/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/061025.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, October 25, 2006, Vol. 7, Issue 212 Headlines A R G E N T I N A ELECTRICIDAD ARGENTINA: S&P Places raB+ Ratings on US$90MM Notes EL CEIBAL: Verification of Proofs of Claim Is Until Dec. 4 EUROMAYOR SA: Moody's LatAm Puts E Rating on US$10-Mil. in Notes HUGO CARLOS: Seeks for Court Approval to Reorganize Business INTERNATIONAL PROALKO: Claims Verification Deadline Is Dec. 18 INVERSORA ELECTRICA: Fitch Arg Confirms D Ratings on Notes PRIME ARGENTINA: Reorganization Proceeding Concluded PROVINCIA DEL CHACO: Moody's LatAm Puts D Rating on US$50MM Debt TELEFONICA DE ARGENTINA: Investment Plan for 2007 at Risk UNION CRAFT: Claims Verification Deadline Is Set for Feb. 1 VALEANT PHARMA: Restatement News Cues Moody's to Review Ratings * ARGENTINA: Issuing US$1 Billion Joint Bond with Venezuela B A R B A D O S ANDREW CORP: Markets Dual Band Satellite Systems with Overwatch B E L I Z E * BELIZE: Consultation with International Monetary Fund Ends B O L I V I A PETROLEO BRASILEIRO: Bolivia Warns of Intervention in Operations PETROLEO BRASILEIRO: May Abandon Operations in Bolivia B R A Z I L BANCO NACIONAL: Offering New Salary Hike to Workers Next Week COMPANHIA DE SANEAMENTO: Fitch Rates US$250-Million Notes at BB COMPANHIA DE SANEAMENTO: Starts Building Sao Joao Pipeline FIDELITY NATIONAL: Repurchases 1.4 Mil. Shares of Common Stock FREESCALE SEMICONDUCTOR: Commences Tender Offers on Sr. Notes PETROLEO BRASILEIRO: Advancing Biodiesel Plants Construction C A Y M A N I S L A N D S ALTERNATIVE VENTURES: Final Shareholders Meeting Is on Nov. 9 GLOBAL VENTURES: Liquidator Presents Wind Up Accounts on Nov. 9 MOLVO: Invites Shareholders for a Final Meeting on Nov. 9 MUTUAL FUND (2): Last Day to File Proofs of Claim Is on Nov. 13 MUTUAL FUND (4): Creditors Must File Proofs of Claim by Nov. 13 MUTUAL FUND (8-GLOBAL): Proofs of Claims Filing Is Until Nov. 13 MUTUAL FUND (8-PACIFIC): Proofs of Claim Filing Ends by Nov. 13 SAPIC 98 (22): Proofs of Claim Filing Deadline Is on Nov. 13 SAPIC 98 (31): Creditors Must Submit Proofs of Claim by Nov. 13 SAPIC 98 (36): Last Day for Filing of Proofs of Claim Is Nov. 13 SAPIC 98 (B-I): Deadline for Proofs of Claim Filing Is Nov. 13 SILICON MAGNETIC: Shareholders Gather for Last Meeting on Nov. 9 C H I L E AES CORP: Files US$40-Million Lawsuit Against Alstom in Delaware C O L O M B I A BANCOLOMBIA SA: Names Olga Botero VP of Information Technology BANCOLOMBIA: Unit Authorizes Issue of COP800-Billion in Bonds ECOPETROL: Five Lawmakers Support Sale of 20% Stake PETROLEOS DE VENEZUELA: Eyes Colombian Gov.'s Stake in Ecogas * COLOMBIA: U'wa Nation Rejects Ecopetrol's Oil Project C O S T A R I C A ARMSTRONG WORLD: Reports Distribution Amount for Class 6 Claims ARMSTRONG WORLD: Registers 5,349,000 Common Shares H O N D U R A S DOLE FOOD: Creating Worker Program for Honduran Banana Workers J A M A I C A AIR JAMAICA: Cabinet Rejects Airline's New Business Plan NATIONAL WATER: Cuts Losses to US$677 Million in 2006 M E X I C O ALLIS-CHALMERS ENERGY: Buys Petro Rentals for US$29.8MM in Cash BALLY TOTAL: Holding Annual Shareholders Meeting on Dec. 19 BALLY TOTAL: Board Reduces Number of Directors from Nine to Six CLIENTLOGIC CORP: Inks Merger Deal with SITEL FORD MOTOR: Reports US$5.3B Net Loss for Third Quarter 2006 FORD MOTOR CREDIT: Posts USUS$262MM Net Income in Third Quarter FORD MOTOR: Restating 2001 Through 2006 Financial Results FORD MOTOR: Moody's Says Weak Results Consistent with B3 Rating FORD MOTOR: S&P Places B-Rated Sr. Unsec. Debt on Negative Watch FORD MOTOR: Fitch Puts Neg. Watch on B+ Rated Senior Unsec. Debt GRUPO MEXICO: Won't Reopen San Martin Zinc-Copper Mine NORTEL NETWOKS: Deploys Municipal Wireless Solution P A N A M A * PANAMA: Citizens Voted Yes in a Referendum on Canal Expansion * PANAMA: Fitch Says Canal Expansion May Yield Positive Results P E R U BANCO DE CREDITO: Fitch Rates Proposed US$120MM Notes at BB+ BANCO DE CREDITO: Moody's Assigns Ba2 Rating on US$120MM Notes P U E R T O R I C O ADELPHIA COMMS: Metropolitan Edison, et al. Want Claims Allowed ADELPHIA COMMS: Santa Monica Seeks Court OK to Century Payments DORAL FIN'L: Reports US$33.8MM Net Loss for 2006 First Semester GLOBAL HOME: Court Approves Plante & Moran to Audit 401(k) GLOBAL HOME: Hires Pricewaterhousecoopers to Provide Tax Works PILGRIM'S PRIDE: Issues Open Letter to Gold Kist Stockholders T R I N I D A D & T O B A G O BRITISH WEST: Outsourcing Customer Service at Miami Office DIGICEL LTD: Authority Asks Rival Firm to Cooperate on Probe V E N E Z U E L A PETROLEOS DE VENEZUELA: Seeking Offshore Rigs for Mariscal Sucre UNIVERSAL COMPRESSION: Secures US$500-Million Credit Facility VENEZUELA: Issuing US$1 Billion Joint Bond with Argentina - - - - - ================= A R G E N T I N A ================= ELECTRICIDAD ARGENTINA: S&P Places raB+ Ratings on US$90MM Notes ---------------------------------------------------------------- Standard and Poor's rating services assigned these ratings on Electricidad Argentina S.A.'s debts: -- Obligaciones Negociables with discount for US$75,000,000 and -- Obligaciones Negociables at same price for US$15,000,000. The rating action was based on the company's balance sheet at June 30, 2006. EL CEIBAL: Verification of Proofs of Claim Is Until Dec. 4 ---------------------------------------------------------- Mirta Haydee Addario, the court-appointed trustee for El Ceibal S.R.L.'s bankruptcy proceeding, will verify creditors' proofs of claim until Dec. 4, 2006. Ms. Addario will present the validated claims in court as individual reports on Feb. 19, 2007. Court No. 11 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 El Ceibal 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 El Ceibal's accounting and banking records will follow on Apr. 2, 2007. Clerk No. 21 will assist the court in the case. The debtor can be reached at: El Ceibal S.R.L. Gutierrez 2564 Buenos Aires, Argentina The trustee can be reached at: Mirta Haydee Addario Lavalle 1454 Buenos Aires, Argentina EUROMAYOR SA: Moody's LatAm Puts E Rating on US$10-Mil. in Notes ---------------------------------------------------------------- Euromayor S.A. de Inversiones's Obligaciones Negociables for US$10 million is rated E by Moody's Latin America. The debt became due on April 28, 2003. The rating action was based on the company's financial status at July 31, 2006. HUGO CARLOS: Seeks for Court Approval to Reorganize Business ------------------------------------------------------------ A court in Buenos Aires is studying the merits of Hugo Carlos Rey S.A.'s petition to reorganize its business after it defaulted on its obligations. The petition, once approved by the court, will enable Hugo Carlos to negotiate a settlement plan with its creditors in order to avoid a straight liquidation. The debtor can be reached at: Hugo Carlos Rey S.A. Junin 1622 Buenos Aires, Argentina INTERNATIONAL PROALKO: Claims Verification Deadline Is Dec. 18 -------------------------------------------------------------- Myriam Lewenbaum, the court-appointed trustee for International Proalko S.A.'s bankruptcy case, will verify creditors' proofs of claim until Dec. 18, 2006. Under the Argentine bankruptcy law, Ms. Lewenbaum is required to present the validated claims in court as individual reports. Court No. 2 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 International Proalko and its creditors. Inadmissible claims may be subject for appeal in a separate proceeding known as an appeal for reversal. Ms. Lewenbaum will also submit a general report that contains an audit of International Proalko's accounting and banking records. The report submission dates have not been disclosed. International Proalko was forced into bankruptcy at the request of Credencial Cooperativa Ltda., which it owes US$1,996. Clerk No. 4 assists the court in the proceeding. The debtor can be reached at: International Proalko S.A. Viamonte 2995 Buenos Aires, Argentina The trustee can be reached at: Myriam Lewenbaum Montevideo 666 Buenos Aires, Argentina INVERSORA ELECTRICA: Fitch Arg Confirms D Ratings on Notes ---------------------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. confirmed the D rating it assigned to the Obligaciones Negociables for US$100 million Class A and for US$130 million Class B issued by Inversora Electrica de Buenos Aires S.A. The ratings are in accordance with the suspension on the payments of capital and interests since March 2002. The rate is based mainly for non-payment associated with the business of Empresa Distribuidora de Energia Atlantica S.A., which is controlled by Inversora. Despite that, Empresa Distribuidora has shown an improvement on its economic and financial situation, its credit feature still depends on the renegotiation of debts with banks. Fitch Argentina estimates that Empresa Distribuidora will not distribute dividends in the short and medium terms. Inversora Electrica de Buenos Aires S.A. was created on June 1997. It holds a majority stake at Empresa Distribuidora de Energia Atlantica S.A. Empresa Distribuidora holds the electricity distribution concession for 95 years in the east region of the Province of Buenos Aires since the privatization of ESEBA. The main shareholder of IEBA is BAECO (Buenos Aires Energy Company) holding 96% of the shares, which it bought on April 28, 2005, from United Utilities International Limited -- holding 45% in the company. Also, BAECO is controlled by Camuzzi Argentina SA. PRIME ARGENTINA: Reorganization Proceeding Concluded ---------------------------------------------------- Prime Argentina S.A.'s reorganization proceeding has ended. Data published by Infobae on its Web site indicated that the process was concluded after Court No. 16 in Buenos Aires, with assistance from Clerk No. 22, approved the debt agreement signed between the company and its creditors. Estudio Giacumbo Hernandez was the court-appointed trustee that supervised the proceeding. The trustee can be reached at: Estudio Giacumbo Hernandez Avenida Corrientes 1250 Buenos Aires PROVINCIA DEL CHACO: Moody's LatAm Puts D Rating on US$50MM Debt ---------------------------------------------------------------- Provincia del Chaco's US$50,000,000 debt, guaranteed by the Federal Coparticipation, is rated D by Moody's Latin America. The debt was issued on Jan. 14, 2001. TELEFONICA DE ARGENTINA: Investment Plan for 2007 at Risk --------------------------------------------------------- A major conflict with the workers' union has put Telefonica de Argentina SA's ARS1.3-billion investment program at risk, Infobae reports. Business News Americas relates that Foetra, a telecom workers' union in Buenos Aires, has been demanding the almost 2,000 outsourced workers at Telefonica de Argentina be considered as Foetra members, rather than members of Uocra -- the Argentine construction workers union. According to BNamericas, Telefonica de Argentina's outsourced personnel work mainly on expanding the network infrastructure of the firm. Infobae notes that almost 60% of the investment plan could be paralyzed. The conflict is putting in danger the installation of new fixed lines as well as the expansion of broadband services in Argentina, Infobae says, citing Telefonica de Argentina. Telefonica, the parent firm of Telefonica de Argentina, told BNamericas that due to the violent nation of the conflict in its Argentine operations, it temporarily closed some commercial offices and other buildings. Headquartered in Buenos Aires, Argentina, Telefonica de Argentina S.A. -- http://www.telefonica.com.ar/-- provides telecommunication services, which include telephony business both in Spain and Latin America, mobile communications businesses, directories and guides businesses, Internet, data and corporate services, audiovisual production and broadcasting, broadband and Business-to-Business e-commerce activities. * * * Moody's Investors Service upgraded on May 27, 2006, the ratings on Telefonica de Argentina, S.A.'s Corporate Family Rating (foreign currency) to B2 from B3 with stable outlook; Foreign currency issuer rating to B2 from B3 with stable outlook; and Senior Unsecured Rating (foreign currency) to B2 from B3 with stable outlook. UNION CRAFT: Claims Verification Deadline Is Set for Feb. 1 ----------------------------------------------------------- Domingo Vicente Marinkovic, the court-appointed trustee for Union Craft S.A.'s bankruptcy proceeding, will verify creditors' proofs of claim until Feb. 1, 2006. Mr. Marinkovic will present the validated claims in court as individual reports on March 15, 2007. A court 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 Union Craft 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 Union Craft's accounting and banking records will follow on May 2, 2007. The trustee can be reached at: Domingo Vicente Marinkovic Fray Justo Santa Maria de Oro 2381 Buenos Aires, Argentina VALEANT PHARMA: Restatement News Cues Moody's to Review Ratings --------------------------------------------------------------- Moody's Investors Service placed the ratings of Valeant Pharmaceuticals International (B1 corporate family rating) under review for possible downgrade. This rating action follows the company's announcement that it will restate certain financial statements as a result of accounting errors related to accounting for stock options. The rating review is prompted primarily by concerns that failure to file timely financial statements with the SEC could lead to an acceleration of debt maturities. According to the indentures governing US$300 million of Valeant's senior notes, US$240 million of 3% convertible notes and US$240 million of 4% convertible notes, failure to file timely SEC reports constitutes a covenant violation. If the trustee or holders of 25% of the respective series of notes or convertibles declare a default, Valeant must cure the violation within 60 days or the debt becomes immediately due. Secondary concerns include the company's cash flow relative to debt, which has remained somewhat weak for Moody's B1 corporate family rating, and delays in the expected timeline for Viramidine regulatory filings following VISER1 data published in March 2006 and VISER2 data published in September 2006. Moody's rating outlook on Valeant has been negative since March 23, 2006. Moody's rating review will focus on: (1) the ability of the company to meet the filing requirements specified in the indentures; (2) the nature and extent of the restatement, as well as the disclosures of any weaknesses in internal controls over financial reporting; and (3) the company's ability to improve free cash flow over the near term through growth in product sales and cost restructuring activities while continuing to invest in Viramidine clinical trials. Moody's placed these ratings under review for possible downgrade: -- B1 corporate family rating; -- Ba3 senior unsecured notes of US$300 million due 2011 (LGD3, 39%); and -- Ba3 probability of default rating. Moody's does not rate Valeant's 3% convertible subordinated notes of US$240 million due 2010 or its 4% convertible subordinated notes of US$240 million due 2013. Headquartered in Costa Mesa, California, Valeant Pharmaceuticals International -- http://www.valeant.com-- is a global specialty pharmaceutical company with US$823 million of 2005 revenues. The company has offices in Argentina. * ARGENTINA: Issuing US$1 Billion Joint Bond with Venezuela ----------------------------------------------------------- The first stage of the so-called South Bond, to be issued jointly by Argentina and Venezuela, will take place in the first two weeks of November, according to a report from Nosis. The first issuance will be for US$1,000,000. As previously reported, the new securities will trade in the Venezuelan internal market. Argentina will issue Boden 12 and the Finance Ministry will release fixed-interest notes. The two nations have maintained strong financial relations, after the current Venezuelan administration bought about US$3.2 billion of Argentina's Boden 2012 bonds. * * * As reported on Oct. 4, 2006, Standard & Poor's Ratings Services raised its long-term local and foreign currency credit rating on the Republic of Argentina to 'B+' from 'B'. Standard & Poor's also affirmed its 'B' short-term ratings on The Republic of Argentina. S&P said the ratings outlook is stable. =============== B A R B A D O S =============== ANDREW CORP: Markets Dual Band Satellite Systems with Overwatch --------------------------------------------------------------- Andrew Corp. and Overwatch Systems Ltd. have agreed to integrate and jointly market satellite antenna systems with dual band capability for military and government usage. Under the agreement, Andrew's satellite communications antennas will be paired with Overwatch's proprietary dual band feeds to create a robust, reliable offering for government systems integrators and government agencies. This will enable Andrew's multiband antennas to receive and send signals to satellites that utilize dual bands, such as X-band and Ka-band, without changing feed systems. This is especially critical with the upcoming launch of the Wideband Gap filler satellite program, where the use of X-/Ka-band dual feeds is an integral part of the requirements. "We look forward to working together with Overwatch and providing a fresh competitive approach to the unique dual band satellite communications requirements of government and commercial customers," said Russell Dearnley, director, Earth Station Antennas and Systems, Satellite Communications, Andrew Corp. "Our antenna systems expertise and Overwatch's proprietary feed technology are a powerful combination that will benefit customers." "We are pleased to join forces with Andrew in offering antenna system solutions with increased operational effectiveness for both military and commercial applications using our simultaneous dual band feed technology," said Terry Benson, business area manager, Communications Systems, Overwatch Systems Ltd. "Satellites are dual band, now satellite terminals can be, too." Integrated dual band offerings from Andrew and Overwatch are expected to be available in November. Andrew's Satellite Communications Group provides a complete line of antennas from 46 centimeters to 11.5 meters for all enterprise, government/military, and consumer satellite communication applications. Andrew-designed and -built products-which cover C-, Ku-, K-, X-, and the emerging Ka-band-include type approved earth station antenna hubs and gateways for broadband and broadcast, VSAT broadband antennas for consumer and enterprise customers, DBS antennas for home satellite broadcast systems, and complete installation and testing services. About Andrew Headquartered in Westchester, Illinois, Andrew Corp. (NASDAQ: ANDW) -- http://www.andrew.com/-- designs, manufactures and delivers innovative and essential equipment and solutions for the global communications infrastructure market. The company serves operators and original equipment manufacturers from facilities in 35 countries including, among others, these Latin American countries: Argentina, Bahamas, Belize, Barbados, Bermuda and Brazil. Andrew is an S&P 500 company Founded in 1937. * * * As reported in yesterday's Troubled Company Reporter, Standard & Poor's Ratings Services revised its CreditWatch implications on Andrew Corp. to negative from developing. The 'BB' corporate credit rating and other ratings on the company were placed on CreditWatch developing on Aug. 7, 2006. =========== B E L I Z E =========== * BELIZE: Consultation with International Monetary Fund Ends ------------------------------------------------------------ The Executive Board of the International Monetary Fund aka IMF concluded the Article IV consultation with Belize. After a number of years of expansionary policies, stabilization measures were implemented more forcefully in the context of the 2005/06 budget. Partly in response to a tighter policy stance, economic growth slowed from 4-1/2% in 2004 to 3-1/2% in 2005, while inflation rose marginally to just over 4%, mainly reflecting higher fuel prices. The overall fiscal deficit fell sharply from 8.6% of gross domestic product in fiscal year 2004/05 to 3.3% of gross domestic product in fiscal year 2005/06. During the same period, the primary balance shifted from a small deficit to a surplus of 3% of gross domestic product. The fiscal correction reflected revenue measures taken in May 2005, as well as lower interest payments and cuts in capital expenditure. The authorities also tightened liquidity by channeling social security deposits to the central bank and increasing the cash reserve and liquid asset requirements on three occasions by one percentage point each, including most recently in September 2006. Reflecting in part the tightening of macroeconomic polices, the external current account deficit is expected to narrow considerably to 8-1/2% of gross domestic product in 2006, from more than 14% of gross domestic product in the 2005. This recovery has been driven by a reduction in the trade balance, due to an increase in traditional exports, the onset of crude oil exports, and restraint in import growth. Continued buoyant tourism earnings have also helped improve the external current account, as did a lower interest bill, because exceptional fees and charges that were incurred in 2004 and 2005 were not repeated in 2006. Despite these welcome developments, the outlook for 2007 and beyond remains worrisome, as scheduled debt service obligations are high and will rise over time, weighing heavily on the overall balance of payments, particularly as access to voluntary market financing at affordable terms is impaired. The authorities have recognized the sustainability problem and in August 2006, they approached external commercial creditors to seek a cooperative agreement on restructuring public sector debt. The Executive Directors welcomed the progress the authorities have made in addressing Belize's serious macroeconomic imbalances in the context of a homegrown adjustment strategy. A significant fiscal correction has been achieved in fiscal year 2005/06 by increasing tax collection, reining in discretionary current spending, and reducing capital expenditure. Tighter monetary conditions have helped slow credit growth and keep inflationary pressures in check. Directors cautioned that large fiscal and balance of payments financing gaps are likely to persist in 2007 and beyond in the absence of fiscal and monetary policies to eliminate these gaps. To set the economy on a path to medium-term sustainability, the authorities should aim progressively and on a firm timetable to close the fiscal and balance of payments financing gaps, replenish international reserves, and reduce significantly the public debt burden. Directors welcomed the authorities' strategy to reform the revenue system, strengthen public expenditure programming and debt management, and improve financial accountability and oversight. Directors encouraged the authorities to persevere with disciplined macroeconomic policies in coming months in order to contain domestic demand and support an orderly debt restructuring. The recent increase in bank reserve requirements is appropriate, and directors noted that the authorities stand ready to take further action, if needed, to curb excess liquidity and contain private sector credit growth. Directors urged the authorities to work to achieve a primary surplus of 3-1/2% of gross domestic product in fiscal year 2006/07. Directors agreed that achieving balance of payments sustainability in the medium term will require a greater fiscal effort, maintaining a prudent monetary stance, external financing, and debt service relief. They recommended raising the primary surplus by about one percentage point of gross domestic product above that originally targeted, first by saving the bulk of projected revenues from oil production, and in later years by enhanced non-oil revenue collection and restrained current expenditures. They welcomed the authorities' intention to pursue these objectives. Directors stressed the need for a set of carefully sequenced structural reforms to support fiscal and monetary discipline and foster stronger long-term growth, and were reassured by the authorities' commitment and ongoing efforts to move in this direction. The tax administration should be modernized, the tax base broadened, and oil and gasoline taxation reformed. Directors pointed to the importance of reviewing the pension system with the aim of limiting the growth of spending and making the system actuarially sound. Debt management practices should be improved. Directors supported the authorities' intention to improve governance of quasi-fiscal institutions, including winding up the operations of the Development Finance Corp. The central bank should work to broaden its market-based policy instruments in order to make monetary policy more effective. The government's overdraft facility at the central bank should be eliminated to strengthen the bank's independence. Directors supported the authorities' request for fund technical assistance to facilitate early actions in the areas of tax policy and monetary instruments. Directors welcomed that Belize's banking system is generally sound and bank supervision has been strengthened. At the same time, they urged the authorities to consider implementing those recommendations of the IMF's 2003 Offshore Financial Center assessment that remain outstanding. In particular, there is a need to strengthen insurance supervision and broaden financial sector prudential regulations, especially with regard to loan-loss provisioning and loan collateral valuation. Directors concurred with the authorities that the fixed exchange rate regime has anchored prices and expectations, and has generally served the economy well. Sustaining the peg will require that the authorities continue to work toward implementing macroeconomic policies that address Belize's economic and financial vulnerabilities. These considerations increase the importance of responding expeditiously to changes in the domestic and external environment and avoiding policy slippages. Directors observed that reaching a cooperative agreement with private creditors on restructuring Belize's external debt will be critical for regaining balance of payments and debt sustainability. They welcomed the authorities' continuing engagement with multilateral and bilateral creditors as well, in order to promote an orderly adjustment process. Directors welcomed Belize's participation in the General Data Dissemination System and encouraged the authorities to continue to strengthen the quality and timeliness of the country's economic statistics. * * * Moody's Investor Service assigned these ratings to Belize: -- CC LT Foreign Bank Deposit, Caa3 -- CC LT Foreign Currency Debt, Caa3 -- CC ST Foreign Bank Deposit, NP -- CC ST Foreign Currency Debt, NP -- LC Currency Issuer Rating, Caa3 -- FC Currency Issuer Rating, Caa3 -- Foreign Currency Long-Term Debt, Caa3 -- Local Currency Long-Term Debt, Caa3 * * * As reported in the Troubled Company Reporter-Latin America on Aug. 8, 2006, Standard & Poor's lowered its long-term foreign currency sovereign credit rating on Belize to 'CC' from 'CCC-' while leaving its outlook on the rating at negative. Standard & Poor's affirmed its 'CCC+' long-term local currency sovereign credit rating on Belize and revised its outlook on the rating to stable from negative. The 'C' short-term sovereign credit ratings on the sovereign were affirmed by S&&P. ============= B O L I V I A ============= PETROLEO BRASILEIRO: Bolivia Warns of Intervention in Operations ---------------------------------------------------------------- The Bolivian government has warned it will intervene in Petroleo Brasileiro SA's operations in the nation next week if no deal over new production contracts is reached by Oct. 28, Valor Economico reports. Juan Ramon Quintana, a representative of Bolivia's President Evo Morales, traveled to Brasilia, Brazil, on Thursday last week to deliver an ultimatum to Brazil's President Luiz Inacio Lula da Silva, Valor relates. President Morales disclosed on May 1 a nationalization of Bolivia's oil and gas sector, giving foreign oil companies 180 days to renew production contracts or leave the nation. The Bolivian government declined last week requests of extending the Oct. 28 deadline, which is on Oct. 28, Dow Jones states. Headquartered in Rio de Janeiro, Brazil, Petroleo Brasileiro SA 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 Brazil. * * * Petroleo Brasileiro SA's long-term corporate family rating is rated Ba3 by Moody's. * * * Fitch Ratings assigned these ratings on Petroleo Brasileiro's senior unsecured notes: Maturity Date Amount Rate Ratings ------------- ------ ---- ------- April 1, 2008 US$400,000,000 9% BB+ July 2, 2013 US$750,000,000 9.125% BB+ Sept. 15, 2014 US$650,000,000 7.75% BB+ Dec. 10, 2018 US$750,000,000 8.375% BB+ Fitch upgraded the foreign currency rating of Petrobras to BB+ from BB, with positive outlook, in conjunction with Fitch's upgrade of the long-term foreign and local currency IDRs of the Federative Republic of Brazil to BB, from BB- on June 29, 2006. PETROLEO BRASILEIRO: May Abandon Operations in Bolivia ------------------------------------------------------ Petroleo Brasileiro SA, Brazil's state oil company, could abandon its operations in Bolivia if a deal with Yacimientos Petroliferos Fiscales Bolivianos, its Bolivian counterpart, is not reached, the Associated Press reports, citing the Brazilian President Luiz Inacio Lula da Silva's top adviser. Brazilian officials told AP that the country hopes to reach an accord with Bolivia over the exploration and production of Bolivian natural gas before a Saturday deadline set by Bolivia. Silas Rondeau, the mines and energy minister of Brazil, told Agencia Estado that he expected to travel to Bolivia this weekend to complete an accord and is very hopeful about the talks with Bolivian officials. AP underscores that Marco Aurelio Garcia, a top aide to President Silva, said that if a deal is reached a new contract will be established. If there would be no agreement between Brazil and Bolivia, Petroleo Brasileiro will have to leave Bolivia and then it would be compensated by the Bolivian government or through decisions made by international authorities, Mr. Garcia told AP. Headquartered in Rio de Janeiro, Brazil, Petroleo Brasileiro SA 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 Brazil. * * * Petroleo Brasileiro SA's long-term corporate family rating is rated Ba3 by Moody's. * * * Fitch Ratings assigned these ratings on Petroleo Brasileiro's senior unsecured notes: Maturity Date Amount Rate Ratings April 1, 2008 US$400,000,000 9% BB+ July 2, 2013 US$750,000,000 9.125% BB+ Sept. 15, 2014 US$650,000,000 7.75% BB+ Dec. 10, 2018 US$750,000,000 8.375% BB+ Fitch upgraded the foreign currency rating of Petrobras to BB+ from BB, with positive outlook, in conjunction with Fitch's upgrade of the long-term foreign and local currency IDRs of the Federative Republic of Brazil to BB, from BB- on June 29, 2006. =========== B R A Z I L =========== BANCO NACIONAL: Offering New Salary Hike to Workers Next Week ------------------------------------------------------------- Banco Nacional de Desenvolvimento Economico e Social will present a new salary increase offer to its workers next week, Agencia Estado reports. The banks' workers are currently protesting, demanding for a salary increase. According to BNamericas, Banco Nacional workers have demanded a 20% pay increase and bonuses equal to a half-month's pay. The workers walked out on Oct. 19 after Banco Nacional offered a 3.84% pay raise and bonuses equal to half a month's wages, BNamericas notes. BNamericas underscores that on Oct. 20, Banco Nacional rejected an offer for a 4.5% pay increase and bonuses equal to 80% of a month's pay. * * * As reported in the Troubled Company Reporter on March 3, 2006, Standard & Poor's Ratings Services raised its foreign currency counterparty credit rating on Banco Nacional de Desenvolvimento Economico e Social S.A. aka BNDES to 'BB' with a stable outlook from 'BB-' with a positive outlook. The company's local currency credit rating was also shifted to 'BB+' with a stable outlook from 'BB' with a positive outlook. COMPANHIA DE SANEAMENTO: Fitch Rates US$250-Million Notes at BB --------------------------------------------------------------- Fitch Ratings has assigned Local and Foreign Currency Issuer Default Ratings of 'BB' and National Long-term Rating of 'A+(bra)' to Companhia de Saneamento Basico do Estado de Sao Paulo aka Sabesp. In addition, Fitch has assigned a 'BB' to the company's proposed US$250 million note issuance due 2016. The Outlook for the IDRs and National Long Term Rating is Stable. The proceeds of the issuance will be used to refinance existing indebtedness and other corporate purposes. Fitch currently rates Sabesp's fourth, fifth and sixth debenture issuances 'A+(bra)'. The ratings reflect Sabesp's strong cash flow generation, moderate leverage and satisfactory average life of its debt. The ratings are also supported by Sabesp's near monopolistic position in its region as well as the economies of scale gained as the largest water and wastewater company in the Americas in terms of the number of customers. Sabesp operates without a concession contract in large municipalities, which moderately adds to business risk. In addition, the sector lacks a specific regulatory framework that adds to uncertainty. Presently, the Federal Government is in the process of introducing new legislation to regulate the water and wastewater sector in Brazil including the clarification of concession ownership. While the introduction of a regulatory model with a specific law and defining regulation would be positive, mild negative financial impacts could occur for Sabesp as new concession agreements could increase operating costs that may be partially offset by tariff. Sabesp's operational and financial performance is exposed to hydrological conditions, as well as political interference risks. The company is addressing this risk by continuing to invest in capacity additions. Political interference risk exists as Sabesp is owned by the Government of the State of Sao Paulo. The company's board of directors includes a majority of members appointed by the government, who influence investment policies and tariff adjustments. Political risks are moderate and somewhat mitigated by continuity of the present political party, which is expected to remain in place up to 2010. Over the last five years, the Government has been neutral to credit quality with little negative interference. Sabesp's financial profile is improving through strong cash generation. The company has stable operating results and high margins and is resilient in economic downturns. The company has been gradually reducing its leverage, which is consistent with the rating category. At June 2006, total debt/LTM EBITDA was 2.6x versus 2.9x in 2005 and 3.7x in 2004. Interest coverage also improved and reached 3.7x in the LTM ending June 2006, against 3.4 times in 2005. Net revenues grew 11% to BRL2.7 billion and EBITDA grew 15% to BRL1.3 billion in the first six months of 2006 over the same period of 2005. EBITDA margin reached 48% at the first half of 2006. Sabesp showed an increase of 3.5% in water and sewage volume billed in the first six months of 2006 and should benefit in the second half of the year from a 6.71% tariff adjustment that took effect in August 2006. Sabesp's debt profile has improved and should benefit from the proposed note issuance. The issue is expected to refinance US$225 million notes due 2008 and reduce the refinancing risk. The new issue will also reduce Sabesp's financial costs and increase the average life of its debt. At June 2006, Sabesp reported total debt of BRL6.4 billion and BRL336 million in cash and in financial investments; short-term debt represented only 10% of total (BRL642 million). Although there is still some foreign exchange risk, Sabesp has reduced its exposure to currency mismatches. At June 2006, Sabesp reached its lowest level of foreign currency denominated debt in the last five years, both in nominal (BRL1.5 billion) and in percentage terms (23%). Sabesp operates public water and sewage service systems in the State of Sao Paulo, serving 367 of the 645 municipalities, as well as supplies water on a wholesale basis to another six municipalities of the metropolitan region. The company provides water to 22.6 million inhabitants directly (6.5 million connections), and sewage collection to 18.4 million inhabitants (4.9 million connections). Sabesp's coverage ratios are 100% of the population in its business area for supplying water and 78% of the population for collecting sewage, of which 60% is treated. Sabesp is controlled by the Government of the State of Sao Paulo, which holds 50.3% of the company's common and total shares. COMPANHIA DE SANEAMENTO: Starts Building Sao Joao Pipeline ---------------------------------------------------------- Companhia de Saneamento Basico do Estado de Sao Paulo, the state water utility of Sao Paulo, said in a press release that it has started the BRL16-million construction works on the Sao Joao do Barueri collection pipeline. Business News Americas relates that the pipeline will extend four kilometers from residential neighborhoods Jandira and Baureri to the wastewater treatment plant in Barueri. The pipeline have a diameter varying between 200mm and 1,500mm. According to BNamericas, sewage produced in Jandira and Baureri is discharged into the Tiete river. BNamericas underscores that the construction of the collection pipeline is part of the Tiete river recuperation project. Construction works on the Sao Joao do Barueri collection pipeline Will take 18 months. It will benefit 39,000 residents, BNamericas says. BNamericas notes that Companhia de Saneamento is also offering expansion works on the potable water network, which is supplied from water taken from the Tiete river, as a public-private partnership. The two projects are aimed at improving water quality of one of the principal water sources for Sao Paulo, BNamericas states. Companhia de Saneamento Basico do Estado de Sao Paulo is one of the largest water and sewage service providers in the world based on the population served in 2005. It operates water and sewage systems in Sao Paulo, Brazil. * * * As reported in the Troubled Company Reporter-Latin America on June 23, 2006, Standard & Poor's Ratings Services has raised its Brazilian national-scale corporate credit rating on Companhia de Saneamento Basico do Estado de Sao Paulo to 'brA+' from 'brA'. At the same time, it affirmed the company's global-scale ratings at 'BB-'. S&P said the outlook is stable. FIDELITY NATIONAL: Repurchases 1.4 Mil. Shares of Common Stock -------------------------------------------------------------- Fidelity National Information Services, Inc. or FIS, a majority-owned subsidiary of Fidelity National Financial, Inc. or FNF, repurchased approximately 1.4 million shares of FIS common stock from Fidelity National Title Group, Inc. or FNT, and its subsidiaries on Oct. 23, 2006, at a total cost of approximately US$56.4 million, bringing the total number of FIS shares outstanding to 189,282,429. FIS' repurchase of shares is in conformity with FNF's receipt of a formal private letter ruling from the Internal Revenue Service regarding the tax-free distribution of FNT stock to FNF shareholders and the merger of FNF with and into FIS. About Fidelity National Headquartered in Jacksonville, Florida, Fidelity National Information Services, Inc. -- http://www.fidelityinfoservices.com/-- provides core processing for financial institutions; card issuer and transaction processing services; mortgage loan processing and mortgage- related information products; and outsourcing services to financial institutions, retailers, mortgage lenders and real estate professionals. FIS has processing and technology relationships with 35 of the top 50 global banks, including nine of the top ten. Nearly 50 percent of all U.S. residential mortgages are processed using FIS software. FIS maintains a strong global presence, serving over 7,800 financial institutions in more than 60 countries worldwide, including Brazil. * * * Standard & Poor's Ratings Services raised, on March 8, 2006, the corporate credit and senior secured ratings of Fidelity National Information Services Inc. to 'BB+' from 'BB', and removed it from CreditWatch where it was placed on Sept. 15, 2005. FREESCALE SEMICONDUCTOR: Commences Tender Offers on Sr. Notes ------------------------------------------------------------- Freescale Semiconductor, Inc., is commencing tender offers for its US$350 million aggregate outstanding principal amount of 6.875% Senior Notes due 2011 and its US$500 million aggregate outstanding principal amount of 7.125% Senior Notes due 2014. In connection with the tender offers, Freescale is soliciting consents to proposed amendments that would, among other things, eliminate most of the restrictive covenants and certain of the events of default contained in the indenture governing the Notes. The tender offers will expire at 5:00 p.m., prevailing eastern time, on Nov. 21, 2006, unless either or both tender offers are earlier terminated or extended. In order to receive the consent payment, which is included in the total consideration, holders must tender their Notes and consent to the proposed amendments at or prior to 5:00 p.m., prevailing eastern time, on Nov. 3, 2006, unless the time and date for either or both consents is extended. Both tender offers and consent solicitations are being made pursuant to the terms and subject to the conditions set forth in an Offer to Purchase and Consent Solicitation Statement, dated Oct. 23, 2006. The Statement contains a description of the specific terms and conditions of the tender offers and consent solicitations. Subject to certain exceptions set forth in the Statement, tenders of Notes may be withdrawn and consents may be revoked at any time until the applicable Consent Date, but not thereafter. Subject to the terms and conditions in the Statement, Freescale will pay each Holder who validly consents to the applicable proposed amendments at or prior to 5:00 p.m., prevailing eastern time, on the applicable Consent Date, US$30.00 in cash per US$1,000 principal amount of the Notes for which consents have been validly delivered and not validly revoked at or prior to 5:00 p.m., prevailing eastern time, on the applicable Consent Date, payable on the applicable settlement date. As more fully described in the Statement, the total consideration for each US$1,000 principal amount of each series of Notes validly tendered pursuant to the applicable tender offer and accepted for payment on the applicable settlement date and consents delivered pursuant to the applicable solicitation and not validly withdrawn or revoked at or prior to 5:00 p.m., prevailing eastern time, on the applicable Consent Date, will be determined with respect to each series of Notes on the basis of a yield to the applicable First Call Date equal to the sum of the bid-side yield on the applicable reference treasury security with respect to such series of Notes as calculated by the Dealer Managers in accordance with standard market practice plus the applicable fixed spread of 50 basis points. The total consideration applicable to a series of Notes includes the Consent Payment applicable to such series of Notes and is payable on the applicable settlement date. In addition, any holders who validly tender and do not validly withdraw their Notes in the tender offers will receive accrued and unpaid interest from the last interest payment date to, but not including, the settlement date with respect to such series of Notes, payable on the applicable settlement date. Subject to the terms and conditions in the Statement, the settlement date for each tender offer is expected to occur promptly following the applicable Expiration Date. Each tender offer is conditioned upon the satisfaction of certain conditions, including, among other things, there being validly tendered and not withdrawn at least a majority in aggregate principal amount of the outstanding Notes of each applicable series and the receipt of the requisite consents for each applicable series of Notes, execution of the applicable supplemental indenture providing for the applicable proposed amendments and the consummation of the merger pursuant to the previously announced Agreement and Plan of Merger, dated Sept. 15, 2006, by and among Freescale, Firestone Holdings LLC and Firestone Acquisition Corporation. Each of Credit Suisse Securities (USA) LLC and Citigroup Corporate and Investment Banking has been retained as a Dealer Manager in connection with the tender offers and as a Solicitation Agent in connection with the consent solicitations. Any questions or requests for assistance may be directed to: Credit Suisse Securities (USA) LLC Tel: (800) 820-1653 (U.S. toll-free) (212) 325-7596 (collect) -- or -- Citigroup Corporate and Investment Banking Tel: (800) 558-3745 (U.S. toll-free) (212) 723-6106 (collect) D.F. King & Co., Inc. has been retained as Tender Agent and as Information Agent in connection with the tender offers and consent solicitations. Requests for additional copies of the Statement or any other document may be directed to: D.F. King & Co., Inc. 48 Wall Street New York, New York 10005 Tel: (800) 714-3312 (U.S. toll-free) Based in Austin, Texas, Freescale Semiconductor, Inc. (NYSE:FSL) (NYSE:FSL.B) -- http://www.freescale.com/-- designs and manufactures embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets. Freescale Semiconductor became a publicly traded company in July 2004. The company has design, research and development, manufacturing or sales operations in more than 30 countries. In Latin America, Freescale Semiconductor has operations in Argentina, Brazil and Mexico. * * * Freescale Semiconductor's 7-1/8% Senior Notes due 2014 carry Moody's Investors Service's Ba1 rating. As reported in the Troubled Company Reporter on Sept. 26, 2006, Fitch downgraded Freescale Semiconductor Inc.'s Issuer Default Rating, senior unsecured notes, and senior unsecured bank credit facility to 'BB+' from 'BBB-' following the company's confirmation that it has entered into a definitive agreement to be purchased by a consortium of private equity firms for US$17.6 billion, the largest ever technology leveraged buy-out. PETROLEO BRASILEIRO: Advancing Biodiesel Plants Construction ------------------------------------------------------------ Petroleo Brasileiro SA, the state-owned oil firm of Brazil, said in a statement that it has agreed with biodiesel cooperatives to advance plans on constructing biodiesel plants. Petroleo Brasileiro told Business News Americas that it will work with the agriculture cooperatives for the conclusion of technical and economic feasibility studies for the plants costing BRL100 million each. The cooperatives include: -- Biopampa, -- Cooperbio, and -- Frigorifico Mercosul. According to local press, two plants will be constructed. BNamericas relates that Petroleo Brasileiro signed accords with the cooperatives in May to conduct initial studies. The agreement with Cooperbio includes ethanol production. Petroleo Brasileiro told BNamericas that some 80,000 small farmers in the state would produce the oilseeds for biodiesel production. BNamericas states that Petroleo Brasileiro wants to make sure that the supply of biodiesel would meet legal admixture requirement of 2% from 2008 onward and 5% from 2013. BR Distribuidora, the retail arm of Petroleo Brasileiro, will buy production from the plants, BNamericas reports. Headquartered in Rio de Janeiro, Brazil, Petroleo Brasileiro SA 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 Brazil. * * * Petroleo Brasileiro SA's long-term corporate family rating is rated Ba3 by Moody's. * * * Fitch Ratings assigned these ratings on Petroleo Brasileiro's senior unsecured notes: Maturity Date Amount Rate Ratings April 1, 2008 US$400,000,000 9% BB+ July 2, 2013 US$750,000,000 9.125% BB+ Sept. 15, 2014 US$650,000,000 7.75% BB+ Dec. 10, 2018 US$750,000,000 8.375% BB+ Fitch upgraded the foreign currency rating of Petrobras to BB+ from BB, with positive outlook, in conjunction with Fitch's upgrade of the long-term foreign and local currency IDRs of the Federative Republic of Brazil to BB, from BB- on June 29, 2006. =========================== C A Y M A N I S L A N D S =========================== ALTERNATIVE VENTURES: Final Shareholders Meeting Is on Nov. 9 ------------------------------------------------------------- Alternative Ventures Ltd.'s final shareholders meeting will be at 10:00 a.m. on Nov. 9, 2006, at: Close Brothers (Cayman) Limited 4th Floor Harbour Place, George Town Grand Cayman, Cayman Islands These agendas 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: Jeff Arkley Attn: Neil Gray Close Brothers (Cayman) Limited Fourth Floor, Harbour Place P.O. Box 1034, George Town Grand Cayman, Cayman Islands Tel: (345) 949 8455 Fax: (345) 949 8499 GLOBAL VENTURES: Liquidator Presents Wind Up Accounts on Nov. 9 --------------------------------------------------------------- Global Ventures Investments Ltd.'s final shareholders meeting will be at 10:00 a.m. on Nov. 9, 2006, at: Close Brothers (Cayman) Limited 4th Floor Harbour Place, George Town Grand Cayman, Cayman Islands These agendas 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: Jeff Arkley Attn: Neil Gray Close Brothers (Cayman) Limited Fourth Floor, Harbour Place P.O. Box 1034, George Town Grand Cayman, Cayman Islands Tel: (345) 949 8455 Fax: (345) 949 8499 MOLVO: Invites Shareholders for a Final Meeting on Nov. 9 --------------------------------------------------------- Molvo's final shareholders meeting will be at 10:00 a.m. on Nov. 9, 2006, at: Close Brothers (Cayman) Limited 4th Floor Harbour Place, George Town Grand Cayman, Cayman Islands These agendas 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: Jeff Arkley Attn: Neil Gray Close Brothers (Cayman) Limited Fourth Floor, Harbour Place P.O. Box 1034, George Town Grand Cayman, Cayman Islands Tel: (345) 949 8455 Fax: (345) 949 8499 MUTUAL FUND (2): Last Day to File Proofs of Claim Is on Nov. 13 --------------------------------------------------------------- Mutual Fund Basket Master Fund (2)'s creditors are required to submit proofs of claim by Nov. 13, 2006, to the company's liquidator: David A.K. Walker Lawrence Edwards PricewaterhouseCoopers Strathvale House, George Town Grand Cayman, Cayman Islands Creditors who are not able to comply with the Nov. 13 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Mutual Fund's shareholders agreed on Aug. 30, 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: Jodi Jones P.O. Box 258, George Town Grand Cayman, Cayman Islands Tel: (345) 914 8694 Fax: (345) 945 4237 MUTUAL FUND (4): Creditors Must File Proofs of Claim by Nov. 13 --------------------------------------------------------------- Mutual Fund Basket Master Fund (4)'s creditors are required to submit proofs of claim by Nov. 13, 2006, to the company's liquidator: David A.K. Walker Lawrence Edwards PricewaterhouseCoopers Strathvale House, George Town Grand Cayman, Cayman Islands Creditors who are not able to comply with the Nov. 13 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Mutual Fund's shareholders agreed on Aug. 30, 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: Jodi Jones P.O. Box 258, George Town Grand Cayman, Cayman Islands Tel: (345) 914 8694 Fax: (345) 945 4237 MUTUAL FUND (8-GLOBAL): Proofs of Claims Filing Is Until Nov. 13 ---------------------------------------------------------------- Mutual Fund Basket Master Fund (8-Global Focus)'s creditors are required to submit proofs of claim by Nov. 13, 2006, to the company's liquidator: David A.K. Walker Lawrence Edwards PricewaterhouseCoopers Strathvale House, George Town Grand Cayman, Cayman Islands Creditors who are not able to comply with the Nov. 13 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Mutual Fund's shareholders agreed on Aug. 30, 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: Jodi Jones P.O. Box 258, George Town Grand Cayman, Cayman Islands Tel: (345) 914 8694 Fax: (345) 945 4237 MUTUAL FUND (8-PACIFIC): Proofs of Claim Filing Ends by Nov. 13 --------------------------------------------------------------- Mutual Fund Basket Master Fund (8-Pacific Focus)'s creditors are required to submit proofs of claim by Nov. 13, 2006, to the company's liquidator: David A.K. Walker Lawrence Edwards PricewaterhouseCoopers Strathvale House, George Town Grand Cayman, Cayman Islands Creditors who are not able to comply with the Nov. 13 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Mutual Fund's shareholders agreed on Aug. 30, 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: Jodi Jones P.O. Box 258, George Town Grand Cayman, Cayman Islands Tel: (345) 914 8694 Fax: (345) 945 4237 SAPIC 98 (22): Proofs of Claim Filing Deadline Is on Nov. 13 ------------------------------------------------------------ Sapic 98 Reference Fund (22) Ltd.'s creditors are required to submit proofs of claim by Nov. 13, 2006, to the company's liquidator: David A.K. Walker Lawrence Edwards PricewaterhouseCoopers Strathvale House, George Town Grand Cayman, Cayman Islands Creditors who are not able to comply with the Nov. 13 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Sapic 98's shareholders agreed on Sept. 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: Jodi Jones P.O. Box 258, George Town Grand Cayman, Cayman Islands Tel: (345) 914 8694 Fax: (345) 945 4237 SAPIC 98 (31): Creditors Must Submit Proofs of Claim by Nov. 13 --------------------------------------------------------------- Sapic 98 Reference Fund (31) Ltd.'s creditors are required to submit proofs of claim by Nov. 13, 2006, to the company's liquidator: David A.K. Walker Lawrence Edwards PricewaterhouseCoopers Strathvale House, George Town Grand Cayman, Cayman Islands Creditors who are not able to comply with the Nov. 13 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Sapic 98's shareholders agreed on Sept. 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: Jodi Jones P.O. Box 258, George Town Grand Cayman, Cayman Islands Tel: (345) 914 8694 Fax: (345) 945 4237 SAPIC 98 (36): Last Day for Filing of Proofs of Claim Is Nov. 13 ---------------------------------------------------------------- Sapic 98 Reference Fund (36) Ltd.'s creditors are required to submit proofs of claim by Nov. 13, 2006, to the company's liquidator: David A.K. Walker Lawrence Edwards PricewaterhouseCoopers Strathvale House, George Town Grand Cayman, Cayman Islands Creditors who are not able to comply with the Nov. 13 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Sapic 98's shareholders agreed on Sept. 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: Jodi Jones P.O. Box 258, George Town Grand Cayman, Cayman Islands Tel: (345) 914 8694 Fax: (345) 945 4237 SAPIC 98 (B-I): Deadline for Proofs of Claim Filing Is Nov. 13 -------------------------------------------------------------- Sapic 98 Reference Fund (B-I) Ltd.'s creditors are required to submit proofs of claim by Nov. 13, 2006, to the company's liquidator: David A.K. Walker Lawrence Edwards PricewaterhouseCoopers Strathvale House, George Town Grand Cayman, Cayman Islands Creditors who are not able to comply with the Nov. 13 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Sapic 98's shareholders agreed on Sept. 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: Jodi Jones P.O. Box 258, George Town Grand Cayman, Cayman Islands Tel: (345) 914 8694 Fax: (345) 945 4237 SILICON MAGNETIC: Shareholders Gather for Last Meeting on Nov. 9 ---------------------------------------------------------------- Silicon Magnetic Systems (Cayman) Ltd.'s final shareholders meeting will be at 10:00 a.m. on Nov. 9, 2006, at: Close Brothers (Cayman) Limited 4th Floor Harbour Place, George Town Grand Cayman, Cayman Islands These agendas 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: Jeff Arkley Attn: Neil Gray Close Brothers (Cayman) Limited Fourth Floor, Harbour Place P.O. Box 1034, George Town Grand Cayman, Cayman Islands Tel: (345) 949 8455 Fax: (345) 949 8499 ========= C H I L E ========= AES CORP: Files US$40-Million Lawsuit Against Alstom in Delaware ---------------------------------------------------------------- AES Corp. is seeking US$40 million from Alstom SA, a French firm, in a trial of a warranty dispute that started in a federal court in Delaware on Monday, Bloomberg News reports. Bloomberg notes that a unit of AES Corp. filed a lawsuit against Alstom Power Inc. in 2004, claiming that the latter breached contract over corrosion in pollution-control systems at an US$800 million coal-fired power plant in Guyama, Puerto Rico. The report says that Dane H. Butswinkas, the legal representative of AES Corp., told the jurors on Monday that parts of the 454-megawatt plant, which uses steam to generate electricity, rusted to bits in a year after it started operating in 2002. Meanwhile, John Anthony Wolf, Alstom's attorney, said that AES Corp. failed to maintain and run the equipment properly and that AES Corp. is seeking exaggerated damages for problems that were self-inflicted, Bloomberg relates. Dane H. Butswinkas can be reached at: Williams & Connolly LLP 725 Twelfth St., N.W. Washington, DC 20005 Phone: 202-434-5110 Fax: 202-434-5029 E-mail: dbutswinkas@wc.com John Anthony Wolf can be reached at: Ober Kaler 120 East Baltimore Street Suite 800 Baltimore, MD 21202-1643 Phone: (410) 347-7346 Fax: (410) 230-7272 AES Corp. -- http://www.aes.com-- and its subsidiaries engage in the generation and distribution of electric power. It generates power for sale to utilities and other wholesale customers, as well as operates utilities that distribute power to retail, commercial, industrial, and governmental customers through integrated transmission and distribution systems. The company operates through three segments: Contract Generation, Competitive Supply, and Regulated Utilities AES Corp.'s Latin America business group is comprised of generation plants and electric utilities in Argentina, Brazil, Chile, Colombia, Dominican Republic, El Salvador, Panama and Venezuela. Fuels include biomass, diesel, coal, gas and hydro. The group also pursues business development activities in the region. AES has been in the region since May 1993, when it acquired the CTSN power plant in Argentina. * * * As reported in the Troubled Company Reporter on Oct. 16, 2006, Moody's Investors Service affirmed its B1 Corporate Family Rating for AES Corp. in connection with the implementation of its new Probability-of-Default and Loss-Given-Default rating methodology. Additionally, Moody's revised its probability-of- default ratings and assigned loss-given-default ratings on the company's loans and bond debt obligations including the B1 rating on its senior unsecured notes 7.75% due 2014, which was also given an LGD4 loss-given default rating, suggesting noteholders will experience a 55% loss in the event of a default. =============== C O L O M B I A =============== BANCOLOMBIA SA: Names Olga Botero VP of Information Technology -------------------------------------------------------------- Bancolombia S.A.'s board of directors accepted the resignation of Jorge Ivan Toro Villegas as Vice President of Information Technology and thanked him for his valuable work at Conavi and Bancolombia during his 32 years of service. To replace him, the Board appointed Olga Botero Pelaez, who will take office as Vice President of Information Technology once authorized by the Superintendency of Finance of Colombia. Olga Botero is an engineer and has both a bachelor degree and a masters degree in Computer Science from Iowa State University. She has held different positions in companies including Hewlett Packard, Suramericana de Seguros S.A., Mecosoft and Orbitel. During her 7 years at Orbitel, she held several positions, including Marketing Operations Manager, Customer Services Manager and National Sales Manager. She has also been a professor at universities including Eafit, Universidad Javeriana and Universidad de la Sabana. * * * The Troubled Company Reporter-Latin America reported on April 28, 2006, that Moody's Investors Service upgraded Bancolombia's bank financial strength ratings to D+ from D with a stable outlook. Moody's added that the action concludes the review for possible upgrade that was announced on Oct. 13, 2005. Moreover, Bancolombia's Ba3/Not Prime long- and short-term foreign currency deposit ratings were affirmed. Moody's said the outlook on all ratings is stable. BANCOLOMBIA: Unit Authorizes Issue of COP800-Billion in Bonds ------------------------------------------------------------- Sufinanciamiento, Bancolombia's auto financing unit, said in a filing with Superfinanciera, the local financial regulator, that it has authorized the issue of up to COP800 billion in bonds. Bancolombia purchased Sufinanciamiento for COP75 billion in December 2003, Business News Americas reports. * * * The Troubled Company Reporter-Latin America reported on April 28, 2006, that Moody's Investors Service upgraded Bancolombia's bank financial strength ratings to D+ from D with a stable outlook. Moody's added that the action concludes the review for possible upgrade that was announced on Oct. 13, 2005. Moreover, Bancolombia's Ba3/Not Prime long- and short-term foreign currency deposit ratings were affirmed. Moody's said the outlook on all ratings is stable. ECOPETROL: Five Lawmakers Support Sale of 20% Stake --------------------------------------------------- Five lawmakers have presented written opinions in favor of the sale of 20% stake in Ecopetrol, the state-owned oil company of Colombia, Portafolio reports. Business News Americas names these lawmakers: -- Senator William Montes, -- Senator Miguel de la Espriella, -- Senator Arturo Char, -- Senator Alvaro Araujo, and -- Representative Bladimiro Cuello. According to BNamericas, the five lawmakers have been discussing with the executive branch, which is directing the sales process. However, the lawmakers warned that the Ecopetrol stake must be sold to private individual investors and that the government must keep the remaining 80% stake in the company, BNamericas notes. BNamericas underscores that the lawmakers want to make sure that an ample number of Colombian citizens are able to purchase shares in Ecopetrol. Luis Ferney Moreno, the energy and mining law department director at Bogota's Externado university, told BNamericas, "That is the mechanism I would choose: an association between the state and the individual investors. We have experience doing this." Interconexion Electrica SA, the state-controlled transmission firm of Colombia, went through a similar process, with individual investors given chance to purchase stakes in the company, BNamericas states. Ecopetrol is an integrated-oil company that is wholly owned by the Colombian government. The company's activities include exploration for and production of crude oil and natural gas, as well as refining, transportation, and marketing of crude oil, natural gas and refined products. Ecopetrol is Latin America's fourth-largest integrated-oil concern. Operations are organized into Exploration & Production, Refining & Marketing, Transportation, and International Commerce & Gas. On June 27, 2006, Fitch Ratings revised the rating outlook of the long-term foreign currency issuer default rating of Ecopetrol S.A. to Positive from Stable. This rating action follows the recent revision in the Rating Outlook to Positive from Stable of the 'BB' foreign currency IDR of the Republic of Colombia. Ecopetrol's IDR remain strongly linked with the credit profile of the Republic of Colombia. PETROLEOS DE VENEZUELA: Eyes Colombian Gov.'s Stake in Ecogas ------------------------------------------------------------- Petroleos de Venezuela SA, the state-owned oil firm of Venezuela, has expressed interest in bidding for the Colombian government's stake in Ecogas, Hernan Martinez, the mining and energy minister of Colombia, told reporters. Business News Americas relates that Minister Martinez said that five firms have expressed interest in Ecogas. Three of those firms are: -- Petroleos de Venezuela, -- Promigas, and -- Enbridge. According to BNamericas, the six AFP pension fund managers of Colombia lost the previous tender for the 97.2% Ecogas stake, after their COP1.97-trillion offer dropped below the 90% minimum price the Colombian government set. The Colombian government will sell the shares on Nov. 24, BNamericas states. Petroleos de Venezuela SA is Venezuela's state oil company in charge of the development of the petroleum, petrochemical and coal industry, as well as planning, coordinating, supervising and controlling the operational activities of its divisions, both in Venezuela and abroad. * * * 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. * COLOMBIA: U'wa Nation Rejects Ecopetrol's Oil Project ------------------------------------------------------- The U'wa nation has rejected a call from the Colombian government to participate in a "prior consultation" about the Siriri/Catleya oil project on their cloud forest homelands. The tribe wants the project cancelled. In recent talks with the government, U'wa presented colonial land titles that they claim uphold their sub-surface rights to their ancestral lands. This announcement is expected to further delay attempts by Ecopetrol, Colombia's state-owned oil company, to move ahead with the project. "We have decided not to permit petroleum activities on our sacred territory, Kera Chikara, and therefore, we believe that prior consultation as currently being applied by the Colombian Government limits our right to veto," the U'wa High Council declared in a position statement. The U'wa's historic legal documents, dating back to the 18th and 19th Centuries, strike at the heart of the claims by the Colombian government that the rights to all sub-surface resources in national territory belong to the State. In the past, both the Colombian Council of State and Supreme Court have repeatedly upheld the colonial law. The news emerged following a recent meeting between the U'wa, Ecopetrol and government representatives. More than 500 U'wa gathered to unanimously tell the officials that they would not participate in the consultation. Prior consultation is a statutory requirement in Colombia for any infrastructure project that might adversely affect the territories of indigenous communities. It does not incorporate the right to Free, Prior, and Informed Consent, the global benchmark human rights standard that would allow the tribal authority to reject a damaging project. U'wa, one of the most traditional indigenous communities in South America, believe oil drilling would devastate their environment, culture, and way of life. The government delegation also received a report by Stanford Professor Terry Lynn Karl, an expert in the "resource curse", that outlined how the project would devastate the lands and livelihoods of U'wa people, have negative environmental impacts, cause social and economic problems, and provoke increased violence. * * * On July 25, 2006, Fitch rated the Republic of Colombia's US$1 billion issue of fixed-rate Global Bonds maturing Jan. 27, 2017, 'BB'. The rating is in line with Fitch's long-term foreign currency rating on Colombia. Fitch said the Rating Outlook is Positive. =================== C O S T A R I C A =================== ARMSTRONG WORLD: Reports Distribution Amount for Class 6 Claims --------------------------------------------------------------- Armstrong World Industries Inc. disclosed the amount of the initial distributions it expects to make to general unsecured creditors under its Chapter 11 plan. Specifically, distributions to holders of allowed unsecured claims falling in Class 6 will commence on Oct. 17, 2006, pursuant to its Court-approved "Fourth Amended Plan of Reorganization, as Modified," dated Feb. 21, 2006. The Company says that per US$10,000 of the Class 6 claims, an initial distribution of 116 Common Shares of reorganized Armstrong World Industries and approximately US$2,435 in cash are expected. The initial distributions exclude approximately US$11 million of cash and 538,000 shares that are reserved from distribution due to disputed unsecured claims in Class 6. A total of 19,418,520 shares and approximately US$407 million of cash will be distributed to creditors in Class 6 under the Plan. Separately, in discharge of all of its present and future asbestos-related personal injury claims, on October 2 the Company issued under the Plan 36,981,480 Common Shares to the Armstrong World Industries, Inc., Asbestos Personal Injury Settlement Trust and by October 17 will distribute to the Trust approximately US$738 million in cash, representing the portion of cash distributions to which the Trust is entitled under the Plan. All present and future asbestos-related personal injury claims must be asserted against, and will be resolved by, the Trust, and such claims may not be asserted against the Company. Under the Plan, payments to unsecured creditors having allowed claims of US$10,000 or less (or who have reduced their claims to US$10,000) began on October 2. The creditors receive distributions entirely in cash in an amount equal to approximately 75% of their allowed claims. The cash amount to be distributed to Class 6 creditors and the Trust includes "Available Cash" as defined in the Plan and US$775 million of the cash proceeds expected from US$800 million of term loans that the Company is arranging in lieu of issuing notes under the Plan. The term loans are in addition to a US$300 million revolving credit facility already established, which is currently undrawn and will be available to support the Company's ongoing liquidity needs. The Company also disclosed that its Common Shares have been approved for listing on the New York Stock Exchange under the ticker symbol "AWI." Trading on the NYSE is expected to commence on a "when issued" basis, and "regular way" trading is anticipated to begin on a date to be announced by the New York Stock Exchange. "We are pleased to return to the New York Stock Exchange, where Armstrong first began trading on July 17, 1935," F. Nicholas Grasberger III, senior vice president and chief financial officer, said. "This is the renewal of a long and rewarding relationship between Armstrong and the NYSE." "We are pleased to welcome back Armstrong World Industries to our family of NYSE-listed companies, resuming our 70-plus year partnership with the company," John A. Thain, NYSE Group, Inc. chief executive officer, said. "We look forward to serving Armstrong World Industries and its shareholders, and providing the company with superior market quality and brand visibility." Based in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior floor coverings and ceiling systems, around the world. The company has operation in Colombia, Costa Rica, Greece Iceland and Asia among others. The Company and its affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. The Company and its affiliates tapped the Feinberg Group for analysis, evaluation, and treatment of personal injury asbestos claims. Mark Felger, Esq. and David Carickhoff, Esq., at Cozen and O'Connor, and Robert Drain, Esq., Andrew Rosenberg, Esq., and Alexander Rohan, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Houlihan Lokey for financial and investment advice. The Official Committee of Asbestos Personal Injury Claimant hired Ashby & Geddes as counsel. The Bankruptcy Court confirmed AWI's plan on Nov. 18, 2003. The District Court Judge Robreno confirmed AWI's Modified Plan on Aug. 14, 2006. The Clerk entered the formal written confirmation order on Aug. 18, 2006. The Company's "Fourth Amended Plan of Reorganization, as Modified," has become effective and AWI has emerged from Chapter 11. (Armstrong Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Oct. 9, 2006 Standard & Poor's Ratings Services raised its corporate credit rating on Armstrong World Industries Inc. to 'BB' from 'D', following the Company's emergence from bankruptcy on Oct. 2, 2006. S&P said the outlook is stable. ARMSTRONG WORLD: Registers 5,349,000 Common Shares -------------------------------------------------- Walter T. Gangl, Deputy General Counsel and Assistant Secretary of Armstrong World Industries, Inc., discloses in a regulatory filing with the U.S. Securities and Exchange Commission that the Company has registered 5,349,000 shares of common stock to be issued to officers and key employees in accordance with its 2006 Long-Term Incentive Plan. The maximum offering price for each share is US$35, for an aggregate offering price of US$187,215,000. The Company paid a US$20,032 registration fee. Based in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior floor coverings and ceiling systems, around the world. The company has operation in Colombia, Costa Rica, Greece Iceland and Asia among others. The Company and its affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. The Company and its affiliates tapped the Feinberg Group for analysis, evaluation, and treatment of personal injury asbestos claims. Mark Felger, Esq. and David Carickhoff, Esq., at Cozen and O'Connor, and Robert Drain, Esq., Andrew Rosenberg, Esq., and Alexander Rohan, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Houlihan Lokey for financial and investment advice. The Official Committee of Asbestos Personal Injury Claimant hired Ashby & Geddes as counsel. The Bankruptcy Court confirmed AWI's plan on Nov. 18, 2003. The District Court Judge Robreno confirmed AWI's Modified Plan on Aug. 14, 2006. The Clerk entered the formal written confirmation order on Aug. 18, 2006. The Company's "Fourth Amended Plan of Reorganization, as Modified," has become effective and AWI has emerged from Chapter 11. (Armstrong Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Oct. 9, 2006 Standard & Poor's Ratings Services raised its corporate credit rating on Armstrong World Industries Inc. to 'BB' from 'D', following the Company's emergence from bankruptcy on Oct. 2, 2006. S&P said the outlook is stable. =============== H O N D U R A S =============== DOLE FOOD: Creating Worker Program for Honduran Banana Workers -------------------------------------------------------------- Dole Food Company, Inc., disclosed that Standard Fruit de Honduras, S.A. has reached an agreement with the Government of Honduras and representatives of Honduran banana workers. This agreement establishes a Worker Program that is intended by the parties to resolve in a fair and equitable manner the claims of male banana workers alleging sterility as a result of exposure to the agricultural chemical DBCP. While Dole believes there is no reliable scientific basis for alleged injuries from the agricultural field application of DBCP, the company has continued to seek reasonable resolution of the pending claims. The Program will not have a material effect on Dole's financial condition or results of operations. Michael Carter, Dole's Executive Vice President, General Counsel and Corporate Secretary said, "The Honduran Worker Program reflects Dole's continued efforts to resolve DBCP claims worldwide. It is good for the community and good for the company. This agreement was only reached after a tremendous effort by all interested parties. Dole has consistently demonstrated its willingness to compensate those workers who meet minimum criteria, consistent with reliable science, in an effort to resolve disputed claims." Mr. Carter also commented that, "As in Honduras, Dole is committed in finding a prompt resolution to the DBCP claims in Nicaragua, and is prepared to pursue a structured worker program with science-based criteria." About Dole Food Co. Dole Food Company Inc., headquartered in Westlake Village, California, has revenues of US$5.8 billion. Dole grows and sources from independent growers and transports bananas grown primarily in Colombia, Costa Rica, Ecuador, Guatemala and Honduras for markets principally in North America, Europe, the Mediterranean and selected Asian markets. * * * As reported in the Troubled Company Reporter-Latin America on Sept. 28, 2006, in connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given- Default rating methodology for the US Consumer Products, Beverage, Toy, Natural Product Processors, Packaged Food Processors, and Agricultural Cooperative sectors, the rating agency confirmed its Ba3 Corporate Family Rating for Dole Food Co., Inc. Additionally, Moody's revised or confirmed its probability-of- default ratings and assigned loss-given-default ratings on these loans facilities: Issuer: Dole Food Company, Inc. Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Gtd. Sr. Sec. Term Loan B Due 2013 Ba3 Ba2 LGD2 20% Gtd. Sr. Sec. Letter of Credit Due 2013 Ba3 Ba2 LGD2 20% Gtd. Global Notes Due 2010 B3 B3 LGD5 77% Global Notes Due 2009 B3 B3 LGD5 77% Gtd. Global Bonds Due 2011 B3 B3 LGD5 77% Debentures Due 2013 B3 B3 LGD5 77% Issuer: Solvest Ltd. Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Gtd. Sr. Sec. Term Loan C Due 2013 Ba3 Ba2 LGD2 20% Gtd. Sr. Sec. Letter of Credit Due 2013 Ba3 Ba2 LGD2 20% ============= J A M A I C A ============= AIR JAMAICA: Cabinet Rejects Airline's New Business Plan -------------------------------------------------------- The Jamaican government's Cabinet did not approve Air Jamaica's proposed new business plan, the Jamaica Observer reports. Donald Buchanan -- the newly installed minister of information and development -- told The Observer that after reviewing the plan submitted by OK Melhado -- Air Jamaica's chairperson -- and Michael Conway, the airline's chief executive officer, against the background of Air Jamaica's financial situation, the cabinet felt that there was a need for additional and better particulars about the plan. The Observer underscores that the losses of Air Jamaica were estimated at US$85 million in June 2006. No official confirmation of the figure was disclosed and there was no further report on the losses. Air Jamaica sources told The Observer that for 2005, the firm lost about US$163 million, which is about US$46 million more than what Dr. Vin Lawrence, the former chairperson of Air Jamaica, forecasted. According to The Observer, the losses led to a decrease in value-added services in Air Jamaica -- like regular meals on flights --that then cost the airline its attractiveness to some Jamaican travelers. Air Jamaica is expected to lose about US$175 million in 2006, causing concerns about whether the Jamaican government should continue financing the company's big appetite for funds, The Observer notes. After extensive deliberations, the cabinet referred the plan to its standing sub-committee that monitors the airline, reports says, citing Mr. Buchanan. The Observer reports that Dr. Omar Davies, the minister of finance and planning, heads the sub-committee, which also includes Robert Pickersgill, the minister of transport. The Observer underscores that a cabinet meeting slated for next Monday was postponed, as the standing sub-committee will meet with Air Jamaica's management on that day to review the plan. Mr. Buchanan told reporters, "Therefore, we decided that the standing cabinet sub-committee should have further meetings with the Air Jamaica team on Monday of next week and then, on Wednesday of next week, the Cabinet will receive a report from the standing committee and, at that time, we hope to make the necessary decisions as to the way forward with Air Jamaica." "You could say that the plan provides for various options about how you go forward, and they are coming to the table with a long-term debt factor that is out there, and certainly they will be putting proposals forward as to how you address this. But, as I said before, there are options," The Observer notes, citing Mr. Buchanan. Mr. Buchanan did not tell The Observer any details of the plan or what was discussed. He said that after next Wednesday's cabinet meeting he would have another briefing, at which time he would reveal the details as well as the cabinet's response. However, Mr. Buchanan admitted that it included options to deal with Air Jamaica's precarious debt, The Observer says. "Anything more that I say now will be premature," Mr. Buchanan told The Observer. * * * On July 21, 2006, Standard & Poor's Rating Services assigned B long-term foreign issuer credit rating on Air Jamaica Ltd., which is equal to the long-term foreign currency sovereign credit rating on Jamaica, is based on the government's unconditional guarantee of both principal and interest payments. NATIONAL WATER: Cuts Losses to US$677 Million in 2006 ----------------------------------------------------- The National Water Commission of Jamaica said in its 2004/2005 annual report that its losses decreased to US$677 million in 2006, from US$5.1 billion in 2005. Radio Jamaica relates that the decline in the National Water's losses was due to a 23% increase in 2006 revenues, compared with the revenues in 2005. Expenses were also contained at 13%. According to Radio Jamaica, other income of the National Water -- including inflows from investment activities and amortization of capital gains -- increased by 102% in 2006, compared with 2005. The National Water's collections increased 12% to US$6.7 billion this year, compared with 2003/2004, Radio Jamaica reports. * * * As reported in the Troubled Company Reporter on Feb. 7, 2006, the National Water Commission of Jamaica had been criticized for failing to act promptly in cutting its losses. For the fiscal years 2002 and 2003, the water commission accumulated a net loss of US$2.11 billion. The deficit fell to US$1.86 billion the following year, and to US$670 million in 2004 and 2005. =========== M E X I C O =========== ALLIS-CHALMERS ENERGY: Buys Petro Rentals for US$29.8MM in Cash --------------------------------------------------------------- Allis-Chalmers Energy Inc. acquired Petro Rentals, Inc., based in Broussard, Louisiana, for approximately US$29.8 million in cash, including the payment of approximately US$9.5 million of debt, and 246,761 shares of the Company's common stock. The Company says that the acquisition was funded with cash on hand remaining from its recent equity and debt securities offerings. Based on Petro Rentals' unaudited financial statements, its EBITDA for the eight-month period ended Aug. 31, 2006 was approximately US$4.9 million. Micki Hidayatallah, chairman and chief executive officer, stated, "The acquisition of Petro Rentals helps us to realize one of our primary objectives of creating a better balance between our drilling-related and production-rental activities. We expect Petro Rentals' coiled tubing division to complement our Production Services segment, which already had two coiled tubing units before this acquisition. With the Petro Rentals acquisition and the additional coiled tubing units on order, we expect to have a total of eight coiled tubing units and 14 capillary tubing units by Dec. 31. With a projected utilization rate of 50%, we are very optimistic about this portfolio of coiled and capillary tubing units contributing significantly to our financial performance. With current estimates of capital expenditures by the E&P companies increasing in 2007 at a rate greater than 15% we feel that Petro Rentals will sustain its EBITDA run rate and through efficient utilization of the new coiled tubing units should increase its EBITDA contribution to Allis-Chalmers Energy to over US$11 million." About Petro Rentals Based in Broussard, Louisiana, Petro Rentals, Inc., provides a variety of rental tools and equipment and services that are vital throughout the life of a well, from drilling through plugging and abandonment, with an emphasis on production related equipment and services. With division offices in Broussard, Houma and Arcadia, Louisiana and Alvin, Texas, Petro Rentals serves both onshore and offshore markets. About Allis-Chalmers Energy Based in Houston, Texas, Allis-Chalmers Energy Inc. (AMEX: ALY) -- http://www.alchenergy.com/-- provides oilfield services and equipment to the oil and gas exploration and development companies primarily in Texas, Louisiana, New Mexico, Colorado, and Oklahoma; offshore in the United States Gulf of Mexico; and offshore and onshore in Mexico. The company offers directional drilling, compressed air drilling, casing and tubing, rental tools, and production services. * * * As reported in the Troubled Company Reporter on Sept. 27, 2006, Moody's Investors Service in connection with the implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the oilfield service and refining and marketing sector, confirmed its B3 Corporate Family Rating for Allis-Chalmers Energy Inc. Moody's also affirmed its B3 rating on the company's 9% Senior Unsecured Guaranteed Global Notes Due 2014, and assigned the debentures an LGD4 rating suggesting a projected loss-given default of 54%. As reported in the Troubled Company Reporter on July 31, 2006, Standard & Poor's Ratings Services affirmed its 'B-' rating on Allis-Chalmers Energy Inc.'s proposed US$80 million senior notes issuance due 2014. The notes are being offered as additional notes under the indenture to which the company issued US$160 million of notes in January 2006. At the same time, Standard & Poor's affirmed the 'B-' corporate credit rating on the company. S&P said the outlook is stable. BALLY TOTAL: Holding Annual Shareholders Meeting on Dec. 19 ----------------------------------------------------------- Bally Total Fitness Holding Corp. will hold its annual meeting of shareholders on Dec. 19, 2006, at 9:00 a.m., Central Time, at: Renaissance Hotel 8500 W. Bryn Mawr Avenue Chicago, Illinois Bally total also disclosed record dates for its 2006 annual meeting of shareholders. Bally shareholders of record on the close of business on Nov. 13, 2006, will be entitled to notice of the annual meeting and to vote upon matters considered at the meeting. Bally will send a definitive proxy statement to shareholders of record containing important information about the meeting and the matters to be considered. Shareholders are urged to read the proxy statement when it becomes available. Chicago, Ill.-based Bally Total Fitness Holding Corp. (NYSE: BFT) -- http://www.Ballyfitness.com/-- is a commercial operator of fitness centers, with over 400 facilities located in 29 states, Mexico, Canada, Korea, the Caribbean, and China under the Bally Total Fitness, Bally Sports Clubs, and Sports Clubs of Canada brands. At June 30, 2006, Bally Total's balance sheet showed a US$1,410,293,000 stockholder's deficit. * * * Moody's Investors Service confirmed its Caa1 Corporate Family Rating for Bally Total Fitness Holding Corp. BALLY TOTAL: Board Reduces Number of Directors from Nine to Six --------------------------------------------------------------- Bally Total Fitness Holding Corp.'s board of directors reduced on Oct. 22, 2006, the number of current directors from nine to six. In addition, the Board also determined not to nominate Steven S. Rogers for re-election as a director when his term expires at the annual meeting on Dec. 19, 2006. Accordingly, as Mr. Rogers is the only director in Class I, the Board voted to move Interim Chairman Don R. Kornstein from Class III to Class I so the Board consists of as close to an equal number of directors in each class, as is practical, and determined to nominate him for reelection to Class I of the Board for a new three-year term at the annual meeting. The Board also voted to reduce the size of the Board from six to five effective upon the annual meeting, at which time the Class I directorship currently held by Mr. Rogers will be eliminated. Chicago, Ill.-based Bally Total Fitness Holding Corp. (NYSE: BFT) -- http://www.Ballyfitness.com/-- is a commercial operator of fitness centers, with over 400 facilities located in 29 states, Mexico, Canada, Korea, the Caribbean, and China under the Bally Total Fitness, Bally Sports Clubs, and Sports Clubs of Canada brands. At June 30, 2006, Bally Total's balance sheet showed a US$1,410,293,000 stockholder's deficit. * * * Moody's Investors Service confirmed its Caa1 Corporate Family Rating for Bally Total Fitness Holding Corp. CLIENTLOGIC CORP: Inks Merger Deal with SITEL --------------------------------------------- ClientLogic and SITEL have entered into a definitive merger agreement. Under the terms of the agreement, a newly formed subsidiary of ClientLogic will merge with SITEL and pay US$4.05 per share in cash for all of the outstanding common stock of SITEL. The Board of Directors of each company has unanimously approved the transaction. The transaction is expected to be completed in the first quarter of 2007 and is subject to customary closing conditions, including approval of SITEL's shareholders and regulatory clearances. SITEL's Board of Directors has recommended to SITEL's shareholders that they vote in favor of the transaction. Approximately 19.9% of the outstanding common stock of SITEL is subject to voting agreements which require such shares to be voted in favor of the merger. SITEL has agreed to pay a termination fee to ClientLogic should the transaction not close due to certain circumstances. ClientLogic will fund the transaction with the proceeds of a committed loan facility. The transaction values SITEL at approximately US$450 million. Commenting on the pending transaction, Jim Lynch, Chairman and CEO of SITEL Corporation, said, "Our board and our financial advisor Citigroup reviewed numerous opportunities while searching for strategic alternatives that would create the greatest value for our shareholders. Based on this review, it was clear to SITEL's board that the offer from ClientLogic represents the best alternative to create significant shareholder value." The US$4.05 to be paid in cash in the merger for each SITEL share represents a 33% premium to the volume-weighted average SITEL share price for the 30-trading day period ending October 11. The combined entity will continue to be named ClientLogic Corporation, and will have approximately 65,000 employees across 28 countries. Dave Garner will be Chief Executive Officer of the combined entity. "Growing market demand for bigger, more complex customer-care BPO solutions requires larger service providers with increased geographic presence, capacity and service capabilities", said Dave Garner, President and CEO of ClientLogic. "Our mission will be to deliver the BPO industry's highest-quality services, while providing our clients with the strategic insight, scale and diversity of offerings to guarantee success." The combination of ClientLogic and SITEL will create a company with revenue of over US$1.7 billion, and one of the most diverse client bases, service offerings, and geographic footprint in the industry. The combined entity will offer clients world-class options for onshore, nearshore and offshore customer care solutions, in over 145 facilities throughout the Americas, EMEA and Asia Pacific. Citigroup Global Capital Markets is acting as financial advisor to SITEL and has provided a fairness opinion in connection with the transaction. Davis Polk & Wardwell and Faegre & Benson are acting as legal counsel to SITEL in connection with the transaction. Goldman, Sachs & Co. is acting as financial advisor to ClientLogic. Mayer, Brown, Rowe & Maw LLP and Oppenheimer Wolff & Donnelly LLP are acting as legal counsel to ClientLogic in connection with the transaction. About SITEL Corp SITEL -- http://www.sitel.com/-- provides outsourced customer support services. SITEL designs and improves customer contact models across its clients' customer acquisition, retention, and development cycles. SITEL has over 42,000 employees in 101 global contact centers located in 26 countries. About ClientLogic ClientLogic Corp. -- http://www.clientlogic.com/-- is a business process outsourcing provider in the customer care and back office processing industries. ClientLogic's footprint spans 49 facilities in 13 countries: Austria, Canada, France, Germany, India, Ireland, Mexico, Morocco, Netherlands, Panama, Philippines, United Kingdom and the United States. * * * As reported in the Troubled Company Reporter on Oct. 23, 2006, Standard & Poor's Rating Services placed its 'B' corporate credit rating on Nashville, Tennessee-based ClientLogic Corp. on CreditWatch with positive implications. FORD MOTOR: Reports US$5.3B Net Loss for Third Quarter 2006 ----------------------------------------------------------- Ford Motor Co. reported preliminary third-quarter 2006 financial results. In a separate announcement, Ford said it would restate financial results from 2001 through the second quarter of 2006 to correct the accounting for certain derivative transactions under Statement of Financial Accounting Standards (SFAS) 133, Accounting for Derivative Instruments and Hedging Activities. These corrections are not reflected in the preliminary results for Ford's 2006 third quarter. The company expects to finalize restatement amounts for this and previous periods by the time it files its Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2006. Financial statements pertaining to the 2006 third quarter will be provided at that time. Summary of Preliminary Results For the third quarter, Ford Motor reported a net loss of US$5.8 billion, or US$3.08 per share. This compares with a net loss of US$284 million, or 15 cents per share, in the 2005 third quarter. Excluding special items, the third quarter loss from continuing operations was US$1.2 billion, or 62 cents per share, compared with a loss of US$191 million, or 10 cents per share, a year earlier. The performance from continuing operations primarily reflected operating challenges in the company's North America, Asia Pacific and Africa, and Premier Automotive Group operations. Performance also included continued profitability in South America and at Ford Credit. Though it lost money during the quarter, Ford Europe showed a year-over-year improvement in operating results and remained poised to deliver full-year profitability. Special items included in the quarter's net loss primarily reflected the costs associated with restructuring efforts, primarily in North America, as well as the revaluation of long-lived assets related to automotive operations in North America and Jaguar/Land Rover. On an after-tax basis, special items reduced third-quarter earnings by a total of US$4.6 billion or US$2.46 per share. The total pre-tax effect of these special items was US$5.3 billion. In addition, effective this quarter, the company established a valuation allowance of US$2.2 billion against deferred tax assets primarily at its North America and Jaguar/Land Rover operations. The valuation allowance was established because of the cumulative losses the company has incurred and the financial outlook for these operations. Alan Mulally, Ford's president and chief executive officer, said he and his senior management team are committed to creating a viable Ford Motor Company business going forward. "These business results are clearly unacceptable," Mulally said. "We are committed to dealing decisively with the fundamental business reality that customer demand is shifting to smaller, more efficient vehicles. Our focused priorities are to restructure aggressively to operate profitably at lower volumes, and to accelerate the development of new, more efficient vehicles that customers really want. "We have great global assets and resources that we will leverage to significantly improve our product strategy, our production efficiency and quality. This will enable us to meet customer expectations for distinctive vehicles much more cost effectively. These actions will lead to profitable growth of our business over the long term." Automotive Sector On a pre-tax basis, worldwide Automotive sector losses in the third quarter were US$1.8 billion. This compares with a pre-tax loss of US$1.3 billion during the same period a year ago. Worldwide automotive sales for the third quarter declined to US$32.6 billion from US$34.7 billion in the same period last year. Worldwide vehicle unit sales in the quarter were 1,511,000, down from 1,531,000 a year ago. North America In the third quarter, Ford's North America automotive operations reported a pre-tax loss of US$2.0 billion, compared with a pre-tax loss of US$1.2 billion a year ago. The decline was largely attributed to lower volumes and unfavorable mix, primarily associated with lower industry volume and lower market share, and higher incentives. Cost reductions were a partial offset. Sales were US$15.4 billion, down from US$18.2 billion for the same period a year ago. South America Ford's South America automotive operations reported a third-quarter pre-tax profit of US$222 million, an improvement from a pre-tax profit of US$96 million a year ago. The improvement was primarily explained by higher volume and favorable pricing. Sales for the third quarter improved to US$1.5 billion from US$1.2 billion in 2005. Ford Europe Ford Europe's third-quarter pre-tax loss was US$13 million compared with a pre-tax loss of US$55 million during the 2005 period. The improvement came from higher vehicle sales, partially offset by higher pension-related costs, lower profits from operations in Turkey and negative net pricing. During the third quarter, Ford Europe's sales were US$7.3 billion, compared with US$6.4 billion during third quarter 2005. Premier Automotive Group (PAG) PAG reported a pre-tax loss of US$593 million for the third quarter, compared with a pre-tax loss of US$108 million for the same period in 2005. The decline was explained by adverse cost performance, primarily reflecting adjustments to Jaguar and Land Rover warranty accruals and lower volume at all operations, excluding Aston Martin. Improvements in overhead costs were offset by increases in advertising. Third-quarter sales for PAG were US$6.5 billion, compared with US$6.8 billion a year ago. Asia Pacific and Africa For the third quarter, Asia Pacific and Africa reported a pre-tax loss of US$56 million, compared with a pre-tax profit of US$21 million a year ago. The decline primarily reflected lower production and dealer inventories, adverse mix, and higher incentives, partially offset by cost reductions. Sales were US$1.6 billion, compared with US$1.9 billion in 2005. Mazda During the third quarter of 2006, Ford's share of Mazda pre-tax profits and associated operations was US$40 million, compared with US$112 million during the same period a year ago. The decline primarily reflected the non- recurrence of mark-to-market gains on Mazda convertible bonds during 2005, which have now been entirely converted to equity. Other Automotive Third-quarter results included a pre-tax profit of US$553 million in Other Automotive, compared with a loss of US$241 million a year ago. The year-over-year improvement relates to tax-related interest and higher portfolio returns. Financial Services Sector For the third quarter, the Financial Services sector earned a pre-tax profit of US$448 million, compared with pre-tax profits of US$1.1 billion a year ago. Ford Motor Credit Co. Ford Motor Credit reported net income of US$262 million in the third quarter of 2006, down US$315 million from net income of US$577 million a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned US$428 million in the third quarter, compared with US$901 million in the previous year. The decrease in earnings was attributed to lower financing margins, higher depreciation expense and the impact of lower average receivable levels. Cash and Liquidity The company ended the quarter with total cash, including automotive cash, marketable securities, loaned securities and short-term Voluntary Employee Beneficiary Association assets at Sept. 30, 2006 of US$23.6 billion, unchanged from the end of the second quarter. The company's operating-related cash flow was US$3.1 billion negative for the quarter. During the quarter, US$3.0 billion was transferred out of long-term VEBA and is now included in total cash. Don Leclair, executive vice president and chief financial officer said, "As we restructure our business we will continue to make investments in products necessary to ensure Ford's future success. Throughout this period, maintaining strong liquidity will continue to be a high priority." About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Company -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents including Brazil and Mexico. With more than 324,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corp. * * * 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'. Fitch said 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. Moody's said the outlook for the ratings is negative. FORD MOTOR CREDIT: Posts USUS$262MM Net Income in Third Quarter --------------------------------------------------------------- Ford Motor Credit Co. reported preliminary financial results with third quarter profits. At the same time, Ford Motor Credit disclosed it plans to restate previous financial results from 2001 through the second quarter of 2006 to correct the accounting for certain derivative transactions under the Statement of Financial Accounting Standards (SFAS) 133, Accounting for Derivative Instruments and Hedging Activities. Third Quarter Financial Results Ford Motor Credit reported net income of US$262 million in the third quarter of 2006, down US$315 million from earnings of US$577 million a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned US$428 million in the third quarter, compared with US$901 million in the previous year. The decrease in earnings primarily reflected lower financing margins, higher depreciation expense and the impact of lower average receivable levels. "Our high-quality portfolio continues to perform very well, generating profits and dividends for Ford Motor Company," said Mike Bannister, chairman and CEO. "Our recently announced North American restructuring along with our efforts to reduce our costs globally will further enhance our operational effectiveness." On Sept. 30, Ford Motor Credit's on-balance sheet net receivables totaled US$135 billion, compared with US$132 billion on Dec. 31, 2005. Managed receivables, which include on-balance sheet receivables and securitized off-balance sheet receivables that we continue to service, were US$148 billion, compared with US$150 billion on Dec. 31, 2005. Ford Motor Credit paid cash dividends of US$300 million during the third quarter. The correction to the accounting does not affect the economics of the derivative transactions, or have any impact on the company's cash. However, the restatements are expected to affect the preliminary financial results Ford Motor Credit for its 2006 third quarter. The company expects to finalize restatement amounts for the current and all previous periods by the time of the filing of its Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2006. The company discovered that since 2001, certain interest rate swaps Ford Motor Credit Co. had entered into to hedge the interest rate risk inherent in certain long-term fixed rate debt were accounted for incorrectly under SFAS 133 because they did not satisfy the standard's technical accounting rules to qualify for exemption from the more strict effectiveness testing requirements. Ford Motor Credit Co. uses transactions involving derivatives, including swaps, forwards and options, to reduce economic risk and volatility in a disciplined and defensive manner. PricewaterhouseCoopers LLP, the company's independent registered public accounting firm, audited Ford Motor Credit Company's 2001 through 2005 financial statements, which included a review of these swaps. "We are very disappointed that we must restate our earnings," said Mr. Bannister. "We are committed to strong internal controls and reporting transparency. Our business fundamentals remain sound, and our operations remain highly efficient and profitable." Ford Motor Credit's interest rate swaps were entered into as part of its asset-liability management strategy. The swaps economically hedge the interest rate risk associated with long-term debt issuances. Although the final restatement amounts have not yet been determined, based on the information to date, the company estimates that Ford Motor Credit's results in 2002 will improve materially -- other periods are still under study. About Ford Motor Credit Ford Motor Credit Company -- http://www.fordcredit.com/-- is an automotive finance company, which has supported the sale of Ford products since 1959. With about 14,000 employees, Ford Motor Credit operates in 36 countries including Brazil and Mexico in Latin America. Ford Motor Credit is an indirect wholly owned subsidiary of Ford Motor Company. It provides automotive financing for Ford, Lincoln, Mercury, Aston Martin, Jaguar, Land Rover, Mazda and Volvo dealers and customers. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Company -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents including Brazil and Mexico. With more than 324,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corp. * * * 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'. Fitch said 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. Moody's said the outlook for the ratings is negative. FORD MOTOR: Restating 2001 Through 2006 Financial Results --------------------------------------------------------- Ford Motor Co. plans to restate previous financial results from 2001 through the second quarter of 2006 to correct the accounting for certain derivative transactions under the Statement of Financial Accounting Standards or SFAS 133, Accounting for Derivative Instruments and Hedging Activities. The correction to the accounting does not affect the economics of the derivative transactions, nor have any impact on the company's cash. However, the restatements are expected to affect the preliminary financial results Ford disclosed for its 2006 third quarter. The company expects to finalize restatement amounts for the current period and all previous periods by the time of the filing of its Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2006. Ford discovered that since 2001, certain interest rate swaps Ford Motor Credit Company had entered into to hedge the interest rate risk inherent in certain long-term fixed rate debt were accounted for incorrectly under SFAS 133 because they did not satisfy the standard's technical accounting rules to qualify for exemption from the more strict effectiveness testing requirements. Ford Motor Credit Co. uses transactions involving derivatives, including swaps, forwards and options, to reduce economic risk and volatility in a disciplined and defensive manner. PricewaterhouseCoopers LLP, the company's independent registered public accounting firm, audited Ford's 2001 through 2005 financial statements, which included a review of these swaps. "This is a very complicated accounting standard, and interpretation of its proper application has continued to evolve," said Executive Vice President and Chief Financial Officer Don Leclair. "Our overall hedging strategy is sound. We will correct our accounting for these types of derivative instruments. We remain committed to strong internal controls and reporting transparency." Ford Motor Credit Co.'s interest rate swaps were entered into as part of the unit's asset-liability management strategy. The swaps economically hedge the interest rate risk associated with long-term debt issuances. Although the final restatement amounts have not yet been determined, the company estimates, based on the information to date, that Ford and Ford Motor Credit's results in 2002 will improve materially. Other periods are still under study. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Company -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents including Brazil and Mexico. With more than 324,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corp. * * * 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'. Fitch said 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. Moody's said the outlook for the ratings is negative. FORD MOTOR: Moody's Says Weak Results Consistent with B3 Rating --------------------------------------------------------------- Moody's Investors Service disclosed that Ford's very weak third quarter performance, with automotive operations generating a pre-tax loss of US$1.8 billion and a negative operating cash flow of US$3 billion, was consistent with the expectations which led to the Sept. 19 downgrade of the company's long-term rating to B3. "Ford's rating at B3 anticipated further weakness in financial results as indicated by the company's need to accelerate its restructuring initiatives. Nevertheless, Ford's outlook remains negative." said Bruce Clark, senior vice president and lead auto industry analyst at Moody's "The key to Ford's Way Forward restructuring plan is to reduce capacity by buying out 25,000 to 30,000 hourly employees and to shift its product line toward cars and more fuel efficient vehicles," Clark said "The problem is that the financial benefits of the program don't begin to kick in until 2009," he added. "This means that even if things go according to plan, Ford will likely burn through a significant amount of cash during 2006 and 2007. The rate of cash consumption could improve in 2008, but cash flow could still be negative in that year." At September 30th, Ford had over US$23 billion in cash and equivalents. However, Ford needs several billion in cash to run its day to day operations. Consequently, the amount of funds currently available to cover operating losses and restructuring requirements is sizable, but it is not the full US$23 billion to which Ford has access. "If Ford hits its cost reduction, market share and new product introduction objectives, the company's cash resources should be adequate to cover uses through 2007," Clark said. "But, things could start to get tight in 2008 if operating cash flow is still negative. In fact, the company's liquidity position could become stressed prior to 2008 if the operating environment is more difficult than planned. This could happen if the economy slows, if there is any kind of work stoppage associated with the 2007 UAW negotiations, or if the already weak financial position of the supplier base erodes further." The significant level of cash consumption that Ford will face during 2007 and 2008, and the potential strain that this will place on the company's liquidity contributed to Moody's September downgrade of Ford's Speculative Grade Liquidity rating to SGL-3 from SGL-1. Ford has reported its decision to consider accessing the secured debt market in order to bolster its cash position. "Given the extended time frame of the Way Forward restructuring plan and the level of cash that may be required through 2008, it will be important for Ford to increase its cash position in order to provide an adequate liquidity cushion," Clark said. "If Ford can't boost its liquidity through accessing the secured debt market, through asset sales or through some other strategic alternatives, there could be further pressure on its long-term and SGL ratings." Should Ford issue secured debt for the purpose of building liquidity, there would likely be no adverse impact on the company's B3 corporate family rating. However, consistent with the analytic framework contained in Moody's Probability of Default and Loss Given Default Methodology dated August 2006, the rating of any secured borrowings by Ford would likely be one or more notches higher than the B3 corporate family rating. In contrast, the rating of the company's unsecured obligations would be subject to a downgrade from current levels. Ford reported that it would have to restate its quarterly and annual financials back to 2001 due to errors in the application of "the short-cut method" promulgated under Statement of Financial Accounting Standard 133 in connection with the accounting for certain hedging transactions. As a result, Ford expects earnings for 2002 to improve materially; the impact on years 2003 through 2006 has not yet been assessed. The company also anticipates that there will be no cash impact and that the necessary restatements for all years will be made in time to permit a timely filing of its third quarter 10Q. In a March 2006 Special Comment on SFAS 133 Moody's noted that many recent restatements by other companies arising from SFAS 133 reflect technical misinterpretations of the accounting rules which do not alter the economic substance of the transactions. On the matter of Ford's restatement Clark said, "Moody's wouldn't view Ford's restatement as a negative credit event as long as the company's auditors make no determination of a Material Weakness with respect to Ford's ongoing hedge accounting, there is no delay in the filing of the company's financial statements, and no other accounting issues arise in conjunction with this restatement." FORD MOTOR: S&P Places B-Rated Sr. Unsec. Debt on Negative Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' senior unsecured debt issue ratings on Ford Motor Co. on CreditWatch with negative implications. At the same time, S&P affirmed all other ratings on Ford, Ford Motor Credit Co., and related entities, except the rating on Ford Motor Co. Capital Trust II 6.5% cumulative convertible trust preferred securities, which was lowered to 'CCC-' from 'CCC.' The CreditWatch placement of the automaker's unsecured issues reflects the potential for unsecured creditors to be disadvantaged if Ford were to incur a material amount of secured borrowings. Ford announced Monday that it is considering a range of measures to help it fund operating losses and restructuring plans while preserving cash and short-term VEBA trust balances at or near current levels of about US$20 billion. The Ford announcement said these measures could include the negotiation of secured credit facilities. If this occurs, "The rating on Ford's senior unsecured debt could be lowered by up to two notches below the corporate credit rating ('B')," said Standard & Poor's credit analyst Robert Schulz, "reflecting the unsecured debt's disadvantaged recovery prospects in the event of a bankruptcy by Ford." We will monitor ongoing developments and resolve the CreditWatch once Ford's financing plans have been finalized. The downgrade of Ford's Capital Trust II 6.5% cumulative convertible trust preferred securities reflects S&P's view that, in the wake of Ford's recent elimination of its common stock dividend, the risk of a payment deferral by Ford on its trust preferred securities is heightened, as the company seeks to conserve liquidity in light of ongoing negative cash flows. Ford itself has not indicated any intention to defer dividends on its trust preferred securities. S&P would view such a deferral as a default on the issue, under our rating definitions. Separately, the ratings on Ford and related entities are not immediately affected by the company's announcement that it will delay release of financial statements for the third quarter of 2006 and restate results dating back to 2001. The restatements are required because accounting for certain derivatives used to hedge interest rate risk at Ford Credit did not comply with Statement of Financial Accounting Standards No. 133 on derivatives and hedging activities. Actual cash flow or the risk-management economics of the derivative transactions are not affected by the restatements, and S&P does not expect the delay or restatements to adversely affect Ford's or Ford Credit's access to their unsecured bank credit lines. However, S&P would reassess its views if the accounting restatement process were to uncover additional issues or raise broader concerns about the strength of Ford's internal controls or risk-management practices, if additional restatements result in a prolonged financial reporting delay, or if liquidity were to be adversely affected. Ford's third-quarter financial results, excluding the effect of the restatements, showed further deterioration in automotive results, which S&P expects to continue through the end of 2006. North American operations reported a US$2.0 billion loss in the latest quarter, excluding US$3.7 billion in special items, compared with a loss of US$1.2 billion in the third quarter of 2005. FORD MOTOR: Fitch Puts Neg. Watch on B+ Rated Senior Unsec. Debt ---------------------------------------------------------------- Fitch Ratings has placed Ford Motor Company's 'B+/RR3' senior unsecured debt on Rating Watch Negative reflecting Ford's intent to raise secured financing that would impair the position of unsecured debtholders. Under Fitch's recovery rating scenario it was estimated that unsecured holders would recover approximately 68% in a bankruptcy scenario, equating to a Recovery Rating of 'RR3' (50-70% recovery). Fitch will review the size, structure and collateral of the secured financing facility to determine the effect on outstanding unsecured debt. Fitch's Issuer Default Ratings of 'B' for both Ford and Ford Motor Credit Company are unaffected at this time, but could be reviewed if accounting issues prevent the timely filing of third quarter financial statements. Secured financing will serve to boost Ford's liquidity and provide incremental resources and time to continue its extended restructuring program. Negative cash flow from operating losses, restructuring costs and working capital outflows in 2006 is expected to exceed US$8 billion. Continuing market share and revenue declines in 2007, and the delayed effect of the employee reduction programs indicate that cash outflow could be at a similar level in 2007. Given the very large working capital financing requirements in North America, as well as tax- disadvantaged overseas cash holdings, Fitch believes that consolidated cash holdings below US$15 billion could raise the level of concern among suppliers and customers. At the end of the third quarter total cash, marketable securities, loaned securities, and short-term VEBA was approximately US$23.6 billion. Stabilization of Ford's revenue performance in 2007 is unlikely, given production cutbacks, a slowing economy, enhanced competition in the critical pickup segment, and lack of new impact products. Ford has shown some progress in the passenger car market, but this progress will not be sufficient to offset the steep declines in volume and profitability from mid-size and large SUV's, and pickups. Near-term improvement in operating results will need to be driven largely by reductions in Ford's cost structure, which is expected to occur gradually, but steadily throughout 2007. A decline in commodity prices could benefit margin performance over the long-term, but is expected to provide little relief well into 2007. Severely stressed conditions in the supply base provide little opportunity to reduce supplier costs, but instead present the potential for higher costs, financial support, and supply-chain disruptions. Ford continues to spend aggressively on employee buyout programs, although the completion of the hourly buyout program will extend to the third quarter of 2007, deferring full realization of the cost savings. Ford's relatively young workforce will make buyouts a more expensive proposition than at General Motors, but could also result in a better mix of employees that would exit without retiree pension and health care benefits. A successful buyout program would also accelerate the restructuring, re-sourcing and closure of facilities at uncompetitive ACH facilities. Longer-term, the re-opening of the UAW contract in September 2007 will represent a critical event in establishing Ford's ability to establish a long-term, competitive cost structure. Asset sales are expected to be limited, and challenging to complete. Recently announced intentions to sell Aston-Martin and APCO, would provide modest proceeds to apply to restructuring efforts. Fitch places the following debt on Rating Watch Negative: Ford -- Senior unsecured 'B+/RR3'. These ratings are unaffected by Fitch's action and currently maintain a Negative Rating Outlook: Ford -- Issuer Default Rating 'B'. Ford Credit -- Issuer Default Rating 'B'. Fitch's Recovery Ratings, introduced in 2005, are a relative indicator of creditor recovery on a given obligation in the event of a default. GRUPO MEXICO: Won't Reopen San Martin Zinc-Copper Mine ------------------------------------------------------ Grupo Mexico SA de CV will not reopen its San Martin zinc-copper mine in Zacatecas, according to a report from Reforma. As reported in the Troubled Company Reporter-Latin America on May 12, 2006, Grupo Mexico closed its San Martin mine due to a strike that started in March halted production. The miners commenced the strike after the Mexican government didn't recognize Napoleon Gomez Urrutia as union leader of the Miner and Steelworkers Union. However, Business News Americas relates that the mine stayed open despite the protests. Grupo Mexico increased workers' salaries by 8% and improved their benefits. Renewed disputes with workers have again motivated Grupo Mexico to shut down the mine, Reforma says, citing Rigoberto Real Baena, the chief executive of the company's San Martin operations. Mr. Baena told BNamericas, "We are going to close because there are still many problems and demands by the miners to which we haven't found a solution. The reserves are running out and the mine is not economically viable. It has been producing 2,500t/d of ore, or 50% less than some months before. That is why we are closing." Grupo Mexico is yet trying to obtain government clearance for the mine's closure, BNamericas notes, citing Mr. Baena. Grupo Mexico SA de C.V. -- http://www.grupomexico.com/-- through its ownership of Asarco and the Southern Peru Copper Company, Grupo Mexico is the world's third largest copper producer, fourth largest silver producer and fifth largest producer of zinc and molybdenum. * * * Fitch Ratings assigned these ratings to Grupo Mexico SA de C.V.: -- foreign currency long-term debt, BB; and -- local currency long-term debt, BB. NORTEL NETWOKS: Deploys Municipal Wireless Solution --------------------------------------------------- Nortel Networks Corp. disclosed new municipal wireless deployments that demonstrate the company's strength in helping governments embrace broadband wireless as a strategic way to deliver efficient services that keep communities safe and productive, as well as economically competitive. "We are committed to helping communities make wireless broadband services affordable and available to everyone," said Dietmar Wendt, president, Global Services, Nortel. "Nortel's Municipal Wireless Solution and simplified business models are helping customers maximize return on investment through improved productivity and efficiency of government operations, increased public safety and new economic growth. Municipal wireless is one of the key strategic areas that will help drive Nortel's business momentum and growth, and we plan to invest heavily in new resources that will help us lead this market." Nortel combines a comprehensive portfolio of Wireless Mesh, Wireless LAN and WiMAX technologies with a full suite of Nortel Global Services, giving customers the solutions they need to design, deploy, support and evolve municipal wireless networks. Nortel's experience designing, launching and installing hundreds of public and private wireless networks around the world helps customers offset risk in building privately-funded networks. For municipalities interested in partnering with private sector companies, Nortel can help connect customers with operators that best meet the economic development and public safety needs of the community. Nortel's municipal wireless lab is located in Research Triangle Park, North Carolina and showcases the Company's entire Municipal Wireless Solution. The lab focuses on research and development of broadband wireless solutions that will allow municipalities and operators to realize simplified introduction of new wireless services and applications to boost economic development, improve public safety and give citizens easier access to government services. The lab also gives Nortel a collaborative environment in which to fully test and integrate an expansive ecosystem of partners to provide municipal applications. Nortel is working with 121Media, Inc., Accela, Inc., Aptilo Networks, Blue Vector Systems, NetMotion Wireless, Pronto Networks and smarTVideo Technologies, Inc. to offer enhanced broadband wireless applications. These applications include in-vehicle communication services, automated meter reading, digital video surveillance, asset or fleet tracking and monitoring, subscriber management and access control and mobile television. In addition, Nortel's Municipal Wireless Solution leverages the Nortel Multimedia Communication Server 5100 to give customers access to a broad range of voice and collaboration tools such as instant messaging and video and audio conferencing. "Through Nortel and NetMotion Wireless collaboration, police officers, firefighters, inspectors and other public safety employees will have the ability to securely and seamlessly roam while maintaining session persistence with mission-critical applications such as background checks or video surveillance," said John Knopf, director of product management, NetMotion Wireless. "For years, NetMotion Wireless' Mobility XE software has provided secure, remote access to the public safety market, enabling real-time access to information that keeps workers productive as they roam seamlessly across a variety of networks. Our expertise in this market paired with Nortel's strong presence in the municipal wireless space will allow many new customers to experience the power of our combined solutions." Nortel's Municipal Wireless Solution is being used in the largest municipal wireless network in the world by the Taipei City government in Taipei, Taiwan and by Golden Telecom in Europe's largest wireless mesh network in Moscow, Russia. Golden Telecom is also conducting trials with Nortel's Mobile WiMAX solution. From rural to urban deployments, Nortel's Municipal Wireless Solution is being used by governments and operators in multiple countries, including Ariel, an Israeli settlement located on the West Bank; Annapolis Wireless in Annapolis, Maryland; Bell Canada in the Township of Chapleau, Ontario; the City of Kaohsiung, Taiwan; Marshalltown, Iowa; Richardson, Texas; Simply Surf in Dunrobin, Ottawa and the Special Areas Board of Alberta, Canada. It is also being used by several new customers in North America, including Carlsbad, New Mexico; Occoquan Wireless in Occoquan, Virginia and Ronco Communications in Niagara County, New York. With a population of 26,000, Carlsbad, New Mexico is on the brink of massive and rapid economic growth. The city's close proximity to California makes it an attractive location for high tech and hospitality businesses, as well as an ideal travel destination for thousands of tourists each year. To compliment the success of the growing community, the Carlsbad Department of Development worked with local service provider Windstream Communications to deploy Nortel's Wireless Mesh Network solution to create a wireless hot zone covering the commercial downtown area. The new network enables residents and visitors to use laptops or wireless handheld devices to access the public Internet and helps the City of Carlsbad expand its economic opportunities by attracting and retaining new businesses. "With an influx of economic activity and new growth, we needed a broadband wireless service that would further Carlsbad's ability to compete with other urban areas for new business while at the same time maintaining the charm of its small town roots, and Nortel gave us the perfect solution," said Robert Detweiler, executive director, Carlsbad Department of Development. "Our long term vision is to expand wireless broadband access throughout the city and into many of the new complexes being built along the Pecos River. As our community grows, so too will our wireless network-it is the backbone of our economic development." The picturesque town of Occoquan, Virginia, is situated 20 miles south of Washington, D.C. on the banks of the Occoquan River and has gained notoriety as one of America's most haunted towns. Occoquan Wireless, a franchise of Annapolis Wireless, is using Nortel's Wireless Mesh Network solution to deliver broadband service in Occoquan for merchants, residents and the thousands of tourists who visit the town each year. By offering sponsorships and advertising on its splash page to local businesses, Occoquan Wireless is able to provide wireless broadband coverage free of charge across Occoquan's waterfront Historic District which features more than 100 antique, art and craft shops and restaurants, as well as a bustling marina. "One of our most important goals is to improve conditions for merchants and visitors in our historic district, and wireless broadband access is an important step in that direction," said Earnie Porta, mayor of Occoquan. 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 Oct. 5, 2006, Moody's Investors Service upgraded its B3 Corporate Family Rating for Nortel Networks Corp. to B2. 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. DBRS confirmed B (low) Stb Senior Unsecured Notes; B (low) Stb Convertible Notes; B (low) Stb Notes & Long-Term Senior Debt; Pfd-5 (low) Stb Class A, Redeemable Preferred Shares; and Pfd-5 (low) Stb Class A, Non-Cumulative Redeemable Preferred Shares. Standard & Poor's also affirmed its 'B-' long-term and 'B-2' short-term corporate credit ratings on the company, and assigned its 'B-' senior unsecured debt rating to the company's proposed US$2 billion notes. S&P said the outlook is stable. =========== P A N A M A =========== * PANAMA: Citizens Voted Yes in a Referendum on Canal Expansion --------------------------------------------------------------- Panamanians voted "Si" in a national referendum on Panama Canal expansion. The voting began on Oct. 22, 2006, at 7 a.m. By law, expansion, or the "third set of locks project," must be put to a vote in a popular referendum. The Panama Canal Authority or ACP presented its formal proposal to the Panamanian government in April. In the end, 78 percent voted for expansion, as of 9:30 p.m. EDT. "Today, Panamanians made history. We are honored by their trust and humbled by the responsibility in front of us," said Dr. Ricaurte Vasquez Morales, chairman of the ACP's board of directors and concurrent minister for Canal affairs. "We spent years studying, researching and preparing and we are ready. This project will be done efficiently and transparently. With this vote, the Canal will be able to grow with demand, improve service, spur economic growth in Panama and maintain the Canal's competitive advantage," Mr. Vasquez concluded. After 92-years of serving world commerce, the Canal will have a major expansion. This expansion will accommodate surging demand for the Canal's routes and services, particularly the rapid growth in traffic from Asia, through the Canal, to the United States and back -- known as the "All-Water Route." Expansion will build a new lane of traffic along the Panama Canal through the construction of a new set of locks, which will double capacity and allow more traffic and wider ships. The Panama Canal is nearing maximum capacity and needs to grow with demand. The result of comprehensive analyses and studies by the ACP, expansion is estimated to cost US$5.25 billion and will be paid by Canal customers through a system of graduated toll increases. An expanded Canal would benefit the people of Panama and world trade, and would help maximize Panama's strategic location to become the great maritime hub of the Americas. "We are proud and energized by the confidence in us that Panamanians showed today. The project will benefit the people of Panama, the shipping/maritime industry and world trade. Panama's geographic location is its destiny -- we aim to be at the center of global trade and become a great maritime hub," said Alberto Aleman Zubieta, ACP administrator/CEO. "Expansion will be a principles-driven project -- we are committed to transparency, efficiency and environmental sustainability. This will guide our vision and direction." The ACP will provide regular updates on expansion and the contracting process, and will continue its environmental conservation efforts along the Canal Watershed to protect this precious water resource for the city of Panama and the Canal. The ACP has successfully managed and operated the Canal since the U.S. handover in 1999. Canal operations have broken several records and have set the bar high for efficiency, safety and reliability, while bringing more revenue to the country. "We are up to the task to take on Canal expansion, to add more capacity and to ensure reliable service years to come," said Aleman Zubieta. The project will not interfere with or disrupt current Canal traffic. Expansion Expansion will build a new lane of traffic along the Canal through the construction of a new set of locks. Environmentally sound water-saving basins will be built next to the new locks, reusing 60 percent of the water in each transit. This technology eliminates the need for constructing dams, flooding or displacing communities along the Canal's Watershed. The ACP is committed to sustainable development and adhering to environmental management best practices. Economics An expanded Canal will benefit the people of Panama and world trade. The expansion will help maximize Panama's strategic geographic location by helping it become an international maritime hub at the center of global trade. Expansion will improve the flow of international commerce and facilitate the movement of goods through several important markets. It will increase capacity at one of the world's critical trade arteries; allow the vital "All-Water Route" to continue to grow; create more efficient service at the Canal, which would tighten the global supply chain and help goods get to market faster, thus saving time and money for producers and consumers. Financing Expansion will be paid for by Canal customers through a system of graduated toll increases. As always, the ACP will consult with customers on the new tolls pricing system. * * * Fitch Ratings assigned these ratings on Panama: Rating Rating Date ------ ----------- Country Ceiling BBB Apr. 8, 2005 Long Term IDR BB+ Dec. 14, 2005 Short Term IDR B Dec. 14, 2005 Local Currency Long Term Issuer Default Rating BB+ Dec. 14, 2005 * PANAMA: Fitch Says Canal Expansion May Yield Positive Results --------------------------------------------------------------- Fitch Ratings stated that the approval of the Panama Canal expansion referendum could yield positive results for the country in the long term in terms of higher external and fiscal receipts and GDP growth prospects. However, the referendum itself will not have an immediate impact on Panama's sovereign ratings, as uncertainties remain about debt financing, future revenues from tolls, and Panama's ongoing fiscal consolidation. Currently, Fitch maintains a Foreign Currency Issuer Default Rating of 'BB+' for Panama with a Stable Outlook. Panamanians voted yesterday on the referendum to expand the Panama Canal. With about 96% of the votes counted, 78% of voters approved the referendum. While Fitch views the approval of the canal expansion as a favorable development for maintaining the country's competitiveness, the project is not without risks. As such, Fitch will closely monitor the project's impact on debt levels and GDP growth. "Panama's key rating weakness relative to other Fitch-rated 'BB' sovereigns continues to be its high level of public debt," according to Theresa Paiz Fredel, lead analyst for Panama and Director of Latin American Sovereign Ratings at Fitch. At a projected 34% by year-end 2006, Panama's ratio of net public external debt to current external receipts is among the highest in the 'BB' category, and its ratio of government debt to GDP of 57.6% is above the 'BB' median of 40%. However, fiscal consolidation and good prospects for the continuation of strong export and economic growth have put debt dynamics on a downward trajectory. As a result, Fitch believes that Panama should be able to absorb any future increase in public debt related to the expansion of the canal. Currently, the cost of canal expansion is estimated at US$5.3 billion, including a contingency to cover the cost of any risks and unforeseen events. Furthermore, the Panama Canal Authority could finance a portion of the construction costs through higher tolls. Additional external financing is not likely to occur before 2008, to cover the peak years of construction between 2009 and 2011. While a significant increase in public debt could potentially constrain upward momentum of Panama's credit ratings, Fitch believes that over the longer term, canal expansion, if managed appropriately, could yield economic benefits that outweigh the medium-term costs of increased public debt. Longstanding dollarization, a stable financial system, moderate debt service needs, and the government's considerable financial and land assets support the sovereign's IDR of 'BB+'. Despite fiscal slippage in 2004, Panama's ratings have been underpinned by a strong economic response to global growth, as well as the efforts of the administration of President Torrijos to strengthen public finances, as demonstrated by the prompt passage of fiscal reform, more recently social security reform, and improvements in fiscal transparency. Output expanded 6.4% in 2005, strong by regional standards, and the prospects for 2006 are even better, with growth likely to exceed 7%. Given fiscal consolidation and growth, the non-financial public sector deficit or NFPS declined to 3.2% of GDP in 2005 from 4.9% of GDP in 2004. In light of higher than expected revenues and economic growth this year, the NFPS deficit is likely to be less than the budgeted 3.0% of GDP. ======= P E R U ======= BANCO DE CREDITO: Fitch Rates Proposed US$120MM Notes at BB+ ------------------------------------------------------------ Fitch Ratings has assigned an expected rating of 'BB+' to the planned US$120 million of subordinated notes to be issued by Banco de Credito del Peru's Panamanian branch. The rating is contingent upon receipt of final documents conforming to information already received. The rating is one notch below Banco de Credito del Peru's long-term foreign currency IDR of 'BBB-', assigned on Oct. 13, 2006, by Fitch. The unsecured subordinated notes will mature in 2021, and will accrue interest at a fixed rate for the first 10 years of the issue, after which there will be a step-up to a LIBOR-based floating rate. The notes will be subordinated in right of payment to all of Banco de Credito's existing and future senior obligations. In the event of Banco de Credito's bankruptcy, liquidation or dissolution under Peruvian banking law, the notes will rank at least pari passu in right of payment with all of Banco de Credito's future subordinated indebtedness and will be senior in right of payment to the holders of all classes of the bank's share capital. The notes will not be guaranteed by Banco de Credito's parent company or any of its subsidiaries. The notes can be redeemed by Banco de Credito in 2016 -- or at any interest payment date thereafter -- with prior regulatory approval. They can also be redeemed anytime in the case of regulatory events that may affect their eligibility for regulatory capital consideration in Peru, and/or in the face of tax events in Peru or Panama that may change the tax status of interest payments. The notes are being issued by Banco de Credito as subordinated notes (Certificados de Deposito Negociables Subordinados) under the laws of Peru and will be governed by the law of New York. The notes are considered debt instruments by Peruvian, Panamanian and New York legislations; they are not covered by any type of deposit insurance. Banco de Credito del Peru is Peru's largest bank, with a dominating market share of over 30% of deposits, and boasts total consolidated assets of US$9.6 billion and equity of US$780 million as of June 30, 2006. It is the principal operating company within Credicorp, Peru's largest financial services company, which controls 96.2% of Banco de Credito; Credicorp is widely held by local and foreign institutional shareholders. BANCO DE CREDITO: Moody's Assigns Ba2 Rating on US$120MM Notes -------------------------------------------------------------- Moody's Investors Service assigned a Ba2 foreign currency subordinated debt rating to Banco de Credito del Peru, Panama Branch's US$120 subordinated negotiable certificates of deposit (unsecured subordinated notes) maturing in 2021. The rating agency noted that the subordination of the notes was taken into consideration and applied to Banco de Crediot's Baa2 global local currency deposit rating. At this rating level, Moody's notching guidelines determine a one-notch differential from the base rating. The Ba2 rating is the result of joint probabilities of default that are incorporated into Peru's Ba2 country ceiling for foreign currency bonds, and into Banco de Credito's Baa3 global local currency subordinated debt rating. The Ba2 rating also reflects the probability of a sovereign default implied by the Peruvian government's Ba3 foreign currency bond rating, and the likelihood that the Peruvian government could impose a debt moratorium in the event of default on its own foreign currency obligations. The rating also addresses the risk that any such moratorium might include foreign currency bonds and that Banco de Credito's bonds might particularly be affected. The Ba2 rating is one notch higher than the foreign currency rating for the Peruvian government bonds and at the same level of Peru's country ceiling for foreign currency bonds. Banco de Credito del Peru is headquartered in Lima, Peru and reported US$8 billion in assets and US$748 million in equity as of June 30, 2006. ===================== P U E R T O R I C O ===================== ADELPHIA COMMS: Metropolitan Edison, et al. Want Claims Allowed --------------------------------------------------------------- Metropolitan Edison Company, Pennsylvania Electric Company, Toledo Edison Company, Ohio Edison Company, Pennsylvania Power Company and Illuminating Company aka Cleveland Electric Illuminating Company, ask the U.S. Bankruptcy Court for the Southern District of New York to allow their administrative expense claim against Adelphia Communications Corp. and its debtor-affiliates for: (1) US$2,438,302, including but not limited to at least US$392,693 against Parnassos in favor of Penelec, for amounts owing under the Agreements; and (2) an unliquidated amount, including but not limited to at least US$1,073 against the JV Debtors in favor of Ohio Edison, for all postpetition amounts owing on Metropolitan Edison, et al.'s utility accounts with the ACOM Debtor through July 31, 2006. Metropolitan Edison, et al., also ask the Court to direct the ACOM Debtors to promptly pay the amounts. Metropolitan Edison, et al., were parties to numerous pole attachment/joint use agreements with the ACOM Debtors, including Parnassos, LP. Metropolitan Edison, et al., provided joint use services to the ACOM Debtors after its filing for chapter 11 protection through the Effective Date of the Third Modified Fourth Amended Joint Plan of Reorganization for the Century-TCI Debtors and the Parnassos Debtors, when the Joint Use Agreements were assigned to Time Warner Cable NY, LLC, or Comcast Corporation. Pursuant to pleadings and notices filed and served by the ACOM Debtors, Penelec and Parnassos were parties to one of the Joint Use Agreement dated September 1, 1987. Metropolitan Edison, et al., reported that the amount due and owing to them for services provided under the Agreements from the Date the Debtors filed for chapter 11 protection to the Effective Date totals US$2,438,302. Based on Metropolitan Edison, et al.'s records and representations of the ACOM Debtors' counsel regarding the applicable Adelphia counterparties to the Joint Use Agreements, of the US$2,438,302, at least US$392,693 is due and owing to Penelec from Parnassos. Jil Mazer-Marino, Esq., at Rosen Slome Marder LLP, in Uniondale, New York, however, notes that that Metropolitan Edison, et al., have been unable to determine from their own records, who the applicable Debtor counterparty is to each of the Joint Use Agreements. Metropolitan Edison, et al., have asked the ACOM Debtors to identify the applicable Debtor counterparty to various of the Joint Use Agreements as of July 30, 2006. While ACOM Debtors' counsel has advised that the ACOM Debtors are diligently working on the request, as of September 13, 2006, the ACOM Debtors have not provided the information, Ms. Mazer-Marino relates. In addition, Metropolitan Edison, et al., had provided postpetition electric utility service to the ACOM Debtors on numerous accounts through the Effective Date. Based their records, only 29 accounts appear to be service accounts of any of the JV Debtors. The aggregate amount owing on those 29 accounts for service provided by Ohio Edison to the JV Debtors from the Date the Debtors filed for chapter 11 protection to the Effective Date is US$1,073. Metropolitan Edison, et al., believe that the ACOM Debtors routinely failed to update the customer names or provide correct customer names on many utility service accounts. Thus, Metropolitan Edison, et al., are unable to identify with any certainty which Adelphia entity is the customer on the various utility accounts with the Debtors. Ms. Mazer-Marino relates that the total amounts owing on all of Metropolitan Edison, et al., utility service accounts with the Debtors have not yet been determined. Metropolitan Edison, et al., are still in the process of calculating the final bills for the accounts. Due to the large number of accounts at issue and certain limitations with their billing system, they are unable to finalize the accounts through the Effective Date until they have determined which service accounts have been assigned to Time Warner and which ones have been assigned to Comcast. Metropolitan Edison, et al., are diligently working with their contacts at each company to determine the information. Based in Coudersport, Pa., Adelphia Communications Corp. (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 149; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ADELPHIA COMMS: Santa Monica Seeks Court OK to Century Payments --------------------------------------------------------------- The city of Santa Monica, Calif., asks the U.S. Bankruptcy Court for the Southern District of New York to preserve its rights to receive administrative expense priority payments to remedy the defaults under the Franchise it issued to Century-TCI California, L.P. Prior to Adelphia Communications Corp. and its debtor-affiliates' filing for chapter 11 protection, Santa Monica granted Century-TCI California, a franchise to own, operate and maintain a cable television system within the boundaries of Santa Monica. In resolution of several disputes between the Santa Monica and Century-TCI, the parties entered into a settlement agreement dated Jan. 30, 2006, which provides, among others, for the assumption of the Franchise. Santa Monica did not waive any defaults arising on or after July 1, 2005, and the period from Jan. 1, 1999 to June 30, 2005, related to the payment of franchise fees, utility users, or business license taxes or fees. Santa Monica has commenced an audit of the Franchise for the period of July 1, 2005, through June 30, 2006. Though the audit has not been completed, based on a preliminary review, Santa Monica believes that there are defaults under the Franchise arising during the period from July 1, 2005, and before July 31, 2006, effective date of the Third Modified Fourth Amended Joint Plan of Reorganization for the Century-TCI Debtors and the Parnassos Debtors. Eric D. Winston, Esq., at Stutman, Treister & Glatt, in Los Angeles, California, informs the Court that prior audits routinely revealed that Century-TCI had failed to satisfy certain obligations arising under the Franchise Agreements. Mr. Winston notes that the JV Plan and its related confirmation order dated June 29, 2006, require Santa Monica to file administrative expense claims within 45 days after the JV Plan's Effective Date. Failure to timely submit an Administrative Expense Claim may result in the forfeiture of the claims. Based in Coudersport, Pa., Adelphia Communications Corp. (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 149; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DORAL FIN'L: Reports US$33.8MM Net Loss for 2006 First Semester --------------------------------------------------------------- Doral Financial Corp. reported the filing of its Form 10-Q reports for the first and second quarters ended March 31 and June 30, 2006. "With the filing of our results for the first half of the year, we have completed another difficult chapter as we move forward in our effort to transform Doral's business and operations into a higher margin financial services enterprise," stated Glen Wakeman, Chief Executive Officer. "Since the beginning of this past summer, Doral has installed a new senior management team, recruiting experienced executives with both the skills set and values to build competitive advantages for Doral in the marketplace, including capitalizing on the potential of the Doral brand in Puerto Rico. In moving forward, Doral is also addressing substantial challenges. Among the key challenges are the refinancing of the Company's US$625 million floating rate senior notes that mature in July 2007, the restructuring of the balance sheet to enhance future earnings and the resolution of remaining restatement related issues. The Board and new senior management team are committed to resolving these challenges in a manner that serves the long-term interests of Doral and all its stakeholders. With respect to its US$625 million floating rate senior notes that mature in July 2007, Doral will require outside financing or other sources of capital to refinance this indebtedness at maturity. Accordingly, Doral is in the process of selecting a financial advisor to assist the Company in reviewing a number of possible alternatives to refinance this indebtedness and in examining alternatives to restructure its balance sheet in order to enhance future earnings," stated Mr. Wakeman. For the first six months of 2006, Doral Financial incurred a net loss of US$33.8 million, compared to net income of US$16.4 million for the same period of 2005. Consolidated loss per diluted common share (after payment of dividends on preferred shares) was US$0.47 for the first six months of 2006, compared to US$0.00 for the comparable 2005 period. Doral Financial reported net income of US$17.1 million and a net loss of US$50.9 million for the quarters ended March 31 and June 30, 2006, respectively, compared to net income of US$39.2 million and a net loss of US$22.8 million for the comparable periods of 2005. Consolidated earnings per diluted common share (after payment of dividends on preferred shares) were US$0.08 for the quarter ended March 31 and a net loss per diluted share of US$0.55 for the quarter ended June 30, 2006, compared to net income per diluted common share of US$0.28 and a net loss per diluted common share of US$0.29 for the comparable periods of 2005. Although with the filing of its results for the first half of the year Doral has become current in its SEC regulatory filings, the company does not expect, because of the delay in filing its prior SEC reports, that it will be able to file its quarterly report on Form 10-Q for the third quarter of 2006 by its due date. "The transformation of Doral is going to be done prudently and will take time. Central to this long-term effort is to capitalize on and expand the Doral brand in Puerto Rico and, where appropriate, in other Hispanic market segments in the U.S. It is our goal to offer a diverse higher margin product portfolio, improved customer technologies and outstanding customer service, all within an environment that is focused on tight cost control, enhanced productivity and strong corporate values. Our portfolio will include, among its products and services, a full suite of mortgage products to allow Doral to remain a leading mortgage originator in Puerto Rico," said Mr. Wakeman. Overview of Financial Condition and Results of Operations Doral Financial's consolidated financial statements for the first six months of 2006 reflect the difficult business environment and challenges faced by the company. Doral Financial's results of operations for the first six months of 2006 were principally affected by: (1) reduced net interest income due principally to the interest rate environment and the repricing and maturity mismatch in the company's assets and liabilities, (2) a net loss on mortgage loan sales and fees due to market value adjustments on the company's held for sale portfolio, losses related to the restructuring of mortgage loan transfers to local financial institutions and lower margins on sales of mortgage loans, (3) increased expenses associated with the company's restatement and reengineering initiative, and (4) a change in tax position from a tax expense for the first six months of 2005 to a tax benefit for the first six months of 2006. Among the key components of the company's financial performance for the six months ended June 30, 2006, were: -- Net interest income for the six months ended June 30, 2006, was US$114.1 million, compared to US$151.4 million for the same period in 2005, a decrease of 24.7%. The decrease in net interest income resulted from a decrease in net interest margin from 1.74% in the first half of 2005 to 1.46% for the first half of 2006, coupled with a decrease in average interest-earning assets from US$17.5 billion for the first half of 2005 to US$15.7 billion for the first half of 2006, principally due to a decrease in investment and mortgage-backed securities and in money market investments. The reduction in net interest margin resulted from the flattening of the yield curve, as on average, the company's interest bearing liabilities, principally wholesale funding and loans payable, re-priced at higher frequency and rates than the company's interest-earning assets. The decrease in the company's interest margin has been particularly significant with respect to its portfolio of investment securities. Assuming a funding cost equal to the weighted-average cost of the company's repurchase agreements, the average interest rate spread on the company's portfolio of investment securities was approximately 0.41% for the six months ended June 30, 2006, compared to 1.36% for the company's interest earning assets taken as a whole. The impact of the flattening yield curve on Doral Financial's net interest margin is magnified by the current mismatch in the duration of the Company's assets and liabilities. The company's interest-earning assets include a large portfolio of fixed-rate long-term investments securities and mortgage loans that were generally financed with short-term or callable liabilities. This mismatch exposes the company to significant interest rate risk in a rising rate environment because, as these short-term or callable liabilities re-price at higher market rates, the company's interest rate margin is further compressed. The company's interest rate risk exposure is further complicated by the negative convexity (i.e. the tendency for the duration of the company's assets to decrease through prepayments as interest rates decline) inherent in the company's portfolio of fixed rate mortgage-backed securities and mortgage loans. The combination of this negative convexity and the current composition of the company's liabilities expose the company to margin compression risks even during certain declining interest rate environments. -- The provision for loan and lease losses for the first six months of 2006 was US$11.0 million, compared to US$7.7 million for the comparable 2005 period. The increase in the provision for loan and lease losses primarily reflects an increase in the allowance for the company's construction loan portfolio, as well as an increase in the delinquency trends of the company's overall loans portfolio. -- Non-interest loss for the first six months of 2006 was US$31.2 million, compared to non-interest income of US$461,000 for the same period in 2005. The non-interest loss was primarily due to a net loss on mortgage loan sale and fees of US$41.5 million, compared with a gain of US$23.3 million for the corresponding 2005 period. This loss was principally due to the company reassessment of its mortgage loans held for sale portfolio in light of the more stringent requirements of the U.S. secondary mortgage market, which has become its principal outlet for non-conforming loans as a result of reduced demand for this product from Puerto Rico financial institutions, and also to losses on sales of mortgage loans driven by the company's decision to restructure previous mortgage loan transfers to local financial institutions. During the first quarter of 2006, management transferred US$876.2 million from its mortgage loans held for sale portfolio to its loan receivable portfolio, which resulted in a market value adjustment of US$12.3 million that was taken as a charge against earnings during the first quarter of 2006. During the second quarter of 2006, the company recognized an aggregate net loss of approximately US$8.2 million as a result of the restructuring of certain prior mortgage loan transfers. In addition, the company made downward market value adjustments of US$5 million in the first quarter and US$17.5 million in the second quarter to reflect the impact of rising interest rates on the company's mortgage loans held for sale portfolio, as well as market terms for secondary sales in the U.S. market. During 2006, the company has also experienced lower margins on sales of mortgage loans as the company sold its non-conforming loan production in the U.S. market at a lower gain. Doral Financial also incurred a net loss on securities held for trading, including gains and losses on the fair value of IOs, of US$17.5 million for the first six months of 2006, compared to a net loss of US$36.4 million for the comparable 2005 period. The positive variance in trading activities during the first half of 2006, compared to the first half of 2005, was principally due to net gains on the company's derivative instruments of US$25.4 million for the first six months of 2006, as compared to net losses of US$57.5 million during the first half of 2005. Offsetting the gains on derivative instruments were net unrealized losses of US$42.9 million on the value of the company's IOs for the first six months of 2006, compared to net unrealized gains of US$15.6 million for the comparable 2005 period. Losses on the value of the company's IOs during the first half of 2006 were primarily related to floating rate IOs that did not have caps on the pass-through interest rate payable to investors. During the second quarter of 2006, Doral Financial was able to restructure its prior mortgage loan transfers giving rise to floating rate IOs and all of its remaining portfolios of floating rate IOs have caps on the pass-through interest rate payable to investors. These net losses were partially offset by higher servicing income related with an increase in the company's MSRs valuation due to a decrease in anticipated mortgage prepayment rates and higher commissions, fees and other income. -- Non-interest expenses for the first half of 2006 were US$134.6 million, compared to US$122.0 million for the same period in 2005. Non-interest expenses for the period continue to reflect significant expenses for professional services associated with the restatement of the company's prior period financial statements and related legal and accounting matters. Non-interest expenses for the first half of 2006 also reflect significant expenses associated with advisory services relating to the reengineering of the company's business and operating practices, as well as US$7.4 million in severance payments in connection with the related headcount reduction. -- For the first half of 2006, Doral Financial recognized an income tax benefit of US$28.9 million, compared to an income tax expense of US$5.7 million for the corresponding period in 2005. The decrease in the tax provision for 2006 was principally due to an increase in the company's net deferred tax asset combined with a decrease in pre-tax income, offset in part by higher net operating losses in certain subsidiaries that under the Puerto Rico Internal Revenue Code of 1994 could not be used to offset gains in other subsidiaries. -- During the first half of 2006, the company had other comprehensive loss of approximately US$125.2 million related principally to the adverse impact of the increase in interest rates on the value of the company's portfolio of available for sale securities. As of June 30, 2006, the company's accumulated other comprehensive loss (net of income tax benefit) reached US$250.6 million. -- Doral Financial's loan production for the first six months of 2006 was US$1.4 billion, compared to US$2.8 billion for the comparable period in 2006, a decrease of approximately 50%. The decrease in Doral Financial's loan production is due to a number of factors including changes in the underwriting processes, economic conditions in Puerto Rico, and competition from other financial institutions. Doral Financial is in the process of implementing new underwriting procedures. The implementation of these procedures has caused disruption in the company's loan originations. The company believes that these underwriting standards will allow it to more efficiently underwrite assets with better credit quality and risk price its loan products in the future. The company anticipates that, for the foreseeable future, loan production volume will continue to be below historical levels as these new underwriting procedures are implemented and new product offerings are developed. For example, loan production for the third quarter of 2006 was approximately US$329.8 million. However, the company is starting to see improving trends in its loan production during the fourth quarter of 2006. -- Doral Financial and its banking subsidiaries remain "well capitalized" for bank regulatory purposes as of June 30, 2006. Doral Financial Corp. -- http://www.doralfinancial.com/ -- a financial holding company, is the largest residential mortgage lender in Puerto Rico, and the parent company of Doral Bank, a Puerto Rico based commercial bank, Doral Securities, a Puerto Rico based investment banking and institutional brokerage firm, Doral Insurance Agency, Inc. and Doral Bank FSB, a federal savings bank based in New York City. * * * As reported in the Troubled Company Reporter on June 13, 2006, Standard & Poor's Ratings Services lowered its long-term ratings on Doral Financial Corp. (NYSE: DRL), including the company's long-term counterparty rating, to 'B+' from 'BB-'. At the same time, Doral's outlook remains on CreditWatch with negative implications. GLOBAL HOME: Court Approves Plante & Moran to Audit 401(k) ---------------------------------------------------------- The Honorable Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware gave Global Home Products LLC and its debtor-affiliates authority to employ Plante & Moran LLP, nunc pro tunc to May 15, 2006. As reported on the Troubled Company Reporter on Sept. 7, 2006, the Debtors sought permission for Plante & Moran to audit its 401(K) and pension plans for certain Anchor Hocking employees. Plante & Moran had audited those 401(K) and pension plans in prior years. The Debtors are managers of the GHP Operating Company, LLC, 401(k) Savings Plan and GHP Operating Company, LLC, Pension Plan for Anchor Hocking Union Employees. Plante & Moran will audit the financial statements and supplemental schedules of the 401(k) Savings Plan and the Union Pension Plan for the year ended Dec. 31, 2005. The audited financial statements will be included in the Savings Plan's Form 5500 filing and Union Pension Plan's Form 5500 filing with the Department of Labor. As part of the audit, Plante & Moran will recommend any adjustments to the 401(k) Savings Plan's and Union Pension Plan's accounting records, and, to the extent necessary, will discuss with the Debtors any suggestion concerning the accounting records and financial affairs. David L. Scheffler, CPA, disclosed that the Firm will receive a fixed fee of US$10,000 for the 401(k) Savings Plan Audit and a fixed fee of US$11,500 for the Union Pension Plan Audit. Mr. Scheffler assured the Court that the Firm neither holds nor represents any interest adverse to the Debtors' estates and is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Westerville, Ohio, Global Home Products, LLC -- http://www.anchorhocking.com/and http://www.burnesgroup.com/ -- sells houseware and home products and manufactures high quality glass products for consumers and the food services industry. The company also designs and markets photo frames, photo albums and related home decor products. The company and 16 of its affiliates, including Burnes Puerto Rico, Inc., and Mirro Puerto Rico, Inc., filed for Chapter 11 protection on Apr. 10, 2006 (Bankr. D. Del. Case No. 06-10340). Laura Davis Jones, Esq., Bruce Grohsgal, Esq., James E. O'Neill, Esq., and Sandra G.M. Selzer, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP, represent the Debtors. Bruce Buechler, Esq., at Lowenstein Sandler, P.C., represents the Official Committee Of Unsecured Creditors. When the company filed for protection from their creditors, they estimated assets between US$50 million and US$100 million and estimated debts of more than US$100 million. GLOBAL HOME: Hires Pricewaterhousecoopers to Provide Tax Works -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Global Home Products LLC and its debtor-affiliates permission to employ Pricewaterhousecoopers LLP to provide tax services. Scope of Services The firm will provide an Ohio investment tax credit analysis in two phases: a) phase one: consist of high level review and calculation for additions during Jan. 1, 2005 through Dec. 31, 2005. b) phase two consist of: -- review of based period; -- detailed calculation of credit; -- preparation of credit attachment for the 2006 Ohio franchise tax report; -- filing of notice of intent to claim the manufacturer's credit for Jan. 1, 2005 through Dec. 31, 2005, if necessary; and -- potential plan tour for determination of qualifying assets. The firm will provide Ohio personal property tax return services, including, but not limited to: prepare and sign as preparer of the 2006 Ohio county return of taxable business property for Anchor Hocking Consumer Glass Operating Company LLC, Anchor Hocking Consumer Glass Corp., Mirro Operating Company LLC and GHP Operating Company LLC. The firm will provide tax services, including, but not limited to: a) prepare and sign as preparer of the U.S. partnership income tax return, Form 1065, for the Debtors for the tax year starting Apr. 1, 2005 through Mar. 31, 2006; b) prepare and sign as preparer of required federal and state income tax returns for Apr. 1, 2005 through Mar. 31, 2006; c) prepare estimated tax payments and extensions due on or after the signing of the April 25 engagement letter in connection with the tax returns; and d) provide special tax services related to the preparation of the tax returns, including but not limited to, fixed assets depreciation, intangible asset amortization, accounting for differences in tax and audit year end, and state apportionment analysis. In addition, the Debtors tells the Court that, from time to time, it may ask the firm to perform tax advisory services outside of the scope mentioned. Compensation For Ohio investment credit analysis, the Debtors agreed to pay the firm US$2,000 for completion for the first phase and US$8,000 for phase two. The firm's billing rates for this service are: Professional Hourly Rate ------------ ----------- Partner US$500 Director US$380 Manager US$325 Senior US$210 Staff US$140 For Ohio personal property tax return, the Debtors agreed to pay the firm for Anchor Hocking Consumer Glass Operating Company LLC between US$6,000-US$8,000; and Anchor Hocking Consumer Glass Corporation, Mirro Operating Company LLC, and GHP Operating Company LLC between US$2,000-US$3,000. The firm's billing rates for this service are: Professional Hourly Rate ------------ ----------- Partner US$500 Director US$380 Manager US$325 Senior US$210 Staff US$140 For tax services, the Debtors have agreed to pay the firm US$140,000 for this specific engagement. The firm's billing rates for this service are: Professional Hourly Rate ------------ ----------- Partner US$500 Director US$400 Manager US$325 Senior US$225 Staff US$175 Robert C. Goldie assures that his firm does not hold any interest adverse to the Debtors' estates and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Goldie can be reached at: PricewaterhouseCoopers LLP 300 Madison Avenue, 24th Floor New York, New York 10017 Tel: (646) 471 4000 Fax: (646) 471 4444 http://www.pwcglobal.com/ Headquartered in Westerville, Ohio, Global Home Products, LLC -- http://www.anchorhocking.com/and http://www.burnesgroup.com/ -- sells houseware and home products and manufactures high quality glass products for consumers and the food services industry. The company also designs and markets photo frames, photo albums and related home decor products. The company and 16 of its affiliates, including Burnes Puerto Rico, Inc., and Mirro Puerto Rico, Inc., filed for Chapter 11 protection on April 10, 2006 (Bankr. D. Del. Case No. 06-10340). Laura Davis Jones, Esq., Bruce Grohsgal, Esq., James E. O'Neill, Esq., and Sandra G.M. Selzer, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP, represent the Debtors. Bruce Buechler, Esq., at Lowenstein Sandler, P.C., and David M. Fournier, Esq., at Pepper Hamilton LLP represent the Official Committee of Unsecured Creditors. Huron Consulting Group LLC gives financial advice to the Committee. When the company filed for protection from their creditors, they estimated assets between US$50 million and US$100 million and estimated debts of more than US$100 million. PILGRIM'S PRIDE: Issues Open Letter to Gold Kist Stockholders ------------------------------------------------------------- Pilgrim's Pride Corp. issued an open letter to the stockholders of Gold Kist Inc. The letter stated that Pilgrim's Pride was disappointed in the Gold Kist board's recommendation, which has failed to recognize both the value the company's offer affords Gold Kist's stockholders and the unique opportunity it presents to employees and contract growers. The offer was to acquire all of the outstanding shares of Gold Kist Inc. at US$20 per share in cash expires at midnight, New York City Time, Oct. 27, 2006, unless extended. Since before going public with its offer on Aug. 18, 2006, Pilgrim's Pride has made it clear that it would prefer to work together with Gold Kist and its board to negotiate a mutually beneficial agreement for both companies' respective stockholders, employees, business partners and other stakeholders. However, the Gold Kist board's unwillingness to hold any meaningful discussions with Pilgrim's Pride, as well as other actions on its part, have convinced the company that Gold Kist does not share the same goal. The company believes that there are many mischaracterizations in Gold Kist's 14D-9 filing on Oct. 12, 2006, and it would like to set the record straight. Pilgrim's Pride believes the Gold Kist board is not managing the process in its best interests. -- Pilgrim's Pride originally sent Gold Kist a confidentiality agreement on Aug. 11, 2006. Gold Kist consistently delayed and as a result there was little progress toward negotiating a confidentiality agreement. -- Since Pilgrim's Pride's receipt of a Gold Kist alternative proposed confidentiality agreement on Sept. 5, 2006, the company's attorneys stated in numerous conversations with Gold Kist attorneys, among other things, that the company could not accept a standstill provision or the equivalent of a standstill provision (one that could jeopardize Pilgrim's Pride's ability to commence a tender offer or proxy solicitation). While Gold Kist claims it was willing to forego the standstill provision and deleted the express standstill provision, Gold Kist was unwilling to expressly exempt from the restrictions of the confidentiality agreement the disclosure of information required by Securities and Exchange Commission rules to be disclosed in connection with a tender offer or proxy solicitation. This is in essence a "backdoor" standstill provision. -- Gold Kist also has been unwilling to confirm to Pilgrim's Pride the materials that it would furnish in response to the company's information request. When Pilgrim's Pride sent its request to Gold Kist's financial advisors on Sept. 1, 2006, the company noted that it was prepared to begin reviewing the information immediately. To date, Pilgrim's Pride has not had a single discussion or meeting with respect to the list of information to be provided, and the company has no idea -- even if it was to sign a confidentiality agreement -- whether it would receive the information requested. -- The Gold Kist board and Special Committee of independent directors also reiterated that they "remain committed to the continuing enhancement and execution of the company's strategic business plan, as well as exploration of potential alternatives to maximize stockholder value." Pilgrim's Pride notes that more than two months have passed since the company made its offer public, and it remains the only buyer that has publicly expressed interest in acquiring Gold Kist. Further, Gold Kist's board of directors has completely excluded Pilgrim's Pride from its process. If indeed a process is underway, it is clearly in the best Interests of Gold Kist stockholders that Pilgrim's Pride be given the opportunity to participate. While the chicken industry is subject to volatility, Pilgrim's Pride believes its offer reflects a significant premium to normalized conditions. -- As is widely known, the chicken industry is subject to volatility and there are a number of factors impacting near-term market conditions. Even though industry dynamics improved in the spring and early summer of 2006, in fact, since Pilgrim's Pride made its US$20 per share offer public on Aug. 18, 2006, the industry conditions have weakened. The price of boneless breast meat has decreased from US$1.47 per pound to a near all-time low of US$1.06 per pound. In addition, the price of corn has increased sharply from US$2.196 per bushel to US$3.126 per bushel over the past two months. These factors negatively affect industry profit margins, which remain below historical industry average performance and Pilgrim's Pride purposely set its US$20 per share offer price for Gold Kist to reflect what Pilgrim's Pride believes is a significant premium to normalized conditions. The Pilgrim's Pride US$20 per share offer provides Gold Kist stockholders with immediate and certain value for their shares. -- Pilgrim's Pride's offer represents a premium of 55% over Gold Kist's closing stock price on Aug. 18, 2006, the last day of trading before Pilgrim's Pride notified Gold Kist's board of directors in a public letter that it was offering US$20 per share in cash for the company. -- While the Gold Kist board has expressed confidence in its strategic plan and the stand-alone value of the company, Pilgrim's Pride notes that prior to its offer, Gold Kist stock was trading at US$12.93 per share. In light of ongoing industry volatility, our offer provides certain and immediate value of US$20 per share in cash, which is not subject to both the risks inherent in the execution of Gold Kist's long-term strategic plan or the many uncertainties of the poultry industry. -- Gold Kist's stock price, on average, has been approximately 50% of the Pilgrim's Pride stock price since Gold Kist's initial public offering in 2004. While stocks in the industry are subject to significant volatility, applying this average relative trading value of 50% to Oct. 20, 2006, Pilgrim's Pride closing stock price of US$25.52 implies a Gold Kist stock price of approximately US$12.94. Thereby, Pilgrim's Pride believes its offer still represents an approximately 55% premium to this implied Gold Kist stock price. Pilgrim's Pride is attempting to preserve Gold Kist's ability to elect a new board majority and negate a lawsuit which seeks to entrench Gold Kist management and delay the stockholders' opportunity to receive cash for their shares. -- Pilgrim's Pride believes Gold Kist is attempting to entrench its management and board and deny stockholders the opportunity to receive US$20 in cash per share. Rather than negotiate a confidentiality agreement, furnish information requested more than six weeks ago, or attempt to negotiate a merger agreement, Gold Kist instead filed a lawsuit against Pilgrim's Pride. This lawsuit seeks to limit Gold Kist stockholders' ability to vote in favor of Pilgrim's Pride's nominees. Pilgrim's Pride believes this is another attempt by Gold Kist's board to entrench itself and delay stockholders' ability to receive cash for your shares. If the current Gold Kist directors continue to stand between stockholders and Pilgrim's Pride's offer, the company will vigorously defend against this lawsuit in order to preserve the right to elect a new board majority. -- Pilgrim's Pride has made tangible progress toward consummating this transaction. As disclosed on Oct. 16, 2006, the company received the requisite consents from approximately 99% of the holders of Gold Kist's outstanding debt. In addition, the Department of Justice has granted early termination under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. -- From the outset of Pilgrim's Pride's offer, the company intends to honor all existing grower contracts. The company agrees with Gold Kist Chief Executive Officer John Bekkers, who has said that good people are important to the ongoing success of the business. The company is proud of its positive working relationships with our own growers, which should give Gold Kist growers confidence that Pilgrim's Pride would approach its relationships with them in the same spirit. And for Gold Kist growers who are stockholders, the company urges them to support the tender offer. Pilfrim's Pride said that it is important all Gold Kist stockholders understand its genuine attempts to negotiate a mutually beneficial transaction with the Gold Kist board. Gold Kist board's refusal to act prompted Pilgrim's Pride to commence the tender offer for Gold Kist shares. The tender offer is scheduled to expire at midnight, New York City Time, on Oct. 27, 2006, unless extended. Gold Kist board of directors has rejected the offer and refused even to discuss the offer with Pilgrim's Pride. The company believes it is clear that reaching an agreement quickly would be in the best interests of all stockholders and all other constituencies. Stockholders' questions may be directed to the information agent at: Innisfree M&A Incorporated Tel: 877-687-1874 (toll free from the U.S. and Canada). Baker & McKenzie LLP and Morris, Nichols, Arsht & Tunnell, LLP are acting as legal counsel and Credit Suisse, Legacy Partners Group LLC and Lehman Brothers Inc. are acting as financial advisors to Pilgrim's Pride. About Gold Kist Based in Atlanta, Georgia, Gold Kist Incorporated (NASDAQ: GKIS) -- http://www.goldkist.com/-- operates a fully integrated chicken production, processing and marketing business. Gold Kist's production operations include nine divisions located in Alabama, Florida, Georgia, North Carolina and South Carolina. About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corp. (NYSE: PPC) -- http://www.pilgrimspride.com/-- produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the United States, Mexico and in Puerto Rico. Pilgrim's Pride employs approximately 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah. * * * In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. Consumer Products sector, the rating agency held its Ba2 Corporate Family Rating for Pilgrim's Pride Corp. In addition, Moody's revised or held its probability-of- default ratings and assigned loss-given-default ratings on the company's note issues, including an LGD6 rating on its US$100 million 9.250% Sr. Sub. Global Notes Due Nov. 15, 2013, suggesting noteholders will experience a 95% loss in the event of a default. ================================= T R I N I D A D & T O B A G O ================================= BRITISH WEST: Outsourcing Customer Service at Miami Office ---------------------------------------------------------- Dionne Ligoure, the head of corporate communications at British West Indies Airlines aka BWIA, told the Trinidad and Tobago Express that its Miami office is not being closed down and that customer service will be outsourced. The Express notes that these services will be provided by a foreign airline: -- ticketing, -- check-in, -- arrival, -- transfer services, -- gate, and -- baggage-handling duties. According to The Express, foreign airlines Servisair and Swissport International may be taking over BWIA's services, as the latter will be shut down by Dec. 31. The Express notes that Servisair has a presence at Piarco International Airport. Swissport also has a local presence but operates passenger and ramp-handling services around the world. Peter Davies, the chief executive officer of BWIA, told The Express that the airline's staff would have been reduced to 550 from 1,800. The Express states that BWIA departments expected to be shut down include: -- reservations office at Edward Street, Port of Spain, -- Piarco service. -- Barbados office. British West Indies aka BWIA was founded in 1940, and for more than 60 years has been serving the Caribbean islands from Trinidad and Tobago, the hub of the Americas, linking the twin island republic and many other Caribbean islands with North America, South America, the United Kingdom and Europe. The airline has reportedly been losing US$1 million a week due to poor operational management. An employee survey revealed that lack of responsibility by the management is a major issue in the company. A number of key employees moved to other companies caused by a deadlock in the airline's negotiation with its labor union. The Trinidad & Tobago government, which owns 97.188% of BWIA, decided to shut down the airline on Dec. 31, 2006, and reopen a new airline that will be called Caribbean Airlines. The government approved a substantial capital injection for the creation of Caribbean Airlines. DIGICEL LTD: Authority Asks Rival Firm to Cooperate on Probe ------------------------------------------------------------ The Telecommunications Authority has called for immediate action from Telecommunications Services of Trinidad and Tobago aka TSTT to fully cooperate with the investigation resulting from Digicel Ltd.'s complaint against TSTT, Trinidad and Tobago Express reports. As reported in the Troubled Company Reporter-Latin America on Oct. 23, 2006, Digicel claimed that TSTT intentionally blocked the former's calls. TSTT denied the accusation. Digicel said in a statement that TSTT must fully cooperate with the Telecommunications Authority's investigation and immediately allow the agency's engineers to visit and inspect their network facilities. According to The Express, Digicel said that it is prepared to take whatever legal action is necessary under the 2001 Telecommunication Act of Trinidad and Tobago to make sure its clients no longer experience inconveniences and that any guilty parties feel the full brunt of the law. Kevin White, the chief executive officer of Digicel's Trinidad & Tobago operations, told The Express, "The inconclusive response from TSTT represents a disregard and violation of customer rights. "They are deliberately trying to deceive and hoodwink the people of Trinidad and Tobago by referring to a software conflict from the decommissioning of their outdated TDMA mobile telecommunications network. If this were true then we would not also be experiencing the blocking of calls to TSTT landline numbers," The Express says, citing Digicel. Digicel Ltd. 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 Caribbean countries including Jamaica, St. Lucia, St. Vincent, Aruba, Grenada, Barbados, Bermuda, 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. Moody's changed the outlook to stable from positive. * * * Fitch Ratings assigned on July 14, 2006, a 'B' rating to Digicel Ltd'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. ================= V E N E Z U E L A ================= PETROLEOS DE VENEZUELA: Seeking Offshore Rigs for Mariscal Sucre ---------------------------------------------------------------- The government of Venezuela is looking for offshore rigs to launch Petroleos de Venezuela's Mariscal Sucre Liquefied Natural Gas Project during the first quarter of 2007, Dow Jones Newswires reports. Dow Jones underscores that Mariscal Sucre is situated in shallower waters than reservoirs in Trinidad, a major gas exporter, or in Venezuela's Deltana Platform, where Chevron Corp. and Statoil are investing in offshore blocks. As reported in the Troubled Company Reporter-Latin America on Feb. 22, 2005, Rafael Ramirez, the Venezuelan Minister of Energy and Oil and president of Petroleos de Venezuela, said that the Mariscal Sucre project was being fine-tuned to differentiate the processes that would be developed in this potential area, north of the Paria Peninsula. The Mariscal Sucre project foresees the exploitation of offshore non-associated gas reserves and the construction of a liquefied natural gas plant in Sucre. It also contemplates liquefied natural gas production and processing. Dow Jones relates that the project is part of an effort to alleviate the domestic gas deficit and start exports in the coming years. Carlos Figueredo, the general manager of offshore projects for Petroleos de Venezuela, is positive that the company will find rigs despite strong demand, Dow Jones notes. According to Dow Jones, "booming profits" in the oil and natural gas sector have encouraged new exploration and development, creating a tight rig market for firms looking to drill new wells. The rigs Petroleos de Venezuela wants to hire for its Mariscal Sucre project are found in the market, Dow Jones says, citing Mr. Figueredo. Mr. Figueredo told the press, "In the size we're looking for there are some options." Petroleos de Venezuela hopes to drill eight wells at the Dragon section of Mariscal Sucre in the next two years, which would bring 600 million cubic feet a day of new natural gas, Dow Jones states. Petroleos de Venezuela SA is Venezuela's state oil company in charge of the development of the petroleum, petrochemical and coal industry, as well as planning, coordinating, supervising and controlling the operational activities of its divisions, both in Venezuela and abroad. * * * 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. UNIVERSAL COMPRESSION: Secures US$500-Million Credit Facility ------------------------------------------------------------- Universal Compression Holdings, Inc., has entered into a five-year US$500 million senior secured credit agreement. The lead banks in the syndicate for the facility are Wachovia Capital Markets, LLC and Deutsche Bank Securities Inc. Universal used approximately US$330 million under the new senior secured credit facility, together with debt assumed by Universal Compression Partners, L.P. and proceeds from the sale of UCLP equity interests pursuant to the exercise of the over-allotment option in the UCLP initial public offering, to repay all balances under the prior senior secured credit facility. The new facility will be used for working capital, acquisitions and general corporate purposes. Headquartered in Houston, Texas, Universal Compression, Inc. -- http://www.universalcompression.com/-- provides natural gas compression equipment and services, primarily to the energy industry in the United States, as well as in Canada, Venezuela, Argentina, Columbia, and Australia. * * * Moody's Investors Service assigned on Oct. 22, 2006, a Ba1, LGD 3 (36%) rating to Universal Compression, Inc.'s US$500 million senior secured bank credit facility. At the same time, Moody's affirmed Universal's Ba2 Corporate Family Rating, its Ba2 Probability of Default Rating and its B1, LGD5 (88%) ratings on its US$175 million 7-1/4% Senior Notes. Moody's said the outlook remains stable. VENEZUELA: Issuing US$1 Billion Joint Bond with Argentina --------------------------------------------------------- The first stage of the so-called South Bond, to be issued jointly by Argentina and Venezuela, will take place in the first two weeks of November, according to a report from Nosis. The first issuance will be for US$1,000,000. As previously reported, the new securities will trade in the Venezuelan internal market. Argentina will issue Boden 12 and the Finance Ministry will release fixed-interest notes. The two nations have maintained strong financial relations, after the current Venezuelan administration bought about US$3.2 billion of Argentina's Boden 2012 bonds. * * * Venezuela's foreign currency long-term debt is rated B1 by Moody's, B+ by Standard & Poor's, and BB- by Fitch. *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter - Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Marjorie C. Sabijon, Sheryl Joy P. Olano, Stella Mae Hechanova, and Christian Toledo, Editors. Copyright 2006. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *