarily due to the IS-
804 impairment charge and fees associated with the Acquisition
incurred in 2005, and higher revenues and lower costs in 2006
described above. Sub Holdco Adjusted EBITDA increased US$32.0
million to US$447.7 million, or 76 percent of revenue, for the
six months ended June 30, 2006 from US$415.7 million, or 71
percent of revenue, for the same period in 2005. Sub Holdco
Adjusted EBITDA less the benefit of the one-time channel
termination fee of US$20.6 million was US$427.1 million, or 75
percent of revenue.
At June 30, 2006, Intelsat's backlog, representing expected
future revenue under contracts with customers, was US$3.74
billion. At March 31, 2006, Intelsat's backlog was US$3.80
billion.
Revenue Percentage Contribution Comparison by Customer Set
and Service Category
By Customer Set:
Three Months Ended Six Months Ended
June 30, June 30,
2005 2006 2005 2006
Network Services
and Telecom 61% 66% 61% 66%
Government 22% 17% 22% 17%
Media 17% 17% 17% 17%
By Service Category:
Three Months Ended Six Months Ended
June 30, June 30,
2005 2006 2005 2006
Lease 63% 64% 64% 65%
Channel 20% 21% 20% 20%
Managed Solutions 9% 11% 9% 11%
Mobile Satellite
Services 8% 4% 7% 4%
About Intelsat
Intelsat, Ltd. - http://www.intelsat.com/-- offers telephony,
corporate network, video and Internet solutions around the globe
via capacity on 25 geosynchronous satellites in prime orbital
locations. Customers in approximately 200 countries rely on
Intelsat's global satellite, teleport and fiber network for
high-quality connections, global reach and reliability. In
Bermuda, the company operates through Intelsat (Bermuda) Ltd.
* * *
As reported in the Troubled Company Reporter on June 19, 2006,
Fitch upgraded the Issuer Default Rating for Intelsat to 'B'
from 'B-' pro forma for its pending acquisition of PanAmSat.
The ratings were also removed from Rating Watch Negative, where
they had originally been placed on Aug. 30, 2005. Fitch said
the Rating Outlook is Stable.
As reported in the Troubled Company Reporter on June 13, 2006,
Moody's Investors Service affirmed the B2 corporate family
rating of Intelsat, Ltd., and downgraded the corporate family
rating of PanAmSat Corp. to B2, given the greater clarity
regarding the final capital structure and the near-term
completion of the PanAmSat acquisition by Intelsat.
INTERNATIONAL SPACE: First Creditors Meeting Is on Aug. 18
----------------------------------------------------------
International Space Development Limited's creditors will gather
for a first meeting at 11:00 a.m. on Aug. 18, 2006, at:
KPMG Financial Advisory Services Limited
Crown House, 4 Par la Ville Road
Hamilton, Bermuda
Proxy forms to be used at the meeting have been mailed to all
known creditors and must be lodged with the provisional
liquidator by 5:00 p.m. on Aug. 17, 2006.
The provisional liquidator can be reached at:
Malcolm Butterfield
KPMG Financial Advisory Services Limited
Crown House, 4 Par-la-Ville Road
Hamilton, Bermuda
INTERNATIONAL SPACE: First Shareholders Meeting Is on Aug. 18
-------------------------------------------------------------
International Space Development Limited's shareholders will
gather for a first meeting at 10:30 a.m. on Aug. 18, 2006, at:
KPMG Financial Advisory Services Limited
Crown House, 4 Par la Ville Road
Hamilton, Bermuda
Proxy forms to be used at the meeting have been mailed to all
known shareholders and must be lodged with the provisional
liquidator by 5:00 p.m. on Aug. 17, 2006.
The provisional liquidator can be reached at:
Malcolm Butterfield
KPMG Financial Advisory Services Limited
Crown House, 4 Par-la-Ville Road
Hamilton, Bermuda
POOLE INVESTMENTS: Final General Meeting Is Set for Sept. 28
------------------------------------------------------------
Pool Investments Limited's final general meeting will be at 9:30
a.m. on Sept. 28, 2006, at:
Messrs. Conyers Dill & Pearman
Clarendon House, Church Street
Hamilton, Bermuda
Poole Investments' shareholders will determine during the
meeting, through a resolution, the manner in which the books,
accounts and documents of the company and of the liquidator will
be disposed. Furthermore, the shareholders will decide whether
or not Poole Investments will be dissolved.
The liquidator can be reached at:
Robin J. Mayor
Messrs. Conyers Dill & Pearman
Clarendon House, Church Street
Hamilton, Bermuda
REFCO: Chapter 11 Trustee Hires Conyers Dill as Bermuda Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorizes Marc Kirschner, the Chapter 11 trustee overseeing the
Refco Capital Markets, Ltd.'s estate, to employ Conyers Dill &
Pearman, as his special Bermuda counsel.
Judge Robert Drain rules that if Conyers Dill seeks a waiver to
represent Russia Growth Fund Ltd., on any matter in which the
counsel would be adverse to RCM, and the RCM Trustee chooses not
to grant the requested waiver, then:
(i) Conyers Dill may withdraw from further representation of
RCM and may represent RGF on any matter; and
(ii) neither RCM nor the RCM Trustee will assert, or permit
anyone on RCM's behalf to assert, that Conyers Dill's
prior representation of RCM should disqualify it from
representing RGF in any manner.
Conyers Dill may be compensated in accordance with an engagement
letter with the RCM Trustee, subject to applicable requirements
for payment of fees and disbursements. No party may challenge
Conyers Dill's fees under Section 328(c) of the Bankruptcy Code
to the extent the Bermuda counsel provides services to RGF
consistent with the provisions of the Order and the Agreement.
Tina L. Brozman, Esq., at Bingham McCutchen LLP in New York,
tells the Court that on October 19, 2005, RCM and Refco Global
Finance, Ltd., filed voluntary winding up petitions in Bermuda.
On October 26, 2005, the Bermuda court appointed joint
provisional liquidators in the Bermuda Proceedings.
Conyers Dill will:
(1) advise the Trustee with respect to his powers and duties
under Bermuda law in the management and operation of RCM's
business and properties;
(2) attend meetings and negotiate with representatives of
creditors and other parties-in-interest of RCM in Bermuda
and advise and consult on the conduct of the case,
including all of the legal and administrative requirements
of operating in a provisional liquidation parallel to a
U.S. bankruptcy proceeding;
(3) take all necessary actions to protect and preserve the RCM
estate, including the prosecution of actions on its
behalf, the defense of any actions commenced against it,
negotiations concerning all litigation in which RCM and
the Trustee may be involved in Bermuda and objections to
claims filed in Bermuda against the estate;
(4) interface and coordinate with the joint provisional
liquidators and any analogous parties that may be
appointed under the laws of various jurisdictions;
(5) prepare on behalf of the Trustee all motions,
applications, answers, orders, reports and papers
necessary to the administration in Bermuda of the RCM
estate;
(6) negotiate and prepare on the Trustee's behalf, a scheme of
arrangement or other resolution of the RCM estate,
explanatory statements and all related agreements and
documents and take any necessary action on behalf of RCM
to obtain approval of the scheme or other resolution of
the RCM estate; and
(7) appear before the Bermuda Supreme Court, the Bermuda
Court of Appeal, Bermuda Magistrate Courts and Bermuda
regulatory bodies and protect the interests of RCM's
estate before the Bermuda courts and regulators.
Robin J. Mayor, Esq., a partner at Conyers Dill, is one of the
lead professionals from her firm performing services to the
Trustee. Ms. Mayor charges US$575 per hour her services.
Other Conyers Dill expected to be primarily involved in the case
and their current hourly rates are:
Professional Designation Hourly Rate
------------ ----------- -----------
David Cooke Partner US$605
Paul Smith Counsel US$575
Daina Casling Associate US$350
Guy Cooper Associate US$340
The firm's customary rates are:
Designation Hourly Rate
----------- -----------
Partners US$420 - US$620
Associates US$300 - US$540
Ms. Mayor assures the Court that Conyers Dill does not represent
any interest materially adverse to RCM, its creditors and its
estate.
About Refco Inc.
Based in New York, Refco Inc. -- http://www.refco.com/-- is a
diversified financial services organization with operations in
14 countries and an extensive global institutional and retail
client base. Refco's worldwide subsidiaries are members of
principal U.S. and international exchanges, and are among the
most active members of futures exchanges in Chicago, New York,
London and Singapore. In addition to its futures brokerage
activities, Refco is a major broker of cash market products,
including foreign exchange, foreign exchange options, government
securities, domestic and international equities, emerging market
debt, and OTC financial and commodity products. Refco is one of
the largest global clearing firms for derivatives.
The Company and 23 of its affiliates filed for chapter 11
protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006).
J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represent the Debtors in their restructuring efforts. Luc
A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP,
represents the Official Committee of Unsecured Creditors. Refco
reported US$16.5 billion in assets and US$16.8 billion in debts
to the Bankruptcy Court on the first day of its chapter 11
cases.
Refco LLC, an affiliate, filed for chapter 7 protection on
Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC,
is a regulated commodity futures company that has businesses in
the United States, London, Asia and Canada. Refco, LLC, filed
for bankruptcy protection in order to consummate the sale of
substantially all of its assets to Man Financial Inc., a wholly
owned subsidiary of Man Group plc. Albert Togut, the chapter 7
trustee, is represented by Togut, Segal & Segal LLP.
On April 13, 2006, the Court appointed Marc S. Kirschner as
Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner
is represented by Bingham McCutchen LLP. RCM is Refco's
operating subsidiary based in Bermuda.
Three more affiliates of Refco, Westminster-Refco Management
LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC,
filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y.
Case Nos. 06-11260 through 06-11262). (Refco Bankruptcy News,
Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000,
http://bankrupt.com/newsstand/).
REFCO: Chap. 7 Trustee Has Until Sept. 12 to Decide on Contracts
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
extended, until September 12, 2006, the time within which Albert
Togut, the Chapter 7 trustee overseeing Refco, LLC's estate, may
assume or reject certain executory contracts.
The Chapter 7 trustee continues to identify and analyze
executory contracts to which the Chapter 7 Debtor is a
counterparty, to determine which contracts the estate will need
to assume or reject, Scott E. Ratner, Esq., at Togut, Segal &
Segal LLP, in New York, explains.
To date, Mr. Ratner tells the Court, the Refco LLC Trustee has
identified, evaluated and disposed of more than 700 executory
contracts, by either rejection or assumption and assignment of
the contracts to Man Financial, Inc. Nearly all of the assumed
and assigned executory contracts involved broker agreements.
Approximately 70 executory contracts, mostly equipment or vendor
contracts, are still being evaluated and whose final disposition
has not yet been determined, Mr. Ratner reports.
Since the Chapter 7 Filing Date, the Refco LLC Trustee has met
all obligations imposed on Refco LLC's estate under Section 365
with respect to executory contracts, Mr. Ratner says. The
Trustee also is performing all of the estate's obligations under
Refco LLC's Acquisition Agreement with Man Financial.
Mr. Ratner contends that Man Financial is entitled to receive
performance under, and the benefit of, certain of Refco LLC's
executory contracts for a specified period of time pursuant to
the Acquisition Agreement.
Mr. Ratner assures the Court that the Extension Request is (i)
without prejudice to the rights of any of the non-debtor
counterparties to seek, for cause shown, an earlier date upon
which the Refco LLC Trustee must assume or reject a specific
contract and (ii) without prejudice to the Trustee's right to
seek a further extension if necessary and appropriate.
About Refco Inc.
Based in New York, Refco Inc. -- http://www.refco.com/-- is a
diversified financial services organization with operations in
14 countries and an extensive global institutional and retail
client base. Refco's worldwide subsidiaries are members of
principal U.S. and international exchanges, and are among the
most active members of futures exchanges in Chicago, New York,
London and Singapore. In addition to its futures brokerage
activities, Refco is a major broker of cash market products,
including foreign exchange, foreign exchange options, government
securities, domestic and international equities, emerging market
debt, and OTC financial and commodity products. Refco is one of
the largest global clearing firms for derivatives.
The Company and 23 of its affiliates filed for chapter 11
protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006).
J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represent the Debtors in their restructuring efforts. Luc
A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP,
represents the Official Committee of Unsecured Creditors. Refco
reported US$16.5 billion in assets and US$16.8 billion in debts
to the Bankruptcy Court on the first day of its chapter 11
cases.
Refco LLC, an affiliate, filed for chapter 7 protection on
Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC,
is a regulated commodity futures company that has businesses in
the United States, London, Asia and Canada. Refco, LLC, filed
for bankruptcy protection in order to consummate the sale of
substantially all of its assets to Man Financial Inc., a wholly
owned subsidiary of Man Group plc. Albert Togut, the chapter 7
trustee, is represented by Togut, Segal & Segal LLP.
On April 13, 2006, the Court appointed Marc S. Kirschner as
Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner
is represented by Bingham McCutchen LLP. RCM is Refco's
operating subsidiary based in Bermuda.
Three more affiliates of Refco, Westminster-Refco Management
LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC,
filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y.
Case Nos. 06-11260 through 06-11262). (Refco Bankruptcy News,
Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000,
http://bankrupt.com/newsstand/).
SEATON INSURANCE: Proofs of Claim Filing Is Until August 25
-----------------------------------------------------------
Seaton Insurance Company of Bermuda Limited's creditors are
given until Aug. 25, 2006, to prove their claims to Robin J.
Mayor, the company's liquidator, or be excluded from receiving
any distribution or payment.
Creditors are required to send by the Aug. 25 deadline their
full names, addresses, the full particulars of their debts or
claims, and the names and addresses of their lawyers, if any, to
Mr. Mayor.
A final general meeting will be held at the liquidator's place
of business on Sept. 13, 2006, at 9:30 a.m., or as soon as
possible.
Seaton Insurance's shareholders will determine during the
meeting, through a resolution, the manner in which the books,
accounts and documents of the company and of the liquidator will
be disposed.
Seaton Insurance's shareholders agreed on Aug. 1, 2006, to place
the company into voluntary liquidation under Bermuda's Companies
Act 1981.
The liquidator can be reached at:
Robin J. Mayor
Messrs. Conyers Dill & Pearman
Clarendon House, Church Street
Hamilton, HM DX, Bermuda
SPARX LONG-SHORT: Last Day to File Proofs of Claim Is on Aug. 25
----------------------------------------------------------------
SPARX Long-Short Master Fund Limited's creditors are given until
Aug. 25, 2006, to prove their claims to Robin J. Mayor, the
company's liquidator, or be excluded from receiving any
distribution or payment.
Creditors are required to send by the Aug. 25 deadline their
full names, addresses, the full particulars of their debts or
claims, and the names and addresses of their lawyers, if any, to
Mr. Mayor.
A final general meeting will be held at the liquidator's place
of business on Sept. 15, 2006, at 9:30 a.m., or as soon as
possible.
SPARX Long-Short's shareholders will determine during the
meeting, through a resolution, the manner in which the books,
accounts and documents of the company and of the liquidator will
be disposed.
SPARX Long-Short's shareholders agreed on Aug. 9, 2006, to place
the company into voluntary liquidation under Bermuda's Companies
Act 1981.
The liquidator can be reached at:
Robin J. Mayor
Messrs. Conyers Dill & Pearman
Clarendon House, Church Street
Hamilton, HM DX, Bermuda
=============
B O L I V I A
=============
* BOLIVIA: Hydrocarbons Nationalization Suspension Raises Doubts
----------------------------------------------------------------
The suspension of the nationalization of the hydrocarbons sector
in Bolivia has spurred doubts on the ability of Yacimientos
Petroliferos Fiscales Boliviano, the state energy firm -- to
handle the nation's extensive oil and gas reserves, the
Associated Press reports.
As reported in the Troubled Company Reporter-Latin America on
Aug. 15, 2006, the Bolivian government temporarily suspended the
nationalization of its oil and natural gas industry. President
Evo Morales had declared on May 1 the government's taking
control of the foreign-controlled fields. Published reports
said that the country was forced to halt the process because
Yacimientos Petroliferos lacked the necessary funds and
operating capacity to take over production. Bolivia's
Hydrocarbons Ministry had said that the government sought US$180
million from the central bank to replenish the coffers of
Yacimientos Petroliferos. Very little advancements were made in
taking over foreign-owned refineries, raising export prices for
natural gas and rewriting contracts with the affected foreign
companies.
However, Bolivian law prohibits the bank from extending credit
to public entities except in cases of emergency, AP relates.
AP notes that the Hydrocarbons Ministry disclosed plans to
restructure and modernize Yacimientos Petroliferos. When
President Evo Morales nationalized the oil and gas industry, he
called for the state firm to be restructured within 60 days as a
transparent, efficient, and socially controlled corporation.
However, the opposition told AP that the suspension of the
nationalization meant lack of progress made since the decree was
implemented.
Pietro Pitts, an oil industry analyst and editor-in-chief of the
online magazine Latin Petroleum, told AP, "The state oil company
in Bolivia doesn't have the technical know-how, doesn't have the
capital, and doesn't have the experience to run those fields
that were run for a long time by the bigger guys."
The nationalization was a media show, AP says citing Fernando
Messmer, the leader of the conservative party Podemos'
congressional delegation. He said that the plants are still run
by multinational firms -- many of them are not yet paying the
government the 82% share of revenue President Morales ordered.
AP underscores that a group of Bolivian oil and gas companies
said that since May 1, more than 30 foreign and domestic
petroleum businesses have shut down or have relocated their
business to other South American nations.
"YPFB has demonstrated that, as a business, it has nothing more
than those four letters," Eduardo Perez, the director of the La
Paz-based Radio Catolica Fides, told AP.
* * *
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
* BOLIVIA: Posts 6.38% Growth in Natural Gas Output in Jan-May
--------------------------------------------------------------
Preliminary figures from Instituto Nacional de Estadistica de
Bolivia -- the statistics institute in Bolivia -- show that
natural gas production in the January-May period this year
increased 6.38% to 189 billion cubic feet (Bf3), compared with
the same period last year, Business News Americas reports.
BNamericas relates that the highest production was in March.
Output during the month was 41.2Bf3. In May, production was
40.8Bf3 and in January, it was 36.9Bf3.
According to the report, about 181Bf3 of gas was transported in
the January-May 2006 period, which was about 7.01% greater
compared with the first five months of 2005. Of the 181Bf3
transported, 156Bf3 was exported while 24.8Bf3 remained in the
country.
Oil production, however, dropped 3.42% to 6.07 million barrels
(Mb) in the first five months of 2006, BNamericas says. A total
of 9.95Mb were transported during the period this year, about
4.21% greater compared with the same period last year. Of the
9.95Mb transported, about 7.2Mb were remained in the country
while the remainder was exported.
BNamericas notes that refined oil products in Bolivia include:
-- diesel, whose production increased 1.56% to 1.83Mb;
-- automotive gasoline, which grew 0.38% to 1.6Mb;
-- jet fuel, which rose 10.4% to 423,000 barrels;
-- liquefied petroleum gas, which dropped 6.41% to 336,000
barrels;
-- kerosene, which increased 6.06% to 70,000 barrels; and
-- aviation fuel, which grew 7.69% to 14,000 barrels.
The report says that about 2.75Mb of refined products were
transported domestically in the first five months of 2006, which
was about 1.03% lesser compared with the same period of 2005.
Production of lubricants increased 5.38% to 1.25 million tons in
January-May 2006, compared with January-May 2005, BNamericas
states. Lubricants include:
-- automotive and industrial oils,
-- greases,
-- asphalt, and
-- paraffin.
* * *
Fitch Ratings assigned these ratings on Bolivia:
Rating Rating Date
------ -----------
Country Ceiling B- Jun. 17, 2004
Long Term IDR B- Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating B- Dec. 14, 2005
===========
B R A Z I L
===========
BANCO NACIONAL: Approves BRL50-Mil. Financing to Magazine Luiza
---------------------------------------------------------------
Banco Nacional de Desenvolvimento Economico e Social aka BNDES
approved a BRL50 million financing to Magazine Luiza S.A. to
acquire 40,000 microcomputers, which will be resold under the
"Computer for All" program founded by the federal government.
It is about the second BNDES direct operation for the
acquisition and resale of PCs by the Magazine Luiza network,
which has roughly 350 stores spread throughout seven States and
250 municipalities. In the first financing, the company
received a BRL30 million loan, which enabled the company to
resell roughly 23,000 computers.
Financing
The "Computer for All" program has received BRL158 million from
BNDES since July, enabling the retail network to acquire 131,000
units for resale to the population.
Other than Magazine Luiza's request, other 20 financing requests
have already been approved, amounting to an average of BRL4
million, to:
-- Ponto Frio,
-- Pao de Acucar,
-- Condor Super Center,
-- Americanas.com,
-- Eletrosom,
-- Eletro Dom Pedro,
-- TV Sky Shop and
-- Submarino.com.
The "Computer for All" program accepts only equipment produced
in industries accredited simultaneously in BNDES and in the
Ministry of Science and Technology. Magazine Luiza has been
trading the acquisition of microcomputers with Positivo
Informatica, Epcom Eletronica and Digibras manufacturers, whose
products are duly accredited.
The program was created last year by the federal government to
increase the population's access to computers and Internet at
available prices. The equipment must be in compliance with the
technical characteristics and specifications established in the
program. The minimum required configuration includes, but not
limited to:
-- Celeron 370 or 478 processor,
-- 128-Kbyte memory,
-- 15-inch monitor,
-- 40 Gigabyte HD, and
-- 56Kbps fax modem.
The program has the objective of making sales reach seven
million PCs in next 3 years, making five million available to
families and two million to micro, small and medium enterprises.
Another aim set in the program is the reduction in sales
performed by the microcomputer informal market. Recent surveys
show that from the total of 3 million PCs traded in Brazil
annually, roughly 80% would end up in the so-called "gray
market", which uses smuggled or irregularly sold spare parts.
To face the problem, the government sent in 2005, a provisory
measure to Congress that became Law 11.196 and exempted the
Social Integration Program and the Financial Contribution for
the Social Security from charge regarding microcomputers with
wholesale prices below BRL2,500. BNDES also released a financing
program to retail networks that reaped favorable results. In 6
months time, it is expected that the "gray market" will have
been reduced to 50%.
* * *
As reported in the Troubled Company Reporter on March 3, 2006,
Standard & Poor's Ratings Services raised its foreign currency
counterparty credit rating on Banco Nacional de Desenvolvimento
Economico e Social S.A. aka BNDES to 'BB' with a stable outlook
from 'BB-' with a positive outlook. The company's local
currency credit rating was also shifted to 'BB+' with a stable
outlook from 'BB' with a positive outlook.
BANCO BMG: Moody's Rates US$150 Mil. Sr. Unsecured Notes at Ba3
---------------------------------------------------------------
Moody's Investors Service assigned a Ba3 long-term foreign
currency rating to Banco BMG S.A.'s US$150,000,000 senior
unsecured notes, with final maturity in 2010. The outlook on
the rating is stable.
Moody's stated that the Ba3 rating incorporates Banco BMG's
fundamental credit quality, which is reflected by its Ba3 global
local-currency deposit rating and which includes all relevant
country risks. At this rating level, Banco BMG's foreign
currency bond rating is unconstrained by Brazil's country
ceiling.
Moody's assigned a D- bank financial strength rating to Banco
BMG on 05/10/2005, in addition to the Ba3 global local-currency
deposit rating. The ratings reflect the bank's track record of
adequate profitability and efficiency ratios, which compare well
with peers', and which reflect BMG's niche business strategy
centered in consumer lending. The bank's core earnings remain
solid, and they are indicative of high margins in its core
product, as well as of a lean operating structure, also
supported by adequate asset quality.
Banco BMG is headquartered in Minas Gerais, Brazil and had R$4.1
billion (approximately US$1.85 billion) in total assets as of
June 2006.
COMPANHIA PARANAENSE: First Semester Revenues Reach BRL2.6 Bil.
---------------------------------------------------------------
Companhia Paranaense de Energia aka Copel disclosed operating
results for the first half of 2006.
On April 13, through Order 769/2006, Aneel approved the
constitution of guarantees by Copel in order to guarantee the
agreement concerning gas purchases for the Araucaria
Thermoeletric Plant or UEG Araucaria. As a result, the company
reversed the payable overage. The final effect of this reversal
totaled BRL424 million.
Highlights
-- Net Operating Revenues: BRL2,605 million -- 11% up on
the same period in 2005.
-- Operating Income: BRL1,212 million, versus BRL322 million
in the 1H05.
-- Net Income: BRL740 million (BRL2.71 per thousand shares),
versus BRL197 million in the first six months of 2005.
-- EBITDA: BRL1,037 million, 112% more than the BRL488
million recorded in the 1H05. Excluding the agreement
concerning the supply of gas to the Araucaria Thermal
Power Plant effects, EBITDA for the first half of 2006
would be BRL738 million.
-- Return on Equity: 27% p.a. Excluding the reversal effects
the return on Equity would be 11%.
-- Copel adjusted its retail tariffs by 5.12% on average, as
of June 24.
-- Billed power consumption dipped 0.6% year-on-year: Copel
Distribuicao's grid market, comprising the captive market
and all free customers within the company's concession
area, grew by 3%.
-- On May 31, Copel assumed ownership of UEG Araucaria,
ending the judicial dispute with El Paso.
Main Events
Copel closed the first half with a net income of BRL740.4
million (BRL2.71 per thousand shares). Second-quarter net
income totaled BRL 569.7 million.
Reversal of provisions for the gas purchase agreement
As a result of the agreement entered into by Copel, Compagas and
Petrobras for gas supply to Araucaria and the approval by Aneel,
through Order 769/2006 on April 13, 2006, of the guarantees put
up by Copel, the company reversed provisions, that had been
constituted for this purpose, as follows:
BRL million
HISTORY AMOUNTS
Operating Expenses - Raw-materials 328.5
Operating Expenses - PASEP/COFINS (30.4)
OPERATING RESULT 298.1
Financial Revenues - Discount Granted 283.2
Financial Expenses - Fine Reversal 72.7
FINANCIAL RESULT 355.9
Income Tax and Social Contribution (230.2)
EFFECT IN THE RESULT 423.8
Tariff Adjustment
On June 24, Copel adjusted its retail tariffs by 5.12% on
average, 4.91% of which referring to the annual tariff and 0.21%
to the tariff's external financial components.
Rating
Copel's rating, measured by Fitch Ratings, went up on June 29,
2006, from A+ to AA-, due to the good results presented by the
company in the last months.
Electric power market
Copel's first-half billed power consumption dipped by 0.6% year-
on-year. Consumption by the residential, commercial and rural
segments increased by 2.6%, 4.1% and 2.4%, respectively, while
that of the industrial segment fell by 6.0% due to the slowdown
in agribusiness caused by drought and the consequent harvest
failure, plus the appreciation of the Real against the US
Dollar, which jeopardized exports. Copel Distribuicao's grid
market grew by 3.0% over
1H06.
UEG Araucaria
On May 31, 2006, Copel assumed ownership of UEG Araucaria,
ending the judicial and arbitration disputes with El Paso over
the agreements covering the electricity to be sold by the plant,
which had dragged on for almost three and a half years in Brazil
and France.
In fact, the severity of the drought that affects the Brazilian
South Region led the Ministry of Mines and Energy and the ONS --
National Electric System Operator -- asked Copel to initiate a
series of precautionary measures, including a plant start-up.
Specialists from the equipment manufacturers monitor this plant
start-up. This is regarded as necessary due to the lengthy
period (since the beginning of 2003) during which the facility
has been in hibernation. All the inspections undertaken to date
show that the plant has been adequately maintained by Copel and
the emergency procedure requested by the authorities should
occur within the next few days.
Workforce
Copel closed the first half with a workforce of 7,991. On June
30, Copel Distribuicao recorded a customer-to-employee ratio of
568 and Compagas, Elejor and UEG Araucaria, all Copel
subsidiaries, had 66, 4 and 5 employees, respectively. COPEL's
workforce is distributed per business unit as:
COPEL Geracao = 945 employees
COPEL Transmissao = 913 employees
COPEL Distribuicao = 5,804 employees
COPEL Telecomunicacoes = 302 employees
COPEL Participacoes = 27 employees
Aneel's Consumer Satisfaction Index 2005
Following a survey of 19,200 consumers nationwide, Aneel
appointed Copel as the best of Brazil's large-scale power
utilities. The company received an approval rating of 74.44 by
consumers in its operating area, the highest among the big
companies and in the south of Brazil, even surpassing the
average satisfaction rating among US consumers, which is 73.
Returns of 58% in 2005
A survey by the Fundacao Getulio Vargas ranked Copel 9th among
the 50 Brazilian listed companies that generated most value for
their shareholders in 2005, with returns of 58%. This survey
has been undertaken for nine years and ranks companies according
to an indicator called TSR (Total Shareholder Return), which
measures how much value the firm has generated in terms of share
appreciation and dividends paid to shareholders.
Opening of Fundao Plant
The Fundao Plant, located on the Jordao River, in the mid-south
of Parana State, was inaugurated on June 28. The plant, which
is part of the Elejor power complex, has an installed capacity
of 120MW and the first 60MW began commercial operations on
June 22. The remaining 60MW are scheduled for start-up in
August.
Global Reporting Initiative
Copel's 2005 annual report was drawn up in line with the
guidelines laid down by the GRI, which develops and disseminates
global parameters for evaluating the economic, social and
environmental impact of a company's activities, products and
services. Copel received an "In accordance" rating from the
organization for complying with all the requirements. Only 5
other Brazilian companies received the same rating.
ABRADEE Award
Copel was elected the best power distributor in the south of
Brazil as well as the best company in the social responsibility
category in the 2006 edition of the award, sponsored by ABRADEE
-- Brazilian Association of Power Distributors.
Financial and Operating Performance
Market Expansion
Copel's total billed power consumption came to 9,347 GWh in the
1H06, 0.6% down year-on-year. Residential consumption, which
accounts for 25.6% of the company's market, grew by 2.6%,
chiefly due to increased sales of home appliances fueled by the
credit expansion, and the higher number of billed consumers.
The upturn would have been even higher but for lower average
temperatures than in the 1HO5, which acted as a brake on
consumption.
Commercial consumption, which accounts for 18.3% of the market,
recorded the best performance among major customer segments,
moving up 4.1% year-on-year, mainly pushed by the healthy
service sector performance, plus the higher number of consumers
(1.8% up on the 1H05). The 2.4% growth in rural consumption was
primarily due to the prolonged drought, which demanded greater
irrigation use.
Consumption by the captive industrial segment dropped 10.3%
year-on-year, chiefly due to the April/05 transfer of free
customers from Copel Distribuicao to Copel Geracao. Copel's
total industrial consumption, including free consumers, fell by
6.0%, due to the slowdown in agribusiness, caused by drought and
the consequent harvest failure, plus the appreciation of the
Real against the US Dollar, which jeopardized exports and the
domestic market.
In June, Copel had 3,297,163 customers, 74,350 more than in June
2005, an increase of 2.3%.
Copel Distribuicao's grid market, comprising the captive market
and all free customers within the company's concession area,
increased by 3.0% in the 1H06.
Revenues
First-half net operating revenues totaled BRL2,605.4 million,
10.6% up on the BRL2,356.3 million recorded in the same period
in 2005. This increase was primarily due to:
(i) the reduction in the discounts granted to costumers who
pay their bills on time, which averaged 5% as of
February 2005 and 4.4% as of August 2005;
(ii) higher "supply" revenue, due to the cancellation of the
initial contract between Copel Geracao and Copel
Distribuicao and the consequent sale of energy from Copel
Geracao at the first old energy auction for the 2006-2013
period;
(iii) the increase in "use of transmission plant", due to the
9.1% adjustment ratified by Aneel Resolution 150, of
July 1, 2005; and
(iv) the increase in "gas sale revenue", due to higher gas
distribution to third parties.
Operating Expenses
First-half operating expenses totaled BRL1,744.5 million, 14.1%
less than the BRL2,029.8 million recorded in the 1H05. The main
variations were:
-- "Energy purchased for resale" fell 12.4%, mainly due to
alterations in the methodology for calculating the CVA,
authorized by Aneel in Technical Note 175 of June 2006.
The main amounts booked were:
-- BRL135.5 million from Itaipu,
-- BRL109.7 million from Cien,
-- BRL43.4 million from Itiquira and
-- BRL300.3 million from the energy auction.
Also, BRL58.6 million was booked as passive CVA.
-- The 25.8% increase in the "use of transmission grid line"
was due to the 9.1% tariff adjustment confirmed by Aneel
Resolution 150, of July 1, 2005, in addition to
remuneration from new transmission assets and the net
effects of CVA costs amounting to BRL 58.0 million.
-- "Personnel" expenses moved up by 6.2% due to the October
2005 pay rise and the increase in the number of employees.
-- The 24.4% upturn in the "pension plan and other benefits"
line was a result of the increase in the workforce and the
booking of estimated costs for 2006, according to
actuarial criteria, in compliance with CVM Deliberation
371/2000.
-- The balance in the "raw material and supply for electric
power production" line reflected the reversal of BRL298.1
million due to the agreement between Copel, Petrobras and
Compagas, related to natural gas for the Araucaria Plant.
-- The "natural gas and supply for the gas business" line
refers to all the gas acquired by Compagas from Petrobras.
The decline was due to the termination of the gas purchase
contract for UEG Araucaria.
-- The increase in "third-party services" was mainly due to
higher costs from mail, technical consulting and travel.
-- The upturn in "depreciation and amortization" was caused
by the entry of new fixed assets in use related to Elejor
and UEG Araucaria.
-- The increase in "regulatory charges" was chiefly due to
the higher amount booked under the Energy Development
Account -- CDE. The total amount booked in the first half
comprised:
-- BRL115.9 million under the Fuel Consumption Account
or CCC;
-- BRL22.8 as financial compensation for the use of
water resources;
-- BRL75.4 million under the CDE; and
-- BRL7.5 million as Aneel's oversight fees.
-- The figures under "electric efficiency and development
research" obey the criteria for investments in such
programs as defined in Aneel Resolution 176, of
November 28, 2005.
-- The "expenses recoverable" line presented growth of 71.5%,
primarily due to the reclassification of the CCC Subsidy
under "other operating revenues", as determined by Aneel
Resolution 473 of March 06, 2006.
-- The increase in the "other operating expenses" account was
mainly due to provisions for contingencies related to the
Energetica Rio Pedrinho (BRL25.0 million) and the
Consorcio Salto Natal Energetica (BRL 23.8 million).
EBITDA
EBITDA totaled BRL1,036.6 million in the first half, 112.4% up
on the BRL488.1 million posted in the same period in 2005.
Excluding the agreement concerning the supply of gas to the
Araucaria Thermal Power Plant effects, EBITDA for the first half
of 2006 would be BRL738,5 million.
Financial Result
Financial revenue moved up 179.1% over the 1H05, primarily due
to:
-- the booking of BRL283.2 million related to the discounts
obtained in the negotiations between Copel, Petrobras and
Compagas on the gas purchase agreement for UEG Araucaria;
-- increased interest from financial investments due to a
higher cash position in the period; and
-- gains from derivative operations.
Financial expenses fell by 11.6%, essentially due to the
reversal of BRL 72.7 million in delinquency fines from the gas
purchase contract with Compagas.
Operating Result
Copel's first-half operating result totaled BRL 1,212.2 million,
directly influenced by the reversal of amounts related to the
UEG Arauc ria gas contract. However, even if we ignore this
effect, the period operating result was still 73.5% up year-on-
year.
Non-operating Result
The 1H06 non-operating result reflected the net effect of write-
offs of assets and rights registered under permanent assets and
BRL 41 million in equity loss from the accrued losses recorded
by UEG Araucaria.
Net Income
Copel recorded a first-half net income of BRL740.4 million,
including the net effects of the UEG Araucaria gas contract
(BRL423.8 million). Excluding these effects, net income would
have totaled BRL316.6 million, 61% up on the BRL196.7 million
recorded in the 1H05.
Assets
On June 30, 2006, Copel's total assets stood at BRL11,072.8
million. The company's first-half capex totaled BRL671.4
million:
-- BRL3.7 million of which allocated to power generation
projects,
-- BRL73.8 million to transmission projects,
-- BRL144.7 million to distribution works,
-- BRL12.6 million to telecommunications and
-- BRL436.6 million spent on Araucaria Thermal Plant
acquisition.
Elejor and Compagas, whose balance sheets are consolidated with
Copel, invested BRL53.2 million in generation projects, and
BRL6.6 million in gas pipelines, respectively.
Liabilities and Shareholders' Equity
On June 30, 2006, Copel's total debt amounted to BRL1,938.7
million, representing a debt to equity ratio of 31.3%.
Excluding Elejor's debt, Copel's debt to equity ratio would have
been 26.3%. Shareholders' equity came to BRL6,190.6 million,
16.1% more than in June 2005 and equivalent to BRL22.62 per
thousand shares.
Headquartered in Parana, Brazil, COPEL aka Companhia Paranaense
de Energia SA -- http://www.copel.com/-- transmits and
distributes electricity to more than 3 million customers in the
state of Paran and has a generating capacity of nearly 4,600 MW,
primarily from hydroelectric plants. COPEL also offers
telecommunications, natural gas, engineering, and water and
sanitation services. The company restructured its utility
operations in 2001 into separate generation, transmission, and
distribution subsidiaries to prepare for full privatization,
which has been indefinitly postponed. In response, COPEL is
re-evaluating its corporate structure. The government of Parana
controls about 59% of COPEL.
* * *
Copel's BRL100,000,000 debentures due March 1, 2007, is rated
Ba3 by Moody's.
COMPANHIA SIDERURGICA: USW Opposes Deal With Wheeling-Pittsburgh
----------------------------------------------------------------
The United Steelworkers or USW will use every means at its
disposal to oppose the proposed transaction between Wheeling-
Pittsburgh Corp. and Companhia Siderurgica Nacional aka CSN.
In a letter delivered to the company on Aug. 14, 2006, David
McCall, director of USW District 1 and the union's chief
negotiator with Wheeling-Pittsburgh, informed James Bradley,
Chairman, President and CEO of the company, that "the
Steelworkers Union is filing a grievance in order to rectify the
company's egregious violations of the Right to Bid provisions of
our labor agreement."
The USW's agreement with Wheeling-Pittsburgh provides the Union
with the right to organize a transaction in the event the
company decides or is presented with an offer to sell the
company. Until the Union is given the same period of time given
to other parties, Wheeling-Pittsburgh may enter into no
contracts regarding a potential sale.
Wheeling-Pittsburgh "breached our contract when it accepted
CSN's offer," Mr. McCall said, adding that the company's
contention that the USW must present a competing transaction by
September 8, 2006, is "completely without merit."
In fact, the union letter asserted, "Even the most conservative
reading of the labor agreement requires that the company enter
into no contract, including most certainly the definite
agreement that you have announced as your next step in the CSN
transaction, prior to February 5, 2007."
"Our union has a long history of successfully opposing corporate
transactions that fail to consider the best interests of the men
and women who work in the mills," said Leo W. Gerard, USW
international president.
"While we clearly recognize the importance of consolidation to
the future of the steel industry," Mr. Gerard added, "we will
only support a transaction that fully protects our members'
rights."
The Union has previously indicated its strong support for the
transaction proposed by Esmark, Inc.
About Wheeling-Pittsburgh
Wheeling-Pittsburgh operates solely in the United States,
producing hot rolled, cold rolled, galvanized, pre-painted and
tin mill sheet products.
About CSN
Companhia Siderurgica Nacional aka CSN produces, sells, exports
and distributes steel products, like hot-dip galvanized sheets,
tin mill products and tinplate. The company also runs its own
iron ore, manganese, limestone and dolomite mines and has
strategic investments in railroad companies and power supply
projects.
* * *
Standard & Poor's Ratings Services affirmed on Aug. 4, 2006, its
'BB' long-term corporate credit rating on Brazil-based steel
maker Companhia Siderurgica Nacional aka CSN after the
announcement of its association with U.S.-based steel maker
Wheeling-Pittsburgh Corp. in the U.S. The outlook is stable.
Fitch Ratings viewed 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 ratings 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)'.
DURA AUTOMOTIVE: Incurs US$131 Mil. Net Loss in Second Quarter
--------------------------------------------------------------
DURA Automotive Systems, Inc., filed its financial results for
the second quarter ended July 2, 2006, with the US Securities
and Exchange Commission on Aug. 4, 2006.
For the three months ended July 2, 2006, Dura Automotive
incurred US$131.3 million net loss on US$573.3 million of net
revenues, compared to US$2.9 million of net income on US$623.8
million of net revenues in 2005.
"While we haven't begun to experience material financial
improvements to date, our operational restructuring plan is off
to an excellent start," said Larry Denton, Chairman and Chief
Executive Officer of DURA Automotive. "Our management team is
committed to meeting our restructuring goals and our entire
organization is aligned to deliver this program."
Primarily lower North American and European automotive
production, unfavorable vehicle platform mix and the loss of the
GMT 800 seat adjuster business drove the decrease in second
quarter revenue from the prior year. Partially offsetting these
decreases was the benefit received from foreign currency
exchange. The decrease in second quarter income from continuing
operations from the prior year reflects the impact of lower
automotive production, the loss of the GMT 800 seat adjuster
business and higher raw material prices.
Mr. Denton continued, "We need to match our overhead structure
to the market share of our major customers. While our 50 cubed
restructuring plan is focused on structuring our operations for
the future, we must take action immediately to address the
current industry conditions. To support this effort, we will
reduce our labor force by 510 employees by year end."
The US$2.9 million facility consolidation charge for the quarter
relates primarily to actions associated with the previously
announced 50-cubed operational restructuring plan.
Approximately US$2.3 million of the charge relates to employee
severance costs and US$600,000 was for facility closure and
asset impairment charges.
In accordance with Statement of Financial Accounting Standards
No. 109 "Accounting for Income Taxes", DURA's second quarter
2006 provision for income taxes includes the recording of a
US$90.8 million valuation allowance for U.S. deferred tax assets
recorded as of Dec. 31, 2005. DURA determined the need for a
valuation allowance based upon its updated quarterly analysis of
its U.S. operations taxable income together with the extended
impact of elevated raw material prices on the automotive and
recreation vehicle industries.
A copy of the Company's Quarterly Report is available for free
at http://researcharchives.com/t/s?fa1
Headquarted in Rochester Hills, Michigan, DURA Automotive
Systems, Inc. -- http://www.duraauto.com/-- is an independent
designer and manufacturer of driver control systems, seating
control systems, glass systems, engineered assemblies,
structural door modules and exterior trim systems for the global
automotive and recreation & specialty vehicle industries. DURA,
which operates in 63 locations, sells its products to every
major North American, Asian and European automotive original
equipment manufacturer and many leading Tier 1 automotive
suppliers. It currently operates in 63 locations including
joint venture companies and customer service centers in 14
countries including Brazil.
* * *
As reported in the Troubled Company Reporter on Aug. 1, 2006,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Dura Automotive Systems Inc. to 'CCC' from 'B-'. The
rating outlook is negative.
KLABIN: Secures BRL1.74BB from BNDES to Increase Prod'n Capacity
----------------------------------------------------------------
Banco Nacional de Desenvolvimento Economico e Social aka BNDES
approved a BRL1.74 billion financing to Klabin S.A. The fund
will be used to increase the production capacity of Klabin
Papeis Monte Alegre in Telemaco Borba, from the current 680,000
tons to 1.1 million tons of paper and carton per year. BNDES
share will be equivalent to 65.9% out of the project total
amount, budgeted in BRL2.6 billion.
It is about the fifth largest financing ever granted in BNDES
history and the second directed to forest product industry.
Klabin investments will enable the installation of the first
large-sized paper machine in 12 years in the Brazilian country.
BNDES resources to the enterprise will generate roughly 4,500
direct jobs in the implementation phase, and 562 new permanent
work posts in the forest and operation areas.
The investments include the culture of 34,000 hectares of
eucalyptus and pine forest in Parana, between 2006 and 2008, and
the installation of seedling nursery, in Santa Catarina that has
a 30-million production capacity of eucalyptus seedling per
year. The seedlings will be supplied in the Forest Units of:
-- Monte Alegre,
-- Octacilio Costa and
-- Angatuba.
The Klabin expansion project has merits that surpass the
corporate focus. Besides attending the growing demand for cards
and guaranteeing the group a higher operational efficiency,
investments will have positive impacts on the social and
environmental area and on the foreign currency generation. The
paper and cellulose industry has a strong participation in the
Brazilian trade balance. In 2005, the industry reached US$2.5
billion in the trade balance and, for the current year, it is
projected to each a similar result. The production expansion
will enable the increase in exports of a new unit, which is
projected to reach US$1.5 billion between 2008 and 2016.
It is estimated that a BRL13 million per year injection in
salaries in the Telemaco Borba region will be implemented during
the project implementation. Those investments will represent an
additional consumption of 478,000 thousand tons of wood per
year, increasing the local income to about BRL29 million per
year. The project is expected to generate BRL356.2 million in
taxes.
BNDES' portfolio in the cellulose and paper area amounts BRL10.2
billion in projects. BRL 2.5 billion has already been approved
and will be released, in installments, for the next months. For
the current year, BNDES' budget forecasts BRL1.9 billion
disbursements, which is 46% superior compared with BRL1.3
billion in 2005.
Klabin will invest BRL18 million in social projects in the
forests and in its industrial units' influence areas.
Financings in social area will be carried out under the new line
of Social Investments in Enterprises, directed to the
implementation, expansion or consolidation of projects.
This program by Klabin is projected to improve the environmental
index by reducing the specific effluent load and decreasing
water consumption.
Klabin, established in 1899, is one of the oldest Brazilian
enterprises in the paper and cellulose sector. It currently
relies on 18 industrial units, with 17 units in Brazil and one
in Argentina. Klabin's Monte Alegre unit, with 230,000 hectares
of forest, is one of he largest carton and paper production
complexes in Brazil.
* * *
Standard & Poor's Ratings Services affirmed on May 22, 2006, its
'BB' long-term corporate credit rating on Klabin S.A. The
outlook is stable.
"The rating reflects the company's exposure to the volatilities
of the Brazilian economy (as packaging products bear a close
correlation to GDP), as well as a fragmented market for
corrugated boxes that does not allow for pricing policies that
are consistent with the company's leading market share, and the
volatile commodity nature of the Kraftliner business that might
be deepened due to local currency fluctuations," said Standard &
Poor's credit analyst Marcelo Costa.
* * *
As reported in the Troubled Company Reporter on March 3, 2006,
Standard & Poor's Ratings Services raised its foreign currency
counterparty credit rating on Banco Nacional de Desenvolvimento
Economico e Social S.A. aka BNDES to 'BB' with a stable outlook
from 'BB-' with a positive outlook. The company's local
currency credit rating was also shifted to 'BB+' with a stable
outlook from 'BB' with a positive outlook.
PETROLEO BRASILEIRO: Using Nansulate in Maintenance Program
-----------------------------------------------------------
Petroleo Brasileiro SA aka Petrobras, the state-run oil firm of
Brazil, will start using Industrial Nanotech's Nansulate High
Heat coating in its maintenance program due to its insulation
and anti-corrosive properties. Potential applications for
Nansulate include oil and gas pipelines, refinery equipment, and
offshore facilities.
"This is the beginning of a good business partnership between
Petrobras and Industrial Nanotech," Joao Hipolite, Assistant to
Petrobras' Director of Pipelines and Terminals, said.
Nansulate is a product line of water-based translucent
insulation coatings containing a nanotechnology-based material.
Nansulate PT is a direct to metal coating for pipes, tanks and
other metallic substrates and Nansulate GP is a general purpose
formulation designed for wood, fiberglass and other non-metal
substrates. Coatings that target extreme industrial
environments include Nansulate Chill Pipe designed for low
temperature applications on pipes and tanks and Nansulate High
Heat designed for high temperature applications. Nansulate
HomeProtect ClearCoat and HomeProtect Interior are designed for
residential and commercial buildings and Nansulate LDX is
designed for lead encapsulation applications. The coatings'
ability to resist mold, prevent corrosion and provide thermal
insulation is well-documented.
Before reaching an agreement, Petrobras had held a series of
meetings with a South American representative of Industrial
Nanotech.
About Industrial Nanotech
Industrial Nanotech Inc. is a global nanoscience solutions and
research leader. The Company develops and commercializes new and
innovative applications for nanotechnology that address real-
world needs through its funding of and participation in research
with world-leading scientists and laboratories, including the US
Center for Integrated Nanotechnology (CINT) and Princeton
Polymers Laboratories.
About Petroleo Brasileiro
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+'
VARIG SA: Plans to Purchase 50 Planes to Increase Fleet
-------------------------------------------------------
Brazil's embattled flagship airline Viacao Aerea Rio-Grandense,
or Varig, will announce this month the purchase of 50 airplanes
to supplement its dwindling fleet, Marco Antonio Audi, chairman
of the airline's new owners, Volo do Brasil, said late Thursday.
According to the local Estado newswire, Mr. Audi said the
company could invest up to US$300 million in purchases from two
different plane makers.
Mr. Audi said he is negotiating "with all plane makers,"
including Brazil aircraft manufacturer Empresa Brasileira de
Aeronautica SA and Airbus, Estado says.
The plan comes a month after Volo, which also is owner of
Varig's former cargo subsidiary, VarigLog, bought Varig,
rescuing the former flagship airline from a possible
liquidation. Volo has pledged US$500 million to allow the
company to pay operating debts.
Currently, the company is only flying 12 planes on a small
portion of its former routes.
Varig's sale must still be approved by Brazil's Civil Aviation
Agency, or Anac.
Meanwhile, rival airlines have complained that Volo cannot run
Varig because it breaks local rules limiting foreign interest in
airlines to 20%. U.S. investment fund Matlin Paterson is a key
investor in Volo.
Varig's new owners have submitted plans to cut routes and reduce
staff to Judge Luiz Roberto Ayoub, the bankruptcy judge
overseeing Varig's restructuring, and to Anac for approval.
Mr. Audi said Varig will start flying a new restricted schedule
from August 25 with 18 planes and 2,100 workers, Estado states.
He said that in the first phase the company would fly to
Frankfurt, Germany, Buenos Aires, Argentina and Caracas,
Venezuela, among other destinations.
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.
* BRAZIL: IDB Approves US$600,000 Grant to Ecologica Institute
--------------------------------------------------------------
The Inter-American Development Bank's Multilateral Investment
Fund announced the approval of a US$600,000 grant to Ecologica
Institute, a non-governmental organization in Brazil, to create
alternative market opportunities in rural areas of the state of
Tocantins.
This project will contribute to the socioeconomic development of
rural areas in the north of the country. It will implement an
integrated model for the production and marketing of an
alternative biofuel and other by-products from rural areas of
Tocantins in Brazil.
Around 160 producer families in two targeted settlements and
producers in other neighboring communities will benefit from
training and access to mini-processing facilities, as well as
other producers that utilize animal feed by-products from sweet
potato production to increase cattle and dairy production.
Compared to sugar cane, sweet potato is a faster and more
efficient source of biofuel. For many low-income, recently
colonized settlements in Tocantins, sweet potato production
offers an alternative source of livelihood due to climate
conditions and lower capital costs.
Brazil has become a world leader in the production of biofuels
thanks to a program initiated by the government in the 1970s.
Today about a third of Brazilians use biofuel (ethanol) in their
vehicles. It is estimated that a 1 percent substitution of
petroleum-based diesel for biodiesel produced by small
agriculturalists could generate 45,000 jobs yielding US$2,000
each.
Ecologica Institute is a nongovernmental organization created in
2000 to improve the quality of life of local communities by
conserving the natural environment and culture and fostering
sustainable development values. Counterpart funds for this
project will total US$782,000.
The Multilateral Investment Fund is an autonomous fund,
administered by the IDB. It provides grants, investments and
loans to promote private sector growth, labor force training and
small enterprise modernization in Latin America and the
Caribbean.
* * *
Fitch Ratings assigned these ratings on Brazil:
Rating Rating Date
------ -----------
Country Ceiling BB- Nov. 18, 2004
Long Term IDR BB- Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB- Dec. 14, 2005
===========================
C A Y M A N I S L A N D S
===========================
ADMIRAL CBO: S&P Puts BB- Rating on Class A-2 Notes on WatchPos.
----------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its rating on the
class A-1 notes issued by Admiral CBO (Cayman) Ltd., a cash flow
CDO of high-yield corporate bonds. Concurrently, the 'BB-'
rating on the class A-2 notes is placed on CreditWatch with
positive implications.
The rating withdrawal follows the complete redemption of the
class A-1 notes on the Aug. 14, 2006, distribution date. The
CreditWatch positive placement follows the paydown of
approximately 21% of the principal face value of the class A-2
notes. The credit support available to this class increased as
a result. According to the Aug. 3, 2006, report, the class A
overcollateralization ratio was 128.35%. With the redemption of
the class A-1 notes and the paydown of US$10.345 million to the
class A-2 notes, the ratio increases to 140%.
Standard & Poor's withdrew this rating:
Rating Balance (mil. US$)
Class To From Current Previous
A-1 NR AAA 0.00 $5.808
This rating was put on Creditwatch Positive:
Rating Balance (mil. US$)
Class To From Current Previous
A-2 BB-/Watch Pos BB- 37.154 47.500
Admiral CBO's other outstanding ratings:
Class Rating Balance (mil. US$)
B-1 CC 14.000
B-2 CC 25.000
C CC 16.000
AHFP CUMBERLAND: Holding Final Shareholders Meeting on Sept. 7
--------------------------------------------------------------
AHFP Cumberland's shareholders will gather for a final meeting
on Sept. 7, 2006, at:
Maples Finance Limited
Queensgate House, George Town
Grand Cayman, Cayman Islands
Accounts on the company's liquidation process will be presented
during the meeting.
The liquidators can be reached at:
Dwight Dube
Richard Gordon
Maples Finance Limited
P.O. Box 1093, George Town
Grand Cayman, Cayman Islands
AHFP DECCAN: Invites Shareholders for Final Meeting on Sept. 7
--------------------------------------------------------------
AHFP Deccan schedules final shareholders meeting on Sept. 7, at:
Maples Finance Limited
Queensgate House, George Town
Grand Cayman, Cayman Islands
Accounts on the company's liquidation process will be presented
during the meeting.
The liquidators can be reached at:
Dwight Dube
Richard Gordon
Maples Finance Limited
P.O. Box 1093, George Town
Grand Cayman, Cayman Islands
BROWNIE FUNDING: Final Shareholders Meeting Is Set for Sept. 7
--------------------------------------------------------------
Brownie Funding Corp.'s shareholders will convene for a final
meeting on Sept. 7, 2006, at:
Maples Finance Limited
Queensgate House, George Town
Grand Cayman, Cayman Islands
Accounts on the company's liquidation process will be presented
during the meeting.
The liquidators can be reached at:
Martin Couch
Emile Small
Maples Finance Limited
P.O. Box 1093, George Town
Grand Cayman, Cayman Islands
CLASSY CAYMAN: Will Hold Final Shareholders Meeting on Sept. 7
--------------------------------------------------------------
Classy Cayman Limited's shareholders will convene for a final
meeting on Sept. 7, 2006, at:
Maples Finance Limited
Queensgate House, George Town
Grand Cayman, Cayman Islands
Accounts on the company's liquidation process will be presented
during the meeting.
The liquidators can be reached at:
Richard Gordon
Mike Hughes
Maples Finance Limited
P.O. Box 1093, George Town
Grand Cayman, Cayman Islands
CT BONDS: Holding Final Shareholders Meeting on Sept. 7
-------------------------------------------------------
CT Bonds Investment Cayman Limited's shareholders will convene
for a final meeting on Sept. 7, 2006, at:
Maples Finance Limited
Queensgate House, George Town
Grand Cayman, Cayman Islands
Accounts on the company's liquidation process will be presented
during the meeting.
The liquidators can be reached at:
Richard Gordon
Mike Hughes
Maples Finance Limited
P.O. Box 1093, George Town
Grand Cayman, Cayman Islands
GANNET ONE: Schedules Final Shareholders Meeting on Sept. 7
-----------------------------------------------------------
Gannet One Funding Corp.'s shareholders will convene for a final
meeting on Sept. 7, 2006, at:
Maples Finance Limited
Queensgate House, George Town
Grand Cayman, Cayman Islands
Accounts on the company's liquidation process will be presented
during the meeting.
The liquidators can be reached at:
Emile Small
Steven O'Connor
Maples Finance Limited
P.O. Box 1093, George Town
Grand Cayman, Cayman Islands
GLOBAL TRADING: Proofs of Claim Filing Is Until Sept. 7
-------------------------------------------------------
Global Trading Fund Ltd.'s creditors are required to submit
proofs of claim by Sept. 7, 2006, to the company's liquidators:
G. James Cleaver
Gordon I. MacRae
Kroll (Cayman) Limited
4th Floor Bermuda House
Dr. Roy's Drive
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 7 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Global Trading's shareholders agreed on June 9, 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:
Korie Drummond
Kroll (Cayman) Limited
4th Floor Bermuda House
Dr. Roy's Drive
Grand Cayman, Cayman Islands
Tel: +1 (345) 946-0081
Fax: +1 (345) 946-0082
GLOBAL TRADING (II): Creditors Must File Claims by Sept. 7
----------------------------------------------------------
Global Trading Fund II Ltd.'s creditors are required to submit
proofs of claim by Sept. 7, 2006, to the company's liquidators:
G. James Cleaver
Gordon I. MacRae
Kroll (Cayman) Limited
4th Floor Bermuda House
Dr. Roy's Drive
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 7 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Global Trading's shareholders agreed on June 9, 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:
Korie Drummond
Kroll (Cayman) Limited
4th Floor Bermuda House
Dr. Roy's Drive
Grand Cayman, Cayman Islands
Tel: +1 (345) 946-0081
Fax: +1 (345) 946-0082
KFC LIMITED: Final Shareholders Meeting Is Scheduled for Sept. 7
----------------------------------------------------------------
KFC Limited's shareholders will convene for a final meeting on
Sept. 7, 2006, at:
Maples Finance Limited
Queensgate House, George Town
Grand Cayman, Cayman Islands
Accounts on the company's liquidation process will be presented
during the meeting.
The liquidator can be reached at:
Richard Gordon
Maples Finance Limited
P.O. Box 1093, George Town
Grand Cayman, Cayman Islands
LAPUTA V: Shareholders Convene for a Final Meeting on Sept. 7
-------------------------------------------------------------
Laputa V Funding Corp.'s shareholders will convene for a final
meeting on Sept. 7, 2006, at:
Maples Finance Limited
Queensgate House, George Town
Grand Cayman, Cayman Islands
Accounts on the company's liquidation process will be presented
during the meeting.
The liquidators can be reached at:
Steven O' Connor
Emile Small
Maples Finance Limited
P.O. Box 1093, George Town
Grand Cayman, Cayman Islands
ML/ZWEIG DIMENNA: Last Shareholders Meeting Is Set for Sept. 7
--------------------------------------------------------------
ML/Zweig Dimenna Ltd.'s shareholders will convene for a final
meeting on Sept. 7, 2006, at:
Maples Finance Limited
Queensgate House, George Town
Grand Cayman, Cayman Islands
Accounts on the company's liquidation process will be presented
during the meeting.
The liquidators can be reached at:
Mike Hughes
Richard Gordon
Maples Finance Limited
P.O. Box 1093, George Town
Grand Cayman, Cayman Islands
POETIC CAYMAN: Final Shareholders Meeting Is Set for Sept. 7
------------------------------------------------------------
Poetic Cayman Limited's shareholders will convene for a final
meeting on Sept. 7, 2006, at:
Maples Finance Limited
Queensgate House, George Town
Grand Cayman, Cayman Islands
Accounts on the company's liquidation process will be presented
during the meeting.
The liquidators can be reached at:
Mike Hughes
Richard Gordon
Maples Finance Limited
P.O. Box 1093, George Town
Grand Cayman, Cayman Islands
SHINSEI SALES: Last Day to File Proofs of Claim Is on Sept. 7
-------------------------------------------------------------
Shinsei Sales Finance One TMK Holding's creditors are required
to submit proofs of claim by Sept. 7, 2006, to the company's
liquidators:
Martin Couch
Emile Small
Maples Finance Limited
P.O. Box 1093, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 7 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Shinsei Sales' shareholders agreed on July 18, 2006, for the
company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
SPN III: Deadline for Proofs of Claim Filing Is on Sept. 7
----------------------------------------------------------
SPN III's creditors are required to submit proofs of claim by
Sept. 7, 2006, to the company's liquidators:
Phillip Hinds
Joshua Grant
Maples Finance Limited
P.O. Box 1093, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 7 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
SPN III' shareholders agreed on July 21, 2006, for the company's
voluntary liquidation under Section 135 of the Companies Law
(2004 Revision) of the Cayman Islands.
TRINITY FINANCE: Final Shareholders Meeting Set for Sept. 7
-----------------------------------------------------------
Trinity Finance Holdings Ltd.'s shareholders will convene for a
final meeting on Sept. 7, 2006, at:
Maples Finance Limited
Queensgate House, George Town
Grand Cayman, Cayman Islands
Accounts on the company's liquidation process will be presented
during the meeting.
The liquidators can be reached at:
Guy Major
Richard Gordon
Maples Finance Limited
P.O. Box 1093, George Town
Grand Cayman, Cayman Islands
=========
C H I L E
=========
AES CORP: Joins Plug-In Hybrid Development Consortium
-----------------------------------------------------
The AES Corp. has joined the Consortium in support of Plug-in
Hybrid Electric Vehicles or PHEVs. The Consortium is made up of
a growing number of automotive suppliers, manufacturers and
other organizations working together to accelerate the
commercial production of Plug-in Hybrid Electric Vehicles.
"As the need for alternative sources of energy continues to
grow, given rising energy costs, energy security issues and
environmental concerns, AES will play a leading role in meeting
that increasing market need," said Robert Hemphill, AES
Executive Vice President. "We see PHEVs as a practical and
economical way to help meet our nation's transportation,
environmental and energy goals in a sustainable way, and we look
forward to continuing to play a leadership role in alternative
energy through our membership in the Plug-In Hybrid Development
Consortium."
Plug-In Hybrids have been gaining increasing popularity and
support because they offer consumers significantly more benefits
than current hybrid vehicles. PHEVs can achieve over 100 mpg
fuel economy, they dramatically reduce emissions and can run on
electric fuel for just 1/4th the price of gasoline. By plugging
into the grid to charge extended range batteries, a Plug-In
Hybrid can drive over 20 miles without turning on its combustion
engine, emitting significantly less greenhouse gases than
conventional vehicles. Current hybrids are limited to the small
amount of electrical energy generated onboard while driving.
In addition, PHEVs can be implemented relatively quickly using
the existing electric power infrastructure, unlike hydrogen fuel
cell vehicles, which may require decades of development and
significant infrastructure changes. With recent support by
President Bush, Senator Hatch, and a growing number of
Congressmen and Senators, Plug-In Hybrids are also being
considered the best near-term solution for reducing a growing
dependency on foreign oil.
Robert Hemphill, Executive Vice President at AES, is the
company's representative to the Consortium and is helping guide
the company's efforts to evaluate and participate in
opportunities to promote clean, renewable electric power for
transportation.
"We are pleased to welcome AES to the Consortium," said Ed
Kjaer, co-founder of the Consortium and Director of Electric
Transportation, for Southern California Edison. "The global
strength of AES and the example of their innovative leadership
in the power industry are valuable additions to this
organization and will help accelerate PHEV development and
public support.
PHEV Facts:
-- Electric Fuel is just 1/4 cost of petroleum fuel with
zero vehicle emissions;
-- PHEVs dramatically improves fuel efficiency. 100 mpg or
higher PHEV hybrids are being demonstrated now;
-- PHEVs offer an immediate, near-term way to dramatically
reduce dependency on foreign oil;
-- PHEVs running on grid power, significantly reduce
greenhouse gases over conventional vehicles;
-- The electrical infrastructure is already in place to
support PHEVs in high volume;
-- Nighttime charging may help reduce utility rates by
balancing peak and off-peak demand; and
-- Home recharging is convenient and requires only an
extension cord.
About The Consortium
The Consortium -- http://www.hybridconsortium.org/-- was
organized to coordinate and accelerate the development of
critical new solutions while reducing the development time for
the next generation Hybrid vehicles. The members of this
growing Consortium plan to develop compatible components and
cost effective working designs, to help make PHEVs commercially
viable.
About AES Corp.
AES Corp. (NYSE:AES) -- http://www.aes.com/-- is a global
power company. The Company operates in South America, Europe,
Africa, Asia and the Caribbean countries. Generating 44,000
megawatts of electricity through 124 power facilities, the
Company delivers electricity through 15 distribution companies.
AES's Latin America business group is comprised of generation
plants and electric utilities in Argentina, Brazil, Chile,
Colombia, Dominican Republic, El Salvador, Panama and Venezuela.
Fuels include biomass, diesel, coal, gas and hydro. The group
also pursues business development activities in the region. AES
has been in the region since May 1993, when it acquired the CTSN
power plant in Argentina.
* * *
As reported in the Troubled Company Reporter on May 25, 2006,
Fitch affirmed The AES Corp.'s Issuer Default Rating at 'B+'.
Fitch also affirmed and withdrew the ratings for the
company's junior convertible debt. Fitch said the Rating
Outlook for all remaining instruments is Stable.
As reported in the Troubled Company Reporter on March 31, 2006,
Standard & Poor's Ratings Services raised its corporate credit
rating on energy company The AES Corp. to 'BB-' from 'B+'. S&P
said the outlook is stable.
As reported in the Troubled Company Reporter on Jan. 11, 2006,
Moody's affirmed the ratings of The AES Corporation, including
its Ba3 Corporate Family Rating and the B1 rating on its senior
unsecured debt. Moody's said the rating outlook remains stable.
===============
C O L O M B I A
===============
CA INC: To Cut 1,700 Jobs to Achieve US$200M Annualized Savings
---------------------------------------------------------------
Software company CA Inc. disclosed a fiscal year 2007 cost
reduction and restructuring plan designed to significantly
improve the Company's expense structure and increase its
competitiveness. The plan's objectives include a workforce
reduction of approximately 1,700 positions, including 300
positions associated with consolidated joint ventures, and
global facilities consolidations and other cost reduction
initiatives, which CA expects to deliver about US$200 million in
annualized savings when completed in late fiscal year 2008.
CA Inc. expects to incur pre-tax restructuring charges of
US$200 million associated with the workforce reductions and
facilities consolidations, with the majority of these charges to
be incurred over the next two quarters. The Company also
expects to implement other programs over the remainder of its
fiscal year to further reduce costs throughout the organization
including tighter control of travel and a reduction in the use
of consultants.
The software company estimates that half of the workforce
reductions will take place in North America.
"CA's senior management is focused on making the Company's cost
structure competitive with that of its peers and aligning it
with CA's strategic market opportunities and initiatives," said
Michael Christenson, CA's chief operating officer. "The
initiative we announced today reflects our ongoing commitment to
improve the efficiency of our operations, reduce our operating
expenses, improve our rate of return on invested capital and
deliver a stronger bottom-line performance."
FY 2007 Financial Results
Revenue for the first quarter of the fiscal year 2007 ended
June 30, 2006, was US$956 million, an increase of 3% over the
US$927 million reported in the similar period last year. The
increase in revenue was primarily attributed to growth in
subscription and professional services revenue.
CA Inc. recorded GAAP net income of US$35 million for the first
quarter, compared to net income of US$97 million in the prior
year comparable period.
"We continue to focus on building and integrating our solutions
portfolio to meet the needs of customers and we are encouraged
by their positive reaction to our Enterprise IT Management
vision," John Swainson, CA's president and chief executive
officer, said. "However, we are not satisfied with our cost
structure and we are implementing an expense reduction plan to
improve the Company's efficiency and competitive position.
These are the first steps in a long-term program to achieve a
best-of-breed cost structure."
For the first quarter, CA reported a use of cash flow from
operations of US$46 million, compared to US$93 million in cash
flow generated from operations reported in the prior year
period. The decline in cash flow from operations was the result
of increased disbursements to vendors associated with a
concerted effort to reduce the Company's payable cycle, 401(k)
contributions not pre-funded in fiscal year 2006 and increased
commission payments related to the fourth quarter of fiscal year
2006.
Capital Structure
The balance of cash, cash equivalents and marketable securities
at June 30, 2006, was US$1.522 billion. With US$1.811 billion
in total debt outstanding, the Company has a net debt position
of US$289 million.
Repurchase Program
CA Inc. expects to commence the first phase of its US$2 billion
stock repurchase program through a tender offer that will price
and launch this week. CA plans to repurchase US$1 billion in
common stock in the first phase through a combination of cash on
hand and bank financing and will provide further information
when it commences the tender offer.
CA is considering various options to execute the second phase of
the program and will provide further details when appropriate.
The Company expects to complete the full US$2 billion share
repurchase plan by the end of fiscal year 2007.
During the quarter, the Company repurchased 7 million shares of
its common stock at an aggregate cost of US$157 million.
About CA
Headquartered in Islandia, New York, CA Inc. (NYSE:CA) --
http://www.ca.com/-- is an information technology management
software company that unifies and simplifies the management of
enterprise-wide IT. Founded in 1976, CA serves customers in
more than 140 countries. In Latin America, CA has operations in
Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela.
* * *
As reported in the Troubled Company Reporter on Aug. 7, 2006,
Moody's Investors Service confirmed CA Inc.'s Ba1 senior
unsecured rating and assigned a negative rating outlook,
concluding a review for possible downgrade initiated on June 30,
2006. The Ba1 rating confirmation reflects the company's
completed accounting review and reestablishment of current
filing of its 10-K and subsequent 10-Q's, including the
company's filing of its 10-K for its March 2006 fiscal year on
July 31, 2006.
Standard & Poor's Rating Services affirmed its 'BB' corporate
credit and senior unsecured debt ratings on CA Inc., and removed
them from CreditWatch where they were placed on July 5, 2006
with negative implications. S&P said the outlook is negative.
ECOPETROL: Government Begins 20% Stake Sale Procedures
------------------------------------------------------
The Colombian government has started procedures in selling 20%
of Ecopetrol SA, the country's state-owned oil company, Prensa
Latina reports.
As reported in the Troubled Company Reporter-Latin America on
July 31, 2006, Colombia's mines and energy ministry said that
Ecopetrol received government approval to sell up to 20% shares.
The ministry said that private sector participation would help
ensure Ecopetrol's financial and administrative independence
needed to carry out investments on exploration and production as
well as to upgrade oil infrastructure. President Alvaro Uribe
said that Colombia would boast a larger and stronger company and
that new oil discoveries require funds to be injected into
Ecopetrol. However, the oil workers union rejected the plan,
threatening to hold demonstrations. Jorge Gamboa, the president
of the union, said that autonomy could be achieved by reforming
the budget statute and Ecopetrol would be allowed to take on
debt and more resources.
Prensa Latina relates the government is seeking for possible
investors in Ecopetrol amid parliamentarians' suspicion around
the results of the sale of one fifth of the company. Lawmakers
are also uncertain about the fate of the resources obtained from
the sale of the 20% shares, estimated at over US$40 billion.
The Colombian government assures that the deal is a fiscal gain.
However, the opposition in the congress and Ecopetrol workers
are against the sale, Prensa Latina says.
Legislators said in a statement that the sale of Ecopetrol is a
failure of workers and the administration to keep their promise
of not selling the firm.
The sale of Ecopetrol will be a serious attack on national and
energy sovereignty. It will weaken state finances, Prensa
Latina states, citing parliamentarians.
Ecopetrol is an integrated-oil company that is wholly owned by
the Colombian government. The company's activities include
exploration for and production of crude oil and natural gas, as
well as refining, transportation, and marketing of crude oil,
natural gas and refined products. Ecopetrol is Latin America's
fourth-largest integrated-oil concern. Operations are organized
into Exploration & Production, Refining & Marketing,
Transportation, and International Commerce & Gas.
On June 27, 2006, Fitch Ratings revised the rating outlook of
the long-term foreign currency issuer default rating of
Ecopetrol S.A. to Positive from Stable. This rating action
follows the recent revision in the Rating Outlook to Positive
from Stable of the 'BB' foreign currency IDR of the Republic of
Colombia. Ecopetrol's IDR remain strongly linked with the
credit profile of the Republic of Colombia.
==================
C O S T A R I C A
==================
* COSTA RICA: Will Ink Free Trade Bilateral Protocol with Panama
----------------------------------------------------------------
Costa Rica will be signing a Bilateral Protocol of the Free
Trade Treaty with Panama, Prensa Latina reports.
Alejandro Ferrer, the minister of trade and industry in Panama,
told Prensa Latina that this kind of agreement will increase and
strengthen commercial relations with Costa Rica.
According to Prensa Latina, a delegation of Panamanian experts
visited Costa Rica on Monday to attend the 4th Round of
Negotiation with the latter.
New discussions would be held from Aug. 14-18 in San Jose, Costa
Rica, Prensa Latina relates, citing an official spokesperson.
Topics to be discussed during the meeting include:
-- access to markets,
-- rules for trade with Costa Rica,
-- services,
-- investment,
-- financial services, and
-- governmental purchase.
The meeting is part of the March 27 commitment of the Ministers
of Trade of Panama and Central America to resume talks for a
free trade agreement between Panama and the Central America,
Prensa Latina underscores.
* * *
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.
===================================
D O M I N I C A N R E P U B L I C
===================================
FALCONBRIDGE LTD: Xstrata Shareholders Approve Increased Offer
--------------------------------------------------------------
Xstrata plc announces that, at an Extraordinary General Meeting
held on August 14 2006, its shareholders overwhelmingly approved
the acquisition of all of the outstanding shares of Falconbridge
Limited.
The resolution was passed as an ordinary resolution on a show of
hands by the required majority. Proxy votes received by Xstrata
before the EGM in respect of the resolution were as follows:
-- 565,759,741 votes (or 99.85% of proxy votes received)
in favor of the resolution,
-- 871,153 votes (or 0.15% of proxy votes received) against
the resolution, and
-- 111,602 proxy votes were withheld.
Xstrata took up and paid for all shares tendered to its offer by
the expiry time of 8 pm Toronto time on Aug. 14, 2006.
Falconbridge shareholders who tendered their shares to Xstrata's
offer before the expiry time will receive payment on or before
August 17, 2006.
Falconbridge shareholders with enquiries about how to tender
their shares should contact:
Kingsdale Shareholder Services Inc.
Tel: 1-866-639-7993
Banks and brokers should call 416-867-2272.
A copy of the resolution passed has been submitted to the
Financial Services Authority and will shortly be available for
inspection at the Document Viewing Facility, which is situated
at:
The Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
About Xstrata
Xstrata plc -- 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) (NYSE:FAL) -- http://www.falconbridge.com/-- is a
leading copper and nickel company with investments in fully
integrated zinc and aluminum assets. Its primary focus is the
identification and development of world-class copper and nickel
orebodies. It employs 14,500 people at its operations and
offices in 18 countries. The Company owns nickel mines in
Canada and the Dominican Republic and operates a refinery and
sulfuric acid plant in Norway. It is also a major producer of
copper (38% of sales) through its Kidd mine in Canada and its
stake in Chile's Collahuasi mine and Lomas Bayas mine. Its
other products include cobalt, platinum group metals, and zinc.
* * *
Falconbridge's CDNUS$150 million 5% convertible and callable
bonds due April 30, 2007, carries Standard & Poor's BB+ rating.
* DOMINICAN REPUBLIC: Fitch Says Liquidity Constrains Ratings
-------------------------------------------------------------
Fitch recently upgraded the Dominican Republic's long-term
foreign currency issuer default rating, the country ceiling and
the ratings on various debt obligations. The country's
comparably low external and public debt burdens and manageable
debt-service profile, as well as a consolidation of the economic
recovery, supported these rating actions, Theresa Paiz Fredel
says. Nevertheless, a still fragile liquidity position
constrains the ratings to current levels at this time.
The Dominican Republic's economic recovery consolidated last
year, in part reflecting prompt actions by the Fernandez
administration to achieve a substantial fiscal adjustment and
the resulting improved domestic and foreign confidence.
Economic growth was broad based and reached a vigorous 9.3% in
2005, one of the strongest rates of growth in Latin America and
the Caribbean, while inflation continued to decline. A
favorable balance of payments performance, underpinned by
remittances and tourism receipts, as well as reduced debt-
service outflows as a result of the debt restructurings, has led
to a steady recuperation of foreign reserves and an improvement
in the country's liquidity position. Scheduled amortizations
are almost entirely with official creditors this year and appear
to be covered by substantial commitments from multilateral and
bilateral disbursements, as well as treasury deposits.
The country's external and public debt ratios compare favorably
with other speculative-grade sovereigns, returning to precrisis
levels following the increase in debt in 2003 related to the
bailout of several local banks and currency weakness. The Banco
Central de la Republica Dominicana has absorbed most of the
increase in debt since 2002 due to domestic issuance of
securities to address the banking crisis and increased
International Monetary Fund borrowing for balance of payment
support. As a proportion of current external receipts or CXR,
the Dominican Republic's net external debt is forecast to reach
33.9% in 2006, slightly lower than precrisis levels and
significantly below the 49.9% median for sovereigns rated in the
'B' category. Of the 16 countries that Fitch rates in this
category, only those with benefits from the Heavily Indebted
Poor Countries or HIPC debt relief initiative (Benin and Ghana),
limited access to external financial markets (Suriname) or a
large domestic market for internationally issued sovereign debt
(Lebanon) have better ratios than the Dominican Republic.
Fluctuations in public debt ratios have been more apparent as
these ratios are computed in local currency terms and the
majority of the Dominican Republic's debt is in foreign
currency. After peaking at 46.9% in 2003, Fitch expects
consolidated central government debt to reach a projected 26.7%
of GDP by the end of 2006, similar to precrisis levels and
considerably less than the median of 47.1% of GDP for similarly
rated sovereigns. As the central bank experienced most of the
increase in debt related to the crisis, consolidated public
sector debt is much higher and is forecast to reach 40.9% of GDP
in 2006 from a peak of 59.8% in 2003, which is still low
relative to similarly rated sovereigns. Continued currency
stability and the strong economic rebound, combined with a
reduced government financing requirement and low net
multilateral disbursements, will contribute to the improvement
in debt ratios this year.
In spite of comparably favorable debt ratios, the Dominican
Republic's credit profile has always been constrained by low
liquidity, a situation that can be exacerbated by a loss of
confidence and ensuing capital flight. Although the Dominican
Republic's liquidity position remains tight relative to peers,
the results of the exchange and Paris Club and commercial bank
reschedulings, combined with a recovery of private capital
inflows, imply a substantial improvement. International reserve
growth and reduced amortizations increased the country's
liquidity ratio to 159% at the beginning of 2006 from 102% in
2004. While this ratio has exceeded 100% for the past two
consecutive years, it is still substantially below the 'B'
median of 190%. Furthermore, when adjusting the liquidity ratio
to exclude banks' foreign assets and include banks' resident
foreign currency deposits, the ratio declines substantially to
48%, highlighting the vulnerabilities associated with high,
albeit declining, dollarization. Even though domestic sentiment
has improved, the sovereign's external liquidity position
remains somewhat susceptible to sudden shifts in confidence.
However, a stronger fiscal position, the recent electoral
outcome and a recovery of private capital inflows should
continue to bolster confidence this year. Nevertheless, it will
be important for the authorities to remain on track with their
IMF program as an indication of their commitment to
strengthening the country's institutional framework and
preventing the type of crisis that occurred in 2003 from
transpiring again.
Although the government is on track with its quantitative
targets under its IMF standby arrangement, other issues,
particularly those related to fiscal, banking and electricity
sector reforms, have contributed to disbursement delays. As was
the case in the previous Fernandez administration, the
government has faced significant hurdles in Congress, as
illustrated by the delays in approving the 2006 budget,
additional tax reforms to compensate for expected lost revenues
as a result of the implementation of Dominican Republic-Central
American Free Trade Agreement or DR-CAFTA and the elimination of
other distortive taxes, and legislation to strengthen financial
institutions.
In this respect, the strong performance of the president's
Progressive Bloc coalition (led by the president's party,
Partido de la Liberacion Dominicana or PLD) will bode well for
enhanced governability prospects during the second half of the
Fernandez administration. The PLD's victory should also help
the government in implementing the legislative framework to
enter DR-CAFTA, a process that has faced significant delays in
the country. While pre-election polls predicted that the ruling
PLD and its coalition parties would significantly increase its
representation, an outright majority was not anticipated. As a
result, Fitch believes the government's economic and
institutional reform agenda, which seeks to improve the
institutional framework in order to avoid the recurrence of the
type of crisis that occurred in 2003, is now more likely to
progress.
Looking ahead, future rating upgrades could be underpinned by a
further strengthening of liquidity and/or a deepening of
structural reforms. In addition to the structural performance
criteria required by the IMF program, the implementation of DR-
CAFTA would also bolster the government's efforts to improve the
country's institutional framework in order to avoid the
recurrence of the type of crisis that occurred in 2003.
* DOMINICAN REPUBLIC: Gov'l Utility Subsidies Can't be Removed
--------------------------------------------------------------
Dominican Republic's President Leonel Fernandez told DR1
Newsletter that it is not yet time for the removal of the
governmental subsidies on propane gas and electricity.
DR1 relates that President Fernandez was also cautious when he
talked about a possible new tax reform program.
The president told DR1 that he and his economic team would wait
for the results of studies, which will determine just how to
maintain fiscal balance in the nation.
DR1 notes that President Fernandez held a meeting with his
economic team in La Romana. They are seeking for ways of
enabling the government to be self-sufficient without creating
additional taxes.
Representatives of the Inter-American Development Bank and the
Dominican Republic's economic team recognized the need to
sustain the viability of the electricity sector and the plan to
capitalize the nation's Central Bank, 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 L S A L V A D O R
====================
* EL SALVADOR: Mayors Aim to Implement Venezuelan Fuel Accord
-------------------------------------------------------------
El Salvador mayors under the National Liberation Farabundo Marti
Front or FMLN are aiming to implement a fuel agreement with
Venezuela, Prensa Latina reports.
Prensa Latina relates that the mayors are still on the move to
import Venezuelan fuel at competitive prices and benefit
Salvadoran citizens.
The plan is to implement the project as soon as possible, Prensa
Latina says, citing Carlos Ruiz, the mayor of Soyapango and
president of the Inter Municipal Association Energia para El
Salvador.
According to Prensa Latina, Mr. Ruiz said the implementation of
the accord could be at the end of the year. Guarantees from
commercializing firms and distributors "are still on steps".
Mr. Ruiz told Prensa Latina that the joint venture will import,
store, sell and distribute fuel in the local market.
The report underscores that three months after entering an
agreement with Petrocaribe -- a unit of Venezuela's state oil
firm Petroleos de Venezuela -- the FMLN began procedures before
the Salvadoran Direction of Mining and Hydrocarbons of the
Ministry of Economy.
Prensa Latina notes that Petrocaribe should supply almost
198,000 barrels of crude oil and by-products daily, which would
be paid with goods. El Salvador would have two years of grace,
and financing 40% of the oil bill, if the barrel is over US$40,
at an interest rate of 1%.
Mr. Ruiz told Prensa Latina that the results of the accord will
be soon seen. However, the Salvadoran government has doubts on
the agreement.
The site where the Venezuelan fuel would be stored is yet to be
determined, Prensa Latina states.
* * *
Fitch Ratings assigned these ratings on El Salvador:
Rating Rating Date
------ -----------
Country Ceiling BB+ Jun. 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
=================
G U A T E M A L A
=================
* GUATEMALA: Japan Grants JPY1,733M Aid for Economic Development
----------------------------------------------------------------
Guatemala was granted up to JPY1,733 million funding by the
Japanese government for the economic development and disaster
reconstruction. Notes to this effect were exchanged on Aug. 11
in Guatemala City between Heisuke Shinomiya, the Japanese
Ambassador to Guatemala, and Rosenthal Koenisberger, the
Minister of Exterior Relations of the Republic of Guatemala.
The aid consists of:
(1) Up to JPY899 million on Grant Aid for General Projects
-- The Project for the Improvement of Main National
Hospitals in Metropolitan Area in Guatemala:
(a) The government of Guatemala formulated the National
Developmental Plan (Policy Guidelines from 2004 to
2008) and designated as immediate priority fields the
improvement of education, social infrastructure,
public order, and healthcare and medical services.
The Ministry of Health put forward the Healthcare
Basic Policy (2004-2008) as a national healthcare
plan, establishing 17 priority items including
maternal and infant mortality and tuberculosis. It
is also working on improving the referral system and
modernizing health facilities;
(b) In Guatemala, the poor reached about 56% of the
population as of 2000, and in recent years, the
influx of people from rural areas to the capital has
been increasing. Because of this, the capital area
has experienced a rapid increase of population from
about 1.8 million in 1994 to 2.5 million in 2002 or
about 23% of the entire population. Because many
people are moving to the capital, a large stratum of
impoverished people has been produced in the
metropolitan region.
The mortality rate of babies and pregnant women, and
the number of people suffering from infectious
diseases such as tuberculosis remain high. In recent
years, the government of Guatemala has been promoting
the development of healthcare and medical services in
rural areas, and the lack of such services in the
capital area is quite noticeable;
(c) There are 43 national hospitals in Guatemala. Even
though the two main general hospitals, the Roosevelt
Hospital, and San Juan de Dios Hospital, have been
providing medical services to citizens including the
poor, they do not have enough equipment in the
departments of pediatrics, obstetrics and gynecology.
There are three hospitals that can accept patients
with infectious diseases including tuberculosis.
Although San Vicente Hospital, one of the main
hospitals, accepts severely ill patients, its
facilities and equipment are in particularly decrepit
conditions and it does not fulfill the role of a
specialized hospital;
(d) In these circumstances, the government of Guatemala
has been making efforts to solve the problems facing
these three hospitals. However, because the
government lacks funds, it has requested from the
government of Japan grant financial aid for The
Project for the Improvement of Main National
Hospitals in Metropolitan Area in Guatemala;
(e) When this plan is implemented, the medical services
in the capital area, especially in the poor
districts, are expected to be improved;
(2) Grant Aid for Disaster Prevention and Reconstruction:
(a) The Project for the Support for the Reconstruction
Efforts after Hurricane Stan Disaster about JPY834
Million;
(b) The Project for the Improvement of Main National
Hospitals in Metropolitan Area in Guatemala; and
(c) The Project for the Reconstruction of Main Bridges of
National Highway:
-- Guatemala sustained damage from various hurricanes
and tropical cyclones from September to November
2005. The tropical cyclone Stan, in particular,
which attacked Guatemala in October, left damage
in 15 departments, mainly in the western, southern
and north-western parts of the Republic of
Guatemala where many poor indigenous people live.
The total amount of damage, about US$970 million
or 3.4% of Guatemala's 2004 Gross Domestic
Product;
-- The disaster by Stan was worse than that of
hurricane Mitch in 1998, and the government of
Guatemala under President Oscar Berger Perdomo
held a cabinet meeting immediately after the
disaster and is now making efforts for
reconstruction, like investing about GTQ970
million or US$120 million out of the 2005
government budget and similarly about GTQ1.5
billion or US$190 million out of the 2006
government budget as emergency assistance for
reconstruction and rehabilitation. The government
of Guatemala also started reconstruction projects
from November 2005 with the cooperation of the
departmental authorities and announced a
rehabilitation program in March 2006. The basic
idea that underlies this program gives
consideration to the indigenous or socially
vulnerable people, taking into account not only
post-disaster reconstruction but also the
alleviation of problem in the future, including
poverty alleviation and human resource
development. Under this principle, a
reconstruction project was announced for each
department;
-- The government of Guatemala is engaged in the
endeavors on its own, but as its funding is
insufficient, it has requested aid from the
international community including Japan;
-- The government of Guatemala requested from the
Government of Japan grant aid for the Project for
the Support for the Reconstruction Efforts after
Hurricane Stan Disaster in the fields of water
supply, agricultural irrigation and bridges; and
-- The government of Japan has decided to utilize the
Grant Aid to Disaster Prevention and
Reconstruction, introduced from this fiscal year,
to support Guatemala.
By this project, water supply facilities in Quezaltenango city,
farming irrigational facilities in San Marcos Department and
regional bridges in San Marcos Department will be reconstructed.
* * *
Fitch Ratings assigned these ratings on Guatemala:
Rating Rating Date
------ -----------
Country Ceiling BB+ Feb. 22, 2006
Long Term IDR BB+ Feb. 22, 2006
Short Term IDR B Feb. 22, 2006
Local Currency
Long Term Issuer
Default Rating BB+ Feb. 22, 2006
Fitch also rated Guatemala's senior unsecured bonds:
Maturity Date Amount Rate Ratings
------------- ------ ---- -------
Aug. 3, 2007 US$150,000,000 8.5% BB+
Nov. 8, 2011 US$325,000,000 10.25% BB+
Aug. 1, 2013 US$300,000,000 9.25% BB+
Oct. 6, 2034 US$330,000,000 8.125% BB+
* GUATEMALA: Six Months Gas Consumption Reaches 3.60MM Barrels
--------------------------------------------------------------
Guatemala has consumed about 3.60 million barrels of gasoline in
the first half of 2006, Business News Americas reports, citing
MEM -- the country's energy and mines ministry.
The ministry told BNamericas that gasoline consumption in the
country was 4.46% higher in the first six months of 2006,
compared with the same period of 2005.
The ministry said in a statement that during the January-June
2006 period, supreme gasoline consumption increased 5.52% to
2.31Mb while consumption on regular gasoline grew 2.6% to
1.29Mb.
BNamericas relates that the average gallon price of supreme
gasoline increased 17% to GTQ23.90 in the first six months of
2006, compared with the year-ago period.
Meanwhile, the average gallon price of regular gasoline in the
first half of 2006 grew 18% to GTQ23.41, from the first half of
2005, BNamericas states.
* * *
Fitch Ratings assigned these ratings on Guatemala:
Rating Rating Date
------ -----------
Country Ceiling BB+ Feb. 22, 2006
Long Term IDR BB+ Feb. 22, 2006
Short Term IDR B Feb. 22, 2006
Local Currency
Long Term Issuer
Default Rating BB+ Feb. 22, 2006
Fitch also rated Guatemala's senior unsecured bonds:
Maturity Date Amount Rate Ratings
------------- ------ ---- -------
Aug. 3, 2007 US$150,000,000 8.5% BB+
Nov. 8, 2011 US$325,000,000 10.25% BB+
Aug. 1, 2013 US$300,000,000 9.25% BB+
Oct. 6, 2034 US$330,000,000 8.125% BB+
===============
H O N D U R A S
===============
* HONDURAS: President Will Ink Free Trade Accord with Taiwan
------------------------------------------------------------
Honduras' President Manuel Zelaya will visit Taiwan to sign a
free trade agreement or FTA with Chen Shi-bian -- his Taiwanese
counterpart -- in October, Taipei Times reports, citing Taiwan
authorities stationed in Honduras.
The officials told Taipei Times that Honduras and Taiwan have
concluded two rounds of talks on the signing of an FTA. The
next round will be held in September.
Honduras has maintained close relations with Taiwan. President
Zelaya's postponed trip to Taiwan was mainly due to a teachers'
strike, the officials told Taipei Times.
* * *
Moody's Investor Service assigned these ratings on Honduras:
Rating Rating Date
------ -----------
Senior Unsecured B2 Sept. 29, 1998
Long Term IDR B2 Sept. 29, 1998
=============
J A M A I C A
=============
AIR JAMAICA: Reaches No Agreement with Union After Wage Meeting
---------------------------------------------------------------
Air Jamaica did not reach a new wage deal with the National
Workers Union during a meeting held on Sunday, Radio Jamaica
reports.
As reported in the Troubled Company Reporter-Latin America on
Aug. 1, 2006, workers of Air Jamaica had cancelled plans to hold
demonstrations against the airline. The union members balked at
the airline's reduced wage offer. Air Jamaica had initially
offered its workers a 25% wage increase over a two-year
contract. However, when talks resumed, Air Jamaica reduced the
offer to 20%, and later to 15%. Due to the ultimatum set by the
union, the airline's management hurriedly set a meeting with the
union officials. Air Jamaica's management reportedly took back
its decision to decrease the wage offer to the airline's ground
staff.
Negotiations will continue on Thursday, Radio Jamaica says.
* * *
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.
KAISER ALUMINUM: Reports US$2.5 Mil. Net Loss in Second Quarter
---------------------------------------------------------------
Kaiser Aluminum reported a net loss of US$2.5 million for the
quarter ended June 30, 2006, due primarily to a US$25 million
net adverse impact from non-run-rate and reorganization items.
These results compare to net income of US$365.8 million for the
same period in 2005. The second quarter 2005 income was
primarily a result of income from discontinued operations (the
sale of the company's interest in an alumina refinery in
Australia).
The company emerged from bankruptcy on July 6, 2006, and the
second quarter 2006 net loss equates to a US$0.03 loss per pre-
emergence share compared with US$4.59 of income per pre-
emergence share for the year-earlier period.
For the six months ended June 30, 2006, the company reported net
income of US$35.9 million (US$0.45 per pre-emergence share),
compared with net income of US$374.1 million (US$4.69 per pre-
emergence share) for the same period in 2005. Both periods were
affected by the second quarter items discussed above.
Net sales for the second quarter of 2006 totaled US$353.5
million compared to US$262.9 million for the second quarter of
2005, reflecting a 15 percent increase in shipments of
fabricated products and significant increases in metal prices.
Net sales for the first six months of 2006 totaled US$689.8
million compared to US$544.3 for the same period the previous
year, reflecting a 12 percent increase in shipments of
fabricated products and significant increases in metal prices.
The increase in fabricated products shipments during the quarter
and six month periods over the comparable periods in 2005 was
broadly based across the markets served by the company but was
led by continuing strength in demand for aerospace and high
strength products.
"The non-run-rate and reorganization items mask very positive
performance in the second quarter," said Jack A. Hockema,
chairman, president and CEO of Kaiser Aluminum. "Results for
the first half were excellent, driven by the core fabricated
products business which delivered a 50 percent increase in
operating income. Income from continuing operations was US$31.6
million despite US$15.0 million of reorganization expense."
Operating income in the fabricated products division was US$16.2
million for the second quarter of 2006 compared with US$15.2
million for the same period in 2005. Both periods included
significant non-run-rate items:
-- Non-cash LIFO charge of US$22 million in 2006; and
-- Non-run-rate metal profits of US$7 million in 2006 and
losses of US$4 million in 2005.
Operating income in the fabricated products division was US$61.2
million for the first six months of 2006 compared to US$40.6
million for the same period in 2005. Both periods included
significant non-run-rate items:
-- Non-cash LIFO charge of US$22 million in 2006; and
-- Non-run-rate metal profits of US$17 million in 2006 and
losses of US$3 million in 2005.
The significant improvement in operating results for the six-
month period reflects higher shipments, stronger conversion
prices and favorable scrap raw material costs. Improved cost
performance more than offset higher natural gas prices for both
the quarter and 2006 year-to-date periods.
Operating income in the primary products segment totaled US$3.7
million for the second quarter, approximately US$2 million below
the second quarter 2005. Operating income in the primary
products segment totaled US$12.4 million for the six months,
approximately US$4 million increase over the same period 2005.
These included the following non-run-rate items:
-- Mark-to-market gains on hedging-related derivative
transactions for the second quarter of US$2 million
compared with a loss of US$2 million for the prior
period; and
-- Mark-to-market gains on hedging-related derivative
transactions for the six months of US$7 million compared
with a loss of US$3 million for the prior period.
The benefit of higher primary aluminum prices and settlements
and gains on external hedging-related derivative activities was
largely offset by internal hedging of the metal purchase
requirements of the fabricated products division. Second
quarter and year-to-date 2006 results were adversely affected by
a 15 percent increase in power costs. Second quarter 2006
results were also adversely affected by an increase in alumina
costs.
"We are experiencing broad based demand for our core fabricated
products led by aerospace and high strength products," added Mr.
Hockema. "Although we may experience some seasonal softness in
the second half of 2006, overall it appears that the current
level of demand is sustainable in the near term.
"This is an exciting time for Kaiser Aluminum. We completed our
reorganization on July 6, 2006, with a clean balance sheet and
approximately US$200 million of liquidity. This positions us to
remain strong throughout the business cycle and fuel our growth
initiatives, such as our US$105 million Trentwood expansion. In
addition, our lean initiatives drive improvements in both
customer satisfaction and cost performance," concluded Mr.
Hockema.
Headquartered in Foothill Ranch, California, Kaiser Aluminum
Corp. -- http://www.kaiseraluminum.com/-- is a leading
producer of fabricated aluminum products for aerospace and high-
strength, general engineering, automotive, and custom industrial
applications. The Company, along with its Jamaican subsidiaries
-- Alpart Jamaica Inc. and Kaiser Jamaica Corporation -- filed
for chapter 11 protection on Feb. 12, 2002 (Bankr. Del. Case No.
02-10429), and has sold off a number of its commodity businesses
during course of its cases. Corinne Ball, Esq., at Jones Day,
represents the Debtors in their restructuring efforts. Lazard
Freres & Co. serves as the Debtors' financial advisor. Lisa G.
Beckerman, Esq., H. Rey Stroube, III, Esq., and Henry J. Kaim,
Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, and William P.
Bowden, Esq., at Ashby & Geddes represent the Debtors' Official
Committee of Unsecured Creditors. The Debtors' Chapter 11 Plan
became effective on July 6, 2006. On June 30, 2004, the Debtors
listed US$1.619 billion in assets and US$3.396 billion in debts.
* JAMAICA: Gov't Allegedly Mishandles Sugar Factory Divestment
--------------------------------------------------------------
The government of Jamaica is mishandling the divestment of
state-owned sugar factories, Radio Jamaica reports, citing
allegations from the All-Island Jamaica Cane Farmers
Association.
The Association told Radio Jamaica that the divestment is being
wrongly conducted.
Reports say that government is less than impressed with the nine
pre-qualification offers it received for the factories.
The report states that Roger Clarke -- the agriculture minister
of Jamaica -- said that the government might have to extend the
bidding process in an effort to attract improved offers.
Continued delay of the process could result in bidders
withdrawing participation, Radio Jamaica relates, citing Allan
Rickards, the head of the Association.
Mr. Rickards told Radio Jamaica that the pre-qualification
exercise is taxing and has led to the refusal of some interested
entities to bid.
The Association is warning that investors might be frustrated
into withdrawing bids, Radio Jamaica states.
* * *
On May 26, 2006, Moody's Investors Service upgraded Jamaica's
rating under a revised foreign currency ceiling:
-- Long-term foreign currency rating: Ba3 from B1 with
stable outlook.
===========
M E X I C O
===========
CINEMARK INC: To Buy Century Theatres' Equity for US$681 Million
----------------------------------------------------------------
Cinemark USA, Inc., inked a definitive purchase agreement to
acquire all of the outstanding stock of Century Theatres, Inc.,
for a combination of cash and stock of Cinemark's parent
company.
The equity purchase price is approximately US$681 million in
addition to the assumption of debt. To finance the acquisition,
the company plans to refinance its current senior facility of
US$254 million and Century's senior facility of US$360 million
with a new US$1.120 billion senior secured term loan and will
issue to Century US$150 million of common stock in Cinemark's
parent. The company will utilize approximately US$50 million of
its current cash to fund the payment of transaction expenses and
the balance of the cash purchase price. The Company also plans
to increase its revolver capacity to US$150 million with no
amount drawn at closing.
"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 Inc. 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 inCalifornia and Illinois.
About Cinemark Inc.
Cinemark Inc. -- http://www.cinemark.com/-- 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.
ENESCO GROUP: Appoints Roger Odell to Board of Directors
--------------------------------------------------------
Enesco Group, Inc., appointed Roger A. Odell as its newest
member of the Board of Directors and member of the Audit
Committee. Mr. Odell's appointment became effective
Aug. 9, 2006.
Mr. Odell is a former Managing Director at JPMorgan Chase Bank,
where he spent nearly 40 years before his retirement in 2005.
Mr. Odell served most recently in the JPMorgan Special Credits
Group, where he was responsible for credit portfolio management
and concentrated on debt restructurings in credit facilities
where JPMorgan served as agent bank on behalf of itself and
other lender participants.
Leonard Campanaro, chairman of Enesco's Board of Directors,
stated, "Roger is a seasoned finance professional who focused
his entire career on debt restructuring and corporate
recapitalization. His restructuring expertise will be an asset
to Enesco, bringing added strength and depth in this area at the
Board level."
Mr. Odell holds a Bachelor of Arts degree in Business from
Baldwin Wallace College in Ohio, and was with the U.S. Army from
1966 to 1968.
Enesco Group, Inc. --- http://www.enesco.com/-- is a world
leader in the giftware, and home and garden decor industries.
Serving more than 44,000 customers worldwide, Enesco distributes
products to a wide variety of specialty card and gift retailers,
home decor boutiques, as well as mass-market chains and direct
mail retailers. Internationally, Enesco serves markets
operating in the United Kingdom, Canada, Europe, Mexico,
Australia and Asia. With subsidiaries located in Europe and
Canada, and a business unit in Hong Kong, Enesco's international
distribution network is a leader in the industry. Enesco's
product lines include some of the world's most recognizable
brands, including Border Fine Arts, Bratz, Circle of Love,
Foundations, Halcyon Days, Jim Shore Designs, Lilliput Lane,
Pooh & Friends, Walt Disney Classics Collection, and Walt Disney
Company, among others.
Credit Default
As reported in the Troubled Company Reporter on Aug. 15, 2006,
Enesco is continuing to aggressively pursue long-term debt
financing. Enesco previously had agreed to obtain a commitment
for long-term financing by Aug. 7, 2006. Because Enesco has not
obtained a commitment, the company is in default of its current
credit facility agreement.
Enesco is working with the lenders for possible additional
loans or terms and conditions, but has been advised that the
lenders are not committing to waive the default.
Enesco reported a US$24.9 million net loss in the quarter ended
June 30, 2006.
MOVIE GALLERY: Hires Turnaround Experts Amidst Flagging Sales
-------------------------------------------------------------
Movie Gallery Inc., has turned to Merrill Lynch & Co. and
Alvarez & Marsal, Inc., in an effort to boost its finances.
Merrill Lynch will explore opportunities to strengthen the
company's balance sheet. Alvarez & Marsal will immediately fill
several vacancies in Movie Gallery's accounting and finance
functions, shorten the lead time for implementing specific
turnaround initiatives, assist in the remediation of previously
identified material weaknesses and deficiencies in internal
control over financial reporting, facilitate the ongoing
integration process and improve the Company's overall operating
performance.
Joe Malugen, the Company's Chairman, President and Chief
Executive Officer said: "Our business continues to be affected
by a weak home video release schedule and other industry-wide
challenges, but we are making great progress on a number of
internal initiatives intended to improve Movie Gallery's
financial and operational performance. We continue to expect a
slow late summer, as is typical due to the seasonality of our
industry, with gradually improving business conditions beginning
in October when the first of several US$100 million titles will
be released to home video. "In the meantime, Movie Gallery is
aggressively pursuing opportunities to increase revenues and
further improve operating efficiencies. We have engaged Merrill
Lynch to advise us on ways to improve our capital structure as
well as Alvarez & Marsal, a leading turnaround management,
restructuring and corporate advisory firm. This great company,
together with its dedicated associates and partners, is taking
the steps necessary to reposition Movie Gallery for renewed
success."
Movie Gallery reported a net loss of US$14.9 million in the
second quarter of 2006. The Company's year-to-date net income
was US$25.5 million.
For the second quarter of 2006, total revenues were US$601.3
million as compared to US$504.7 million in the comparable period
last year. The Company's year-to-date revenues were
approximately US$1.3 billion for the twenty-six weeks ended July
2, 2006 as compared to revenue of US$738.5 million in the
comparable 2005 period.
As of July 2, 2006, Movie Gallery had cash and cash equivalents
of US$21.2 million and US$39.3 million in available borrowings
under its revolving credit facility. Furthermore, as of Aug. 9,
2006, the Company had no borrowings on its revolving credit
facility apart from open letter of credit commitments. As of
July 2, 2006, Movie Gallery was in compliance with the financial
covenants contained in its credit facility.
Operational Improvement Initiatives
In conjunction with the continuing integration of Hollywood
Entertainment Corporation, Movie Gallery is also pursuing cost
savings and cash generation opportunities through a combination
of real estate optimization strategies, lower capital spending,
and non-core asset divestitures.
Real Estate Optimization
Movie Gallery is implementing several strategies to better
manage store leases and sales floor space to generate
significant savings over the next three years. The Company
plans to reduce the overall footprint of its store base by
returning under-utilized portions to landlords and negotiating
subleases where economically feasible. Movie Gallery is
experiencing better than expected progress from this effort to
restructure the Company's real estate assets, manage occupancy
costs and unlock unrealized value.
However, these real estate projects are long-term in nature will
take some time to implement. Most of the financial benefits
associated with these projects are expected to begin in 2007,
with the bulk of the financial benefits to be realized in 2008
and beyond.
In addition, Movie Gallery continues to evaluate underperforming
stores and stores that have overlapping trade areas in order to
close stores in those markets at an accelerated pace. The
Company anticipates closing approximately 175 underperforming
and overlapping stores during fiscal 2006 and believes it can
transfer a sufficient percentage of the customer base to other
Movie Gallery and Hollywood Video stores to improve
profitability in these markets.
Reduced Capital Spending
During the second quarter of 2006 Movie Gallery opened 32 new
stores and closed 42 of its existing stores. Through the
remainder of 2006, the Company currently plans to open
approximately 30 new stores, which were already in the pipeline
for 2006. In order to maximize free cash flow, the Company
plans to curtail new store openings over the next several years.
Divestiture of Certain Non-Core Assets
Movie Gallery is continuing to review the Company's overall
asset portfolio. Net proceeds from any divestitures will be
used for debt reduction, working capital and other general
corporate purposes.
Expense Reductions
As a part of the Company's integration process and ongoing cost
reduction efforts, Movie Gallery has reduced its salaried and
administrative office staff from the date of the merger by
approximately 21%, or 380 positions, as of the end of the second
quarter of 2006. While this exceeds the Company's previously
announced staff reduction target of 17%, or 300 positions, the
Company will continue to pursue opportunities to reduce expenses
and streamline the organization to improve its bottom-line
results.
About Movie Gallery
Headquartered in Dothan, Alabama, Movie Gallery, Inc. --
http://www.moviegallery.com/-- is the second largest North
American video rental Company with approximately 4,800 stores
located in all 50 U.S. states, Canada and Mexico. Since the
Company's initial public offering in August 1994, Movie Gallery
has grown from 97 stores to its present size through
acquisitions and new store openings.
* * *
As reported in the Troubled Company Reporter on March 15, 2006,
Moody's Investors Services downgraded the corporate family
rating of Movie Gallery to Caa1 from B2. The Company's US$920
million of senior secured credit facilities carry Moody's Caa1
rating while its US$325 million of guaranteed senior notes are
rated at Caa3.
PENN OCTANE: Amends and Restates Lease Agreement with Seadrift
--------------------------------------------------------------
Penn Octane Corporation and Seadrift Pipeline Corp., a
subsidiary of The Dow Chemical Company, entered into an amended
and restated lease agreement for the Ella-Brownsville pipeline.
The pipeline runs approximately 132 miles from Exxon Mobil
Corporation's King Ranch Gas Plant to the Company's Brownsville
terminal facility. The Amended Lease will expire on
December 31, 2013.
The Amended Lease provides that, the Company will have the
exclusive right to transport materials through the Ella-
Brownsville pipeline, and Seadrift will no longer have certain
rights to utilize the pipeline for its own purposes. In
addition, the Company will no longer be required to make minimum
payments for propane storage in Markham, Texas and will no
longer have access to the storage. The Company will also no
longer have access to the Ella-Seadrift pipeline.
The Company disclosed that it has agreed to indemnify Seadrift
for environmental liabilities, including claims relating to the
condition of the leased property and any environmental
remediation costs, arising after September 1, 1993. Seadrift
has agreed to indemnify the Company for similar environmental
liabilities arising before September 1, 1993.
The Company's lease payments will now be a fixed annual amount
of US$1.6 million.
Headquartered in Palm Desert, California, Penn Octane
Corporation (NASDAQ:POCC) -- http://www.pennoctane.com/--
formerly known as International Energy Development Corporation
buys, transports and sells liquefied petroleum gas for
distribution in northeast Mexico, and resells gasoline and
diesel fuel. The Company has a long-term lease agreement for
approximately 132 miles of pipeline, which connects ExxonMobil
Corporation's King Ranch Gas Plant in Kleberg County, Texas and
Duke Energy's La Gloria Gas Plant in Jim Wells County, Texas, to
the Company's Brownsville Terminal Facility.
Going Concern Doubt
As reported in the Troubled Company Reporter on May 4, 2006,
Burton McCumber & Cortez, L.L.P., Brownsville, Texas, raised
substantial doubt about the ability of Penn Octane Corporation
to continue as a going concern after auditing the company's
consolidated financial statements for the year ended
Dec. 31, 2005.
Burton McCumber pointed to the Company's insufficient cash flow
to pay its obligations when due, inability to obtain additional
financing because substantially all of the Company's assets are
pledged or committed to be pledged as collateral on existing
debt, existing credit facility may be insufficient to finance
its liquefied petroleum gas and Fuel Sales Business, and working
capital deficiency.
SONIC CORP: S&P Assigns BB- Ratings on Proposed US$775M Debts
-------------------------------------------------------------
Standard & Poor's Ratings Services said assigned its 'BB-'
corporate credit rating to Oklahoma City, Okla.-based quick-
service restaurant operator Sonic Corp. The outlook is stable.
Standard & Poor's also assigned a 'BB-' rating to the company's
proposed US$100 million secured revolving credit facility
maturing in 2011 and to its US$675 million secured term loan B
maturing in 2013. A recovery rating of '2' was assigned to the
credit facilities, indicating the expectation for substantial
recovery of principal in the event of a payment default.
The ratings are based on preliminary terms and are subject to
change after review of final documents. Sonic is recapitalizing
and will use proceeds from the bank facilities to repurchase
US$560 million of common stock and to refinance existing debt.
"Ratings reflect Sonic's weak cash flow protection measures,
lack of geographic diversity, risk of business disruptions due
to its plans to expand nationally, and relatively small market
share in the intensely competitive quick-service restaurant
sector," said Standard & Poor's credit analyst Diane Shand.
These risks are partly offset by its good brand name and
generally good operating performance.
Sonic will be highly leveraged after the transaction. Standard
& Poor's estimates that pro forma total debt to EBITDA will be
4.3x in 2006, up from 1.1x in 2005. Cash flow protection
measures also deteriorate. EBITDA coverage of interest falls to
about 3x in 2006, from 13x in 2005, and funds from operations to
total debt declines to 9.2% from 68.3%. Because the
amortization schedule is minimal, leverage is expected to
decline only modestly over the next few years.
Sonic is a distant fourth player in the US$56 billion hamburger
market of the U.S. restaurant industry. With a 5.5% share, the
company competes against more formidable players such as
McDonald's, which has a 45% share; Burger King, with 13.9%; and
Wendy's, with 13.6%. Sonic differentiates itself from other
quick-service restaurant operators with its retro drive-in style
and service to the car.
Headquartered in Oklahoma City, Oklahoma, Sonic Corp. engages in
the operation and franchising of a chain of quick-service drive-
ins in the United States and Mexico. As of August 31, 2005,
Sonic Corp. had 3,039 Sonic Drive-Ins, including 574 Partner
Drive-Ins and 2,465 Franchise Drive-Ins.
=================
N I C A R A G U A
=================
* NICARAGUA: Financial System Posts 614MM Nio First Half Profits
----------------------------------------------------------------
Consolidated profits of the financial system in Nicaragua
increased 11.1% to 614 million nio in the first half of 2006,
compared with the 553 million nio recorded for the same period
of 2005, Business News Americas reports, citing Siboif -- the
country's financial system regulator.
Nicaragua's financial system is includes seven banks and two
finance firms -- Findesa and Finarca.
Mauricio Choussy, the managing director of Fitch Ratings Central
America, told BNamericas that the "bottom line results" are
mainly due to:
-- loan growth,
-- greater banking penetration, and
-- Nicaragua's economic expansion.
Debts of the Nicaraguan government used to make up a substantial
proportion of banks' interest earning assets. However,
declining returns on the securities have made lending more
appealing for banks, BNamericas syas, citing Mr. Choussy.
According to the report, the financial system's ROAE in the
first half of 2006 was 27.3%. In the same period of 2005, ROAE
was 30.5%.
Mr. Choussy told BNamericas, the decrease in was due to factors
like:
-- stronger competition in commercial and retail lending,
-- lower returns on government securities, and
-- higher administrative expenses, among others.
BNamericas relates that the financial system's ROAA was 2.52% in
the first six months of 2006, while in the same period of 2005,
ROAA was 2.71%.
The report underscores that the financial system's net interest
income increased 21% to 1.90 billion nio. Net non-interest
income rose 18% to 469 million nio due to higher fee revenues.
Administrative costs grew 28% to 1.32 billion nio.
The financial system's net loans increased 36% to 26.4 billion
nio at the end of June 2006, compared with June 2005, due to
boost in mortgage and consumer as well as lending, BNamericas
notes. Past-due loans as a percentage of total loans dropped to
2.1% at the end of June 2006 from 2.26% in 2005.
BNamericas emphasizes that deposits increased 16% to 39.1
billion nio at the end of June 2006, compared with June 2005.
Increase in deposits was at a slower rate than loans. Mr.
Choussy said that this was due to a low level of banking
penetration and the usual deposits contraction that occurs in
pre-electoral periods.
Mr. Choussy told BNamericas that the volume of deposits,
however, has been more stable compared to the 2001 elections,
which reflects growing political maturity.
According to BNamericas, Nicaragua will be holding presidential
and legislative elections on Nov. 5, 2006. .
The financial system's assets increased 22% to 51.7 billion nio
at the end of June 2006, compared with the same month in 2005.
Liabilities grew 22% to 47.0 billion nio. Equity rose 29% to
4.79 billion nio, BNamericas states.
* * *
Moody's Investor Service assigned these ratings to Nicaragua:
Rating Rating Date
------ -----------
Long Term Caa1 June 30, 2003
Senior Unsecured
Debt B3 June 30, 2003
===============
P A R A G U A Y
===============
* PARAGUAY: State Firm's Monopoly Slows Broadband Penetration
-------------------------------------------------------------
Capadi, a Paraguayan Internet chamber, told ABC that state-owned
fixed line operator Copaco's monopoly in the Internet sector is
hampering broadband penetration in Paraguay.
Private Internet service providers could offer rates up to six
times less than what Copaco offers, Capadi told Business News
Americas.
The US$1,800 per month per Mb international Internet
interconnection fee Copaco charges to local Internet service
providers is one of the highest in the region, BNamericas
reports, citing Capadi.
Capadi told BNamericas that Copaco's own Internet service
provider pays US$300 for international Internet interconnection.
The fee clients paid would only reduce if the monopoly of Copaco
ends, BNamericas states, citing Capadi.
* * *
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 A N A M A
===========
* PANAMA: Will Ink Free Trade Bilateral Protocol with Costa Rica
----------------------------------------------------------------
Panama will be signing a Bilateral Protocol of the Free Trade
Treaty with Costa Rica, Prensa Latina reports.
Alejandro Ferrer, the minister of trade and industry in Panama,
told Prensa Latina that this kind of agreement will increase and
strengthen commercial relations with Costa Rica.
According to Prensa Latina, a delegation of Panamanian experts
visited Costa Rica on Monday to attend the 4th Round of
Negotiation with the latter.
New discussions would be held from Aug. 14-18 in San Jose, Costa
Rica, Prensa Latina relates, citing an official spokesperson.
Topics to be discussed during the meeting include:
-- access to markets,
-- rules for trade with Costa Rica,
-- services,
-- investment,
-- financial services, and
-- governmental purchase.
The meeting is part of the March 27 commitment of the Ministers
of Trade of Panama and Central America to resume talks for a
free trade agreement between Panama and the Central America,
Prensa Latina underscores.
* * *
Fitch Ratings assigned these ratings on Panama:
Rating Rating Date
------ -----------
Country Ceiling BBB Apr. 8, 2005
Long Term IDR BB+ Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB+ Dec. 14, 2005
=======
P E R U
=======
IMPSAT FIBER: Posts US$69.4 Mil. Second Quarter 2006 Revenues
-------------------------------------------------------------
IMPSAT Fiber Networks, Inc., disclosed its results for the
second quarter of 2006.
Second Quarter 2006 Highlights
-- Net Revenues increased for the tenth consecutive quarter.
For the second quarter of 2006, net revenues totaled
US$69.4 million, an increase of US$8.0 million or 13.0%
compared to the second quarter of 2005.
-- EBITDA totaled US$16.2 million, or 23.4% of net revenues,
for the second quarter of 2006. EBITDA increased
US$4.5 million, or 38.8%, as compared to second quarter
of 2005.
-- Capital Expenditures for the second quarter of 2006
totaled US$9.5 million.
-- Impsat Brazil's revenues rose by US$5.2 million for the
second quarter of 2006 as compared to the second quarter
of 2005, an increase of 46.1%.
Commenting on the results of the second quarter of 2006, Impsat
CEO Ricardo Verdaguer stated, "I am pleased to announce that
during the second quarter of 2006 we reached remarkable
achievements in revenue growth and EBITDA margins. As a
consequence of our customer-driven strategy and our improved
solutions portfolio, our net revenues grew by 13% relative to
the second quarter of 2005. Furthermore, this was our tenth
consecutive quarter of revenue growth. In addition, our cost
control efforts, together with leveraged fixed expenses, are
paying off in higher EBITDA margins, which increased from 19.0%
of Net Revenues in the second quarter of 2005 to 23.4% in the
same period of 2006. Also, we continued expanding our Brazilian
operations, where revenues and EBITDA grew by 46.1% and 121.2%
respectively."
Revenues
Net revenues during the second quarter of 2006 totaled US$69.4
million, an increase of US$8.0 million, or 13.0%, compared to
the second quarter of 2005. All product lines increased
revenues period-over-period.
-- Broadband and Satellite revenues increased US$3.7 million,
or 8.8%, period-over-period, driven by growth of IP
solutions in Brazil, Colombia, and Ecuador.
-- Internet revenues increased 16.2% period-over-period due
to higher managed security services and the expansion of
internet access to corporate customers. Brazil,
Argentina, and Colombia were the subsidiaries with the
highest growth.
-- Value Added Services revenues increased by 44.6% as
compared to the second quarter of 2005. Growth was led by
housing, hosting, and managed services in our data
centers, particularly in Brazil.
-- Telephony revenues grew by 9.9% compared to the second
quarter of 2005, led by higher sales to corporate
customers in Brazil and Peru.
For the six months ended June 30, 2006, net revenues totaled
US$138.0 million, an increase of US$16.7 million, or 13.7%, as
compared to the same period in 2005.
Impsat's growth in revenues over the prior quarters is a
combination of several factors including:
(a) its increased customer base, which expanded from
3,912 customers at June 30, 2005, to 4,530 on
June 30, 2006;
(b) cross-selling and up-selling to existing and new
customers;
(c) bundling of existing and new services;
(d) stable or improved macroeconomic conditions throughout
the Latin American region; and
(e) appreciation of local currencies, mainly in Brazil.
Operating Expenses
Operating Expenses for the three months ended June 30, 2006
totaled US$66.9 million, an increase of US$2.7 million, or 4.3%,
compared to the second quarter of 2005. This increase is
related to a US$1.7 million increase in direct costs, a US$1.3
million increase in salaries and wages, a US$0.4 million
increase in selling, general and administrative expenses, and a
US$0.7 million decrease in depreciation and amortization
charges.
Direct Costs for the second quarter of 2006 totaled US$33.3
million, an increase of US$1.7 million, or 5.4%, compared to the
first quarter of 2005. The principal components of direct costs
were as follows:
Contracted Services decreased by US$0.2 million compared to the
second quarter of 2005. Contracted services include
installation and maintenance services. The decrease is related
to maintenance works rescheduled for the following quarters.
Other Direct Costs principally include provisions for doubtful
accounts, licenses and other fees, sales commissions paid to our
salaried work force and to third-party sales representatives,
and node expenses. Other Direct Costs for the second quarter of
2006 increased by US$1.9 million compared to the second quarter
of 2005. The increase is related primarily to higher services
delivered to customers, an increase in energy costs, doubtful
accounts recoveries during 2005, and the appreciation of the
local currency in Brazil.
Leased Capacity Costs did not change in the three months ended
June 30, 2006, as compared to the same period in 2005. Higher
capacity needs to fulfill higher services demanded, were offset
by price renegotiations.
Salaries and Wages for the second quarter of 2006 totaled
US$13.6 million, a US$1.3 million increase as compared to the
second quarter of 2005. The effect of currency revaluation in
Brazil, and salary adjustments related to higher cost of living
were partially offset by savings due to lower headcount. The
aggregate number of employees decreased from 1,253 at
June 30, 2005, to 1,220 at June 30, 2006.
Selling, General and Administrative expenses totaled US$6.3
million for the second quarter of 2006, an increase of 6.9%
compared to the US$5.9 million of the second quarter of 2005.
This increase is primarily related to higher legal advisory
fees.
EBITDA
EBITDA for the three months ended June 30, 2006 totaled US$16.2
million, compared to US$11.7 million in the second quarter of
2005. The US$4.5 million, or 38.8%, increase in EBITDA is
directly related to higher revenues and a stable cost structure.
EBITDA represented 23.4% of Net Revenues during the second
quarter of 2006 compared to 19.0% during the second quarter of
2005.
For the first two quarters of 2006 EBITDA totaled US$31.8
million, compared to US$22.3 million during the same period of
2005.
Interest Expense
Net interest expense for the three months ended June 30, 2006,
totaled US$7.0 million, compared to net interest expense of
US$8.9 million for the second quarter of 2005. The decrease in
our net interest expense is related to lower total indebtedness
and to lower taxes over interest payments.
Effect of Foreign Exchange Losses and Gains
Impsat recorded a net gain on foreign exchange for the second
quarter of 2006 of US$3.0 million, principally due to the impact
of the appreciation of the Brazilian Real on the book value of
monetary assets and liabilities in Brazil. This compares to a
net gain on foreign exchange of US$11.9 million for the same
period of 2005.
Net Loss
For the three months ended June 30, 2006, the company recorded a
net loss of US$3.5 million, compared to a net loss of US$7.0
million during the second quarter of 2005.
Liquidity and Capital Resources
Cash and cash equivalents at June 30, 2006 were US$23.1 million.
This compares to cash and cash equivalents of US$24.1 million at
December 31, 2005. Total indebtedness as of June 30, 2006, was
US$241.0 million as compared to US$248.1 million on
December 31, 2005.
Of the total indebtedness at June 30, 2006, US$28.1 million
represented short-term debt and the current portion of long-term
debt, with the balance of US$212.8 million representing long-
term debt.
Impsat Fiber Networks, Inc., -- http://www.impsat.com-- is a
provider of private telecommunications networks and Internet
services in Latin America. The company owns and operates 15
data centers and metropolitan area networks in some of the
largest cities in Latin America, providing services to more than
4,200 national and multinational companies, financial
institutions, governmental agencies, carriers, ISPs and other
service providers throughout the region. Impsat has operations
in Argentina, Colombia, Brazil, Venezuela, Ecuador, Chile, Peru,
the United States and throughout Latin America and the
Caribbean.
Impsat registered an increase in losses from US$14.2 million in
2004 to US$36.2 million in 2005.
* PERU: Posts US$311MM First Half Steel & Metallurgical Exports
---------------------------------------------------------------
Prompex, the export agency in Peru, said in a statement that the
country's steel and metallurgical exports increased 69.4% to
US$311 million in the first half of 2006, compared with the same
period of 2005.
The statement says that the value of the sector's exports in
June 2006 rose 94.8% to US$60.1 million, year-on-year, led by
copper wire and unrefined zinc sales abroad.
According to Prompex, copper wire and unrefined zinc are the
sector's two most important products.
Prompex told Business News Americas that copper wire exports
increased 79.5% to US$18.3 million, compared with the same
period of 2005. Unrefined zinc grew 694% to US$11.8 million in
June 2006.
Peru's steel and metallurgical goods are mainly shipped to:
-- Colombia (22%),
-- Brazil (8.4%),
-- Holland (7.8%),
-- Italy (6.5%), and
-- United States (6.2%).
* * *
Fitch Ratings assigned these ratings on Peru:
Rating Rating Date
------ -----------
Country Ceiling BB Nov. 18, 2004
Long Term IDR BB Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB+ Dec. 14, 2005
=====================
P U E R T O R I C O
=====================
ADELPHIA COMMS: Can Implement Post-Closing Incentive Program
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
allowed Adelphia Communications Corp. and its debtor-affiliates
to implement a post-closing incentive program to ensure that
certain key employees will continue their employment with the
Debtors through a transition and wind-down period.
Upon consummation of the sale of substantially all of the
Debtor's assets to Time Warner NY Cable, LLC, and to Comcast
Corp., the ACOM Debtors' cable operations will largely cease,
Shelley C. Chapman, Esq., at Willkie Farr & Gallagher LLP, in
New York, told the Court.
Accordingly, on the closing date of the Sale, the ACOM Debtors
intend to terminate approximately 98% of their workforce.
However, the ACOM Debtors will need to retain key personnel in
order to continue administering their estates and preserve value
for stakeholders. Out of the ACOM Debtors' 13,500 employees,
approximately 275 employees will be asked to remain with ACOM to
handle important accounting, tax, administrative, and financial
matters, Ms. Chapman disclosed.
According to Ms. Chapman, most of the Key Transition Employees
have irreplaceable institutional knowledge of matters and
projects within their particular expertise, including, among
other things, oversight and assistance with the audit, the
restatement, claims reconciliation, compliance with the post-
close requirements under the asset purchase agreements, the
government settlement, and the completion of certain tax
filings.
Ms. Chapman noted that thousands of employees have continued
their employment with the ACOM Debtors during the reorganization
due, in large part, to their loyalty to senior management.
Given that the tasks are critical, time sensitive, and, for the
most part, required by applicable law, the ACOM Debtors need to
ensure that the Key Transition Employees remain with ACOM until
those tasks are complete, or, in some cases, until transition
can be made to a new administrative team, Ms. Chapman asserted.
Ms. Chapman noted that the Key Transition Employees, who have
been so critical to the monumental effort for the ACOM Debtors'
Chapter 11 cases, are anxious to move on and are entitled to do
so upon the closing of the Sale. "They have been under enormous
pressure and strain for extended periods, compounded by the
uncertainty inherent in working for years for a company
operating in chapter 11 and on the auction block since the
spring of 2004."
Based on current compensation and benefit entitlements, the Key
Transition Employees have little financial incentive to remain
in ACOM's employ after the Closing Date. Specifically, the Key
Transition Employees will become entitled to receive
substantially all of their retention incentives on the Closing
Date. Like their colleagues whose employment will terminate
upon the close of the Sale, eligible Key Transition Employees
will receive their short term and long term incentive bonuses,
the first installment of their bonus on the Closing Date and, to
the extent they elect to terminate their employment for "good
reason," eligible VP Transition Employees -- employees at the
Vice President or Senior Vice President level -- may receive
severance.
If new incentives are not put in place prior to the Closing
Date, the ACOM Debtors anticipate that most of the Key
Transition Employees will elect to terminate their employment,
Ms. Chapman contends. Without the Key Transition Employees in
place, the ACOM Debtors stand to lose an enormous resource pool,
a loss that imperils the value the ACOM Debtors have worked so
hard to preserve, Ms. Chapman said.
The Court also authorized the ACOM Debtors to:
(a) enter into new employment agreements with certain VP
Transition Employees to provide for their day-to-day
compensation after the Closing Date; and
(b) increase the base compensation of EVPs to provide for
their day-to-day compensation after the Closing Date
pursuant to new letter agreements.
According to Ms. Chapman, the ACOM Debtors currently maintain a
compensation structure that is fair to employees, reasonably
calculated to preserve, rather than squander, estate assets
through the retention of qualified personnel, and comparable to
the compensation available to employees in the marketplace.
Specifically, the Existing Compensation Programs are:
Nature of
Compensation Rationale
------------ ---------
Base Salary Employees' annual base salaries constitute
compensation for the performance of day to
day tasks.
STIP The Short Term Incentive Plan provides
employees with the opportunity to earn an
annual bonus, which is tied to the
satisfaction of certain predetermined
targets. Short term incentives are one of
the three elements of an employees' core
compensation. For 2006's first seven months,
most of the ACOM Debtors' STIP targets were
based on metrics that were intended to comply
with provisions of the Asset Purchase
Agreements with the Buyers.
PRP The PRP Awards are intended to replace the
long-term incentives provided by the ACOM
Debtors' competitors and comparable companies
not in Chapter 11. Together with base salary
and the STIP, the PRP Awards are a core
component of an executives basic
compensation, which is designed to ensure
that the ACOM Debtors' employees are paid at
market rates.
Severance Severance benefits -- whether afforded under
the ACOM Debtors' Severance Plan or under an
employment agreement -- are intended to
provide compensation in lieu of employment.
Severance is not a retention device.
Stay Bonus The Stay Bonus and Sale Bonus were designed
To Sale Bonus reflect the unique
circumstances of these cases, and
specifically intended to encourage certain
key managers to:
(a) work diligently through the Debtors'
dual-track emergence; and
(b) remain with the Debtors until the closing
of the Sale.
The occurrence of the Closing in the context of the Joint
Venture Plan for the Century-TCI and Parnassos Debtors has
created a new and somewhat unique set of circumstances imposing
risk and uncertainty on a subset of the ACOM Debtors' key
managers. The Parnassos Debtors are comprised of:
* Parnassos Communications, L.P.,
* Parnassos Distribution Company I, LLC,
* Parnassos Distribution Company II, LLC,
* Parnassos, L.P.,
* Parnassos Holdings, LLC, and
* Western NY Cablevision, L.P.
The Debtors now believe that the Existing Compensation Programs
are no longer sufficient to retain the Key Transition Employees,
Ms. Chapman said.
Closing and Post-Closing Compensation
On the Closing Date, all eligible Senior Transition Employees
will be paid their 2006 STIP, their PRP Award and 50% of their
Sale Bonus. Ms. Chapman clarified that these are not incentives
or entitlements that can be altered or utilized as an inducement
for the Key Transition Employees to remain with ACOM. Rather,
these are entitlements, which have been bargained for, earned,
and approved by the ACOM's Board of Directors or the Court, and
now must be paid, Ms. Chapman said.
The ACOM Debtors anticipate that many, if not all, of the VP
Transition Employees will elect to terminate their employment as
of the Closing Date for "good reason" and collect their
severance and other entitlements.
The ACOM Debtors also got Court authority to rehire the VP
Transition Employees pursuant to the terms of their New VP/SVP
Agreements.
The New Employment Agreements will provide that all Senior
Transition Employees who remain with the Debtors after the
Closing Date will be entitled to earn an adjusted base salary
calculated by adding that employee's Base Salary, STIP
opportunity and PRP Award opportunity at their target levels.
The Adjusted Base Salary will be paid pro rata every two weeks
during the course of an employee's post-Sale employment with the
ACOM Debtors.
The ACOM Debtors estimate that the Adjusted Base Salaries for
Senior Transition Employees during the Transition will be
approximately US$4,000,000 in the aggregate, Ms. Chapman
disclosed.
With regards to the Directors, the ACOM Debtors will calculate
an Adjusted Base Salary for Directors by adding that employee's
Base Salary and annual STIP at target level to ensure that the
Directors are compensated at market rates during the Transition.
The ACOM Debtors estimate that the Adjusted Base Salaries for
Directors will be approximately US$1,500,000 in the aggregate.
According to Ms. Chapman, while those at the Director level and
below will not be entitled to a severance payment on the Closing
Date, these employees will be given a date certain on which
their employment will conclude. If these employees do not
voluntarily terminate their employment before the Guaranteed
Severance Date, they will automatically be entitled to receive
payment under the Severance Plan on that date.
A full-text copy of the Post-Closing Employment Agreements is
available for free at http://ResearchArchives.com/t/s?e72
Post-Closing Incentive Program
According to Ms. Chapman, virtually all employees who remain
with the ACOM Debtors after the Closing Date will be entitled to
participate in the Post-Closing Incentive Program.
Pursuant to the Post-Closing Incentive Program, the ACOM Debtors
will advise each employee of the length of time his or her post-
Closing Date assignment is expected to last. Upon the Key
Transition Employee's eligible separation from ACOM, the
employee will be entitled to receive a payment equal to a
percentage of that employee's Base Salary -- prior to any STIP
or PRP additions to the employee's Adjusted Base Salary -- pro-
rated for the number of days in the Assignment Period.
If an eligible employee works until the earlier of the end of
the Assignment Period, the employee will receive his or her
entire bonus under the Post-Closing Incentive Program.
To the extent the ACOM Debtors require that employee to remain
longer than the Assignment Period, the Debtors will need to
negotiate a compensation package with the employee for the rest
of their post-close tenure.
The total funding of the Post-Closing Incentive Program is
estimated to be approximately US$5,000,000 and the average bonus
to any one employee will be approximately 50% of base salary.
A full-text copy of ACOM's Post Closing Incentive Program is
available for free at http://ResearchArchives.com/t/s?e73
About Adelphia Communications
Based in Coudersport, Pa., Adelphia Communications Corp. (OTC:
ADELQ) -- http://www.adelphia.com/-- is the fifth-largest
cable television company in the country. Adelphia serves
customers in 30 states and Puerto Rico, and offers analog and
digital video services, high-speed Internet access and other
advanced services over its broadband networks. The Company and
its more than 200 affiliates filed for Chapter 11 protection in
the Southern District of New York on June 25, 2002. Those cases
are jointly administered under case number 02-41729. Willkie
Farr & Gallagher represents the ACOM Debtors.
PricewaterhouseCoopers serves as the Debtors' financial advisor.
Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin,
Bogdanoff & Stern LLP represent the Official Committee of
Unsecured Creditors.
Adelphia Cablevision Associates of Radnor, L.P., and 20 of its
affiliates, collectively known as Rigas Manged Entities, are
entities that were previously held or controlled by members of
the Rigas family. In March 2006, the rights and titles to these
entities were transferred to certain subsidiaries of Adelphia
Cablevision, LLC. The RME Debtors filed for chapter 11
protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622
through 06-10642). Their cases are jointly administered under
Adelphia Communications and its debtor-affiliates chapter 11
cases. (Adelphia Bankruptcy News, Issue No. 144; Bankruptcy
Creditors' Service, Inc., 215/945-7000,
http://bankrupt.com/newsstand/)
ADELPHIA: Court Okays Local Franchising Settlement Procedures
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
allowed Adelphia Communications Corp. and its debtor-
affiliates to enter into settlement agreements with certain
local franchising authorities without further Court approval,
and upon notice to:
-- the Official Committee of Unsecured Creditors,
-- the Official Committee of Equity Security Holders, and
-- the agents for the prepetition and postpetition lenders.
As previously reported, a number of local franchising
authorities objected to the ACOM Debtors' proposed assumption
and assignment of the franchise agreements to Time Warner NY
Cable, LLC, and Comcast Corp. -- the buyers of substantially all
of the Debtors' assets.
Roger Netzer, Esq., Willkie Farr & Gallagher LLP, in New York,
relates that many of the Objections have been resolved, but the
Debtors are still negotiating with a small number of the LFAs
regarding certain Objections that remain pending.
"The Debtors are working expeditiously to craft settlement
agreements with the remaining LFAs that will resolve the
Objections and allow the transfer of the Franchise Agreements to
the Buyers as of the Closing Date or shortly thereafter.
However, once [those] agreements have been finalized, rapid
approval of [those] compromises is imperative," Mr. Netzer says.
Mr. Netzer explains that expedited approval of the Settlement
Agreements is necessary because, absent approval of the
negotiated resolution of the LFAs' Objections, the Debtors may
be unable to transfer the Franchise Agreements to the Buyers on
the Closing Date or shortly thereafter. If the Franchise
Agreements cannot be transferred in the very near future, the
Debtors may be forced to divert estate resources to:
(a) attempt to continue to operate under those Franchise
Agreements without sufficient personnel or equipment to
do so; or
(b) reject those Franchise Agreements and satisfy claims
brought by the LFAs for damages related to the Debtors'
inability to perform their obligations under the
Franchise Agreements.
Accordingly, the Debtors propose to implement uniform guidelines
and procedures with respect to the approval of the Settlement
Agreements:
(a) The ACOM Debtors will provide notice via fax or e-mail
to:
-- the Official Committee of Unsecured Creditors,
-- the Official Committee of Equity Security Holders,
-- the agents for the prepetition and postpetition
lenders, and
-- the Buyers,
of the proposed settlement along with a copy of the
Settlement Agreement in substantially final form.
(b) If any Constituent objects to the proposed settlement
within one business day of service of the Settlement
Notice, the Debtors may either:
(1) renegotiate the settlement and re-submit a
revised Settlement Notice to the Constituents
with the revised Settlement Agreement; or
(2) file a motion pursuant to Rule 9019 of the
Federal Rules of Bankruptcy Procedure with the
Court seeking approval of the existing Settlement
Agreement on no less than three days notice.
(c) In the absence of an objection to a Settlement Notice
within the timeframe, the ACOM Debtors will be deemed
authorized to enter into the Settlement Agreement
without prior Court approval.
(d) Upon deemed approval of a Settlement Agreement, the ACOM
Debtors will present to the Court for signature a
proposed order, authorizing the assumption and
assignment to the Buyers of the Franchise Agreements
that were addressed in the Settlement Agreement. The
Settlement Agreement will be annexed as an exhibit to
the Assignment Order, and the Assignment Order will be
filed under seal.
The ACOM Debtors propose that each Assignment Order remain
confidential, be filed under seal and be served on and made
available only to:
(i) the United States Trustee for the Southern District of
New York;
(ii) the Constituents;
(iii) counsel to the LFA that is a party to the Franchise
Agreement addressed in the Assignment Order; and
(iv) other parties as may be ordered by the Court, and will
not be made available to the general public.
The terms of the Settlement Agreements will contain competitive
and proprietary information about the Franchise Agreements and
the Buyers' obligations on a going-forward basis.
"Disclosure of the terms of any Settlement Agreement may
adversely impact the ability of the LFAs and the Buyers to
negotiate favorable franchise agreements with third parties.
Furthermore, the Debtors continue to negotiate with certain LFAs
that have objected to the assumption and assignment of their
franchise agreements. Disclosure of the terms of any Settlement
Agreement may detrimentally affect the course of such ongoing
negotiations," Mr. Netzer says.
Thus, the ACOM Debtors have agreed with the LFAs and the Buyers
to protect the confidential terms of the Settlement Agreements.
The Debtors seek the Court's authority to file those agreements
under seal and to provide for only limited disclosure of the
Settlement Agreements.
Absent approval of the settlement procedures, Mr. Netzer says,
the Debtors would be required to seek specific Court approval
for each individual resolution of an Objection. Given the
exigent circumstances of the impending Closing Date, holding
individual hearings, filing individual pleadings, and sending
notice of each proposed settlement to every one of the numerous
creditors and interested parties entitled to receive notice in
the Debtors' cases would be an expensive, cumbersome, and highly
inefficient way to resolve the LFAs' Objections and effect the
assumption and assignment of the Franchise Agreements.
If the ACOM Debtors are authorized to settle the Objections
their way, Mr. Netzer relates, their estates will be spared the
expense, delay, and uncertainty, while preserving an oversight
function for key parties-in-interest.
About Adelphia Communications
Based in Coudersport, Pa., Adelphia Communications Corp. (OTC:
ADELQ) -- http://www.adelphia.com/-- is the fifth-largest
cable television company in the country. Adelphia serves
customers in 30 states and Puerto Rico, and offers analog and
digital video services, high-speed Internet access and other
advanced services over its broadband networks. The Company and
its more than 200 affiliates filed for Chapter 11 protection in
the Southern District of New York on June 25, 2002. Those cases
are jointly administered under case number 02-41729. Willkie
Farr & Gallagher represents the ACOM Debtors.
PricewaterhouseCoopers serves as the Debtors' financial advisor.
Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin,
Bogdanoff & Stern LLP represent the Official Committee of
Unsecured Creditors.
Adelphia Cablevision Associates of Radnor, L.P., and 20 of its
affiliates, collectively known as Rigas Manged Entities, are
entities that were previously held or controlled by members of
the Rigas family. In March 2006, the rights and titles to these
entities were transferred to certain subsidiaries of Adelphia
Cablevision, LLC. The RME Debtors filed for chapter 11
protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622
through 06-10642). Their cases are jointly administered under
Adelphia Communications and its debtor-affiliates chapter 11
cases. (Adelphia Bankruptcy News, Issue Nos. 143 & 144;
Bankruptcy Creditors' Service, Inc., 215/945-7000,
http://bankrupt.com/newsstand/)
DORAL FINANCIAL: Delays Filing of Form 10-Q for Second Quarter
--------------------------------------------------------------
Doral Finanacial Corp.'s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2006, was not timely filed because of the
work required for the preparation of the 2005 Form 10-K, which
resulted in a filing delay for the report. The company said it
is working diligently to return to timely reporting and will
file the 2005 Form 10-K and its Quarterly Reports on Form 10-Q
for the quarters ended March 31, 2006, and June 30, 2006, as
soon as it can.
Doral Financial is not in a position to provide an estimate of
anticipated significant changes between the results of
operations for the quarter ended June 30, 2005, and the quarter
ended June 30, 2006, because its unaudited financial statements
for the quarter ended June 30, 2006, are not yet ready. As
disclosed in the company's filings with the U.S. Securities and
Exchange Commission, the restatement process has adversely
affected the company's results and operations, including the
results and operations for the second quarter of 2006.
About Doral Financial
Doral Financial Corporation -- http://www.doralfinancial.com/
-- a financial holding company, is the largest residential
mortgage lender in Puerto Rico, and the parent company of Doral
Bank, a Puerto Rico based commercial bank, Doral Securities, a
Puerto Rico based investment banking and institutional brokerage
firm, Doral Insurance Agency, Inc. and Doral Bank FSB, a federal
savings bank based in New York City.
* * *
As reported in the Troubled Company Reporter on June 13, 2006,
Standard & Poor's Ratings Services lowered its long-term ratings
on Doral Financial Corp. (NYSE: DRL), including the company's
long-term counterparty rating, to 'B+' from 'BB-'. At the same
time, Doral's outlook remains on CreditWatch with negative
implications.
MAXXAM INC: June 30 Balance Sheet Upside-Down by US$704 Million
---------------------------------------------------------------
MAXXAM Inc.'s balance sheet at June 30, 2006, showed US$975.2
million in total assets and US$1.68 billion in total
liabilities, resulting in a US$704.9 million stockholders'
deficit. The Company had reported a US$671.3 million
stockholders' deficit at March 31, 2006.
For the second quarter of 2006, the Company reported a net loss
of US$11.2 million, compared to a net loss of US$9.6 million for
the same period a year ago. Net sales for the second quarter of
2006 totaled US$63.5 million, compared to US$87.2 million in the
second quarter of 2005.
For the first six months of 2006, MAXXAM reported a net loss of
US$21.4 million, compared to a net loss of US$23.8 million for
the same period of 2005. Net sales for the first six months of
2006 were US$143.7 million, compared to US$170.2 million for the
first six months of 2005.
MAXXAM reported operating income of US$2 million for the second
quarter of 2006 and US$8.3 million for the first six months of
2006, compared to operating income of US$6.5 million and US$9.3
million for the comparable periods in 2005.
Forest Products Operations
Net sales for the Company's forest products operations decreased
to US$33.8 million for the second quarter of 2006, as compared
to US$46.9 million for the second quarter of 2005. The US$13.1
million decrease in net sales was due to a decline in lumber
shipments as a result of a lower log supply from Scotia Pacific
Company LLC (ScoPac) and an increase in the volume of lumber
placed into the Pacific Lumber Company's (Palco) redwood lumber
drying program during the second quarter of 2006, as compared to
the same period in 2005. The lower log supply from ScoPac was
due to adverse weather conditions in early 2006 and harvest
restrictions.
The forest products segment generated operating income of US$0.1
million for the second quarter of 2006 and an operating loss of
US$5.4 million for the six months ended June 30, 2006.
Real Estate Operations
Net sales and operating income for the Company's real estate
operations for the second quarter of 2006 decreased by US$10.9
million and US$7.5 million, respectively, as compared to the
same period in 2005, primarily due to a substantial reduction in
the number of lots sold at the Company's Fountain Hills
development, partially offset by increased lot sales at the
Company's Mirada development.
Racing Operations
Net sales for the Company's racing operations improved
US$300,000 for the second quarter of 2006, as compared to the
same period in 2005, due primarily to higher simulcast wagering
levels.
Racing operations' operating losses increased US$700,000 for the
second quarter of 2006, as compared to the same period in 2005,
principally due to expenditures related to the Company's efforts
to obtain an additional racing license in Laredo, Texas.
Corporate
The Corporate segment's operating losses represent general and
administrative expenses that are not specifically attributable
to the Company's operating segments, including stock-based
compensation expense. The Corporate segment's operating losses
improved US$500,000 for the second quarter of 2006 as compared
to the same period in 2005, primarily due to cost cutting
initiatives.
Consolidated investment, interest and other income decreased to
US$2.3 million for the second quarter of 2006, as compared to
US$4.3 million for the second quarter of 2005, due to lower
levels of investments and a decrease in income from equity
method investments.
During the second quarter of 2006, the Company purchased 707,285
shares of its Common Stock for an aggregate cost of US$22.4
million.
A full-text copy of the Company's quarterly report is available
for free at http://researcharchives.com/t/s?fa3
Palco-Scopac Liquidity Update
The Company reported in its quarterly report on Form 10-Q filed
with the Securities and Exchange Commission that the cash flows
of Palco and ScoPac, indirect subsidiaries of the Company, have
been materially adversely affected by the ongoing regulatory,
environmental and litigation matters faced by Palco and ScoPac,
and as a consequence, additional liquidity was required at both
Palco and ScoPac to fund expected liquidity shortfalls.
On July 18, 2006, Palco and Britt Lumber Co., Inc., as
borrowers, closed on a new five-year US$85 million secured term
loan and a new five-year US$60 million secured asset-based
revolving credit facility. The Term Loan was fully funded at
closing.
The borrowers used approximately US$34 million of the Term Loan
funds to pay off the borrowers' existing term loan and
US$22.5 million of the Term Loan funds to pay off the borrowers'
existing revolving credit facility and cash collateralize
existing letters of credit. The borrowers have not made any
borrowings under the Revolving Credit Facility to date, although
they currently have availability in excess of US$20 million.
On the Timber Notes payment date of July 20, 2006, ScoPac used
its existing cash resources, all of the remaining funds
available under its line of credit, the additional funds made
available from proceeds from land sales of US$10.2 million, a
US$3.7 million timber/log purchase by MGI and a US$2.1 million
early log payment by Palco, to pay all of the US$27.1 million of
interest due (US$25.4 million net of interest due in respect of
Timber Notes held in the SAR Account).
ScoPac also repaid US$10 million of principal on the Timber
Notes (US$6.2 million net of principal in respect of Timber
Notes held in the SAR Account) using funds held in the SAR
Account. As previously announced, ScoPac expects to incur
substantial interest shortfalls over at least the next several
years.
Kaiser Emergence
On July 6, 2006, Kaiser Aluminum Corp. emerged from Chapter 11
bankruptcy and the Company's Kaiser common shares were cancelled
without consideration or obligation. The Company expects to
reverse the US$516.2 million of losses in excess of its
investment in Kaiser, net of accumulated other comprehensive
losses of US$85.3 million related to Kaiser, and expects to
recognize the net amount, including the related tax effects in
the consolidated financial statements in the third quarter of
2006.
Headquartered in Houston, Texas, MAXXAM Inc. (AMEX: MXM)
operates businesses ranging from aluminum and timber products to
real estate and horse racing. MAXXAM's top revenue source is
Kaiser Aluminum, which has been in Chapter 11 bankruptcy since
2002. MAXXAM's timber subsidiary, Pacific Lumber, owns about
205,000 acres of old-growth redwood and Douglas fir timberlands
in Humboldt County, California. MAXXAM's real estate interests
include commercial and residential properties in Arizona,
California, Texas, and Puerto Rico. The Company also owns the
Sam Houston Race Park, a horseracing track near Houston. Its
Chairman and CEO, Charles Hurwitz, controls 77% of MAXXAM.
=================================
T R I N I D A D & T O B A G O
=================================
BRITISH WEST: Confirms Mechanical Problems with Airbus Plane
------------------------------------------------------------
Dionne Ligoure, the communications specialist at British West
Indies Airlines aka BWIA, told the Trinidad & Tobago Express
that there were mechanical problems with the Airbus aircraft.
The Express notes that more than 200 passengers traveling on the
BW Flight 603 from Canada to Piarco International Airport at the
weekend were anxious.
According to the report, the airplane's flight was delayed for
two hours at the Toronto International airport. The plane had
to return to the airport to check the level of hydraulic fluid.
It developed a mechanical defect.
"The flight which was scheduled to leave Toronto airport at
11:55 p.m. on Saturday but did not leave for several hours," a
female passenger and her daughter who were returning to Trinidad
told The Express.
The Express says that when the flight finally left Toronto and
was heading Barbados, the plane captain had announced that the
aircraft would not be landing in the nation due to the same
problem -- a defective hydraulic system. The plane arrived in
Trinidad on Sunday morning.
"We had to thoroughly checked the aircraft before it left
Toronto," The Express relates, citing Ms. Ligoure.
Ms. Ligoure told The Express that safety is BWIA's number one
priority.
According to the report, Ms. Ligoure said the plane did not stop
in Barbados because the repairs had to be done at Piarco where
the aircraft is based.
Ms. Ligoure told The Express, "The Barbados passengers had to be
put on another aircraft when they landed in Trinidad."
The aircraft was fixed and was on its way to Toronto, The
Express says, citing Ms. Ligoure.
BWIA was founded in 1940, and for more than 60 years has been
serving the Caribbean islands from Trinidad and Tobago, the hub
of the Americas, linking the twin island republic and many other
Caribbean islands with North America, South America, the United
Kingdom and Europe.
The airline has reportedly been losing US$1 million a week due
to poor operational management. An employee survey revealed
that lack of responsibility by the management is a major issue
in the company. A number of key employees moved to other
companies caused by a deadlock in the company's negotiation with
its labor union.
=============
U R U G U A Y
=============
* URUGUAY: Fitch Says Dollarized Financial System Will Remain
-------------------------------------------------------------
According to Fitch's Maria Fernanda Lopez, the Uruguayan
financial system has historically shown a high level of
dollarization, which is expected to remain in the short to
medium term. Although there has been some decrease in deposits
denominated in dollars, dollarization is considered an intrinsic
characteristic of the Uruguayan banking system. The monetary
authorities are trying to address this situation through new
regulations that tend to diminish the risk associated to
exchange rate volatility.
As of March 2006, 88% of the nonfinancial private sector
deposits were denominated in foreign currency (versus 91% in
March 2005); 18% of the foreign currency deposits are made by
nonresidents (versus 19% in March 2005). Foreign currency
assets represented 79% of total assets (compared with 85% in
March 2005), which is composed of 52% loans to the financial
sector, 25% credits to the private sector, 9.7% securities and
7.4% cash. In spite of the increase in remonetization compared
with the previous year, Fitch considers dollarization levels to
still be high.
During 2005, the appreciation of the Uruguayan peso and lower
inflation contributed to an increase in pesodenominated
deposits. Nevertheless, low interests rates for time deposits
generated a preference for more liquid investments.
Notwithstanding, during 2006, interest rates for dollar-
denominated deposits began to register a positive trend, in
accordance with international interest rates, which may possibly
favor the transfer from sight deposits to time deposits.
The high amount of short-term funding denominated in foreign
currency, of which only a portion is from nonresidents, has
meant banks are forced to seek investment options that generate
a reasonable match.
Currently, almost 69% of foreign currency assets are liquid
investments (cash, securities and short-term loans to the
financial sector). While only 25% of these loans are to the
nonfinancial sector (24% to resident and only 1% to nonresident
private sector), most of them are hard currency generators. A
stress scenario with high exchange rate volatility would find
banks better prepared than three years ago, when the crisis hit
the Uruguayan financial system immediately after the country
abandoned a quasifixed exchange rate regime. At the time, the
devaluation had a strong adverse effect on dollardenominated
debtors with pesodenominated income.
Although the number of financial institutions in the Uruguay
banking system showed a significant reduction from 47 in
December 2001 to 30 in March 2006, its structure did not
evidence important changes. Public banks hold 55% of total
assets; private banks are mainly subsidiaries of foreign banks,
and 46% of the private banks' assets are concentrated in the
branches of the foreign banks.
The capital structure of the financial system is reflected in
its distribution of liquid assets. Thus, 43% of private banks'
assets are investments in the financial sector and 60% of these
investments are cross-border, generally placed with well-rated
institutions. Conversely, 99% of public banks' loans to the
financial sector are domestic, although roughly 90% are
denominated in foreign currency.
Although Fitch considers that maturities for both assets and
liabilities will gradually increase, the currency in which they
are denominated will depend on the direction of monetary policy.
Uruguay's central bank has implemented changes in regulations
with the intention of reducing risks arising from currency and
term mismatches. New guidelines for loan classification and
provisions were introduced in April 2006. These include tighter
guidelines when analyzing debtor currency mismatches, the
introduction of stress scenarios in the analysis, additional
classification categories and the reduction of the term during
which loans can be held as uncollectible on the balance sheet.
Additionally, as of July 2006 new capital regulatory
requirements for "market risk" will be implemented. This
includes capital requirements for interest rate and currency
mismatches generated by the investment portfolio. Although
these changes are not expected to have an important effect on
total requirements, due to the fact that the requirement for
riskweighted assets will be reduced from 10% to 8%, the
objective is to generate awareness regarding capital management
in relation to the level of risk.
With this reduction in basic capital requirement, Uruguay has
one of the lowest capital requirements in the region, a
situation that is perhaps not compatible with the country's
small market size and its recent problematic history.
Fitch considers that even though the level of dollarization in
the Uruguay financial system may still show signs of
diminishing, it will remain high. However, the introduction of
new regulations and important lessons that were learned after
the last crisis will contribute to more adequate currency risk
management. There is still a long way to go and, in spite of
the advances so far, the economy remains vulnerable to external
shocks.
* URUGUAY: Private Banks Post UYU874MM January-July 2006 Profit
---------------------------------------------------------------
Figures from the Uruguayan central bank show that combined
profit of the country's 13 private banks was UYU874 million in
the January-July period of this year, Business News Americas
reports.
BNamericas relates that in the first seven months of 2005, the
combined profit was UYU882 million.
The central bank posted these results for the January-July 2006
period:
-- pre-tax profits decreased 13.5% to UYU1.02 billion;
-- operating income dropped 3.2% to UYU1.01 billion;
-- net service income increased 10.8% to UYU1.11 billion;
-- combined loan volume rose 20.4% to UYU118 billion;
-- deposits grew 10.8% to US$9.44 billion;
-- foreign currency deposits were at US$7.77 billion or
82.3% of private deposits, down from the 86.1% in the
same period of 2005;
-- deposits Uruguayan residents held increased 6.3% to
US$6.20 billion; and
-- non-resident deposits increased 3.9% to US$1.51 billion.
* * *
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: Intent to Sell Texas Refinery to Lyondell
----------------------------------------------------------
Citgo Petroleum Corp. is eager to sell its 41.25% stake in
Lyondell-Citgo Refining L.P. to Lyondell Chemical Co., its
partner, Dow Jones Newswires quoted Alejandro Granado -- the
head of refining for Petroleos de Venezuela, the state-run oil
firm in Venezuela.
Dow Jones relates that Mr. Granado said Citgo will be making a
decision soon.
Mr. Granado told Dow Jones, "We're negotiating directly with
Lyondell, and it's moving along well."
As reported in the Troubled Company Reporter-Latin America on
July 25, 2006, Citgo would likely sell its stake in Lyondell-
Citgo to co-owner Lyondell by the end of July. David Harpole, a
Lyondell spokesperson, said that the company is considering sole
ownership of Lyondell-Citgo because the plant's cash flow raises
the firm's ability to pay debt. Citgo and Lyondell discontinued
the exploration of a sale to a third party because not one of
the bids submitted was good enough to overcome the benefit of
retaining a stake in the 268,000 barrel-per-day refinery.
Lyondell had called off the plant's sale to a third party.
Offers for the refinery had been over US$5 billion from at least
four prospective buyers.
About Lyondell
Lyondell Chemical Company, headquartered in Houston, Texas, is
North America's third-largest independent, publicly traded
chemical company. Lyondell is a major global manufacturer of
basic chemicals and derivatives including ethylene, propylene,
titanium dioxide, styrene, polyethylene, propylene oxide and
acetyls. It also is a significant producer of gasoline blending
components. The company has a 58.75 percent interest in
LYONDELL-CITGO Refining LP, a refiner of heavy, high-sulfur
crude oil. Lyondell is a global company operating on five
continents and employs approximately 10,000 people worldwide.
About CITGO
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.
PETROLEOS DE VENEZUELA: Wants to Offer Cheap Oil to Indians
-----------------------------------------------------------
Petroleos de Venezuela SA wants to offer home heating oil at a
deeply discounted price to American Indian tribes in the Pacific
Northwest, Herald Net reports.
Heating oil -- which is essentially a similar product as diesel
fuel -- is widely used on the Eastern Coast of the United
States. However, it has been largely replaced by natural gas in
the West.
Herald Net says the offer may be at a 40% discount to the
tribes.
According to the report, company representatives have contacted:
-- the Tulalip Tribes,
-- the Yakama Nation in central Washington,
-- the Nez Perce,
-- Coeur D'Alene tribes in Idaho, and
-- many others.
The move, however, is yet in the exploratory stage, Herald Net
relates, citing Jorge Toledo, a spokesperson for Petroleos de
Venezuela's US refining arm, Citgo.
Mr. Toledo told Herald Net, "We're going to meet with some
tribes in the West Coast within the next few weeks to consider
the feasibility of a program there."
Herald Net notes that Mr. Toledo said a local meeting will be
held on Aug. 16 at a hotel in SeaTac.
Petroleos de Venezuela SA is Venezuela's state oil company in
charge of the development of the petroleum, petrochemical and
coal industry, as well as planning, coordinating, supervising
and controlling the operational activities of its divisions,
both in Venezuela and abroad.
* * *
Standard & Poor's said on July 17 that it may lower the
company's B+ foreign-currency debt rating in part because of the
absence of timely financial and operating information.
Moody's has withdrawn its ratings on the company because of the
absence of relevant financial information.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total
Equity Assets
Company Ticker (US$MM) (US$MM)
------- ------ ------------ -------
Alpargatas SAIC ALPA (262.27) 646.43
Kuala ARTE3 (33.57) 11.86
Kuala-Pref ARTE4 (33.57) 11.86
Blount International BLT (123) 465.00
Bombril BOBR3 (554.69) 488.38
Bombril-Pref BOBR4 (554.69) 488.38
CableVision System CVC (2,468) 12,832.00
Centennial Comm CYCL (1,069) 1,409.00
CIC CIC (1,883.69) 22,312.12
Choice Hotels CHH (118) 280.00
Telefonica Holding CITI (1,481.31) 307.89
Telefonica Holding CITI5 (1,481.31) 307.89
Domino's Pizza DPZ (609) 395.00
Foster Wheeler FWLT (38) 2,224.00
IMPSAT Fiber Networks IMPTQ (17.16) 535.01
Maxxam Inc. MXM (661) 1,048.00
Paranapanema SA PMAM3 (214.08) 2,847.86
Paranapanema-PREF PMAM4 (214.08) 2,847.86
TEKA TEKA3 (180.22) 557.47
TEKA-PREF TEKA4 (180.22) 557.47
***********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter - Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA. Marjorie C. Sabijon, Sheryl Joy P. Olano, Stella
Mae Hechanova, and Christian Toledo, Editors.
Copyright 2006. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
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Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
The TCR Latin America subscription rate is US$575 per half-year,
delivered via e-mail. Additional e-mail subscriptions for
members of the same firm for the term of the initial
subscription or balance thereof are US$25 each. For
subscription information, contact Christopher Beard at 240/629-
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