/raid1/www/Hosts/bankrupt/TCRLA_Public/080303.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
Monday, March 3, 2008, Vol. 9, No. 44
Headlines
A R G E N T I N A
AIMPO SRL: Proofs of Claim Verification Deadline Is April 14
BANCO HIPOTECARIO: To Settle Tendered Eligible Notes Today
BIOMET INC: Taps Jon Serbousek as President for Orthopedics Unit
FIAT SPA: India Plant to Start Linea Line Production in August
GRUPO ASISTENCIAL: Proofs of Claim Verification Is Until May 9
MUNISTAR ARGENTINA: Claims Verification Is Until April 21
NUEVO BANCO INDUSTRIAL: Will Launch IPO This Year
OLD VETIKAR: Proofs of Claim Verification Deadline Is April 28
B A H A M A S
CENVEO INC: Delay in 10-K Filing Won't Affect Rating, S&P Says
B E R M U D A
ANNUITY & LIFE: Settles Dispute With Transamerica for US$3 Mil.
B O L I V I A
COEUR D'ALENE: Discloses 2007 Exploration Program Results
B R A Z I L
BANCO NACIONAL: Increases Infrastructure Funds to BRL25.8 Bil.
BANCO NACIONAL: Delivers Two Trucks & 30 Trolleys to Cortrap
COMPANHIA ENERGETICA: Energias Wants to Join Consortium
DELPHI CORP: Shareholder Settlement Hearing Set for April 29
ENERGIAS DO BRASIL: Inks Bridge Loan Contracts With Citibank
ENERGIAS DO BRASIL: Wants to Join Group to Bid for Energetica
FORD MOTOR: Navistar Re-Files Breach of Contract Suit
FURNAS CENTRAIS: Wants Partner to Bid for Transmission Lines
GENERAL MOTORS: Idles Assembly Plant Due to AAM Workers' Strike
GENERAL MOTORS: Supplier's Workers Strike Won't Affect S&P Rtg.
INTELSAT LTD: ViewAfrica Extends Contract to Up Channel Offering
MILACRON INC: Dec. 31 Balance Sheet Upside-Down by US$51.1 Mil.
NAVISTAR INTERNATIONAL: Re-Files Breach of Contract Suit vs Ford
NORTEL NETWORKS: Posts $844 Mil. Net Loss in Fourth Quarter 2007
TELE NORTE: Earns BRL2.36 Billion in 2007
C A Y M A N I S L A N D S
ATLAS CAPITAL: Sets Final Shareholders' Meeting for March 7
DIAMOND REIT: Will Hold Final Shareholders' Meeting on March 10
HONJO GLOBAL: Proofs of Claim Filing Deadline Is March 8
MORLEY BALANCED: Proofs of Claim Filing Ends on March 10
PRAIRIE FUTURES: Proofs of Claim Filing Is Until March 8
SCOTTISH RE: A.M. Best Chips Issuer Credit Rtg. to bb from bbb-
C H I L E
FIDELITY NATIONAL: Earns US$108 Mil. in Quarter Ended Dec. 31
FIDELITY NATIONAL: Sells Certegy Gaming to Global Cash Access
SHAW GROUP: Unit to Provide Engineering Services in India
C O L O M B I A
BANCOLOMBIA SA: Superior Court Annuls Ruling Against Gilinski
SOLUTIA INC: Emerges From Chapter 11 Bankruptcy Protection
SOLUTIA INC: Judge Beatty OKs Bank of New York Settlement Pact
SOLUTIA INC: New Stock to Trade on NYSE Effective March 3
C O S T A R I C A
ANIXTER INT'L: Robert Grubbs to Quit as CEO Effective June 2008
SIRVA INC: Obtains Court OK for Additional US$10 Mil. DIP Loan
D O M I N I C A N R E P U B L I C
FREESTAR TECH: Posts US$4.5 Mil. Net Loss in Qtr. Ended Dec. 31
E C U A D O R
PETROECUADOR: Launches 1st Drill Rig With Petroleos de Venezuela
PETROECUADOR: Reaches Oil Contract Agreements With Four Firms
M E X I C O
AXTEL SAB: Will Launch Quadruple Play Services Next Year
BALLY TOTAL: Reaches Settlement With SEC on Fraud Allegations
COTT CORP: In Talks With Wal-Mart on Shelf Space Allocation
COTT CORP: Wal-Mart Negotiations Cue Moody's to Review Ratings
COTT CORP: Unable to Meet Deadline; Delays Filing of Form 10-K
FLEXTRONICS: To Increase Workforce in Hungary by 10%
KANSAS CITY: Sets Annual Stockholders' Meeting for May 1
ALASKA AIRLINES: Appoints Brad Walker As Managing Director
SCIENTIFIC GAMES: 4Q Loss From Mexican Operations is US$2.8MM
SHARPER IMAGE: Court Grants Request to Pay Vendor Obligations
SHARPER IMAGE: Schedules Filing Deadline Extended to April 4
P A N A M A
CABLE & WIRELESS: CitiGroup Seeks Demerger of Two Businesses
CHIQUITA BRANDS: To Hold Annual Shareholders' Meeting on May 22
P U E R T O R I C O
DIRECTV GROUP: FCC Says Liberty Media Deal Will Benefit Public
DIRECTV GROUP: Stake Swap Results in Two Board Seats for Liberty
MYLAN INC: Books US$1.27-Bil. Loss in Three Mos. Ended Dec. 31
MYLAN INC: J. Dore' Joins as Matrix Labs CEO & Managing Director
MYLAN INC: Forest Labs Will Assume Rights on Hypertension Drug
UNIVISION COMMS: Sells Univision Music Group to Universal Music
V E N E Z U E L A
CHRYSLER LLC: Idles Plant in Ontario Due to TRW's Workers Strike
CHRYSLER LLC: Plastech to Continue Supply Parts Until March 3
PETROLEOS DE VENEZUELA: Launches 1st Drill Rig with Petroecuador
PETROLEOS DE VENEZUELA: Says NB Power's Damage Claim Is Settled
X X X X X X
* S&P Projects Decline in 2008 LatAm & Caribbean Sovereign Debts
* BOND PRICING: For the Week February 25 - February 29, 2008
- - - - -
=================
A R G E N T I N A
=================
AIMPO SRL: Proofs of Claim Verification Deadline Is April 14
------------------------------------------------------------
Miguel Angel Troisi, the court-appointed trustee for Aimpo
S.R.L.'s bankruptcy proceeding, will be verifying creditors'
proofs of claim until April 14, 2008.
Mr. Troisi will present the validated claims in court as
individual reports on May 27, 2008. The National Commercial
Court of First Instance in Buenos Aires will determine if the
verified claims are admissible, taking into account the
trustee's opinion, and the objections and challenges that will
be raised by Aimpo 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 Aimpo's accounting
and banking records will be submitted in court on Aug. 27, 2008.
Mr. Troisi is also in charge of administering Aimpo's assets
under court supervision and will take part in their disposal to
the extent established by law.
The trustee can be reached at:
Miguel Angel Troisi
Cerrito 146
Buenos Aires, Argentina
BANCO HIPOTECARIO: To Settle Tendered Eligible Notes Today
----------------------------------------------------------
Banco Hipotecario S.A.'s cash tender offer to purchase up to
US$56 million aggregate principal amount of its US dollar-
denominated notes due 2013 and up to the equivalent of
US$56 million aggregate principal amount of its EUR-Denominated
Notes due 2013 expired at 11:59 p.m., New York City time, on
Feb. 27, 2008.
Banco Hipotecario received aggregate tenders for a total of USD
equivalent principal amount of US$61,053,602 of Eligible Notes,
consisting of (i) US$16,535,993 aggregate principal amount of
the outstanding USD Long Term Notes and (ii) the equivalent of
US$44,517,609 aggregate principal amount of the outstanding EUR
Long Term Notes (based on the USD/EUR exchange rate published by
the European Central Bank at the close of business on
Feb. 12, 2008). Banco Hipotecario accepted for payment all of
the Eligible Notes tendered prior to Feb. 27, 2008. The
settlement of all tendered Eligible Notes is expected to occur
on March 3, 2008.
Banco Hipotecario believes that this transaction reflects its
solvency and financial flexibility to successfully complete
liability management initiatives during a period of volatile
market conditions.
The Tender Offer was made in accordance with the terms and
conditions set forth in Banco Hipotecario's Offer to Purchase
dated Janu. 29, 2008, as supplemented on Feb. 8, 2008, and was
subject to the satisfaction or waiver of certain conditions.
In connection with the Tender Offer, Deutsche Bank Securities
Inc. acted as the Dealer Manager, Deutsche Bank Luxembourg S.A.
acted as the Luxembourg Depository and Global Bondholder
Services Corporation acted as the Information Agent and
Depositary.
Questions may be directed to:
Deutsche Bank Securities Inc.
Tel. numbers: (866) 627-0391 (toll free) or
(212) 250-2955 (collect)
Attention: Liability Management Group
Requests for documents should be directed to:
Information Agent
Tel. numbers: (866) 873-5600 (toll free) or
(212) 430-3774 (collect)
Headquartered in Buenos Aires, Argentina, Banco Hipotecario SA
-- http://www.hipotecario.com.ar-- is a commercial bank that
accepts deposits and offers retail and commercial banking
services. The bank offers mortgage, personal and corporate
loans, credit cards and insurance services. It operates through
a network of 35 branches and 61 service agencies located in
Argentina. The bank's subsidiaries consist of BHN Sociedad de
Inversion Sociedad Anonima.
* * *
On Nov. 30, 2007, Moody's Investors Service assigned a bank
financial strength rating of D to Banco Hipotecario S.A, and
global local currency deposit rating of Ba1 to the bank's US$200
million senior unsecured Argentine peso-linked notes, which are
due in 2010. Moody's outlook on the ratings is stable.
BIOMET INC: Taps Jon Serbousek as President for Orthopedics Unit
----------------------------------------------------------------
Biomet Inc. has appointed Jon Serbousek as President of Biomet
Orthopedics, Inc., effective March 3. Mr. Serbousek will lead
Biomet's efforts in continuing the success and growth of the
U.S. total joint reconstruction business.
During the past eight years, Mr. Serbousek has held diverse
general management roles with Medtronic in the areas of Spinal
Reconstruction, International, New Technology Development and
most recently, worldwide Vice-President and General Manager,
Biologics. Prior to Medtronic, Mr. Serbousek spent 13 years
with DePuy, holding positions of Vice President of Marketing and
Product Development Joint Reconstruction, Vice President, Spinal
Operations; Vice President and General Manager, Arthroscopy &
Sports Medicine and a series of Product Development and
Engineering Management positions.
Jeff Binder, Biomet President and CEO, stated, "I have worked
closely with Jon in the past and he fits perfectly with Biomet's
culture and heritage. He shares our company's commitment to
clinical excellence and innovation, extraordinary service,
personalized patient care and surgeon prominence in the
healthcare system."
"I am very excited about joining the Biomet team," Mr. Serbousek
said. "The company's track record of innovation, clinical
performance, and growth is unmatched, and I am honored to have
the opportunity to contribute to its future."
About Biomet
Based in Warsaw, Indiana, Biomet Inc. (NASDAQ: BMET) and its
subsidiaries design, manufacture, and market products used
primarily by musculoskeletal medical specialists in both
surgical and non-surgical therapy. Biomet and its subsidiaries
currently distribute products in more than 100 countries,
including the Netherlands, Argentina and Korea.
Biomet Inc. and its subsidiaries design, manufacture, and market
products used primarily by musculoskeletal medical specialists
in both surgical and non-surgical therapy. Biomet's product
portfolio encompasses reconstructive products, fixation
products, spinal products, and other products.
* * *
As reported in the Troubled Company Reporter-Latin America on
Sept. 27, 2007, Moody's Investors Service assigned final
debt ratings to Biomet, Inc. (B2 Corporate Family Rating) in
conjunction with the close of the leveraged buy-out transaction
by a consortium of equity sponsors. Moody's said the rating
outlook is negative.
FIAT SPA: India Plant to Start Linea Line Production in August
--------------------------------------------------------------
Fiat India Chief Executive Officer Rajeev Kapoor said that the
company's Linea family car will start production in August 2008
at its joint venture plant in Ranjangaon, India, Thomson
Financial News reports.
The plant is a 50:50 joint venture between Fiat and Tata Motors
Ltd's and has a 100,000-car and 200,000-engine and transmission
parts manufacturing capacity.
About Fiat S.p.A.
Headquartered in Turin, Italy, Fiat S.p.A. --
http://www.fiatgroup.com/-- is one of the largest industrial
groups in Italy and the fourth largest European-based automobile
manufacturer, with revenues of EUR33.4 billion in the first nine
months of 2005. Fiat's creditors include Banca Intesa, Banca
Monte dei Paschi di Siena, Banca Nazionale del Lavoro,
Capitalia, Sanpaolo IMI, and UniCredito Italiano.
Fiat operates in Argentina, Australia, Austria, Belgium, Brazil,
Bulgaria, China, Czech Republic, Denmark, France, Germany,
Greece, Hungary, India, Ireland, Italy, Japan, Lituania,
Netherlands, Poland, Portugal, Romania, Russia, Singapore,
Spain, among others.
* * *
In November 2007, Moody's Investors Service changed the outlook
on Fiat S.p.A. and subsidiaries' Ba3 Corporate Family Rating to
positive from stable and affirmed its Ba3 long-term senior
unsecured ratings as well as the short-term non-Prime rating.
In October 2007, Fitch Ratings affirmed Fiat S.p.A.'s Issuer
Default and senior unsecured ratings at BB- and Short-term
rating at B.
The company carries Standard & Poor's Ratings Services' BB long-
term corporate credit rating. The company also carries B short-
term rating. S&P said the outlook is stable.
GRUPO ASISTENCIAL: Proofs of Claim Verification Is Until May 9
--------------------------------------------------------------
Susana Graciela Marino, the court-appointed trustee for Grupo
Asistencial de Alta Complejidad-Ambulancias SA's bankruptcy
proceeding, will be verifying creditors' proofs of claim until
May 9, 2008.
Ms. Marino will present the validated claims in court as
individual reports. The National Commercial Court of First
Instance No. 2 in Buenos Aires, with the assistance of Clerk No.
4, will determine if the verified claims are admissible, taking
into account the trustee's opinion, and the objections and
challenges that will be raised by Grupo Asistencial 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 Grupo Asistencial's
accounting and banking records will be submitted in court.
La Nacion didn't state the submission deadlines for the reports.
Ms. Marino is also in charge of administering Grupo
Asistencial's assets under court supervision and will take part
in their disposal to the extent established by law.
The debtor can be reached at:
Grupo Asistencial de Alta Complejidad-Ambulancias SA
Remedios de Escalada de San Martin 4880
Buenos Aires, Argentina
The trustee can be reached at:
Susana Graciela Marino
Uruguay 560
Buenos Aires, Argentina
MUNISTAR ARGENTINA: Claims Verification Is Until April 21
---------------------------------------------------------
Ernesto Oscar Puerta, the court-appointed trustee for Munistar
Argentina S.A.'s bankruptcy proceeding, will be verifying
creditors' proofs of claim until April 21, 2008.
Mr. Puerta will present the validated claims in court as
individual reports on June 2, 2008. The National Commercial
Court of First Instance in Buenos Aires will determine if the
verified claims are admissible, taking into account the
trustee's opinion, and the objections and challenges that will
be raised by Munistar Argentina 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 Munistar Argentina's
accounting and banking records will be submitted in court on
July 14, 2008.
Mr. Puerta is also in charge of administering Munistar
Argentina's assets under court supervision and will take part in
their disposal to the extent established by law.
The trustee can be reached at:
Ernesto Oscar Puerta
Fragata Presidente Sarmiento 72
Buenos Aires, Argentina
NUEVO BANCO INDUSTRIAL: Will Launch IPO This Year
-------------------------------------------------
Nuevo Banco Industrial de Azul will launch an initial public
offering on the Buenos Aires stock exchange this year, Argentine
financial daily Ambito Financiero reports.
According to Ambito Financiero, Banco Industrial will list
shares to consolidate its business plan, which is concentrated
on lending to small and medium-sized enterprises.
Banco Industrial turned to the capital markets this month and
sold some ARS73 million of short-term debt with an 11% coupon,
Business News Americas states.
Nuevo Banco Industrial de Azul S.A is headquartered in Buenos
Aires, Argentina, and it had assets of ARS1.8 billion and
deposits for ARS0.8 billion, as of March 2007. The bank has 22
branches. It is one of the principle banks of Argentina. It
provides corporate banking, exterior commerce, capital markets,
and markets of exchange rates.
* * *
On Jan. 30, 2008, Moody's Investors Service assigned a Caa1
long-term foreign currency deposit rating to Nuevo Banco
Industrial de Azul S.A.
OLD VETIKAR: Proofs of Claim Verification Deadline Is April 28
--------------------------------------------------------------
Isabel Ana Ramirez, the court-appointed trustee for Old Vetikar
SA's bankruptcy proceeding, will be verifying creditors' proofs
of claim until April 28, 2008.
Ms. Ramirez will present the validated claims in court as
individual reports. The National Commercial Court of First
Instance No. 2 in Buenos Aires, with the assistance of Clerk No.
4, will determine if the verified claims are admissible, taking
into account the trustee's opinion, and the objections and
challenges that will be raised by Old Vetikar 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 Old Vetikar's
accounting and banking records will be submitted in court.
Ms. Ramirez is also in charge of administering Old Vetikar's
assets under court supervision and will take part in their
disposal to the extent established by law.
The debtor can be reached at:
Old Vetikar SA
Pasteur 259
Buenos Aires, Argentina
The trustee can be reached at:
Isabel Ana Ramirez
Teniente General Juan Domingo Peron 2082
Buenos Aires, Argentina
=============
B A H A M A S
=============
CENVEO INC: Delay in 10-K Filing Won't Affect Rating, S&P Says
--------------------------------------------------------------
Standard & Poor's Ratings Services said that Cenveo Inc.'s delay
in the filing of its 2007 10-K does not currently affect the
rating or outlook on the company. Cenveo is currently in the
process of completing its required year-end audit and is
conducting a review, directed by the audit committee of the
board, of recently discovered unsupported accounting entries
made by a former plant controller for two plants in the
company's envelope business. The company plans to file its 2007
10-K by March 13, 2008.
As reported in the Troubled Company Reporter-Latin America on
Dec. 10, 2007, Standard & Poor's Ratings Services raised its
corporate credit rating on Cenveo Inc. to 'BB-' from 'B+'. The
rating outlook is stable.
The company stated that it currently believes the individual was
operating alone and, as such, the scope of the unsupported
accounting entries is expected to be limited. As a result, S&P
does not expect the matter will impair Cenveo's long-term
financial profile at this time. However, S&P will monitor the
audit committee's review and related potential financial
restatements to determine their materiality and possible impact
on Cenveo's credit quality. In the event the company further
delays the filing of its 2007 10-K, or if S&P believes potential
financial restatements or internal control issues are meaningful
enough to impact the company's risk profile, there could be
downward pressure on the rating.
Cenveo Inc. -- http://www.cenveo.com/-- (NYSE:CVO),
headquartered in Stamford, Connecticut, is a leader in the
management and distribution of print and related products and
services. The company provides its customers with low-cost
solutions within its core business of commercial printing and
packaging, envelope, form, and label manufacturing, and
publisher services; offering one-stop services from design
through fulfillment. With over 10,000 employees worldwide,
Cenveo delivers everyday for its customers through a network of
production, fulfillment, content management, and distribution
facilities across the globe.
Cenveo acquired Cadmus Communications in a merger completed on
March 2007. The company has operations in the US, India and the
Caribbean Rim, particularly in the Bahamas, Cuba, Jamaica,
Haiti, Dominican Republic, Puerto Rico, and Belize.
=============
B E R M U D A
=============
ANNUITY & LIFE: Settles Dispute With Transamerica for US$3 Mil.
---------------------------------------------------------------
Annuity and Life Re (Holdings), Ltd. has resolved its disputes
with Transamerica concerning the novation to Transamerica of the
company's reinsurance contracts with F&G and Scottish Re. The
novations were effective Dec. 31, 2004, and had been the subject
of arbitration and other proceedings.
Pursuant to the settlement agreement relating to the F&G
business, the company will pay Transamerica US$3 million.
Although the agreement discharges the company from any further
postnovation liabilities, the company remains responsible for
pre-novation activity on the F&G business.
The settlement agreement regarding the Scottish Re business was
a three-party agreement among the company, Transamerica and
Scottish Re. Pursuant to that agreement, the company will pay
Transamerica US$2.5 million and Scottish Re US$11,067,208 to
settle all claims. The agreement discharges the company from
all future liabilities to Transamerica or Scottish Re.
Annuity and Life Re (Holdings), Ltd. -- http://www.alre.bm/or
http://www.annuityandlifere.com/-- provides annuity and life
reinsurance to insurers through its wholly owned subsidiaries,
Annuity and Life Reassurance, Ltd., and Annuity and Life
Reassurance America, Inc. The company has operations in
Bermuda.
Going Concern Doubt
Chartered Accountants of Hamilton, Bermuda, raised substantial
doubt about Annuity and Life Re (Holdings), Ltd.'s ability to
continue as a going concern after it audited the company's
annual report for 2004. The auditor pointed to the company's
significant losses from operations and experience of liquidity
demands.
Annuity and Life Re incurred losses for two consecutive
quarters. The company posted a net loss of US$92,056 for the
three months ended June 30, 2007, compared to a net loss of
US$649,949 for the same period in 2006. The company incurred a
net loss from continuing operations of US$88 million for the
three months ended Sept. 30, 2007, as compared to a net loss
from continuing operations of US$212.2 million for the same
period in 2006.
=============
B O L I V I A
=============
COEUR D'ALENE: Discloses 2007 Exploration Program Results
---------------------------------------------------------
Coeur d'Alene Mines Corporation reported significant results
from its US$14.9 million exploration program during 2007.
Coeur's exploration strategy continued to focus on cost-
effectively adding new mineralization at its existing properties
while continuing to expand the company's greenfields
initiatives.
Due to this success and the addition of the Palmarejo Project in
late 2007, the company has increased its 2008 exploration budget
to a record US$27.6 million, with almost a third of that amount
allocated to Palmarejo, where production is expected to commence
next year at annualized levels of approximately 10.4 million
ounces of silver and 115,000 ounces of gold.
Highlights of the 2007 program include:
* High-grade drill results from Guadalupe Norte at
Palmarejo, Mexico and from the new Los Bancos target north
of Guadalupe.
* Nearly eleven million new silver mineral resource ounces
defined in two of five new veins discovered in the Cerro
Bayo District, Chile.
* Discovery of the new Betty Sur high-grade silver veins in
the Martha District, Argentina.
* New silver, gold and base metal mineralization at the
Rochester mine, Nevada.
* Favorable results from exploration on the company's
properties in the Lake Victoria Gold Belt of Tanzania.
"These positive results confirm our ability to continue to grow
the Company through exploration on our large land positions
around our existing mines and development projects," said Dennis
E. Wheeler, Chairman, President and Chief Executive Officer.
"Because of these recent successes and the completion of the
transactions that resulted in the addition of the Palmarejo
project to Coeur, we have increased our exploration program by
over 80% this coming year, with almost a third of the total
targeted for our newly acquired Palmarejo silver and gold
development property, where production will begin within twelve
months, and where our extensive land holdings hold great
potential for additional exploration success."
Palmarejo
Drilling in December at the company's newly acquired Palmarejo
project in the state of Chihuahua, Mexico returned positive
results from the Guadalupe zone and also continued to confirm
the prospective nature of the nearby Los Bancos structure.
Palmarejo is under construction with production expected to
begin in the first quarter of 2009. The site is located in
Mexico's premier silver-gold district in Chihuahua and the
Sierra Madre belt, with land holdings covering more than 12,100
hectares. A feasibility study is nearing completion to define
the first proven and probable mineral reserve on this large
prospective property. The company believes the Palmarejo
District holds tremendous exploration potential and has
committed over US$8.3 million in 2008 to discover new mineral
resources and define new mineral reserves.
In recent drilling at Guadalupe, assay results confirmed the
extension of the Guadalupe Norte Clavo which remains open to the
north and at depth. Very significant results were received from
several holes – notably TGDH-218D and 222D. At the Los Bancos
target, located north of Guadalupe, reverse circulation drill
hole LBDH-025, the deepest hole drilled to date, intercepted a
36.6-meter thick high-grade horizon. Previous shallow drilling
had intersected anomalous mineralization with high silver-to-
gold ratios, suggesting that this earlier drilling intersected
the veins high in the paleo-epithermal system and above ore
grade mineralization. Hole 25 confirmed our geologic model.
Drilling recommenced in January on Guadalupe with two core
drills to tighten the existing drill spacing to upgrade current
inferred and indicated mineral resources to indicated and
measured confidence and further extend the Guadalupe Norte zone.
Drilling will resume at Los Bancos and around the main Palmarejo
area later this quarter.
Cerro Bayo (Chile)
At year-end, a total of 16,800 meters of core drilling was
completed in 87 drill holes on the five new ore-bearing
structures discovered in June. Most of this drilling was
conducted on the Dagny and Fabiola veins where mineralization
has now been defined over a NW-SE strike of 700 meters and a
vertical height of 120 to 150 meters, and remains open for
expansion in the SE direction on both veins. Mineral resources
estimated from this extensive drilling program on just two of
the five new veins are shown in the following table. They are
now subject to engineering and economic analyses to establish an
initial mineral reserve. Permitting commenced in the fourth
quarter and development for underground access is expected to
commence in the third quarter of this year.
Martha (Argentina)
In the high-grade Martha silver and gold district in southern
Argentina, surface exploration was successful in discovering
mineralization in new structures using detailed stratigraphic,
structural and alteration mapping. Late in the year, drilling
on one of the new structures – Betty Sur – encountered high-
grade silver mineralization north of the main Martha mine.
Betty Sur, exposed as thin veinlets and faults over an east-west
strike length of over 0.7 km, is very significant due to the
high-grade nature of the mineralization and because it is hosted
in rocks similar to those of the Martha Mine. Four core holes
were drilled into Betty Sur in 2007 with the following results.
Argentina Greenfields
The company conducted an extensive greenfields program in 2007
in Argentina, focused on five new properties in the province of
Santa Cruz. Late in the year, a program of eight core holes
were completed at the wholly-owned Cisne property which borders
the Company's Lejano property northwest of the Martha mine in
western Santa Cruz.
Core length is believed to be true width as mineralization
occurs in sub-horizontal zones.
Very encouraging results were obtained from core holes C-03 and
C-06 which intersected moderate-grade silver mineralization over
significant drill widths. Additional drilling is planned in
2008.
Rochester (Nevada)
During the last quarter of 2007, a program of trenching and core
drilling was conducted in the bottom of the main Rochester pit,
designed to test the extension of two high-grade vein systems
beyond the pit limits, termed the Pump and Corner structures.
All holes encountered significant precious and base metal
mineralization with particularly encouraging Ag and Au
mineralization intersected in holes 4, 5, 6 and 7. Additional
exploration is planned for 2008 on the Pump and Corner
structures in the Rochester mine and other structural zones and
vein systems within the district.
Tanzania
During the year activities were focused on three project areas:
Kiziba Hill, Saragurwa and Bunda, all located within the Lake
Victoria Gold Belt. At Kiziba Hill, a property controlled 100%
by the company which lies west of the Geita gold mine, a drill
program was completed that consisted of 6,100 meters of
reverse circulation drilling and 1,100 meters of core drilling.
The holes were drilled along widely-spaced fences across 4
kilometers of strike length. Gold mineralization occurs in
multiple east-west striking shear zones. Over 35 drill
intervals with gold mineralization have been intercepted at
Kiziba in these zones. To date, all drilling has been performed
on fences spaced 400 meters apart in an east-west direction and
70 meter north to south. In-fill drilling is planned to confirm
mineralization continuity.
Drill hole IDs with KC prefix are core holes and holes with KR
prefix are reverse circulation holes. True widths are not yet
known.
At Saragurwa, which the company controls under an option
agreement with a private Tanzanian entity, a core drilling
program was completed during 2007 totaling 2,800 meters. A
detailed soil sampling program was carried out in conjunction
with the drill program and a total of 271 samples were
collected. Gold mineralization is being intercepted and results
from the 2007 soil survey at Saragurwa have identified two
additional parallel zones of anomalous gold with strike lengths
of over one kilometer.
All core holes. True widths are not yet known.
About Coeur d'Alene
Coeur d'Alene Mines Corp. (NYSE:CDE) (TSX:CDM) --
http://www.coeur.com/-- is the world's largest primary silver
producer, as well as a significant, low-cost producer of gold.
The company has mining interests in Nevada, Idaho, Alaska,
Argentina, Chile, Bolivia and Australia.
* * *
Coeur d'Alene Mines Corp.'s US$180 Million notes due Jan. 15,
2024, carry Standard & Poor's Ratings Services B- rating.
===========
B R A Z I L
===========
BANCO NACIONAL: Increases Infrastructure Funds to BRL25.8 Bil.
--------------------------------------------------------------
Banco Nacional de Desenvolvimento Economico e Social has
increased funds for infrastructure by 62% to BRL25.8 billion in
the last 12 months ended January 2008, compared to the prior
period.
According to Business News Americas, this was the first time
that Banco Nacional gave more funds to infrastructure than to
industry.
BNamericas relates that resources for the Brazilian government's
growth acceleration plan influenced the results, representing
BRL5 billion or 39.9% of the total funds for the period up to
January 2008.
"The tendency is that resources [for infrastructure] will
continue at this level since the bank has already approved
projects in the sector and has more projects in view," Banco
Nacional's Infrastructure Director Wagner Bittencourt told
BNamericas.
Banco Nacional de Desenvolvimento Economico e Social is Brazil's
national development bank. It provides financing for projects
within Brazil and plays a major role in the privatization
programs undertaken by the federal government.
* * *
Banco Nacional currently carries a Ba2 foreign long-term bank
deposit rating from Moody's Investors Service, and a BB+ long-
term foreign issuer credit rating from Standards and Poor's
Ratings Services. The ratings were assigned in August and May
2007.
BANCO NACIONAL: Delivers Two Trucks & 30 Trolleys to Cortrap
------------------------------------------------------------
Banco Nacional de Desenvolvimento Economico e Social has
delivered two moving trucks and 30 recycled material collecting
trolleys to Cooperativa de Reciclagem Trabalho e Producao
(Cortrap) [Co-operative of Recycling, Work and Production],
located in Brasilia. The trucks are worth BRL108,789.00 each
and were received by Cortrap director, Janilson Santana Andrade,
at the headquarters of the co-operative, in Cidade do Automovel
[Automobile City]. These were the first trucks delivered to one
of the 34 co-operatives enrolled in BNDES program of support to
recycled material collectors, launched by president Lula, on
Oct. 1, 2007.
The trucks are destined to locations where higher residue
volumes are collected. The collecting trolleys are destined to
those points where the volume is not so concentrated.
The event had the participation of a technical team from BNDES.
Also represented were Banco do Brasil and Caixa Economica
Foundations -– which support the co-operative since its
construction -– as well as representatives of the Ministry of
Social Development and members of the house of representatives
and the Federal Senate.
For the economist Eduardo Reis Gonçalves, who spoke on behalf of
BNDES, "this is a first step to support collectors of the
Federal District, which currently relies on 15 co-operatives
distributed by the 15 Administrative Regions in Brasilia." And
to have an idea of the relevance of this initiative, the
economist highlighted that "only Cortrap congregates 110
families, with an average of four kids, each."
Another aspect stressed by the economist was that the Bank's
action in support to these co-operatives is made with basis on
societies. "This is a social inclusion effort for people who
were out of the consumption social links. The collectors work
with the base, the garbage, a material which nobody wants to
work with. This is good for the environment and for the
economy, since you have the plastic and the paper back, on a
clean way."
Banco Nacional de Desenvolvimento Economico e Social is Brazil's
national development bank. It provides financing for projects
within Brazil and plays a major role in the privatization
programs undertaken by the federal government.
* * *
Banco Nacional currently carries a Ba2 foreign long-term bank
deposit rating from Moody's Investors Service, and a BB+ long-
term foreign issuer credit rating from Standards and Poor's
Ratings Services. The ratings were assigned in August and May
2007.
COMPANHIA ENERGETICA: Energias Wants to Join Consortium
-------------------------------------------------------
Energias do Brasil's President Antonio Pita de Abreu told
Business News Americas that the company wants to join a
consortium to bid for Companhia Energetica de Sao Paulo.
BNamericas relates that the Sao Paulo local government will
publish a list of prequalified bidders on March 14 and a list of
companies that offer a financial guarantee of BRL1.74 billion.
According to the report, the state will host the auction on
March 26.
Mr. Pita de Abreu commented to reporters, "We were waiting for
the auction rules to join a consortium because we feel Cesp
[Companhia Energetica] is too big a company for one single
player to purchase."
Energias do Brasil hasn't confirmed its participation in the
Companhia Energetica auction, BNamericas says.
About Energias do Brasil
Energias do Brasil S.A. is an integrated utility group
controlled by Energias de Portugal, with activities in
generation, distribution and commercialization of electricity.
Its power distribution subsdiaries Bandeirante, Escelsa and
Enersul represent altogether some 64% of consolidated total
assets, while the power generation assets represent some 31%.
About Companhia Energetica
Headquartered in Sao Paulo, Brazil, Companhia Energetica de Sao
Paulo (BOVESPA: CESP3, CESP5 and CESP6) is the country's third
largest power generator, majority owned by the State of Sao
Paulo. CESP operates 6 hydroelectric plants with total
installed capacity of 7,456 MW and reported net revenues of
BRL1,983 million in the last twelve months through Sept. 30,
2006.
* * *
In October 2007, Standard & Poor's Ratings Services raised its
ratings on electricity generator Companhia Energetica de Sao
Paulo, including its corporate credit rating to 'B' from 'B-'.
At the same time, S&P raised its Brazil national scale ratings
on CESP to 'brBBB-' from 'brBB'. S&P said the outlook remains
positive on both scales.
DELPHI CORP: Shareholder Settlement Hearing Set for April 29
------------------------------------------------------------
The Hon. Gerald E. Rosen of the U.S. District Court for the
Eastern District of Michigan, Southern Division, will convene a
hearing on April 29, 2008, to decide, among other things, final
Court approval of a settlement providing for a recovery of
US$38,250,000 to be paid by Deloitte & Touche LLP, Delphi
Corp.'s outside auditor; and on the dismissal of claims against
Deloitte & Touche.
District Court Certifies Class
The Court has preliminarily certified a class consisting of all
persons and entities who purchased or acquired publicly traded
securities issued by Delphi Trust I and Delphi Trust II between
March 7, 2000, and March 3, 2005, inclusive, and who suffered
damages thereby, including all entities who acquired shares of
Delphi common and preferred stock in the secondary market and
debt securities in Delphi. The case is in In re Delphi
Securities, Derivative and ERISA Litigation, MDL No. 1725, Case
No. 05-md-1725.
The District Court also preliminarily approved the Deloitte &
Touche Settlement providing for a recovery of $38,250,000 to be
paid by Deloitte & Touche LLP, Delphi Corp.'s outside auditor
during the Class Period. The Class will receive an interest on
the Deloitte & Touche Settlement Amount.
Copies of the full printed Deloitte & Touche Notice and the
Proof of Claim and Release form may be obtained at
http://www.delphiclasssettlement.comor by contacting:
In re Delphi Corporation Securities Litigation Settlement
c/o The Garden City Group, Inc.
Claims Administrator
P.O. Box 9185
Dublin, OH 43017-4185
Inquiries may be made to the four co-lead counsel for the Lead
Plaintiffs in the Securities Litigation:
* Bradley E. Beckworth, Esq.
Nix, Patterson & Roach, L.L.P.
205 Linda Drive
Daingerfield, Texas 75638
* Sean Handler, Esq.
Schiffrin Barroway Topaz & Kessler, LLP
280 King of Prussia Road
Radnor, PA 19087
* Jeffrey N. Leibell, Esq.
Bernsten Litowitz Berger & Grossmann, LLP
1285 Avenue of the Americas
New York 10019
* Stuart Grant, Esq.
Grant & Eisenhofer P.A.
Chase Manhattan Centre
Suite 2100
1201 N. Market St.
Wilmington, DE 19801
Further information may also be obtained by writing to the
Claims Administrator or calling 1-800-918-0998 toll-free.
The Securities Litigation has been resolved with respect to the
Debtors pursuant to the Court-approved Multidistrict Litigation
Settlements between the Debtors and the Lead Plaintiffs. Under
the terms of the MDL Settlements, the Debtors granted the Lead
Plaintiffs claims that will be satisfied through Delphi's
confirmed Plan of Reorganization.
To participate in the Deloitte & Touche Settlement, parties-in-
interest must have submitted a valid proof of claim in
connection with the MDL Settlements or submit a valid proof of
claim to the Claims Administrator postmarked not later than
May 30, 2008. The deadline for filing objection and the receipt
of requests for exclusions is April 15, 2008.
Headquartered in Troy, Michigan, Delphi Corporation (PINKSHEETS:
DPHIQ) -- http://www.delphi.com/-- is the single supplier of
vehicle electronics, transportation components, integrated
systems and modules, and other electronic technology. The
company's technology and products are present in more than 75
million vehicles on the road worldwide. Delphi has regional
headquarters in Japan, Brazil and France.
The company filed for chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represents the Official Committee of Unsecured Creditors. As of
March 31, 2007, the Debtors' balance sheet showed
US$11,446,000,000 in total assets and US$23,851,000,000 in total
debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on
Dec. 20, 2007. The Court confirmed the Debtors' First Amended
Plan on Jan. 25, 2008.
(Delphi Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported in the Troubled Company Reporter-Latin America on
Jan. 16, 2008, Moody's Investors Service assigned ratings to
Delphi Corporation for the company's financing for emergence
from Chapter 11 bankruptcy protection: Corporate Family Rating
of (P)B2; US$3.7 billion of first lien term loans, (P)Ba3; and
US$0.825 billion of 2nd lien term debt, (P)B3. In addition, a
Speculative Grade Liquidity rating of SGL-2 representing good
liquidity was assigned. The outlook is stable.
As reported in the Troubled Company Reporter on Jan. 11, 2008,
Standard & Poor's Ratings Services expects to assign its 'B'
corporate credit rating to Troy, Michigan-based automotive
supplier Delphi Corp. upon the company's emergence from Chapter
11 bankruptcy protection, which may occur by the end of the
first quarter of 2008. S&P expects the outlook to be negative.
In addition, Standard & Poor's expects to assign these
issue-level ratings: a 'B+' issue rating (one notch above the
corporate credit rating), and '2' recovery rating to the
company's proposed US$3.7 billion senior secured first-lien term
loan; and a 'B-' issue rating (one notch below the corporate
creditrating), and '5' recovery rating to the company's proposed
US$825 million senior secured second-lien term loan.
ENERGIAS DO BRASIL: Inks Bridge Loan Contracts With Citibank
------------------------------------------------------------
Energias do Brasil S.A. has signed bridge loan contracts worth
US$270 million with Citibank and a syndicate of banks to
partially fund the UTE Porto do Pecem project.
Other signatories to the contracts are:
-- Banco do Brasil,
-- Banco Espirito Santo,
-- Grupo Banco Comercial Portugues,
-- ING Bank,
-- West LB, and
-- MPX Energia S.A. (a power company).
The bridge loan will be replaced with recourses arising from the
long term financing. The bridge loan will be terminated with
the first disbursement by IDB (Inter-American Development Bank)
and BNDES (Brazilian Development Bank) under the long term
financing. UTE Porto do Pecem project has already secured
eligibility for IDB and BNDES long term financing.
Business News Americas notes that investments in Porto do Pecem
will total US$1.2 billion. Porto do Pecem will have installed
capacity of 720 megawatts beginning in 2011, the report says.
Energias do Brasil and MPX will add 360 megawatts of power to
Porto do Pecem's installed capacity in the second phase, which
will conclude in 2013, BNamericas says, citing MPX. MPX has
nine power generation projects under development consisting
primarily of coal-fired thermoelectric plants, with a totally
integrated concept and strategically located at the main ports
and super ports in Brazil and Chile.
About Energias do Brasil
Energias do Brasil S.A. is an integrated utility group
controlled by Energias de Portugal, with activities in
generation, distribution and commercialization of electricity.
Its power distribution subsdiaries Bandeirante, Escelsa and
Enersul represent altogether some 64% of consolidated total
assets, while the power generation assets represent some 31%.
* * *
In May 2007, Moody's Investors Service placed a Ba2 long-term
corporate family rating on Energias do Brasil.
ENERGIAS DO BRASIL: Wants to Join Group to Bid for Energetica
-------------------------------------------------------------
Energias do Brasil's President Antonio Pita de Abreu told
Business News Americas that the company wants to join a
consortium to bid for Companhia Energetica de Sao Paulo.
BNamericas relates that the Sao Paulo local government will
publish a list of prequalified bidders on March 14 and a list of
companies that offer a financial guarantee of BRL1.74 billion.
According to the report, the state will host the auction on
March 26.
Mr. Pita de Abreu commented to reporters, "We were waiting for
the auction rules to join a consortium because we feel Cesp
[Companhia Energetica] is too big a company for one single
player to purchase."
Energias do Brasil hasn't confirmed its participation in the
Companhia Energetica auction, BNamericas says.
About Companhia Energetica
Headquartered in Sao Paulo, Brazil, Companhia Energetica de Sao
Paulo (BOVESPA: CESP3, CESP5 and CESP6) is the country's third
largest power generator, majority owned by the State of Sao
Paulo. CESP operates 6 hydroelectric plants with total
installed capacity of 7,456 MW and reported net revenues of
BRL1,983 million in the last twelve months through
Sept. 30, 2006.
About Energias do Brasil
Energias do Brasil S.A. is an integrated utility group
controlled by Energias de Portugal, with activities in
generation, distribution and commercialization of electricity.
Its power distribution subsdiaries Bandeirante, Escelsa and
Enersul represent altogether some 64% of consolidated total
assets, while the power generation assets represent some 31%.
* * *
In May 2007, Moody's Investors Service placed a Ba2 long-term
corporate family rating on Energias do Brasil.
FORD MOTOR: Navistar Re-Files Breach of Contract Suit
-----------------------------------------------------
Navistar International Corp. has re-filed a lawsuit against Ford
Motor Co. for violating a diesel engine contract in which Ford
promised that Navistar would be Ford's primary manufacturer and
supplier of V-6 and V-8 diesel engines in North America,
including diesel engines for Ford's F-150 pickup trucks.
The suit, filed in the Circuit Court of Cook County, Ill., seeks
"at least hundreds of millions of dollars."
Navistar originally sued Ford alleging breach of the contract in
June 2007. Cook County Circuit Court Judge Dennis Burke
dismissed that suit to allow for mediation of the dispute by a
third-party. Navistar and Ford were unable to resolve the
dispute through mediation, so Navistar now has re-filed the
lawsuit.
According to the lawsuit, Ford will introduce a 4.4 liter diesel
engine for production in North America by late 2009 or 2010 or
possibly earlier. Ford intends to produce the engine itself for
use in the F-150, and possibly other vehicles. The lawsuit
states that Ford cannot manufacture the engine without violating
its contract with Navistar. Reportedly, Ford will produce the
engines at a Ford facility in Chihuahua, Mexico.
The lawsuit states that Navistar spent millions of dollars and
devoted years of its employees' time to develop a next
generation diesel engine named "Lion" for use in F-150 pickup
trucks and other vehicles in which Ford had not previously
offered diesel engines. Ford agreed that Navistar, which has
been the exclusive diesel engine supplier for Ford's heavy-duty
pickup trucks since 1979, would be the manufacturer and supplier
of the new engines for the North American vehicle market.
The lawsuit, filed Feb. 26, 2008, is separate from previously
reported litigation between the two companies. In 2007, Ford
filed a lawsuit against Navistar involving engine pricing and
warranty claims on Power Stroke diesel engines. Navistar
counter-sued, stating that pricing was consistent with
contractual agreements, that the warranty claims were entirely
without merit and that Ford has stopped honoring the terms of an
agreement under which the engines were built. Navistar amended
its counter-suit in May 2007 and asked for in excess of
US$2 billion in damages.
About Navistar International
Based in Warrenville, Illinois, Navistar International Corp.
(NYSE:NAV) -- http://www.nav-international.com/-- is the parent
company of Navistar Financial Corp. and International Truck and
Engine Corp. The company produces International brand
commercial trucks, mid-range diesel engines and IC brand school
buses, Workhorse brand chassis for motor homes and step vans,
and is a private label designer and manufacturer of diesel
engines for the pickup truck, van and SUV market. The company
also provides truck and diesel engine parts and service sold
under the International brand. A wholly owned subsidiary offers
financing services. The company has operations in Brazil,
Iceland and India.
About Ford Motor
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F)
-- http://www.ford.com/-- manufactures or distributes
automobiles in 200 markets across six continents. With about
260,000 employees and about 100 plants worldwide, the company's
core and affiliated automotive brands include Ford, Jaguar, Land
Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The
company provides financial services through Ford Motor Credit
Company.
The company has operations in Japan in the Asia Pacific region.
In Europe, the company maintains a presence in Sweden, and the
United Kingdom. The company also distributes its brands in
various Latin American regions, including Argentina and Brazil.
* * *
As reported in the Troubled Company Reporter-Latin America on
Feb. 15, 2008, Fitch Ratings affirmed the Issuer Default Ratings
of Ford Motor Company and Ford Motor Credit Company at 'B', and
maintained the Rating Outlook at Negative.
As reported in the Troubled Company Reporter on Nov. 19, 2007,
Moody's Investors Service affirmed the long-term ratings of Ford
Motor Company (B3 Corporate Family Rating, Ba3 senior secured,
Caa1 senior unsecured, and B3 probability of default), but
changed the rating outlook to Stable from Negative and raised
the company's Speculative Grade Liquidity rating to SGL-1 from
SGL-3. Moody's also affirmed Ford Motor Credit Company's B1
senior unsecured rating, and changed the outlook to Stable from
Negative. These rating actions follow Ford's announcement of
the details of the newly ratified four-year labor agreement with
the UAW.
FURNAS CENTRAIS: Wants Partner to Bid for Transmission Lines
------------------------------------------------------------
Furnas Centrais Eletricas S.A. is seeking a partner to bid in an
auction to build transmission lines to connect hydro plants on
the Madeira river, Business News Americas reports.
Brazilian power regulator Aneel hasn't disclosed the auction
date for transmission lines, BNamerica says.
Firms that want to bid with Furnas Centrais must notify the
company before March 7.
Headquartered in Rio de Janeiro, Furnas Centrais Eletricas S.A.
is one of Brazil's largest electricity generation and
transmission utility companies. Furnas Centrais is closely
held, with 99.5% of its shares owned by Eletrobras, the
Brazilian Federal Government's holding company that controls
about 39% of the country's installed power generation capacity
and approximately 56% of high voltage energy transmission
countrywide. Furnas Centrais operates 10 hydro-power plants
representing some 92% of its total installed capacity of 9,458
megawatts (8% is represented by 2 thermal power plants). The
company also owns about 19,278 kilometers of transmission lines,
mainly in the southeast and mid-west regions of Brazil. These
assets include the transmission line connecting the Itaipu power
plant, which supplies energy consumption to the most
industrialized region of the country. Furnas is also
responsible for trading the nuclear energy generated by
Eletronuclear (99.8% Eletrobras), which represents about 23% of
energy sales volume. In 2006, Furnas reported net earnings of
BRL364 million (about US$165 million) on BRL5,325 million
(US$2,416 million) net revenues.
* * *
As reported ion the Troubled Company Reporter-Latin America on
Aug. 20, 2007, Moody's America Latina Ltda. affirmed its Ba1
global local currency issuer rating for Furnas Centrais
Eletricas S.A.
GENERAL MOTORS: Idles Assembly Plant Due to AAM Workers' Strike
---------------------------------------------------------------
American Axle & Manufacturing Inc.'s worker strike has affected
the production of General Motors Corp.'s vehicles equipped with
the former's auto parts sooner that it thought, various sources
report.
GM's production of Chevrolet Silverado and GMC Sierra pickups at
the Pontiac Assembly Center, which has 2,500 hourly and salaried
employees, in Michigan, ceased after the first shift Thursday,
the Associated Press related citing GM spokesman Tom Wickham.
As reported in the Troubled Company Reporter on Feb. 27, 2008,
although the strike of union workers at its supplier American
Axle and Manufacturing Inc. does not affect General Motors
Corp.'s plant production yet, the auto maker says it is
following the protest closely. GM has a large inventory of
pickups and sport utility vehicles, which are equipped with
American Axle's parts. However, if the strike lasts longer than
the supply, GM's assembly lines would suffer.
United Auto Workers union president Ron Gettelfinger and Vice
President James Settles disclosed that members at American Axle
began an unfair labor practices strike at 12:01 a.m. on Feb. 26,
2008, following expiration of a four-year master labor
agreement. Talks broke off Monday with major issues unresolved.
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries, including the United Kingdom, Germany,
France, Russia, Brazil and India. In 2007, nearly 9.37 million
GM cars and trucks were sold globally under the following
brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden,
HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's
OnStar subsidiary is the industry leader in vehicle safety,
security and information services.
GENERAL MOTORS: Supplier's Workers Strike Won't Affect S&P Rtg.
---------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings on
General Motors Corp. (GM; B/Stable/B-3) are not immediately
affected by the United Auto Workers work stoppage at key
supplier American Axle and Manufacturing Holdings Inc.
(BB/Negative/--) that began Feb. 26.
S&P expects American Axle and the UAW to reach an agreement that
will improve American Axle's cost position. However, if the
American Axle work stoppage were to persist beyond a brief
period (likely measured in days, not weeks), it would begin to
affect GM's production schedules and there would be a ripple
effect on many of GM's suppliers as well.
If S&P came to believe that the American Axle work stoppage
would draw out, S&P could place the ratings on GM on CreditWatch
with negative implications, along with the ratings on certain
suppliers that depend heavily on GM production. S&P already
expects GM's first-quarter production to be below year-earlier
levels, which should provide some room for a short work
stoppage.
In addition, S&P estimates that GM has about US$27.3 billion in
cash, marketable securities, and readily available assets in its
existing VEBA trust. The company also has access to
US$7 billion in committed U.S. credit lines.
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries, including the United Kingdom, Germany,
France, Russia, Brazil and India. In 2007, nearly 9.37 million
GM cars and trucks were sold globally under the following
brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden,
HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's
OnStar subsidiary is the industry leader in vehicle safety,
security and information services.
INTELSAT LTD: ViewAfrica Extends Contract to Up Channel Offering
----------------------------------------------------------------
Intelsat Ltd. reported that U.K.-based ViewAfrica has contracted
for additional capacity on the Intelsat 10 satellite for
increased channel distribution. ViewAfrica Network is
distributing free-to-air programming bouquets reaching all the
Sub-Saharan countries.
"The Intelsat 10 satellite is the most attractive payload for
us, containing multiple high-powered beams focused on the
regions we seek to grow our business," said Awaes Jaswal, CEO,
ViewAfrica Network. "We have once again turned to Intelsat
because its industry-leading reliability and video penetration
enables us to efficiently expand as market opportunities present
themselves."
"The IS-10 Ku-band service is ideally suited for DTH
applications. We are working closely with customers like
ViewAfrica in building and growing some of the most popular
broadcast communities worldwide," said Jean Philippe Gillet,
Intelsat's Regional Vice President, Europe and Middle East
Sales. "The Intelsat 10 satellite, is Intelsat's premier video
neighborhood for Africa."
ViewAfrica Network, uplinking out of Stellar in Germany, carries
a free-to-air bouquet of religious and general entertainment
programming that currently includes the following networks:
Daystar, LoveWorld, Press TV and Supreme Master TV. ViewAfrica
is among 27 DTH platforms built on the global Intelsat system.
About Intelsat
Headquartered in Pembroke, Bermuda, Intelsat, Ltd. --
http://www.intelsat.com/-- is the largest fixed
satellite service operator in the world and is owned by Apollo
Management, Apax Partners, Madison Dearborn, and Permira. The
company has a sales office in Brazil.
* * *
As reported in the Troubled Company Reporter-Latin America on
Feb. 19, 2008, Standard & Poor's Ratings Services lowered its
corporate credit rating on Bermuda-based Intelsat Ltd. to 'B'
from 'B+' and removed the ratings from CreditWatch. S&P said
the outlook is stable.
MILACRON INC: Dec. 31 Balance Sheet Upside-Down by US$51.1 Mil.
---------------------------------------------------------------
Milacron Inc. released its results for the fourth quarter ended
Dec. 31, 2007. The company's balance sheet showed total assets
of US$592.9 million and total liabilities of US$644 million,
resulting in a US$51.1 million stockholders' deficit. Deficit,
at Dec. 31, 2006, was US$21.3 million.
The company reported a net loss in the fourth quarter of 2007 of
US$73.4 million, caused primarily by a non-cash writedown of
deferred tax assets of US$63.0 million associated with the
change of ownership of the majority of the company's preferred
stock, as announced in October. The loss also included
US$7.4 million in restructuring charges, US$1.9 million in one-
time costs related to the curtailment of the company's U.S.
pension plan, as well as US$1.4 million in expenses related to
the preferred stock transaction. This compared to a net loss in
the fourth quarter of 2006 of US$8.6 million, which included
US$5.1 million in restructuring costs and US$1.8 million in
refinancing charges.
"We continue to make solid progress throughout the company in
terms of our restructuring and other cost reduction
initiatives," Ronald D. Brown, chairman, president and chief
executive officer, said. "Our manufacturing margins and
operating cash flow or EBITDA are both up significantly from the
year-ago quarter. And our efforts to expand Milacron's presence
in faster-growing markets of the world are also paying off. In
fact, our sales to markets outside the U.S., Canada and Western
Europe are up well in excess of 20% and now represent about 25%
of our total sales."
These gains in non-traditional markets helped offset declines in
North America, as fourth quarter 2007 sales reached
US$217 million, up 10% from US$198 million in the year-ago
quarter. About half of the sales increase came as a result of
favorable currency translation effects. New orders in the
quarter were US$213 million, up from US$203 million in 2006,
entirely due to currency translation.
Aided by favorable resolutions of long-standing product
liability claims and the benefits of restructuring and product
cost reduction initiatives, manufacturing margins in the quarter
rose to 22.3%, up from 19.4% in the year ago quarter.
Net cash provided by operations during the quarter was
US$9.6 million, compared to a use of cash by operations of
US$800,000 in the fourth quarter of 2006. At the end of the
quarter, Milacron had US$41 million in cash, up US$3 million
from the beginning of the quarter. The company also had US$34
million in borrowing availability under its North American
revolving credit agreement, down from US$42 million at the
beginning of the quarter.
Year 2007
Milacron's net loss for the year was US$88.8 million, or
US$19.59 per share. This included the writedown of tax assets
of US$63.0 million, restructuring charges of US$12.5 million,
US$1.9 million in one-time costs for pension plan curtailment,
as well as US$1.9 million in expenses for the preferred stock
transaction. In 2006, Milacron lost US$39.7 million, or
US$10.15 per share, which included US$17.4 million in
restructuring costs and US$1.8 million in refinancing charges.
Operating earnings in 2007 improved to US$3.1 million, up from a
loss of US$7.2 million in 2006. Sales in 2007 fell to US$808
million from US$820 million in 2006, while new orders were
US$826 million, down slightly from US$828 million in the prior
year. 2007 sales and new orders were helped by approximately
US$29 million in favorable currency translation effects.
Throughout 2007, Milacron faced severe declines in two of its
largest markets in North America: injection molding machinery
and mold technologies, which have been impacted by the shakeout
in U.S. auto parts suppliers and the decline in new housing
starts. During the year, however, restructuring measures helped
reduce overall operating expenses by US$12 million, while global
redesign and sourcing initiatives cut product costs by
US$6 million. To further soften the impact of the downturn in
capital spending in North America, Milacron focused on growing
aftermarket sales, which approached US$200 million and grew to
represent 36% of total machinery sales. The company also
accelerated efforts to further penetrate markets outside the
U.S., Canada and Western Europe. As a result, sales to these
non-traditional markets rose to US$187 million in 2007, up 27%
over 2006.
Continued cost reductions and efficiency improvements helped
raise manufacturing margins in 2007 to 20.2%, a significant
increase over 18.5% in 2006.
Net cash provided by operations for the year was US$9.6 million,
compared to a use of cash by operations of US$19.2 million in
2006.
Outlook
"The economic outlook for 2008 is mixed," Mr. Brown said. "We
expect to see continued growth in most of our markets outside of
North America, particularly in China, India and other faster-
growing economies. Due to uncertainty in the automotive and
housing sectors, however, we are not anticipating any market
growth in North America.
"We entered the year with a solid backlog for the first quarter.
This should enable us to show significant year-over-year
improvement in sales and operating results compared to the first
quarter of 2007.
"We continue to work hard to make 2008 a significantly better
year for Milacron," Mr. Brown said. "In addition to improved
operating results from restructuring efforts, our cash flow will
benefit from the U.S. pension plan freeze we implemented at the
end of last year, from lower insurance costs going forward and
from the ongoing sale of redundant or non-core assets. We are
also in the process of negotiating an asset-based loan in
Europe, which will increase our overall liquidity."
Annual Meeting Date Set
Milacron's board of directors set May 8, 2008 as the date of the
annual meeting of shareholders to be held in Cincinnati, Ohio,
and March 12, 2008 as the record date for determination of
shareholders entitled to notice of and to vote at the annual
meeting.
About Milacron
Headquartered in Cincinnati, Ohio, Milacron Inc. --
http://www.milacron.com/-- is a global manufacturer and
supplier of plastics-processing equipment and related supplies.
Milacron is also one of the largest global manufacturers of
synthetic water-based industrial fluids used in metalworking
applications. The company has major manufacturing facilities in
Brazil, North America, Europe, and Asia.
* * *
As reported in the Troubled Company Reporter-Latin America on
Dec. 27, 2007, Moody's Investors Service lowered the ratings of
Milacron Inc. Corporate Family, to Caa2 from Caa1; Probability
of Default, to Caa2 from Caa1; and senior secured notes, to Caa2
from Caa1. The lowered ratings reflect the company's weak
credit metrics and ongoing cash flow pressures.
NAVISTAR INTERNATIONAL: Re-Files Breach of Contract Suit vs Ford
----------------------------------------------------------------
Navistar International Corp. has re-filed a lawsuit against Ford
Motor Co. for violating a diesel engine contract in which Ford
promised that Navistar would be Ford's primary manufacturer and
supplier of V-6 and V-8 diesel engines in North America,
including diesel engines for Ford's F-150 pickup trucks.
The suit, filed in the Circuit Court of Cook County, Ill., seeks
"at least hundreds of millions of dollars."
Navistar originally sued Ford alleging breach of the contract in
June 2007. Cook County Circuit Court Judge Dennis Burke
dismissed that suit to allow for mediation of the dispute by a
third-party. Navistar and Ford were unable to resolve the
dispute through mediation, so Navistar now has re-filed the
lawsuit.
According to the lawsuit, Ford will introduce a 4.4 liter diesel
engine for production in North America by late 2009 or 2010 or
possibly earlier. Ford intends to produce the engine itself for
use in the F-150, and possibly other vehicles. The lawsuit
states that Ford cannot manufacture the engine without violating
its contract with Navistar. Reportedly, Ford will produce the
engines at a Ford facility in Chihuahua, Mexico.
The lawsuit states that Navistar spent millions of dollars and
devoted years of its employees' time to develop a next
generation diesel engine named "Lion" for use in F-150 pickup
trucks and other vehicles in which Ford had not previously
offered diesel engines. Ford agreed that Navistar, which has
been the exclusive diesel engine supplier for Ford's heavy-duty
pickup trucks since 1979, would be the manufacturer and supplier
of the new engines for the North American vehicle market.
The lawsuit, filed Feb. 26, 2008, is separate from previously
reported litigation between the two companies. In 2007, Ford
filed a lawsuit against Navistar involving engine pricing and
warranty claims on Power Stroke diesel engines. Navistar
counter-sued, stating that pricing was consistent with
contractual agreements, that the warranty claims were entirely
without merit and that Ford has stopped honoring the terms of an
agreement under which the engines were built. Navistar amended
its counter-suit in May 2007 and asked for in excess of
US$2 billion in damages.
About Ford Motor
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F)
-- http://www.ford.com/-- manufactures or distributes
automobiles in 200 markets across six continents. With about
260,000 employees and about 100 plants worldwide, the company's
core and affiliated automotive brands include Ford, Jaguar, Land
Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The
company provides financial services through Ford Motor Credit
Company.
The company has operations in Japan in the Asia Pacific region.
In Europe, the company maintains a presence in Sweden, and the
United Kingdom. The company also distributes its brands in
various Latin American regions, including Argentina and Brazil.
About Navistar International
Based in Warrenville, Illinois, Navistar International Corp.
(NYSE:NAV) -- http://www.nav-international.com/-- is the parent
company of Navistar Financial Corp. and International Truck and
Engine Corp. The company produces International brand
commercial trucks, mid-range diesel engines and IC brand school
buses, Workhorse brand chassis for motor homes and step vans,
and is a private label designer and manufacturer of diesel
engines for the pickup truck, van and SUV market. The company
also provides truck and diesel engine parts and service sold
under the International brand. A wholly owned subsidiary offers
financing services. The company has operations in Brazil,
Iceland and India.
* * *
The company carries Standard & Poor's Ratings Services' 'BB-'
corporate credit ratings with a negative outlook. The company's
subsidiary, Navistar Financial Corp. also carries S&P's BB-
rating.
NORTEL NETWORKS: Posts $844 Mil. Net Loss in Fourth Quarter 2007
----------------------------------------------------------------
Nortel Networks Corp. reported financial and operating results
for the fourth quarter and full year of 2007.
The Company reported a net loss in the fourth quarter of 2007 of
US$844 million, compared to net loss of US$80 million in the
fourth quarter of 2006 and net income of US$27 million in the
third quarter of 2007. Nortel reported a net loss for 2007 of
US$957 million, compared to net earnings of US$28 million for
the year 2006.
Revenue was US$3.2 billion for the fourth quarter of 2007
compared to US$3.3 billion for the fourth quarter of 2006 and
US$2.7 billion for the third quarter of 2007. In the fourth
quarter of 2007, revenue increased by 18% compared to the third
quarter of 2007 and excluding the impact of the UMTS Access
divestiture, revenue increased by 2% compared with the year-ago
quarter. For 2007, revenues were US$10.95 billion compared to
US$11.4 billion for 2006.
"Nortel continued to make strong progress in the fourth quarter
as we completed a pivotal year in our transformation," Nortel
President and CEO Mike Zafirovski said. "In a period of
significant change for our industry, we have now reported six
consecutive quarters of strong year over year improvement in
operating margin, reflected in a 353 basis points improvement in
the second half of 2006 and a 369 basis points improvement in
2007. Although our fourth quarter operating margin was below
our target, it is the highest in 12 quarters. We also recorded
a 386 basis point increase in gross margin to 43.7%, also the
highest in 12 quarters. And most importantly, customers around
the world are validating our strategic direction by signing up
for multi-year engagements that leverage both our technological
innovation and world-class know-how. We ended the year with a
positive book to bill of 1.01 in the fourth quarter."
Gross margin was 43.7% of revenue in the fourth quarter of 2007.
This compared to gross margin of 39.8% for the fourth quarter of
2006 and 43.0% for the third quarter of 2007. Compared to the
fourth quarter of 2006, gross margins benefited primarily from
productivity improvements and mix.
Cash balance at the end of the fourth quarter of 2007 was
US$3.5 billion, up from US$3.13 billion at the end of the third
quarter of 2007. The increase in cash was primarily driven by
cash from operating activities of US$417 million and a positive
impact from foreign exchange of US$16 million, partially offset
by cash used in financing activities of US$23 million and cash
used in investing activities of US$6 million.
Outlook
Nortel provided its financial outlook for the full year 2008,
and expects:
* Revenue to grow in the low single digits compared to 2007;
* Gross Margin to be about our business model target of 43% of
revenue;
* Operating Margin as a percentage of revenue to increase by
about 300 basis points compared to 2007.
At Dec. 31, 2007, the company's balance sheet showed total
assets of US$17.0 billion and total liabilities of US$13.4
billion, resulting in a US$2.7 billion, stockholders' equity.
Equity, on Sept. 30, 2007, was US$2.9 billion and, on
Dec. 31, 2006, was US$1.1 billion.
About Nortel Networks
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next-
generation technologies, for both service provider and
enterprise networks, support multimedia and business-critical
applications. Nortel's technologies are designed to help
eliminate today's barriers to efficiency, speed and performance
by simplifying networks and connecting people to the information
they need, when they need it. Nortel does business in more than
150 countries around the world. Nortel Networks Limited is the
principal direct operating subsidiary of Nortel Networks
Corporation.
Nortel does business in more than 150 countries including
Indonesia, the United Kingdom, Denmark, Russia, Norway,
Australia, Brazil, China, Singapore, among others.
* * *
Nortel Networks Corp. still carries Moody's Investors Service
'B3' Senior Unsecured Debt rating which was placed on March 22,
2007.
TELE NORTE: Earns BRL2.36 Billion in 2007
-----------------------------------------
Tele Norte Leste Participacoes SA's net profit increased 80% to
BRL2.36 billion in 2007, compared to BRL1.31 billion in 2006.
Revenue generating units increased by 1.11 million in the fourth
quarter 2007 and by 3.13 million in the full year, +134.8% and
+20.9%, respectively, compared to the fourth quarter 2006 and
full year 2006. Units Oi Movel and Oi Velox outperformed in the
quarter, increasing respectively 1.08 million and 125,000.
Although the rate has slowed, the alternative plans continued to
expand during the quarter, increasing by 296,000 for a total of
5.0 million at the end of December 2007 (45.2% of all
residential lines).
With 125,000 new customers, Oi Velox maintained the rate of
expansion as in the previous quarter (127,000). In 2007, there
were 390,000 net adds, 20.7% above 2006.
As per mobile services, Oi Conta Total also sustained the growth
rate of the previous quarter, closing the year with 537 thousand
customers (20.7% of the post-paid customer base). In the pre-
paid segment, the net addition of 951 thousand customers during
the quarter was largely due to the continued success of the Oi
Ligadores campaign.
The net consolidated revenue for the quarter amounted to
BRL4,484 million, a slight increase compared to third quarter
2007 (+1.1%). The figure for the full year 2007 came to
BRL17,584 million (+4.2%), mainly supported by data, broadband
and mobile services.
There was a slight increase in the average revenue per user
(ARPU) for wireline services (BRL85.59; +0.1% vs third quarter
2007), thereby reassuring for another quarter the success of the
alternative plans in stabilizing wireline revenues. The ARPU
for mobile services (BRL22.74) was up 1.8% in relation to that
of the previous quarter and 2.7% higher than fourth quarter
2006.
The consolidated EBITDA totaled BRL1,548 million for the quarter
(margin of 34.5%), a reduction in relation to the EBITDA and
EBITDA margin for the previous quarter (BRL1,679 million and
37.8%). The full year's EBITDA, of BRL6,501 million (margin of
37.0%), represents a 6.5% increase compared to 2006. Adjusting
the non-recurring effects, the consolidated EBITDA for the year
reached BRL6.332 million (margin of 36.0%), 3.8% higher than
2006.
At the end of December 2007, the net debt of BRL2,681 million
represented a reduction of 14.2% for the quarter and 45.1% for
the year, and was equivalent to 0.41x EBITDA in 2007.
The consolidated net earnings totaled BRL911 million in fourth
quarter 2007 and BRL2,358 million in 2007 (BRL6.17/share and
US$3.17/ADR), the latter representing an 80.0% increase from
2006.
Consolidated capital expenditure in fourth quarter 2007 totaled
BRL1,026 million, and BRL2,328 million for the full year,
equivalent to 22.9% of the net earnings for the quarter (13.2%
for the year). The free cash flow, after investments, amounted
to BRL629 million in the quarter (-41.5% vs third quarter 2007),
adding to a total of BRL3,330 million for the full year (+2.5%
vs. 2006).
The number of fixed telephone lines in service (14,222 thousand)
remained practically stable in relation to the figure at the end
of September 2007 (-0.7%). The continuation of a more flexible
credit policy has been effective in securing customers in the
lower income segment of the customer base, which, despite a
higher level of default, generates positive overall results for
Oi Fixo. The 1.2% reduction in relation to the customer base at
the end of 2006 was within the range predicted at the beginning
of the year.
A total of 5.0 million customers were on alternative plans at
the end of 2007, an increase of 6.3% in the quarter and 154.3%
for the year. These plans, which represent 35.1% of the total
number of lines in service and 45.2% of residential lines,
contributed not only to the increase in customer loyalty, but
also to the defense and increase of wireline services ARPU.
The number of ADSL (Oi Velox) access points increased by 9.0% in
the quarter, thereby sustaining the strong pace of growth seen
in the previous quarter. Oi Velox closed 2007 with a 1,518
thousand customer base, an increase of 34.6% (390 thousand)
compared to 1,128 thousand access points at the end of 2006.
Oi Movel also sustained a strong growth rate through the fourth
quarter 2007, generating 1,084 thousand net additions (gross
additions totaled 2,482 thousand and 1,398 thousand
disconnections) to the subscriber base, representing 37.3% of
the year's total net additions (2,906 thousand). The churn rate
for the quarter (9.1%) was 2.4 percentage points lower than that
of the previous quarter. At the end of the year, Oi Movel
customer base reached 15,984 thousand, an increase of 22.2%
compared to the end of December/06, thus confirming the
company's market leadership in Region I with a 26.9% market
share.
The pre-paid segment saw robust growth, due to the success of
the Oi Ligadores campaign, which began in July 2007 and
contributed to increase net additions in this segment by 2,152
thousand over the last two quarters of 2007 (+80.4% in the full
year). At the end of 2007, the pre-paid customer base stood at
13,395 thousand. The post-paid customer base recovered strongly
in the fourth quarter 2007 (+133 thousand net additions),
closing the year with a total of 2,589 thousand subscribers
(16.2% of the mobile subscriber base).
The consolidated gross revenue increased by 1.6% in the quarter
(+3.8% for the full year), with strong performances from mobile,
data and fixed-to-mobile (VC1, VC2 and VC3) services, which more
than offset the revenue loss from public telephones, network
usage and local fixed services.
The gross revenue from wireline services remained stable, both
on a quarterly and on a yearly basis (-0.2%). During the fourth
quarter 2007, revenues from local services and public telephones
declined and were offset by increasing revenues from fixed-to-
mobile (VC1, VC2 and VC3), data and advanced voice/other
services.
For the year 2007, the highlights were higher revenues from
monthly subscriptions, data communication, fixed-to-mobile (VC1,
VC2 and VC3) and additional services, which served to offset the
reduced revenue from local, long distance and network usage
services. The revenue streams were affected by these factors:
(a) a 1.83% adjustment of the local and long distance
tariffs, in July 2007 (except local minutes);
(b) the same percentage adjustment (1.83%) of the
local minutes tariff, in October 2007;
(c) a 2.88% adjustment of fixed-to-mobile (VC1, VC2
and VC3) tariffs, in July 2007 and increased
traffic for these services;
(d) the expansion of data transmission products,
notably the broadband service - Oi Velox;
(e) significant take-up by customers of alternative
plans denominated in minutes (2.5 million);
(f) a 20% reduction in the local network
interconnection fee (TU-RL), in January 2007.
Fixed-to-Fixed: (monthly subscription, traffic, connection fee)
The gross revenue from local services declined by 2.0% in fourth
quarter 2007. During this period, 296 thousand more customers
joined the alternative plans, which led to a reduction in the
excess traffic billed. However, in this quarter, this was not
sufficient to increase the monthly subscriptions revenues,
though this did generate a year-on-year positive impact (+4.8%).
Fixed-to-Mobile: (VC1)
The increase in revenue, both for the quarter (+6.9%) and for
the full year (+4.6%), was influenced by the tariff adjustment
in July 2007 (2.88%) and by the increased traffic for this
service.
Long Distance Services (LD) Fixed-to-Fixed LD (DLD and ILD)
The 2.2% revenue reduction over the quarter and in relation to
the full year (-7.6%) was due to reduced traffic, and was
partially offset by the tariff adjustments in July 2007
(+1.83%).
Fixed-to-Mobile LD (VC2/VC3)
Long distance fixed-to-mobile services recorded 7.5% higher
revenue than in the third quarter 2007, with a 16.1% increase
over the full year. This performance was due to the same
factors as those affecting VC1, for example; increased traffic,
and the 2.88% tariff adjustment in July 2007.
Remuneration for Network Usage
This quarter's revenue remained practically stable in comparison
to third quarter 2007 (-BRL4 million). However, it was down by
15.7% (-BRL112 million) in relation to 2006, due to a 20%
reduction in the local fixed network interconnection fee (TU-
RL), in January 2007, as provided for in the concession
contract.
Data Communication Services
The revenue for the quarter was BRL29 million (+4.0%) higher
than third quarter 2007, while that of the full year was up by
BRL366 million (+14.6%) in relation to 2006. The performance
highlight was Oi Velox revenue, sold. In relation to the full
year, however, TUP revenue was practically stable at BRL1.1
billion (-1.0%).
Wireless Services
The gross revenue from wireless services increased by BRL106
million over the quarter (+9.2%) and by BRL962 million on a
year-on-year basis (+27.7%). The increase in the fourth quarter
2007 was due to the expansion of monthly subscriptions (+12.0%)
and outgoing calls (+15.1%). In 2007, the revenue from wireless
services represented 17.6% of the consolidated revenue, despite
the 25.1% fall in revenue from handset sales, mainly as a result
an expanded customer base (+2,906 thousand) and the full year
impact of full billing on network usage revenue (+89.2%; BRL544
million), compared with just 5.5 months in the previous year.
During 2007, it is also important to highlight the monthly
subscriptions and outgoing calls revenues, where:
(a) the convergent plans, focusing high-value
customers (Oi Conta Total), boosted post-paid
growth customers (+9.7%). Such clients
already reaches 537,000, representing 20.7% of
the total post-paid customer base;
(b) the Oi Ligadores campaign, which begun in
July 2007, increased the rate of expansion in
the pre-paid segment and was responsible for
attracting 4.3 million new customers, raising
the pre-paid customer base to a total of
13,395 thousand (+25.0% over 2006). It should
also be noted that the migration of customers
to Oi Ligadores base (3.4 million in the year)
helped to increase the revenues from data/value
added services, as a result of the fee charged
to join the offer; revenue from handset sales
fell by 25.1% in relation to the previous year,
as a result of the company's policy of selling
the sim-card alone to the pre-paid segment, as
part of the company's strategy to reduce
customer's acquisition cost.
The consolidated revenue from network usage totaled BRL319
million, excluding the BRL206 million (BRL187 million in the
third quarter 2007) received by Oi Móvel from TMAR during the
fourth quarter 2007. The revenue for the full year was up by
89.2%, as mentioned earlier. The VUM tariff adjustment
(+1.97%), in July/07, together with the full year
impact of full billing, were the factors affecting the increased
network usage revenue in 2007.
The main reasons for expense increase were higher
Interconnection fees (BRL540 million) and "Provision for Bad
Debts" (BRL174 million), which were partially offset by lower
costs of SMP handsets and other COGS (BRL316 million) and
reduced Other Operating Expenses (Income)
(BRL269 million).
It should be pointed out that, while the full billing system
helped to increase revenue, it also affected the cost side,
increasing this item for the year. The Provision for Bad Debts,
which was equivalent to 2.5% of the gross revenue for the fourth
quarter 2007 (2.6% for the year), showed an increase of 36.6%
over the year, mainly due to the policy of greater credit
flexibility for the sale of fixed lines.
Interconnection
The 3.9% increase in the cost of interconnection (+BRL32
million), during the quarter, is basically due to increased
fixed to mobile traffic (VC-1, VC-2 e VC-3).
The 19.3% increase for the full year is mainly the result of the
impact of full billing among the mobile operators, implemented
as from July 2006 and therefore in effect for only 5.5 months in
2006.
Personnel
The 73.0% (BRL84 million) increase in personnel expenses during
the quarter was mainly due to the reversal of provisions made in
the third quarter 2007, which had had a positive impact on the
"personnel" expenses for that quarter of BRL60 million.
The full year 2007 saw an increase of 7.1% (BRL46 million), due
to the company's assumption of previously outsourced services in
relation to the Network Management Center (CGR), the operational
start-up of SEREDE (a fully-owned subsidiary of TMAR) in
August 2007.
At the end of 2007, headcount totaled 9,936 (7,098 at the end of
2006). This increase of 2,838 employees was due to hiring done
for the new subsidiary - SEREDE (1,160 employees at the end of
2007), and additional staff hired in the first quarter 2007 as
the company assumed the responsibility of network management
services.
Cost of SMP Handsets and other COGS (CMV)
There was a reduction of R$13 million during the quarter and of
BRL316 million in relation to the previous full year, due to the
continuing strategy of selling the sim cards alone to the pre-
paid segment. As a
result of eliminating the subsidy on pre-paid handsets, there
has been a substantial reduction in the customer's acquisition
cost in this segment.
Part of the year-on-year difference relates to the reversal of a
provision for obsolete inventory, to the sum of BRL55 million,
as a result of the fire at the Rio de Janeiro distribution
center, the details of which were provided in the first quarter
2007 report.
Third-Party Services
These expenses grew by 4.6% during the quarter (BRL46 million),
due to increased spending on consultancy services and legal
counseling in relation to litigation proceedings (+BRL10 million
and +BRL19 million, respectively). On top of this, there was
increased spending on sales commissions (BRL8 million) and data
processing, which were partially offset by reduced spending on
network maintenance. For the full year 2007, these expenses
were up by BRL99 million. Contributions to this increase came
from the cost of electricity, arising from a tariff adjustment,
increased power consumption, due to network expansion (broadband
and mobile), increased spending on data processing and other
expenses, the latter arising, basically, from increasing premium
sales to the postpaid segment.
Marketing
During the quarter, there was an increase of 11.8% (BRL8
million), due to more spending on TV coverage. On an annual
basis, there was a decline of 3.2% (BRL10 million), due to
reduced spending on sponsorship and market research, despite the
expense of the campaigns to consolidate the Oi brand and the
sponsorship of the Pan-American Games Rio – 2007 project, during
the first half of 2007.
Provisions for Bad Debts
The Provisions for Bad Debts remained stable in relation to the
level of the previous quarter. On an annual basis, however,
there was an increase of BRL174 million in comparison with 2006,
mainly reflecting Oi's strategy of implementing a more flexible
credit policy for lower income users of wireline services.
Other Operating Expenses (Income)
The BRL256 million increase in other operating expenses during
the quarter was mainly due to the fact that this item had been
positively affected by certain non-recurrent events during the
third quarter 2007:
-- A BRL265 million reversal against labor
contingencies, to bring the balance in line with
the new assessment of losses in labor claims,
based on the historical record of effective
payments;
-- A supplementary provision of BRL96 million for
regulatory contingencies, following a more precise
assessment of liabilities regarding the failure to
comply with contractual commitments, notably those
related to the PGMU – General Target Plan for
Universal Access.
On an annual basis, there was a BRL269 million reduction in
other operating expenses (income) during 2007, mainly due to the
positive non-recurrent events of third quarter 2007, notably the
reversal of the BRL265 million labor contingency mentioned
above.
The consolidated EBITDA for the quarter amounted to BRL1,548
million (-18.9% vs. third quarter 2007), representing a margin
of 34.5%. However, it should be noted that, in comparison with
the third quarter 2007, that quarter benefited from non-
recurrent events having a net positive impact of BRL229 million,
without which the decline would have been just 7.8%. A
comparison of the fourth quarter 2007 vs. third quarter 2007
recurring EBITDA margins shows a drop of 3.3 p.p.
The consolidated EBITDA and EBITDA margin declined in the fourth
quarter 2007 basically due to the performance of wireline
services, which felt the impact of increased interconnection
costs (more fixed-to-mobile traffic), Provisions for Bad Debts
(increased sales of fixed lines to lower income customers),
spending on customer care (improved standard of service),
provision for contingencies (tax and labor) and legal costs.
The consolidated EBITDA of TMAR totaled BRL1,557 million (a
margin of 34.8%), bringing the total for the year to BRL6,530
million. The parent company recorded an EBITDA of BRL1,213
million in the fourth quarter 2007 (a margin of 33.5%), and
accumulated BRL5,385 million for the full year (a margin of
37.7%). At the mobile services company (TNL-PCS), the EBITDA
for the quarter was BRL352 million, with a
margin of 31.8%, which was stable in relation to the previous
quarter. The highlight was the accumulated EBITDA for 2007,
which reached a total of BRL1,154 million, 162.9% higher than
that of 2006, with a margin of 27.5% (+15.2 p.p.). In 2007 the
mobile segment maintained its steady rate of growth in its
customer base, while at the same time broadening its operating
margins, mainly through reducing costs to acquire new customers.
The overall consolidated EBITDA for the year 2007 came to
BRL6,501 million, with a margin of 37.0%, an increase of 6.5%
and 0.8 base points, respectively. Taking into consideration
the non-recurring adjustments in the year, the margin would have
been 36.0%, showing a stabilization of the consolidated EBITDA
margin. The highlights were the performances of the data
communication services (Oi Velox) and the mobile services (Oi
Movel), which reached EBITDA margin of 27.5% in 2007.
Due to the declaration of IOC – Interest on Capital on December
2007 (TNL and TMAR) and the exploitation profit (TMAR), the
provision for Income Tax and Social Contribution was positive in
the fourth quarter 2007, making a considerable contribution to
year-end Net Earnings.
Net Financial Income (Expenses)
The consolidated net financial expenses for the fourth quarter
2007 amounted to BRL65 million, an increase of BRL13 million in
comparison with the third quarter 2007. On an annual basis,
there was a reduction of BRL866 million in relation to the
figure for 2006, as detailed below:
The consolidated financial income was BRL108 million higher than
3Q07, due to a higher average cash balance during the period and
the recording of monetary correction on judicial deposits
against labor and civil litigation (BRL80 million). There was a
31.0% increase for the full year, due to the higher average
volume of short-term investments in the financial market,
together with the increases due to the monetary correction of
judicial deposits and to financial discounts.
The financial expenses amounted to BRL386 million in the 4Q07
and BRL1,384 million for the full year 2007, an increase of
BRL122 million in the quarter and a reduction of BRL638 million
in relation to the
previous year:
-- Interest on loans and financing, with expenses
during the quarter of BRL166 million, was
BRL12 million higher than in the 3Q07, basically
due to the greater average debt volume resulting
from the raising of new funding. The expenses for
the full year amounted to BRL651 million, a
reduction of BRL81 million in relation to 2006,
largely a reflection of falling interest rates
during the period.
-- Foreign exchange impact on loans and financing saw
a reduction of BRL21 million in the expenses over
the quarter, and amounted BRL29 million expenses,
resulting from:
(a) a net gain of BRL72 million, derived from a
foreign exchange gain on the company's debt of
BRL74 million, which was partially offset by
the appreciation of the real against the US
dollar and monetary variation expenses,
amounting to BRL2 million;
(b) Net hedging costs of BRL101 million,
represented by expenses of BRL38 million from
foreign exchange variations and of BRL63
million in interests based on the CDI
(Interbank Deposit Certificate) rate.
The net foreign exchange impact on loans and financing for the
full year was an expense of BRL156 million, BRL244 million lower
than in 2006, due to less debt being denominated in foreign
currency.
Other financial expenses for the quarter totaled BRL192 million,
an increase of BRL131 million from 3Q07, largely due to the
recording of the reversal of monetary correction on the
provision for labor contingencies, in the 3Q07, to the sum of
BRL143 million, as well as BRL59 million from PIS and COFINS
taxes on the declaration of ISE during the quarter, partially
offset by a reduction of BRL51 million in other items. The
reduction of BRL313 million for the full year is largely due to
lower monetary correction on contingencies (BRL269 million),
affected by the BRL143 million reversal of monetary correction
on the provision for labor contingencies, in the 3Q07, and the
lower level of monetary contingencies correction recorded during
the period.
Depreciation/Amortization
Depreciation and amortization totaled BRL649 million in the 4Q07
(-1.4% vs 3Q07) and BRL2,605 million for the full year (-17.2%
vs 2006). The decline during the year, notably in the area of
fixed telephony, reflects the full depreciation of capital
expenditure carried out in relation to the Plan to Advance the
Meeting of Regulatory Targets (2000/2001). It should be noted
that the depreciation of fixed telephony assets during the year
was approximately of BRL450/460 million per quarter.
Net Earnings
The consolidated net earnings for the quarter amounted to BRL911
million (BRL2.39 per share and US$1.34/ADR), an increase of
43.0% over the 3Q07, while the full year total was BRL2,358
million (+80.0% vs. 2006). The main factors supporting this
growth were: higher EBITDA (BRL399 million), lower depreciation
and amortization (BRL542 million) and net financial expenses
(BRL866 million). These were partially offset by higher income
tax/social contribution expenses
(BRL667 million). The net earnings of the parent company, TMAR,
amounted to BRL939 million for the quarter (+21.6%) and
BRL2,692 million for the full year (+66.7%).
Oi (TNL PCS) achieved net earnings of BRL216 million for the
quarter (+134.8%) and BRL456 million for the full year
(+230.4%).
Debt
The consolidated net debt was reduced by BRL445 million during
the quarter and by BRL2,202 million during the full financial
year, closing 2007 at BRL2,681 million (41.2% of the EBITDA for
the year). Of the company's total gross debt (BRL9,390
million), 8.38% is exposed to local currency variations against
the US dollar and the yen. The average cost of the debt
accumulated during the year, net of the impact of currency
hedging, was 92.5% of the CDI rate.
During the quarter, TMAR raised BRL20 million, BRL11 million of
which was from a private issue of debentures (remunerated
according to the IPCA inflation index + 0.5% p.a.), with a view
to financing the expansion of wireless services in various
locations within the state of Minas Gerais (Projeto Minas
Comunica).
In the previous quarter, Oi (TNL PCS) closed a financing
contract with the BNDES (Brazilian Development Bank) for BRL467
million and drew down BRL290 million (average cost of the TJLP +
4.50% p.a.) in order to finance the expansion and technological
upgrading of Oi's mobile telecommunications network, scheduled
for the period 2006 to 2008. During the quarter, Oi drew down
another BRL150 million against this facility. The scheduled
maturity of the company's gross debt is reasonably well
distributed over the next few years, without any concentration
of payments. The existing cash balance (BRL6,710 million) is
sufficient to cover 98% of the debt coming due up to 2011.
Capital Expenditure
The consolidated capital expenditure during the quarter amounted
to BRL1,026 million, of which BRL689 million (67.2%) was
allocated to wireline telephony and BRL337 million (32.8%) went
into wireless telephony. The total investment represented a
79.4% increase from 3Q07, due to greater expansion in both the
fixed and mobile areas:
-- BRL219 million was invested in wireline telephony,
mostly to expand the network and data communication
infrastructure, with a view to increase the
transmission capacity and the broadband platform
(Oi Velox);
-- An extra BRL235 million was invested in wireless
telephony during the quarter, of which
BRL131 million relates to the acquisition of the
right to operate in the state of Sao Paulo
(2G license) and to increase the frequency range
in certain states in which Oi already operates.
The capital expenditure over the full year amounted to BRL2,328
million, practically the same level as in the previous year
(BRL2,307 million).
Cash Flow
The free cash flow, net of investment, came to BRL629 million
for the quarter and totaled BRL3,330 million for the full year
2007, which was stable in relation to the figure for 2006
(BRL3,250 million). However, on a quarterly basis, free cash
flow declined due to these factors:
(i) a payment of BRL260 million to the Fundacao
Atlantico in October, in order to reconcile the
foundation's financial statements to the new
actuarial premises, as explained in the 3Q07
quarterly report.
(ii) a payment of BRL128 million for the 2G licenses.
The increase in operational cash flow during the
year (+BRL368 million) was largely offset by
higher investments (+BRL289 million). On the
other hand, it should be remembered that, in
April 2007, the sum of BRL234.9 million was paid
as a fee for the renewal of the concessions to
provide wireline services (STFC). This fee is
payable every two years.
In fixed line segment, Oi will continue with its strategy of
offering alternative plans to preserve its customer base and, at
the same time, increase the revenue (ARPU) generated from these
clients. The offer of those plans is intended to defend the
traditional services revenues, specially voice traffic. In the
area of broadband, the company continues to expect growth in the
market, driven by the growing demand for PCs and household
internet access, as well as by the expansion of our Oi Velox
urban coverage, in both density and number of centers served.
By December 2008, the company will be offering Oi Velox services
in more than 450 town and cities (up from 286 in December 2007).
In the wireless segment, the introduction of third generation
plans (3G), planned for the second half of the year, and number
portability should ensure an intense competitive environment.
Nevertheless, the company expects to see more moderate growth in
the mobile market this year (between 10% and 15%). In this
scenario, in operational terms, it is possible that in 2008 Oi
will still register reduction in the number of fixed lines in
service - Oi Fixo, closing the year with around 14.0 million
lines in service. Oi Velox will continue to record strong
growth rates, closing the year with about 2.1 million access
points. Oi Movel will see a slower expansion of its subscriber
base than in 2007, possibly reaching 18.0 million at the end of
December 2008 in Region I. In this region, we will retain our
strategy, focused on offering Oi Conta Total convergent plans to
the post-paid segment while continuing to sell the sim-card
alone to the pre-paid segment and to keep down the cost of
acquiring new customers. It is expected to have a substantial
increase in the consolidated capital expenditures during 2008,
which should come to around BRL4.0 billion, allocating 51% to
the wireline segment and 49% to wireless segment:
(i) CAPEX directed at the present operational
activities should be similar to the level of
investment in 2007: 55%;
(ii) Implementation of number portability (fixed
and mobile): 12%;
(iii) Development and implementation of 3G platforms
in Region I and 2G/3G throughout the state of
Sao Paulo will require the additional investment
(including the cost of the licenses –
BRL867 million): 33%.
The total of BRL4.0 billion, does not include the acquisition
costs of company takeovers that have already been announced, as
these are still subject to approval by the relevant government
authorities. The capital expenditure and acquisitions, are all
part of the company's long-term strategy, the expected returns
on which will be evident over the medium to long term.
Headquartered in Rio de Janeiro, Brazil, Tele Norte Leste
Participacoes SA -- http://www.telemar.com.br-- is a provider
of fixed-line telecommunications services in South America. The
company markets its services under its Telemar brand name. Tele
Norte's subsidiaries include Telemar Norte Leste SA; TNL PCS SA;
Telemar Internet Ltda.; and Companhia AIX Participacoes SA.
* * *
As reported on April 27, 2007, Standard & Poor's Ratings
Services placed on CreditWatch with negative implications the
'BB+' corporate credit rating on Tele Norte Leste Participacoes
S.A. The creditwatch resulted from TmarPart's decision to buy
out its holding company's preferred shares.
==========================
C A Y M A N I S L A N D S
==========================
ATLAS CAPITAL: Sets Final Shareholders' Meeting for March 7
-----------------------------------------------------------
Atlas Capital Offshore Exempt Fund, Ltd., will hold its final
shareholders' meeting on March 7, 2008, at 9:00 a.m. at the
registered office of the company.
These matters will be taken up during the meeting:
1) accounting of the winding-up process; and
2) authorizing the liquidator to retain the records
of the company for a period of six years from
the dissolution of the company after which they
may be destroyed.
Atlas Capital's shareholders decided on Jan. 24, 2008, to place
the company into voluntary liquidation under The Companies Law
(2004 Revision) of the Cayman Islands.
The liquidator can be reached at:
Richard L. Finlay
Attn: Krysten Lumsden
P.O. Box 2681, George Town
Grand Cayman, Cayman Islands
Telephone: (345) 945 3901
Fax: (345) 945 3902
DIAMOND REIT: Will Hold Final Shareholders' Meeting on March 10
---------------------------------------------------------------
Diamond Reit Limited will hold its final shareholders' meeting
on March 7, 2008, at 10:00 a.m. at 23/F, Wheelock House,
20 Pedder Street in Hong Kong.
These matters will be taken up during the meeting:
1) accounting of the winding-up process; and
2) authorizing the liquidator to retain the records
of the company for a period of six years from
the dissolution of the company after which they
may be destroyed.
Diamond Reit's shareholders decided on Jan. 17, 2008, to place
the company into voluntary liquidation under The Companies Law
(2004 Revision) of the Cayman Islands.
The liquidator can be reached at:
Kevin Chung Ying Hui
16th Floor, Ocean Center
Harbor City, Canton Road
Kowloon, Hong Kong
HONJO GLOBAL: Proofs of Claim Filing Deadline Is March 8
--------------------------------------------------------
Honjo Global's creditors have until March 8, 2008, to prove
their claims to John Cullinane and Derrie Boggess, the company's
liquidators, or be excluded from receiving any
distribution or payment.
In their proofs of claim, creditors must indicate their full
names, addresses, the full particulars of their debts or claims,
and the names and addresses of their lawyers, if any.
Honjo Global's shareholder decided on Feb. 7, 2008, to place the
company into voluntary liquidation under The Companies Law (2004
Revision) of the Cayman Islands.
The liquidators can be reached at:
John Cullinane and Derrie Boggess
c/o Walkers SPV Limited
Walker House, 87 Mary Street
George Town, Grand Cayman, KY1-9002
Cayman Islands
Telephone: (345) 914-6305
MORLEY BALANCED: Proofs of Claim Filing Ends on March 10
--------------------------------------------------------
Morley Balanced Fund Limited's creditors have until
March 10, 2008, to prove their claims to Maricorp Services Ltd.,
the company's liquidator, or be excluded from receiving any
distribution or payment.
In their proofs of claim, creditors must indicate their full
names, addresses, the full particulars of their debts or claims,
and the names and addresses of their lawyers, if any.
Morley Balanced's shareholder decided on Dec. 5, 2007, to place
the company into voluntary liquidation under The Companies Law
(2004 Revision) of the Cayman Islands.
The liquidator can be reached at:
Maricorp Services Ltd.
Attn: J. Andrew Murray
31 The Strand, 46 Canal Point Drive
Grand Cayman KY1-1105, Cayman Islands
Telephone: (345) 949 9710
PRAIRIE FUTURES: Proofs of Claim Filing Is Until March 8
--------------------------------------------------------
The Prairie Futures Fund Ltd.'s creditors have until
March 8, 2008, to prove their claims to Glen Trenouth and Rodney
Graham, the company's liquidators, or be excluded from receiving
any distribution or payment.
In their proofs of claim, creditors must indicate their full
names, addresses, the full particulars of their debts or claims,
and the names and addresses of their lawyers, if any.
The Prairie Futures' shareholder decided on Jan. 11, 2008, to
place the company into voluntary liquidation under The Companies
Law (2004 Revision) of the Cayman Islands.
The liquidators can be reached at:
Glen Trenouth and Rodney Graham
BDO Tortuga
Governors Square, Building 3, 2nd Floor
23 Lime Tree Bay Avenue
P.O. Box 31118, Grand Cayman
Cayman Islands
Telephone: (345) 943 8800
Fax: (345) 943 8801
SCOTTISH RE: A.M. Best Chips Issuer Credit Rtg. to bb from bbb-
---------------------------------------------------------------
A.M. Best Co. has downgraded the financial strength rating to
B(Fair) from B+(Good) and the issuer credit ratings to "bb" from
"bbb-" of the primary operating insurance subsidiaries of
Scottish Re Group Limited. A.M. Best also has downgraded the
ICR to "b-"from "bb-" and the various debt ratings of Scottish
Re. The outlook for all ratings is negative.
These rating actions are based on A.M. Best's opinion that
continuing market deterioration in the subprime mortgage loan
market will result in additional delinquencies and losses and
that the uncertainty surrounding the ultimate impact of
investment write-downs on Scottish Re, its subsidiaries and
special purpose vehicles such as Ballantyne Re are not
appropriate for "Secure" FSRs. The rating downgrades also
reflect A.M. Best's concerns with the ongoing pricing,
volatility, valuation and default risk in the mortgage-backed
securities market, which could result in substantial negative
impact on the company's consolidated balance
sheet.
A.M. Best notes that Scottish Re remains heavily dependent upon
off-shore securitizations for its XXX reserves. While a
majority of Scottish Re's XXX reinsurance structures are
bankruptcy remote, an additional rating concern is the
deterioration in the market value of the underlying collateral,
which reduces the amount available to fund future reserve
increases. Large write-downs on subprime loans held in the
SPV's investment portfolio could potentially deplete the capital
held within those structures. If any deficiency were to
develop, Scottish Re's operating subsidiaries may be required to
pledge additional assets to secure reserve credit outside of the
securitization structure.
Given the increased risk commonly associated with lower rated
companies, A.M. Best has widened the notching for its debt
ratings and downgraded the senior debt.
The FSR has been downgraded to B(Fair) from B+(Good) and the
ICRs to "bb" from "bbb-" for these subsidiaries of Scottish Re
Group Limited:
-- Scottish Annuity & Life Insurance Company (Cayman) Ltd.
-- Scottish Re (U.S.), Inc.
-- Scottish Re Life Corporation
-- Scottish Re Limited
-- Orkney Re, Inc.
The ICR has been downgraded to "b-" from "bb-" for Scottish Re
Group Limited.
These debt ratings have been downgraded:
Scottish Re Group Limited --
-- to "ccc" from "b" on US$125 million non-cumulative
preferred shares
Stingray Pass-thru Trust --
-- to "bb" from "bbb-"on US$325 million 5.902% senior secured
pass-thru certificates, due 2012
These indicative ratings for debt securities have been
downgraded:
Scottish Re Group Limited --
-- to "b-" from "bb-"on senior unsecured debt
-- to "ccc+" from "b+" on subordinated debt
-- to "ccc" from "b" on preferred stock
-- Scottish Holdings Statutory Trust II and III --
-- to "ccc+" from "b+" on preferred securities
Scottish Re Group Ltd. -- http://www.scottishre.com/-- is a
global life reinsurance specialist. Scottish Re has operating
businesses in Bermuda, Grand Cayman, Guernsey, Ireland, the
United Kingdom, United States, and Singapore. Its flagship
operating subsidiaries include Scottish Annuity & Life Insurance
Company (Cayman) Ltd. and Scottish Re (US), Inc. Scottish Re
Capital Markets, Inc., a member of Scottish Re Group Ltd., is a
registered broker dealer that specializes in securitization of
life insurance assets and liabilities.
=========
C H I L E
=========
FIDELITY NATIONAL: Earns US$108 Mil. in Quarter Ended Dec. 31
-------------------------------------------------------------
Fidelity National Information Services Inc. disclosed financial
results for the quarter and year ended Dec. 31, 2007.
Fourth quarter 2007 net earnings totaled US$108.4 million
compared to net earnings of US$75.12 million for the same period
in the previous year. FIS' fourth quarter 2007 results include
approximately US$140 million in revenue from eFunds. Excluding
eFunds, the company reported fourth quarter revenue growth of
7.4%.
For the full year 2007, net earnings totaled US$561.2 million
compared to net earnings of US$259.09 million in 2006. These
results include revenue of approximately US$167 million
attributable to eFunds, which was acquired by FIS in
September 2007. Excluding eFunds, full year revenue increased
11.0% to US$4.6 billion, compared to pro forma revenue of US$4.1
billion in 2006. The increase was driven by 10.5% growth in
Transaction Processing Services and 11.2% growth in Lender
Processing Services.
"It was a good quarter and great year for FIS," William P.
Foley, II, executive chairman of FIS, stated. "Double digit
revenue growth in Transaction Processing Services and Lender
Processing Services enabled us to achieve excellent financial
performance in 2007, despite a highly challenging economic
environment. We expect to make significant progress with the
eFunds integration, and are on track to complete the spin-off of
our Lender Processing business by mid 2008."
About Fidelity National
Based 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% of all US 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, Chile and Japan.
* * *
As reported in the Troubled company Reporter-Latin America on
Oct. 29, 2007, Standard & Poor's Ratings Services placed its
ratings, including the 'BB' corporate credit rating, on Fidelity
National Information Services Inc. on CreditWatch with negative
implications.
Moody's Investors Service also placed these ratings on review
for possible downgrade: US$1.6 billion First Lien Senior Secured
Term Loan B Ba1; US$2.1 billion First Lien Senior Secured Term
Loan A Ba1; US$900 million First Lien Senior Revolving Credit
Facility Ba1; US$200 million 4.75% (Certegy) notes due
September 2008 Ba1; and Corporate Family Rating Ba1.
FIDELITY NATIONAL: Sells Certegy Gaming to Global Cash Access
-------------------------------------------------------------
Fidelity National Information Services, Inc. reported the sale
of Certegy Gaming Services to Global Cash Access for
approximately US$100 million in cash which includes cash used to
fund Certegy Gaming's ATM operations. The sale includes Certegy
Gaming's quasi-credit card cash advance, debit and casino ATM
operations. The sale does not include Certegy Gaming's payroll
and personal check cashing services.
The sale, which is expected to close in late March or early
April 2008, is expected to be neutral to Fidelity's full year
2008 earnings per diluted share.
Based 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% of all US residential
mortgages are processed using FIS software. FIS maintains a
strong global presence, serving over 9,000 financial
institutions in more than 80 countries worldwide, including
Brazil, Chile, Australia, Canada and Japan.
* * *
As reported in the Troubled company Reporter-Latin America on
Oct. 29, 2007, Standard & Poor's Ratings Services placed its
ratings, including the 'BB' corporate credit rating, on Fidelity
National Information Services Inc. on CreditWatch with negative
implications.
Moody's Investors Service also placed these ratings on review
for possible downgrade: US$1.6 billion First Lien Senior Secured
Term Loan B Ba1; US$2.1 billion First Lien Senior Secured Term
Loan A Ba1; US$900 million First Lien Senior Revolving Credit
Facility Ba1; US$200 million 4.75% (Certegy) notes due September
2008 Ba1; and Corporate Family Rating Ba1.
SHAW GROUP: Unit to Provide Engineering Services in India
---------------------------------------------------------
The Shaw Group Inc.'s Energy & Chemicals Group has been selected
by Guru Gobind Singh Refineries Limited (GGSRL) to provide
technology, engineering and procurement services for a Deep
Catalytic Cracking (DCC) unit at the grassroots Punjab Refinery
Project in Punjab, India. The value of Shaw's contract, which
has been included in the company's previously announced backlog,
was not disclosed.
"Shaw's ability to incorporate Deep Catalytic Cracking
technology into the Punjab Refinery Project will facilitate the
most cost-effective and commercially proven option for the
production of polymer grade propylene from the refining
process," said Lou Pucher, president of Shaw's Energy &
Chemicals Group.
DCC technology, originally developed by SINOPEC Research
Institute of Petroleum Processing (RIPP), is a proprietary
technology for the production of light olefins, particularly
propylene and isobutylene, from a variety of hydrocarbon
feedstock inputs. As primary building blocks for other
downstream petrochemicals, light olefins produced using DCC
technology are a value-added product of the refining process.
Shaw is the exclusive licensed provider of DCC technology
outside of China, and together with RIPP has licensed 11 DCC
units around the world. The first DCC complex designed and
engineered by Shaw was successfully commissioned for Thai
Petrochemical Industries in 1997.
GGSRL is a joint venture company between Hindustan Petroleum
Corporation Limited and Mittal Energy Investment Pte Limited.
About Shaw Group
Based in Baton Rouge, Louisiana, The Shaw Group Inc. (NYSE: SGR)
-- http://www.shawgrp.com/-- provides services to the
environmental, infrastructure and homeland security markets,
including consulting, engineering, construction, remediation and
facilities management services to governmental and commercial
customers. It is also a vertically integrated provider of
engineering, procurement, pipe fabrication, construction and
maintenance services to the power and process industries. The
company segregates its business activities into four operating
segments: Environmental & Infrastructure; Energy & Chemicals;
Maintenance, and Fabrication, Manufacturing & Distribution. In
January 2005, the company sold substantially all of the assets
of its Shaw Power Technologies, Inc. and Shaw Power Technologies
International, Ltd. units to Siemens Power Transmission and
Distribution Inc., a unit of Siemens AG.
The company has operations in Chile, China, Malaysia, the United
Kingdom and, Venezuela, among others.
* * *
Standard & Poor's Ratings Services affirmed its 'BB' corporate
credit rating on The Shaw Group Inc. and removed it from
CreditWatch, where it was placed with negative implications in
October 2006. S&P said the outlook is stable. In addition,
'BB' senior secured debt rating was affirmed after the US$100
million increase to the company's revolving credit facility.
===============
C O L O M B I A
===============
BANCOLOMBIA SA: Superior Court Annuls Ruling Against Gilinski
--------------------------------------------------------------
On Feb. 26, 2008, the Tribunal Superior de Bogota (Superior
Court) annulled the decision of the Arbitral Tribunal dated
March 30, 2006, that had decided a complaint filed by
Bancolombia S.A. against Jaime Gilinski. The Arbitral Tribunal
had originally ordered Mr. Gilinski to pay COP63,216,447,152 to
Bancolombia. This amount includes accrued interest and
adjustments for inflation.
Bancolombia filed the complaint, in the context of the merger
with Banco de Colombia S.A. to resolve certain claims related to
specified contingencies and liabilities Bancolombia believed
were payable by Mr. Gilinski, as former owner of Banco de
Colombia SA, and to ensure the effectiveness of the guaranty
that was granted, the value of which is now US$30 million.
Although Bancolombia's attorneys have not been officially
notified of the decision by the Superior Court, Bancolombia
notes that an annulment of an arbitral award under Colombian
laws can be based solely on procedural and not substantive
matters. Mr. Giliniski's actions were therefore not under
review by the Superior Court, which limited its analysis to
procedural matters.
This decision is one of many decisions rendered by various
Colombian judicial authorities in the context of the merger
between Banco de Colombia SA and Bancolombia. Bancolombia and
its attorneys will analyze the decision of the Superior Court
upon official notification of such decision from the Superior
Court. It is important to note that Bancolombia has not
recorded any income relating to the award by the Arbitral
Tribunal in its financial statements, and accordingly, the
annulment of the award granted by the Arbitral Tribunal will not
have a negative effect on Bancolombia's financial condition.
Bancolombia is Colombia's largest full-service financial
institution, formed by a merger of three leading Colombian
financial institutions. Bancolombia's market capitalization is
over US$5.5 billion, with US$13.8 billion asset base and US$1.4
billion in shareholders' equity as of Sept. 30, 2006.
Bancolombia is the only Colombian company with an ADR level III
program in the New York Stock Exchange.
* * *
As reported in the Troubled Company Reporter-Latin America on
June 27, 2007, Moody's Investors Service changed the outlook to
positive from stable on its Ba3 long-term foreign currency
deposit ratings and Ba1 long-term foreign currency subordinated
bond rating for Bancolombia, S.A.
SOLUTIA INC: Emerges From Chapter 11 Bankruptcy Protection
----------------------------------------------------------
Solutia Inc. emerged from Chapter 11 reorganization on Feb. 28,
2008.
"Solutia has emerged as a well-positioned specialty chemicals
and performance materials company with market-leading global
positions and a diverse portfolio of high potential businesses,"
said Jeffry N. Quinn, chairman, president and chief executive
officer. "We believe we are a stronger, healthier and more
competitive company than at any point in our history. Over the
past four years, we have transformed our portfolio through
strategic acquisitions, internal investments, asset
dispositions, and the re-deployment of significant nylon assets
to higher-value uses."
During its time in Chapter 11, Solutia has diversified from both
an end-market and a geographic perspective. In 2007, the
company's net sales from outside the United States were 55% of
the total revenue, compared to 39% in 2003. The increase has
been driven primarily by Solutia's Asian growth strategy, as
well as significant growth in Europe.
"During this period, we have made great strides in improving our
financial position by reducing legacy liabilities, enhancing and
focusing the business portfolio and delivering strong revenue
and operating earnings growth and momentum," said James M.
Sullivan, senior vice president and chief financial officer.
"With a strong balance sheet and more than 50% of our portfolio
growing at greater than two times global GDP, we believe we are
positioned to deliver increased shareholder value."
On Nov. 29, 2007, the U.S. Bankruptcy Court for the Southern
District of New York confirmed Solutia's plan of reorganization
and approved the company's exit from bankruptcy subject to
certain conditions including the funding of an exit financing
facility. Solutia's US$2.05 billion exit financing facility was
funded by Citigroup Global Markets Inc., Goldman Sachs Credit
Partners L.P., and Deutsche Bank Securities Inc. This exit
financing is being used to pay certain creditors, and for
ongoing operations.
About Solutia Inc.
Solutia Inc. (NYSE:SOA-WI) -- http://www.solutia.com/--
is a performance materials and specialty chemicals company. The
company focuses on providing solutions for a better life through
a range of products, including Saflex(r) interlayer for
laminated glass, CPFilms(r) aftermarket window films, high-
performance nylon polymers and fibers sold under brands
including Vydyne(r) and Wear-Dated(r), Flexsys(r) chemicals for
the rubber industry, and specialty products such as Skydrol(r)
aviation hydraulic fluid and Therminol(r) heat transfer fluid.
Solutia's businesses are world leaders in each of their market
segments. With its headquarters in St. Louis, Missouri, USA,
the company operates globally with approximately 6,000 employees
in more than 60 countries that includes Malaysia, China,
Singapore, Belgium, and Colombia.
The company and 15 debtor-affiliates filed for chapter 11
protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949).
When the Debtors filed for protection from their creditors, they
listed US$2,854,000,000 in assets and US$3,223,000,000 in debts.
Solutia is represented by Richard M. Cieri, Esq., Jonathan S.
Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis
LLP, in New York, as lead bankruptcy counsel, and David A.
Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders
LLP, in St. Louis Missouri, as special counsel. Trumbull Group
LLC is the Debtor's claims and noticing agent. Daniel H.
Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq.,
at Akin Gump Strauss Hauer & Feld LLP represent the Official
Committee of Unsecured Creditors, and Derron S. Slonecker at
Houlihan Lokey Howard & Zukin Capital provides the Creditors'
Committee with financial advice. The Official Committee of
Retirees of Solutia, Inc., et al., is represented by Daniel D.
Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq.,
at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and
Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott
Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in
Birmingham, Alabama.
On Feb. 14, 2006, the Debtors filed their Reorganization Plan &
Disclosure Statement. On May 15, 2007, they filed an Amended
Reorganization Plan and on July 9, 2007, filed a 2nd Amended
Reorganization Plan. The Bankruptcy Court approved the Debtors'
amended Disclosure Statement on Oct. 19, 2007. On Oct. 22,
2007, the Debtor re-filed a Consensual Plan & Disclosure
Statement and on Nov. 29, 2007, the Court confirmed the Debtors'
Consensual Plan.
* * *
As reported in the Troubled Company Reporter-Latin America on
Dec. 10, 2007, Standard & Poor's Ratings Services assigned its
'B+' loan rating to Solutia Inc.'s (D/--/--) proposed
US$1.2 billion senior secured term loan and a '3' recovery
rating, indicating the likelihood of a meaningful (50%-70%)
recovery of principal in the event of a payment default. The
ratings are based on preliminary terms and conditions. S&P also
assigned its 'B-' rating to the company's proposed
US$400 million unsecured notes.
SOLUTIA INC: Judge Beatty OKs Bank of New York Settlement Pact
--------------------------------------------------------------
The Hon. Prudence C. Beatty of the U.S. Bankruptcy Court for the
Southern District of New York approved Solutia Inc.'s settlement
agreement with holders of Solutia's 11.25% Senior Secured Notes
due July 2009, and the Bank of New York, as successor indenture
trustee for the 2009 Notes.
The Settlement will resolve the disputes that have arisen
between the parties regarding the allowed amount of Claim No.
6210 filed by the Bank of New York on behalf of the Noteholders.
Solutia will pay BNY $220,500,000 in cash plus all accrued but
unpaid interest on the 2009 Notes through the Effective Date, at
the rate of 11.25% per annum on the face amount of 2009 Notes.
If the effective date of Solutia's reorganization plan occurs
before the Settlement is approved, Solutia will pay about
US$210,000,000 plus accrued unpaid interest through the
Effective Date.
Committee Wants Settlement Delayed
The Official Committee of Unsecured Creditors asked the Court to
delay approval of the 2009 Settlement, in light of the then
pending high-stakes litigation between the Debtors and their
exit lenders. It argued that the Debtors must not be married to
a financial arrangement that could preclude restructuring
alternatives that may prove necessary, if the Debtors fail to
resolved their disputes with their exit lenders Citigroup Global
Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche
Bank Securities Inc. The Debtors, however, have reached a
settlement with the Exit Lenders.
The Creditors Committee, however, had said the 2009 Settlement,
should it be ripe for adjudication, requires key modifications.
It noted that the 2009 Settlement, as drafted, materially
impairs the Committee's rights with respect to the ultimate
allowance of the 2009 Noteholders' claim in the event that the
2009 Settlement is declared void by the settling parties, or not
approved by the Court.
The Committee previously sought the Court's determination that
the 2009 Noteholders will have received an US$12,200,000 of
postpetition cash interest payments in excess of the amount they
are actually entitled to under Section 506(b) of the Bankruptcy
Code. The Court denied the determination request, and the
Committee has appealed the Order. The Committee has also filed
a motion seeking to increase the 2009 Noteholders' disputed
claims reserve under the Plan from US$37,500,000 -- the amount
in excess of US$210,000,000 which BNY believes they are entitled
to -– by US$12,200,000 on account of the Overpayment.
The Committee notes that in the event the 2009 Settlement is
declared void, the parties would return to their pre-settlement
litigation positions. However, should a distribution have
already been made to the 2009 Noteholders that includes an
amount equal to the Overpayment, the Committee's rights to the
Overpayment would be rendered moot.
The Committee also objected to the provision that provides, if
the 2009 Settlement is declared void or stayed, the Debtors must
establish a reserve funded only with $37,500,000. This
provision, according to the Committee, would render the 2009
Settlement moot in the event the Court approves the Reserve
Motion.
Judge Beatty, however, held "The [Debtors' Settlement] Motion is
granted in its entirety and approved in all respects."
No objection to the Settlement has been filed by any holder of
the 2009 Notes. Accordingly, the Court held that BNY is
authorized to settle the claims on behalf of the holders of the
2009 Notes and will have no liability to any holder of the 2009
Notes as a result of its entry into the Settlement.
Background to the BoNY Dispute
As reported in the Troubled Company Reporter on May 25, 2006,
the Court denied approval of the Disclosure Statement explaining
the Plan of Reorganization filed by Solutia and its debtor-
affiliates. BNY is the indenture trustee for the 11.25% Senior
Secured Notes due 2009 issued by Solutia.
BNY complains that as described in the Disclosure Statement, the
Debtors' Plan of Reorganization purports to impair the Senior
Secured Notes, which are designated in Class 3.
On Nov. 1, 2007, the TCR said John K. Cunningham, Esq., at White
& Case LLP, in New York, appeared before the Court on behalf of
Bank of New York, regarding a US$223,000,000 claim by the bank
on account of the 11.25% Senior Secured Notes due 2009 issued by
Solutia Inc. or its predecessor. Bank of New York serves as
indenture trustee for the Senior Notes.
Judge Beatty told BoNY's counsel, John K. Cunningham, Esq., at
White & Case LLP, "Pigs become hogs and then hogs get
slaughtered. And then eaten. What you're going for is so piggy
that you risk getting nothing."
At the hearing, which was held on Oct. 31, 2007, Judge Beatty
urged Solutia to settle its dispute with Bank of New York,
noting that the claim was the biggest hurdle to approval of
Solutia's reorganization plan.
"There are no cases that I have found which remotely approximate
the application of these principles to a case of this financial
magnitude," Judge Beatty stated. Judge Beatty said if no
settlement is reached she will rule on the matter in about two
weeks.
About Solutia Inc.
Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE:
SOA-WI) -- http://www.solutia.com/-- and its subsidiaries,
engage in the manufacture and sale of chemical-based materials,
which are used in consumer and industrial applications
worldwide. Solutia has operations in Malaysia, China,
Singapore, Belgium, and Colombia.
The company and 15 debtor-affiliates filed for chapter 11
protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03-
17949). When the Debtors filed for protection from their
creditors, they listed US$2,854,000,000 in assets and
US$3,223,000,000 in debts.
Solutia is represented by Richard M. Cieri, Esq., Jonathan S.
Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis
LLP, in New York, as lead bankruptcy counsel, and David A.
Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders
LLP, in St. Louis Missouri, as special counsel. Trumbull Group
LLC is the Debtor's claims and noticing agent. Daniel H.
Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq.,
at Akin Gump Strauss Hauer & Feld LLP represent the Official
Committee of Unsecured Creditors, and Derron S. Slonecker at
Houlihan Lokey Howard & Zukin Capital provides the Creditors'
Committee with financial advice. The Official Committee of
Retirees of Solutia, Inc., et al., is represented by Daniel D.
Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq.,
at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and
Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott
Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in
Birmingham, Alabama.
On Feb. 14, 2006, the Debtors filed their Reorganization Plan &
Disclosure Statement. On May 15, 2007, they filed an Amended
Reorganization Plan and on July 9, 2007, filed a 2nd Amended
Reorganization Plan. The Bankruptcy Court approved the Debtors'
amended Disclosure Statement on Oct. 19, 2007. On
Oct. 22, 2007, the Debtor re-filed a Consensual Plan &
Disclosure Statement and on Nov. 29, 2007, the Court confirmed
the Debtors' Consensual Plan. The company emerged from Chapter
11 protection on Feb. 28, 2008. (Solutia Bankruptcy News, Issue
No. 119; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported in the Troubled Company Reporter-Latin America on
Dec. 10, 2007, Standard & Poor's Ratings Services assigned its
'B+' loan rating to Solutia Inc.'s (D/--/--) proposed
US$1.2 billion senior secured term loan and a '3' recovery
rating, indicating the likelihood of a meaningful (50%-70%)
recovery of principal in the event of a payment default. The
ratings are based on preliminary terms and conditions. S&P also
assigned its 'B-' rating to the company's proposed
US$400 million unsecured notes.
SOLUTIA INC: New Stock to Trade on NYSE Effective March 3
---------------------------------------------------------
Solutia Inc. disclosed that the new common stock of reorganized
Solutia is scheduled to begin trading on the New York Stock
Exchange under the ticker symbol SOA on Monday, March 3, 2008.
(Currently the stock symbol also includes the "WI" notation).
The "old" Solutia stock, which was trading over-the-counter
under the SOLUQ ticker symbol, together with warrants or options
to purchase old common stock, were canceled as of Feb. 28, 2008.
Solutia Inc. (NYSE:SOA-WI) -- http://www.solutia.com/--
is a performance materials and specialty chemicals company. The
company focuses on providing solutions for a better life through
a range of products, including Saflex(r) interlayer for
laminated glass, CPFilms(r) aftermarket window films, high-
performance nylon polymers and fibers sold under brands
including Vydyne(r) and Wear-Dated(r), Flexsys(r) chemicals for
the rubber industry, and specialty products such as Skydrol(r)
aviation hydraulic fluid and Therminol(r) heat transfer fluid.
Solutia's businesses are world leaders in each of their market
segments. With its headquarters in St. Louis, Missouri, USA,
the company operates globally with approximately 6,000 employees
in more than 60 countries that includes Malaysia, China,
Singapore, Belgium, and Colombia.
The company and 15 debtor-affiliates filed for chapter 11
protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949).
When the Debtors filed for protection from their creditors, they
listed US$2,854,000,000 in assets and US$3,223,000,000 in debts.
Solutia is represented by Richard M. Cieri, Esq., Jonathan S.
Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis
LLP, in New York, as lead bankruptcy counsel, and David A.
Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders
LLP, in St. Louis Missouri, as special counsel. Trumbull Group
LLC is the Debtor's claims and noticing agent. Daniel H.
Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq.,
at Akin Gump Strauss Hauer & Feld LLP represent the Official
Committee of Unsecured Creditors, and Derron S. Slonecker at
Houlihan Lokey Howard & Zukin Capital provides the Creditors'
Committee with financial advice. The Official Committee of
Retirees of Solutia, Inc., et al., is represented by Daniel D.
Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq.,
at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and
Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott
Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in
Birmingham, Alabama.
On Feb. 14, 2006, the Debtors filed their Reorganization Plan &
Disclosure Statement. On May 15, 2007, they filed an Amended
Reorganization Plan and on July 9, 2007, filed a 2nd Amended
Reorganization Plan. The Bankruptcy Court approved the Debtors'
amended Disclosure Statement on Oct. 19, 2007. On Oct. 22,
2007, the Debtor re-filed a Consensual Plan & Disclosure
Statement and on Nov. 29, 2007, the Court confirmed the Debtors'
Consensual Plan. The company emerged from Chapter 11 protection
on Feb. 28, 2008.
* * *
As reported in the Troubled Company Reporter-Latin America on
Dec. 10, 2007, Standard & Poor's Ratings Services assigned its
'B+' loan rating to Solutia Inc.'s (D/--/--) proposed
US$1.2 billion senior secured term loan and a '3' recovery
rating, indicating the likelihood of a meaningful (50%-70%)
recovery of principal in the event of a payment default. The
ratings are based on preliminary terms and conditions. S&P also
assigned its 'B-' rating to the company's proposed
US$400 million unsecured notes.
==================
C O S T A R I C A
==================
ANIXTER INT'L: Robert Grubbs to Quit as CEO Effective June 2008
---------------------------------------------------------------
Anixter International Inc. disclosed that Robert W. Grubbs will
retire as president and chief executive officer at the end of
June 2008, following a 30-year career with the company.
Mr. Grubbs, who has held those posts since 1998, will continue
to serve on the company's Board of Directors.
Effective July 1, 2008, Robert J. Eck will become President and
Chief Executive Officer. Mr. Eck, age 49, has served as the
company's Executive Vice President and Chief Operating Officer
since September 2007. During the last 17 years, Mr. Eck has
served in a variety of senior management positions with Anixter
Inc., the company's operating subsidiary, most recently as
Executive Vice President -- Enterprise Cabling and Security
Solutions (2004-2007) and Senior Vice President -- Physical
Security Products and Integrated Supply (2003).
Commenting on the transition, Sam Zell, Chairman of the Board,
said, "During Bob Grubbs' tenure the company has seen tremendous
growth in sales, profitability and shareholder returns. Under
his leadership, the company has successfully evolved into one of
the world's truly global distribution businesses. We are
especially pleased that Bob will continue to serve on our Board
of Directors, allowing Anixter to continue benefiting from his
many years of company and industry experience."
In discussing his upcoming retirement, Mr. Grubbs said, "During
my 30 years at Anixter the company has gone through an
incredible amount of change and I have a real sense of pride in
what the company's leadership team has accomplished during my
tenure as CEO. The company is well positioned for the future
and I look forward to continuing to contribute to the future
success of the company as a member of the Board of Directors."
Mr. Zell continued, "The company has worked hard over the years
to successfully develop future leaders who could continue to
drive the ongoing growth and success of our business. Bob Eck
brings many years of increasing responsibilities and successful
leadership to his new role at Anixter. The Board of Directors
has confidence that, under Bob Eck's leadership, the company
can continue its consistent track record of driving strong
growth and shareholder returns."
"I am honored to have the opportunity to lead the company and
further build on its past successes," commented Mr. Eck. "Our
priorities as a company will continue to center around building
on our strategic initiatives of growing our customer base,
expanding our product and service offerings and enlarging the
geographic presence of our electrical wire & cable and OEM
supply businesses. I am very excited about the future and the
opportunities that lie ahead for Anixter."
About Anixter
Anixter International Inc. -- http://www.anixter.com/-- is the
world's largest distributor of communication products and
electrical and electronic wire and cable, and a leading
distributor of fasteners and other small parts ("C" class
inventory components) to original equipment manufacturers.
The company has nearly US$725 million in inventory of more than
325,000 products, logistics network of 197 warehouses with more
than 5 million square feet of space. It has operations in Latin
American countries including Mexico, Costa Rica, Brazil and
Chile.
* * *
As reported in the Troubled Company Reporter-Latin America on
Nov. 2, 2007, Fitch Ratings affirmed these ratings for
Anixter International Inc. and its wholly owned operating
subsidiary, Anixter Inc.:
Anixter International Inc.
-- Issuer Default Rating 'BB+';
-- Senior unsecured debt 'BB-'.
Anixter Inc.
-- Issuer Default Rating 'BB+';
-- Senior unsecured notes 'BB+';
-- Senior unsecured bank credit facility at 'BB+'.
SIRVA INC: Obtains Court OK for Additional US$10 Mil. DIP Loan
--------------------------------------------------------------
The Honorable James M. Peck of the U.S. Bankruptcy Court for the
Southern District of New York gave SIRVA Inc. and its debtor-
affiliates interim permission to obtain US$10,000,000 on top of
the US$100,000,000 that was authorized in the Court's interim
order dated Feb. 5, 2008.
According to Marc Kieselstein, P.C., at Kirkland and Ellis LLP
in Chicago, Illinois, a creditors committee was formed on
Feb. 20, 2008. To give the Official Committee of Unsecured
Creditors sufficient time to evaluate the DIP Motion, the
Debtors agreed to continue the Final DIP Hearing to February 28.
"[T]he Debtors require an additional US$10 million in funding
over the initial US$100 million amount authorized by the Interim
DIP Financing Order to ensure sufficient liquidity during the
additional four days before the Court can consider granting
final relief," Mr. Kieselstein informed the Court.
Without the additional liquidity, Mr. Kieselstein said, the
Debtors may encounter additional difficulties in meeting certain
critical cash needs, and subsequently cause an adverse impact on
the Debtors' business operations and delay their Plan of
Reorganization.
The Creditors Committee did not object to the request for
interim financing.
Triple Net Objects
Triple Net Investments IX, LP, holds a claim against one of the
Debtors, North American Van Lines, Inc., for US$2,021,546, of
which US$89,624 is an administrative claim for the February 2008
rent under a non-residential real property lease between Triple
Net and North American.
According to Triple Net, the DIP Motion works as a de facto
substantive consolidation of the Debtors' assets, to secure the
proposed US$150,000,000 DIP financing, to cross collateralize
SIRVA Worldwide, Inc.'s pre- and postpetition lender
obligations, and to collateralize exit financing.
Triple Net said it was denied recourse to a substantial
unencumbered asset base, which it submits had been available
prepetition to satisfy its claims against North American by the
removal from North American's reach valuable North American
solvent, non-debtor, foreign subsidiaries.
Triple Net noted that the DIP Motion estimates the revenues of
North American's subsidiaries to be US$36,000,000 at Sept. 30,
2007. Part of North American's equity in its subsidiaries was
unencumbered by Debtors' obligations to prepetition secured
lenders. Without discovery, Triple Net said, similar creditors
including itself, as well as the Court, are "operating in the
dark."
Triple Net stated that the DIP Motion had also sought a
US$65,000,000 postpetition transfer to the Prepetition Secured
Lenders, and that the transfer is preferential and was made in
bad faith, since the Debtors should have known that Prepetition
Secured Lenders were grossly undersecured when the prepetition
loan was made. According to Triple Net, it was in fact an
unsecured loan that was paid postpetition.
Triple Net added that the the DIP Motion appears to be an
integral component of a "prepackaged" plan of reorganization,
which the Debtors are pushing through the confirmation process.
Like the DIP Motion, the Plan, has as its "lynch-pin" the
substantive consolidation of the Debtors' assets and
liabilities, including those unencumbered assets of North
American, Triple Net contended.
Triple Net pointed out that the Plan provides for a zero
distribution for general unsecured creditors like itself, while
giving full payment to those that the Debtors elect to pay,
either in the ordinary course of business or in full upon
confirmation of the Plan.
Triple Net asserted that if the Court approves the DIP Motion,
it will be prejudiced because North American, through its
subsidiaries, are solvent, and therefore able to pay Triple
Net's claim in full.
Triple Net accordingly sought a reconsideration of the interim
relief which the Court had granted to the Debtors. It also
asked the Court to deny the final relief sought by the DIP
Motion, and to direct the Prepetition Secured Lenders to
disgorge the US$65,000,000 postpetition transfer.
Debtors Respond
Mr. Kieselstein told Judge Peck that Triple Net has not provided
any justification for the Court to reconsider the Interim DIP
Order, and provides no legal arguments that rebut the Court's
ruling, other than its incorrect assertion that the loans were
unsecured. He argued that the loans, refinanced under the
Interim DIP Order, were entitled to priority over other
prepetition facility claims, and are thus fully secured.
The argument that the DIP Motion works as a de facto substantive
consolidation is meritless, according to Mr. Kieselstein, since
the DIP Facility mirrors the guarantee and security interest of
the prepetition senior secured facility -- overlapping
guarantees and security interests in the Debtors' assets.
Hence, the DIP facility has a structure essentially identical to
the Prepetition Facility, with extra collateral to secure the
additional US$35,000,000 in funds, advanced to the Debtors.
As a result, Mr. Kieselstein explained, the Debtors were not
required to notify Triple Net of the DIP Motion, since the
service provided was adequate under Rules 4001 and 9014 of the
Federal Rules of Bankruptcy Procedure, and Triple Net was not
directly affected by the DIP Motion.
Committee Objects to DIP Facility
The Committee objects to the entry of a final order on the DIP
Motion because:
(i) the DIP Financing appears to be unnecessary, since the
Debtors could operate on a cash collateral basis; and
(ii) the DIP Financing is an attempt by the Debtors'
Prepetition Secured Lenders to gain inappropriate
leverage over the Committee concerning an "inevitable
plan fight."
According to the Committee, the Debtors suggested a lack of
significant opposition to its Plan, and relied on this "global
harmony" to obtain relief for its first-day motions.
The Committee maintains that the Plan is not consensual. The
Committee does not support the Plan because, unlike typical
prepackaged plans, the Debtors propose to pay nothing to general
unsecured creditors. With regard to the Debtors' assertion that
the Plan is supported by "all classes entitled to vote," it is
only because holders of Class 5 Claims are deemed to reject the
Plan, and are not entitled to vote.
The Committee believes that the Plan cannot be confirmed because
in addition to discrimination issues, there appear to be holes
in the Prepetition Secured Lenders' collateral position. It
asserts that the Class 5 Claimants are as entitled as the other
unsecured claimholders to reap the value of unencumbered assets.
The Debtors and the Prepetition Secured Lenders have sought to
rectify the problem by the superpriority US$150,000,000 DIP
Financing. However, the Committee says, the Lenders have used
the DIP Financing to gain an advantage over the Class 5
Claimants since all of its proceeds are used:
-- to satisfy prepetition claims, of which more than half are
owed to the Lenders, and
-- to pay interest and fees to the Lenders.
The Committee maintains that the Debtors have not presented any
meaningful evidence that they could not operate postpetition on
a cash collateral basis, as long as they do not use the cash
collateral to pay prepetition claims or other payments to their
Prepetition Secured Lenders.
According to the Committee, some of the most problematic aspects
of the DIP Financing are:
(a) US$65,000,000 is used simply to repay the Prepetition
Secured Lenders, without demonstrating that the payment
benefits the Debtors' estates;
(b) the premise of the Plan is that the Lenders' claims are
undersecured, but the Debtors propose to use the DIP
Financing proceeds for ongoing interest and expense
payments, in violation of Section 506 of the Bankruptcy
Code;
(c) certain Debtors are not obligated on the prepetition debt,
but become obligated to repay the DIP Financing;
(d) the Committee is given a short investigation period of
until March 11, 2008, and a limited funding of US$50,000
or US$833 per Debtor, to investigate the validity of the
Lenders' liens and possible claims that the 61 Debtors may
have against the Lenders;
(e) the Lenders improperly take a lien on proceeds of
avoidance actions;
(f) the Lenders seek a surcharge waiver under Section 506(c),
which is inappropriate under the DIP Financing
circumstances;
(g) the Lenders seek a prohibition on marshalling, which is
improper given the unfairness of imposing obligations on
Debtors not obligated on the Prepetition Debt; and
(h) the DIP Financing attempts to impose burdens on the
Committee for the sole reason of impeding its statutory
duties, by the provision that the Committee has no
standing to bring claims against the Lenders without
permission from the Court.
The Committee submits that a Court should approve a proposed DIP
Financing only if it is in the best interest of the general
creditor body, citing In re Roblin Industries, Inc., 52 B.R.
241, 244 (Bankr. W.D.N.Y. 1985).
The Committee asks the Court to deny the final approval of the
DIP Financing, and to terminate the Debtors' ability to borrow
until payments to the Lenders are reversed.
Headquartered in Westmont, Illinois, SIRVA Inc. (Pink Sheets :
SIRV.PK) -- http://www.sirva.com/-- is a provider of relocation
solutions to a well-established and diverse customer base. The
company handles all aspects of relocation, including home
purchase and home sale services, household goods moving,
mortgage services and home closing and settlement services.
SIRVA conducts more than 300,000 relocations per year,
transferring corporate and government employees along with
individual consumers. SIRVA's brands include Allied, Allied
International, Allied Pickfords, Allied Special Products, DJK
Residential, Global, northAmerican, northAmerican International,
Pickfords, SIRVA Mortgage, SIRVA Relocation and SIRVA
Settlement. The company has operations in Costa Rica.
The company and 61 of its affiliates filed separate petitions
for Chapter 11 protection on Feb. 5, 2008 (Bankr. S.D.N.Y. Case
No. 08-10433). Marc Kieselstein, Esq. at Kirkland & Ellis,
L.L.P. is representing the Debtor. An official Committee of
Unsecured Creditors has been appointed in this case. When the
Debtors filed for bankruptcy, it reported total assets of
US$924,457,299 and total debts of US$1,232,566,813 for the
quarter ended Sept. 30, 2007.
(Sirva Inc. Bankruptcy News, Issue No. 6; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
===================================
D O M I N I C A N R E P U B L I C
===================================
FREESTAR TECH: Posts US$4.5 Mil. Net Loss in Qtr. Ended Dec. 31
---------------------------------------------------------------
FreeStar Technology Corp. recorded a net loss of US$4,568,270
for the second quarter ended Dec. 31, 2007, compared to a net
loss of US$3,124,456 for the three months ended Dec. 31, 2006,
an increase of US$1,443,814 or approximately 46%.
Ciaran Egan, FreeStar's chief financial officer, commented that
"approximately US$2,300,000 of this amount consisted of non-cash
compensation in the form of stock, stock options, and warrants
issued to consultants and employees. We continue to launch new
innovative products and expand our geographical market for
increased growth opportunities in 2008. We believe that our
investment program in our product and sales and marketing
programs together with our growing pipelines will drive revenue
growth in 2008."
Revenue for the three months ended Dec. 31, 2007, was
US$1,448,713 compared to US$811,902 for the three months ended
Dec. 31, 2006, an increase of US$636,811 or approximately 78%.
Revenue consisted of transaction processing and related revenue
of US$512,782; consulting services revenue of US$683,862 and
hardware and related revenue of US$252,069.
FreeStar Technology president and chief executive officer Paul
Egan said, "We expect to see continued increased hardware
related sales to our expanding customer base, but also recognize
increasing revenue streams from annual maintenance fees and
service initiation fees.
"Our cross border payments processing has now expanded to Spain,
Iceland, Denmark, Sweden and the U.K. We are seeing a steady
increase in DCC (Dynamic Currency Conversion) Transactions from
our partner, Global Refunds. We have successfully deployed
terminals in Dominican Republic and see continuing growth in the
region. Our International projects are nearing deployment and
can expect to see a large increase in processing revenues
throughout the remainder of fiscal 2008."
Balance Sheet
At Dec. 31, 2007, the company's consolidated balance sheet
showed US$8,201,305 in total assets, US$3,509,597 in total
liabilities, US$407,398 in minority interest, and US$4,284,310
in total stockholders' equity.
The company's consolidated balance sheet at Dec. 31, 2007, also
showed strained liquidity with US$1,945,907 in total current
assets available to pay US$3,509,597 in total current
liabilities.
Full-text copies of the company's consolidated financial
statements for the quarter ended Dec. 31, 2007, are available
for free at http://researcharchives.com/t/s?288f
Going Concern Disclaimer
As reported in the Troubled Company Reporter on Oct. 4, 2007,
New York-based RBSM LLP expressed substantial doubt about
FreeStar Technology Corp.'s ability to continue as a going
concern after auditing the company's financial statements for
the year ended June 30, 2007. The auditing firm said the
company is experiencing difficulty in generating sufficient cash
flow to meet its obligations and sustain its operations.
About FreeStar Technology
Based in Dublin, Ireland, FreeStar Technology Corp. (OTC BB:
FSRT) -- http://www.freestartech.com/-- provides electronic
payment processing services, including credit and debit card
transaction processing, point-of-sale related software
applications and other value-added services. The company was
incorporated in the State of Nevada. The company also has
offices in Helsinki, Finland; Stockholm, Sweden; Geneva,
Switzerland; and Santo Domingo, the Dominican Republic.
=============
E C U A D O R
=============
PETROECUADOR: Launches 1st Drill Rig With Petroleos de Venezuela
----------------------------------------------------------------
Petroecuador's first drill rig under a preferential accord with
Petroleos de Venezuela has started drilling the Guanta 19 well
in Ecuador, Business News Americas reports.
According to Petroecuador, Ecuador will pay Venezuela US$7,976
per day for every rig, compared to international rates of up to
US$40,000 per day. The rig will drill four wells in the field,
while a second rig will arrive in March to drill another four.
Petroecuador's unit Petroproduccion is in talks to acquire eight
more rigs to drill 78 new wells this year. Petroecuador wants
its production to reach 190,000 barrels per day this year,
BNamericas notes.
About Petroleos de Venezuela
Petroleos de Venezuela SA -- http://www.pdv.com/-- 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. The company has a commercial office in China.
PDVSA is one of the top exporters of oil to the US with proven
reserves of 77.2 billion barrels of oil -- the most outside the
Middle East -- and about 150 trillion cu. ft. of natural gas.
PDVSA's exploration and production take place in Venezuela, but
the company also has refining and marketing operations in the
Caribbean, Europe, and the US.
About Petroecuador
Headquartered in Quito, Ecuador, Petroecuador --
http://www.petroecuador.com.ec-- is an international oil
company owned by the Ecuador government. It produces crude
petroleum and natural gas.
* * *
In previous years, Petroecuador, according to published reports,
was faced with cash-problems. The state-oil firm has no funds
for maintenance, has no funds to repair pumps in diesel,
gasoline and natural gas refineries, and has no capacity to pay
suppliers and vendors. The government refused to give the much-
needed cash alleging inefficiency and non-transparency in
Petroecuador's dealings. In 2008, a new management team was
appointed to turn around the company's operations.
PETROECUADOR: Reaches Oil Contract Agreements With Four Firms
-------------------------------------------------------------
Petroecuador has reached agreements for six oil contracts with
Petroriental, Repsol YPF, Perenco, and Petrobras, Business News
Americas reports, citing Ecuadorian Mines and Oil Minister Galo
Chiriboga.
BNamericas relates that the contracts include those of:
-- blocks 14 and 17 with Petroriental;
-- block 16 and the Bogui Capiron field with Repsol
YPF;
-- block 7 and the Coca Payamino field with Perenco;
and
-- block 18, the Palo Azul field, and block 31 with
Petrobras.
A ministry spokesperson told BNamericas that Petroecuador is
still negotiating with:
-- Perenco for block 21,
-- Andes Petroleum for the Parapoa field,
-- Canada Grande for block 1, and
-- CNPC for block 11.
According to BNamericas, the government wants to turn existing
participation contracts into service provider contracts that
will pay companies a production fee and investment costs.
As reported in the Troubled Company Reporter-Latin America on
Jan. 29, 2008, Ecuadorian President President Rafael Correa gave
oil firms until March 8 to agree to the changes in their
contracts with Petroecuador.
The Mines and Oil Ministry said that oil contract negotiations
in Ecuador are coming to an end. Once the negotiations end, the
new contracts will be presented to the national constituent
assembly, Minister Chiriboga told BNamericas.
Headquartered in Quito, Ecuador, Petroecuador --
http://www.petroecuador.com.ec-- is an international oil
company owned by the Ecuador government. It produces crude
petroleum and natural gas.
* * *
In previous years, Petroecuador, according to published reports,
was faced with cash-problems. The state-oil firm has no funds
for maintenance, has no funds to repair pumps in diesel,
gasoline and natural gas refineries, and has no capacity to pay
suppliers and vendors. The government refused to give the much-
needed cash alleging inefficiency and non-transparency in
Petroecuador's dealings. In 2008, a new management team was
appointed to turn around the company's operations.
===========
M E X I C O
===========
AXTEL SAB: Will Launch Quadruple Play Services Next Year
--------------------------------------------------------
Axtel, S.A.B. de C.V.'s President Tomas Milmo told Mexican news
daily El Norte that the company will launch quadruple play
services in the first months of 2009.
Business News Americas relates that the services will include:
-- voice,
-- video,
-- Internet, and
-- mobile wireless.
Axtel has secured the licenses to begin offering the services
and will soon have all the technology required, BNamericas
notes, citing Mr. Milmo.
Mr. Milmo told BNamericas that the installation of the WiMax
network will let Axtel expand its service offering. The firm
will deploy the technology over the next 12 months in the 27
cities where it operates, the report states, citing the company
official.
Headquartered in Monterrey, Mexico, Axtel S.A.B. de C.V. (BMV:
AXTELCPO; OTC: AXTLY) was formerly known as Axtel SA DE CV. The
company's principal activity is providing local and long-
distance domestic and international telephony, data and Internet
services, virtual private networks and value added services.
Services include different access technologies such as fixed
wireless telephony, point-to-point and point-to-multi point
radio links, and copper and fiber optic connections. Basic
services are divided into 5 categories such as voice, conference
call, data, Internet and bundles. It offers basic
telecommunications infrastructure in Mexico through an
intelligent network that provides extensive coverage to all
markets. It currently operates in Mexico City, Monterrey,
Guadalajara, Puebla, Leon, Toluca, Queretaro, San Luis Potosi,
Aguascalientes, Saltillo, Ciudad Juarez, Tijuana, La Laguna,
Veracruz and Chihuahua.
* * *
As reported in the Troubled Company Reporter-Latin America on
Nov. 8, 2007, Moody's Investors Service upgraded Axtel, S.A.B.
de C.V.'s corporate family rating to Ba2 from Ba3 based on the
rapid improvement of the company's credit metrics to levels
prior to the acquisition of Avantel as well as expected
improvements in free cash flow generation. Moody's says the
outlook is now stable.
BALLY TOTAL: Reaches Settlement With SEC on Fraud Allegations
-------------------------------------------------------------
Bally Total Fitness Holding Corporation and its debtor-
affiliates have reached a settlement with the U.S. Securities
and Exchange Commission concerning the SEC's investigation
relating to the restatement of the company's financial
statements for 2002 and 2003 and selected financial data for
2000 and 2001.
In a lawsuit brought before the U.S. District Court in the
District of Columbia on Feb. 28, 2008, the SEC filed financial
fraud charges against against Bally alleging that the Company
violated securities law -- and misled investors -- by issuing
financial reports which fraudulently misrepresented Bally's
financial condition during the years from 1997 to 2003, reports
the Chicago Tribune.
Specifically, the SEC alleges that:
-- from at least 1997 through 2003, Bally's financial
statements were affected by more than two dozen accounting
improprieties, which caused Bally to overstate its
originally reported year-end 2001 stockholders' equity by
nearly US$1.8 billion, or more than 340%.
-- Bally understated its originally reported 2002 net loss by
US$92.4 million, or 9341%, and understated its originally
reported 2003 net loss by US$90.8 million, or 845%.
-- Bally violated the antifraud, reporting, books and
records, and internal control provisions of the federal
securities laws.
-- Bally fraudulently accounted for (i) three types of
revenue it received from its members: initiation fees,
prepaid dues, and reactivation fees; and (ii) its
membership acquisition costs.
"These frauds account for US$1.2 billion of the US$1.8 billion
overstatement of Bally's originally reported year-end 2001
stockholders' equity," the SEC said in its complaint.
In addition, Bally's accounting for more than 20 other revenue
or expense items failed to conform to Generally Accepted
Accounting Principles, which account for the remaining US$600
million of the US$1.8 billion overstatement of Bally's
originally reported year-end 2001 stockholders' equity, said the
SEC.
Bally Settles
In a "consent decree," says the Tribune, the suit was filed, and
Bally settled the charges simultaneously.
The company settled the proceedings without admitting or denying
the SEC's findings, according to reports. The settlement does
not require the Company to pay a monetary penalty.
In accepting Bally's settlement offer, the SEC said, the
Commission took into account "Bally's cooperation with the
commission staff in the investigation leading to this action and
(its) prompt commencement of remedial action," reports the
Tribune.
As part of the settlement, the company has consented to a final
judgment requiring future compliance with Federal securities
laws and regulations.
Since the suit asks the Court only to enjoin Bally from future
violations, the litigation appears to be resolved. However, the
SEC said that its investigation of events "is continuing," the
Tribune adds.
"I am pleased that the conclusion of the government
investigations puts these matters behind us as we continue to
execute our strategies for the long-term success of our
business," said Don R. Kornstein, Chairman of Bally Total
Fitness.
The Department of Justice also closed the criminal investigation
involving Bally's restatement, without action against the
company, according to a statement issued by Bally.
About Bally Total Fitness
Based in Chicago, Illinois, Bally Total Fitness Holding Corp.
(Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/--
operates fitness centers in the U.S., with over 375 facilities
located in 26 states, Mexico, Canada, Korea, China and the
Caribbean under the Bally Total Fitness(R), Bally Sports
Clubs(R) and Sports Clubs of Canada (R) brands. Bally Total and
its affiliates filed for chapter 11 protection on July 31, 2007
(Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite
number of votes in favor of their pre-packaged chapter 11 plan.
Joseph Furst, III, Esq. at Latham & Watkins, L.L.P. represents
the Debtors in their restructuring efforts. As of
June 30, 2007, the Debtors had US$408,546,205 in total assets
and US$1,825,941,54627 in total liabilities.
The Debtors filed their Joint Prepackaged Plan & Disclosure
Statement on July 31, 2007. On Aug. 13, 2007, they filed an
Amended Joint Prepackaged Plan and on Aug. 17 filed a Modified
Amended Prepackaged Plan.
COTT CORP: In Talks With Wal-Mart on Shelf Space Allocation
-----------------------------------------------------------
Cott Corporation, in response to recent reports of reallocation
of shelf space by Wal-Mart, confirmed that it has received
notice of a reduction in shelf space and merchandising support
for Wal-Mart's private label carbonated soft drinks in the U.S.,
including Sam's Choice, which would be significant to Cott's
business plans.
However, the 2008 programs have not yet been finalized and Cott
is still actively negotiating with Wal-Mart appropriate space
allocation and other merchandising programs associated with
Sam's Choice brands. Wal-Mart is Cott's biggest customer and
Cott is fully committed to deploying the necessary efforts to
maintain a mutually satisfactory relationship for the long-term.
Cott further confirmed that Wal-Mart's notice did not indicate
any potential shelf space reduction for Sam's Choice water.
Conversations between Cott and Wal-Mart are on-going and the
final outcome of the 2008 merchandising, shelf allocation and
other support programs for Sam's Choice carbonated soft drinks
at Wal-Mart has yet to be determined. Regardless of the
outcome, Cott will work hard to continue to diversify its
customer base and to offset the potential impact on its
profitability.
About Cott Corporation
Headquartered in Toronto, Ontario, Cott Corporation (NYSE:
COT)(TSX: BCB) -- http://www.cott.com/-- is a non-alcoholic
beverage company and a retailer brand soft drink company. The
company commercializes its business in over 60 countries
worldwide, with its principal markets being the United States,
Canada, the United Kingdom and Mexico. Cott markets or supplies
over 200 retailer and licensed brands, and company-owned brands
including Cott, RC, Vintage, Vess and So Clear. Its products
include carbonated soft drinks, sparkling and flavored waters,
energy drinks, sports drinks, juices, juice drinks and
smoothies, ready-to-drink teas, and other non-carbonated
beverages.
* * *
Cott Corporation carries Moody's Investors Service's B1
Corporate Family Rating and B1 Probability of Default Rating.
COTT CORP: Wal-Mart Negotiations Cue Moody's to Review Ratings
--------------------------------------------------------------
Moody's Investors Service placed Cott Corporation's B1 CFR and
B2 subordinated ratings on review for possible downgrade.
The rating action follows a very difficult year in which Cott's
revenues and profitability were negatively affected by shrinking
carbonated soft drink volumes, higher than expected commodities
costs and the need to take impairment charges to write down all
of the goodwill relating to the U.S. business. This week, Cott
also announced that it is currently negotiating with Wal-Mart to
avoid a possible reduction in shelf space and merchandising
support for Wal-Mart's private label carbonated soft drinks
produced by Cott in the U.S. Cott also announced that it would
be late filing its 2007 10K and that it will report a material
weakness in financial controls due to lack of an appropriate
complement of accounting personnel.
Moody's last lowered Cott's ratings in November 2007, leaving
the outlook negative.
The review will focus on the ultimate resolution of negotiations
with Wal-Mart concerning appropriate merchandising support
including shelf space, for brands produced by Cott, the
resolution of material weaknesses, the expectation for
performance in 2008 and the ability of the company to adequately
bolster its liquidity position in the short run, which is under
pressure because current covenant levels for Q1 will be
breeched, absent waivers or closing a new ABL facility.
These ratings were placed on review for downgrade:
Cott Corporation:
-- Corporate Family Rating of B1
-- Probability of Default Rating of B1
Cott Beverages Inc:
-- $275 million 8% senior subordinated notes due 2011 at B2
LGD 5; 74%
Headquartered in Toronto, Ontario, Cott Corporation is one of
the word's largest retailer-brand soft drink suppliers with a
leading position in take-home carbonated soft drink markets in
the U.S. Canada, and the UK. Sales in 2007 were approximately
US$1.8 billion.
COTT CORP: Unable to Meet Deadline; Delays Filing of Form 10-K
--------------------------------------------------------------
Cott Corporation filed a Form 12b-25 Wednesday notifying the
U.S. Securities and Exchange Commission that it was unable to
meet the Feb. 27, 2008 deadline to file its Annual Report on
Form 10-K for the fiscal year ended Dec. 29, 2007.
The company anticipates filing its Form 10-K on or before
March 13, 2008.
The company is unable to file its Form 10-K by the deadline
because it requires additional time to complete the preparation
of its consolidated financial statements and to complete its
assessment of the company's internal control over financial
reporting as of December 29, 2007. This delay is principally
due to the previously announced transition of its executive
offices, including corporate accounting and control functions,
from Toronto, Ontario to new offices in Tampa, Florida.
As a result, the company did not have an appropriate complement
of accounting personnel during the year-end financial closing
process. The company expects to report material weaknesses in
its internal control over financial reporting as a result of
such shortage. The company has taken and is continuing to take
actions to remedy this issue as soon as practicable.
About Cott Corporation
Headquartered in Toronto, Ontario, Cott Corporation (NYSE:
COT)(TSX: BCB) -- http://www.cott.com/-- is a non-alcoholic
beverage company and a retailer brand soft drink company. The
company commercializes its business in over 60 countries
worldwide, with its principal markets being the United States,
Canada, the United Kingdom and Mexico. Cott markets or supplies
over 200 retailer and licensed brands, and company-owned brands
including Cott, RC, Vintage, Vess and So Clear. Its products
include carbonated soft drinks, sparkling and flavored waters,
energy drinks, sports drinks, juices, juice drinks and
smoothies, ready-to-drink teas, and other non-carbonated
beverages.
* * *
Cott Corporation carries Moody's Investors Service's B1
Corporate Family Rating and B1 Probability of Default Rating.
FLEXTRONICS: To Increase Workforce in Hungary by 10%
----------------------------------------------------
Flextronics International Ltd. is planning to increase its
manufacturing in Hungary and will increase its local workforce
by approximately 10%, EE Times Europe reports, citing
a Hungarian business daily news article.
Flextronics, the report relates, employs 10,000 workers in five
production plants in Hungary. As well as increasing
manufacturing with some particular product lines the company
wants to develop its service base in Zalaegerszeg, which is one
of the largest regional service centers in Central and Eastern
Europe, the report adds.
Production is set to start in May, report adds.
About Flextronics
Headquartered in Singapore, Flextronics International Ltd.
(NasdaqGS: FLEX) -- http://www.flextronics.com/-- is an
Electronics Manufacturing Services provider focused on
delivering design, engineering and manufacturing services to
automotive, computing, consumer digital, industrial,
infrastructure, medical and mobile OEMs. Flextronics helps
customers design, build, ship, and service electronics products
through a network of facilities in over 30 countries on four
continents including Brazil, Mexico, Hungary, Sweden, United
Kingdom, among others.
* * *
Flextronics International Ltd. continues to carry Moody's
Investors Service's "Ba1" probability of default and long-term
corporate family ratings with a negative outlook.
The company also carries Standard & Poor's Ratings Services'
"BB+" long-term local and foreign issuer credit ratings with a
negative outlook.
KANSAS CITY: Sets Annual Stockholders' Meeting for May 1
--------------------------------------------------------
Kansas City Southern's Board of Directors has declared a regular
quarterly dividend of 25 cents per share on the outstanding KCS
4% non-cumulative preferred stock. The dividend is payable on
April 1, 2008, to preferred stockholders of record at the close
of business on March 10, 2008.
The Board of Directors also set the Annual Meeting of
Stockholders to be held in Kansas City, Missouri on May 1, 2008.
Stockholders of record of our common stock and our 4% non-
cumulative preferred stock as of March 3, 2008, will be
entitled to notice of the meeting and to vote at such meeting.
Headquartered in Kansas City, Missouri, Kansas City Southern --
http://www.kcsouthern.com/en-us-- is an international
transportation holding company comprised of three primary
railroads: The Kansas City Southern Railway Company, Kansas City
Southern de Mexico, and Panama Canal Railway Company.
* * *
As reported in the Troubled Company Reporter-Latin America on
Feb. 28, 2008, Fitch Ratings upgraded the foreign and local
currency Issuer Default Ratings of Kansas City Southern de
Mexico, S.A. de C.V. to 'BB-'from 'B+'. Fitch said the Rating
Outlook is stable. Fitch also upgraded Kansas City Southern de
Mexico's US$165 million 7.375% senior notes due 2014; US$460
million 9.375% senior notes due 2012; US$175 million 7.625%
senior notes due 2013 to 'BB-' from 'B+' rating.
ALASKA AIRLINES: Appoints Brad Walker As Managing Director
----------------------------------------------------------
Alaska Airlines has named Brad Walker managing director of
leisure and group travel marketing.
A 25-year veteran of Alaska Airlines, Mr. Walker previously
served as director of leisure marketing, responsible for Alaska
Airlines Vacations' leisure and tour business. In his expanded
role, Mr. Walker also will manage the airline's relationships
with online travel agencies and cruise lines, and lead marketing
and sales for group and meeting travel.
"Brad has been instrumental in developing Alaska Airlines'
leisure travel strategy," said Alaska's vice president of
marketing, sales and customer experience, Steve Jarvis. "His 25
years of experience at Alaska Airlines and leadership roles in
the broader travel industry position him well to lead this
expanded leisure and group travel unit."
Mr. Walker was appointed by Gov. Christine Gregoire to the
Washington State Tourism Alliance. He also serves on the
executive committees of the Seattle King County Visitors and
Convention Bureau and the Mexico Tourism Board, and on the
advisory board of the Palm Springs Convention and Visitors
Bureau.
Hired as an Alaska Airlines customer service agent in Seattle,
Mr. Walker later served as a sales representative in Los Angeles
before being promoted to manager of national leisure sales.
Mr. Walker co-founded a wine and travel auction that has raised
more than $500,000 for the Boys and Girls Clubs of King County.
Seattle, Washington-based Alaska Air Group, Inc. (NYSE: ALK) --
http://alaskaair.com/-- is a holding company with two principal
subsidiaries, Alaska Airlines, Inc. and Horizon Air Industries,
Inc. Together, the two companies serve 92 cities through an
expansive network in Alaska, the Lower 48, Hawaii, Canada and
Mexico. Horizon operates jet and turboprop aircraft with
average passenger trip of 382 miles. Horizon serves 40 cities
in seven states and six cities in Canada.
* * *
As reported in the Troubled Company Reporter on Nov. 6, 2006,
Moody's Investors Service affirmed the corporate family rating
of Alaska Air Group, Inc. and the Equipment Trust Certificate
rating of Alaska Airlines, Inc. at B1, and changed the outlook
to stable from negative.
SCIENTIFIC GAMES: 4Q Loss From Mexican Operations is US$2.8MM
-------------------------------------------------------------
Scientific Games Corporation reported fourth quarter 2007
revenues of US$268 million, up 15 percent from US$232.1 million
in the fourth quarter of 2006. Net income was US$16.4 million
up from net income of US$7.9 million in the fourth quarter of
2006. Non-GAAP adjusted net income excluding a net loss from
the start-up in Mexico, Peru lottery disposal costs, employee
termination costs, the reversal of purchase accounting reserves
and stock compensation expense, was US$25.5 million compared to
non-GAAP adjusted net income of US$24 million in the fourth
quarter of 2006.
EBITDA for the fourth quarter of 2007 was US$73.7 million, up 53
percent from US$48.3 million in the fourth quarter of 2006.
Adjusted EBITDA increased 29 percent to US$84.6 million for the
fourth quarter of 2007, compared to adjusted EBITDA of US$65.7
million for the fourth quarter of 2006.
During the quarter ended Dec. 31, 2007, the company reported a
net loss of US$2.8 million from its Mexican operations, a
benefit of US$3.9 million from the reversal of purchase
accounting reserves and US$6.9 million in charges for stock
compensation costs. In addition, following the rationalization
of its global Printed Products Group operations in Germany and
Peru in the third quarter 2007, the company reported additional
disposal costs and asset impairment charges of US$3 million in
the fourth quarter, and employee termination costs of US$3.6
million.
For the full year ended Dec. 31, 2007, revenues were US$1,046.7
million, compared to US$897.2 million for the full year ended
Dec. 31, 2006, an increase of 17 percent. Net income was
US$65.4 million compared to US$66.8 million in 2006. Non-GAAP
adjusted net income, excluding a net loss from the company's
Mexican operations, Peru lottery disposal costs, employee
termination costs, the reversal of purchase accounting reserves,
asset impairment charges and stock compensation expense, was
US$111 million compared to non-GAAP adjusted net income of
US$98.8 million for the full year ended Dec. 31, 2006.
For the full year ended Dec. 31, 2007, EBITDA increased 28
percent to US$307.5 million, compared to US$239.5 million in
2006. Adjusted EBITDA increased 25 percent to US$340.6 million,
compared to US$273 million in 2006.
Printed Products
Printed Products Group revenue increased by 17 percent overall
to US$137.7 million in the fourth quarter of 2007. Printed
Product service revenue for the quarter of 2007 was US$127.5
million, 23 percent ahead of the fourth quarter of 2006.
Excluding the impact of licensed products, the re-pricing of the
Pennsylvania cooperative services program contract and revenues
from Oberthur Gaming Technologies (OGT) of US$24.6 million,
"same store" sales growth in the quarter was just under 8%.
International instant ticket sales, especially in the United
Kingdom and Italy, were particularly strong. Licensed product
sales, which tend to exhibit far more quarter-to-quarter
volatility than core instant tickets sales, declined by US$5.6
million in the fourth quarter of 2007 due primarily to the
seasonality of some brands in the fourth quarter 2006.
Conversely, the company believes that 2008 promises to be a very
strong year for licensed products in general with nearly a 50
percent increase in the total number of licensed games,
including Major League Baseball(R), Deal or No Deal(TM) and the
World Poker Tour(R) games in particular.
Overall margins in the Printed Products Group declined from 45
percent in the fourth quarter of 2006 to 39 percent in the
fourth quarter of 2007. However, if the impact of both OGT and
phone cards is eliminated from revenue and gross margin, then
the resulting overall gross margin for the quarter was 45
percent. As of the end of the fourth quarter of 2007, OGT's
annualized San Antonio production of 4.5 billion tickets had
been relocated to Alpharetta, Georgia, a consolidation that is
expected to yield improved margins throughout 2008.
Rationalization of Printed Products operations in Germany and
Peru, which was initiated in the third quarter of 2007, is
expected to further improve margins in 2008. In the third
quarter the company recorded a depreciation and amortization
charge of US$26.1 million related to asset write-downs in these
operations and in the fourth quarter the company recorded an
additional charge of US$6.6 million for associated shutdown and
employee termination expenses. Overall, the rationalization of
the German and Peru operations negatively impacted 2007 earnings
per share by approximately US$0.25, most of which was non-cash.
After the close of the fourth quarter, the company announced two
important agreements involving the China Sports Lottery.
Scientific Games will design, install and operate a national
instant ticket network comprising a central monitoring and
control system, a national call center, and 90,000 validation
terminals, for which it will be paid on the basis of a
percentage of retail sales. Sales are expected to begin during
the first quarter of 2008 in four of the wealthiest provinces in
China. In one of these provinces, Shandong, the company will be
providing traditional "cooperative services" support through a
joint-venture partnership. The company also is working with
China Sports Lottery Printing, Ltd. to establish a state-of-the-
art instant ticket production facility in China that is expected
to supply tickets to all 30 Sports Lottery operations in China.
Additionally, in connection with the company's activities in
China, the company has broadened its relationship with
REXCAPITAL Financial Holdings Limited, its partner in the Guard
Libang joint venture that services the China Welfare Lottery, to
include a strategic alliance to pursue other gaming and lottery
related opportunities in China.
Management intends to discuss the range of activities in China
in considerable detail during tomorrow's conference call.
Lottery Systems Group
Lottery Systems revenue and gross margins for the fourth quarter
increased by 21 percent and 31 percent, respectively, year over
year, with the largest increase coming in the international
market. Lottery Systems international revenue increased by 41
percent to US$30.5 million in the fourth quarter of 2007. A sale
of terminals to Golden Casket in Australia was an important
contributor to international revenue growth. Overall Lottery
Systems margins improved from 43 percent in 2006 to 47 percent
in 2007.
Notwithstanding these improvements, the Televisa Mexican lottery
contract continued to be a significant drag on earnings in 2007.
The fourth quarter and full year impacts on the company were
approximately US$0.03 and US$0.10, respectively, in earnings per
share, including an allocation of interest expense. As the
company has previously indicated, it believes that the launch of
instant tickets is the key to the eventual turnaround of this
venture. At the present time, the company has begun to see
meaningful progress in this regard and is cautiously optimistic
that there will be a launch of instant tickets in the second
half of 2008.
Diversified Gaming
As previously disclosed at the end of the third quarter, the
change in gaming regulations that were introduced in Great
Britain in September 2007 continued to have a very positive
impact on Global Draw in the fourth quarter, and this has
carried over into the first quarter of 2008. Global Draw's
"same store" sales were up 17% in the fourth quarter of 2007
versus 2006; in January of this year, Global Draw's average
gross win per shop and per terminal were up 40 percent and 20
percent respectively over January 2007. On the strength of this
performance, Global Draw was awarded a contract by William Hill
PLC to supply a minimum of 548 betting shops with approximately
2,100 new state-of-the-art dual screen Nevada(TM) terminals,
which are specifically designed to allow both the legacy B2
and newly introduced B3 games on all terminals. The terminals
are being installed during the first quarter of 2008 and should
be 100% operational by the beginning of the second quarter.
Also during the fourth quarter, Global Draw expanded importantly
outside of the U.K. by signing a contract to supply 1,500 multi-
game server-based gaming terminals to Corporacion Interamericana
de Entretenimiento in Mexico. Given the very high fixed cost
nature of this business, the company expects that these
additional 3,600 terminals will have very high levels of
marginal profitability.
Games Media has announced agreements to supply an integrated
digital gaming and entertainment solution for commercial
distribution with six of the largest public house retailers in
the U.K. -- Enterprise Inns, Spirit Group, Orchid Group, Admiral
Taverns, Greene King and Marston's -- which together control
approximately 16,000 venues representing approximately 30
percent of the total U.K. pub market. Installations took place
during October and November 2007 in a total of 63 pub retail
outlets, incorporating 275 machines, including gaming and
entertainment terminals and digital juke boxes. Performance
from all products was in line with management's expectations and
ahead of comparable competitive offers, and the company is
confident that as it continues to hit target performance levels,
the base of machines will continue to expand.
Racing-related revenues and gross margin declined slightly in
the fourth quarter, reflecting the continued secular decline in
racetrack-based attendance and wagering handle. Several
important developmental opportunities were completed during the
fourth quarter, suggesting that expansion via non-traditional
products, markets and distribution channels has the potential to
reverse the recent revenue trend. During the fourth quarter the
company was awarded a racebook contract by the Oneida Bingo &
Casino in Wisconsin, a contract to provide an internet wagering
platform and an interactive voice response telephone wagering
system for New Jersey Account Wagering LLC and a tote/keno
agreement with Loteria Electronica Internacional Dominicana,
S.A. throughout the Dominican Republic. In addition, the
company was awarded its first contract in Brazil by Comtech
Telecommunications Corp. calling initially for three upscale
off-track wagering facilities growing potentially to 30 sites by
2009, and potentially to include sports betting as well.
Convertible Debentures
A market price event did not occur for the quarter ended Dec.
31, 2007, and accordingly, the Convertible Debentures are not
convertible during the current quarter ending March 31, 2008.
During the fourth quarter of 2007, the average price of the
company's common stock exceeded the specified conversion price
of US$29.10 of the Convertible Debentures. Because of this,
1,506,960 shares of common stock underlying the Convertible
Debentures have been included in the weighted average number of
diluted shares for the fourth quarter of 2007. For the full
year 2007, the company has included 1,357,207 shares of common
stock in its weighted average number of diluted shares.
Although the company purchased a hedge in December 2004 to
mitigate the potential dilution from the conversion of the
Convertible Debenture, the company is precluded from reflecting
this hedge in the GAAP weighted average number of diluted shares
because the effect would be anti-dilutive. However, to the
extent the Convertible Debentures are converted during the term
of the hedge, the diluted share amount will decrease because the
hedge will offset the dilution from conversion of the
Convertible Debentures.
About Scientific Games
Headquartered in New York City, Scientific Games Corporation
(Nasdaq: SGMS) - http://www.scientificgames.com/-- is an
integrated supplier of instant tickets, systems and services to
lotteries worldwide. The company is a supplier of fixed odds
betting terminals and systems, amusement and skill with prize
betting terminals, interactive sports betting terminals and
systems, and wagering systems and services to pari-mutuel
operators. It is also a licensed pari-mutuel gaming operator in
Connecticut, Maine and the Netherlands and is a supplier of
prepaid phone cards to telephone companies. Scientific Games'
customers are in the United States and more than 60 other
countries. The company has additional productions and operating
facilities located in Austria, Brazil, Peru, Mexico and the
United Kingdom.
* * *
On Jan. 4, 2007, Moody's Investor Services assigned a Ba1 rating
to Scientific Games Corp.'s term loan and affirmed its Ba2
Corporate Family Rating. Moody's said the rating outlook is
stable.
SHARPER IMAGE: Court Grants Request to Pay Vendor Obligations
-------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
granted a request by Sharper Image Corp. to pay its Vendor
Obligations in the ordinary course of business
The Debtor relies on providers of goods including, but not
limited to, manufacturers and suppliers, as well as packagers,
transporters, and product servicers, according to the Debtor's
proposed counsel, Steven K. Kortanek, Esq., at Womble Carlyle
Sandridge & Rice, PLLC, in Wilmington, Delaware.
Shipment and servicing of the Debtor's products from Vendors to
the Debtor's warehouse and distribution facilities in California
and Arkansas, as well as shipment of the Debtor's products to
its stores, and retail and wholesale customers is typically
effectuated through the services of common carriers, customs
brokers, freight forwarders and third parties that service and
repair certain of the Debtor's goods, Mr. Kortanek noted.
As of the Debtors' bankruptcy petition, and in the ordinary
course of business, the Debtor had approximately US$113,000,000
of purchase orders outstanding with various manufacturers and
suppliers, as well as packagers, transporters and product
servicers for goods ordered prior to the Petition Date, and
delivered postpetition.
Mr. Kortanek explained that as a result of the Debtor's Chapter
11 case, Vendors may be concerned that the goods and services
provided to the Debtor prior to the Petition Date, but delivered
after the Petition Date, will make them general unsecured
creditors of the Debtor's estate.
There is the possibility, Mr. Kortanek said, that the Vendors
may refuse to ship or transport goods or perform services with
respect to the Outstanding Orders, unless the Debtor (i) issues
substitute postpetition purchase orders, (ii) obtains a Court
order granting all undisputed obligations of the Debtor arising
from its postpetition receipt and acceptance goods and services
subject to Outstanding Orders administrative expense priority
status, (iii) obtains the Court's authority to satisfy the
Undisputed Obligations, in the ordinary course of business.
Custom Duties and Other Fees
Mr. Kortanek related that the Debtor imports approximately
US$75,000,000 to US$175,000,000 of goods per quarter.
Furthermore, the Debtor engages V. Alexander & Co., a Custom
Broker, and Panalpina Group, an import Freight Forwarder, to
take all actions necessary, including making payment, to obtain
the release of imported surcharged goods for delivery to the
Debtor.
As of the Petition Date, the Debtor estimates that it owes
Alexander & Co. approximately US$2,000, while Panalpina is owed
roughly US$250,000. Mr. Kortanek pointed out that prompt
payment to these entities are vital to the Debtor's operations.
The Debtor estimates that, as of the Petition Date,
approximately US$2,700,000 of imported goods have been paid for,
and are either awaiting transit or are in transit to the U.S.,
all of which must be processed by Alexander & Co. or Panalpina.
Prompt payment of the Customs Duties and other fees promotes the
uninterrupted flow of retail products, which are essential to
the Debtor's business, Mr. Kortanek maintained.
Common Carriers and Product Servicers
The Debtor's catalog and Internet sales are dependent on common
carriers to ensure delivery of its customer orders, Mr. Kortanek
told Judge Gross.
As of the Petition Date, the Debtor owes approximately
US$850,000 to Common Carriers that are in possession of around
US$2,200,000 of the Debtor's goods. Furthermore, the Debtor
also owes roughly US$415,000 to Product Servicers who are in
possession of in excess of US$1,350,000 worth of the Debtor's
goods.
To avoid disruptions to the continuous and timely flow of
products from the Vendors to the Debtor, which could result in
insufficient goods with which to provide customers with the
products they expect, the Court, at the Debtor's behest:
* granted the Vendors administrative expense priority status
for undisputed obligation arising from the postpetition
delivery of goods and services ordered in the prepetition
period;
* authorized the Debtor to pay its Vendor Obligations in the
ordinary course of business;
* authorized the Debtor to pay all undisputed prepetition
customs duties, broker's fees, freight forward charges,
ocean freight charges, common carrier charges and product
servicer charges, for an amount not exceeding US$1,500,000,
without further Court order; and
* authorized the Debtor's banks to receive, process, honor and
pay checks related to the undisputed prepetition
obligations.
Furthermore, upon the Debtor's payment of any undisputed
prepetition obligation, any property held by any Vendor as
security for the payment will be immediately released and
delivered by the Vendor to its destination as directed by the
Debtor.
Based in San Francisco, California, Sharper Image Corp. --
http://www.sharperimage.com/-- is a multi-channel specialty
retailer. It operates in three principal selling channels: the
Sharper Image specialty stores throughout the U.S., the Sharper
Image catalog and the Internet. The company has operations in
Australia, Brazil and Mexico. In addition, through its Brand
Licensing Division, it is also licensing the Sharper Image brand
to select third parties to allow them to sell Sharper Image
branded products in other channels of distribution. The company
filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D.,
Case No. 08-10322). Steven K. Kortanek, Esq. at Womble,
Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its
restructuring efforts. When the Debtor filed for bankruptcy, it
listed total assets of US$251,500,000 and total debts of
US$199,000,000.
(Sharper Image Bankruptcy News Issue No. 4, Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
SHARPER IMAGE: Schedules Filing Deadline Extended to April 4
------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
granted a request by Sharper Image Corp. to extend a deadline
for the Debtor to submit Schedules for an additional 15 days, or
until April 4, 2008.
Judge Kevin Gross will consider the Debtor's request for a
waiver of the requirements to file the list of equity security
holders on March 7, 2008, at 1:00 p.m.
Under Section 521 of the Bankruptcy Code and Rule 1007 of the
Federal Rules of Bankruptcy Procedure, a debtor is required
to file a schedule of assets and liabilities; schedule of
current income and expenditures; schedule of executory contract
and unexpired leases; and statement of financial affairs within
15 days after it filed for bankruptcy.
Rule 1007-1(b) of the Local Rules of Bankruptcy Practice and
Procedure of the United States Bankruptcy Court for the District
of Delaware provides that a debtor with over 200 creditors is
given 30 days to file its schedules.
Sharper Image asked the Court to extend the 30-day period to 60
days, without prejudice to the Debtor's ability to request
additional time should it become necessary.
Proposed counsel for the Debtor, Steven K. Kortanek, Esq., at
Womble Carlyle Sandridge & Rice, PLLC, in Wilmington, Delaware,
stated that the Debtor needs until May 19, 2008, to submit its
Schedules.
Mr. Kortanek asserted that the 60-day extension is justified on
the grounds that:
-- resources are strained;
-- in view of the amount of work entailed in completing th
Schedules and the competing demands on the Debtor's
employees to assist in efforts to stabilize business
operations during the initial postpetition period, the
Debtor likely will not be able to properly and accurately
complete the Schedules within the 30-day time period;
-- the task of completing the schedules takes a significant
amount of time and effort on the employees; and
-- there is a large amount of information to be compiled and
assembled.
The Debtor also asked the Court to waive the requirement that it
file a list of equity security holders within 15 days of the
Petition Date.
As of the Petition Date, the Debtor has approximately 15,172,523
shares of common stock outstanding.
Mr. Kortanek noted that preparing a list of the equity security
holders and sending of notice to all holders of the 15,172,523
shares is expensive and time consuming. Moreover, the equity
security holders change on a daily basis.
If it becomes necessary for the equity security holders to file
proofs of interest, they will be provided with notice of the bar
date and then will have an opportunity to assert their interests
-- and therefore, will not be prejudiced, Mr. Kortanek says.
Based in San Francisco, California, Sharper Image Corp. --
http://www.sharperimage.com/-- is a multi-channel specialty
retailer. It operates in three principal selling channels: the
Sharper Image specialty stores throughout the U.S., the Sharper
Image catalog and the Internet. The company has operations in
Australia, Brazil and Mexico. In addition, through its Brand
Licensing Division, it is also licensing the Sharper Image brand
to select third parties to allow them to sell Sharper Image
branded products in other channels of distribution. The company
filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D.,
Case No. 08-10322). Steven K. Kortanek, Esq. at Womble,
Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its
restructuring efforts. When the Debtor filed for bankruptcy, it
listed total assets of US$251,500,000 and total debts of
US$199,000,000.
(Sharper Image Bankruptcy News Issue No. 4, Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
===========
P A N A M A
===========
CABLE & WIRELESS: CitiGroup Seeks Demerger of Two Businesses
------------------------------------------------------------
Citigroup's telecoms team is urging Cable & Wireless Plc to
demerge its UK and international divisions, declaring it will
take a "dim view" of the company if it decides otherwise,
Dominic White writes for the Daily Telegraph.
According to the report, Cable & Wireless, which is preparing
for an investor day next week, is contemplating a demerger.
However, Michael Williams, an analyst at Citigroup, noted the
telecoms company's management may opt to maintain the combined
group structure instead after a successful turnaround of the UK
business, whose GBP2 billion revenue and GBP400 million
underlying earnings target the Daily Telegraph says are crucial
to its ability to operate as a standalone business.
"We call on management to confirm its plans in this respect on
or before the H1 results in November 2008," Mr. Williams told
the paper.
Headquartered in London, Cable & Wireless Plc
-- http://www.cw.com/new/-- operates through two standalone
business units –- International and Europe, Asia & US. The
International business unit operates integrated
telecommunications companies in 33 countries offering mobile,
broadband, domestic and international fixed line services to
residential and business customers, with principal operations in
the Caribbean, Panama, Macau, Monaco and the Channel Islands.
The Europe, Asia & U.S. business unit provides enterprise and
carrier solutions to the largest users of telecoms services
across the U.K., U.S., continental Europe and Asia -- and
wholesale broadband services in the U.K.
* * *
As of Feb. 12, 2008, Cable & Wireless Plc carried a Ba3 long-
term corporate family rating, a B1 senior unsecured debt rating
and a Ba3 probability of default rating from Moody's Investors
Service, which said the outlook is stable.
The company also carries a BB- long-term local and foreign
issuer credit ratings from Standard & Poor's Ratings Services,
which said the outlook is stable. S&P rates its short-term
local and foreign issuer credit at B.
CHIQUITA BRANDS: To Hold Annual Shareholders' Meeting on May 22
---------------------------------------------------------------
Chiquita Brands International Inc. will hold its Annual Meeting
of Shareholders on May 22, 2008, at the Hilton Cincinnati
Netherland Plaza. The record date for determining shareholders
entitled to vote at the meeting will be April 1, 2008. The
company will mail to shareholders of record in mid-April a
notice of the meeting and related proxy materials.
Cincinnati, Ohio-based Chiquita Brands International, Inc.
(NYSE: CQB) -- http://www.chiquita.com/-- markets and
distributes fresh food products including bananas and nutritious
blends of green salads. The company markets its products under
the Chiquita(R) and Fresh Express(R) premium brands and other
related trademarks. Chiquita employs approximately 25,000
people operating in more than 70 countries worldwide, including
Belgium, Columbia, Germany, Panama, Philippines, among others.
* * *
As reported in the Troubled Company Reporter-Latin America on
Feb. 28, 2008, Standard & Poor's Ratings Services assigned its
'CCC' senior unsecured rating to Chiquita Brands International
Inc.'s US$200 million convertible senior notes due 2016. Net
proceeds from the issuance were used to repay a portion of the
US$375 million term loan C (US$132 million outstanding at
Dec. 31, 2007, pro forma for this notes offering) of its senior
secured credit facility.
====================
P U E R T O R I C O
====================
DIRECTV GROUP: FCC Says Liberty Media Deal Will Benefit Public
--------------------------------------------------------------
The Federal Communications Commission approved the transfer of
control of DirecTV Group Inc. to Liberty Media Corp., subject to
conditions. The Commission concluded that, as conditioned, the
public interest benefits of the transfer outweighed the
potential harms and would be consistent with applicable
Commission rules and policies.
As reported in the Troubled Company Reporter on Feb. 11, 2008,
under the deal, News Corp. will exchange its interest in DirecTV
Group Inc. with Liberty Media's interest in News Corp. Liberty
Media said it plans to exchange its stake in News Corp. for 39%
of DirectTV. The parties reached an US$11 billion deal that
includes News Corp.'s stake in DirectTV.
As a benefit of the transaction, Liberty Media and News Corp.,
which is the majority stakeholder of DirecTV, would sever their
ownership interests with each other which will decrease media
consolidation and reduce vertical integration therefore
benefiting the public.
The Order also imposes certain conditions to ensure that the
transaction will serve Commission's competition and diversity
goals. The Order requires that Liberty and DirecTV abide by
program access, program carriage, Regional Sports Network
arbitration, retransmission consent arbitration conditions,
modeled on similar conditions imposed in 2003, when the
Commission approved the transfer of DIRECTV from Hughes to News
Corp.
In addition, the Order requires that all of the attributable
ownership interests connecting DirecTV-Puerto Rico and Liberty
Cablevision of Puerto Rico, Ltd., which will be under common
control as a result of the transaction, be severed within one
year, at which point the companies must certify either that they
have reduced the relevant interests to a non-attributable level
or that they have filed any applications necessary to divest
assets.
On balance, the Commission found that the transaction, as
conditioned, would serve the public interest.
About News Corp.
News Corporation is a diversified international media and
entertainment company with operations in eight industry
segments: filmed entertainment; television; cable network
programming; direct broadcast satellite television; magazines
and inserts; newspapers; book publishing; and other. The
activities of News Corporation are conducted principally in the
United States, Continental Europe, the United Kingdom,
Australia, Asia and the Pacific Basin.
About Liberty Media
Headquartered in Englewood, Colorado, Liberty Media Corporation
(NasdaqGS: LINTA) -- http://www.libertymedia.com/-- owns
interests in a broad range of electronic retailing, media,
communications and entertainment businesses. Those interests
are attributed to two tracking stock groups: the Liberty
Interactive group, which includes Liberty's interests in QVC,
Provide Commerce, IAC/InterActiveCorp, and Expedia, and the
Liberty Capital group, which includes Liberty's interests in
Starz Entertainment, News Corporation, and Time Warner.
About DirecTV
Headquartered in El Segundo, California, The DirecTV Group Inc.
(NASDAQ:DTV) -- http://www.DirecTV.com/-- provides digital
television entertainment in the United States and Latin America.
The company's two business segments, DirecTV U.S. and DirecTV
Latin America, are engaged in acquiring, promoting, selling
and/or distributing digital entertainment programming via
satellite to residential and commercial subscribers. DirecTV
Holdings LLC and its subsidiaries are a provider of direct-to-
home digital television services and a provider in the multi-
channel video programming distribution industry in the United
States. DTVLA is a provider of DTH digital television services
throughout Latin America. In January 2007, the company acquired
Darlene Investments LLC's 14.1% equity interest in DirecTV Latin
America, LLC. DirecTV Latin America LLC is a multinational
company, which, as a result of this transaction, became a wholly
owned subsidiary of the company. The DIRECTV Latin America
segment provides digital direct-to-home digital television
services to approximately 1.6 million subscribers in 27
countries, including Brazil, Argentina, Venezuela, and Puerto
Rico.
* * *
The DIRECTV Group Inc. still carries Standard & Poor's Ratings
Services' 'BB' corporate credit and 'BB-' senior unsecured debt
rating given on April 3, 2007. The outlook remains stable.
DIRECTV GROUP: Stake Swap Results in Two Board Seats for Liberty
----------------------------------------------------------------
Liberty Media Corporation has completed the exchange of its
16.3% stake in News Corporation for a subsidiary of News that
holds a 41% stake in The DIRECTV Group Inc., regional sports
networks in Denver, Pittsburgh, and Seattle, and $465 million of
cash.
John Malone and Greg Maffei have been appointed to the DIRECTV
board, filling two of the three seats previously held by News
representatives. Chase Carey will continue to serve as
DIRECTV's president and CEO.
"This transaction is strategically important, financially
attractive, and will provide new focus to Liberty Media," said
Liberty CEO Greg Maffei. "We've been impressed with Chase Carey
and his team and are thrilled to welcome them to the Liberty
family. We look forward to a partnership with DIRECTV."
The reclassification of Liberty Capital Tracking stock is
expected to be completed in the next three to five business days
and the new Liberty Entertainment and Liberty Capital tracking
stocks will commence trading early next week.
About News Corp.
News Corporation is a diversified international media and
entertainment company with operations in eight industry
segments: filmed entertainment; television; cable network
programming; direct broadcast satellite television; magazines
and inserts; newspapers; book publishing; and other. The
activities of News Corporation are conducted principally in the
United States, Continental Europe, the United Kingdom,
Australia, Asia and the Pacific Basin.
About Liberty Media
Headquartered in Englewood, Colorado, Liberty Media Corporation
(NasdaqGS: LINTA) -- http://www.libertymedia.com/-- owns
interests in a broad range of electronic retailing, media,
communications and entertainment businesses. Those interests are
attributed to two tracking stock groups: the Liberty Interactive
group, which includes Liberty's interests in QVC, Provide
Commerce, IAC/InterActiveCorp, and Expedia, and the Liberty
Capital group, which includes Liberty's interests in Starz
Entertainment, News Corporation, and Time Warner.
About DirecTV Group
Headquartered in El Segundo, California, The DirecTV Group Inc.
(NASDAQ:DTV) -- http://www.DirecTV.com/-- provides digital
television entertainment in the United States and Latin America.
The company's two business segments, DirecTV U.S. and DirecTV
Latin America, are engaged in acquiring, promoting, selling
and/or distributing digital entertainment programming via
satellite to residential and commercial subscribers. DirecTV
Holdings LLC and its subsidiaries are a provider of direct-to-
home digital television services and a provider in the multi-
channel video programming distribution industry in the United
States. DTVLA is a provider of DTH digital television services
throughout Latin America. In January 2007, the company acquired
Darlene Investments LLC's 14.1% equity interest in DirecTV Latin
America, LLC. DirecTV Latin America LLC is a multinational
company, which, as a result of this transaction, became a wholly
owned subsidiary of the company. The DIRECTV Latin America
segment provides digital direct-to-home digital television
services to approximately 1.6 million subscribers in 27
countries, including Brazil, Argentina, Venezuela, and Puerto
Rico.
* * *
The DIRECTV Group Inc. still carries Standard & Poor's Ratings
Services' 'BB' corporate credit and 'BB-' senior unsecured debt
rating given on April 3, 2007. The outlook remains stable.
MYLAN INC: Books US$1.27-Bil. Loss in Three Mos. Ended Dec. 31
--------------------------------------------------------------
Mylan Inc. reported its financial results for the three and nine
months ended Dec. 31, 2007, provided an update on its synergy
targets for the Merck Generics acquisition, and disclosed a
number of strategic and operational initiatives.
Financial Highlights:
-- Adjusted diluted cash EPS of US$0.11 and US$0.92 for the
three and nine months ended Dec. 31, 2007, respectively,
both of which exclude the impact of purchase accounting
items related to the Matrix acquisition completed in
January 2007 and the acquisition of Merck Generics
completed in October 2007, as well as other non-recurring
items as discussed in detail below;
-- Total revenues of US$1.16 billion for the three months
ended Dec. 31, 2007, an increase of US$753.6 million over
the same prior year period;
-- Total revenues of US$2.18 billion for the nine months
ended Dec. 31, 2007, an increase of US$1.05 billion over
the same prior year period;
-- On a GAAP basis, a loss per diluted share of US$5.04 and
US$4.49 for the three and nine months ended Dec. 31, 2007,
respectively, as a result of purchase accounting
adjustments including the write-off of US$1.27 billion of
acquired in-process research and development, which was
recorded without tax effect.
Mylan's Vice Chairperson and Chief Executive Officer, Robert J.
Coury commented: "The strength of this first quarter as a
consolidated company showcases Merck Generics' contribution to
our growth. The strong performance of Merck Generics bolstered
the solid nine-month results of the legacy Mylan operations.
Further, these strong results were achieved while tremendous
progress was made, both on the integration and on achieving our
targeted synergies. Looking forward, we will continue to
execute on our strategies and leverage the additional
opportunities and benefits that we see from the global platform
created by the combination of Mylan, Merck Generics and Matrix."
Synergy Update
Mylan confirmed that it expects to realize its stated US$100
million synergy target for the Merck Generics acquisition for
2008 and it is on track to meet or exceed the targeted recurring
annual synergies of US$300 million by the end of 2010, as
outlined by the company during its investor day on Oct. 3, 2007.
To achieve these results, the company announced that it has
initiated the necessary actions within research and development
(R&D) and manufacturing. The actions are expected to yield 75%
of the overall US$300 million annual synergy target by the end
of 2010.
Chief Operating Officer and Chief Integration Officer, Heather
Bresch said: "We are well ahead of our implementation schedule.
Our efforts to date extend across all areas of the new combined
company, including strengthening our leadership and
organizational infrastructure, ensuring effective separation
from Merck KGaA, building Mylan's brand equity globally and,
most importantly, realizing value from the New Mylan by
delivering on our synergy targets."
Specific steps being taken to rationalize and optimize our
global manufacturing and research and development platforms
include:
-- Discontinue manufacturing and R&D at Genpharm in Canada.
The Commercial Operations, Packaging Unit, Quality
Control Laboratory, Biopharm Department, Supply Chain
Functions, and Regulatory Affairs at Genpharm will
continue operation.
-- Discontinue manufacturing of non-high potency products at
Mylan's Puerto Rico location. High potency manufacturing
operations will remain and be expanded in Puerto Rico,
creating a "center of excellence" for high potency
manufacturing at this facility.
-- Discontinue R&D activities at Gerard Laboratories in
Ireland.
-- Discontinue R&D activities in Spain.
-- Scale down R&D activities at Generics UK.
Executive Vice President and Head of Global Technical
Operations, Rajiv Malik commented: "The actions announced today
will allow us to leverage the scale of our expanded global
assets and optimize our operations. We expect that our new
streamlined, consolidated and integrated R&D and manufacturing
platforms will not only deliver the promised synergies, but also
enable us to even more effectively execute on the growth
strategy for our global business."
Strategic Initiatives
Mylan reported a number of key initiatives to enhance its
strategic focus, specifically:
-- Mylan has reached a definitive agreement with Forest
Laboratories whereby Mylan will sell its rights to
Nebivolol, a FDA approved product for the treatment of
hypertension which is marketed by Forest under the brand
name Bystolic(TM). Mylan will receive a one-time cash
payment of US$370 million and will retain royalties for
the product through 2010.
-- Mylan will pursue strategic alternatives for Dey,
including the potential sale of the business, Mylan's
specialty pharmaceutical business acquired as part of the
Merck Generics transaction. Dey is a leader in the
nebulized respiratory and severe allergy markets with
fully integrated capabilities in R&D, manufacturing and
marketing and sales.
-- The Board of Directors of Mylan's majority owned
subsidiary, Matrix Laboratories, has authorized its
management to explore strategic alternatives for
Docpharma, its commercial operations in the Benelux
region (Belgium, the Netherlands and Luxemburg),
including a potential divestiture of the asset.
-- Mylan has exercised its option with respect to Merck
Generics' operations in Central and Eastern Europe,
including such high-growth markets as Poland, Slovakia,
Hungary, the Czech Republic and Slovenia.
Mr. Coury added: "After conducting a further review of our
global portfolio of businesses following the completion of the
Merck Generics acquisition, we have decided to pursue several
initiatives that will allow us to leverage the power of our
global generics platform, focus on the successful execution of
our integration, and meet our commitments to de-levering our
balance sheet."
"More specifically, during our recent post-closing review of
Dey, it became clear that the launch of Perforomist(TM), which
occurred concurrently with the closing of the Merck Generics
acquisition, requires a redefined strategic approach. While Dey
is already in the process of addressing this issue, the delay
will result in slower growth and a longer timeframe to reach
peak sales than was originally anticipated from this product.
While we continue to believe that the Dey business, as a whole,
represents a very exciting opportunity in specialty
pharmaceuticals, we believe that our resources would be better
allocated toward our core generics business. As a result, we
have decided to consider a sale of Dey." Mr. Coury continued.
The slower than expected launch of Perforomist(TM) is expected
to have approximately a US$0.20 to US$0.25 negative impact on
Mylan's diluted earnings per share in 2008, 2009 and 2010.
Although the company is not in a position to update or revise
guidance at this time, it will do so in conjunction with its
2008 first quarter earnings announcement.
Mr. Coury said: "Notwithstanding the timing issue associated
with the slower uptake of Perforomist(TM), the results of our
initial quarter with Merck Generics continues to give us great
confidence in the growth potential of our core generics business
around the world. We continue to see strong performance across
our global generics business and we expect that the further
integration of our businesses will result in even greater
potential opportunities for growth going forward."
Detailed Financial Summary
Mylan previously had two reportable segments, the "Mylan
Segment" and the "Matrix Segment." With the acquisition of
Merck Generics, Mylan now has three reportable segments:
Generics Segment (or "Generics"), Specialty Segment (or
"Specialty") and the Matrix Segment (or "Matrix"). The former
Mylan Segment is included within the Generics Segment.
Additionally, certain general and administrative and research
and development expenses not allocated to the segments, as well
as litigation settlements and non-operating income and expenses,
are reported in Corporate/Other.
Total revenues for the quarter ended Dec. 31, 2007, increased by
188% or US$753.6 million to US$1.16 billion from US$401.8
million in the same prior year period. Approximately US$793.5
million represents amounts contributed through acquisitions.
Generics Segment revenues are derived from sales in Europe, the
Middle East & Africa (EMEA), North America and Asia Pacific.
Revenues from North America were US$416.3 million for the three
months ended Dec. 31, 2007, compared to US$401.8 million for the
same prior year period, representing an increase of US$14.5
million or 4%. Revenues of approximately US$54.4 million were
realized in North America as a result of the acquisition of
Merck Generics.
Revenues from EMEA and Asia Pacific, as well as revenues from
the Specialty Segment, were all the result of the acquisition of
Merck Generics. For EMEA, revenues for the quarter ended Dec.
31, 2007, were US$373.1 million, the majority of which are
derived from the three largest markets; France, the United
Kingdom and Germany.
Revenues from Asia Pacific were US$170.9 million for the three
months ended Dec. 31, 2007, and were derived from Mylan's newly
acquired operations in Australia, Japan and New Zealand.
For the Specialty Segment, total revenues for the three months
ended Dec. 31, 2007, were US$102.1 million. The Specialty
Segment consists of the Dey business that focuses on the
development, manufacturing and marketing of specialty
pharmaceuticals in the respiratory and severe allergy markets.
The Matrix Segment reported total revenues of US$107.1 million,
of which US$92.9 million represents sales to third parties.
Gross profit for the three months ended Dec. 31, 2007, was
US$356.1 million and gross margins were 30.8%. The decrease in
gross margins is due primarily to the effects of purchase
accounting items recorded during the quarter of approximately
US$117.7 million, which consisted primarily of amortization
related to purchased intangible assets and the amortization of
the inventory step-up associated with the acquisition of Merck
Generics. Excluding such items, gross margins were 41% compared
to 55.9% for the three months ended Dec. 31, 2006.
The company reported a loss from operations of US$1.27 billion
for the three months ended Dec. 31, 2007. This loss from
operations for the quarter included a US$1.27 billion one-time
charge to write-off acquired in-process research and
development, which is recorded without a tax effect, and
excludes the US$117.7 million of purchase accounting items
discussed above. Excluding these amounts, earnings from
operations would have been US$118.5 million, a decrease of
US$65.1 million from the prior year.
Research and development (R&D) expense for the three months
ended Dec. 31, 2007 was US$80.8 million compared to US$22.9
million in the same prior year period. R&D expense includes
approximately US$53.9 million related to newly acquired
entities, all of which was incremental to the comparable prior
year period.
The acquisition of Merck Generics and Matrix added US$170
million of incremental selling, general and administrative
(SG&A) expense to the current period. Excluding this amount,
SG&A expense increased by US$53.1 million or 101% to US$105.7
million compared to US$52.6 million in the comparable prior year
period. The majority of this increase was realized by Corporate
and Other and is the result of costs, such as professional and
consulting fees, associated with the integration of Merck
Generics, as well as higher payroll and related costs
principally attributable to the
build-up of additional corporate infrastructure as a direct
result of the Merck Generics acquisition.
Interest expense for the current quarter totaled US$133.4
million compared to US$10.5 million for the three months ended
Dec. 31, 2006. The increase is due to the additional debt
incurred to finance the acquisition of Merck Generics.
Other (expense) income, net was expense of US$43.9 million for
the three months ended Dec. 31, 2007 compared to income of
US$32.4 million in the same prior year period. The most
significant item in the current period was US$57.2 million
related to the early repayment of certain debt and expensing
certain financing fees, partially offset by other income
attributable to interest and dividends.
For the nine months ended Dec. 31, 2007 total revenues were
US$2.18 billion compared to US$1.12 billion during the
comparable nine-month period of the prior year. Approximately
US$964.8 million of revenues for the nine-month period were
contributed through acquisitions.
For the nine-months ended Dec. 31, 2007, the Matrix Segment
reported total revenues of US$293.8 million, of which US$264.2
million represented third party sales. As Mylan began
consolidating the results of Matrix beginning on Jan. 8, 2007,
all of this revenue is incremental to the results of the prior
year.
Gross profit for the nine months ended Dec. 31, 2007, was
US$874.4 million and gross margins were 40.1%. The decrease in
gross margins is due primarily to the effects of purchase
accounting items of approximately US$148.9 million. Excluding
such items, gross margins were 47% compared to 54.1% for the
nine months ended Dec. 31, 2006.
The loss from operations for the nine months ended Dec. 31, 2007
was US$988.3 million as a result of the purchase accounting
items discussed above and the one-time charge to write-off
acquired in-process research and development. Excluding these
amounts, earnings from operations would have been US$429.7
million for the nine month period, a decrease of US$5.7 million
from the prior year.
R&D expense for the nine months ended Dec. 31, 2007, excluding
that incurred by newly acquired entities, was US$74.9 million
compared to US$66.8 million in the same prior year period, an
increase of US$8.1 million or 12%.
SG&A expense, also excluding amounts contributed by new
entities, increased by US$95.1 million or 62% to US$247.9
million compared to US$152.8 million in the comparable prior
year period. The majority of this increase was realized by
Corporate and Other, and is the result of costs, such as
professional and consulting fees, associated with the
integration of Merck Generics, as well as higher payroll and
related costs principally attributable to the build-up of
additional corporate infrastructure as a direct result of the
Merck Generics acquisition.
Interest expense for the nine months ended Dec. 31, 2007,
totaled US$179.4 million compared to US$31.3 million for the
nine months ended Dec. 31, 2006. The increase is due to the
additional debt incurred to finance the acquisition of Merck
Generics.
Other income (expense), net was income of US$86.6 million for
the nine months ended Dec. 31, 2007, compared to income of
US$39.8 million in the same prior year period. The most
significant items in the current period are net foreign exchange
gains consisting mainly of US$85 million on a contract related
to the acquisition of Merck Generics and US$57.2 million of
expense related to the early repayment of certain debt and
expensing certain financing fees as discussed previously, with
the remainder of the other income attributable to interest and
dividends.
About Mylan Inc.
Mylan Inc., formerly known as Mylan Laboratories Inc. (NYSE:
MYL), -- http://www.mylan.com/-- is a global pharmaceutical
company with market leading positions in generic
pharmaceuticals, transdermal technology and unit dose packaged
products. Mylan operates through three principal subsidiaries:
Mylan Pharmaceuticals, a world leader in generic
pharmaceuticals; Mylan Technologies, the largest producer of
generic and branded transdermal patches for the U.S. market; and
UDL Laboratories, the top U.S.-supplier of unit dose
pharmaceuticals.
Mylan also owns a controlling interest in Matrix Laboratories,
one of the world's premier suppliers of active pharmaceutical
ingredients. Mylan also has a European platform through
Docpharma, a Matrix subsidiary, which is a marketer of branded
generics in Europe. The company also has a production facility
in Puerto Rico.
* * *
As reported in the Troubled Company Reporter-Latin America on
Nov. 19, 2007, Moody's Investors Service assigned B1 ratings to
the new senior secured credit facilities of Mylan Inc. In
addition, Moody's lowered Mylan's Corporate Family Rating to B1
from Ba1, concluding a rating review for possible downgrade
initiated on May 14, 2007 and lowered the speculative grade
liquidity rating to SGL-2 from SGL-1.
MYLAN INC: J. Dore' Joins as Matrix Labs CEO & Managing Director
----------------------------------------------------------------
Mylan Inc. has appointed Jagdish Viswanath Dore' as Chief
Executive Officer and Managing Director of Matrix Laboratories
Limited. Mr. Dore' will assume the responsibilities of Rajiv
Malik who became Executive Vice President and Head of Global
Technical Operations for Mylan in October 2007 and has been
serving as interim CEO for Matrix, a majority-owned subsidiary
of Mylan. Mr. Malik will relocate to the United States in
connection with his employment by Mylan.
Mr. Dore' joins Matrix after a distinguished 29 year career with
Sandoz most recently as Managing Director and India Country
Head. In this role, Mr. Dore' was responsible for all of
Sandoz's operations in India including global development and
manufacturing; local and export sales; day-to-day operations;
and technical operations in the Asia Pacific region. He was
previously responsible for business operations in the Asia
Pacific cluster and involved in the startup of Novartis
Enterprises Private Limited (now Sandoz), Novartis Consumer
Health India Private Limited and Master Builders Technology
India Private Limited, India.
Matrix Chairperson and Mylan Vice Chairperson and Chief
Executive Officer, Robert J. Coury said: "Jagdish's impressive
industry reputation is well known, and I believe he will be a
huge asset to Matrix as it continues to expand its integral role
in support of Mylan's global platform. I have every confidence
that Jagdish will ensure that Matrix continues its strong growth
and supports Mylan in becoming the world's leading, fully-
integrated generic pharmaceuticals company."
Matrix's Vice Chairperson, N. Prasad commented, "I have known
Jagdish for some time, and I am absolutely delighted that he
will be assuming Rajiv's role as CEO of Matrix. During his
tenure at Sandoz, Jagdish was responsible for managing the
company's 1,800 employees based in India along with developing a
rapidly growing business across the Asia Pacific region. He
brings a great deal of experience on a strategic and operational
level that will be invaluable to Matrix as it strengthens its
leadership in active pharmaceutical ingredients (API), further
develops its finished dosage form (FDF) capabilities and
continues to grow its antiretroviral (ARV) business."
Mr. Dore' said: "Matrix is an established, highly respected and
high-quality company in the pharmaceuticals industry both in
India and world-wide. It is only enhanced by being part of
Mylan. I look forward to leading Matrix into the next phase of
its growth and working with the Mylan and Matrix senior
management teams to further align our organizations and leverage
the opportunities available to us in the global generics
market."
Mr. Dore' earned a Bachelor of Technology degree from the Indian
Institute of Technology, Chennai, and a postgraduate degree in
business management from the Xavier Institute in Jamshedpur
specializing in marketing.
About Mylan Inc.
Mylan Inc., formerly known as Mylan Laboratories Inc. (NYSE:
MYL), -- http://www.mylan.com/-- is a global pharmaceutical
company with market leading positions in generic
pharmaceuticals, transdermal technology and unit dose packaged
products. Mylan operates through three principal subsidiaries:
Mylan Pharmaceuticals, a world leader in generic
pharmaceuticals; Mylan Technologies, the largest producer of
generic and branded transdermal patches for the U.S. market; and
UDL Laboratories, the top U.S.-supplier of unit dose
pharmaceuticals.
Mylan also owns a controlling interest in Matrix Laboratories,
one of the world's premier suppliers of active pharmaceutical
ingredients. Mylan also has a European platform through
Docpharma, a Matrix subsidiary, which is a marketer of branded
generics in Europe. The company also has a production facility
in Puerto Rico.
* * *
As reported in the Troubled Company Reporter-Latin America on
Nov. 19, 2007, Moody's Investors Service assigned B1 ratings to
the new senior secured credit facilities of Mylan Inc. In
addition, Moody's lowered Mylan's Corporate Family Rating to B1
from Ba1, concluding a rating review for possible downgrade
initiated on May 14, 2007 and lowered the speculative grade
liquidity rating to SGL-2 from SGL-1.
MYLAN INC: Forest Labs Will Assume Rights on Hypertension Drug
--------------------------------------------------------------
Mylan Inc. said that Forest Laboratories Holdings, Ltd., a
wholly owned subsidiary of Forest Laboratories, Inc., have
amended their January 2006 agreement to commercialize, develop
and distribute the novel beta blocker Bystolic(TM) (nebivolol),
which is currently approved in the United States for the
treatment of hypertension. The companies have agreed that
Forest Laboratories will assume Mylan's commercial rights for
Bystolic in the United States and Canada including, but not
limited to, the elimination of Mylan's option to co-promote the
product. Forest will be responsible for all future Bystolic
development expenses as well as all sales and marketing expenses
for the product.
Under the terms of this amendment, Forest Laboratories Holdings,
Ltd. (Ireland) will make a one-time cash payment of
US$370 million to Mylan. Forest Labs will continue to pay the
company its contractual royalties for three years, through
calendar 2010.
Mylan Vice Chairperson and Chief Executive Officer, Robert J.
Coury commented: "We are very proud of the role Mylan has
played to date in Bystolic's development and commercialization
in the U.S. and believe that today's agreement with Forest is
evidence of the value we have created through this product.
Today's announcement is just one of the many initiatives we have
announced to enhance our strategic focus and ensure we are
ideally positioned to maximize the significant opportunities of
our world leading generics assets."
About Bystolic
Bystolic (nebivolol) is a novel beta blocker that was approved
by the FDA in December 2007 and is approved and marketed in more
than 65 countries outside of North America. Mylan licensed the
U.S. and Canadian rights to Bystolic from Janssen Pharmaceutical
N.V. in 2001, and obtained Janssen's consent to sub-license
Bystolic to Forest Laboratories in those territories in an
initial agreement completed in January 2006. Bystolic is a
cardio-selective beta-1 blocker, with vasodilation properties
and a favorable tolerability profile. Upon FDA approval,
Bystolic has received five years of marketing exclusivity under
the Hatch Waxman legislation. In addition there is an issued
U.S. pharmaceutical composition of matter patent that expires in
2021, which may offer additional exclusivity.
About Mylan Inc.
Mylan Inc., formerly known as Mylan Laboratories Inc. (NYSE:
MYL), -- http://www.mylan.com/-- is a global pharmaceutical
company with market leading positions in generic
pharmaceuticals, transdermal technology and unit dose packaged
products. Mylan operates through three principal subsidiaries:
Mylan Pharmaceuticals, a world leader in generic
pharmaceuticals; Mylan Technologies, the largest producer of
generic and branded transdermal patches for the U.S. market; and
UDL Laboratories, the top U.S.-supplier of unit dose
pharmaceuticals.
Mylan also owns a controlling interest in Matrix Laboratories,
one of the world's premier suppliers of active pharmaceutical
ingredients. Mylan also has a European platform through
Docpharma, a Matrix subsidiary, which is a marketer of branded
generics in Europe. The company also has a production facility
in Puerto Rico.
* * *
As reported in the Troubled Company Reporter-Latin America on
Nov. 19, 2007, Moody's Investors Service assigned B1 ratings to
the new senior secured credit facilities of Mylan Inc. In
addition, Moody's lowered Mylan's Corporate Family Rating to B1
from Ba1, concluding a rating review for possible downgrade
initiated on May 14, 2007 and lowered the speculative grade
liquidity rating to SGL-2 from SGL-1.
UNIVISION COMMS: Sells Univision Music Group to Universal Music
---------------------------------------------------------------
Universal Music Group has signed a definitive agreement in which
the company will acquire Univision Music Group, including its
music recording and publishing division. Univision Music Group
is the No. 1 Latin record company in the United States.
Financial terms of the transaction were not disclosed, and the
acquisition is subject to regulatory approvals and customary
closing conditions.
Univision Music Group, which includes Univision Records,
Fonovisa Records, Disa Records, Univision Music Mexico and
Univision Music Publishing, has helped define, expand and
diversify Latin music in the last three decades. Its artists
and songwriters have been the recipients of many prestigious
honors and awards bringing worldwide recognition to them and to
the many styles of Latin music, including Regional Mexican,
Tropical, Pop, and Latin Rap/Hip Hop. The Group's artist roster
includes such superstars as Marco Antonio Solis, Los Tigres del
Norte, Los Temerarios, Horoscopos de Durango, K-Paz de la
Sierra, Grupo Montes de Durango, Alacranes Musical, Conjunto
Primavera, Banda El Recodo, Jenni Rivera, Gloria Trevi, Graciela
Beltran, Xtreme, Olga Tanon, Tito Nieves, and Ivy Queen, among
many others. Universal Music Group will phase out the use of
the Univision name and continue to use such industry leading
brands as Fonovisa and Disa. Since the inception of Univision
Music Group in 2001, Universal Music Group has been its
distributor in the U.S., Puerto Rico and Mexico.
As part of this transaction, Universal Music Group will continue
Univision Music's long-established and successful relationship
with Univision's broadcast television networks under a long-term
agreement that will allow Universal Music Group to promote its
Latin artists on the Univision Network, the most-watched
Spanish-language broadcast television network in the U.S.
reaching 99% of U.S. Hispanic Households, and on leading
Spanish-language network TeleFutura.
"Univision Music Group's artists, labels and catalog are among
the finest in Latin music," said Universal Music Group president
and chief operating officer, Zach Horowitz. "This acquisition
expands UMG's presence in one of the most dynamic and vital
genres of music today. We are especially excited about our
important partnership with Univision's television networks, the
most-watched Spanish-language broadcast television networks in
the U.S., as we continue the major television advertising
campaigns that have proven so effective in promoting Univision
Music's artists in the past. We'd also like to thank Jose
Behar, President and CEO and Founder of Univision Music Group
and his team for all their efforts in building the company into
what it is today."
"We're delighted with this transaction and pleased that our
talented artists will continue to flourish with UMG, the global
leader in the music industry," stated Univision Communications
Chief Executive Officer, Joe Uva. "The sale of Univision Music
Group is an important step in the execution of our strategic
plan to divest certain non-core assets in order to focus
exclusively on our television, radio and online businesses."
Universal Music Group chairperson and chief executive officer,
Doug Morris added, "The acquisition of Univision Music Group
highlights our ongoing commitment, and that of our parent
company Vivendi, to the music business in general and to the
Latin music business in particular. Univision Music Group's
artists are among the best in any genre of music."
Universal Music Group Chairperson and CEO of Latin America and
Iberian Peninsula, Jesus Lopez said, "The Univision Music team
has built an exciting and powerful catalog of Latin music that
complements UMG's already well-established roster of Latin
recording artists and songwriters in both the U.S. and Mexico,
with a great potential to expand them around the world. We are
delighted to welcome the Univision Music employees, artists and
songwriters to the UMG family."
Univision Music Group's CEO, President and Founder, Jose Behar
said, "I would like to thank Mr. Perenchio for affording me the
opportunity to create the premier Latin Music Company in the
world. I also want to thank Univision's Management team, all of
Univision Music's talented artists and employees, and the
Univision Networks, Univision Online and Universal Music Group
Distribution for their wonderful support throughout the years.
I am so proud of the portfolio we've built and I am confident
that Univision Music will continue to thrive under the guidance
of the talented team at UMG."
About Universal Music Group
Universal Music Group is a unit of Vivendi, a global media and
communications company, with wholly owned record operations or
licensees in 77 countries. Its businesses also include
Universal Music Publishing Group, the industry's leading global
music publishing operations. Its labels include Decca, Deutsche
Grammophon, Interscope Geffen A&M Records, Island Def Jam Music
Group, Lost Highway Records, Machete Music, MCA Nashville,
Mercury Nashville, Mercury Records, Philips, Polydor Records,
Universal Music Latino, Universal Motown Republic Group,
Universal South Records and Verve Music Group, as well as a
multitude of record labels owned or distributed by its record
company subsidiaries around the world. The Universal Music
Group owns the most extensive catalog of music in the industry,
which is marketed through two distinct divisions, Universal
Music Enterprises (in the U.S.) and Universal Strategic
Marketing (outside the U.S.). Universal Music Group also
includes eLabs, a new media and technologies division, Bravado,
its merchandising company, and Twenty-First Artists, its full
service management division.
About Univision Communications
Headquartered in Los Angeles, Calif., Univision Communications
Inc., (NYSE: UVN) -- http://www.univision.net/-- owns and
operates more than 60 television stations in the U.S. and Puerto
Rico offering a variety of news, sports, and entertainment
programming. The company had about US$2.6 billion in debts at
Dec. 31, 2006. Univision Music Group is a subsidiary of
Univision Communications Inc.
* * *
As reported in the Troubled Company Reporter-Latin America on
Feb. 28, 2008, Fitch Ratings published a review of its Recovery
Ratings methodology and updated analysis for rated issuers in
the United States media and entertainment space including
Univision Communication, Inc. (LT Issuer Default Rating at 'B';
Stable Outlook).
=================
V E N E Z U E L A
=================
CHRYSLER LLC: Idles Plant in Ontario Due to TRW's Workers Strike
----------------------------------------------------------------
A Chrysler LLC assembly plant in Windsor, Ontario was forced to
temporarily shut down after Canadian Auto Workers union members
of TRW Automotive Inc. went on strike Thursday due to failed
wage increase talks, according to various papers.
TRW supplies Chrysler suspension modules for Dodge Caravan and
Town & Country minivans, Dow Jones Newswires relates.
Reuters discloses citing Chrysler spokeswoman Michele Tinson
that the automaker's assembly plant in Windsor has 4,475 hourly
workers as of December 2007. A Chrysler assembly plant in St.
Louis that also produces minivans is not affected by the rally
because it doesn't use TRW's products.
Dow Jones Newswires relates that TRW and Canadian Auto Workers
union representatives failed to reach an agreement on salary
increases, spurring the protest.
Reuters discloses that TRW spokesman John Wilkerson proposes to
maintain TRW plant production using salaried workers and hopes
to continue negotiations with the union as soon as possible.
About TRW
Headquartered in Livonia, Michigan, TRW Automotive, Inc.,
supplies automotive systems, modules, and components to global
vehicle manufacturers and related aftermarket. The company has
three operating segments; Chassis Systems, Occupant Safety
Systems, and Automotive Components. Its primary business lines
encompass the design, manufacture and sale of active and passive
safety related products.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K.,
Argentina, Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter-Latin America on
Nov. 13, 2007, Standard & Poor's Ratings Services affirmed its
'B' corporate credit rating on Chrysler LLC and DaimlerChrysler
Financial Services Americas LLC and removed it from CreditWatch
with positive implications, where it was placed Sept. 26, 2007.
S&P said the outlook is negative.
CHRYSLER LLC: Plastech to Continue Supply Parts Until March 3
-------------------------------------------------------------
Plastech Engineered Products Inc. and its debtor-affiliates have
agreed to continue to supply parts to Chrysler LLC until
March 3, 2008, Crain's Detroit Business reports.
As reported in the Troubled Company Reporter on Feb. 22, 2008,
the Debtors and Chrysler previously agreed to an extension of
their interim production agreement, under which Plastech will
continue to manufacture and deliver component parts to Chrysler
until Feb. 27, 2008.
Pursuant to the initial interim agreement between the parties:
-- Chrysler was obligated to make certain payments to
Plastech in conjunction with the continued production of
component parts; and
-- The Debtors are to allow BBK, as agents for Chrysler, to
have supervised access to Plastech facilities for the
purpose of inspecting and conducting an inventory of all
tooling used for Chrysler production.
The U.S. Bankruptcy Court for the Eastern District of Michigan
denied Chrysler LLC's request to pull out the tooling equipment
from Plastech's plants a few weeks ago.
About Plastech Engineered Products
Based in Dearborn, Michigan, Plastech Engineered Products, Inc.
-- http://www.plastecheng.com/-- is full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded
plastic products primarily for the automotive industry.
Plastech's products include automotive interior trim, underhood
components, bumper and other exterior components, and cockpit
modules. Plastech's major customers are General Motors, Ford
Motor Company, and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is
certified as a Minority Business Enterprise by the state of
Michigan. Plastech maintains more than 35 manufacturing
facilities in the midwestern and southern United States. The
company's products are sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The
Debtors chose Jones Day as their special corporate and
litigation counsel. Lazard Freres & Co. LLC serves as the
Debtors' investment bankers, while Conway, MacKenzie & Dunleavy
provide financial advisory services. The Debtors also employed
Donlin, Recano & Company as their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed
in the Debtors' cases.
As of Dec. 31, 2006, the company's books and records reflected
assets totaling US$729,000,000 and total liabilities of
US$695,000,000.
About Chrysler LLC
Based in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K.,
Argentina, Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter-Latin America on
Nov. 13, 2007, Standard & Poor's Ratings Services affirmed its
'B' corporate credit rating on Chrysler LLC and DaimlerChrysler
Financial Services Americas LLC and removed it from CreditWatch
with positive implications, where it was placed Sept. 26, 2007.
S&P said the outlook is negative.
PETROLEOS DE VENEZUELA: Launches 1st Drill Rig with Petroecuador
----------------------------------------------------------------
Petroleos de Venezuela's first drill rig under a preferential
accord with Petroecuador has started drilling the Guanta 19 well
in Ecuador, Business News Americas reports.
According to Petroecuador, Ecuador will pay Venezuela US$7,976
per day for every rig, compared to international rates of up to
US$40,000 per day. The rig will drill four wells in the field,
while a second rig will arrive in March to drill another four.
Petroecuador's unit Petroproduccion is in talks to acquire eight
more rigs to drill 78 new wells this year. Petroecuador wants
to its production to reach 190,000 barrels per day this year,
BNamericas notes.
About Petroecuador
Headquartered in Quito, Ecuador, Petroecuador --
http://www.petroecuador.com.ec-- is an international oil
company owned by the Ecuador government. It produces crude
petroleum and natural gas.
About Petroleos de Venezuela
Petroleos de Venezuela SA -- http://www.pdv.com/-- 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. The company has a commercial office in China.
PDVSA is one of the top exporters of oil to the US with proven
reserves of 77.2 billion barrels of oil -- the most outside the
Middle East -- and about 150 trillion cu. ft. of natural gas.
PDVSA's exploration and production take place in Venezuela, but
the company also has refining and marketing operations in the
Caribbean, Europe, and the US.
* * *
As of Feb. 14, 2008, Fitch Ratings held Petroleos de Venezuela
SA's long-term issuer default rating and local currency long
term issuer default rating at BB-. Fitch said the ratings
outlook was negative.
PETROLEOS DE VENEZUELA: Says NB Power's Damage Claim Is Settled
---------------------------------------------------------------
Petroleos de Venezuela SA said in its financial and operational
report for the first half of 2007 that Canadian power company NB
Power's claim for damages is "definitely over."
According to Petroleos de Venezuela's financial report, the
company had paid NB Power US$110 million on July 25, 2007, in an
out-of-court settlement.
Business News Americas relates that NB Power filed a lawsuit in
a Canadian court and an arbitration request in New York in 2005,
seeking CDN2 billion in damages against Petroleos de Venezuela,
who allegedly failed to comply with orimulsion supply contracts.
Petroleos de Venezuela had argued the supply contract was never
finalized, the report says.
About Petroleos de Venezuela
Petroleos de Venezuela SA -- http://www.pdv.com/-- 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. The company has a commercial office in China.
PDVSA is one of the top exporters of oil to the US with proven
reserves of 77.2 billion barrels of oil -- the most outside the
Middle East -- and about 150 trillion cu. ft. of natural gas.
PDVSA's exploration and production take place in Venezuela, but
the company also has refining and marketing operations in the
Caribbean, Europe, and the US.
* * *
As of Feb. 14, 2008, Fitch Ratings held Petroleos de Venezuela
SA's long-term issuer default rating and local currency long
term issuer default rating at BB-. Fitch said the ratings
outlook was negative.
===========
X X X X X X
===========
* S&P Projects Decline in 2008 LatAm & Caribbean Sovereign Debts
----------------------------------------------------------------
Sovereigns in Latin America and the Caribbean are projected to
issue marginally less new debt this year than in 2007. In its
fourth annual survey of government debt issuance, Standard &
Poor's Ratings Services projects that gross long-term borrowing
by 25 Latin American and Caribbean sovereigns is likely to reach
about US$290 billion in 2008, down from an estimated US$322
billion the previous year.
S&P's survey highlights the diminishing role of official sector
funding in the region, reflecting the growing ability of
sovereign borrowers in recent years to gain better access to
debt markets. The total stock of official creditor debt is
projected to remain stagnant, at just below US$100 billion in
2008. The growth of commercial borrowing in recent years and
the repayment of multilateral loans by large borrowers like
Argentina and Brazil have contributed to this trend. Official
debt is projected to decline to only 7% of the total outstanding
stock of sovereign debt in the region by year-end 2008, compared
with 8.5% in 2006.
The gross stock of sovereign debt in the region is projected to
rise to just over US$1.4 trillion by the end of 2008, up from
just over US$1.3 trillion the previous year. Brazil is again
estimated to account for the bulk of gross debt issuance this
year, followed by Mexico, Colombia, and Venezuela. Brazil has
the largest stock of total commercial debt outstanding in the
market, projected to exceed US$800 billion in 2008, followed by
Mexico, Argentina, and Colombia.
High oil prices in recent years have allowed the Mexican
government to run a balanced budget. That, along with
impressive debt management to increase the average life of
sovereign debt, has contained the Mexican government's gross
annual borrowing needs in recent times. Brazil has taken
advantage of falling interest rates to improve the structure of
its debt. However, about 30% of the sovereign's stock of debt
at the end of 2007 matures within 12 months, indicating the
large volume of new issuance needed to roll over the stock of
debt.
Good Economic Performances in 2007
The good economic performances seen in most countries in recent
years have strengthened the region's debt profile. Latin
America's GDP grew by an estimated average 5.6% rate in 2007,
representing the fifth year of continuous regional GDP growth in
this decade. The Caribbean region's GDP grew by an estimated 4%
last year (estimates are from the United Nation's Economic
Commission for Latin America and the Caribbean, CEPAL).
Positive external conditions, such as easy access to funding and
high commodity prices, played a large role in sustaining the
high growth rates of many Latin American countries in recent
years. However, part of the good growth trajectory is due to
strong domestic demand within the region, thanks to economic
reform and macroeconomic policies that have reduced fiscal
deficits and cut inflation.
The "terms of trade" improved modestly for many sovereigns in
Latin America last year, but may have worsened for countries in
Central America that are net commodity importers. CEPAL
estimates that the Latin American and Caribbean region as a
whole enjoyed a modest current account surplus in 2007, perhaps
about 0.7% of GDP, contributing to the moderation in its
commercial borrowing abroad.
The combination of good GDP growth and a falling external debt
burden had a favorable impact on sovereign creditworthiness.
Net external debt as a share of current account earnings has
fallen rapidly in countries such as Mexico, Colombia, Brazil,
and Chile, bolstering their external flexibility.
These positive trends have been reflected in sovereign ratings.
S&P upgraded nine sovereigns in 2007, including Brazil, Mexico,
Colombia, Chile, the Dominican Republic, Belize, Ecuador,
Paraguay, and Suriname. S&P also revised its outlook to
positive on several sovereigns, including Guatemala, Peru,
Panama, Uruguay, and Trinidad and Tobago. There were no
sovereign downgrades in 2007.
Improved Creditworthiness Due To Good Debt Management
Creditworthiness in the region as a whole has improved in recent
times because of good debt management and a declining debt
burden (measured as a share of GDP or as a share of current
account earnings).
Several governments have increased the share of inflation-
indexed debt in their total debt stock. Large issuers like
Brazil and Mexico have increasingly relied upon inflation-
indexed bonds, gradually extending their yield curves.
The share of inflation-indexed debt increased during 2007 in
several markets, mainly Brazil, Chile, and Costa Rica.
Inflation-indexed debt has remained relatively stable in
Colombia and the Dominican Republic, at about 5% of total
debt or slightly less. The share of such debt decreased in
Argentina, reflecting the impact of market turmoil in the second
half of 2007 that reduced the government's access to funding in
the local market.
Gross borrowing by investment-grade sovereigns is likely to
represent less than 20% of the region's total commercial
borrowing in 2008. About 80% of total borrowing in the region is
projected to be done by 'BB' rated sovereigns, thanks largely to
Brazil. The rating composition of sovereign debt in the region
could change drastically if Brazil manages to improve its
sovereign creditworthiness (long-term foreign currency rating is
'BB+', with a positive outlook). A potential upgrade for Brazil
would mean that the two largest sovereign issuers in the region,
Brazil and Mexico, would both have investment-grade long-term
foreign currency sovereign credit ratings.
Prospects for 2008 Tied to U.S. Economy
The economic panorama for the Latin American and Caribbean
region in 2008 appears less optimistic than last year due
to a downturn in the United States economy. S&P projects GDP
growth to decelerate due to worsening international conditions.
Nevertheless, GDP in both Latin America and the Caribbean is
likely to grow above 4% on average this year, modestly slower
than in 2007. GDP growth in countries like Panama, Peru,
Argentina, Uruguay, and Venezuela is likely to be above the
regional average, while growth in Mexico and El Salvador is
likely to be below average.
S&P expects 2008 to be the sixth consecutive year of GDP growth
in the region. The recent years of growth, along with other
government policies, contributed to an encouraging decline in
poverty across much of the region. According to CEPAL data, the
poverty rate fell to 31.7% of the population in Mexico in 2006
from 39.4% in 2000. Brazil enjoyed a similar decline (33.3%
from 37.5%), as did Peru (44.5% from 54.8%) and Argentina (21%
from 45.4%). The decline in poverty is likely to help
governments withstand potential political pressure to abandon
prudent macroeconomic policies in case there is a serious
slowdown in economic activity, especially in large countries
such as Mexico and Brazil.
The ongoing slowdown in the U.S. economy is likely to dampen GDP
growth worldwide. Slower global growth would hurt the region
directly through weaker export markets as well as possibly
weaker service earnings through tourism and remittances.
Remittances are estimated to be about 2% of GDP for the Latin
America and Caribbean region as a whole. Indirectly, the
slowdown in the U.S. could affect the level of international
liquidity, reducing the flow of external funds into the region.
Moreover, slower global growth could reverse recent increases in
commodity prices, resulting in worsening terms of trade for many
South American countries.
Such negative trends will likely contribute to a modest current
account deficit for the region as a whole in 2008, after several
years of surpluses. However, the growth of local capital
markets and the greater availability of local funding should
allow both sovereigns and other borrowers to better absorb the
negative impact of such trends than in the past, thanks to the
region's lower vulnerability to external shocks.
* BOND PRICING: For the Week February 25 - February 29, 2008
------------------------------------------------------------
Issuer Coupon Maturity Currency Price
------ ------ -------- -------- -----
ARGENTINA
---------
Argnt-Bocon PR11 2.000 12/3/10 ARS 62.96
Argnt-Bocon PR13 2.000 3/15/24 ARS 68.43
Arg Boden 2.000 9/30/08 ARS 29.84
Argent-Par 0.630 12/31/38 ARS 41.53
BRAZIL
------
CESP 9.750 1/15/15 BRL 62.85
CAYMAN ISLANDS
--------------
Vontobel Cayman 6.400 3/28/08 CHF 74.50
Vontobel Cayman 6.533 3/27/08 CHF 72.70
Vontobel Cayman 8.250 4/25/08 CHF 70.20
Vontobel Cayman 8.250 7/28/08 CHF 51.40
Vontobel Cayman 8.500 3/27/08 CHF 58.35
Vontobel Cayman 8.750 3/27/08 CHF 47.60
Vontobel Cayman 8.900 3/27/08 CHF 72.50
Vontobel Cayman 9.050 7/1/08 CHF 73.20
Vontobel Cayman 9.100 10/31/08 CHF 68.20
Vontobel Cayman 10.000 10/24/08 CHF 59.40
Vontobel Cayman 10.400 7/8/08 CHF 56.40
Vontobel Cayman 10.800 9/26/08 CHF 61.75
Vontobel Cayman 10.850 3/27/08 EUR 64.55
Vontobel Cayman 10.900 9/26/08 CHF 59.00
Vontobel Cayman 11.000 6/20/08 CHF 47.60
Vontobel Cayman 11.500 6/27/08 EUR 64.75
Vontobel Cayman 11.500 7/22/08 CHF 66.60
JAMAICA
-------
Jamaica Govt LRS 7.500 10/6/12 JMD 71.81
Jamaica Govt LRS 12.750 6/29/22 JMD 73.83
Jamaica Govt LRS 12.850 5/31/22 JMD 74.41
PUERTO RICO
-----------
Puerto Rico Cons. 5.900 4/15/34 USD 58.95
Puerto Rico Cons. 6.000 12/15/34 USD 57.80
VENEZUELA
---------
Petroleos de Ven 5.250 4/12/17 USD 69.12
Petroleos de Ven 5.375 4/12/27 USD 58.95
Petroleos de Ven 5.500 4/12/37 USD 57.80
Venezuela 7.000 3/31/38 USD 74.97
***********
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. Sheryl Joy P. Olano, Rizande de los Santos,
Pamella Ritah K. Jala, Tara Eliza Tecarro, Frauline S. Abangan,
and Peter A. Chapman, Editors.
Copyright 2008. All rights reserved. ISSN 1529-2746.
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Information contained herein is obtained from sources believed
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