/raid1/www/Hosts/bankrupt/TCRLA_Public/060830.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, August 30, 2006, Vol. 7, Issue 172
Headlines
A R G E N T I N A
EMPLOYS SA: Trustee Verifies Proofs of Claim Until Oct. 6
EUROMAYOR SA: Fitch Argentina Affirms C Ratings on Four Debts
INDALME SA: Claims Verification Deadline Is Set for Oct. 3
INDESA SA: Claims Verification Deadline Is October 6
IRSA: Fitch Argentina Upgrades Rating on US$250-Mil. Debt to BB+
JUPERMAN SA: Verification of Claims Is Until October 16
OBRAS Y CONSTRUCCIONES: Files Bankruptcy in Buenos Aires Court
SENNIC SA: Seeks Reorganization Approval from Buenos Aires Court
B A H A M A S
KERZNER INT'L: Shareholders Okay Acquisition by Investor Group
WINN-DIXIE: Wants CBC's US$885,975 Administrative Claim Denied
B E R M U D A
REFCO INC: BofA Wants Final Approval on Cash Collateral Use
REFCO INC: Court Okays Rejection of Refco F/X Introducing Pacts
B O L I V I A
PETROLEO BRASILEIRO: Guarani Tribe Warns Takeover of Operations
PETROLEO BRASILEIRO: Tries to Keep Control of Bolivian Plants
YPF SA: Guarani Tribe Threatens Takeover of Bolivian Operations
B R A Z I L
BANCO ITAU BBA: BofA Deal Prompts Fitch to Affirm Ratings
BANCO ITAU HOLDING: BofA Deal Prompts Fitch to Affirm Ratings
BANCO ITAU SA: BofA Deal Prompts Fitch to Affirm Ratings
COREL CORP: Buying InterVideo Inc. for US$196 Million in Cash
GULFMARK OFFSHORE: Earns US$13 Million in Quarter Ended June 30
NOSSA CAIXA: Prepares to Sell Over 18.8 Million Ordinary Shares
NOVELIS INC: Declares Quarterly Dividend of US$0.01 Per Share
TELE NORTE: Uses Telcordia & Accenture Broadband Services
VARIG S.A.: Returns Five Engines to Willis Lease
* BRAZIL: Bajaj Hindusthan Investing US$500M in Ethanol Sector
C A Y M A N I S L A N D S
AFM CO: Last Day to File Proofs of Claim Is September 21
ASTER CITY: Creditors Must File Proofs of Claim by Sept. 21
CENTER INVESTMENTS: Shareholders Final Meeting Set for Sept. 29
DEAM RREEF: Proofs of Claim Filing Ends on September 29
GLOBAL (MASTER): Last Day to File Proofs of Claim Is Sept. 21
GLOBAL PRECISION: Proofs of Claim Must be Filed by Sept. 21
MTRMA REINSURANCE: Holding Last Shareholders Meeting on Sept. 20
PEAKINVEST ACQUISITION: Proofs of Claim Filing Ends on Sept. 22
PEAKINVEST CORPORATE: Proofs of Claim Must be Filed by Sept. 22
PEAKINVEST FUNDING: Proofs of Claim Filing Deadline Is Sept. 22
SAIL APPEF: Last Day to File Proofs of Claim Is September 21
SANGONA INSURANCE: Proofs of Claim Filing Deadline Is Sept. 21
TAMARIN II: Creditors Must File Proofs of Claim by Sept. 21
TOTO LTD: Proofs of Claim Must be Filed by October 4
TRISUN OFFSHORE: Proofs of Claim Must be Filed by September 30
C H I L E
FALCONBRIDGE LTD: Proposes Rio Cuervo Project in Chilean Region
C O L O M B I A
HEXION SPECIALTY: Rationing Formaldehyde in North America
D O M I N I C A N R E P U B L I C
FALCONBRIDGE: Xtrata Acquires Additional 4.9% Share in Company
E C U A D O R
PETROECUADOR: Oil Cleanup at Cuyabeno Park to Cost US$8 Mil.
E L S A L V A D O R
BANCO CUSCATLAN: Posts US$16MM First Half Consolidated Profit
G U A T E M A L A
TECO ENERGY: Earns US$62.5 Million in 2006 Second Quarter
H O N D U R A S
* HONDURAS: Will Launch Auction on Plant Construction
J A M A I C A
DYOLL INSURANCE: Farmers Fighting with Liquidators over Payments
M E X I C O
AMERICAN AXLE: Earns US$20.4 Million in 2006 Second Quarter
BERRY PLASTICS: Earns US$9.7 Mil. in Second Quarter Ended July 1
FORD MOTOR: Executive Committee Chairman Robert E. Rubin Resigns
GRUPO IUSACELL: Executes Convenio Concursal With Creditors
GRUPO IUSACELL: Posts MXP867MM Net Loss in 2006 Second Quarter
GRUPO IUSACELL: Will Sue Gramercy for Insider Trading Violations
JAFRA WORLDWIDE: Mexican Model Cues Moody's to Raise All Ratings
LIBBEY INC: Posts US$9.6 Million Net Loss in 2006 Second Quarter
NORTEL NETWORKS: Deploys New IP Telephony Network for DEDIC
SATELITES MEXICANOS: Continues Investment Rule on Interim Basis
SATELITES MEXICANOS: Has Interim Use of Existing Bank Accounts
N I C A R A G U A
* NICARAGUA: Gas Supply Shortage Worsens Energy Crisis
P A N A M A
* PANAMA: Posts US$1.71 Bil. First Semester 2006 Trade Deficit
P E R U
* PERU: Reaches New Trade Accord with Bachelet Administration
P U E R T O R I C O
ADELPHIA: Lenders Want Cases Converted or Exclusivity Terminated
ADELPHIA COMMS: Operations Unit Selling Converters for US$1.74MM
ADELPHIA COMMS: Inks Second Travelers Surety Credit Agreement
DEVELOPERS DIVERSIFIED: Prices US$250 Mil. Convertible Sr. Notes
HORIZON LINES: Earns US$6.4 Million in 2006 Second Quarter
RES-CARE INC: S&P Lifts Sr. Unsecured Debt Rating to B+ from B
T R I N I D A D & T O B A G O
DIGICEL LTD: Resuming Interconnection Talks with TSTT
MIRANT CORP: Battles GE Capital Over US$2.1-Million Admin. Claim
V E N E Z U E L A
PETROLEOS DE VENEZUELA: Drafting Ethanol Pact with Petrobras
* Large Companies with Insolvent Balance Sheets
- - - - -
=================
A R G E N T I N A
=================
EMPLOYS SA: Trustee Verifies Proofs of Claim Until Oct. 6
---------------------------------------------------------
Maria Cristina Agrelo, the court-appointed trustee for Employs
SA's reorganization case, verifies creditors' proofs of claim
until Oct. 6, 2006, La Nacion reports.
As reported in the Troubled Company Reporter-Latin America on
June 28, 2006, Employs filed a petition with Court No. 17 in
Buenos Aires to reorganize its business after defaulting on its
debt payments on Dec. 21, 2005. Reorganization would allow
Employs to negotiate a settlement with its creditors in order to
avoid a straight liquidation. Clerk No. 34 assists the court in
the case.
Under Argentine Bankruptcy Law, Ms. Agrelo is required to
present the validated claims in court as individual reports.
Court No. 17 in Buenos Aires will determine if the verified
claims are admissible, taking into account the trustee's opinion
and the objections and challenges raised by Employs and its
creditors.
Inadmissible claims may be subject for appeal in a separate
proceeding known as an appeal for reversal.
Ms. Agrelo will also submit a general report that contains an
audit of Employ's accounting and banking records. The report
submission dates have not been disclosed.
On June 19, 2007, Employ will present a settlement proposal to
its creditors for approval.
The debtor can be reached at:
Employs SA
Lavalle 1570
Buenos Aires, Argentina
The trustee can be reached at:
Maria Cristina Agrelo
Viamonte 1365
Buenos Aires, Argentina
EUROMAYOR SA: Fitch Argentina Affirms C Ratings on Four Debts
-------------------------------------------------------------
Fitch Argentina affirmed the C ratings assigned to the
Obligaciones Negociables issued by Euromayor SA:
-- Serie I Pesos Class for US$6.8 million
-- Serie I Dollars Class for US$3.2 million
-- Serie II Pesos Class for US$4.4 million
-- Serie II Dollars Class US$3.1 million.
The rate shows the risk associated to the paying capacity of the
company's financial committments because of its weak and
variable generation of funds. Despite that the company is up to
date with the payments, the last due of the debt (capital and
interest's services) which operated since the renegotiaton of
the debt with its creditors, have not been paid yet.
Sales during the quarter (April 2006) reached US$2.3 million,
100% more than the amount registered during the same time of the
previous period (US$900 in April 2005). Despite the growing
trend in the amount of income previously quoted, the level of
funds generated, measured as EBITDA, continue to be negative.
Euromayor has made a partial anticipated buy back of its
Obligaciones Negociables Clase Pesos for US$3,366,487
(repurchased US$2,039,940 corresponding to the ONs Clase Pesos
Serie I and US$1,326,547 of the ONs Clase Pesos Serie II),
equivalent to the 80% of the technical value of the ONs
estimated at the date of consortation. The repurchase
represents 30% of the total ONs Pesos class which are in
circulation. The amount not bought back will have to be made
effecttive in no more than 120 days since the date previously
mentioned.
Fitch understands that the anticipated repurchase of the ONs
Clase Pesos Serie I and II are a good event in Euromayor as
contributing to its financial committments, nevertheless, the
capacity of generating funds continue to be uncertain and
unreliable.
The company is considering the possibility of making strategic
alliances which might favour the viability of the projects of
the company.
Euromayor S.A de Inversiones, is a holding society related to
activities which develop in the rent and let of homes. It has
got a group of societies which in all constitute the Grupo
ECIPSA. The company focuses its activities mainly in the
Argentine province of Cordoba. Euromayor is controlled by
ECIPSA Holding -72.49%-, the remaining 27.51% has got price at
the stock market.
INDALME SA: Claims Verification Deadline Is Set for Oct. 3
----------------------------------------------------------
Jorge Gustavo Awad, the court-appointed trustee for Indalme
S.A.'s bankruptcy proceeding, verifies creditors' proofs of
claim until Oct. 3, 2006, Infobae reports.
Mr. Awad will present the validated claims in court as
individual reports on Nov. 8, 2006. A court in Mendoza will
determine if the verified claims are admissible, taking into
account the trustee's opinion and the objections and challenges
raised by Indalme and its creditors.
Inadmissible claims may be subject for appeal in a separate
proceeding known as an appeal for reversal.
A general report that contains an audit of Indalem's
accounting and banking records will follow on Feb. 2, 2007.
Mr. Awad is also in charge of administering Indalme's assets
under court supervision and will take part in their disposal to
the extent established by law.
The debtor can be reached at:
Jorge Gustavo Awad
Maza 1264 Dorrego
Guaymallen, Mendoza
INDESA SA: Claims Verification Deadline Is October 6
----------------------------------------------------
Court-appointed trustee Francisco Cano verifies creditors'
proofs of claim against bankrupt company Indesa SA until
Oct. 6, 2006, La Nacion reports.
Court No. 19 in Buenos Aires declared Indesa bankrupt at the
behest of Juan Romano, the firm's creditor.
Mr. Cano will present the validated claims in court as
individual reports. The court will determine if the verified
claims are admissible, taking into account the trustee's opinion
and the objections and challenges raised by Indesa and its
creditors.
Inadmissible claims may be subject for appeal in a separate
proceeding known as an appeal for reversal.
Mr. Cano will also prepare a general report that contains an
audit of Indesa's accounting and banking records.
Mr. Cano is also in charge of administering Indesa's assets
under court supervision and will take part in their disposal to
the extent established by law.
The debtor can be reached at:
Indesa SA
Avenida Corrientes 745
Buenos Aires, Argentina
The trustee can be reached at:
Francisco Cano
Uruguay 618
Buenos Aires, Argentina
IRSA: Fitch Argentina Upgrades Rating on US$250-Mil. Debt to BB+
----------------------------------------------------------------
Fitch Argentina has increased the rate of IRSA's debt from BB+
to BBB. This rate includes the program of Obligaciones
Negociables emitted for US$250 million, under which are included
the Obligaciones Negociables for US$30.8 million. Also, the
shares' rate was increased from category 2 to category 1.
The increase in the rate is based in the positive evolution that
the different business areas in which the company participates
has shown in the recent past. This translates to a better
amount of funds that the company is getting, both as an active
participant in the lease and sale of offices and homes, as
through the participation in the shops located in the commercial
center of Alto Palermo SA.
Fitch also considers as favorable the competitive position that
the company has, as well as a good quality on its assets. On
March 2006, the properties of IRSA reached more than US$550
million.
The rate considers the low level of debt that the company has
got in relation to its funds. On March 2006, IRSA Obligaciones
Negociables have decreased around US$50 million. Fitch
considers that IRSA might be able to keep the present level of
debt as long as it can mantain its conservative structure of
capital and that the new debt is used for funds that can provide
the company with new sources of funds so that it can be paid
back.
The rate also includes the limited though increasing capacity of
the company in generating funds. These come mainly from its
participation in APSA, through dividends, while has also showed
an increase during the past years (US$8 million and US$18
million in 2004 and 2005 respectively), and of interests for
US$3 million per year on its convertible ONS of APSA. On other
hand, APSA gives IRSA a stable source of funds, and is strongly
recovering its generation of funds since the increase registered
in the price of rents, having obtained an EBITDA of US$12.7
million during the nine-month period ended on March 2006.
IRSA will restructure debt in the long term, having to cover
annual interests of around US$6 million. IRSA has a good
position for obtaining funds through different business (US$40
million to date). It has also the chance of getting additional
sources of money through the suscription of shares from holders
of convertible ONs, being able to get US$60 million until
Nov. 2007.
IRSA is a leading company in the rent and let service sector in
Argentina. The total of its shares are traded at the Bolsa de
Comercio de Buenos Aires (stock market) as well as in New York.
Its main shareholder is Cresud SA, with 26.7% of participation;
percentage that will be increased in a 34.3% considering the
conversion of ONs and the exercise of suscription of shares.
JUPERMAN SA: Verification of Claims Is Until October 16
-------------------------------------------------------
Court-appointed trustee Norberto Bonesi verifies creditors'
proofs of claim against bankrupt company Juperman SA until
Oct. 16, 2006, La Nacion reports.
Court No. 12 in Buenos Aires, with the assistance of Clerk
No. 23, declared Juperman bankrupt at the behest of Mario
Bronfman, whom the company owes US$4,530.
Mr. Bonesi will present the validated claims in court as
individual reports. The court will determine if the verified
claims are admissible, taking into account the trustee's opinion
and the objections and challenges raised by Juperman and its
creditors.
Inadmissible claims may be subject for appeal in a separate
proceeding known as an appeal for reversal.
Mr. Bonesi will also prepare a general report that contains an
audit of Juperman's accounting and banking records.
Mr. Fernandez is also in charge of administering Juperman's
assets under court supervision and will take part in their
disposal to the extent established by law.
The debtor can be reached at:
Juperman SA
Corrientes 4642
Buenos Aires, Argentina
The trustee can be reached at:
Norberto Bonesi
Juan B. Justo 5096
Buenos Aires, Argentina
OBRAS Y CONSTRUCCIONES: Files Bankruptcy in Buenos Aires Court
--------------------------------------------------------------
Obras y Construcciones Civiles SA has filed for bankruptcy
petition with Court No. 22 in Buenos Aires, La Nacion reports.
Obras y Construcciones has defaulted on its debt payments since
June 11, 2002.
Clerk No. 44 assists the court.
The debtor can be reached at:
Obras y Construcciones Civiles SA
Julian Alvarez 2333
Buenos Aires, Argentina
SENNIC SA: Seeks Reorganization Approval from Buenos Aires Court
----------------------------------------------------------------
Sennic SA has filed for reorganization before a Buenos Aires
Court in Argentina, Infobae reports.
Under the Argentine Bankruptcy Law, reorganization will prevent
the firm's liquidation and will allow the company to propose a
settlement plan to its creditors.
Once Sennic SA's reorganization petition is approved, the court
will appoint a trustee, who will supervise the company's
activities and verify the claims of the company's creditors.
Out of the verified claims, the trustee will prepare individual
reports and submit them to court. The trustee will also prepare
a general report containing the company's audited business
records as well as a summary of the firm's activities. The
company will then present a settlement proposal to its creditors
for approval.
=============
B A H A M A S
=============
KERZNER INT'L: Shareholders Okay Acquisition by Investor Group
--------------------------------------------------------------
Kerzner International Limited, through its subsidiaries a
leading international developer and operator of destination
resorts, casinos and luxury hotels, announced that the
acquisition of the company by an investor group led by Sol
Kerzner -- the company's Chairman of the Board -- and Butch
Kerzner, the company's Chief Executive Officer, was approved by
the firm's shareholders at an extraordinary general meeting.
The acquisition is expected to be completed not earlier than
Aug. 31, 2006, subject to the satisfaction of closing
conditions.
Under the terms of the merger agreement, the Kerzner's
shareholders will receive US$81 in cash, without interest, for
each of the Company's ordinary shares -- other than certain
restricted shares -- held.
Following completion of the merger, the registration of the
Kerzner's ordinary shares and its reporting obligations under
the Securities Exchange Act of 1934, as amended, will be
terminated upon application to the Securities and Exchange
Commission. The company's ordinary shares will no longer be
listed on any exchange or quotation system, including the New
York Stock Exchange.
Kerzner International Limited -- http://www.kerzner.com--
through its subsidiaries, is a leading international developer
and operator of destination resorts, casinos and luxury hotels.
The company's flagship brand is Atlantis, which includes
Atlantis, Paradise Island, a 2,317-room, ocean-themed
destination resort located on Paradise Island, The Bahamas -- a
unique property featuring three interconnected hotel towers
built around a seven-acre lagoon and a 34-acre marine
environment that includes the world's largest open-air marine
habitat. The resort is also home to the largest casino in the
Caribbean.
* * *
As reported in the Troubled Company Reporter-Latin America on
Aug. 8, 2006, Standard & Poor's Ratings Services said that its
ratings on Kerzner International Ltd., including its 'BB-'
corporate credit rating, remain on CreditWatch with negative
implications where they were placed on March 20, 2006, following
Kerzner's announcement that the company would be acquired by a
private investor group led by the company's Chairman, Sol
Kerzner, and its Chief Executive Officer, Butch Kerzner.
WINN-DIXIE: Wants CBC's US$885,975 Administrative Claim Denied
--------------------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Middle District of Florida to deny
Consolidated Biscuit Company's request on grounds that
that they have no obligation under the terms of the Packaging
Agreement to pay for the charges CBC is claiming.
The Debtors object to Consolidated Biscuit Company's request for
payment of US$885,975 in administrative expenses.
Before their bankruptcy filing, the Debtors entered into an
asset purchase agreement with CBC for the sale of the Debtors'
manufacturing facility located in Valdosta, Georgia. The two
companies subsequently entered into a Contract Packaging
Agreement under which CB would manufacture bakery and snack
products at the Valdosta Facility for the Debtors.
According to D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher
& Flom LLP, in New York, CBC unilaterally terminated the
Packaging Agreement as of Dec. 2005, by exercising the
agreement's 120-day termination notice provision. Shortly
thereafter, CBC ceased all operations at the Valdosta Facility.
In June 2006, CBC filed its request for payment of an
administrative expense claim for US$344,618 in leftover
packaging materials; US$463,488 in leftover ingredients; and
US$77,869 in manufactured products on hand at the time of
termination of the Packaging Agreement.
Mr. Baker says that any obligation of the Debtors under the
Packaging Agreement is a prepetition obligation and CBC has not
shown that its charges were actual and necessary to the
preservation of the Debtors' estates.
Moreover, CBC violated the automatic stay when it terminated the
Packaging Agreement and it should not be compensated for the
consequences of the termination, Mr. Baker asserts.
Had CBC properly sought relief from the Court, Mr. Baker says,
the proceedings might have facilitated a managed termination
under which CBC's charges now at issue would not have been
incurred. And the Debtors might not have suffered the product
shortfalls that they experienced during the period leading up to
the termination, Mr. Baker adds.
The Debtors reserve their right to seek damages from CBC for the
violation of the automatic stay and any loss of profits
resulting from the termination of the Packaging Agreement.
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 527 stores in Florida,
Alabama, Louisiana, Georgia, and Mississippi. 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. 50; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
=============
B E R M U D A
=============
REFCO INC: BofA Wants Final Approval on Cash Collateral Use
-----------------------------------------------------------
Bank of America, N.A., in its capacity as administrative agent
for prepetition secured lenders under a Credit Agreement, dated
Aug. 5, 2004, asks the Hon. Robert Drain of the U.S. Bankruptcy
for the Southern District of New York to enter a final order:
(1) authorizing Refco Group Ltd., LLC, and its affiliates to
use the Prepetition Lenders' Cash Collateral; and
(2) providing adequate protection to the Prepetition Lenders.
BofA delivered to the Court a proposed Final Cash Collateral
Order, pursuant to which the Debtors will be authorized to:
(a) use up to US$83,333,000 in the aggregate of cash and cash
investments of the Debtors other than Refco Capital
Markets, LTD., for professional expenses related to RCM's
Chapter 11 case -- Non-Lender Other Estate Expenses; and
(b) use or distribute up to US$200,000,000 of Available Cash,
provided that:
-- with respect to the first US$100,000,000 used or
distributed, 50% will be paid to BofA as adequate
protection in respect of the Prepetition Credit
Agreement; and
-- with respect to the next US$100,000,000, 66-2/3% will
be paid to BofA as Adequate Protection Payment.
The balance of Available Cash used or distributed may be:
(A) applied to the payment of Non-Lender Other Estate
Expenses, to the extent accrued and payable in
accordance with the Interim Compensation Order and
with the Payment Allocation Methodology; or
(B) reserved for the payment of future Non-Lender Other
Estate Expenses accrued through the Termination Date
when so accrued and payable.
BofA proposes that no further Available Cash will be used or
distributed without its written consent or further Court order,
if:
-- the aggregate amount of Available Cash paid or reserved
for the payment of Non-Lender Other Estate Expenses
reaches the US$83,333,000 Authorized Amount; or
-- a plan of reorganization and corresponding disclosure
statement for RCM has not been filed with the Court by
Nov. 15, 2006.
BofA also asks the Court to permit the Debtors to use, from
Oct. 18, 2005, through the Termination Date, up to US$12,000,000
of Cash Collateral to pay administrative expenses other than
Non-Lender Other Estate Expenses.
"Termination Date" will mean the earlier of:
* Dec. 15, 2006; and
* seven business days after BofA notifies the Debtors in
writing that it no longer consents to the use of Cash
Collateral.
BofA further asks Judge Drain to grant the Prepetition Lenders:
1. Adequate Protection Liens and Claims to the extent of
their valid, perfected, and non-voidable security
interests and liens in the Prepetition Collateral, for
any diminution in value of their interests in the
Prepetition Collateral from and after the Petition Date;
and
2. to the extent of diminution, superpriority allowed claims
pursuant to Section 507(b) of the Bankruptcy Code, with
priority over administrative expenses and other claims
allowable under Section 507(a)(2).
BofA agrees to a US$1,000,000 carve-out to cover expenses of the
Debtors and the statutory committees in connection with the
investigation or evaluation of the validity, perfection,
priority, extent or enforceability of the Prepetition Debt or
the liens securing the Prepetition Debt.
BofA asks Judge Drain to approve a scheme for allocating
professional expenses of RCM, the Committee and other parties
with professionals required to be compensated from RCM's
estates.
BofA adds that the Debtors should be required to continue
providing weekly financial reports.
A full-text copy of the Payment Allocation Methodology is
available at no charge at http://ResearchArchives.com/t/s?107e
BofA is represented in the Debtors' cases by Donald S.
Bernstein, Esq., Karen E. Wagner, Esq., and Brian M. Resnick,
Esq., at Davis Polk & Wardwell, in New York.
The Court will convene a hearing on Aug. 28, 2006, at 10:00
a.m. to consider entry of a Final Cash Collateral Order.
A full-text copy of BofA's proposed Final Cash Collateral Order
is available at no charge at
http://ResearchArchives.com/t/s?107f
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. 39; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
REFCO INC: Court Okays Rejection of Refco F/X Introducing Pacts
---------------------------------------------------------------
The Hon. Robert D. Drain of the U.S. Bankruptcy Court for the
Southern District of New York authorized Refco Inc., and its
debtor-affiliates to reject Refco F/X Associates, LLC's
Introducing Agreements with certain agents or introducing
brokers, to the extent executory, effective as of Aug. 15, 2006.
Judge Drain directs all entities asserting a claim against any
of the Debtors either arising from or related to the rejection
of any of the Agreements or to those that arose before the
Effective Date to file a proof of claim or request for payment
of administrative claim no later than 5:00 p.m. on
Oct. 10, 2006.
Any claimholder who is required, but fails, to file a proof of
claim before the Claims Deadline will:
(i) be forever barred, estopped, and permanently enjoined
from asserting a claim against the Debtors, their
successors, or their property;
(ii) not be treated as a "creditor' for purposes of voting on
any plan or in respect of any distribution in the
Debtors' Chapter 11 cases; and
(iii) not be entitled to receive further notices regarding that
claim.
Reject Introducing Agreements
Refco F/X Associates, operates an on-line retail foreign
exchange trading business under the trade name RefcoFX.com. The
business operates under a Facilities Management Agreement
between Refco Group Ltd., LLC, and Forex Capital Markets, LLC,
on a software trading platform created and maintained by FXCM.
In connection with FXA's Foreign Exchange Business, FXA entered
into certain Introducing Agreements with agents or introducing
brokers, pursuant to which the Brokers agreed to identify and
refer prospective customers to the Foreign Exchange Business in
return for transaction-based commissions on trading activity by
Referred Customers for as long as the Referred Customer
maintains its account or until an agreement was terminated.
A complete list of the Brokers is available at no charge at:
http://ResearchArchives.com/t/s?107c
To enhance their Commissions, the Brokers also maintained
customer relationships by continuing to communicate with their
Referred Customers and to encourage trading.
Sally McDonald Henry, Esq., at Skadden, Arps, Slate, Meagher &
Flom LLP, in New York, related that the initial term of each
Agreement was one year but was automatically extended for
additional one-year successive periods, unless either party gave
written notice of its intent not to extend the term before the
end of the current term. Despite the potential long-term nature
of the relationship, the Agreement was freely terminable by
either party.
Specifically, the Agreement provides that it may be terminated
by "RFXA or Introducer, at any time, with or without cause, upon
written notice of termination given to the other party."
Considering that the Foreign Exchange Business has been
interrupted since the Petition Date, Ms. Henry states that FXA
is not accepting new client deposits or opening new client
accounts.
Furthermore, the Debtors have ascertained that the consummation
of a transaction that would provide for assumption and
assignment of customer accounts and Agreements is no longer
likely.
Under those circumstances, FXA has determined that its estates
do not receive any benefit from the Agreements, yet FXA
continues to accrue obligations to pay Commissions to the
Brokers for trading by existing Referred Customers.
Ms. Henry noted that FXA has initiated a process of terminating
the Agreements under their terms.
The Debtors had asked the Court to approve FXA's rejection of
the Introducing Agreements effective immediately, as a
protective measure. The Debtors also asked the Court to
establish 60 days after the entry of the Rejection Order as
deadline for filing claims either arising from or related to the
rejection of any of the Agreements or those that arose before
the effective date of rejection.
Ms. Henry asserted that the Debtors' "business judgment"
standard for rejection has been satisfied because the Agreements
are not providing any value to FXA's bankruptcy estate.
The Debtors believe that all claims arising from or related to
the Agreements constitute prepetition, non-priority general
unsecured claims against the FXA estate.
Ms. Henry further contended that the establishment of the Claims
Deadline permits the Brokers to submit a claim with respect to
the entire amount of their claim regardless of whether that
claim arose before or after the Debtors filed for bankruptcy.
Ms. Henry insisted that establishing the Claims Deadline will
give the Debtors an opportunity to understand the magnitude and
alleged priority of all claims arising from or related to the
Agreements, thereby facilitating the administration of the
bankruptcy estates.
WSD Objects
Wall Street Derivatives, Inc., a licensed Refco FX Associates
broker administered under the Commodity Futures Trading
Commission Regulation, objected to the Debtors' proposed
rejection of certain introducing broker agreements with the FXA.
Dave Banerjee, WSD's principal, related that WSD was under an
assumption that Refco, Inc., was a registered firm that would
maintain WSD's clearing deposit under the CFTC guidelines
requiring for funds segregation for the broker's protection.
WSD complained that the Debtors only wanted the clearing deposit
"discharged" under the Bankruptcy Code.
"We cannot accept this as an acceptable alternative," Mr.
Banerjee told Judge Drain.
To the extent that the Debtors' request denies WSD any claim to
a refund of its clearing deposit, the proposed rejection will
place undue burden and will impact WSD's objective to provide
for an orderly market in foreign exchange for WSD clients'
benefit, Mr. Banerjee contends.
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. 39; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
=============
B O L I V I A
=============
PETROLEO BRASILEIRO: Guarani Tribe Warns Takeover of Operations
---------------------------------------------------------------
Members of the Guarani tribe in Bolivia told the local radio
that they plan a takeover of the operations of Brazilian state-
run Petroleo Brasileiro and Repsol YPF -- the parent firm of YPF
SA.
Wilson Changaray, the leader of the Guarani People's Assembly,
told Fides radio, "Today we are going to occupy production
fields and we are going to paralyze all oil (and gas) activities
and suspend exports to Brazil."
"It is possible (a disruption), but ever since they invaded the
control station on Aug. 15, they've been saying this ... but
nothing has been disrupted," Reuters relates, citing Jorge
Boland -- the trader manager of Transierra, which is a
Petrobras, Total and Repsol YPF joint venture.
Mr. Boland told Reuters that supplies were normal.
As reported in the Troubled Company Reporter-Latin America on
Aug. 23, 2006, the Guarani tribe, according to published
reports, occupied the gas pipeline that Repsol YPF operates with
Petroleo Brasileiro and Total SA. The control station that the
tribe seized is in Parapet, Santa Cruz. It serves to compress
gas to transport it to Brazil, which imports about 25 million
cubic meters of gas a day from Bolivia. The official of
Petroleo Brasileiro said that up to 30 Indians were still
occupying the site, while up to 150 people were holding
demonstrations outside the premises, demanding the immediate
payment of US$9 million in social contributions the oil firms
promised in 2005. However, Petroleo Brasileiro noted that the
deal predicts contributions to be made over a time period of 20
years and not immediately. According to the official, the tribe
leaders threatened to close valves in the control station to
halt the gas exports. Sergio Gabrielli, the chief executive
officer of Petroleo Brasileiro said that planned infrastructure
investments in the region could possibly be done earlier to
alleviate the conflict. However, the official said that it
would still undergo a negotiation. A press official of
Bolivia's Hydrocarbons Ministry said that the ministry sent a
commission led by William Donaire, the vice-minister for the
commercialization and industrialization of hydrocarbons, to
Parapeti in order to talk with the Indians.
Mr. Boland told Reuters that Transierra formally refused to make
a one-off payment of US$9 million for development projects
instead of constant regular payments over 20 years.
Reuters states that Mr. Boland said, "Under the deal we invest
US$450,000 a year in works ... we do not agree to pay everything
at once."
The Indians decided to go on with the protests against
Transierra, as the company directors failed to attend a
negotiation meeting last Friday, Reuters relates, citing Mr.
Changaray.
Mr. Boland told Reuters that Transierra tried to set a meeting
with the Guaranis for Tuesday or Wednesday since a meeting last
week was postponed due to security concerns as it was on the
Guarani territory.
"We are not asking for an economic handout, but for compensation
for all the wealth that they extract from our land and the
damage they leave behind," Mr. Changaray told Reuters.
Headquartered in Rio de Janeiro, Brazil, Petroleo Brasileiro
S.A. aka Petrobras was founded in 1953. The company explores,
produces, refines, transports, markets, distributes oil and
natural gas and power to various wholesale customers and retail
distributors in the country.
* * *
Petroleo Brasileiro SA's long-term corporate family rating is
rated Ba3 by Moody's and its foreign currency long-term debt is
rated BB- by Fitch.
* * *
As reported in the Troubled Company Reporter on April 26, 2006,
in conjunction with the roll out of Issuer Default Ratings and
Recovery Ratings for Latin America Corporates, Fitch Ratings has
taken rating actions on Petroleo de Brasileiro SA. These
ratings were affected:
Foreign Currency:
-- Previous Rating: 'BB-'
-- New RR: 'BB', Rating Outlook Positive
US$2.5 billion, Senior Unsecured Notes due 2008, 2013, 2014
and 2018:
-- Previous Rating: 'BB-'
-- New IDR: 'BB+'
PETROLEO BRASILEIRO: Tries to Keep Control of Bolivian Plants
-------------------------------------------------------------
Petroleo Brasileiro SA aka Petrobras, the state-run oil company
of Brazil, is trying to keep control of its two refineries in
Bolivia, Prensa Latina reports.
The refineries process 40,000 oil barrels per day and produce
70% of the diesel Bolivia consumes.
Prensa Latina relates that the two plants were privatized in the
past decade. However, the Bolivian government ordered in May
the nationalization of the hydrocarbons sector, including the
oil fields in Bolivia.
Prensa Latina notes that Jose Freitas, the head of Petrobras,
commented on the talks of the re-purchase by Bolivian Federal
Oilfields or YPFB, of half plus one of the shares of the
refineries in the central and eastern regions of Bolivia. He
said Petrobras is willing to sell the share package to YPFB at a
value fixed by a neutral and consensus-appointed appraiser, but
under the condition of holding the administration and technical
management of the refineries.
If Bolivia does not accept that condition, Petrobras won't
divide the shares, and the state will have to acquire all of
them and pay for investments in the refineries, Prensa Latina
says, citing Mr. Freitas.
Mr. Freitas confirmed to Prensa Latina that Petrobras' decision
of investing in Bolivia, saying that it supposedly lacks
adequate and legal economic conditions.
Manuel Morales, a YPFB advisor, said that the team that will be
responsible for negotiations with Brazil about the plants and
other issues related to the nationalization, Prensa states.
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+'
YPF SA: Guarani Tribe Threatens Takeover of Bolivian Operations
---------------------------------------------------------------
Members of the Guarani tribe in Bolivia told the local radio
that they plan a takeover of the operations of Repsol YPF -- the
parent firm of YPF SA -- and Brazilian state-run Petroleo
Brasileiro.
Wilson Changaray, the leader of the Guarani People's Assembly,
told Fides radio, "Today we are going to occupy production
fields and we are going to paralyze all oil (and gas) activities
and suspend exports to Brazil."
"It is possible (a disruption), but ever since they invaded the
control station on Aug. 15, they've been saying this ... but
nothing has been disrupted," Reuters relates, citing Jorge
Boland -- the trader manager of Transierra, which is a
Petrobras, Total and Repsol YPF joint venture.
Mr. Boland told Reuters that supplies were normal.
As reported in the Troubled Company Reporter-Latin America on
Aug. 23, 2006, the Guarani tribe occupied the gas pipeline that
Repsol YPF operates with Petroleo Brasileiro and Total SA. The
control station that the tribe seized is in Parapet, Santa Cruz.
It serves to compress gas to transport it to Brazil, which
imports about 25 million cubic meters of gas a day from Bolivia.
The official of Petroleo Brasileiro said that up to 30 Indians
were still occupying the site, while up to 150 people were
holding demonstrations outside the premises, demanding the
immediate payment of US$9 million in social contributions the
oil firms promised in 2005. However, Petroleo Brasileiro noted
that the deal predicts contributions to be made over a time
period of 20 years and not immediately. According to the
official, the tribe leaders threatened to close valves in the
control station to halt the gas exports. Sergio Gabrielli, the
chief executive officer of PetroleoBrasileiro said that planned
infrastructure investments in the region could possibly be done
earlier to alleviate the conflict. However, the official said
that it would still undergo a negotiation. A press official of
Bolivia's Hydrocarbons Ministry said that the ministry sent a
commission led by William Donaire, the vice-minister for the
commercialization and industrialization of hydrocarbons, to
Parapeti in order to talk with the Indians.
Mr. Boland told Reuters that Transierra formally refused to make
a one-off payment of US$9 million for development projects
instead of constant regular payments over 20 years.
Reuters states that Mr. Boland said, "Under the deal we invest
US$450,000 a year in works ... we do not agree to pay everything
at once."
The Indians decided to go on with the protests against
Transierra, as the company directors failed to attend a
negotiation meeting last Friday, Reuters relates, citing Mr.
Changaray.
Mr. Boland told Reuters that Transierra tried to set a meeting
with the Guaranis for Tuesday or Wednesday since a meeting last
week was postponed due to security concerns as it was on the
Guarani territory.
"We are not asking for an economic handout, but for compensation
for all the wealth that they extract from our land and the
damage they leave behind," Mr. Changaray told Reuters.
* * *
As reported in the Troubled Company Reporter-Latin America on
June 9, 2006, Moody's Investors Service upgraded YPF Sociedad
Anonima's rating under the revised foreign currency ceilings:
-- Foreign Currency Corporate Family Rating: to B2 from B3;
Outlook remains Negative.
Moody's affirmed these five ratings:
-- Issuer Rating (domestic currency): Baa2/NEG;
-- Senior Unsecured Rating (foreign currency): Ba2/NEG;
-- Senior Unsecured Rating MTN (foreign currency): Ba2/NEG;
-- Senior Secured Shelf Rating (foreign currency):
(P)Ba2/NEG; and
-- Senior Unsecured Shelf Rating (foreign
currency):(P)Ba2/NEG.
===========
B R A Z I L
===========
BANCO ITAU BBA: BofA Deal Prompts Fitch to Affirm Ratings
---------------------------------------------------------
Fitch has affirmed the ratings of the Itau Group of banks and
the National Long- and Short-term ratings of BankBoston Banco
Multiplo S.A. and its subsidiary, BankBoston Leasing S.A. --
Arrendamento Mercantil (BankBoston Leasing). This follows the
conclusion of the agreement between Banco Itau Holding
Financeira with Bank of America Corp. (Issuer Default rating
'AA-' with Stable Outlook) to acquire BAC's Brazilian operations
(spearheaded by BKB) and its Latin American subsidiaries.
Central Bank of Brazil approved the BKB transaction on
Aug. 22, 2006, and the acquisition of the local subsidiaries of
BAC is contingent on approval by the Chilean and Uruguayan
regulatory authorities.
The affected ratings are:
Banco Itau BBA S.A.
-- Foreign currency IDR affirmed at 'BB+', Stable Outlook
-- Short-term foreign currency rating affirmed at 'B'
-- Local currency IDR affirmed at 'BBB-' (BBB minus),
Stable Outlook
-- Short-term local currency rating affirmed at 'F3'
-- Individual rating affirmed at 'B/C'
-- National Long-term rating affirmed at 'AA+(bra)',
Stable Outlook
-- National Short-term rating affirmed at 'F1+(bra)'
-- Support rating affirmed at '4'
BKB
-- National Long term rating affirmed at 'AA+(bra)',
Stable Outlook
-- National Short-term rating affirmed at 'F1+(bra)'
-- Support rating affirmed at '3'
BankBoston Leasing
-- National Long-term rating affirmed at 'AA+(bra)',
Stable Outlook
-- National Short-term rating affirmed at 'F1+(bra)
BankBoston Leasing-fifth issuance of debentures
-- National Long-term rating affirmed at 'AA+(bra)'
BIHF intends to fully write down goodwill estimated at
approximately BRL2.8 billion after-tax during fiscal year 2006.
BHIF management projects a slight decrease in the Basel solvency
ratio and a temporary reduction in BHIF results due to the
amortization of goodwill of the new stockholder base, although
dividend payouts will not be affected.
At June 2006, the combined banks had total assets estimated at
BRL203.3 billion (USD93.9bn at the current BRL/USD exchange
rate), total equity of about BRL20.7bn (approximately USD9.6bn)
and about BRL168.8bn in assets under management (approximately
USD78bn) with an estimated pro-forma base of 18,135 million
customers and 4,463 outlets. The acquisition will strengthen
BIHF's presence in the high end of Brazil's retail market, as
well as reinforce the bank's product offerings for the rapidly
expanding middle-market segment. BIHF estimates that the full
inCorp. of BKB operations over the next few months will have
only a marginal effect on its strong capital ratios, and that
the larger bank will return to BIHF's historical level of
profitability by H207. While Fitch will monitor the integration
process, BIHF's successful track record of integrating
acquisitions and the maintenance of its balance sheet
fundamentals contribute to the affirmation of the ratings of the
Itau group of banks.
BIHF is the second largest private financial conglomerate in
Brazil and a leader in many segments of the domestic market. Its
local currency IDR, which is above Brazil's IDR 'BB', and its
National ratings reflect BIHF's broad and diversified franchise,
history of deposit stability, and proven access to the capital
market. They also reflect BIHF's conservative management,
consistent track record of solid performance and responsiveness
to changes in the operating environment. The Country Ceiling
caps the foreign currency IDR.
BIHF's Banco Itau and Banco Itau BBA's Individual ratings
reflect their lower exposure to Brazilian government debt, a
significant presence abroad, and ample international liquidity.
All of these provide an important cushion against the volatile
environment in Brazil and set BIHF apart from its regional
peers. BIHF is 88.8%-controlled by Itausa, which in turn is
60.6%-controlled by the Egydio de Souza Aranha family.
Present in Brazil since 1947, BKB enjoys a strong reputation in
corporate banking and retail banking for high net worth
individuals, and ranked among the 10th largest in Brazil by
assets.
BANCO ITAU HOLDING: BofA Deal Prompts Fitch to Affirm Ratings
-------------------------------------------------------------
Fitch has affirmed the ratings of the Itau Group of banks and
the National Long- and Short-term ratings of BankBoston Banco
Multiplo S.A. and its subsidiary, BankBoston Leasing S.A. --
Arrendamento Mercantil (BankBoston Leasing). This follows the
conclusion of the agreement between Banco Itau Holding
Financeira with Bank of America Corp. (Issuer Default rating
'AA-' with Stable Outlook) to acquire BAC's Brazilian operations
(spearheaded by BKB) and its Latin American subsidiaries.
Central Bank of Brazil approved the BKB transaction on
Aug. 22, 2006, and the acquisition of the local subsidiaries of
BAC is contingent on approval by the Chilean and Uruguayan
regulatory authorities.
The affected ratings are:
Banco Itau Holding Financiera
-- Foreign currency IDR affirmed at 'BB+', Stable Outlook
-- Short-term foreign currency rating affirmed at 'B'
-- Local currency IDR affirmed at 'BBB-' (BBB minus),
Stable Outlook
-- Short-term local currency rating affirmed at 'F3'
-- Individual rating affirmed at 'B/C'
-- National Long-term rating affirmed at 'AA+(bra)',
Stable Outlook
-- National Short-term rating affirmed at 'F1+(bra)'
-- Support rating affirmed at '4'
BKB
-- National Long-term rating affirmed at 'AA+(bra)',
Stable Outlook
-- National Short-term rating affirmed at 'F1+(bra)'
-- Support rating affirmed at '3'
BankBoston Leasing
-- National Long-term rating affirmed at 'AA+(bra)',
Stable Outlook
-- National Short-term rating affirmed at 'F1+(bra)
BankBoston Leasing-fifth issuance of debentures
-- National Long-term rating affirmed at 'AA+(bra)'
BIHF intends to fully write down goodwill estimated at
approximately BRL2.8 billion after-tax during fiscal year 2006.
BHIF management projects a slight decrease in the Basel solvency
ratio and a temporary reduction in BHIF results due to the
amortization of goodwill of the new stockholder base, although
dividend payouts will not be affected.
At June 2006, the combined banks had total assets estimated at
BRL203.3 billion (USD93.9bn at the current BRL/USD exchange
rate), total equity of about BRL20.7bn (approximately USD9.6bn)
and about BRL168.8bn in assets under management (approximately
USD78bn) with an estimated pro-forma base of 18,135 million
customers and 4,463 outlets. The acquisition will strengthen
BIHF's presence in the high end of Brazil's retail market, as
well as reinforce the bank's product offerings for the rapidly
expanding middle-market segment. BIHF estimates that the full
inCorp. of BKB operations over the next few months will have
only a marginal effect on its strong capital ratios, and that
the larger bank will return to BIHF's historical level of
profitability by H207. While Fitch will monitor the integration
process, BIHF's successful track record of integrating
acquisitions and the maintenance of its balance sheet
fundamentals contribute to the affirmation of the ratings of the
Itau group of banks.
BIHF is the second largest private financial conglomerate in
Brazil and a leader in many segments of the domestic market. Its
local currency IDR, which is above Brazil's IDR 'BB', and its
National ratings reflect BIHF's broad and diversified franchise,
history of deposit stability, and proven access to the capital
market. They also reflect BIHF's conservative management,
consistent track record of solid performance and responsiveness
to changes in the operating environment. The Country Ceiling
caps the foreign currency IDR.
BIHF's Banco Itau and Banco Itau BBA's Individual ratings
reflect their lower exposure to Brazilian government debt, a
significant presence abroad, and ample international liquidity.
All of these provide an important cushion against the volatile
environment in Brazil and set BIHF apart from its regional
peers. BIHF is 88.8%-controlled by Itausa, which in turn is
60.6%-controlled by the Egydio de Souza Aranha family.
Present in Brazil since 1947, BKB enjoys a strong reputation in
corporate banking and retail banking for high net worth
individuals, and ranked among the 10th largest in Brazil by
assets.
BANCO ITAU SA: BofA Deal Prompts Fitch to Affirm Ratings
--------------------------------------------------------
Fitch has affirmed the ratings of the Itau Group of banks and
the National Long- and Short-term ratings of BankBoston Banco
Multiplo S.A. and its subsidiary, BankBoston Leasing S.A. --
Arrendamento Mercantil (BankBoston Leasing). This follows the
conclusion of the agreement between Banco Itau Holding
Financeira with Bank of America Corp. (Issuer Default rating
'AA-' with Stable Outlook) to acquire BAC's Brazilian operations
(spearheaded by BKB) and its Latin American subsidiaries.
Central Bank of Brazil approved the BKB transaction on
Aug. 22, 2006, and the acquisition of the local subsidiaries of
BAC is contingent on approval by the Chilean and Uruguayan
regulatory authorities.
The affected ratings are:
Banco Itau S.A.
-- Foreign currency IDR affirmed at 'BB+', Stable Outlook
-- Short-term foreign currency rating affirmed at 'B'
-- Local currency IDR affirmed at 'BBB-' (BBB minus),
Stable Outlook
-- Short-term local currency rating affirmed at 'F3'
-- Individual rating affirmed at 'B/C'
-- National Long-term rating affirmed at 'AA+(bra)',
Stable Outlook
-- National Short-term rating affirmed at 'F1+(bra)'
-- Support rating affirmed at '4'
BKB
-- National Long term rating affirmed at 'AA+(bra)',
Stable Outlook
-- National Short-term rating affirmed at 'F1+(bra)'
-- Support rating affirmed at '3'
BankBoston Leasing
-- National Long-term rating affirmed at 'AA+(bra)',
Stable Outlook
-- National Short-term rating affirmed at 'F1+(bra)
BankBoston Leasing-fifth issuance of debentures
-- National Long-term rating affirmed at 'AA+(bra)'
BIHF intends to fully write down goodwill estimated at
approximately BRL2.8 billion after-tax during fiscal year 2006.
BHIF management projects a slight decrease in the Basel solvency
ratio and a temporary reduction in BHIF results due to the
amortization of goodwill of the new stockholder base, although
dividend payouts will not be affected.
At June 2006, the combined banks had total assets estimated at
BRL203.3 billion (USD93.9bn at the current BRL/USD exchange
rate), total equity of about BRL20.7bn (approximately USD9.6bn)
and about BRL168.8bn in assets under management (approximately
USD78bn) with an estimated pro-forma base of 18,135 million
customers and 4,463 outlets. The acquisition will strengthen
BIHF's presence in the high end of Brazil's retail market, as
well as reinforce the bank's product offerings for the rapidly
expanding middle-market segment. BIHF estimates that the full
inCorp. of BKB operations over the next few months will have
only a marginal effect on its strong capital ratios, and that
the larger bank will return to BIHF's historical level of
profitability by H207. While Fitch will monitor the integration
process, BIHF's successful track record of integrating
acquisitions and the maintenance of its balance sheet
fundamentals contribute to the affirmation of the ratings of the
Itau group of banks.
BIHF is the second largest private financial conglomerate in
Brazil and a leader in many segments of the domestic market. Its
local currency IDR, which is above Brazil's IDR 'BB', and its
National ratings reflect BIHF's broad and diversified franchise,
history of deposit stability, and proven access to the capital
market. They also reflect BIHF's conservative management,
consistent track record of solid performance and responsiveness
to changes in the operating environment. The foreign currency
IDR is capped by the Country Ceiling.
BIHF's Banco Itau and Banco Itau BBA's Individual ratings
reflect their lower exposure to Brazilian government debt, a
significant presence abroad, and ample international liquidity.
All of these provide an important cushion against the volatile
environment in Brazil and set BIHF apart from its regional
peers. BIHF is 88.8%-controlled by Itausa, which in turn is
60.6%-controlled by the Egydio de Souza Aranha family.
Present in Brazil since 1947, BKB enjoys a strong reputation in
corporate banking and retail banking for high net worth
individuals, and ranked among the 10th largest in Brazil by
assets.
COREL CORP: Buying InterVideo Inc. for US$196 Million in Cash
-------------------------------------------------------------
Corel Corp. and InterVideo, Inc., entered into a definitive
agreement for Corel to acquire InterVideo in an all-cash
transaction at a price of US$13 per share or US$196 million.
In 2005, InterVideo acquired a majority interest in Ulead, a
developer of video imaging and DVD authoring software for
desktop, server, mobile and Internet platforms.
By acquiring InterVideo, Corel is delivering on its strategy to
accelerate revenue and earnings growth by acquiring
complementary companies and technologies that will benefit from
Corel's global sales, marketing, and distribution capabilities.
With a robust product line, strategic partnerships with leading
OEM manufacturers, and an established presence in Asia Pacific
and Europe, InterVideo will provide Corel with added critical
mass to efficiently serve the growing consumer demand for
digital media software. This acquisition is especially
strategic for Corel given InterVideo's strength in Asian
markets, including China, Taiwan and Japan regions that Corel
has targeted for expansion. InterVideo's development centers
across China and Taiwan provide Corel with a solid base from
which to broaden its footprint in these key regions.
The companies share a common vision around delivering high
quality, full-featured software to consumers through leading
OEMs and Internet distribution channels. The companies also
believe they will be able to realize meaningful efficiencies by
eliminating redundant operational expenses and public company
costs.
"We are pleased to announce Corel's latest acquisition as a
public company as we continue to execute our strategy to grow
both organically and through the acquisition of complementary
businesses that leverage our capabilities and scale in the
packaged software market," said David Dobson, CEO of Corel.
"With outstanding products, talented employees and deep
relationships with eight of the world's top ten PC
manufacturers, InterVideo represents a significant opportunity
for Corel to deliver enhanced value to our shareholders. This
acquisition will also benefit customers and partners as we
expand our ability to provide flexible, bundled solutions that
meet the needs of today's digital media consumers."
The acquisition will be financed through a combination of
Corel's cash reserves, debt financing, and InterVideo's cash and
cash equivalents, which stood at approximately US$105 million as
of June 30, 2006. The acquisition is subject to InterVideo
shareholder approval, regulatory approvals, and other customary
closing conditions. The transaction is expected to close in the
fourth quarter of 2006 and to be accretive in the second quarter
after closing.
Directors and executive officers of InterVideo, including Steve
Ro, Chinn Chin and Honda Shing, have entered into voting
agreements pursuant to which they have agreed to vote their
shares of InterVideo in favor of the merger.
About InterVideo, Inc.
Based in Fremont, California, InterVideo, Inc. (NASDAQ:IVII)
-- http://www.intervideo.com/-- provides integrated digital and
high-definition multimedia and audio/video content solutions in
the PC, CE and wireless industries. The company's broad suite
of integrated multimedia software products are designed to
enhance the consumer's entertainment experience, whether the
content is delivered to a home system, HDTV set, wireless
system, mobile or personal multimedia device. InterVideo also
has major offices in Taiwan, Japan, Mainland China and around
the globe.
About Corel Corp
Headquartered in Ottawa, Ontario, Corel Corp. (NASDAQ:CREL)
(TSX:CRE) -- http://www.corel.com/-- is a packaged software
company with an estimated installed base of over 40 million
users. The Company provides productivity, graphics and digital
imaging software. Its products are sold in over 75 countries,
including Brazil and Mexico, through a scalable distribution
platform comprised of original equipment manufacturers, Corel's
international websites, and a global network of resellers and
retailers. The Company's product portfolio features
CorelDRAW(R) Graphics Suite, Corel(R) WordPerfect(R) Office,
WinZip(R), Corel(R) Paint Shop(R) Pro, and Corel Painter(TM).
* * *
As reported in the Troubled Company Reporter on April 7, 2006,
Standard & Poor's Ratings Services assigned its 'B' long-term
corporate credit and senior secured debt ratings to Corel Corp.
At the same time, Standard & Poor's assigned its 'B' bank loan
rating, with a recovery rating of '3', to the company's US$165
million first-lien senior secured bank facility. The outlook is
positive.
As reported in the Troubled Company Reporter on April 11, 2006,
Moody's Investors Service assigned first time corporate family
rating of B3 to Corel Corp. and B3 ratings to Corel's
proposed senior secured term loan facility and senior secured
revolving credit facility. Moody's also assigned a SGL-2
liquidity rating, reflecting good liquidity. Combined proceeds
of US$90 million from the term loan and those of Corel's IPO
will be used to repay Corel's existing debt. The rating outlook
is stable.
GULFMARK OFFSHORE: Earns US$13 Million in Quarter Ended June 30
---------------------------------------------------------------
GulfMark Offshore, Inc., earned US$13 million of net income on
revenue of US$58.4 million for the quarter ended June 30, 2006,
exceeding the record previously set in the third quarter of
2005. Operating income of US$18.8 million also established a
new GulfMark record. Compared to the first quarter of 2006, net
income more than doubled while revenues increased over 22%. The
improvements were directly related to improved day rates,
increased vessel utilization and the contribution from the
newest addition to the fleet.
Comparing the record 2006 second quarter results to the same
quarter in 2005 when net income was US$8.3 million on revenue of
US$51.3 million, both net income and revenue increased 58% and
14% respectively. The US$7.1 million increase in revenue in
2006 over the same quarter in 2005 is attributable to
improvements in day rates of US$4.1 million, utilization of
US$2.3 million and the full quarter effect of four of the
Company's new builds of US$2.2 million. Partially offsetting
was a decrease of US$1.5 million related to the termination of
the bareboat leased vessel at the beginning of 2006.
Bruce Streeter, President and COO, stated: "The historic levels
of operating income and net income achieved in the quarter
reflect both the underlying strength of the markets we serve and
the improvements we indicated would come as we completed the
bulk of our dry dock requirements for the year. With more than
two thirds of our planned dry docks completed in the first half
we will have an increased number of vessel days available in the
second half of the year. We therefore are looking forward to
the balance of the year and into 2007 when we believe we will
see continued improvement in term day rates."
"Our second quarter performance is attributable to a number of
positive factors. The contribution from the earlier new build
program has been identifiable for sometime, but we are now
benefiting from the current building program as our most recent
delivery, the Sea Guardian, is on contract and continues to work
at a favorable rate. In comparison to the second quarter of
2005, we also have had the benefit of the two vessels working in
Mexico and the Sea Intrepid that delivered late last year."
"In the North Sea, the two large anchor handling vessels
operating in the spot market have experienced excellent results
including a number of days at all-time record day rates. Demand
continues to be strong and we have been working with customers
to try and balance their vessel needs as best we can with our
near term dry dock requirements. We moved one vessel from the
Americas to the North Sea and, while we did most of the planned
dry docks, we were not able to complete all of those we hoped to
do in the second quarter. In Southeast Asia, we benefited from
the increased fleet size, improving rates and increased
utilization. In the Americas, the fleet size was reduced by the
one vessel that transferred to the North Sea, but the rest of
the fleet, all on long term contracts, performed well with no
lost revenue days."
At June 30, 2006, GulfMark had working capital of US$43.3
million, including US$25.5 million in cash. The Company had
total debt of US$240.9 million, consisting of US$159.5 million
of senior notes, US$80.9 million outstanding under the new
credit facility and US$500,000 related to the Aker Joint Venture
capital contribution.
GulfMark Offshore Inc. -- http://www.gulfmark.com/-- provides
marine transportation services to the energy industry through a
fleet of 60 offshore support vessels, primarily in the North
Sea, offshore Southeast Asia, and Brazil.
* * *
As reported in the Troubled Company Reporter on June 13, 2006,
Standard & Poor's Rating Services affirmed its 'BB-' corporate
credit rating on oilfield services company GulfMark Offshore
Inc. and downgraded the company's 7.75% senior notes due 2014 to
'B+' from 'BB-'. The outlook is negative.
NOSSA CAIXA: Prepares to Sell Over 18.8 Million Ordinary Shares
---------------------------------------------------------------
Banco Nossa Caixa SA, the state savings bank of Sao Paulo,
Brazil, informed Comissao de Valores Mobiliarios -- the
securities and exchange commission of Brazil -- that it is
preparing to sell over 18.8 million ordinary shares in its
second public share offer in less than a year.
Business News Americas relates that Nossa Caixa may extend the
offer with an additional 2.83 million shares.
According to the local news agency Agencia Estado, the offer --
including the "greenshoe" option -- could add over BRL936
million to Nossa Caixa's coffers, based on share prices at
market close on Aug. 25.
Agencia Estado notes that the share offer will boost Nossa
Caixa's free float to 49% from 29%.
BNamericas states that UBS will be the coordinating bank.
Nossa Caixa, says BNamericas, concluded its IPO on the Sao Paulo
stock exchange Bovespa on Oct. 28, 2005. It became the first
bank to earn a listing on the Novo Mercado index -- whose
participants must issue only common shares and reach a free
float of at least 25% in three years of debuting.
A spokesperson of Nossa Caixa said the firm would release more
information about the share offer "at an opportune time",
BNamericas reports.
* * *
On Oct. 19, 2005, Moody's Investors Service upgraded Banco Nossa
Caixa S.A.'s long-term foreign currency deposit rating to B1
from B2 with a positive outlook.
At the same time, the ratings agency upgraded Banco Nossa
Caixa's long-term foreign currency debt rating to Ba1 with a
stable outlook.
NOVELIS INC: Declares Quarterly Dividend of US$0.01 Per Share
-------------------------------------------------------------
Novelis Inc. declared a quarterly dividend of US$0.01 per share
on its outstanding common stock, payable on Sept. 25, 2006, to
shareholders of record at the close of business on
Sept. 7, 2006.
There are approximately 74 million common shares of Novelis Inc.
stock outstanding.
Novelis said the Board of Directors reduced the dividend this
quarter in consideration of previously announced corporate cost
increases and higher interest rates, as well as the limitations
under its credit agreement related to dividend payments. The
Board has not made any decision with respect to future dividend
payments, which will be determined in light of the quarterly
results, credit agreement limitations and other factors at that
time.
Novelis -- http://www.novelis.com-- is the global leader in
aluminum rolled products and aluminum can recycling. The
company operates in 11 countries and has approximately 12,500
employees. Novelis has the unrivaled capability to provide its
customers with a regional supply of technologically
sophisticated rolled aluminum products throughout Asia, Europe,
North America and South America. Through its advanced
production capabilities, the company supplies aluminum sheet and
foil to the automotive and transportation, beverage and food
packaging, construction and industrial, and printing markets.
Novelis South America operates two rolling plants and primary
production facilities in Brazil. The company's Pindamonhangaba
rolling and recycling facility in Brazil is the largest aluminum
rolling and recycling facility in South America and the only one
capable of producing can body and end stock. The plant recycles
primarily used beverage cans, and is engaged in tolling recycled
metal for its customers.
* * *
As reported in the Troubled Company Reporter on May 18, 2006,
Moody's Investors Service placed the ratings of Novelis Inc.,
and its subsidiary, Novelis Corp., under review for possible
downgrade. In a related rating action, Moody's changed Novelis
Inc's speculative grade liquidity rating to SGL-3 from SGL-2.
Novelis Corporation's Ba2 senior secured bank credit facility
rating was placed on review for possible downgrade.
Novelis Inc.'s Ba3 corporate family rating; Ba2 senior secured
bank credit facility and B1 senior unsecured regular
bond/debenture were placed on review for possible downgrade.
TELE NORTE: Uses Telcordia & Accenture Broadband Services
---------------------------------------------------------
Tele Norte Leste Participacoes SA aka Telemar has selected
Telcordia Technologies Inc. and Accenture to deliver an end-to-
end service fulfillment solution to help enable mission-critical
enterprise data services and consumer broadband.
The move is part of Telemar's ambitious, multi-organizational
project for transforming its order management and provisioning
processes.
Accenture will lead the integration of the Telemar project and
will provide application development support and ongoing
assistance by managing and aligning technology resources and
solutions.
Accenture will use Telcordia's suite of products to replace
Telemar's legacy order management systems while integrating the
new solution into the existing CRM system to provide a complete
order-to-cash fulfillment system.
The multi-phase project will provide all order management,
inventory, configuration and activation functions needed for
these services. This project will allow Telemar to automate the
provisioning process for a wide range of advanced data
offerings, which could result in faster delivery of new services
to the market and reductions in operating costs. Telemar will
leverage Accenture Communications Solutions knowledge assets in
the OSS space designed to help drive the effective integration
of Telcordia products.
The Telcordia Fulfillment Suite, which includes industry leading
products, Telcordia(R) Granite Inventory and Telcordia(R)
Expediter are critical components as Telemar builds a foundation
to transform its operations and position itself to deliver
exciting new services.
Paulo Goncalves, the Telemar CTO, said, "Telemar continues its
record of innovation, providing our corporate and residential
customers with the highest quality services. Services are the
key to growth and profitability for Telemar. Telcordia and
Accenture's track record of reliability in delivering this scale
and breadth in an Operations Support System solution was
fundamental to our selection. Having Telcordia's open and
flexible service fulfillment environment paired with Accenture's
understanding of telecommunications business processes will help
us rapidly develop new IP-based services for our customers and
deliver them in a cost-effective and accessible manner."
Dan Mikesell, the Vice President of Telcordia Latin America,
said, "Telemar is moving aggressively to offer services that
its customers want. By delivering the right mix of services in
a timely manner, Telemar can reduce customer churn and increase
average revenue per user. Our Fulfillment Suite enables
wireline and wireless operators to fulfill complex business
service requests for its customers without the delay and errors
that result from manual processes. By implementing a
comprehensive solution from Telcordia, Telemar will have a lower
total cost of ownership versus point solutions from multiple
vendors. We look forward to working closely with Telemar to
help achieve its ambitious goals."
Henrique Washington, a senior executive in the Accenture
Communications & High Tech group in Brazil, notes, "This
engagement demonstrates how a significant service provider such
as Telemar is proactively addressing the impact of migration to
IP networks and at the same time renewing its OSS suite for all
other networks. This project leverages the Accenture
Communications Solutions and the Telcordia suite of products,
which in combination will help to facilitate Telemar's business
objectives of rolling out advanced data services to the market
more rapidly and economically."
The work at Telemar builds on the successful teaming
relationship between Accenture and Telcordia. In April of this
year, the two companies announced an alliance to build and
deliver end-to-end operations support, network management and
business support solutions for communications service providers.
The Telcordia Fulfillment Suite for Telemar includes Granite
Inventory and Expediter. Telcordia Granite Inventory is an open
OSS product that easily and seamlessly works in a multi-vendor
environment and also gives operators a unique way to leverage
their legacy investments. The first to support Java(TM) 2
Platform, Enterprise Edition (J2EE(TM)) standards, Telcordia
Granite Inventory gives operators and their business partners
the ability to easily configure the software to support the new
applications and services that it enables. Telcordia Expediter
is a highly flexible, configurable order management and
lifecycle management system that guides service orders through
the entire workflow process, managing decomposition, routing,
tracking, validation, message mapping and hand-off to
provisioning/activation, and billing.
About Accenture
Accenture -- http://www.accenture.com-- is a global management
consulting, technology services and outsourcing company.
Committed to delivering innovation, Accenture collaborates with
its clients to help them become high-performance businesses and
governments. With deep industry and business process expertise,
broad global resources and a proven track record, Accenture can
mobilize the right people, skills and technologies to help
clients improve their performance. With more than 133,000
people in 48 countries, the company generated net revenues of
US$15.55 billion for the fiscal year ended Aug. 31, 2005.
About Telcordia
Telcordia Technologies, Inc. -- http://www.telcordia.com-- is a
leading global provider of telecommunications network software
and services for IP, wireline, wireless, and cable. As the
industry continuously evolves, Telcordia is focused on being the
undisputed transformation partner for its customers. By
delivering flexible, standards-based software solutions and
consulting services that optimize complex network and business
support systems, Telcordia helps customers transform their
business while aggressively reducing costs and growing revenues.
Telcordia is headquartered in Piscataway, N.J, with offices
throughout the United States, Canada, Europe, Asia, Central and
Latin America.
About Telemar
Telemar provides telecommunication services in South America.
It offers local, intra-regional long distance, and data
transmission services in 16 Brazilian states, which covers
approximately 64% of the country. Mobile services are provided
through its wireless unit Oi, and it has acquired data
transmission services provider Pegasus.
* * *
Standard & Poor's Ratings Services disclosed on May 24, 2006,
that its 'BB' long-term corporate credit ratings on Brazil-based
integrated telecommunications carrier Telemar Norte Leste S.A.
and its holding company Tele Norte Leste Participacoes S.A.
remain on CreditWatch with positive implications, where they
were placed on Feb. 28, 2006. The national scale rating
assigned to three local debentures issued by Telemar
Participacoes S.A. (Tele Norte's holding company) also remain on
CreditWatch with positive implications.
VARIG S.A.: Returns Five Engines to Willis Lease
------------------------------------------------
Willis Lease Finance Corp. discloses in a regulatory filing
with the Securities and Exchange Commission that VARIG S.A. has
returned five leased aircraft engines.
Willis leased nine engines to VARIG and Rio-Sul Linhas Aereas,
S.A., pursuant to prepetition lease agreements. All of the
leases have terminated.
Willis reports that, of the five returned engines, one has been
sold for a gain, three have been placed on lease and one is off-
lease.
Willis relates that the remaining four engines have a
US$16,000,000 net book value and are in various stages of the
lease return process. Rents on the nine engines were paid
through May 2006 and security deposits are adequate to cover
most rents through June 2006, according to Willis.
Willis leases spare commercial aircraft engines, rotable parts
and aircraft to commercial airlines, aircraft engine
manufacturers and overhaul/repair facilities worldwide. The
leasing activities are integrated with the purchase and resale
of used and refurbished commercial aircraft engines.
As reported in the Troubled Company Reporter on June 29, 2006,
Willis Lease asked the U.S. Bankruptcy Court for the Southern
District of New York for judgment:
1. declaring nine engines leased to VARIG, S.A., and its
affiliate Rio-Sul Linhas Aereas, S.A., pursuant to
lease agreements, as Willis' property;
2. directing the Foreign Debtors to:
a. return all of the Willis engines together with all
parts and records;
b. execute all documents necessary to acknowledge the
termination of the leases; and
c. secure any export permits, licenses or documents
necessary to remove the engines from Brazil;
3. for wrongful detention, conversion and use of the engines
equal to the rent and use fees provided in the leases
until the engines are returned properly together with all
parts and records; and
4. awarding Willis punitive damages against the Foreign
Debtors in an amount to be determined by the Court.
About VARIG
Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's
largest air carrier and the largest air carrier in Latin
America. VARIG's principal business is the transportation of
passengers and cargo by air on domestic routes within Brazil and
on international routes between Brazil and North and South
America, Europe and Asia. VARIG carries approximately 13
million passengers annually and employs approximately 11,456
full-time employees, of which approximately 133 are employed in
the United States.
The Company, along with two affiliates, filed for a judicial
reorganization proceeding under the New Bankruptcy and
Restructuring Law of Brazil on June 17, 2005, due to a
competitive landscape, high fuel costs, cash flow deficit, and
high operating leverage. The Debtors may be the first case
under the new law, which took effect on June 9, 2005. Similar
to a chapter 11 debtor-in-possession under the U.S. Bankruptcy
Code, the Debtors remain in possession and control of their
estate pending the Judicial Reorganization. Sergio Bermudes,
Esq., at Escritorio de Advocacia Sergio Bermudes, represents the
carrier in Brazil.
Each of the Debtors' Boards of Directors authorized Vicente
Cervo as foreign representative. In this capacity, Mr. Cervo
filed a Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case
Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at
Pillsbury Winthrop Shaw Pittman LLP represents Mr. Cervo in the
United States. As of March 31, 2005, the Debtors reported
BRL2,979,309,000 in total assets and BRL9,474,930,000 in total
debts. (VARIG Bankruptcy News, Issue No. 30; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
* BRAZIL: Bajaj Hindusthan Investing US$500M in Ethanol Sector
--------------------------------------------------------------
India's biggest sugar company, Bajaj Hindusthan Ltd., will tap
the Brazilian ethanol market with a US$500 million investment.
Bloomberg News says the company's chief executive officer
Kushagra Nayan Bajaj wants to acquire mills in South America
that can produce sugar and ethanol, in order for the Mumbai-
based company to build on a 10-fold increase in crushing
capacity that has driven four years of record profits.
"If I need to grow exponentially I need to be in Brazil," the
chief officer told Bloomberg. "If an investor expects another
10-fold increase out of me in the next five years, or three
years, I can't do it in India."
Brazil is considered to be the number one ethanol market.
Bloomberg says production costs in Brazil are half the global
average.
"Sugarcane area can't be increased in India and whatever
expansion Bajaj Hindusthan had to do in India it has done,"
Vinit Birla, an analyst at Pranav Securities Ltd., underscored
to Bloomberg.
About Bajaj Hindusthan
Headquartered in Mumbai, India, Bajaj Hindusthan Ltd. --
http://www.bajajhindusthan.com/-- a part of the Bajaj Group, is
India's largest sugar and ethanol manufacturing company. The
company's plants are located in the northern Indian state of
Uttar Pradesh, at Golagokarannath and Palia Kalan (district
Lakhimpur Kheri), at Kinauni (district Meerut), Thanabhavan and
Budhana (district Muzaffarnagar) and at Bilai (district
Bijnore).
* * *
Fitch Ratings assigned these ratings on Brazil:
Rating Rating Date
------ -----------
Country Ceiling BB+ Aug. 17, 2006
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
===========================
AFM CO: Last Day to File Proofs of Claim Is September 21
--------------------------------------------------------
AFM Co., Ltd. 's creditors are required to submit proofs of
claim by Sept. 21, 2006, to the company's liquidators:
John Cullinane
Derrie Boggess
c/o Walkers SPV Limited
P.O. Box 908, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 21 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
AFM Co.'s sole shareholder decided on July 28, 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:
John Cullinane
c/o Walkers SPV Limited, Walker House
P.O. Box 908, George Town
Grand Cayman, Cayman Islands
Tel: (345) 914-6305
ASTER CITY: Creditors Must File Proofs of Claim by Sept. 21
-----------------------------------------------------------
Aster City Cable Europe (Cayman) Limited's creditors are
required to submit proofs of claim by Sept. 21, 2006, to the
company's liquidator:
William G. Neisel
c/o Stuarts Walker Hersant, Attorneys-at-law
P.O. Box 2510GT, Cayman Financial Centre
36A Dr. Roy's Drive, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 21 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Aster City Cable is voluntarily winding up its business under
the Companies Law (2003 Revision) of the Cayman Islands.
CENTER INVESTMENTS: Shareholders Final Meeting Set for Sept. 29
---------------------------------------------------------------
Center Investments Limited's final shareholders meeting will be
at 2:00 p.m. on Sept. 29, 2006, at the registered office of the
company.
These agenda will be taken during the meeting:
1) accounting of the liquidation process showing how the
winding up has been conducted during the preceding year,
2) requesting the members' approval of the liquidation fees
incurred to date, approval of the liquidator's estimated
costs to completion, and
3) hearing any explanation that may be given by the
liquidator.
A member entitled to attend and vote at the meeting may appoint
a proxy, who need not be a member, in his stead.
The liquidator can be reached at:
Westport Services Ltd.
Bonnie Willkom
P.O. Box 1111
Grand Cayman, Cayman Islands
Tel.: 949-5122
Fax: 949-7920
DEAM RREEF: Proofs of Claim Filing Ends on September 29
-------------------------------------------------------
Deam Rreef Real Estate Securities Fund Limited's creditors are
required to submit proofs of claim by Sept. 29, 2006, to the
company's liquidators:
David A.K. Walker
Lawrence Edwards
PricewaterhouseCoopers
Strathvale House, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 29 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Deam Rreef's shareholders agreed on July 27, 2006, for the
company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Lawrence Edwards
Jyoti Choi
P.O. Box 258, George Town
Grand Cayman, Cayman Islands
Tel.: (345) 914 8657
Fax: (345) 949 4237
GLOBAL (MASTER): Last Day to File Proofs of Claim Is Sept. 21
-------------------------------------------------------------
Global Precision Master Fund, Ltd.'s creditors are required to
submit proofs of claim by Sept. 21, 2006, to the company's
liquidators:
Linburgh Martin
John Sutlic
P.O. Box 1034GT
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 21 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 Precision Master's sole shareholder decided on Aug. 1,
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:
Thiry Gordon
Close Brothers (Cayman) Limited
Fourth Floor, Harbour Place
P.O. Box 1034GT
Grand Cayman, Cayman Islands
Tel: (345) 949 8455
Fax: (345) 949 8499
GLOBAL PRECISION: Proofs of Claim Must be Filed by Sept. 21
-----------------------------------------------------------
Global Precision Fund, Ltd.'s creditors are required to submit
proofs of claim by Sept. 21, 2006, to the company's liquidators:
Linburgh Martin
John Sutlic
P.O. Box 1034GT
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 21 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 Precision's sole shareholder decided on Aug. 1, 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:
Thiry Gordon
Close Brothers (Cayman) Limited
Fourth Floor, Harbour Place
P.O. Box 1034GT
Grand Cayman, Cayman Islands
Tel: (345) 949 8455
Fax: (345) 949 8499
MTRMA REINSURANCE: Holding Last Shareholders Meeting on Sept. 20
----------------------------------------------------------------
Mtrma Reinsurance, Ltd., invites shareholders to attend a final
meeting at 10:00 a.m. on Sept. 20, 2006, at:
Global Captive Management Ltd.
Genesis Building
P.O. Box 1363GT, George Town
Grand Cayman, Cayman Islands,
These agenda will be taken during the meeting:
1) accounting of the liquidation process showing how the
winding up has been conducted during the preceding year,
2) requesting the members' approval of the liquidation fees
incurred to date, approval of the liquidator's estimated
costs to completion, and
3) hearing any explanation that may be given by the
liquidator.
A member entitled to attend and vote at the meeting may appoint
a proxy, who need not be a member, in his stead.
The liquidator can be reached at:
Peter Mackay
Global Captive Management Ltd.
Genesis Building, P.O. Box 1363GT
Grand Cayman, Cayman Islands
Tel: (345) 949 7966
PEAKINVEST ACQUISITION: Proofs of Claim Filing Ends on Sept. 22
---------------------------------------------------------------
Peakinvest Acquisition Ltd.'s creditors are required to submit
proofs of claim by Sept. 22, 2006, to the company's liquidator:
Westport Services Ltd.
P.O. Box 1111
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 22 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Peakinvest Acquisition's shareholders agreed on July 27, 2006,
for the company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Westport Services Ltd.
Bonnie Willkom
P.O. Box 1111
Grand Cayman, Cayman Islands
Tel: 949-5122
Fax: 949-7920
PEAKINVEST CORPORATE: Proofs of Claim Must be Filed by Sept. 22
---------------------------------------------------------------
Peakinvest Corporate Limited's creditors are required to submit
proofs of claim by Sept. 22, 2006, to the company's liquidators:
Westport Services Ltd.
P.O. Box 1111
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 22 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Peakinvest Corporate's shareholders agreed on July 27, 2006, for
the company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Westport Services Ltd
Bonnie Willkom
P.O. Box 1111
Grand Cayman, Cayman Islands
Tel.: 949-5122
Fax: 949-7920
PEAKINVEST FUNDING: Proofs of Claim Filing Deadline Is Sept. 22
---------------------------------------------------------------
Peakinvest Funding Ltd.'s creditors are required to submit
proofs of claim by Sept. 22, 2006, to the company's liquidators:
Westport Services Ltd.
P.O. Box 1111
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 22 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Peakinvest Funding's shareholders agreed on July 27, 2006, for
the company's voluntary liquidation under Section 135 of the
Companies Law (2004 Revision) of the Cayman Islands.
Parties-in-interest may contact:
Westport Services Ltd.
Bonnie Willkom
P.O. Box 1111
Grand Cayman, Cayman Islands
Tel: 949-5122
Fax: 949-7920
SAIL APPEF: Last Day to File Proofs of Claim Is September 21
------------------------------------------------------------
Sail Appef I GP Limited's creditors are required to submit
proofs of claim by Sept. 21, 2006, to the company's liquidator:
Q&H Nominees Ltd.
Third Floor, Harbour Centre
P.O. Box 1348 GT
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 21 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Sail Appef's shareholders agreed on July 28, 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:
Quin & Hampson (Ref: JAF)
c/o P.O. Box 1348GT
Grand Cayman, Cayman Islands
Tel: (+1) 345 949 4123
Fax: (+1) 345 949 4647
SANGONA INSURANCE: Proofs of Claim Filing Deadline Is Sept. 21
--------------------------------------------------------------
Sangona Insurance Ltd.'s creditors are required to submit proofs
of claim by Sept. 21, 2006, to the company's liquidators:
Ian Wight
Stuart Sybersma
Deloitte, P.O. Box 1787 GT
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 21 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Sangona Insurance's sole shareholder decided on Aug. 1, 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:
Christopher Rowland
Deloitte
P.O. Box 1787 GT
Grand Cayman, Cayman Islands
Tel: (345) 949 7500
Fax: (345) 949 8258
TAMARIN II: Creditors Must File Proofs of Claim by Sept. 21
-----------------------------------------------------------
Tamarin II Lease Finance Ltd.'s creditors are required to submit
proofs of claim by Sept. 21, 2006, to the company's liquidators:
John Cullinane
Derrie Boggess
c/o Walkers SPV Limited
P.O. Box 908, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 21 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Tamarin II's sole shareholder decided on Aug. 8, 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:
John Cullinane
c/o Walkers SPV Limited, Walker House
P.O. Box 908, George Town
Grand Cayman, Cayman Islands
Tel: (345) 914-6305
TOTO LTD: Proofs of Claim Must be Filed by October 4
----------------------------------------------------
Toto Ltd.'s creditors are required to submit proofs of claim by
Oct. 4, 2006, to the company's liquidator:
Paolo Giacomelli,
MBT Trustees Ltd.
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Oct. 4 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Toto Ltd.'s shareholders agreed on July 4, 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:
Paolo Giacomelli
P.O. Box 30622 S.M.B.
Grand Cayman, Cayman Islands
Tel: 945-8859
Fax: 949-9793/4
TRISUN OFFSHORE: Proofs of Claim Must be Filed by September 30
--------------------------------------------------------------
Trisun Offshore Fund, Ltd's creditors are required to submit
proofs of claim by Sept. 30, 2006, to the company's liquidators:
Kenneth M. Krys
Joanna Chong
RSM Cayman Islands
P.O. Box 1370, George Town
Grand Cayman, Cayman Islands
Creditors who are not able to comply with the Sept. 30 deadline
won't receive any distribution that the liquidator will make.
Creditors are required to present proofs of claim personally or
through their solicitors.
Trisun Offshore's shareholders agreed on July 26, 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:
Kenneth M. Krys
Joanna Chong
P.O. Box 1370, George Town
Grand Cayman, Cayman Islands
Tel.: (345) 949-7100
Fax: (345) 949-7120
=========
C H I L E
=========
FALCONBRIDGE LTD: Proposes Rio Cuervo Project in Chilean Region
---------------------------------------------------------------
Local papers say that Falconbridge has presented a 600-megawatt
Rio Cuervo hydroelectric project in Chile's Region X to
Direccion General de Aguas, the water management agency in
Chile.
The move was Falconbridge's first "bureaucratic step" for the
project, Business News Americas says. It will be followed by
the presentation of the environmental impact study for
evaluation.
The project will cost US$600 million and will be built in Aysen.
It would supply energy to Chile's central grid, BNamericas
reports.
About Falconbridge
Headquartered in Toronto, Ontario, Falconbridge Limited
(TSX:FAL.LV)(NYSE: FAL) -- http://www.falconbridge.com/-- is a
leading copper and nickel company with investments in fully
integrated zinc and aluminum assets. Its primary focus is the
identification and development of world-class copper and nickel
orebodies. It employs 14,500 people at its operations and
offices in 18 countries. The Company owns nickel mines in
Canada and the Dominican Republic and operates a refinery and
sulfuric acid plant in Norway. It is also a major producer of
copper (38% of sales) through its Kidd mine in Canada and its
stake in Chile's Collahuasi mine and Lomas Bayas mine. Its
other products include cobalt, platinum group metals, and zinc.
* * *
Falconbridge's CDN$150 million 5% convertible and callable
bonds due April 30, 2007, carry Standard & Poor's BB+ rating.
===============
C O L O M B I A
===============
HEXION SPECIALTY: Rationing Formaldehyde in North America
---------------------------------------------------------
Hexion Specialty Chemicals disclosed that its Phenolics and
Forest Products Division declared force majeure for formaldehyde
and formaldehyde-derived products in North America.
The declaration followed the Company being placed on allocation
for methanol, as two major methanol producers declared force
majeure.
The Company also disclosed that with the raw material
limitations, it is allocating its available supply of
formaldehyde and formaldehyde derived products in North America
among its customers during the force majeure period, dependent
on logistics. Methanol is a key raw material in the production
of formaldehyde and formaldehyde-derived products used in a wide
range of engineered wood resins, specialty wood adhesives and
other applications.
The Company further disclosed that it is working with all
impacted customers to mitigate the effects of the supply
interruption on its operations and customer deliveries and that
the duration of the force majeure period and the potential
financial impact of the situation on the Company are still
unknown.
Based in Columbus, Ohio, Hexion Specialty Chemicals Inc.
-- http://hexionchem.com/-- makes thermosetting resins (or
thermosets). Thermosets add a desired quality (heat resistance,
gloss, adhesion) to a number of different paints and adhesives.
Hexion also makes formaldehyde and other forest product resins,
epoxy resins, and raw materials for coatings and inks. The
Company has 86 manufacturing and distribution facilities in 18
countries. In Latin America, the company has operations in
Argentina, Brazil and Colombia.
* * *
As reported in the Troubled Company Reporter on May 4, 2006,
Standard & Poor's Ratings Services assigned its 'B+' rating and
its recovery rating of '3' to Hexion Specialty's US$1.675
billion senior secured term loan and synthetic letter of credit
facilities.
The rating on the existing US$225 million revolving credit
facility was lowered to 'B+' with a recovery rating of '3', from
'BB-' with a recovery rating of '1', to reflect the similar
security package as the new term loan and synthetic letter of
credit facility.
The ratings on the existing senior second secured notes were
raised to 'B', with a recovery rating of '3', from 'B-' with a
recovery rating of '5'. The ratings on the senior second
secured notes reflect the amount of priority claims of the
revolving facility and the first-lien term loan lenders.
At the same time, Standard & Poor's affirmed its 'B+' corporate
credit rating on Hexion and revised the outlook to stable from
negative.
===================================
D O M I N I C A N R E P U B L I C
===================================
FALCONBRIDGE: Xtrata Acquires Additional 4.9% Share in Company
--------------------------------------------------------------
Xstrata said in a statement that it has obtained an additional
4.9% stake at Falconbridge Ltd.
According to the statement, Xstrata started compulsory
acquisition to obtain 100% of Falconbridge.
Business News Americas reports that Xstrata acquired additional
interest after the 18.6 million shares in Falconbridge were
deposited before the former's takeover offer expired on Aug. 25.
Xstrata said in a statement that it now owns over 369 million
common shares, or approximately 97.1% of issued and outstanding
shares on a fully diluted basis. It has started compulsory
purchase of the remainder at the same price of CDN$62.50 each.
The purchase of Falconbridge shares gives Xstrata significant
exposure to nickel and potential synergies between the two
firm's important copper assets in South America, BNamericas
states.
About Falconbridge
Headquartered in Toronto, Ontario, Falconbridge Limited
(TSX:FAL.LV)(NYSE: FAL) -- http://www.falconbridge.com/-- is a
leading copper and nickel company with investments in fully
integrated zinc and aluminum assets. Its primary focus is the
identification and development of world-class copper and nickel
orebodies. It employs 14,500 people at its operations and
offices in 18 countries. The Company owns nickel mines in
Canada and the Dominican Republic and operates a refinery and
sulfuric acid plant in Norway. It is also a major producer of
copper (38% of sales) through its Kidd mine in Canada and its
stake in Chile's Collahuasi mine and Lomas Bayas mine. Its
other products include cobalt, platinum group metals, and zinc.
* * *
Falconbridge's CDN$150 million 5% convertible and callable
bonds due April 30, 2007, carry Standard & Poor's BB+ rating.
=============
E C U A D O R
=============
PETROECUADOR: Oil Cleanup at Cuyabeno Park to Cost US$8 Mil.
------------------------------------------------------------
Galo Chiriboga -- the head of Petroecuador, the Ecuadorian
state-run oil firm -- told Dow Jones Newswires that oil cleanup
at the Cuyabeno National Park could cost up to US$8 million.
As reported in the Troubled Company Reporter-Latin America on
Aug. 29, 2006, Mr. Chiriboga said the oil spill in the Amazon
region of Ecuador has caused damage to the Cuyabeno Park. It
was suspected that the spill was caused by sabotage. "We've
detected damage in Cuyabeno Park and investigations so far
indicate that this was effectively sabotage," Mr. Chiriboga
said. Petroecuador directors visited the Amazon region to ask
local authorities to complete their investigation so that those
responsible for the damage can be prosecuted. Petroecuador
technicians said that despite efforts to control the situation,
some of the oil from the 500 spilled barrels reached the park's
first lake, which is a wildlife reserve.
Jaime Crow, vice president of Petroecuador unit Petroproduccion,
told Dow Jones that local residents committed the sabotage to
demand state compensation for environmental damage.
Insurance will cover the costs and that authorities will hold a
tender in the coming days for the clean-up contract, Mr.
Chiriboga told reporters on Monday.
Lucy Ruiz, the environmental manager of Petroecuador, told Dow
Jones that the oil spill damaged at least one hectare of the
Cuyabeno Park.
Dow Jones relates that Mr. Chiriboga is forming a team to
monitor clean-up efforts in Cuyabeno Park.
Mr. Chiriboga told Dow Jones, "We are looking for a group of
citizens to keep watch over the results of the clean-up, and
likewise over the investigations of these attacks, which are
common in the area."
Mr. Chiriboga said that he will also appoint a lawyer
specialized in environmental issues to work with police
officials, to assure that the perpetrators can be prosecuted,
Dow Jones states.
According to the report, the oversight team will comprise those
involved in environmental protection activities like:
-- ex-Environmental Minister Yolanda Kakabadse, and
-- ecologist Esperanza Martinez of the non-governmental
organization Accion Ecologica.
Petroecuador, according to published reports, is faced with
cash-problems. The state-oil firm has no funds for maintenance,
has no funds to repair pumps in diesel, gasoline and natural gas
refineries, and has no capacity to pay suppliers and vendors.
The government refused to give the much-needed cash alleging
inefficiency and non-transparency in Petroecuador's dealings.
=====================
E L S A L V A D O R
=====================
BANCO CUSCATLAN: Posts US$16MM First Half Consolidated Profit
-------------------------------------------------------------
El Salvador's Banco Cuscatlan's consolidated profit increased
US$16 million in the first half of 2006, from the US$15.9
million recorded in the same period of 2005, Business News
Americas reports.
Banco Cuscatlan posted in its Web site these results for the
first half of 2006:
-- net interest income rose 11% to US$46.0 million;
-- provisions increased to US$12.7 million in the first half
of 2006, compared with US$6.17 million in the first half
of 2005;
-- net operating income fell 24% to US$20.7 million;
-- net loans grew 13% to US$1.66 billion;
-- deposits remained flat at US$1.59 billion;
-- assets increased 7% to US$2.61 billion;
-- liabilities rose 7% to US$2.30 billion;
-- market share by assets is 23.9%; and
-- market share by loans is at 22.6%.
According to BNamericas, Banco Cuscatlan's consolidated
financial statements include results from:
-- card issuer Tarjetas de Oro,
-- stockbrokerage Valores Cuscatlan,
-- factoring company Factoraje Cuscatlan,
-- money exchange Corfinge SA,
-- remittances company Corfinge Inc, and
-- leasing company Cuscatlan.
Banco Cuscatlan and its units form part of Inversiones
Financieras Cuscatlan, which also controls Sisa -- El Salvador's
largest insurer -- and AFP Confia, a pension fund manager.
Panama's Corporacion Union de Bancos Cuscatlan Internacional is
the conglomerate's holding firm.
* * *
As reported in the Troubled Company Reporter-Latin America on
July 4, 2006, Standard & Poor's Ratings Services assigned these
ratings on Banco Cuscatlan S.A.:
-- credit rating: BB/Stable/B;
-- counterparty credit rating: BB/Stable/B; and
-- certificate of deposit: BB/B.
=================
G U A T E M A L A
=================
TECO ENERGY: Earns US$62.5 Million in 2006 Second Quarter
---------------------------------------------------------
TECO Energy, Inc. reported second quarter net income of
US$62.5 million, compared to US$95.2 million in the second
quarter of 2005.
Net income for the quarter reflects a US$23.9 million after-tax
reduction of second quarter earnings from the estimated
reduction in benefits from the sale of the ownership interests
in the synthetic fuel production facilities. This reduction in
the potential benefits from the production of synthetic fuel was
a result of oil prices that were above the threshold level for
the phase-out of the tax credits from synthetic fuel.
Second quarter net income from continuing operations was
US$61.1 million, compared to US$12.4 million in the same period
in 2005. Results from continuing operations also reflect the
US$23.9 million after-tax reduction in earnings from the
estimated reduction in benefits from the production of synthetic
fuel.
Year-to-date net income was US$117.7 million in 2006, compared
to US$127.9 million in the same period in 2005. Year-to-date
net income reflects a US$34.8 million after- tax reduction in
earnings from the estimated reduction in benefits from the sale
of the ownership interests in the synthetic fuel production
facilities due to high oil prices.
Year-to-date net income from continuing operations was
US$116.3 million, compared to US$63.9 million in the same period
in 2005. Results from continuing operations also reflect the
US$34.8 million after-tax reduction in earnings from the
estimated reduction in benefits from the production of synthetic
fuel.
TECO Energy Chairman and CEO Sherrill Hudson said, "Our results
this quarter clearly demonstrate the benefits of the debt
retirements completed last year, although high oil prices
reduced the benefits from the sale of TECO Coal's synthetic fuel
production facilities this year. Our Florida utilities
continued to enjoy steady customer growth and more normal
weather, but increased spending for system reliability and
customer service enhancements at Tampa Electric are offsetting
the growth this year. TECO Guatemala is producing strong
results despite the expected higher tax rate. TECO Transport
continues to benefit from better markets and pricing especially
at the river business, and the conventional coal market
fundamentals remain strong."
Mr. Hudson went on to say, "In Jan., we provided our earnings
outlook for 2006 in a range of US$1.25 to US$1.35 per share from
continuing operations, excluding all charges and gains.
Included in this outlook were about US$0.40 per share of
benefits from synthetic fuel production, which did not reflect a
reduction in those benefits from high oil prices. Recent global
events have increased the likelihood that oil prices for the
year could be at a level that makes it uneconomic to produce
synthetic fuel. Because of these factors we announced our
decision almost two weeks ago to idle synthetic fuel
production."
"We're updating our 2006 earnings outlook today to remove the
potential earnings from synthetic fuel and effectively assume
breakeven results for our seven months of production. As we've
shown you in the past, when we adjust our original 2006
expectations to reflect synthetic fuel at the breakeven point,
which is in effect the same as excluding benefits or costs of
synthetic fuel, we would expect results to be in a range of
US$0.85 to US$0.95. At this point, however, we now expect
improved results from other segments of the business of about
US$0.05 per share, resulting in a revised 2006 earnings outlook
of US$0.90 to US$1.00 per share, assuming that oil prices limit
the results from the production of synthetic fuel to breakeven
results," Mr. Hudson added.
"On the cash front, as we've indicated in the past that, with or
without synthetic fuel, we expect to have sufficient cash and
the flexibility in the timing of certain cash expenditures to be
in position to fully repay our TECO Energy 2007 debt
maturities," Mr. Hudson concluded.
Executive Vice President and Chief Financial Officer Gordon
Gillette stated, "For some time, TECO Energy has been providing
investors with non-GAAP earnings, which have excluded certain
charges and gains but included synthetic fuel production, to
help provide investors a clear view of the company's ongoing
performance. Due to the idling of the synthetic fuel production
facilities, we will now provide a second non-GAAP measure that
excludes all costs or benefits related to the production of
synthetic fuel. This new measure will provide investors
additional information to assess the company's results and
future earnings potential without the production of synthetic
fuel. We will now provide both measures to allow comparison of
our results both with and without synthetic fuel. As we have in
the past, we'll continue to provide our cash outlook with and
without synthetic fuel as well."
Outlook
The company expects that 2007 earnings, assuming no production
of synthetic fuel, will be in a range between the revised 2006
results guidance and the previously communicated 2008 earnings
target. In April, TECO Energy provided a target for 2008
earnings of at least 2005's non-GAAP results of US$1.23 per
share. This target assumed no reduction in cash generated from
the production of synthetic fuel in 2006 or 2007, continued
strength in coal prices and margins at TECO Coal, and operations
and maintenance spending increases at inflationary levels after
2006 at Tampa Electric.
The 2007 expectations are based on continued customer and energy
sales growth at the utilities and operations and maintenance
expense increases at about inflationary levels. In 2007, TECO
Coal expects to sell between 10 and 10.5 million tons of coal at
average pretax margins near those being experienced in 2006.
TECO Transport expects continued strong demand and rates similar
to the 2006 level in the river barge and oceangoing businesses
in 2007. TECO Guatemala expects lower interest expense on the
non-recourse debt associated with its power plants, resulting
from normal amortization and from recently negotiated lower
interest rates. TECO Energy parent expects lower interest
expense as a result of the retirement of the US$357 million of
debt that matures in 2007.
About TECO
TECO Energy, Inc. -- http://www.tecoenergy.com/-- is an
integrated energy-related holding company with regulated utility
businesses, complemented by a family of unregulated businesses.
Its principal subsidiary, Tampa Electric Company, is a regulated
utility with both electric and gas divisions (Tampa Electric and
Peoples Gas System). Other subsidiaries are engaged in
waterborne transportation, coal and synthetic fuel production
and electric generation and distribution in Guatemala.
* * *
As reported in the Troubled Company Reporter on Jan. 9, 2006,
Fitch Ratings has affirmed the senior unsecured ratings of TECO
Energy, Inc. at 'BB+' and subsidiary Tampa Electric Company at
'BBB+'. The Rating Outlooks for both TECO and Tampa are Stable.
===============
H O N D U R A S
===============
* HONDURAS: Will Launch Auction on Plant Construction
-----------------------------------------------------
Honduras' President Manuel Zelaya will launch in a few days the
first international tender for the construction of a plant as
well as the purchase of fuels, Prensa Latina reports.
Prensa Latina relates that the plant to be built in Colon
province Puerto Castilla. The plant could serve to import about
14 million barrels a year.
Prensa Latina notes that the proposal aims to ease tariffs due
to the increasing prices of oil.
However, foreign entities like US Esso, Texaco and Dutch Shell
threatened not to participate in the auction, saying that the
government of Honduras will become the only importer and would
create a monopoly, Prensa Latina says.
According to Prensa Latina, Texaco and Esso control 50% of the
market while Shell holds 11.78%. The rest belongs to other
firms.
Prensa Latina underscores that the auction has been delayed from
the unexpected decision of the foreign companies to refuse
joining.
Those ventures are doing everything to boycott the sale because
it is a clean process that will re-organize the system to
benefit Honduras' development, President Zelaya asserted to
Prensa Latina.
The report states that Henry Arevalo, executive president of the
Honduran oil company Distribuidora e Importadora de Petroleos
aka DIPPSA, also disclosed the company's sale for US$100
million.
DIPPSA has 180 gas stations in Honduras.
DIPPSA will be offered, because its actions won't be profitable
once the Honduran state is the single operator in fuel imports,
Mr. Arevalo told Prensa Latina.
* * *
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
=============
DYOLL INSURANCE: Farmers Fighting with Liquidators over Payments
----------------------------------------------------------------
Farmers who had insured their crops with Dyoll Insurance Company
are fighting with the liquidators over the payments, Radio
Jamaica reports.
As reported in the Troubled Company Reporter-Latin America on
Aug. 21, 2006, coffee farmers received a total of J$204 million
from the Supreme Court of Jamaica, after the collapse of Dyoll
Insurance Company, the farmer's insurer. The payments to the
farmers, however, were delayed after liquidator John Lee of
PriceWaterhouseCoopers was granted leave for appeal. Meanwhile,
the farmers whose crops were damaged by Hurrican Ivan in
September 2004 received on Aug. 11 J$100 million interim payment
from Jamaica's agriculture ministry. Robert Clarke, the
agriculture minister, handed these cheques to the farmers: one
J$15 million cheque to the Coffee Industry Board, and two others
totaling J$85 million to the trustees of the Coffee Industry
Insurance Fund. Minister Clarke said that the individual claims
are being reconciled and the funds will be distributed. About
6,000 coffee farmers will benefit from the funds the Coffee
Industry Board will administer. The farmers had waited for
almost 24 months for the funds. The Coffee Industry Board was
collaborating with stakeholders in the industry to determine
benefits to farmers, said Graham Dunkley, the organization's
director-general. However, Minister Clarke said that full
payments would have to wait for court proceedings.
The farmers went to the Coffee Industry Board on Monday morning
to demand their payment, Radio Jamaica notes. After a brief
demonstration, they met with the trustees of the insurance plan.
Radio Jamaica relates that the farmers have waited two years for
the compensation for damage that the Hurricane Ivan caused.
According to the report, the government is close to providing
the farmers with an interim payment, as agreed.
Derrick Simon, the Farmer Representative for the Blue Mountain
Coffee Farmers, told Radio Jamaica at the end of the meeting
with the trustees that the group had been assured that an
interim payment will be made beginning next week.
Radio Jamaica underscores that Mr. Simon said, "The cheques will
be ready by the very latest next week Friday but they hope
distribution will take place from as early as next Wednesday."
The payments will be made directly to the marketing firms, who
will be giving farmers US$20 for each box of coffee claimed,
Radio Jamaica, says, citing Mr. Simon.
"It's going to actually going to be US$96 million that will be
paid out. The major discrepancies which we had was the
reduction from the US$180 million to US$60 million to US$40
million in grants," Mr. Simon told Radio Jamaica.
The Financial Services Commission of Jamaica took over control
of Dyoll Insurance in Mar. 7, 2005, in order to establish the
true position of the Company, address the matter of settlement
to its claimants and ensure that its policies will remain in
force after a high level of insurance claims were levelled on
the company as a result of the hurricane Ivan. Kenneth Tomlison
was appointed temporary manager. Jamaica's Supreme Court
ordered for the distribution of a US$653 million fund held by
the FSC in accordance with the Insurance Act 2001, section
59, which says that the prescribed deposit, on the winding up of
an insurance company, should be applied first to settle the
claims of local policyholders.
===========
M E X I C O
===========
AMERICAN AXLE: Earns US$20.4 Million in 2006 Second Quarter
-----------------------------------------------------------
American Axle & Manufacturing Holdings, Inc., reported
US$20.4 million of earnings for the second quarter of 2006.
This compares to earnings of US$18.9 million in the second
quarter of 2005.
AAM's second quarter earnings in 2006 reflect the impact of a
one-time non-cash charge of US$2.4 million to write off
unamortized debt issuance costs related to the cash conversion
of approximately US$128.4 million of AAM's Senior Convertible
Notes due 2024. An additional US$21.6 million of these Notes
remain outstanding as of June 30, 2006. AAM's second quarter
earnings in 2006 also reflect the impact of an unfavorable tax
adjustment of US$2.6 million related to the settlement of prior
year foreign jurisdiction tax liabilities. AAM's earnings in
the second quarter of 2005 included a charge of US$8.9 million
related to voluntary lump-sum separation payments accepted by
162 hourly associates.
Net sales in the second quarter of 2006 were US$874.6 million as
compared to US$867.7 million in the second quarter of 2005.
Non-GM sales in the quarter were US$204.5 million and now
represent 23% of AAM's total sales. On a year-to- date basis
through the second quarter of 2006, AAM's non-GM sales have
increased US$53.9 million or 15% over the prior year.
"In the second quarter of 2006, AAM benefited from strong demand
for GM's full-size utility vehicles and the increase in our
content appearing on these outstanding new vehicles. We look
forward to supporting the launch of GM's new full-size pick-ups
later this year," said American Axle & Manufacturing Co-Founder,
Chairman of the Board & CEO, Richard E. Dauch.
"AAM is also looking forward to the launch of production at our
new regional manufacturing facilities in Changshu, China and
Olawa, Poland. With the addition of these new low-cost
manufacturing facilities, as well as the continuing development
of our products supporting passenger car and crossover vehicle
applications, AAM is well positioned for profitable growth and
diversification in 2007 and beyond."
AAM sales in the quarter reflect an estimated 5% increase in
customer production volumes for the major full-size truck and
SUV programs it currently supports for GM and The Chrysler Group
as compared to the second quarter of 2005. AAM estimates that
customer production volumes for its mid-sized pick- up truck and
SUV programs were down approximately 23% in the quarter on a
year-over-year basis.
AAM's content per vehicle increased by approximately 3% to
US$1,216 in the second quarter of 2006 as compared to US$1,185
in the second quarter of 2005. This increase is due primarily
to the impact of new AAM content appearing on GM's full-size
utility vehicles, as well as production mix shifts favoring
AAM's axles and driveline systems for the Dodge Ram heavy-duty
series pick-ups and the four-wheel-drive HUMMER H3 in the mid-
size SUV segment.
Gross margin in the second quarter of 2006 was 10.3% as compared
to 9.8% in the second quarter of 2005. Operating income was
US$40.5 million or 4.6% of sales in the quarter as compared to
US$36.4 million or 4.2% of sales in the second quarter of 2005.
Net sales in the first half of 2006 were US$1.7 billion,
approximately the same as the first half of 2005. Gross margin
was 9.0% in the first half of 2006 as compared to 9.4% for the
first half of 2005. Operating income for the first half of 2006
was US$55.5 million or 3.2% of sales as compared to US$62.1
million or 3.7% of sales for the first half of 2005.
AAM's gross margin and operating margin performance in the first
half of 2006 reflects the impact of higher non-cash expenses
related to depreciation, amortization, pension and
postretirement benefits and stock-based compensation. Higher
fringe benefit costs, including supplemental unemployment
benefits paid to certain of AAM's hourly associates, also
pressured margins in the first half of 2006.
Recent Developments
On June 8, 2006, AAM received financing commitments for a
US$200 million senior unsecured term loan. Proceeds from this
financing, which closed on June 28, 2006, will be used for
general corporate purposes and to finance payments made upon the
cash conversion of American Axle & Manufacturing Holdings, Inc.
Senior Convertible Notes due 2024.
AAM also disclosed on June 8, 2006 that it expects its full year
2006 earnings to be in the range of US$1.00 - US$1.10 per share
to reflect the anticipated impact of the term loan financing.
On May 31, 2006, AAM reported that it had purchased a
manufacturing building in Olawa, Poland. In addition, AAM
purchased approximately 75 acres of land in an industrial park
adjacent to the building for future development. AAM has
designed a new 170,000 square-foot, state-of-the-art
manufacturing plant for that site, to accommodate future
manufacturing requirements. Operations will begin in late 2006.
About American Axle
American Axle & Manufacturing -- http://www.aam.com/--
manufactures, engineers, designs and validates driveline and
drivetrain systems and related components and modules, chassis
systems and metal-formed products for light trucks, sport
utility vehicles and passenger cars. In addition to locations
in the United States, AAM also has offices or facilities in
Brazil, China, England, Germany, India, Japan, Mexico, Poland,
Scotland and South Korea.
* * *
As reported in the Troubled Company Reporter on Aug. 17, 2006,
Standard & Poor's Ratings Services assigned its 'BB' rating to
the new US$50 million senior unsecured term loan of American
Axle & Manufacturing Inc. (BB/Negative/--).
The corporate credit ratings on American Axle and parent
company, American Axle & Manufacturing Holdings Inc., are 'BB'.
The rating outlook is negative. The company has about US$717
million of lease-adjusted debt and US$425 million of underfunded
employee benefit liabilities.
BERRY PLASTICS: Earns US$9.7 Mil. in Second Quarter Ended July 1
----------------------------------------------------------------
Berry Plastics Corp.'s parent company, BPC Holding Corp.,
filed a consolidated second quarter financial statements for the
three months ended July 1, 2006, with the US Securities and
Exchange Commission.
Net sales increased 33% to US$375.1 million for the quarter from
US$282.9 million for the prior quarter. This US$92.2 million
increase included approximately US$14.6 million or 5% due to the
pass through of higher resin costs to the Company's customers,
increased base business volume of approximately US$2.3 million
or 1%, and acquisition volume of US$75.3 million or 27%.
The Company's resin pounds sold, excluding acquired businesses,
increased by 1% in the quarter over the prior quarter. Rigid
open top net sales increased US$18.3 million from the prior
quarter to US$222.8 million for the quarter.
The increase in rigid open top net sales was primarily a result
of increased selling prices and base business volume growth in
several of the division's product lines with significant volume
growth in the thermoformed polypropylene drink cup line of 26%.
Rigid closed top net sales increased US$73.9 million from the
prior quarter to US$152.3 million for the quarter.
The increase in rigid closed top net sales can be primarily
attributed to net sales in the quarter from the Kerr Acquisition
of US$75.3 million and increased selling prices on base business
partially offset by softness in the overcaps and base closure
businesses.
Gross profit increased by US$26.4 million to US$75.8 million
(20% of net sales) for the quarter from US$49.4 million (17% of
net sales) for the prior quarter. This 53% dollar increase
includes the combined impact of the additional sales volume,
productivity improvement initiatives, the Company's financial
and mechanical resin hedging programs, and the timing effect of
the 5% increase in net selling prices due to higher resin costs
passed through to its customers.
The increase in gross profit percentage from 17% in the prior
quarter to 20% in the quarter can be primarily attributed to the
5% increase in net selling prices due to higher resin costs
passed through to the Company's customers partially offset by
increased raw material costs as well as improvements in the
margins of acquired businesses.
In addition, in the prior quarter, an expense of US$700,000 was
charged to cost of goods sold related to the write-up and
subsequent sale of Kerr's finished goods inventory to fair
market value in accordance with purchase accounting.
Significant productivity improvements were made since the prior
quarter, including the installation of state-of-the-art
equipment at several of the Company's facilities. These
productivity improvements were more than offset by increased
costs from inflation such as higher energy prices.
Selling expenses increased by US$2.1 million to US$9.7 million
for the quarter from US$7.6 million for the prior quarter
principally as a result of increased selling expenses associated
with higher sales, including the Kerr Acquisition, partially
offset by cost reduction efforts.
General and administrative expenses increased by US$7.5 million
from US$9.5 million for the prior quarter to US$17.0 million for
the quarter primarily as a result of general and administrative
expenses from the Kerr Acquisition, increased accrued employee
bonus expense, and US$1.0 million of stock option expense
recorded in the quarter.
Research and development expenses increased by US$500,000 over
the prior quarter primarily due to the Kerr Acquisition and
increased development efforts.
Amortization of intangibles increased US$3.3 million from the
prior quarter to US$5.3 million in the quarter primarily due to
the amortization of intangible assets from the Kerr Acquisition.
Transition expenses related to integrating acquired businesses
were US$2.7 million and US$400,000 in the quarter and prior
quarter, respectively. This increase of US$2.3 million is
primarily due to costs associated with the Kerr Acquisition in
the quarter.
Net income was US$9.7 million for the quarter compared with
US$1.8 million for the prior quarter.
At July 1, 2006, the Company's balance sheet showed
US$1,673,286,000 in total assets, US$1,445,617,000 in total
liabilities, and US$227,669,000 in total stockholders' equity.
Kerr Acquisition
Berry acquired June 3, 2005, Kerr Group, Inc., for aggregate
consideration of approximately US$454.8 million, including
direct costs associated with the acquisition.
The operations from the Kerr Acquisition are included in Berry's
operations since the acquisition date. The purchase price was
financed through additional term loan borrowings under an
amendment to Berry's senior secured credit facility and cash on
hand.
Full-text copies of the Company's financials are available for
free at http://ResearchArchives.com/t/s?1080
Based in Evansville, Indiana, Berry Plastics Corp. --
http://www.berryplastics.com/-- is a leading manufacturer and
marketer of rigid plastic packaging products. Berry Plastics
provides a wide range of rigid open top and rigid closed top
packaging as well as comprehensive packaging solutions to over
12,000 customers, ranging from large multinational Corp.s to
small local businesses. The company has 25 manufacturing
facilities worldwide, one in Mexico, and has more than 6,800
employees.
* * *
As reported in the Troubled Company Reporter on Aug. 7, 2006,
Moody's Investors Service confirmed the B3 rating on Berry
Plastics Corp.'s US$335 million 10.75% senior subordinated
notes, due July 15, 2012.
As reported in the Troubled Company Reporter on July 31, 2006,
Standard & Poor's Ratings Services revised its CreditWatch
implications on the 'B+' corporate credit rating on Berry
Plastics Corp. to negative from developing.
FORD MOTOR: Executive Committee Chairman Robert E. Rubin Resigns
----------------------------------------------------------------
Ford Motor Company disclosed that Robert E. Rubin, director,
chairman of the Executive Committee and member of the Office of
the Chairman of Citigroup Inc., has resigned from the Company's
Board of Directors. Mr. Rubin joined the board in 2000.
In a letter to Bill Ford, Mr. Rubin said, "As the Board
undertakes its upcoming review of strategic options, Citigroup's
multi-faceted relationship with Ford could raise a question
whether my relationship with Ford and Citigroup creates an
appearance of conflict. Although no conflict currently exists
and while I would have liked to remain involved, I have with
great regret concluded that I should resign from the Board at
this time."
Commenting on the announcement, Bill Ford, chairman and chief
executive officer, said, "I greatly appreciate the many valuable
contributions Bob has made to Ford Motor Company during his six-
year tenure. He brought strategic thinking to every situation
and has been a wise and generous counselor to me and to the
company. However, I understand and respect Bob's prudent
decision to resign as we continue to explore future strategic
options."
Headquartered in Dearborn, Michigan, Ford Motor Company
(NYSE: F) -- http://www.ford.com/-- manufactures and
distributes automobiles in 200 markets across six continents.
With about 300,000 employees and more than 100 plants worldwide,
the company's core and affiliated automotive brands include
Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury
and Volvo. Its automotive-related services include Ford Motor
Credit Company.
* * *
As reported in the Troubled Company Reporter on Aug. 22, 2006,
Dominion Bond Rating Service placed long-term debt rating of
Ford Motor Company Under Review with Negative Implications
following announcement that Ford will sharply reduce its North
American vehicle production in 2006. DBRS lowered on
July 21, 2006, Ford Motor Company's long-term debt rating to B
from BB, and lowered its short-term debt rating to R-3 middle
from R-3 high. DBRS also lowered Ford Motor Credit Company's
long-term debt rating to BB(low) from BB, and confirmed Ford
Credit's short-term debt rating at R-3(high).
Fitch Ratings also downgraded the Issuer Default Rating of Ford
Motor Company and Ford Motor Credit Company to 'B' from 'B+'.
Fitch also lowered the Ford's senior unsecured rating to
'B+/RR3' from 'BB-/RR3' and Ford Credit's senior unsecured
rating to 'BB- /RR2' from 'BB/RR2'. The Rating Outlook remains
Negative.
Standard & Poor's Ratings Services also placed its 'B+' long-
term and 'B-2' short-term ratings on Ford Motor Co., Ford Motor
Credit Co., and related entities on CreditWatch with negative
implications.
As reported in the Troubled Company Reporter on July 24, 2006,
Moody's Investors Service lowered the Corporate Family and
senior unsecured ratings of Ford Motor Company to B2 from Ba3
and the senior unsecured rating of Ford Motor Credit Company to
Ba3 from Ba2. The Speculative Grade Liquidity rating of Ford
has been confirmed at SGL-1, indicating very good liquidity over
the coming 12 month period. The outlook for the ratings is
negative.
GRUPO IUSACELL: Executes Convenio Concursal With Creditors
----------------------------------------------------------
Grupo Iusacell, S.A. de C.V. reported, as part of its plan of
reorganization (convenio concursal) process, the execution of
the convenio concursal by a group of creditors representing
approximately 90% of the company's total debt, which the company
expects, with the consent of the conciliator appointed by the
Federal Institute Specializing in Concursos Mercantiles
(Instituto Federal de Especialistas en Concursos Mercantiles
-- IFECOM), to submit for approval to a Mexican judge (Juzgado
Septimo de Distrito en Materia Civil del Primer Circuito).
Upon the court's approval of that submission, Iusacell's
restructuring process will have been completed.
In order to comply with all the requirements of the concurso
mercantil process and conclude the process as quickly as
possible, Iusacell is closely cooperating with Lic. Enrique
Estrella Menendez, the conciliator appointed by IFECOM in
connection with the Company's restructuring proceedings.
The convenio concursal among Iusacell and its creditors was
executed in accordance with its previously announced
restructuring agreement, which will consist of the exchange of
its US$350 million 14.25% notes due 2006 for an aggregate
principal amount of US$175 million of new notes due 2013 that
will bear interest at an annual rate of 10% -- with semi-annual
interest payments in arrears, including the option for Iusacell
to capitalize up to 40% of each interest payment. The
restructuring agreement also includes the cancellation of any
default interest due and payable under the 2006 Notes.
Gustavo Guzman, the chief executive officer of Iusacell, said,
"We consider the signing of this plan of reorganization to be
not just a materialization of the agreement reached with our
creditors but an unprecedented achievement when compared to
similar Mexican restructurings -- not only because of its terms
but also the considerable approval obtained by our creditors."
About Grupo Iusacell
Headquartered in Mexico City, Mexico, Grupo Iusacell, S.A. de
C.V. (BMV: CEL) -- http://www.iusacell.com-- is a wireless
cellular and PCS service provider in Mexico with a national
footprint. Independent of the negotiations towards the
restructuring of its debt, Grupo Iusacell reinforces its
commitment with customers, employees and suppliers and
guarantees the highest quality standards in its daily operations
offering more and better voice communication and data services
through state-of-the-art technology, including its new 3G
network, throughout all of the regions in which it operate.
As of Dec. 31, 2005, Grupo Iusacell's stockholders' deficit
widened to MXN2,076,000,000 from a deficit of MXN1,187,000,000
at Dec. 31, 2004.
Grupo Iusacell filed for bankruptcy protection on June 18 under
Mexican Law to prevent creditors from disrupting its debt
restructuring talks. On July 14, 2006, Gramercy Emerging
Markets Fund, Pallmall LLC and Kapali LLC, owed an aggregate
amount of US$55,878,000 filed an Involuntary Chapter 11 Case
against Grupo Iusacell's operating subsidiary, Grupo Iusacell
Celular, S.A. de C.V. (Bankr. S.D.N.Y. Case No. 06-11599). Alan
M. Field, Esq., at Manatt, Phelps & Phillips, LLP, represents
the petitioners.
Iusacell Celular then filed for bankruptcy protection under
Mexican Law on July 18.
GRUPO IUSACELL: Posts MXP867MM Net Loss in 2006 Second Quarter
--------------------------------------------------------------
Grupo Iusacell, S.A. de C.V., generated MXP1,852 million of net
revenues in the second quarter of 2006, a 27% increase compared
to MXP1,460 million during the same period 2005. The increase
is primarily a result of growth in postpaid revenues as well as
higher revenues from value added services mainly attributable to
an increase in the subscriber base. Iusacell ended the second
quarter of 2006 with 2.0 million subscribers.
Iusacell registered a net loss of MXP867 million for the second
quarter of 2006, compared to a net loss of MXP34 million during
the same period in 2005. This loss is mainly a result of an
increase in integral financing costs affected mainly by the
exchange loss derived from the increase in exchange rates of the
peso against the dollar.
During the second quarter of 2006, total cost, increased by 46%
to MXP1,115 million as compared to MXP763 million in the second
quarter 2005. Operating expenses increased by 12% to MXP437
million, as compared to Ps US$389 million in the same period
2005.
The increase in the total cost during the second quarter 2006
mainly reflects the increase in:
a) handset subsidy;
b) the costs related to value added services and
interconnection costs as a result of the increase in
airtime traffic and subscribers;
c) technical expenses; and
d) concessions rights.
The increase in operating expenses during the second quarter
2006 mainly reflects an increase in administrative expenses
owing to the creation of regional sales and customer care
structures, offset by the reduction in advertising expenses.
Iusacell's operating income before depreciation and amortization
for the second quarter of 2006 was MXP300 million, a decrease of
3% as compared to MXP308 million during the same period the year
before.
During the second quarter of 2006, the Company made investments
of approximately US$17 million, mainly for the acquisition of
cellular equipment related to the expansion of coverage and
capacity of Iusacell's 3-G network and EV-DO services.
The Company continues with its debt restructuring process. In
this respect and in furtherance of the debt restructuring
process, the Company has commenced various proceedings for the
legal implementation of the agreements reached with majority of
its creditors, which we expect to be accomplished shortly.
As of July 2006, Iusacell's subscribers will now have
international data service for easy access to mobile
applications as a result of Iusacell's entering into a new
agreement with Sprint of the USA. The Sprint data roaming
agreement for coverage in North America is part of the
international expansion of Iusacell in 2006.
Iusacell is extending the network coverage for its clients
through data roaming agreements. Under the terms of this
agreement, users will be able to have easy access to email,
Internet and corporative applications in the United States using
selected cellular telephones, intelligent devices and broadband
mobile cards as if they were connected to the local network of
Iusacell.
About Grupo Iusacell
Headquartered in Mexico City, Mexico, Grupo Iusacell, S.A. de
C.V. (BMV: CEL) -- http://www.iusacell.com-- is a wireless
cellular and PCS service provider in Mexico with a national
footprint. Independent of the negotiations towards the
restructuring of its debt, Grupo Iusacell reinforces its
commitment with customers, employees and suppliers and
guarantees the highest quality standards in its daily operations
offering more and better voice communication and data services
through state-of-the-art technology, including its new 3G
network, throughout all of the regions in which it operate.
Grupo Iusacell filed for bankruptcy protection on June 18 under
Mexican Law to prevent creditors from disrupting its debt
restructuring talks. On July 14, 2006, Gramercy Emerging
Markets Fund, Pallmall LLC and Kapali LLC, owed an aggregate
amount of US$55,878,000 filed an Involuntary Chapter 11 Case
against Grupo Iusacell's operating subsidiary, Grupo Iusacell
Celular, S.A. de C.V. (Bankr. S.D.N.Y. Case No. 06-11599). Alan
M. Field, Esq., at Manatt, Phelps & Phillips, LLP, represents
the petitioners. Iusacell Celular then filed for bankruptcy
protection under Mexican Law on July 18.
GRUPO IUSACELL: Will Sue Gramercy for Insider Trading Violations
----------------------------------------------------------------
Grupo Iusacell SA will sue Gramercy Advisors, one of its
creditors, for violating insider-trading rules, according to a
report by local daily Reforma.
Luis Cervantes, the legal affairs representative of Iusacell,
told Reforma, "We have evidence that [Gramercy's] legal advisors
in Mexico illegally accessed information about [Iusacell] and
then bought bonds. It has acted totally in violation of US and
Mexican secrecy laws and we are preparing to formally accuse
them of illegally using privileged information."
Business News Americas reports that Mr. Cervantes alleged that
Gramercy has also gathered company information to profit from
ailing firms like Satmex, Altos Hornos and San Luis Corporacion.
Mr. Cervantes told BNamericas that Gramercy would use the
information to start bankruptcy rumors and then buy the firms'
bonds at bargain rates.
Gramercy, which holds Iusacell bonds worth a total of US$55
million, has profited up to US$30 million from dealing with the
bonds, BNamericas relates, citing Mr. Cervantes.
Mr. Cervantes told BNamericas that the allegations even go as
far as extortion. Gramercy demanded an US$8 million payoff to
ensure that it would not subject Iusacell to involuntary
bankruptcy proceedings in the US before it had completed
restructuring negotiations in Mexico.
BNamericas notes that on July 24 Gramercy, represented by law
firm Canales y Socios, filed involuntary bankruptcy proceedings
against Iusacell to prevent the latter's restructuring talks in
Mexico from succeeding.
According to BNamericas, Iusacell's legal representatives expect
a bankruptcy court in New York to discuss Gramercy's filing on
Sept. 12-18, expecting the judge to reject it.
The report says that if Iusacell proceeds with its counter-suit
against Gramercy, it would file the charges with:
-- Mexico's attorney general,
-- the securities and banking regulator CNBV, and
-- the Securities and Exchange Commission in the US.
About Grupo Iusacell
Headquartered in Mexico City, Mexico, Grupo Iusacell, S.A. de
C.V. (BMV: CEL) -- http://www.iusacell.com-- is a wireless
cellular and PCS service provider in Mexico with a national
footprint. Independent of the negotiations towards the
restructuring of its debt, Grupo Iusacell reinforces its
commitment with customers, employees and suppliers and
guarantees the highest quality standards in its daily operations
offering more and better voice communication and data services
through state-of-the-art technology, including its new 3G
network, throughout all of the regions in which it operate.
Grupo Iusacell filed for bankruptcy protection on June 18 under
Mexican Law to prevent creditors from disrupting its debt
restructuring talks. On July 14, 2006, Gramercy Emerging
Markets Fund, Pallmall LLC and Kapali LLC, owed an aggregate
amount of US$55,878,000 filed an Involuntary Chapter 11 Case
against Grupo Iusacell's operating subsidiary, Grupo Iusacell
Celular, S.A. de C.V. (Bankr. S.D.N.Y. Case No. 06-11599). Alan
M. Field, Esq., at Manatt, Phelps & Phillips, LLP, represents
the petitioners. Iusacell Celular then filed for bankruptcy
protection under Mexican Law on July 18.
JAFRA WORLDWIDE: Mexican Model Cues Moody's to Raise All Ratings
----------------------------------------------------------------
Moody's Investors Service upgraded its ratings on Jafra
Worldwide Holdings (Lux), S.aR.L and its affiliates including
the company's corporate family rating and senior subordinated
notes rating. These actions reflect the company's robust
business model in Mexico and strong financial metrics. The
rating outlook is stable.
These ratings of Jafra Worldwide Holdings (Lux), S.aR.L were
upgraded:
Corporate family rating, from B1 to Ba3.
These ratings of Distribuidora Comercial Jafra, S.A. de C.V. and
Jafra Cosmetics International, Inc., were upgraded:
-- USUS$130 million senior subordinated notes due 2011, from
B3 to B2.
Jafra's Ba3 corporate family rating reflects the company's
strong financial metrics, free cash flow and leading market
share position in its core Mexican direct selling business
offset by the company's small scale and reliance on a single
market for the majority of its revenue and nearly all of the
company's cash flow. The ratings also reflect management's
experience in implementing strategies to grow its consultant
base, especially in core markets, and improve productivity.
At the same time, Jafra and Vorwerk have maintained prudent
financial policies including meaningful debt reduction through
free cash flow and proceeds from private equity issuances as
well as by exiting unprofitable markets in Latin America.
While Moody's recognizes the strategic value of company's plans
to diversify into other developing markets including Russia,
Indonesia and China, it notes the heightened competitive and
operational risks the company faces in achieving this much
needed diversification. In addition, competitive activity is
likely to be heightened as Jafra will compete with both large,
well-resourced players and nimble regional providers of personal
care products.
Ultimately, Jafra may not achieve the returns necessary to
sustain profitability in those markets without significant
capital investment and/or potential charges. The Ba3 corporate
family rating is also constrained by the challenges faced in
operating a multi-level direct selling model, with the attendant
risk of consultant turnover and productivity. These risks are
further heightened by the mismatch between company's peso-
denominated revenues and earnings against its dollar denominated
debt obligations.
The stable outlook reflects Jafra's strong credit metrics and
leading market position in important direct selling markets such
as Mexico and Hispanic markets in the U.S. where the company has
been successful in building its consultant base, revenue and
cash flow.
Ratings are unlikely to increase over the near-term given the
significant operational and financial risks the company faces
implementing its global growth strategy. Moody's believes that
Jafra is comfortably positioned within its rating category.
Important components of an eventual upgrade and/or outlook
revision would be profitable diversification into new markets to
reduce Jafra's reliance on Mexico, continued strong performance
and consultant gains in the company's core Mexican and Hispanic
operations in the U.S. as well as a prudent and measured
approach to refinancing its high coupon public debt.
The rating and/or outlook would be negatively impacted should
the company's financial performance deteriorate materially from
plan, political or currency shock to its core Mexican market
occurs, financial policies deviates significantly from its
prudent balance sheet management. Deterioration in credit
metrics such that leverage exceeds 2x and/or free cash flow to
debt drops below 25%, would also result in ratings pressure.
Headquartered in Westlake Village, California, Jafra sells
fragrances, color cosmetics, skin and body care products, and
other personal care items through a network of over 470,000
self-employed consultants. Revenues for the last twelve months
ending June 2006 totaled USUS$467 million. Jafra's parent
company, Vorwerk & Co. KG, is a family-owned direct seller of
household appliances, carpets, industrial and financial
services, based in Wuppertal, Germany with annual revenues of
approximately USUS$2.8 billion.
LIBBEY INC: Posts US$9.6 Million Net Loss in 2006 Second Quarter
----------------------------------------------------------------
Libbey Inc. reported a net loss of US$9.6 million for the second
quarter ended June 30, 2006, compared with a net loss of
US$900,000 in the prior year quarter. The net loss for the
quarter included a total of US$13.4 million in special charges
related to the consolidation of two of its recently acquired
Mexican facilities and the write-off of finance fees.
The Company posted second quarter adjusted net income, excluding
special charges of US$3.9 million, as compared with US$3.4
million for the year-ago quarter.
Sales increased 9.3% to US$158 million from US$144.5 million in
the prior year second quarter. The increase in sales was
primarily attributable to the consolidation of sales of Crisa,
the Company's former joint venture in Mexico, for the last two
weeks of June, a more than 10% increase in shipments to retail
and export glassware customers and shipments of Traex products,
an 8% increase in shipments of Royal Leerdam and Crisal products
and a 5% increase in sales to foodservice glassware customers.
Shipments of Syracuse China products were down approximately 8%
as the result of the work stoppage early in the quarter and
shipments of World Tableware products were down slightly.
Excluding Crisa's sales, sales were up 4.0% in total.
The Company reported a loss from operations of US$4.1 million
during the quarter, as compared to income from operations of
US$2.5 million in the year-ago quarter. Income from operations,
excluding special charges, was US$11 million during the quarter,
as compared to US$8.9 million for the year-ago quarter.
Six-Month Results
For the six months ended June 30, 2006, sales increased 6.8% to
US$292.9 million from US$274.3 million in the year-ago period.
Excluding Crisa's sales during the last two weeks of June 2006,
sales increased 4% compared with the first six months of 2005.
This increase in sales was attributable to increases of at least
8% in shipments to foodservice glassware customers, retail
customers, export customers, Traex customers and Crisal
customers. Sales of Royal Leerdam products increased almost 2%
as compared to the first six months of 2005. Shipments to
industrial customers were down over 10% during the first half of
2006, while shipments of Syracuse China and World Tableware
products were down slightly.
Libbey reported a loss from operations of US$1.1 million during
the first six months of 2006 as compared to income from
operations of US$2.6 million during the year-ago period.
Adjusted income from operations, excluding special charges, was
US$14.1 million for the first six months of 2006, as compared to
US$12 million for the year-ago period. Contributing to the
increase in adjusted income from operations were higher sales,
higher production activity and improved operating results at
Crisal in Portugal.
Equity earnings from Crisa were US$2 million on a pretax basis,
as compared to a pretax loss of US$200,000 in the year-ago
period. The increased equity earnings were the result of
increased and more profitable sales, higher translation gain,
and lower natural gas and electricity costs.
For the first six months of 2006, the Company recorded a net
loss of US$9.1 million, compared with a net loss of US$2.5
million, in the year-ago period.
Year-to-date cash flow from operations increased US$8.9 million,
or 77.3% to US$20.4 million as compared to the year-ago period.
Contributing to the increase in operating cash flow were higher
earnings and a reduction in working capital.
Working capital, defined as inventories and accounts receivable
less accounts payable, increased by US$44.3 million from
US$170.3 million to US$214.6 million compared to June 30, 2005
due to the acquisition of Crisa. Excluding working capital of
US$54.5 million at Crisa at June 30, 2006, the Company's working
capital was US$10.2 million lower than the year-ago period,
reflecting the Company's continued efforts to reduce its
investment in working capital.
John F. Meier, chairman and chief executive officer, commenting
on the quarter, said, "We are pleased with the addition of Crisa
to the Libbey family and with the strength of our core business
performance. Sales to foodservice glassware customers were
strong and shipments to retail customers were especially
robust. We saw a solid performance from Crisa, our recently
acquired Mexican glass tableware operation." Meier also added,
"With the closing of our acquisition of the remaining 51% of
Crisa on June 16, 2006, we will now be including their results
of operations for the balance of 2006. We are well into our
consolidation of the facilities in Mexico, and we look forward
to harvesting those future savings."
He added, "We expect third and fourth quarter sales to increase
by 4 to 5% as compared with the pro forma third and fourth
quarter sales in 2005. Earnings before interest, taxes,
depreciation and amortization are expected to be between US$18.5
million and US$19.5 million in each of the third and fourth
quarters of 2006."
Libbey also confirmed that it is on schedule to begin production
in early 2007 at its new glass tableware production facility in
China.
About Libbey Inc.
Based in Toledo, Ohio, Libbey Inc. -- http://www.libbey.com/
-- operates glass tableware manufacturing plants in the United
States in Louisiana and Ohio, in Mexico, Portugal and the
Netherlands.
* * *
Standard & Poor's Ratings Services assigned on May 16, 2006, its
'B' corporate credit rating to Libbey Inc. At the same time,
Standard & Poor's assigned its 'B' senior unsecured debt rating
to the company's proposed US$400 million of senior unsecured
notes due 2014, which will be issued by the company's wholly
owned subsidiary Libbey Glass Inc. and guaranteed on a senior
basis by Libbey Inc. Standard & Poor's said the outlook is
stable.
NORTEL NETWORKS: Deploys New IP Telephony Network for DEDIC
-----------------------------------------------------------
Nortel Networks Corp. deployed its new IP telephony network
to create a state of the art contact center to support business
expansion of DEDIC.
The new network, being deployed by the Company's channel partner
Wittel, makes it possible for DEDIC to cost-effectively expand
its contact center outsourcing services to customers through the
addition of 1,000 new agent positions. DEDIC is investing
US$2 million on the first project phase.
The Company's IP technology makes it possible for DEDIC to
respond quickly to customer service requests through a range of
multimedia services beyond telephony such as e-mail and web-
based chat. Incoming calls to the center are also immediately
routed to the most appropriate agent. The new IP telephony
network includes anywhere, anytime mobility for agents and gives
DEDIC the flexibility to expand quickly to meet increasing
demand without major costs for additional network upgrades.
"Nortel's contact center solutions provide DEDIC with one of the
most innovative and competitive cost-effective product on the
market. These technologies are essential to ensuring DEDIC
maintains its competitive edge as one of the largest calls
centers in Brazil," noted Juan Chico, president, Nortel Brazil.
"Instead of deploying several contact centers we decided to
create a central site with intelligent routing to reduce
operational costs" Miguel Cui, president of DEDIC, said. "Among
all suppliers we contacted, Nortel was the one that best
understood our needs both in terms of proposed solution and our
cost limitations. Nortel and its partner Wittel also ensured
the network will be deployed quickly without interrupting daily
business activities."
Carlos Louro, president of Wittel, said, "For a contact center
to maintain competitive advantage today, it's essential that
access to information happens in real time. The Nortel solution
we are deploying allows DEDIC to maintain the advantage of
services being centralized through one management center,"
DEDIC's new network includes the Company's Communication Server
1000 and its Contact Center 6.0 for skill-based routing. The
deployment also includes the Company's ERS 470 to ensure network
capacity easily meets increased demand.
About DEDIC
DEDIC is one of the largest Brazilian contact center companies,
and ranks among the top five in the segment. It is owned by
Portugal Telecom Group and was created in 2002 to strengthen the
Group's contact center business.
About Wittel
Wittel is a company that provides corporate communications and
technology solutions, and is specialized in the Contact Center
and Trading Floors fields with a strong presence in the
financial, wireline and wireless telecommunications, and third-
party contact center service provider segments. Wittel provides
services ranging from design, deployment and maintenance for the
solutions it offers.
About Nortel Networks Corp.
Headquartered in Ontario, Canada, Nortel Networks Corp.
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers technology
solutions encompassing end-to-end broadband, Voice over IP,
multimedia services and applications, and wireless broadband
designed to help people solve the world's greatest challenges.
Nortel does business in more than 150 countries including
Mexico.
* * *
As reported in the Troubled Company Reporter on July 10, 2006,
Dominion Bond Rating Service confirmed the long-term ratings of
Nortel Networks Capital Corp., Nortel Networks Corp.,
and Nortel Networks Limited at B (low) along with the preferred
share ratings of Nortel Networks Limited at Pfd-5 (low). All
trends are Stable.
SATELITES MEXICANOS: Continues Investment Rule on Interim Basis
---------------------------------------------------------------
The Honorable Robert D. Drain, of the U.S. Bankruptcy Court for
the Southern District of New York, pending a final hearing,
authorized Satelites Mexicanos, S.A. de C.V., to invest and
deposit funds in accordance with its prepetition Investment
Policy without the need for any additional agreements not
utilized prior to its filing for chapter 11 protection.
Section 345(a) of the Bankruptcy Code authorizes a debtor-in-
possession to make deposits or investments of money of its
estate that "will yield the maximum reasonable net return on
such money, taking into account the safety of such deposit or
investment."
For deposits or investments that are not "insured or guaranteed
by the United States or by a department, agency or
instrumentality of the United States or backed by the full faith
and credit of the United States," Section 345(b) provides that a
debtor-in-possession must require a bond in favor of the United
States secured by the undertaking of a corporate surety approved
by the United States trustee for Region 2 from an entity with
which money of a debtor-in-possession's estate is deposited or
invested.
In the alternative, the debtor-in-possession may require the
entity to deposit governmental securities pursuant to 31 U.S.C.
Section 9303, which provides that where a person is required by
law to give a surety bond, that person, in lieu of the surety
bond, may provide a governmental obligation.
Prior to filing for chapter 11 prtection, the Debtor opened two
investment accounts at HSBC Mexico, S.A. Institucion de Banca
Multiple, Grupo Financiero HSBC. The HSBC Investment Accounts
are maintained in Mexican Pesos and U.S. Dollars and serve as
the Debtor's primary investment accounts during the pendency of
the Chapter 11 case.
The HSBC Investment Account maintained in U.S. Dollars currently
contains investments of approximately US$20,000,000 in HSBC-
backed short-term time deposits maturing over periods between
overnight to two weeks. The HSBC Investment Account maintained
in Mexican Pesos currently contains investments of approximately
US$2,300,000 in AAA-rated government-issued bonds.
At the close of each business day, the Debtor reviews all of its
collection and operating accounts, and sweeps any cash gains
into the corresponding HSBC Investment Account or another
overnight account maintained at HSBC Mexico. If cash is
projected to be necessary for operations when the investments in
the HSBC Investment Accounts or Other Accounts mature, the
required portion of the proceeds is moved to the Debtor's
operating accounts for use in the Debtor's operations, while the
remaining portion is reinvested in the corresponding HSBC
Investment Account.
If the proceeds from the matured investments in the HSBC
Investment Accounts or Other Accounts are not needed for
operations, however, the balance of the proceeds is reinvested
in the corresponding HSBC Investment Account with additional
cash invested if available. The investments generally mature
approximately seven days after investment.
The Debtor believes that its current Investment Policy provides
the protection contemplated by Section 345(b), notwithstanding
the absence of a "corporate surety."
Matthew S. Barr, Esq., at Milbank, Tweed, Hadley & McCloy LLP,
in New York, points out that the investments permitted under the
Debtor's Investment Policy that are not guaranteed by the United
States or any agency are similarly low-risk, time deposits or
AAA-rated short-term investments with maturities not to exceed
two weeks in duration. Moreover, the Debtor's primary
investment accounts are maintained by HSBC Mexico, a reputable
financial institution, which is affiliated with HSBC Bank USA
N.A., which appears on the U.S. Trustee's list of Authorized
Bank Depositories.
About Satelites Mexicanos
Satelites Mexicanos, S.A. de C.V., provides fixed satellite
services in Mexico. Satmex provides transponder capacity via
its satellites to customers for distribution of network and
cable television programming, direct-to-home television service,
on-site transmission of live news reports, sporting events and
other video feeds. Satmex also provides satellite transmission
capacity to telecommunications service providers for public
telephone networks in Mexico and elsewhere and to corporate
customers for their private business networks with data, voice
and video applications. Satmex also provides the government of
the United Mexican States with approximately 7% of its satellite
capacity for national security and public purposes without
charge, under the terms of the Orbital Concessions.
The Debtor filed for chapter 11 petition on Aug. 11, 2006
(Bankr. S.D.N.Y. Case No. 06-11868). Luc A. Despins, Esq., at
Milbank, Tweed Hadley & McCloy LLP represents the Debtor in the
U.S. Bankruptcy proceedings. Attorneys from Galicia y Robles,
S.C., and Quijano Cortina Lopez y de la Torre give legal advice
in the Debtor's Mexican Bankrutpcy proceedings. UBS Securities
LLC and Valor Consultores, S.A. de C.V., give financial advice
to the Debtor. Steven Scheinman, Esq., Michael S. Stamer, Esq.,
and Shuba Satyaprasad, Esq., at Akin Gump Strauss Hauer & Feld
LLP give legal advice to the Ad Hoc Existing Bondholders'
Committee. Dennis Jenkins, Esq., and George W. Shuster, Jr.,
Esq., at Wilmer Cutler Pickering Hale and Dorr LLP give legal
advice to Ad Hoc Senior Secured Noteholders' Committee. As of
July 24, 2006, the Debtor has US$905,953,928 in total assets and
US$743,473,721 in total liabilities.
On May 25, 2005, certain holders of Satmex's Existing Bonds and
Senior Secured Notes filed an involuntary chapter 11 petition
against the Company (Bankr. S.D.N.Y. Case No. 05-13862).
On June 29, 2005, Satmex filed a voluntary petition for a
Mexican reorganization, known as a Concurso Mercantil, which was
assigned to the Second Federal District Court for Civil Matters
for the Federal District in Mexico City.
On Aug. 4, 2005, Satmex filed a petition, pursuant to Section
304 of the Bankruptcy Code to commence a case ancillary to the
Concurso Proceeding and a motion for injunctive relief seeking,
among other things, to enjoin actions against Satmex or its
assets (Bankr. S.D.N.Y. Case No. 05-16103). (Satmex Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
SATELITES MEXICANOS: Has Interim Use of Existing Bank Accounts
--------------------------------------------------------------
The Honorable Robert D. Drain, of the U.S. Bankruptcy Court for
the Southern District of New York, authorized Satelites
Mexicanos, S.A. de C.V., to designate and maintain, with the
same names and account numbers, all of its bank accounts
existing immediately prior to the Petition Date, pending a final
hearing.
The Debtor seeks a waiver of the U.S. Trustee requirement that
the Bank Accounts be closed and that new postpetition bank
accounts be opened.
The United States Trustee's operating guidelines require Chapter
11 debtors to, among other things:
(a) close all existing bank accounts and open new debtor-in-
possession bank accounts;
(b) establish one debtor-in-possession account for all estate
funds required for the payment of taxes, including
payroll taxes; and
(c) maintain a separate debtor-in-possession account for cash
collateral.
Prior to the Petition Date, the Debtor maintained 18 bank
accounts at various banks in Mexico, Luxemburg and the United
States.
A list of the Debtor's bank accounts is available for free at:
http://bankrupt.com/misc/Satmexbankaccounts.pdf
The Debtor proposes to continue using all of its foreign,
prepetition collection accounts at Citibank, N.A.; HSBC Mexico,
S.A. Institucion de Banca Multiple, Grupo Financiero HSBC; and
BBVA Bancomer, S.A., to allow its customers to continue making
payments consistent with prepetition practices. Funds from the
collection accounts will be swept into the Debtor's operating
accounts maintained with HSBC Mexico or the corresponding HSBC
investment account on a daily basis.
Maintenance of the existing Bank Accounts will enable the Debtor
to continue engaging in commercial transactions with Mexican
residents in local currency, which, in many cases, accelerates
the Debtor's ability to receive funds from its Mexican
customers, as well as fund all general operating expenses,
including employee obligations, with accounts maintained by
local banks, Luc A. Despins, Esq., at Milbank, Tweed, Hadley &
McCloy LLP, in New York, relates.
Mr. Despins also notes that the Debtor modified its cash
management system to ensure that its Bank Accounts maintained at
HSBC Mexico serve as its primary Bank Accounts during the
pendency of the Chapter 11 case. The Debtor intends to take all
reasonable steps necessary to cause HSBC Mexico to appear on the
U.S. Trustee's list of Authorized Bank Depositories.
HSBC Bank USA N.A., is one of the banks on the U.S. Trustee's
list of Authorized Bank Depositories.
In light of the steps taken by the Debtor to ensure the safety
of deposits and investments of funds, the requirements of
opening new accounts to prevent the unauthorized payment of
prepetition claims, will not provide any benefit and would be a
waste of the Debtor's limited resources, Mr. Despins asserts.
About Satelites Mexicanos
Satelites Mexicanos, S.A. de C.V., provides fixed satellite
services in Mexico. Satmex provides transponder capacity via
its satellites to customers for distribution of network and
cable television programming, direct-to-home television service,
on-site transmission of live news reports, sporting events and
other video feeds. Satmex also provides satellite transmission
capacity to telecommunications service providers for public
telephone networks in Mexico and elsewhere and to corporate
customers for their private business networks with data, voice
and video applications. Satmex also provides the government of
the United Mexican States with approximately 7% of its satellite
capacity for national security and public purposes without
charge, under the terms of the Orbital Concessions.
The Debtor filed for chapter 11 petition on August 11, 2006
(Bankr. S.D.N.Y. Case No. 06-11868). Luc A. Despins, Esq., at
Milbank, Tweed Hadley & McCloy LLP represents the Debtor in the
U.S. Bankruptcy proceedings. Attorneys from Galicia y Robles,
S.C., and Quijano Cortina Lopez y de la Torre give legal advice
in the Debtor's Mexican Bankrutpcy proceedings. UBS Securities
LLC and Valor Consultores, S.A. de C.V., give financial advice
to the Debtor. Steven Scheinman, Esq., Michael S. Stamer, Esq.,
and Shuba Satyaprasad, Esq., at Akin Gump Strauss Hauer & Feld
LLP give legal advice to the Ad Hoc Existing Bondholders'
Committee.
Dennis Jenkins, Esq., and George W. Shuster, Jr., Esq., at
Wilmer Cutler Pickering Hale and Dorr LLP give legal advice to
Ad Hoc Senior Secured Noteholders' Committee. As of July 24,
2006, the Debtor has US$905,953,928 in total assets and
US$743,473,721 in total liabilities.
On May 25, 2005, certain holders of Satmex's Existing Bonds and
Senior Secured Notes filed an involuntary chapter 11 petition
against the Company (Bankr. S.D.N.Y. Case No. 05-13862).
On June 29, 2005, Satmex filed a voluntary petition for a
Mexican reorganization, known as a Concurso Mercantil, which was
assigned to the Second Federal District Court for Civil Matters
for the Federal District in Mexico City.
On August 4, 2005, Satmex filed a petition, pursuant to Section
304 of the Bankruptcy Code to commence a case ancillary to the
Concurso Proceeding and a motion for injunctive relief seeking,
among other things, to enjoin actions against Satmex or its
assets (Bankr. S.D.N.Y. Case No. 05-16103). (Satmex Bankruptcy
News, Issue No. 1; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
=================
N I C A R A G U A
=================
* NICARAGUA: Gas Supply Shortage Worsens Energy Crisis
------------------------------------------------------
Nicaragua's energy crisis worsened as it is now facing a
shortage of gas supplies, Inside Costa Rica reports.
As reported in the Troubled Company Reporter-Latin America on
Aug. 10, 2006, Nicaragua experienced power outages up to eight
hours daily and increasing prices of gasoline. About 150
communities in 13 provinces of Nicaragua were affected by the
outage from 6:00 a.m. to 2:00 p.m. Spanish Union Fenosa, which
controls electricity distribution in Nicaragua, disclosed power
cuts, saying that a deficit in energy production resulted from
technical faults in one of the plants that generate electricity.
Fenosa Union said that the hydroelectric plant in Apanas, in
particular, has low generating capacity due to the low level of
waters in the lake Apanas.
Inside Costa Rica relates that other than power outages,
Nicaragua is also facing a shortage on water.
Tropigas de Nicaragua Company has difficulties in delivering
supplies to a customers affected by power outages, according to
Inside Costa Rica.
El Nuevo Diario says that the Nicaraguan Energy Institute
threatened economic sanctions on Tropigas, as the latter
promised a solution this week. However, the prolonged deficit
resulted to wide-spread speculation.
Inside Costa Rica notes that Nicaragua's President Enrique
Bolanos is trying to resolve the crisis through arrangements
with Honduran and El Salvadorian firms.
The General Comptroller of Nicaragua urged that the contract
with Spain's Union Fenosa be cancelled for breaching the
agreement. The unjustifiable violations caused up to 30% losses
in domestic electricity services in July and August this year,
Inside Costa Rica states.
* * *
Moody's Investor Service assigned these ratings to Nicaragua:
Rating Rating Date
------ -----------
Long Term Caa1 June 30, 2003
Senior Unsecured
Debt B3 June 30, 2003
===========
P A N A M A
===========
* PANAMA: Posts US$1.71 Bil. First Semester 2006 Trade Deficit
--------------------------------------------------------------
Official sources told Inside Costa Rica that the trade deficit
of Panama increased 17.8% to US$1.71 billion in the first
semester of 2006, compared with the same period of 2005.
Imports of good in Panama rose US$2.28 billion from January to
June 2006, Inside Costa Rica states, citing the General
Comptroller's Office.
The sources told Inside Costa Rica relates that the amount of
imports was 16.8% above that of last year. They said that
Panama's exports of goods totaled US$573.8 million, accounting
for a 4.3% boost compared with the first semester of 2005.
High fuel prices in the international market is one of the
causes of Panama's increased trade deficit, Inside Costa Rica
reports, citing local analysts.
* * *
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
=======
* PERU: Reaches New Trade Accord with Bachelet Administration
-------------------------------------------------------------
Peru and Chile signed a bilateral agreement last week, according
to a report from The Financial Times.
Under the pact, Peru will be granted a most favored nation
status, the FT says. As such, Peruvian workers in Chile will be
protected.
However, the two nations excluded from the agreement key issues
like commercial airspace, hydrocarbons, tariffs on agricultural
products, financial services and intellectual property --
including a long-standing dispute over the country of origin of
pisco, a white-grape brandy popular in both countries, the FT
relates.
But the pact is viewed unfavorably by former Peruvian president
Alejandro Toledo, saying it will benefit Chile more than Peru.
The two nations have been at odds with each other after the war
in the 19th century, which caused Peru to lose a large portion
of its southern territory to Chile, the FT relates. Both
countries have sought to improve ties and put a historic rivalry
behind them.
Additionally, Peru is urging Chile to rejoin the Andean trade
bloc after it left 30 years ago.
* * *
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: Lenders Want Cases Converted or Exclusivity Terminated
----------------------------------------------------------------
Several bank lenders ask the U.S. Bankruptcy Court for the
Southern District of New York to terminate the exclusive periods
of Adelphia Communications Corp. and its debtor-affiliates to
allow the banks to file and solicit acceptance of a Chapter 11
plan or plans for the Debtors.
In the alternative, the Bank Lenders want the Debtors' cases
converted to a liquidation proceeding under Chapter 7 of the
Bankruptcy Code.
The Bank Lenders also ask Judge Gerber to prohibit solicitation
of votes for the ACOM Debtors' Fifth Amended Plan of
Reorganization or any other plan grounded in the Monitor process
until the Banks have filed their plans, obtained approval of
their related disclosure statements, and concluded solicitation
of votes.
The Bank Lenders are participants in any of the Century Credit
Agreement, the FrontierVision Credit Agreement, the Olympus
Credit Agreement and the UCA Credit Agreement entered into by
the Operating Company Debtors:
1. Wachovia Bank National Association, in its capacity as the
UCA Administrative Agent;
2. Bank of America, N.A., in its capacity as the Century
Cable Administrative Agent;
3. Bank of Montreal, in its capacity as the Olympus
Administrative Agent;
4. PNC Bank, National Association;
5. ABN Amro Bank N.V.;
6. Barclay's Bank PLC;
7. Credit Suisse, Cayman Branch;
8. Societe Generale, S.A.; and
9. CIBC, Inc.
The Bank Lenders have filed their Motion to Terminate under
seal. The Banks' Motion contains several quotes from the
transcript of a sealed status conference conducted by the
Bankruptcy Court on July 6, 2006, to discuss the Monitor's
process and the filing of the Monitor's Report, Kimberly S.
Winick, Esq., at Mayer, Brown, Rowe & Maw LLP, in New York,
counsel for Bank of Montreal, explains. The Motion should be
sealed to insure the continued protection of the transcript's
contents, Ms. Winick says.
Calyon New York Branch and The Bank of New York also call for
the conversion of the Obligor Debtors' cases to Chapter 7. The
Obligor Debtors are parties to the Prepetition Credit
Agreements.
"The distribution to creditors by a dispassionate Chapter 7
trustee will insure a quicker, more efficient, more certain and
less costly alternative to the bottomless bog of Adelphia's
Chapter 11 cases," Andrew P. Brozman, Esq., at Clifford Chance
US LLP, in New York, tells Judge Gerber on Calyon's behalf.
The Fifth Amended Plan is a hopeful failure as to the Obligor
Debtors, Mr. Brozman says.
Mr. Brozman contends that parties that have no constituency to
speak for the Obligor Debtors propound the Plan. Mr. Brozman
argues that the Creditors' Committee has no authority to
represent the interests of the Banks as secured creditors of the
Obligor Debtors.
Even if it does, the Creditors' Committee's acts in furtherance
of the Fifth Amended Plan "are opposed to those interested in a
prompt distribution of payment in full, in cash," Mr. Brozman
says.
According to Mr. Brozman, the Obligor Debtors are obligated to:
-- the holders of Bank Claims totaling US$5.2 billion;
-- trade and other unsecured creditors holding US$589 million
in claims; and
-- holders of modest amounts of other claims.
Mr. Brozman also notes that the Obligor Debtors' assets have
been substantially liquidated as a result of the consummation of
Adelphia's Sale Transactions with Comcast Corp. and Time Warner,
Inc. The sale transactions also terminated the Obligor Debtors'
business operations.
"The cash proceeds of the Sale Transaction are in hand and
sufficient to pay all of the allowed claims against the Obligor
Debtors in full. The cash proceeds are available for immediate
distribution," Mr. Brozman tells Judge Gerber.
There is nothing that inextricably links the path of the Obligor
Debtors to the tortuous and disputatious route the creditors of
the Holding Debtors have elected to follow, Mr. Brozman adds.
Toronto Dominion (Texas) LLC, the Ad Hoc Committee of Non-Agent
Secured Lenders, and Merrill Lynch Capital Corp. support the
Banks' request.
The Court will convene a hearing to consider the Banks' Motions
to Terminate on Sept. 11 and 12, 2006, at 9:45 a.m. Objections,
if any, are due Sept. 8.
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 COMMS: Operations Unit Selling Converters for US$1.74MM
----------------------------------------------------------------
ACC Operations, Inc., an Adelphia Communications Corp. debtor-
affiliate, owns various models of digital set-top converters
that are not being used in any of the Debtors' operations and
are not being transferred to Time Warner NY Cable, LLC, or to
Comcast Corp. in connection with the sale of substantially all
of the ACOM Debtors' assets.
Accordingly, ACC Operations has entered into a sale terms
agreement to sell digital converters to Tulsat-Pennsylvania,
LLC, for US$1,741,179.
ACC Operations has determined to sell the digital converters to
Tulsat because the price to be paid by Tulsat represents the
highest and best offer that ACC Operations has received for the
Property.
ACC Operations asks the U.S. Bankruptcy Court for the Southern
District of New York for permission to sell the Property
pursuant to the Tulsat Agreement.
If ACC Operations receives any additional offers for the
Property that is higher or otherwise better than Tulsat's offer,
ACC Operations may conduct an auction for the Property at a time
and place to be determined.
If an auction is held, ACC Operations will not be bound by the
Agreement, and Tulsat will not be entitled to recover any costs
and expenses related to the Agreement.
According to Shelley C. Chapman, Esq., at Willkie Farr &
Gallagher LLP, in New York, the proceeds of the sale of the
Property will be deposited in the Debtors' post-closing accounts
held by JPMorgan Chase Bank, N.A., and invested in accordance
with the investment practices and guidelines approved by the
Court on July 28, 2006.
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. 146; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
ADELPHIA COMMS: Inks Second Travelers Surety Credit Agreement
-------------------------------------------------------------
Adelphia Communications Corp. and its debtor-affiliates ask the
U.S. Bankruptcy Court for the Southern District of New York for
permission to:
(i) enter into a second secured postpetition surety credit
agreement with Travelers Casualty and Surety Company of
America and approving its terms; and
(ii) provide collateral to Travelers to secure obligations
pursuant to the Second Indemnity Contract.
Pursuant to the First Indemnity Contract approved by the Court
on April 8, 2004, Travelers issued bonds covering certain
obligations of the ACOM Debtors. Under the terms of the First
Indemnity Contract, the Debtors are required to provide
collateral, consisting primarily of letters of credit, to
Travelers for all bonds issued by Travelers, in an amount equal
to between 75% to 100% of the penal amount of the outstanding
bonds.
Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, LLP, in
New York, discloses that as of Aug. 18, 2006, and in accordance
with the terms of the First Indemnity Contract, the ACOM Debtors
have issued letters of credit with an aggregate face amount of
approximately US$59,800,000 in favor of Travelers and, in
addition, have posted approximately US$1,500,000 of cash
collateral.
In connection with the closing of the ACOM Debtors' sale of
substantially all of their assets, Time Warner NY Cable, LLC,
and Comcast Corp. have issued bonds to replace substantially
all of the bonds issued by Travelers under the terms of the
First Indemnity Contract, thus, significantly reducing the
likelihood that any of the Existing Bonds will be drawn upon.
As a result, Travelers has agreed to reduce significantly the
amount of collateral that the ACOM Debtors are required to
maintain in respect of the Existing Bonds.
Under the terms of the Second Indemnity Contract, the ACOM
Debtors are required to deliver to Travelers US$12,500,000 in
cash, which will serve as collateral for the ACOM Debtors'
obligations in respect of the Existing Bonds.
After the delivery of the Cash Collateral to Travelers,
Travelers will release any and all other collateral that it
currently held in respect of the Existing Bonds, consisting of
letters of credit and cash collateral with an aggregate face
amount of approximately US$61,300,000.
In addition, under the terms of the Second Indemnity Contract,
and subject to limited exceptions, all of the Cash Collateral
will be returned to the ACOM Debtors on the third anniversary of
the effective date of the Second Indemnity Contract.
Other principal provisions of the Second Indemnity Contract
include:
Term: The Second Indemnity Contract and any other
Surety Documents will remain in full force
and effect until terminated. The ACOM
Debtors may terminate participation in the
Second Indemnity Contract by providing 30
days advance written notice to Travelers.
In addition, Travelers has certain
termination rights based upon, among other
things, the occurrence and continuation of
certain Events of Default.
Security Interest: The ACOM Debtors' obligations to Travelers
will be secured by a first priority
perfected security interest in favor of
Travelers in all of the Collateral, which
will remain perfected without taking
further action, including without
limitation, any recordation of any
instrument of mortgage or assignment.
Collateral: On the Effective Date, the ACOM Debtors
will deposit US$12,500,000 into a control
account, which will secure the payment and
performance obligations of the ACOM Debtors
in respect of the Existing Bonds.
Additionally, the ACOM Debtors will provide
collateral to Travelers for all new bonds
issued by Travelers after the Effective
Date in an amount equal to 100% of the
penal amount of those New Bonds.
Payment of
Obligations: The ACOM Debtors will continue to make
payments authorized by the Court for all
obligations covered by any bond issued by
Travelers and:
* will make payments on all claims
received to date, which, to the extent
not otherwise paid by the ACOM Debtors,
will be satisfied with Collateral held
by Travelers; and
* will otherwise satisfactorily cure any
defaults under prepetition obligations
which are covered by any Bonds only to
the extent authorized, as applicable, by
the Court.
Defaults: Various events relating to any Indemnitor,
Bond or a contract in respect of which a
Bond is issued constitute Events of Default
under the Second Indemnity Contract and
would allow Travelers to, among other
things, terminate the issuance of Bonds,
cancel any Bonds and declare all or any
portion of the Indemnitors' obligations
under the Second Indemnity Contract and the
Bonds immediately due and payable.
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. 146; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
DEVELOPERS DIVERSIFIED: Prices US$250 Mil. Convertible Sr. Notes
----------------------------------------------------------------
Developers Diversified Realty Corp. priced its offering of
US$250 million aggregate principal amount of convertible senior
unsecured notes due 2011 and will repurchase of US$48.3 million
of its common shares.
The notes will pay interest semiannually at a rate of 3.50% per
annum and mature on Aug. 15, 2011. The notes will have an
initial conversion rate of approximately 15.3589 common shares
per US$1,000 principal amount of the notes, representing a
conversion price of approximately US$65.11 per common share and
a conversion premium of approximately 22.5% based on the last
reported sale price of US$53.15 per common share on
Aug. 22, 2006. The initial conversion rate is subject to
adjustment under certain circumstances. The notes will be
convertible, upon the occurrence of specified events and during
the period beginning on June 15, 2011, and ending on the second
business day prior to the maturity date, into cash up to their
principal amount and Developers Diversified's common shares
in respect of the remainder, if any, of the conversion value in
excess of such principal amount. Closing of the sale of the
notes and repurchase by Developers Diversified of US$48.3
million of its common shares is expected to occur on
Aug. 28, 2006. Net proceeds from this offering are estimated to
be approximately US$244.45 million, after deducting estimated
fees and expenses of approximately US$5.55 million, which will
result in an all in effective annual interest rate of less than
4%.
In connection with the offering, Developers Diversified has
entered into a convertible note hedge transaction with an
affiliate of an initial purchaser of the notes to increase the
effective conversion price of the notes to US$74.41 per common
share, which represents a 40.0% premium based on the
Aug. 22, 2006, closing price of US$53.15 per common share. This
transaction is also intended to minimize the potential dilution
upon future conversion of the notes. The net cost of the
convertible note hedge was approximately US$10.3 million and
will be accounted for as an effective hedge through its maturity
and included in the equity section of Developers Diversified's
balance sheet and therefore not included in interest expense.
In connection with the convertible note hedge transaction, the
counterparty has advised Developers Diversified that it or its
affiliates has entered into, simultaneously with the pricing of
the notes and may enter into shortly after pricing, various
derivative transactions with respect to Developers Diversified
common shares. In addition, following pricing of the notes, the
counterparty or its affiliates may enter into or unwind various
derivatives and/or continue to purchase or sell Developers
Diversified common shares in secondary market transactions,
including during the observation period relating to any
conversion of the notes.
Developers Diversified expects to use the net proceeds from the
offering to repurchase US$48.3 million of its common shares at a
price of US$53.15 per common share, to fund the US$10.3 million
cost of the convertible note hedge transaction, to repay
outstanding debt under its senior unsecured credit facility,
which bears interest at LIBOR plus 60 basis points, and for
other general business purposes.
The notes will be sold through an offering to qualified
institutional buyers in accordance with Rule 144A under the
Securities Act of 1933, as amended.
About Developers Diversified
Based in Beachwood, Ohio, Developers Diversified Realty Corp.
(NYSE: DDR) -- http://www.ddr.com/-- currently owns and manages
approximately 500 retail operating and development properties in
44 states, plus Puerto Rico, comprising 114 million square feet
of real estate. Developers Diversified Realty is a self-
administered and self-managed real estate investment trust
operating as a fully integrated real estate company, which
acquires, develops, leases and manages shopping centers.
* * *
Developers Diversified Realty Corp's Preferred stock currently
has Fitch Ratings' BB+' rating assigned on March 2003.
HORIZON LINES: Earns US$6.4 Million in 2006 Second Quarter
----------------------------------------------------------
Horizon Lines, Inc., reported net income of US$6.4 million for
the second quarter ended June 25, 2006, compared to a net loss
of US$4.1 million in the 2005 second quarter.
After adjustment to exclude non-recurring transaction-related
expenses associated with a secondary stock offering in 2006 and
an initial public stock offering in 2005, adjusted net income
was US$7 million in the second quarter of 2006, compared to
adjusted net income of US$4.4 million in the second quarter of
2005.
Operating revenue increased by US$19.3 million or 7.1% to
US$289.8 million for the second quarter of 2006 versus
US$270.5 million in the 2005 second quarter. Freight rate and
cargo mix improvements more than offset some modest volume
softness in the second quarter of 2006 compared to 2005.
Operating income for the second quarter 2006 was US$22.4 million
compared to US$12 million in the second quarter of 2005. Absent
the non-recurring transaction-related expenses, second quarter
2006 operating income would have been US$23.3 million, an
increase of US$5.1 million or 28.0% over US$18.2 million in the
second quarter of 2005.
Earnings before interest expense, taxes, depreciation and
amortization was US$39.8 million for the second quarter of 2006,
compared to US$29.3 million for the 2005 second quarter.
Excluding the non-recurring transaction-related expenses, EBITDA
was US$40.7 million in the 2006 second quarter versus US$36
million in the second quarter of 2005, an improvement of US$4.7
million or 13.1%.
"The second quarter 2006 was another great one for Horizon
Lines," said Chuck Raymond, President and Chief Executive
Officer. "We produced our 18th consecutive quarter of adjusted
EBITDA growth and enjoyed double digit gains in all earnings
measures. Our vessel fleet enhancement program is ahead of
schedule, and we have launched our customer focus and service
efficiency program, Horizon Edge. Also, we continue to invest
in our container fleet as part of our rolling stock replacement
program, with the acquisition of 1,250 new containers in the
second quarter. Horizon Lines was again recognized for service
excellence, the fourth such customer award in 2006."
The Company updated its earnings guidance for the full year
2006, with projections of operating revenue at US$1,155-US$1,165
million. Earnings guidance for the third quarter of 2006 was
also provided, with forecasts of operating revenue of US$305-
US$310 million and EBITDA of US$48-US$51 million.
Headquartered in Charlotte, North Carolina, Horizon Lines, Inc.
-- http://www.horizonlines.com/-- is the U.S.'s leading Jones
Act container shipping and integrated logistics company and is
the ultimate parent company of Horizon Lines Holding Corp., and
Horizon Lines LLC. The Company accounts for approximately 37%
of total U.S. marine container shipments from the continental
U.S. to the three non-contiguous Jones Act markets, Alaska,
Hawaii and Puerto Rico, and to Guam.
* * *
As reported in the Troubled Company Reporter on March 2, 2006,
Standard & Poor's Ratings Services revised its outlook on
Horizon Lines Inc., a cargo shipping company based in Charlotte,
North Carolina, to positive from stable. At the same time, the
'B' corporate credit rating was affirmed.
RES-CARE INC: S&P Lifts Sr. Unsecured Debt Rating to B+ from B
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on
Louisville, Kentucky-based Res-Care Inc. The corporate credit
rating was raised to 'BB-' from 'B+' and the rating outlook is
stable. The senior secured debt rating was raised to 'BB' from
'BB-' and the senior unsecured debt rating was raised to 'B+'
from 'B'.
"This ratings action reflects the company's ability to
consistently expand margins despite a flat reimbursement
environment, and the resulting improvement in its financial
profile," said Standard & Poor's credit analyst Alain Pelanne.
The ratings on Res-Care reflect the company's narrow operating
focus and the potential for reimbursement rate pressures from
government and related payors dealing with overburdened budgets.
While the company has managed to reduce insurance and labor
expenses as a percentage of revenues during the past year,
EBITDA margins remain thin and are vulnerable to any negative
swings for key expenses.
These credit factors are partially mitigated by Res-Care's
successful expansion and diversification of its core operations,
its top standing in a unique market -- providing support
services to individuals with special needs -- and its
strengthening financial and liquidity profile.
Res-Care predominantly provides residential services, training,
education, and support services to populations with special
needs throughout the U.S., Puerto Rico, and Canada, including
people with developmental or other disabilities, and to at-risk
youths and people experiencing barriers to employment. The
company's market has grown rapidly, as state agencies have
stopped providing services to at-risk populations. While
reimbursement has been flat over the last few years, the company
has managed to generate growth in revenues through both
acquisitions and program expansion.
Res-Care's financial profile has improved steadily in recent
years. EBITDA growth should continue as the company diversifies
its revenues and gains further efficiencies in labor and
insurance costs. Total lease-adjusted debt to EBITDA is
expected to be less than 3x going forward. Despite its
relatively low operating margins, Res-Care has demonstrated an
ability to generate healthy cash flows sufficient to support its
obligations. Funds from operations to total debt is expected to
be greater than 25%.
=================================
T R I N I D A D & T O B A G O
=================================
DIGICEL LTD: Resuming Interconnection Talks with TSTT
-----------------------------------------------------
Digicel Ltd. and Telecommunication Services of Trinidad and
Tobago are to resume negotiations to set up an interconnection
rate schedule after urgings from local authorities, according to
a report from the Trinidad & Tobago Express.
In a letter, the Telecommunications Authority of Trinidad and
Tobago asked the two telecom providers in the nation to resolve
the interconnection dispute in the "shortest possible time," the
Express says.
"In the interest of all stakeholders, the Authority has by
letter dated Aug. 21 (Monday) urged Digicel and TSTT to resume
negotiations in order to conclude an interconnection agreement
in the shortest possible time," the Express quoted a statement
issude by the telecom regulator.
An interconnection rate is the charge operators pay each other
to enable their respective customers to make and receive calls
between each other's network.
Digicel and TSTT's networks were inteconnected on March 31.
Interconnection rates were negotiated since Jan. this year.
However, the parties failed to reach a consensual agreement
prompting the local regulator to appoint an arbitration
committee that would determine the rates. Still, actual rates
were not decided on the conclusion of the hearings last week.
TSTT recently said, "The main point of contention was whether
both companies should pay the same interconnect rate for the
same service or whether TSTT should pay Digicel a higher mobile
termination rate that what Digicel would be paying TSTT," the
Express relates.
"TSTT has already expressed (in a letter on Tuesday) the desire
to resume negotiations with Digicel and conclude an
interconnection agreement in the shortest possible time, in
accordance with the decision of the arbitration panel," TSTT's
VP Legal, Regulatory and Carrier Services Lisa Agard told the
Express.
"However, TSTT has proposed that the mobile termination rate be
45 cents per minute to be charged on a reciprocal basis. This
will ensure that consumers do not pay for the inefficiencies of
a new entrant in the market," Ms. Agard added.
When asked about the local regulator's request, Digicel told the
Express: "Digicel is always willing to meet and discuss with any
party who wants to negotiate on a reasonable basis."
Digicel Limited is a wireless services provider in the Caribbean
region founded in 2000, and controlled by Denis O'Brien. The
company started operations in Jamaica in April 2001 and now
offers GSM mobile services in 13 countries of the Caribbean
including Jamaica, St. Lucia, St. Vincent, Aruba, Grenada,
Barbados, Cayman, and Curacao among others. Digicel finished
FY2005 with 1.722 million total subscribers -- 97% pre-paid --
estimated market share of 67% and revenues and EBITDA of US$478
million and US$155 million, respectively.
* * *
On July 12, 2006, Moody's Investors Service assigned a B3 senior
unsecured rating to the US$150 million add-on Notes offering of
Digicel Limited and affirmed Digicel's existing B3 senior
unsecured and B1 Corporate Family Ratings. The outlook has been
changed to stable from positive.
Fitch Ratings assigned on July 14, 2006, a 'B' rating to Digicel
Limited's proposed add-on offering of US$150 million 9.25%
senior notes due 2012. These notes are an extension of the
US$300 million notes issued in July 2005. In addition, Fitch
also affirms Digicel's foreign currency Issuer Default Rating
and the existing US$300 million senior notes due 2012 at 'B'.
Fitch said the Rating Outlook is Stable.
MIRANT CORP: Battles GE Capital Over US$2.1-Million Admin. Claim
--------------------------------------------------------------
In May 2003, General Electric Capital Corp. and certain of
its affiliates acquired ownership interests in Birchwood Powers
Partners, L.P., and Greenhost, Inc., from Mirant Birchwood,
Inc., for US$71,000,000. MAI issued a guaranty in favor of
Mirant Birchwood, as its wholly owned indirect subsidiary.
QF Regulations
Mirant Birchwood represented that "Birchwood Power is a
'qualifying cogeneration facility' as defined in Section 3(18)
of the Federal Power Act, and the implementing rules set forth
in 18 C.F.R. Part 292(2002)."
The QF Regulations were promulgated under the Public Utility
Regulatory Policies Act of 1978, with the intention that energy
facilities could be made more efficient and waste less energy.
For a cogeneration facility like Birchwood to qualify as a
"qualifying cogeneration facility," the useful thermal energy
output of the facility must be no less than 5% of the total
energy output of the facility and must be used in the operation
of a qualifying business.
Birchwood Power is required to make an annual certification to
DVP confirming the QF status of the Birchwood Facility for not
only the previous calendar year, but for all previous years. If
the Birchwood Facility loses its QF status, it would become a
public utility under the Federal Power Act, and the rates
charged by the facility would be subject to the review and
approval of the FERC.
Failure to Meet the QF Standards
David Bennett, Esq., at Thompson & Knight LLP, in Dallas, Texas,
relates that a year after its acquisition, GECC investigated and
determined that the Birchwood facility failed to meet the
operating standards required by the QF Regulations for the year
2001. Specifically, GECC found that the useful thermal energy
output for 2001 was 4.98%. GECC also determined that the
facility would likely fail to meet the operating standards for
2004. The thermal energy output for 2004 was 4.79%.
GECC notified Mirant Birchwood and MAI about the findings.
To mitigate the damages due to Mirant Birchwood's breach of the
QF representation, GECC built a distilled water plant. The
water plant was necessary to ensure that the Birchwood Facility
would comply with QF Regulations in 2004 and beyond.
In light of the requirement for certification of previous years,
GECC directed Birchwood to file a Request for Declaratory Order,
or in the Alternative, Petition for Order Granting Limited
Waiver of Qualifying Facility Operating Standard with the
Federal Energy Regulatory Commission.
The FERC declined to enter the declaratory order and instead
granted a waiver of the operating standard for the calendar year
2001.
Additionally, Birchwood and DVP were party to an excess energy
agreement dated March 1, 2004, under which DVP would purchase
excess energy produced by the Birchwood Facility. The term of
the EEA spanned from March 1, 2004, to Dec. 31, 2004. However,
Birchwood was no longer able to produce any Excess Energy for
the remainder of the year after it discovered in Sept. 2004 that
it was likely to miss the operating standards for a QF for 2004.
By this motion, GECC asks the Court to grant its administrative
claim for US$2,105,710 against Mirant Americas on account of
breach of contract and damages incurred.
David Bennett, Esq., at Thompson & Knight LLP, in Dallas, Texas,
asserts that Mirant Birchwood failed to meet the QF Regulations
standard contrary to its representations in the Acquisition
Agreement. Consequently, GECC suffered damages in the form of:
* professional costs incurred during the investigation and
in obtaining the Waiver;
* construction costs incurred in putting up the Water Plant;
and
* EEA costs based on the inability to produce and sell any
excess energy for the period Sept. through Dec.
2004.
New Mirant Objects
The New Mirant Entities ask the Court to disallow GECC's Claim
in its entirety.
The FERC QF Waiver was not needed in the first place because the
Birchwood Facility meets the 5% requirement at all times, Jeff
P. Prostok, Esq., at Forshey & Prostok LLP, in Fort Worth,
Texas, tells the Court.
Mr. Prostok notes that Birchwood Facility's useful thermal
energy "has been and continues to be used by Greenhost for
process uses." According to Mr. Prostok, GECC assumes that the
useful thermal energy must be measured at Greenhost, where it is
"used," rather than at, or adjacent to, the Birchwood Facility,
where it is "made available" at Greenhost.
If the useful thermal energy is measured where it is "made
available" to Greenhost, it is undisputed that the Facility
meets the 5% requirement at all times, Mr. Prostok explains.
Only if the useful thermal energy is measured where it is "used"
does the Facility fall to 4.98% in 2001.
Moreover, GECC's claim for loss profits under the EEA is not
compensable, Mr. Prostok contends. The Acquisition Agreement
provides that GECC as a Purchaser Indemnified Party "will not be
entitled to any punitive, incidental, indirect or consequential
damages resulting from or arising out of any Purchaser Claims or
Third Party Claims, including damages for lost revenues, income
or profits."
GECC's Claim for construction costs is also not compensable, Mr.
Prostok says. Any claim for incidental, indirect, special or
consequential damages, and would be disallowed under the
Acquisition Agreement.
Mr. Prostok adds that GECC's construction of the Water Plant
merely demonstrates its lower risk tolerance relating to
maintenance of its QF status than that of the prior owner, and
not a damage resulting from a breach of the QF status for 2001.
Sufficient data was available and provided to GECC to allow it
to determine prior to Closing whether it would desire to opt for
a secondary use of steam assumption, Mr. Prostok says.
"It should be noted that the only year found out to be out of
compliance with FERC standards was 2001, and this was based on
extremely technical calculations relating to losses in thermal
energy as the steam passed through a pipeline from the Birchwood
Facility to the greenhouse," Mr. Prostok points out. "Steam
usage in every other year was adequate."
Mr. Prostok says the first year GECC operated the Birchwood
Facility was 2004. GECC has not established a causal connection
between an alleged shortage of thermal energy usage in 2005 and
the representations made under the Acquisition Agreement.
"GECC, in operating the Birchwood Facility, may have operated
the facility differently such that the cause of any potential
breach of the QF requirement for 2004 was not a result of any
miscalculation of the thermal output calculation by the Seller,
but instead was a result of a change in operating protocol
implemented by GECC," Mr. Prostok says.
Moreover, GECC's claim for attorney's fees is excessive and
unreasonable, Mr. Prostok continues. "Even if that Claim were a
legitimate expense, the amount would not be sufficient to
trigger liability under the 'materiality' threshold provision of
. . . the Acquisition Agreement." The parties agreed that
indemnification claims may not be sustained unless the aggregate
claim exceeds US$1,000,000. Because GECC does not hold or
assert claims for direct, out-of-pocket expenses, which exceed
US$1,000,000, Mr. Prostok asserts GECC's Claim must be
disallowed.
Scheduling Order
To provide for the orderly resolution of the Administrative
Expense Claim, the parties agree to these deadlines:
(1) Disclosures of:
* GECC's testifying experts will be provided on or
before Aug. 15, 2006, and discovery on the experts
will be completed by Sept. 15, 2006; and
* New Mirant's testifying experts will be provided on or
before Oct. 15, 2006, and discovery on the experts
will be completed by Nov. 15, 2006;
(2) General discovery, which excludes discovery relating to
experts, will be completed on or before Oct. 15, 2006;
(3) Dispositive motions will be filed on or before
Dec. 15, 2006;
(4) Pre-trial Order will be filed with the Court on or
before Jan. 31, 2007;
(5) Written proposed Findings of Fact and Conclusions of
Law will be filed on or before Jan. 31, 2007;
(6) Trial briefs will be filed on or before Jan. 31, 2007;
(7) Trial will be conducted from Feb. 20 to 21, 2007.
New Mirant Wants Claim Disallowed
The New Mirant Entities ask Judge Lynn to disallow the
administrative expense claim for US$2,100,000 asserted by
General Electric Credit Corp. and certain of its affiliates,
including Birchwood Powers Partners, LP.
Pursuant to an Acquisition Agreement dated May 16, 2003, GECC
acquired partnership interests in Birchwood Powers and the stock
of Greenhost, Inc., from Mirant Birchwood, Inc., for
US$71,000,000. The transaction was completed on Oct. 31, 2003.
Greenhost operates a greenhouse adjacent to the Mirant Birchwood
facility, and uses the steam from the Facility for its produce.
Mirant Birchwood is a non-debtor, wholly owned subsidiary of
Mirant Americas, Inc. MAI guaranteed the performance of Mirant
Birchwood's obligations under the Acquisition Agreement. GECC's
administrative claim is based on MAI's guaranty agreement.
The Birchwood Facility is a qualifying cogeneration facility
under applicable federal law. A power generating facility
qualifies for QF status if the useful thermal output of the
facility is not less than 5% of its total energy output.
J. Robert Forshey, Esq., at Forshey & Prostok, LLP, in Fort
Worth, Texas, relates that GECC, in its request for allowance of
administrative expense claim, complained that Mirant Birchwood
breached its representation in the Acquisition Agreement that
the facility met the QF standards for 2001 and 2004.
GECC asserted that Mirant Birchwood failed to meet the QF status
because the useful thermal energy for both years was improperly
measured adjacent to the Birchwood Facility without making any
allowance for certain line losses. If the line losses are
applied, GECC contends the useful thermal energy for 2001 and
2004 was less than 5%.
As a result of Mirant Birchwood's "breach," GECC says it
incurred damages in the form of:
(1) professional costs with respect to obtaining a waiver
from the Federal Energy Regulatory Commission;
(2) professional fees as a result of the prosecution of the
administrative claim;
(3) costs in constructing a water plant necessary to meet
the QF standard; and
(4) losses in relation to certain excess energy agreement.
Mr. Forshey informs Judge Lynn that the Acquisition Agreement
has significant limits, which preclude any recovery by GECC on
its administrative claim. The Acquisition Agreement:
* provides for reciprocal rights of indemnity between the
parties, which constitute the parties' sole and exclusive
right and remedy for any breach of the Agreement;
* precludes GECC from recovering any incidental,
consequential or indirect damages; and
* requires that, as a condition to any recovery, GECC must
demonstrate indemnifiable damages in excess of
US$1,000,000.
Moreover, Mr. Forshey asserts that GECC's Request for Allowance
should be disallowed on these grounds:
(1) Lack of issue of material fact for 2001 and 2004 QF
status;
(2) Quasi-estoppel;
(3) Judicial estoppel;
(4) Issue preclusion based on FERC Order;
(5) Failure to give notice of assertion of claim for
indemnity;
(6) Lack of nexus between representation and costs of
constructing water plant;
(7) Preclusion of indemnity for costs of constructing a
water plant;
(8) Lack of nexus between representation and alleged
damages under the Energy Excess Agreement; and
(9) Preclusion of recovery of consequential damages.
Pursuant to the QF Regulations, if the Greenhouse is a process
use, the useful energy is measured where it is made available to
the Greenhouse, which was adjacent to the Birchwood Facility,
Mr. Forshey explains. In that event, no adjustment is necessary
for the line losses.
GECC, Mr. Forshey tells the Court, used similar explanation when
it requested a waiver from the FERC. In addition, GECC issued
re-certifications to the FERC stating that the Greenhouse "has
been and continues to be" a process use.
Hence, Mr. Forshey says, unless GECC is able to establish that
the Greenhouse was not a process use in 2001, there is no legal
basis for its claim. Moreover, because of GECC's assertions
with the FERC and its re-certifications that Greenhouse is a
process use, Mr. Forshey argues that GECC is now estopped from
asserting that the Greenhouse was not a process use or that the
Birchwood Facility was not a QF in 2001 or 2004.
To establish any potential right of indemnity under the
Acquisition Agreement, Mr. Forshey adds that GECC must establish
that the costs of constructing the Water Plant relate to an act
or failure to act by Mirant Birchwood existing as of the Oct.
2003 Closing Date, which would result in the loss of the QF
status.
Any issue regarding the 2001 measurements of useful thermal
energy would not give rise to a right of indemnity for the 2004
construction of the Water Plant, Mr. Forshey points out. In
addition, Mr. Forshey says the costs to construct a Water Plant
are excluded from indemnification as an incidental, indirect,
special or consequential damage.
Mr. Forshey further asserts that there is no connection between
the loss relating to the EEA and Mirant Birchwood's
representation. Neither the EEA nor any related circumstance
was an act or failure to act existing as of the Closing Date.
The EEA was not executed until March 2004. Mirant Birchwood did
not warrant or promise that the useful energy of the Greenhouse
alone would allow GECC to enter into, or obtain benefits of, the
EEA in 2004.
About Mirant
Headquartered in Atlanta, Georgia, Mirant Corp. (NYSE: MIR)
-- http://www.mirant.com/-- is an energy company that produces
and sells electricity in North America, the Caribbean, and the
Philippines. Mirant owns or leases more than 18,000 megawatts
of electric generating capacity globally. Mirant Corp. filed
for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-
46590), and emerged under the terms of a confirmed Second
Amended Plan on Jan. 3, 2006. Thomas E. Lauria, Esq., at White
& Case LLP, represented the Debtors in their successful
restructuring. When the Debtors filed for protection from their
creditors, they listed US$20,574,000,000 in assets and
US$11,401,000,000 in debts. The Debtors emerged from bankruptcy
on Jan. 3, 2006. (Mirant Bankruptcy News, Issue Nos. 103 & 104;
Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported in the Troubled Company Reporter on July 17, 2006,
Moody's Investors Service downgraded the ratings of Mirant
Corp. and its subsidiaries Mirant North America, LLC and
Mirant Americas Generation, LLC. The Ba2 rating for Mirant Mid-
Atlantic, LLC's secured pass through trust certificates was
affirmed. Additionally, Mirant's Speculative Grade Liquidity
rating was revised to SGL-2 from SGL-1. The rating outlook is
stable for Mirant, MNA, MAG, and MIRMA.
Moody's downgraded Mirant Americas Generation, LLC's Senior
Unsecured Regular Bond/Debenture, to B3 from B2. Moody's also
downgraded Mirant Corp.'s Corporate Family Rating, to B2
from B1, and Speculative Grade Liquidity Rating, to SGL-2 from
SGL-1. Mirant North America, LLC's Senior Secured Bank Credit
Facility, was also downgraded to B1 from Ba3 and its Senior
Unsecured Regular Bond/Debenture, to B2 from B1.
As reported in the Troubled Company Reporter on July 13, 2006,
Fitch Ratings placed the ratings of Mirant Corp., including the
Issuer Default Rating of 'B+', and its subsidiaries on Rating
Watch Negative following its announced plans to buy back stock
and sell its Philippine and Caribbean assets.
Ratings affected are Mirant Corp.'s 'B+' Issuer Default Rating
and Mirant Mid-Atlantic LLC's 'B+' Issuer Default Rating and the
Pass-through certificates' 'BB+/Recovery Rating RR1'.
Fitch also placed Mirant North America, Inc.'s Issuer Default
Rating of 'B+', Senior secured bank debt's 'BB/RR1' rating,
Senior secured term loan's 'BB/RR1' rating, and Senior unsecured
notes' 'BB-/RR1' rating on Rating Watch Negative. Mirant
Americas Generation, LLC's Issuer Default Rating of 'B+' and
Senior unsecured notes' 'B/RR5' rating was included as well.
Standard & Poor's Ratings Services also placed the 'B+'
corporate credit ratings on Mirant Corp. and its subsidiaries,
Mirant North American LLC, Mirant Americas Generating LLC, and
Mirant Mid-Atlantic LLC, on CreditWatch with negative
implications.
=================
V E N E Z U E L A
=================
PETROLEOS DE VENEZUELA: Drafting Ethanol Pact with Petrobras
------------------------------------------------------------
Petroleos de Venezuela SA will draft a long-term agreement for
the supply of ethanol from Petroleo Brasileiro SA, according to
a report from El Universal.
The local paper says ethanol shipments to Venezuela started last
year under a bilateral convention. The Venezuelan state oil
firm has been conducting tests to mix the additive with the
gasoline of 91 and 95 octanes sold in the domestic market.
But sources have pointed out that the corrosion caused by the
additive when reacting to the water deposited in pipes and tanks
is the major obstacle to the implementation, El Universal
relates.
About Petroleos de Venezuela
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.
* 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
Bombril BOBR3 (554.69) 488.38
Bombril-Pref BOBR4 (554.69) 488.38
CableVision System CVC (2,468) 12,832
Centennial Comm CYCL (1,062) 1,436
CIC CIC (1,883.69) 22,312.12
Choice Hotels CHH (118) 280
Telefonica Holding CITI (1,481.31) 307.89
Telefonica Holding CITI5 (1,481.31) 307.89
Domino's Pizza DPZ (609) 395
Foster Wheeler FWLT (38) 2,224
IMPSAT Fiber Networks IMPTQ (17.16) 535.01
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
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Maryland USA. Marjorie C. Sabijon, Sheryl Joy P. Olano, Stella
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Copyright 2006. All rights reserved. ISSN 1529-2746.
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