T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Thursday, March 20, 2008, Vol. 9, No. 57
Headlines
A R G E N T I N A
BOWNE & CO: Incurs Net Loss of US$76,000 for 2007 Fourth Quarter
CASSANO ARGENTINA: Proofs of Claim Verification is Until May 8
CLINICA TODOS: Proofs of Claim Verification is Until May 7
DELTA AIR: Will Cut Flights & 30,000 Jobs
ESCUELA PANAMERICANA: Claims Verification Deadline is April 25
ESPECTACULOS DEL PILAR: Concludes Reorganization Process
EXPORTACIONES AGROINDUSTRIALES: Concludes Reorganization Process
NATIONAL ADVISORS: Trustee to Verify Proofs of Claim Until May 5
PROTEL SERVICIOS: Seeks Out-of-Court Preventive Agreement
ROYAL & SUN (ARGENTINA): Moody's Holds Global IFS Rating at B2
SCO GROUP: Bankruptcy Court Sets April 21 as Claims Bar Date
* ARGENTINA: 2008 Provincial Finances May Deteriorate, S&P Says
B A H A M A S
HARRAH'S ENTERTAINMENT: Reports US$47.8MM Net Loss in 4th Qtr.
B O L I V I A
COEUR D'ALENE: Underwriters to Exercise Option for Senior Notes
INTERNATIONAL PAPER: Analysts Downgrade Firm's Shares to Neutral
B R A Z I L
ABITIBIBOWATER INC: Moody's Junks Corporate Family Ratings
AES CORP: May Acquire Banco Nacional's Stake in Brasiliana
BANCO NACIONAL: AES Corp May Buy Firm's Stake in Brasiliana
BANCO NACIONAL: Okays BRL10MM Financing for Hospital Expansion
BANCO NACIONAL: Okays BRL6.6 Billion in Loans for Power Sector
COMPANHIA ENERGETICA: Two Firms Unsure of Bidding for Company
COMPANHIA PARANAENSE: Net Income Rises to BRL1,107 Mil. in 2007
DELPHI CORP: Completes Rights Offering for 62,707,305 Shares
DELPHI CORP: Moody's Holds (P)B2 Rtg. on US$3.7-Bil. Term Loans
ENERGIAS DO BRASIL: Hasn't Decided on Companhia Energetica Bid
GENERAL MOTORS: Strike Cues S&P to Put Ratings on Negative Watch
GOL LINHAS: Unit Implements Sabre Airline Solutions
NORTEL NETWORKS: Inks Settlement Agreement with Vonage
USINAS SIDERURGICAS: Will Install Hot Strip Mill at Cosipa
C A Y M A N I S L A N D S
AAM EMERGING: Proofs of Claim Filing Deadline is March 21
BRAZVEST FUND: Proofs of Claim Filing Will End on March 25
CHEYNE GLOBAL: Proofs of Claim Filing is Until March 21
FINANCIAL RISK: Proofs of Claim Filing Deadline is March 21
GLOBALVEST VALUE: Proofs of Claim Filing Will End on March 25
LATINVEST HOLDINGS: Proofs of Claim Filing is Until March 25
LATINVEST PARTNERS: Proofs of Claim Filing Deadline is March 25
TIME FOR US: Sets Final Shareholders Meeting for March 24
UTILITIVEST II: Proofs of Claim Filing Deadline is March 25
UTILITIVEST III: Proofs of Claim Filing is Until March 25
C H I L E
INVENSYS PLC: Fitch Withdraws BB Rating on Senior Notes
C O L O M B I A
BANCO PICHINCHA: To Sell Inversora Pichincha to AIG Consumer
D O M I N I C A N R E P U B L I C
GUESS? INC: Co-Founder Wins Agreements From Christie's
PRC LLC: Can Sell Real Property to Brett Houston for US$2.2 Mil.
G U A T E M A L A
ALLIANCE ONE: S&P Changes Outlook to Stable; Retains 'B+' Rating
J A M A I C A
AIR JAMAICA: Union Seeks Ministry's Intervention in Wage Talks
AIR JAMAICA: Public Accounts Comm. Probes Contract Extensions
NACIONAL COMMERCIAL: Fights Olint's Injunction in Court
M E X I C O
AMERICAN AXLE: Work Stoppage Prompts S&P's Negative Watch
DURA AUTOMOTIVE: Files Amended First Revised Chapter 11 Plan
DURA AUTO: Claims Treatment & Classification of Revised Plan
DURA AUTO: Unveils Financial Projections Under Revised Plan
FEDERAL-MOGUL: Professionals Bill US$323 Mil. in Fees & Expenses
INNOPHOS HOLDINGS: Posts US$3.9 Mil. Net Loss for 4th Quarter
LEAR CORP: S&P Puts Ratings on Negative Watch on Extended Strike
ODYSSEY RE: Okays Additional US$200 Mln Share Repurchase Program
N I C A R A G U A
INTERPUBLIC GROUP: Put Option for 4.50% Senior Notes Expires
P U E R T O R I C O
COOPER COMPANIES: Picks Nine Directors; Hires KPMG as Auditors
V E N E Z U E L A
HARVEST NATURAL: Posts US$57.2 Million Net Loss in December 2007
PETROLEOS DE VENEZUELA: Wins Exxon Lawsuit
PETROLEOS DE VENEZUELA: CITGO Commends PDVSA on Lawsuit Victory
X X X X X X
* Moody's Sovereign Issuers Has Increased to 107 in 2007
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A R G E N T I N A
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BOWNE & CO: Incurs Net Loss of US$76,000 for 2007 Fourth Quarter
----------------------------------------------------------------
Bowne & Co. Inc. reported net loss of US$76,000 for the 2007
fourth quarter ended Dec. 31 compared to US$2.234 million for
the 2006 fourth quarter. For the full fiscal year ended
Dec. 31, 2007, the company's net income was at US$27.104 million
compared to US$1.768 million net loss in 2006.
For the year ended Dec. 31, 2007, revenue was US$850.6 million,
up US$16.9 million from US$833.7 million in 2006. Gross margin
improved to 37.5% from 34.8% and segment profit increased 29.7%,
or US$16.2 million, to US$70.6 million in 2007 compared to 2006.
Income from continuing operations increased to US$27.3 million
from US$12.2 million in 2006.
For the fourth quarter, revenue increased to US$194.7 million
from US$191.4 million. Gross margin improved to 38.0% from
34.7% and segment profit increased 45.4%, or US$3.6 million to
US$11.4 million in 2007 from US$7.9 million in 2006.
"2007 was a year of strong operating performance and we
effectively positioned the company for future growth," David J.
Shea, chairman and chief executive officer, said. "Since 2006,
we have successfully implemented our strategic vision by
introducing new products and services, completing several
strategic acquisitions and continuing to grow our non-
transactional revenue."
"During this two-year period of growth, we have also streamlined
and automated many processes thereby improving efficiencies
while reducing costs," Mr. Shea continued.
"Client demand for more of our services increasingly overlaps;
the technology serving them and the marketing and channel
requirements for reaching them are virtually identical," William
P. Penders, president of Bowne, said. "Last year, we announced
several significant changes to our organizational structure and
manufacturing capabilities to consolidate our operations into a
unified model that supports our ability to market and deliver
our full range of services."
For the year ended Dec. 31, 2007, cash and marketable securities
increased US$18.1 million from Dec. 31, 2006. The company had
net cash provided by operating activities of US$98.4 million for
the year ending Dec. 31, 2007 as compared to US$3.6 million for
the year ending Dec. 31, 2006. This US$95 million increase was
primarily driven by the improvement in operating results and by
the reduction in accounts receivable resulting from higher
collections of receivables during 2007 and as a result of
improved billing and collection efforts.
Accounts receivable decreased approximately US$18.7 million from
December 2006 principally due to lower days sales outstanding.
Days sales outstanding improved 10 days to 62 days in
December 2007 from 72 days in December 2006. Financial
Communications work-in-process inventory was US$15.5 million at
Dec. 31, 2007 compared to US$18.7 million at Dec. 31, 2006. The
company had no borrowings outstanding under its US$150 million
five-year senior, unsecured revolving credit facility as of
Dec. 31, 2007.
The share repurchase authorization was completed in 2007. From
December 2004, the inception of the company's share repurchase
program, through Dec. 31, 2007, Bowne spent US$196.3 million to
repurchase 12.9 million shares. In 2007, the company spent
US$51.7 million repurchasing 3.1 million shares at an average
price per share of US$16.52, of which approximately 700,000
shares were purchased in the fourth quarter. Total shares
outstanding as of Feb. 29, 2008 were 26,307,627.
As of Dec. 31, 2007, the company's balance sheet showed total
assets of US$509.417 million, total liabilities of US$258.938
million and a total stockholders' equity of US$250.479 million.
About Bowne & Co. Inc.
Headquartered in New York City, Bowne & Co. Inc. (NYSE: BNE)
-- http://www.bowne.com/ -- provides financial, marketing and
business communications services around the world. The company
has 3,200 employees and 60 offices worldwide. The company's
Latin American offices are located in Argentina, Brazil and
Mexico.
* * *
Bowne & Co. Inc. still carries Moody's 'Ba3' corporate family
rating which was affirmed in January 2007. The outlook remains
positive.
CASSANO ARGENTINA: Proofs of Claim Verification is Until May 8
--------------------------------------------------------------
Francisco Marcelo Fabian, the court-appointed trustee for
Cassano Argentina S.A.'s bankruptcy proceeding, will be
verifying creditors' proofs of claim until May 8, 2008.
Mr. Fabian will present the validated claims in court as
individual reports on June 19, 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 Cassano 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 Cassano Argentina's
accounting and banking records will be submitted in court on
Aug. 15, 2008.
Mr. Fabian is also in charge of administering Cassano
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:
Francisco Marcelo Fabian
Uruguay 328 Capital Federal
Buenos Aires, Argentina
CLINICA TODOS: Proofs of Claim Verification is Until May 7
----------------------------------------------------------
Marcelo Carlos Rodriguez, the court-appointed trustee for
Clinica Todos Los Santos S.A.'s bankruptcy proceeding, will be
verifying creditors' proofs of claim until May 7, 2008.
Mr. Rodriguez will present the validated claims in court as
individual reports on June 5, 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 Clinica Todos 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 Clinica Todos'
accounting and banking records will be submitted in court on
Aug. 5, 2008.
Mr. Rodriguez is also in charge of administering Clinica Todos'
assets under court supervision and will take part in their
disposal to the extent established by law.
The trustee can be reached at:
Marcelo Carlos Rodriguez
Cerrito 146
Buenos Aires, Argentina
DELTA AIR: Will Cut Flights & 30,000 Jobs
-----------------------------------------
Delta Air Lines Inc. chief executive officer, Richard Anderson,
and president and chief financial officer, Edward H. Bastian,
wrote a statement on March 18, 2008, to the company's global
staff discussing the company's move to address record fuel
prices and the weakening U.S. economy.
In the statement, the executives said that despite the
significant momentum at Delta, the rapid increase in fuel costs
to record highs and the weakening U.S. economy are placing
pressure on the business. In the past three months, fuel prices
have climbed nearly 20% and 2008 fuel bill is now expected to
increase by nearly US$900 million compared to the business plan
(based on US$90 per barrel fuel) and more than US$2 billion over
2007.
Messrs. Anderson and Bastian said Delta must act quickly and
decisively, as speed in execution leads to success. With fuel
expected to remain at approximately US$100 per barrel for the
foreseeable future, the officers indicated that they must take
action to keep Delta strong. The executives are scheduled to
announce the plans to manage revenues, capacity, fleet and costs
at an investor conference in New York. They said that efforts
are focused on four key areas: continued international
expansion, further domestic capacity rationalization, improving
RASM to more than 100% of industry average, and a heightened
focus on cost and cash flow discipline, which will include
voluntary reductions in staff.
Voluntary Headcount Reductions
The executives disclosed plans to reduce cost and domestic
capacity will change the number of people needed to operate the
airline. To manage these reductions, in April the company will
offer two comprehensive voluntary programs for U.S., non-pilot
employees:
1. The 60-Point Retirement Program for those who are already
eligible for retirement or for those whose age and years
of service add up to at least 60, with 10 or more years of
service.
2. The Early Out Program for frontline employees with 10 or
more years of service and for administrative and
management employees with one or more years of service.
According to the statement, both programs offer a severance
payment, travel privileges, and additional benefits to manage
career transitions. Specifics differ based on age, retirement
eligibility and years of service. Approximately 30,000
employees will be eligible for one of the two voluntary
programs.
In addition to meeting the company's business needs, these
programs are influenced by the many requests for early
retirement and early out programs that give an opportunity to
make a career choice that benefits the worker, their family and
the company. Importantly, for frontline employees, the company
expects to achieve the necessary reduction of approximately
1,300 positions through attrition, retirements, limited hiring
and the introduction of these voluntary programs. The number of
frontline employees who want to participate in these programs
will not be limited.
For the administrative and management teams, the company has
even more aggressive productivity improvement targets, including
the reduction of more than 700 merit positions. The executives
hope these enhanced voluntary programs will minimize the need
for involuntary reductions for the merit group.
In the next few weeks Delta workers will have opportunities to
learn more about these programs prior to the April 14 to May 12
enrollment window. Beginning March 31, DeltaNet will be updated
with more information and the Employee Service Center will be
available to answer questions. These programs reflect yet
another aspect of the Delta Difference. The company's overall
flexibility allows it to offer creative, generous, employee-
focused solutions to achieve the necessary reductions
voluntarily.
In addition to these initiatives, the company said it is
deferring any decision on 2008 pay increases until it better
understands the outlook for its business. Delta, according to
the statement, remains committed to moving toward industry
standard pay over time; however, it is important that it
proceeds cautiously in the current economic and fuel climate.
Domestic Rationalization
Domestically, fuel prices -- combined with a weakening domestic
economy -- have put significant pressure on the profitability of
Delta's U.S. network. Because of this, the company is reducing
2008 domestic capacity by an additional 5% by August, resulting
in a 10% year-over-year domestic reduction. These reductions
will be made through a combination of decreased utilization and
parking 15-20 mainline aircraft and 20-25 regional jets. Delta
will continue to be an aggressive domestic competitor and will
complete these capacity reductions primarily by thinning
frequencies and reducing point-to-point routes. As with past
schedule reductions, changes will also be focused at off-peak
times or in markets where regional jets are not profitable at
the current fuel levels.
International Expansion
The executives also stated that this summer more than 40% of
Delta's capacity will be dedicated to international flying where
fares more readily cover higher fuel costs. They said they
firmly believe that global expansion, and the network diversity
that it provides, is key to long-term success.
Delta is in its third consecutive year of record international
expansion, including the important additions of Shanghai and
Heathrow in the first quarter, the statement revealed. Delta's
international growth will continue to be supported by
investments in its fleet, including the continued delivery of 22
international-capable 737-700s, 757-200-ETOPS and 777-200LRs
through 2009. Because of their importance in achieving the
company's international growth, Delta has no plans to defer or
delay the delivery of these aircraft. While the company will
make small adjustments to its international plans to ensure it
is focused on the most profitable routes, the company will still
increase international capacity by more than 15% in 2008. Any
adjustments to international flying will focus on reducing
frequencies or eliminating select seasonal routes, the statement
said. For example, Delta will serve Edinburgh this summer from
the company's JFK hub but will not reinstate seasonal flights
from Edinburgh to Atlanta.
RASM Improvement
Based on the statement, Delta made significant progress in
closing its unit revenue gap versus the industry, moving from
86% of industry average in 2005 to 95% last year. So far this
year, the company has reached 98% of industry RASM and it must
accelerate efforts to improve RASM performance to more than 100%
of industry average in 2008 -- up from Delta's original goal of
98%. Delta, the statement asserted, is aggressively acting to
recover the fuel price increase in its fare structure. In the
past year, the company has regularly increased systemwide
domestic fares, boosted fuel surcharges, increased international
fares, and increased select service fees.
Cost and Cash Flow Discipline
While Delta will partially offset fuel's impact through fare
increases and long-term fuel hedging program, the domestic
environment limits the company's ability to increase fares to
cover the full cost of fuel, the statement warned. Delta's
current fuel hedges for 2008 have a value of approximately
US$300 million and cover 25% of its 2008 requirements.
According to the statement, Delta must look to all areas of its
business for cost savings and revenue enhancements. Delta has
now targeted $550 million in productivity initiatives for 2008,
a US$150 million increase over its plan. Every Delta employee
will play a role in achieving productivity goal, the statement
stressed.
The company is also taking a prudent approach to cash outflows
and have identified $200 million in capital expenditures to be
deferred or eliminated, the statement revealed. Delta will sell
mainline and regional aircraft as they are removed from the
schedule. By selling these aircraft, Delta said it can improve
its liquidity and eliminate overhead.
Exploring Strategic Options
The doard of directors and senior management will continue to
explore Delta's strategic options, the statement asserted. As
the company has previously stated, it supports industry
consolidation as a vehicle to ensure Delta remains an industry
leader. The special committee of the board continues to work
with senior leadership team on strategic alternatives, based on
the statement. The board, at its discretion, will act in the
best interest of all Delta stakeholders, Delta assured. While
the rise in fuel and the weakening economy present near-term
challenges, Delta's long-term view remains that consolidation
may be the right course of action.
At the end of the statement, Messrs. Anderson and Bastian
comforted employees by saying that through all of Delta's many
challenges, the employees have shown unquestionable commitment
and unparalleled service.
About Delta Air
Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) --
http://www.delta.com/-- is the world's second-largest airline
in terms of passengers carried and the leading U.S. carrier
across the Atlantic, offering daily flights to 328 destinations
in 56 countries on Delta, Song, Delta Shuttle, the Delta
Connection carriers and its worldwide partners. Delta flies to
Argentina, Australia and the United Kingdom, among others.
The company and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923).
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents
the Debtors in their restructuring efforts. Timothy R. Coleman
at The Blackstone Group L.P. provides the Debtors with financial
advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at
Akin Gump Strauss Hauer & Feld LLP, provide the Official
Committee of Unsecured Creditors with legal advice. John
McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James
S. Feltman at Mesirow Financial Consulting, LLC, serve as the
Committee's financial advisors.
The Debtors filed a chapter 11 plan of reorganization and
disclosure statement explaining that plan on Dec. 19, 2007. On
Jan. 19, 2007, they filed revisions to the plan and disclosure
statement, and submitted further revisions to the plan on
Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors'
disclosure statement. In April 25, 2007, the Court confirmed
the Debtors' plan. That plan became effective on
April 30, 2007. The Court entered a final decree closing 17
cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News,
Issue No. 92; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported in the Troubled Company Reporter-Latin America on
Jan. 18, 2008, Standard and Poor's said that media reports that
Delta Air Lines Inc. (B/Positive/--) entered into merger talks
with UAL Corp. (B/Stable/--) and Northwest Airlines Corp.
(B+/Stable/--) will have no effect on the ratings or outlook on
Delta, but that confirmed merger negotiations would result in
S&P's placing ratings of Delta and other airlines involved on
CreditWatch, most likely with developing or negative
implications.
ESCUELA PANAMERICANA: Claims Verification Deadline is April 25
--------------------------------------------------------------
Roberto Di Martino, the court-appointed trustee for Escuela
Panamericana de Arte S.A.'s bankruptcy proceeding, will be
verifying creditors' proofs of claim until April 25, 2008.
Mr. Di Martino will present the validated claims in court as
individual reports on June 9, 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 Escuela Panamericana 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 Escuela
Panamericana's accounting and banking records will be submitted
in court on Aug. 6, 2008.
Mr. Di Martino is also in charge of administering Escuela
Panamericana's assets under court supervision and will take part
in their disposal to the extent established by law.
The trustee can be reached at:
Roberto Di Martino
Avenida Callao 449
Buenos Aires, Argentina
ESPECTACULOS DEL PILAR: Concludes Reorganization Process
--------------------------------------------------------
Espectaculos del Pilar S.A. has concluded its reorganization
process, according to data released by Infobae on its Web site.
The closure came after the National Commercial Court of First
Instance in Buenos Aires homologated the debt plan signed
between the company and its creditors.
EXPORTACIONES AGROINDUSTRIALES: Concludes Reorganization Process
----------------------------------------------------------------
Exportaciones Agroindustriales Argentinas S.A. has concluded its
reorganization process, according to data released by Infobae on
its Web site. The closure came after the National Commercial
Court of First Instance in Buenos Aires homologated the debt
plan signed between the company and its creditors.
NATIONAL ADVISORS: Trustee to Verify Proofs of Claim Until May 5
----------------------------------------------------------------
Horacio Fernando Crespo, the court-appointed trustee for
National Advisors S.A.'s reorganization proceeding, will be
verifying creditors' proofs of claim until May 5, 2008.
Mr. Crespo will present the validated claims in court as
individual reports on June 18, 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 National Advisors 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 National Advisors'
accounting and banking records will be submitted in court on
Aug. 14, 2008.
Creditors will vote to ratify the completed settlement plan
during the assembly on Feb. 18, 2009.
The trustee can be reached at:
Horacio Fernando Crespo
Maipu 464
Buenos Aires, Argentina
PROTEL SERVICIOS: Seeks Out-of-Court Preventive Agreement
---------------------------------------------------------
The National Commercial Court of First Instance in Buenos Aires
is studying the request for an out-of-court preventive agreement
submitted by Protel Servicios S.A.
Protel Servicios started reorganization after the court approved
its petition.
The debtor can be reached at:
Protel Servicios S.A.
Cordoba 838
Buenos Aires, Argentina
ROYAL & SUN (ARGENTINA): Moody's Holds Global IFS Rating at B2
--------------------------------------------------------------
Moody's Investors Service affirmed the ratings and stable
outlook on the B2 global local-currency insurance financial
strength (IFS) rating and the A1.ar IFS rating on Argentina's
national scale of Royal & Sun Alliance Seguros (Argentina); the
agency has also affirmed the ratings and outlook on the Baa3
global local-currency IFS rating and the Aa1.uy IFS rating on
the Uruguayan national scale of Royal & Sun Alliance Seguros
(Uruguay). Moody's notes that the two insurance companies are
subsidiaries of Royal & Sun Alliance Insurance plc. This rating
and outlook affirmation follows the change in the outlook of
Royal & Sun Alliance Insurance's A3 IFS rating to positive
from stable announced on Feb. 29, 2008.
The rating agency explained that although the ratings of the two
subsidiaries in Latin America include some implicit support from
their ownership and affiliation with the larger Royal & Sun
Alliance group, the ratings primarily reflect the stand-alone
credit profile of the companies. Moody's added that the ratings
of the two subsidiaries are not directly linked to the parent
company, Royal & Sun Alliance Insurance Group Plc's rating as
there is no explicit support from the parent, whose policy is
not to provide guarantees to its subsidiaries. The ratings of
these two companies reflect that they conduct their operations
in countries with operating environments that are much weaker
than those of Europe; moreover, the two subsidiaries have
investment concentrations in speculative grade assets and highly
volatile profitability. These rating factors exert more
influence on their ratings than the positive financial strength
trend of their parent company, according to Moody's.
Based in Montevideo, Uruguay, Royal & Sun Alliance Seguros
(Uruguay), reported a net profit of UYU10.1 million during 2007
fiscal year ended Dec. 31, 2007. Total assets amounted to
UYU850.5 million and shareholders' equity was reported at
UYU358.6 million.
Based in Buenos Aires, Argentina, Royal & Sun Alliance Seguros
(Argentina) reported a net loss of ARS12.4 million during the
first half of the 2007/2008 fiscal year ended Dec. 31 2007.
This was the result of underwriting losses of ARS11.3 million
coupled with a negative financial result of ARS1.1 million.
Total reported assets amounted to ARS357.6 million, and
shareholders' equity reached approximately ARS60 million at
Dec. 31, 2007.
SCO GROUP: Bankruptcy Court Sets April 21 as Claims Bar Date
------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
established April 21, 2008, as deadline for creditors of The SCO
Group Inc. and its debtor-affiliates to file proofs of claim.
All entities, including governmental units, which assert any
prepetition claims against the Debtors, must deliver proofs of
claim with Epiq Bankruptcy Solutions, LLC, the claims, noticing
and balloting agent of these Chapter 11 cases.
Original proofs of claims must submitted no later than 4:00
p.m., Eastern Time, at:
The SCO Group Inc.
c/o Epiq Bankruptcy Solutions LLC
FDR Station
P.O. Box 5012
New York, NY 10150-5012
Headquartered in Lindon, Utah, The SCO Group Inc. (Nasdaq: SCOX)
fka Caldera International Inc. -- http://www.sco.com/--
provides software technology for distributed, embedded and
network-based systems, offering SCO OpenServer for small to
medium business and UnixWare for enterprise applications and
digital network services.
The company has office locations in Australia, Austria,
Argentina, Brazil, China, Japan, Poland, Russia, the United
Kingdom, among others.
The company and its affiliate, SCO Operations Inc., filed for
Chapter 11 protection on Sept. 14, 2007, (Bankr. D. Del. Lead
Case No. 07-11337). Epiq Bankruptcy Solutions, LLC, acts as the
Debtors' claims and noticing agent. The United States Trustee
failed to form an Official Committee of Unsecured Creditors in
these cases due to insufficient response from creditors. The
Debtors' exclusive period to file a chapter 11 plan expires on
March 12, 2008. The Debtors' schedules of assets and
liabilities showed total assets of US$9,549,519 and total
liabilities of US$3,018,489. The Debtors’ exclusive period to
file a Chapter 11 plan expires on May 11, 2008.
* ARGENTINA: 2008 Provincial Finances May Deteriorate, S&P Says
---------------------------------------------------------------
While the Republic of Argentina (B+/Stable/B sovereign credit
ratings) has not issued new bonds in the international capital
markets since it cured its default in 2005, two of its
provinces, Buenos Aires and Neuquen, together raised US$1.125
billion over the last one and one half years. Will other
provinces follow suit? Standard & Poor's Ratings Services
estimates that an additional US$1 billion could be issued by
provincial governments in international markets in 2008.
This commentary reviews the fiscal performances of Argentina's
provinces in the wake of the 2001 crisis, highlights how the
institutional relationship between the central government and
the provinces has changed, and explains current restrictions on
the provinces' fiscal and financial autonomy. The purpose is
twofold: to evaluate the potential impact of provincial
developments on Argentina's consolidated fiscal health, and to
assess the likelihood that the provinces will increase their
participation in global capital markets.
Continuing deterioration of provincial fiscal outlooks is
expected over the medium term, driven by a sustained increase in
salaries that weighs more heavily on provincial budgets than on
that of the republic. However, fiscal implications at the
consolidated level in Argentina are still not material, given
still-low provincial deficits and the more solid fiscal position
expected at the central government level. Nonetheless,
increasing fiscal strain at the provincial level, in particular
in the Province of Buenos Aires, will represent a greater
challenge in the political than the fiscal arena and could
result in new conflicts between some provinces and the central
government in the future. While these issues are of no great
concern over the short term, given the ability of the central
government to "bridge the conflict" by transferring
discretionary funds to the provinces, the risk will certainly
increase in proportion to the provincial fiscal imbalance.
How The Intergovernmental System Changed After The Crisis
While there is consensus among analysts on the structural
weakness of provincial finances in Argentina, there is no
consensus on the role this fragility played in the development
of the crisis that exploded in 2001. More important, however,
there has been no substantial debate at the political level over
how to strengthen provincial finances over the medium to long
term. Discussions about reforming the system that regulates
intergovernmental issues in Argentina are not part of the
political debate underway in the country today. The political
cost of dealing with this issue is high. Nonetheless, the 2001-
2002 crisis reconfigured the economic and fiscal structure of
the provinces in various ways.
First, in a purely fiscal move that proved negative to
provincial finances, the central government's post-crisis tax
structure introduced two new taxes -— export duty and the
financial transaction tax -— the revenue from which, unlike for
most taxes in Argentina, is not transferable to the provinces.
Therefore, provincial governments cannot count upon additional
fiscal revenue from these new taxes, which in 2007 accounted for
17.8% of total central government revenue and 4.4% of the
country's GDP. This is one of the factors supporting a stronger
fiscal performance at the national than at the provincial level.
Second, there was a major modification to the provincial debt
structure. Before the crisis, most of the debt was held by the
private sector. Domestic and international bonds and commercial
loans accounted for about 70% of provincial indebtedness in
2000. The federal government assumed a material portion of
provincial debt at the end of 2001, thereby becoming the
provinces' most important creditor; it now holds 68% of
provincial debt.
The combination of these two factors -— a central government
with stronger fiscal results that is also the provinces' major
creditor —- modified the distribution of power between the
central government and the provinces. It gave more discretion
to the former in intervening in the policy decisionmaking of the
latter. Provincial fiscal and financial autonomy was therefore
restricted, making it easier for the central government to exert
some control on provincial fiscal performance.
The financial assistance provided by the central government to
the provinces since 2002 therefore enabled it to impose
restrictions that were impossible to implement in the 1990s.
The most important among them was to constrain the issuance of
new debt. Unless in compliance with preset fiscal and debt
targets prescribed by both the Fiscal Responsibility Law, signed
in 2004, and bilateral agreements signed each year between the
central government and the provinces (Programas de Asistencia
Financiera), provincial governments cannot issue new debt.
Although this restriction still has to gain credibility, its
mere existence provides the central government with a new
instrument for managing the provincial debt problem. Both the
Fiscal Responsibility Law and Programas de Asistencia Financiera
introduced important tools for dealing with provincial finances.
However, as with numerous economic legislation implemented in
Argentina in the past (e.g., the Convertibility Law and other
laws that protect depositors), its strength will only gain
credibility once tested. In addition, the original law already
incorporated some contradictions to other current legislation in
Argentina (e.g., the Federal Education Law, which obliges
provinces to increase expenditure on education at a pace that
make it impossible to comply with the Fiscal Responsibility Law
limit on nominal expenditure growth).
However, the most relevant aspect of the intergovernmental
relationship -— namely, the formal system that regulates the
relationship between different levels of governments in
Argentina, the now internationally famous coparticipation
regime -— did not change after the crisis. The system must be
modernized to fulfill the two basic objectives that any system
of this type requires: first, distributing funds according to a
criteria of efficiency (e.g., transferring more resources to the
entities that do a better job collecting their own), and second,
achieving criteria of equality (e.g., compensating relatively
poorer provinces). The current system has been unsuccessful in
meeting these two requirements. However, the political process
necessary to reform the system requires that the coparticipation
law be approved by each single provincial government and
legislature in Argentina, making the process extremely risky for
all political leaders and politically impossible to pass. This
old intrinsic problem of getting a new law passed is what
actually led negotiators to pass a temporary (Coparticipation
Law) instead of a permanent law back in 1988. Nonetheless,
despite all the structural problems in Argentina's
intergovernmental relations, the coparticipation system does not
compare that unfavorably to other systems in Latin America and
clearly does not preclude the provinces from doing a better job
in taking care of their own finances.
How Provincial Finances Are Faring
Provincial fiscal performance in Argentina, unlike that of the
republic, depends to a large degree on the level of real
salaries in the economy. Therefore, fiscal performance after
the crisis could be split into two periods: before and after
2005. Before 2005, uncertainty about the strength of the
recovery matched the still-prevalent sense of fragility among
the population in the wake of the economy's extraordinary
meltdown and its social costs, precluding major claims on salary
increases. The rapid increase in economic activity beginning in
2003, combined with increasing inflation, contributed to
correcting the fiscal performance through the revenue part of
the provincial budget. The beginning of the electoral cycle,
starting with congressional elections in October 2005, changed
this scenario. Negotiations for salary increases across all
sectors grew as a significant credit factor as the country moved
closer toward the 2007 presidential elections, and is probably
the most significant credit factor evolving today for both the
provinces, because of its direct impact on their finances and
the federal government, because of the direct impact on
inflation.
Payroll expenses represent about 50% of the provinces'
consolidated budgets and only 12% of the central government's.
Similar salary increases will affect the provinces' budgets
proportionally much more than that of the central government.
This structural difference is explained by the fact that most
educational and health expenses were transferred to the
provinces in 1992 and 1993. Therefore, as happened clearly
throughout 2007, salary increases are announced at the central
level but paid and suffered fiscally at the provincial level.
This is another sign of how vulnerable and fragile the provinces
remain to decisions made in the capital of Argentina, despite
the preponderant federal structure the country has on paper. As
mentioned below, this vulnerability remains as one of the key
credit weaknesses in provincial governments, in particular in
the Province of Buenos Aires, which will remain dependent upon
whatever the central government decides to transfer as
discretionary revenue.
The recovery peaked in 2004 and, while the economy continues to
grow strongly, pressures for significant salary increases began
affecting provincial performance in 2005. Although the
provinces continued to run primary surpluses until 2007, there
has been a deteriorating trend since 2005 despite the country's
high economic growth rates. Pressures grew in 2007 and in the
beginning of 2008, due to high inflation that intensified claims
for salary increases.
The fiscal surplus provincial governments exhibited until 2006
was replaced in 2007 by a small deficit estimated ARS100 million
(US$32 million; estimate from Economia y Regiones, official
figures not yet available). However, the fiscal stance is not
similar across all Argentine provinces. The Province and City
of Buenos Aires—the country's two largest entities—showed
significant fiscal deficits in 2007 (ARS1.3 billion and ARS300
million, respectively) that were partially offset by the rest of
the provinces. Not surprisingly, their payroll expenses are the
highest of all Argentine provinces in terms of their budgets.
The good news is that the provincial deficit is still
insignificant in terms of GDP (about 0.1%). However, the
deficit occurred at the peak of the cycle and S&P expects
Argentina's GDP to slow in the future. S&P therefore expects
balances to deteriorate rather than improve in the medium term.
Economía y Regiones projects a deficit of ARS1.8 billion for
2008, which, although growing, represents only about 0.2% of
GDP. Therefore, over the short to medium term, the problem
seems more political than fiscal. The provinces by themselves
will not damage Argentina's fiscal stance as long as the central
government performs well, but the provincial deterioration is
expected to increase—adding political noise to the country's
always-challenging governability.
Prospects For New Bond Issuance
While the large provinces may issue more bonds, others provinces
will be financed by the central government.
Assuming increasing salary pressures in some cases and higher
requirements of funds for investment in infrastructure in
others, it is pretty clear that the provinces will need
financing. Nonetheless, only a few of Argentina's 23 provinces
and the City of Buenos Aires are expected to tap international
capital markets over the near term. However, since the larger
provinces may be issuing debt, the total amount could be
relatively high. S&P estimates total capital debt issuance by
Argentine provinces at US$1 billion.
Several factors explain why only few provinces are expected to
issue bonds. First, and despite the substantial decline in
provincial debt levels compared to revenue, most of the
provinces still have high level of indebtedness. Therefore,
most of them will be denied access to borrowing unless they
reduce their debt ratios dramatically, something that is not
expected to happen any time soon. Most of the provinces
currently have debt levels that surpass the size of their
respective budgets, and debt services above or approaching 15%
of revenue.
More importantly, the central government, their major creditor,
is expected to continue to refinance their debt -— and with
that, to continue to have a say in the provinces internal
policymaking process.
However, not all provincial debt was restructured with the
central government in 2001. International capital market bonds
continued to represent about 17% of the provinces' total debt in
2007, similar to its level before the crisis. Most of the
US$5.15 billion of bonds outstanding at year-end 2007
corresponded to international bonds issued by only five entities
(all rated by S&P): the provinces of Buenos Aires (eight
international issues outstanding), Mendoza (1), Neuquen (2), and
Salta (1), and the autonomous City of Buenos Aires (4).
One interesting perspective is that economic and fiscal
distribution across Argentina's provinces is so unequal that
the Province and City of Buenos Aires account together for about
60% of the country's GDP, 46% of the country's population, and
36% of the consolidated provincial budget. Having said that,
potential bond issuances by the Province of Buenos Aires (with a
budget estimated at US$10.4 billion in 2008) or the City of
Buenos Aires (estimated at US$3.7 billion), could be as
attractive for institutional investors as some sovereign issuers
in South America, such as the Republic of Ecuador (with a
government budget of US$8.4 billion) or the Oriental Republic of
Uruguay (US$7 billion).
Larger provinces have sophisticated debt management systems that
allow them to manage relatively large levels of capital market
debt appropriately. In addition, several provinces restructured
their international bonds after the crisis, offering better
terms than the sovereign in the hope this would help provide
access to international markets. It is worth mentioning that,
unlike the sovereign, there is no "holdout" problem at the
provincial level. International debt restructurings carried on
by the Province and City of Buenos and the Province of Mendoza
all were very well received and reached high levels of
acceptance. In addition, at a time when exotic issuers were
becoming fashionable, these provinces could easily attract
substantial interest from institutional investors.
Among other governments, S&P expects both the Province and City
of Buenos Aires to issue new international bonds over the next
three to six months as new administrations now are in office --
the terms began on Dec. 10, 2007, for most entities -- and as
long as reasonable international conditions return to the
markets.
The Outlook For 2008 And Beyond
Provincial finances are expected to continue to deteriorate
through 2008. The macroeconomic relevance of any deficits is
not material. However, any continuing deterioration in the
provinces or a material increase in the Province of Buenos
Aires' deficit would be focus of increasing attention for
political rather than fiscal considerations.
While the provinces are not expected to become a source of
fiscal instability over the medium term, the quality of
provincial performance will still depend upon the central
government. This is because most of the key issues governing
provincial finances are still under its control, including the
source of funds to cover financing needs through mechanisms such
as the Programas de Asistencia Financiera and the possibility of
renegotiating the terms of provincial debt restructured at the
end of 2001, which bear costly for the provinces indexation to
inflation. In addition, as the tax structure continues to
benefit the sovereign more than the subnational governments, the
division of power will continue to favor a relatively strong
fiscal position at the central level and a slowly deteriorating
position for the provinces, increasing the central authority's
leverage in determining the luck and health of provincial
finances. In a few words: bad but not dangerous.
=============
B A H A M A S
=============
HARRAH'S ENTERTAINMENT: Reports US$47.8MM Net Loss in 4th Qtr.
--------------------------------------------------------------
Harrah's Entertainment Inc. reported a fourth-quarter net loss
of US$47.8 million, compared with net income of US$47.6 million
in the 2006 fourth quarter. On a GAAP basis, fourth-quarter
income from operations was US$145.8 million, compared with
US$229.7 million in the year-ago quarter.
The fourth-quarter 2007 loss was due to impairment charges of
US$169.6 million recorded in the period for certain intangible
assets.
On Jan. 28, 2008, Harrah's Entertainment was acquired by
affiliates of Apollo Global Management, LLC and TPG Capital, LP
in a transaction valued at US$29.7 billion, including assumption
of US$12.4 billion of debt but excluding transaction costs.
Harrah's stockholders received US$90 cash for each share of
common stock, or a total of US$17.3 billion.
Harrah's Entertainment, Inc. -- http://www.harrahs.com-- is the
world's largest provider of branded casino entertainment. Since
its beginning in Reno, Nevada, more than 70 years ago, Harrah's
has grown through development of new properties, expansions and
acquisitions, and now owns or manages casinos on four
continents. The company's properties operate primarily under the
Harrah's, Caesars and Horseshoe brand names; Harrah's also owns
the London Clubs International family of casinos and the World
Series of Poker. The company has operations in Bahamas.
* * *
As reported in the Troubled Company Reporter-Latin America on
Jan. 21, 2008, Standard & Poor's Ratings Services lowered its
ratings on Harrah's Entertainment Inc. and its wholly owned
subsidiary, Harrah's Operating Co. Inc. The corporate credit
rating on each entity was lowered to 'B+' from 'BB'. In
addition, S&P's senior unsecured and subordinated debt ratings
on approximately US$4.6 billion of existing notes, which will be
rolled over as part of the leveraged buyout, were both lowered
to 'B-', from 'BB' and 'B+'. The ratings were removed from
CreditWatch, where they were placed with negative implications
on Oct. 2, 2006. The rating outlook is stable.
=============
B O L I V I A
=============
COEUR D'ALENE: Underwriters to Exercise Option for Senior Notes
---------------------------------------------------------------
Coeur d'Alene Mines Corporation related that the underwriters
have elected to exercise their over-allotment option in full,
increasing the aggregate principal amount of 3.25% Senior
Convertible Notes due 2028 from US$200 million to
US$230 million.
The Company has filed a final prospectus supplement with U.S.
the Securities and Exchange Commission relating to the public
offering of the convertible
senior notes. Copies of this final prospectus supplement may be
obtained from:
Deutsche Bank Securities Inc.
Prospectus Department
100 Plaza One
Jersey City, NJ 07311-3901
Tel: 1-800-503-4611
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.
INTERNATIONAL PAPER: Analysts Downgrade Firm's Shares to Neutral
----------------------------------------------------------------
Analysts have downgraded International Paper Co.'s shares to
“neutral,” Newratings.com reports.
Newratings.com relates that JP Morgan analysts have downgraded
International Paper's shares to "neutral" from "overweight,"
while DA Davidson analysts have downgraded the firm's shares to
"neutral" from "buy."
JP Morgan has decreased the target price for International
Paper's shares to US$33 from US$42, Newratings.com states.
Headquartered in Stamford, Connecticut, International Paper Co.
(NYSE: IP) -- http://www.internationalpaper.com/-- is an
uncoated paper and packaging company with primary markets and
manufacturing operations in North America, Europe, Russia, Latin
America, Asia and North Africa. International Paper employs
approximately 54,000 people in more than 20 countries, and
serves customers worldwide. Its South American operations
include, among others, facilities in Argentina, Brazil, Bolivia,
and Venezuela.
* * *
Moody's Investors Service placed International Paper Co.'s
senior subordinate rating at 'Ba1' in December 2005. The rating
still holds to date with a stable outlook.
===========
B R A Z I L
===========
ABITIBIBOWATER INC: Moody's Junks Corporate Family Ratings
----------------------------------------------------------
Moody's Investors Service downgraded the corporate family
ratings of AbitibiBowater Inc.'s subsidiaries Abitibi-
Consolidated Inc. and Bowater Incorporated to Caa1 from B2.
The rating action results from AbitibiBowater's deteriorating
liquidity profile, the anticipated challenges associated with
the company's recently announced US$1.4 billion refinancing plan
and weakened credit protection measures. At the same time,
Moody's downgraded the probability-of-default rating of Abitibi
to Caa3 from B2 and the probability-of-default rating of Bowater
to Caa1 from B2. Moody's assigned a B1 rating to the new US$415
million secured notes due 2011 at Abitibi and downgraded the
senior unsecured ratings for bonds and debentures issued by
Abitibi and Bowater to Caa2 from B3. In addition, Abitibi's and
Bowater's speculative grade liquidity ratings were downgraded to
SGL-4 and SGL-3 respectively from SGL-2. The rating outlooks
for Abitibi and Bowater are negative.
The ratings of Abitibi reflect the company's weakened liquidity
profile and the anticipated challenges of completing the
company's recently announced exchange offer whereby the company
has offered to exchange the 6.95% notes of Abitibi due
April 1, 2008, the 5.25% Notes of Abitibi-Consolidated Company
of Canada due June 20, 2008, and the 7.875% notes of Abitibi due
Aug. 1, 2009 (the affected notes) in a private placement for a
combination of cash and new 15% notes due 2010 to be issued by
Abitibi-Consolidated Company of Canada. Moody's considers the
exchange offer to be occurring under distressed circumstances
and upon the completion of the exchange, would downgrade
Abitibi's probability-of-default rating on the affected notes to
LD from Caa3 reflecting a limited default.
The ratings of Abitibi and Bowater also reflect their weak
operating performance, negative free cash flow and high debt
levels from past debt-financed acquisitions. The ratings
incorporate declining demand for newsprint, deteriorating
markets for their sawmill operations, rising input costs
(especially in eastern Canada), the strong Canadian dollar, and
a weakened liquidity profile. Positive factors that support the
ratings include AbitibiBowater's large scale as the largest
newsprint producer in the world, which provides flexibility to
reduce costs, the potential to realize a large portion of the
US$375 million of identified synergies, and cost-competitive
operations. It is noted that even as newsprint consumption
continues to decline in 2008 owing to rising substitution by
electronic media and the slowing US economy, the newsprint
capacity reductions by AbitibiBowater and its competitors should
provide support to the price increases implemented in the first
quarter of 2008. Some improvement in cash flow generation
should be observed as the effects of price increases work their
way through the company's results.
The speculative grade liquidity ratings for Abitibi and Bowater
result from minimal availability under each company's respective
credit facilities, and expectations that cash flow will be
slightly negative to neutral over the next four quarter SGL time
horizon. The weaker SGL rating for Abitibi reflects the
scheduled debt maturity of US$346 million in the next quarter
and the limited cash and credit availability of approximately
US$100 million. The SGL ratings also incorporate the
expectation that financial covenant compliance may become a
problem should the company prove unsuccessful in extending an
expiring waiver or financial performance fails to improve
materially in the next few quarters. Moody's believes that
AbitibiBowater has some alternative liquidity potential with the
ability to sell certain non-core assets including the company's
hydro assets, timberlands and operating assets in the UK and
South Korea. In addition, the company expects to receive
approximately US$160 million in cash proceeds in the second
quarter of this year from the recent sale of the Snowflake,
Arizona newsprint mill to Catalyst Paper Corporation.
The negative outlook reflects the potential for further downward
ratings adjustment should the refinancing plan fail to be
completed in the amounts and in the timeframe required to
address Abitibi's debt maturities. The negative rating outlook
also reflects expectations that AbitibiBowater's liquidity
profile will be at risk should declining newsprint demand, the
strong Canadian dollar and rising input costs offset the
expected improved financial results from the newsprint price
increases implemented since November 2007.
Downgrades:
Issuer: Abitibi-Consolidated Company of Canada
-- Senior Unsecured Regular Bond/Debenture, Downgraded
to Caa2, LGD4-62% from B3, LGD4-57%
-- Senior Unsecured Shelf, Downgraded to (P)Caa2 from (P)B3
Issuer: Abitibi-Consolidated Finance L.P.
-- Multiple Seniority Shelf, Downgraded to (P)Caa2
from (P)B3
-- Senior Unsecured Regular Bond/Debenture, Downgraded
to Caa2, LGD4-62% from B3, LGD4-57%
Issuer: Abitibi-Consolidated Inc.
-- Probability of Default Rating, Downgraded to Caa3
from B2
-- Speculative Grade Liquidity Rating, Downgraded to SGL-4
from SGL-2
-- Corporate Family Rating, Downgraded to Caa1 from B2
-- Multiple Seniority Shelf, Downgraded to (P)Caa2
from (P)B3
-- Senior Unsecured Regular Bond/Debenture, Downgraded
to Caa2, LGD 4-62% from B3, LGD4-57%
Issuer: Bowater Canada Finance Corp.
-- Senior Unsecured Regular Bond/Debenture, Downgraded
to Caa2, LGD4-61% from B3, LGD4-60%
Issuer: Bowater Incorporated
-- Probability of Default Rating, Downgraded to Caa1
from B2
-- Speculative Grade Liquidity Rating, Downgraded to SGL-3
from SGL-2
-- Corporate Family Rating, Downgraded to Caa1 from B2
-- Senior Unsecured Regular Bond/Debenture, Downgraded
to Caa2, LGD4-61% from B3, LGD4-60%
Issuer: Maine Finance Authority
-- Senior Unsecured Revenue Bonds, Downgraded to Caa2,
LGD4-61% from B3, LGD4-60%
Issuer: McMinn (County of) TN, I.D.B.
-- Senior Unsecured Revenue Bonds, Downgraded to Caa2,
LGD4-61% from B3,LGD4-60%
Issuer: York (County of) SC
-- Senior Unsecured Revenue Bonds, Downgraded to Caa2,
LGD4-61% from B3,LGD4-60%
Assignments:
Issuer: Abitibi-Consolidated Company of Canada
-- Senior Secured Regular Bond/Debenture, Assigned B1,
LGD1-08%
Outlook Actions:
Issuer: Abitibi-Consolidated Company of Canada
-- Outlook, Changed To Negative From Developing
Issuer: Abitibi-Consolidated Finance L.P.
-- Outlook, Changed To Negative From Developing
Issuer: Abitibi-Consolidated Inc.
-- Outlook, Changed To Negative From Developing
Issuer: Bowater Canada Finance Corp.
-- Outlook, Changed To Negative From Developing
Issuer: Bowater Incorporated
-- Outlook, Changed To Negative From Developing
Headquartered in Montreal, Quubec, with a regional office in
Greenville, South Carolina, AbitibiBowater is North America's
leader in newsprint and commercial printing papers. The company
also produces lumber and market pulp. The company was formed
from the merger of Abitibi and Bowater in October 2007.
AbitibiBowater owns or operates 27 paper and pulp facilities
(excluding the Snowflake, Arizona newsprint mill) and 35 wood
products facilities located in the United States, Canada, Brazil
the United Kingdom and South Korea.
AES CORP: May Acquire Banco Nacional's Stake in Brasiliana
----------------------------------------------------------
AES Corp. is eyeing Banco Nacional de Desenvolvimento Economico
e Social SA's 49.99% stake in Brasiliana, Business News Americas
reports.
AES' Vice President and Chief Operating Officer Andres Gluski
said in a Web cast that Banco Nacional will likely sell the
asset in June, BNamericas notes.
Mr. Gluski told BNamericas, "We have the first right of refusal,
we're keeping our options open and have a local line of credit
in place."
According to BNamericas, AES owns the remaining stake in
Brasiliana, which controls power companies AES Eletropaulo, AES
Tiete, AES Sul and AES Uruguaiana.
If AES doesn't claim the stake in Brasiliana, companies like
Light, Tractebel Energia, Cemig and CPFL Energia are interested
in bidding for it, BNamericas states.
AES Corp. -- http://www.aes.com/-- is a global power company.
The company operates in South America, Europe, Africa, Asia and
the Caribbean countries. Specifically, it has operations
in India. Generating 44,000 megawatts of electricity through
124 power facilities, the company delivers electricity through
15 distribution companies.
The company has Latin America operations in Argentina, Brazil,
Chile, Dominican Republic, El Salvador and Panama.
* * *
AES Corporation still carries Moody's Investors Service's
Corporate Family Rating and the senior unsecured rating assigned
at B1. As of Feb. 6, 2008, the company still carried Fitch
Ratings' 'BB/RR1' rating on US$500 million issue of senior
unsecured notes due 2017.
BANCO NACIONAL: AES Corp May Buy Firm's Stake in Brasiliana
-----------------------------------------------------------
AES Corp. is considering the purchase of Banco Nacional de
Desenvolvimento Economico e Social SA's 49.99% stake in
Brasiliana, Business News Americas reports.
AES' Vice President and Chief Operating Officer Andres Gluski
said in a Web cast that Banco Nacional will likely sell the
asset in June, BNamericas notes.
Mr. Gluski told BNamericas, "We have the first right of refusal,
we're keeping our options open and have a local line of credit
in place."
According to BNamericas, AES owns the remaining stake in
Brasiliana, which controls power companies AES Eletropaulo, AES
Tiete, AES Sul and AES Uruguaiana.
If AES doesn't claim the stake in Brasiliana, companies like
Light, Tractebel Energia, Cemig and CPFL Energia are interested
in bidding for it, BNamericas states.
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: Okays BRL10MM Financing for Hospital Expansion
--------------------------------------------------------------
Banco Nacional de Desenvolvimento Economico e Social’s
president, Luciano Coutinho, signed on March 14, a financing
contract of BRL10 million to Irmandade do Senhor Jesus dos
Passos, supporter of Hospital de Caridade, located in the city
of Florianopolis (State of Santa Catarina). This BNDES
financing corresponds to 51% of the total project amount
BRL19.7 million. The resources will be transferred by Banco
Regional de Desenvolvimento do Extremo Sul [Regional Development
Bank of the Deep South] BRDE.
The financing is destined to the construction of a new surgical
and support services center to the Intensive Care Unit and to
the Intensive Coronary Care Unit, each with 20 hospital beds,
within a total area of 7.4 thousand square meters. The new
building, which will make up a new intensive assistance block
of Hospital de Caridade, will have six floors, besides a
helicopter pad on the roof. The project also provides the
acquisition of national equipment and furniture and utensils.
The new unit will enable the expansion of the hospital’s
assistance capacity, in a way to make up for the deficit of
approximately 300 beds in the metropolitan region of
Florianopolis.
The entire architectonic project was developed and coordinated
by the State Government of Santa Catarina, through the
Edifications and Hydraulic Construction Board, entailed to the
State Infrastructure Department of the State Infrastructure
Office.
Irmandade do Senhor Jesus dos Passos is an association providing
hospital assistance activities, with effects of a mid-size
company. Hospital de Caridade, founded in 1765, is supported by
Irmandade do Senhor Jesus dos Passos. It provides medical and
hospital services within almost all specialty areas, assisting
the population of the entire State of Santa Catarina.
The hospital is reference in high complexity surgery, including
heart surgery, brain surgery, vascular surgery, digestive system
surgery, video-surgeries in several medical specialties and
organ transplant.
In order to assist this wide gamut of procedures, the hospital
counts on 14 hospitalization sectors, including a high
complexity ICU and a coronary unit.
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: Okays BRL6.6 Billion in Loans for Power Sector
--------------------------------------------------------------
Banco Nacional de Desenvolvimento Economico e Social's loans to
the power sector increased 109% to BRL6.6 billion in the 12
months ended February 2008, compared to the 12 months ended
February 2007, Business News Americas reports.
Banco Nacional told BNamericas that it authorized some
BRL13.4 billion in loans between March 2007 and February 2008
for the power sector.
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: Two Firms Unsure of Bidding for Company
-------------------------------------------------------------
Energias do Brasil and Tractebel Energia haven't decided on
whether to bid for a stake in Companhia Energetica de Sao Paulo,
Business News Americas reports.
As reported in the Troubled Company Reporter-Latin America on
March 13, 2008, Energias do Brasil registered as a bidder in the
March 26 auction of a controlling stake in Companhia Energetica.
Other bidders in the auction include Alcoa, Neoenergia, and CPFL
Energia. Interested parties who failed to register can still
compete in the auction by partnering with one of the five
registered firms.
BNamericas relates that “one risk is whether Companhia
Energetica can renew concessions at some of its hydro plants.”
"We are trying to understand how this works legally and how it
impacts the price we are willing to pay for the company,"
Energias do Brasil's Investor Relations Executive Flavia Heller
told BNamericas.
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.
* * *
As reported in the Troubled Company Reporter-Latin America on
Oct. 10, 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.
COMPANHIA PARANAENSE: Net Income Rises to BRL1,107 Mil. in 2007
---------------------------------------------------------------
Companhia Paranaense de Energia aka. Copel reported its results
of 2007. All figures included in this report are in Reais and
were prepared in accordance with Brazilian GAAP (corporate law
method).
The company's consolidated financial statements present, in
addition to the figures of the wholly-owned subsidiaries (Copel
Geracao e Transmissao, Copel Distribuicao, Copel
Telecomunicacoes and Copel Participacoes), those of Compagas,
Elejor, UEG Araucaria and Centrais Eolicas do Parana (companies
in which Copel retains a majority stake).
Net operating revenues for 2007 were BRL5,422 million, an
increase of 10.9% compared to 2006. In the fourth quarter of
2007, net operating revenues were BRL1,434 million.
Operating income for 2007 is BRL1,629 million. In the 2007
fourth quarter, operating income was BRL437 million.
Year-to-date Net income was BRL1,107 million. Net income in
fourth quarter 2007 alone was BRL312 million.
EBITDA (earnings before interest, taxes, depreciation and
amortization) was BRL2,029 million in 2007. In the fourth
quarter 2007, EBITDA was BRL518 million. The return on net
equity was 15.3%.
Total power consumption billed by the company in 2007 rose 6.8%
over the figure for the same period last year.
During 2007, the company's shares appreciated at these rates:
CPLE3 (common/Bovespa) = 37.2%
CPLE6 (preferred B/Bovespa) = 7.2%
ELP (ADR/NYSE) = 29.5%
XCOP (preferred B/Latibex) = 18.3%
Headquartered in Parana, Brazil, COPEL aka Companhia Paranaense
de Energia SA -- http://www.copel.com/ir-- (NYSE: ELP/LATIBEX:
XCOP/BOVESPA: CPLE3, CPLE5, CPLE6) transmits and distributes
electricity to more than 3 million customers in the state of
Parana and has a generating capacity of nearly 4,600 megawatts,
primarily from hydroelectric plants. COPEL also offers
telecommunications, natural gas, engineering, and water and
sanitation services. The company restructured its utility
operations in 2001 into separate generation, transmission, and
distribution subsidiaries to prepare for full privatization,
which has been indefinitely postponed. In response, Copel is
re-evaluating its corporate structure. The government of Parana
controls about 59% of Copel.
* * *
As reported in the Troubled Company Reporter-Latin America on
Dec. 13, 2006, Moody's America Latina upgraded the corporate
family rating of Companhia Paranaense de Energia aka Copel to
Ba2 from Ba3 on its global scale. Moody's also upgraded its
rating on the company's BRL500 million senior unsecured
guaranteed debentures due 2007 to Ba2 from Ba3 (Global Local
Currency) as well as its rating on the BRL400 million senior
secured Guaranteed debentures due 2009 to Ba1 from Ba2 (Global
Local Currency). Moody's said the rating outlook is stable.
This rating action concludes the review process initiated on
July 26, 2006, and still hold to date.
DELPHI CORP: Completes Rights Offering for 62,707,305 Shares
------------------------------------------------------------
Delphi Corp.'s registration statement regarding subscription
rights and warrants to purchase shares of common stock in
Reorganized Delphi became effective on March 11, 2008.
Prior to the Effective Date of its confirmed Plan of
Reorganization, Delphi will initiate a sale and offer of
subscription rights to purchase up to 62,707,305 of Reorganized
Delphi common stock.
After the Effective Date of the Plan, Reorganized Delphi will
sell warrants to purchase up to 15,384,616 shares of the
company's common stock. The warrants are immediately
exercisable from and after the date of issuance until the six-
month anniversary of the date of issuance.
A full-text copy of Delphi's Registration Statement filed with
the U.S. Securities and Exchange Commission is available at:
http://ResearchArchives.com/t/s?2944
Rights Offering
The Rights Offering is comprised of a Par Rights Offering and a
Discount Rights Offering.
Under the Par Rights Offering, each holder of Delphi common
stock will receive, for each 26 shares of common stock owned of
record at 5:00 p.m., New York City time, on Jan. 17, 2008, one
nontransferable right to purchase one share of Reorganized
Delphi common stock for US$59.61 in cash. Fractional par rights
will not be issued.
Under the Discount Rights Offering, holders of allowed General
Unsecured Claims, Section 510(b) Note Claims, Section 510(b)
Equity Claims, or Section 510(b) ERISA Claims, as those claims
are defined in the Plan, will receive, for each US$99.07 of
their claim, one transferable right to purchase one share of
Reorganized Delphi common stock for US$38.39 in cash.
To the extent that Delphi's provisional claim allowance or
estimation results in a particular claimholder receiving more
discount rights than what the claimholder should have received
based on the ultimate allowed amount of its claim, and those
excess discount rights are transferred or exercised, Delphi, in
its sole discretion:
(a) will withhold an amount of Reorganized Delphi common
stock equal to the value of the Excess Discount Rights
from the Overpaid Eligible Holder's ultimate
distribution; or
(b) require the Overpaid Eligible Holder to return the value
of the Excess Discount Rights.
To the extent Delphi's provisional claim allowance or estimation
results in a particular claimholder receiving fewer discount
rights than it should have received based on the ultimate
allowed amount of its claim, no subsequent adjustment will be
made in respect of the claimholder's Claim.
Each discount right entitles a claimholder who fully exercise
its basic subscription privilege to subscribe, prior to the
expiration date of the Discount Rights Offering, for additional
shares of Reorganized Delphi common stock at an exercise price
of US$38.64 per full share. If an insufficient number of shares
are available to fully satisfy Oversubscription Privilege
requests, the available shares, if any, will be allocated pro
rata among the applicants. If there is a pro rata allocation of
the remaining shares and an applicant receives an larger
allocation than it subscribed for under its Oversubscription
Privilege, Reorganized Delphi will issue the number of shares
subscribed and allocate the remaining shares pro rata among the
remaining applicants.
There is no Oversubscription Privilege in the Par Rights
Offering.
The Par Rights and Discount Rights will expire at 5:00 p.m., New
York City time, on March 31, 2008.
Appaloosa Management L.P. and the other Plan Investors have
agreed to backstop the Discount Rights Offering, on the terms
and subject to the conditions of their New Equity Purchase and
Commitment Agreement with the Debtors. Pursuant to the Backstop
Agreement, the Plan Investors will purchase, for the US$38.39 in
cash per full share, any shares that are not purchased pursuant
to the exercise of Discount Rights.
The Plan Investors' Backstop Agreement does not apply to the Par
Rights Offering. If all of the Par Rights are not exercised in
the Par Rights Offering, the remaining shares of Reorganized
Delphi common stock will be issued to certain creditors in
partial satisfaction of their claims.
Use of Proceeds
The Rights Offering is conducted to raise a portion of the funds
necessary to consummate the Plan, Rodney O'Neal, Delphi Corp.'s
chief executive officer and president, related in Delphi's
Registration Statement.
On the Effective Date of the Plan, all existing shares of
Delphi's common stock, and any options, warrants, rights to
purchase shares of Delphi common stock or other outstanding
equity securities will be canceled. On or shortly after the
Effective Date, Reorganized Delphi will make the distributions
provided for in the Plan, including issuing the shares of new
common stock for which Par Rights and Discount Rights are
exercised in the Rights Offerings.
On the Effective Date, Reorganized Delphi will have up to
160,124,155 shares of common stock outstanding assuming:
(1) the conversion of up to 35,381,155 shares of Convertible
Preferred Stock;
(2) no exercise of Par Rights and exercise in full of
Discount Rights or the Plan Investors' Backstop Agreement
regarding the Discount Rights Offering;
(3) the exercise in full of six-month warrants, seven-year
warrants and ten-year warrants that are initially
exercisable for the purchase of up to 25,113,275 shares
of Reorganized Delphi common stock; and
(4) the issuance of 17,237,418 shares of Reorganized Delphi
common stock to creditors in respect of Trade and Other
Unsecured Claims, aggregating approximately
US$1,310,000,000.
Assuming that all Par Rights are exercised, Delphi anticipates
receiving up to US$2,900,000,000 in gross proceeds from the
Rights Offerings before deducting fees, including the Plan
Investors' backstop commitment fee, and expenses related to the
rights offerings:
* US$1,600,000,000 from the Discount Rights Offering; and
* US$1,300,000,000 from the Par Rights Offering.
If any shares of Reorganized Delphi common stock are purchased
pursuant to the exercise of Oversubscription Privileges in the
Discount Rights Offering, Reorganized Delphi will receive
additional gross proceeds of US$0.25 per Oversubscription
Privilege share, Mr. O'Neal disclosed.
Delphi intends to use the net proceeds from the Rights Offering
to make payments and distributions contemplated by the Plan and
for general corporate purposes. The net proceeds from the
Discount Rights Offering will be used for general corporate
purposes, Mr. O'Neal elaborated. On the other hand, the net
proceeds from the Par Rights Offering will be used to (i)
satisfy certain liquidity requirements and claims asserted by
the Debtors' labor unions; (ii) reduce the amount of preferred
stock distributed to General Motors Corp.; and (iii) partially
satisfy certain unsecured creditors' claims.
As of March 10, 2008, the Appaloosa Plan Investors and their
affiliates beneficially owned 125,739,448 shares, or 22.3%, of
Delphi's existing common stock.
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, Issue No. 117; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported in the Troubled Company Reporter-Latin America on
March 18, 2008, Standard & Poor's Ratings Services still expects
to assign a 'B' corporate credit rating to Delphi Corp. if the
company emerges from bankruptcy in early April.
S&P has revised its expected issue-level ratings because
changes to the structure of the proposed financings have
affected relative recovery prospects among the various term
loans. S&P's expected ratings are:
-- The US$1.7 billion "first out" first-lien term loan B-1 is
expected to be rated 'BB-' (two notches higher than the
expected corporate credit rating on Delphi), with a '1'
recovery rating, indicating the expectation of very high
(90%-100%) recovery in the event of payment default.
-- The US$2 billion "second out" first-lien term loan B-2 is
expected to be rated 'B' (equal to the corporate credit
rating), with a '4' recovery rating, indicating the
expectation of average (30%-50%) recovery in the event of
payment default.
-- The US$825 million second-lien term loan is expected to be
rated 'B-' (one notch lower than the corporate credit
rating), with a '5' recovery rating, indicating the
expectation of modest (10%-30%) recovery in the event of
payment default.
DELPHI CORP: Moody's Holds (P)B2 Rtg. on US$3.7-Bil. Term Loans
---------------------------------------------------------------
Moody's Investors Service affirmed Delphi Corporation's
Corporate Family Rating of (P)B2 but revised the rating on the
company's US$3.7 billon of first lien term loans. Moody's also
affirmed Delphi's (P)B3 rating on the company's proposed US$825
million of second lien term loans and its Speculative Grade
Liquidity rating of SGL-2.
The actions follow revisions to Delphi's financing arranged for
its planned emergence from Chapter 11 bankruptcy protection.
While the total amount of the first lien term loan is unchanged
at US$3.7 billion, it will now be separated into a senior
tranche ("B-1") for US$1.7 billion, and a junior tranche ("B-2")
for US$2.0 billion which an affiliate of General Motors
Corporation will hold as consideration as part of GM's emergence
claims.
Moody's upgraded the rating on US$1.7 billion of the more senior
B-1 tranche to (P)Ba2 from (P)Ba3 (the rating applies to both
the domestic portion of US$1.5 billion (previously US$2.95
billion), and the equivalent of US$0.2 billion to its European
subsidiary borrower (previously the equivalent of US$0.75
billion)). Moody's assigned a rating of (P)B2 to the B-2
tranche. The outlook is stable.
Moody's assigned prospective ratings to Delphi's emergence
financing on Jan. 14, 2008. Those facilities were launched on a
"best efforts" basis. In response to challenging credit
markets, certain provisions to the earlier structure have been
revised. GM will now receive a lower amount of cash at the time
of Delphi's emergence and will accept Delphi notes. An
affiliate of GM has agreed to accept US$2.0 billion of notes
under the B-2 tranche whose principal will be junior in a
bankruptcy waterfall to claims of the B-1 tranche. The amount
of cash GM will receive will depend upon amounts raised from
market sources of the second lien term loan issuance but will be
at least US$175 million. The first US$75 million obtained from
market sources from the second lien term loan would be retained
by Delphi. GM would be paid any amounts received above US$75
million. To the extent that market sources subscribe to less
than US$825 million, GM would accept the remainder of the notes
as reimbursement.
Pricing and certain other provisions have also been altered from
the earlier structure. While lending margins have been
increased from previous levels, LIBOR rates to which those
margins would be added have materially declined in response to
actions taken by the Federal Reserve Bank. As a result, Delphi
anticipates that its prospective interest expense post emergence
will be slightly less than earlier expectations, but it has
agreed to a floor on LIBOR and would be exposed to any increases
in LIBOR above the floor to the extent it has not hedged that
exposure.
Delphi's operating performance in the final quarter of 2007
exceeded levels in its approved Plan of Reorganization, and, on
a pro forma basis, it would expect to emerge with slightly more
consolidated cash balances than previously contemplated. While
such trends are encouraging, prospects for North American
automotive production in 2008 have dimmed as macro-economic
factors have increased uncertainty on consumer expenditures on
durable goods such as automobiles. Should North American
production volumes decline as a result, operating profitability
would likely diminish and could offset any assumption of
incremental performance based on recent experience. In Moody's
view, there has been no material change in Delphi's prospective
aggregate indebtedness, interest expense or cash flows from
previous expectations. As a result, Moody's affirmed the (P)B2
Corporate Family Rating since many key metrics remain consistent
with the B2 rating category.
The (P)B2 CFR reflects the magnitude of the company's
indebtedness upon emergence, weak but improving coverage over
the intermediate term as the anticipated benefits of
restructuring initiatives take hold, and the absence of free
cash flow in its initial year after emergence. The rating
recognizes substantial improvements in the company's cost
structure and operational efficiencies achieved during its
period of bankruptcy re-organization and ongoing benefits from
its global scale and manufacturing footprint. However, the
rating also considers the extent of the company's exposure to
General Motors Corporation's North American operations. While
GMNA exposure has significantly declined, it will continue as
the largest individual component in the customer base, leaving
Delphi vulnerable to any further reduction in GM's production
volumes or market share in this critical region.
Delphi's strengths include its geographic diversification, and
large book of long term contracts to supply components for
various vehicle platforms. The company will have significantly
reduced its legacy liabilities through the bankruptcy process,
shed unprofitable operations, and identified other initiatives
that should improve its operating cost structure and better
position it to compete in the auto parts supply business.
However, the full benefit of these initiatives will only be
achieved over time, and during the near term the company's
financial metrics will remain consistent with ratings at the low
end of the B range.
In particular, it is noted that Delphi will require incremental
restructuring disbursements of roughly US$800 million over the
next few years, which will likely preclude free cash flow
generation during 2008. It is also noted that Delphi will be
emerging from bankruptcy at a time when economic trends suggest
potential for further weakness in automotive sales. While the
benefits of restructuring initiatives should yield improvement
in financial metrics over time, economic pressures could temper
the rate of improvement. Consequently, Moody's continues to
view the company's rating profile as more consistent with the B2
rating category at this time.
The stable outlook is supported by Delphi's liquidity profile,
expectations that the pace of operational improvements will gain
traction over the intermediate term, and the company's
participation in multiple geographic regions with different
growth prospects. These factors along with an expected
transition to positive free cash flow in 2009 have the potential
to produce stronger coverage ratios and lower leverage going
forward. Nonetheless, should a weaker environment for
automotive sales develop in 2008, pressure on Delphi's liquidity
and outlook could ensue.
Ratings affirmed with updated LGD assessment:
Delphi Corporation
-- Corporate Family Rating, (P)B2
-- Probability of Default Rating, (P)B2
-- US$825 million second lien term loan, (P)B3 (LGD-4, 65%)
-- Speculative Grade Liquidity rating, SGL-2
Ratings revised on reduced amounts issued:
Delphi Corporation
-- US$1,500 million first lien secured term loan, tranche B-1,
(P)Ba2 (LGD 2, 17%) from (P)Ba3, (LGD-2-62%)
Delphi Holdings Luxembourg S.ar.l.
-- equivalent of US$200 million first lien term loan, tranche
B-1, guaranteed by Delphi Corporation, (P)Ba2 (LGD-2, 17%)
from (P)Ba3 (LGD-2, 26%)
Ratings assigned
Delphi Corporation
-- US$2,000 million first lien secured term loan, tranche B-2,
(P)B2 (LGD-3, 47%)
The higher rating on the B-1 tranche of the first lien term loan
reflects the application of a probability of default rating of
(P)B2 and a loss given default assessment of LGD-2, 17%. The
rating benefits from the priority of its secured claims and a
substantial increase in the amount of junior debt from the
introduction of the B-2 tranche. The assigned rating of (P)B2
to the B-2 tranche results from the application of the same PDR
and an LGD of LGD-3, 47%. Its rating, level with the underlying
CFR, flows from its secured position in the waterfall behind the
B-1 tranche but ahead of the second lien obligation. The rating
on the second lien term loan is unchanged as the total amount of
more senior claims has not changed. Its LGD assessment has
changed slightly as a result of up-dated amounts of unsecured
non-debt claims.
The above ratings were assigned on a prospective basis and
assumed a full subscription to Delphi's proposed financing as
well as recieving bankruptcy court affirmation of an effective
date of emergence. Upon confirmation that those events have
occurred, the (P) modifier will be removed. Should any of those
assumptions prove to be incorrect, the ratings may be subject to
change or could be withdrawn.
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.
ENERGIAS DO BRASIL: Hasn't Decided on Companhia Energetica Bid
--------------------------------------------------------------
Energias do Brasil's Investor Relations Executive Flavia Heller
told investors that the company hasn't decided whether to bid
for Companhia Energetica de Sao Paulo, Business News Americas
reports.
As reported in the Troubled Company Reporter-Latin America on
March 13, 2008, Energias do Brasil registered as a bidder in the
March 26 auction of a controlling stake in Companhia Energetica.
Energias do Brasil's President Antonio Pita de Abreu said that
the company wants to join a consortium to bid for Companhia
Energetica because the company is too big a company for one
single player to purchase.
BNamericas relates that “one risk is whether Companhia
Energetica can renew concessions at some of its hydro plants.”
"We are trying to understand how this works legally and how it
impacts the price we are willing to pay for the company," Mr.
Heller commented to BNamericas.
Meanwhile, Energias do Brasil is seeking for other market
opportunities in the distribution segment, BNamericas notes.
"It is all a matter of price and how, in case of acquiring
assets, they would fit in our current portfolio," Mr. Heller
told BNamericas.
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.
GENERAL MOTORS: Strike Cues S&P to Put Ratings on Negative Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed the ratings on General
Motors Corp., American Axle & Manufacturing Holdings Inc., Lear
Corp., and Tenneco Inc. on CreditWatch with negative
implications. The CreditWatch placement reflects S&P's
decision to review the ratings in light of the extended American
Axle (BB/Watch Neg/--) strike.
The work stoppage that began Feb. 25 at American Axle's U.S.
United Auto Workers plants has forced closure of many GM
(B/Watch Neg/--) plants, as well as plants of certain GM
suppliers. The strike began after the expiration of the four-
year master labor agreement with American Axle. Although S&P
still expect American Axle and the UAW to reach an agreement
that will reflect more competitive labor costs, the timing is
unknown. The two sides resumed negotiations last week.
"We believe the strike has gone on long enough to possibly begin
to affect the financial resources of GM and those suppliers most
exposed to the automaker," said Standard & Poor's credit analyst
Robert Schulz.
To resolve the CreditWatch listings, Standard & Poor's will
assess the strike's impact on the companies' credit profiles,
particularly liquidity, once production resumes. S&P could
lower the ratings any time prior to a resolution of the Axle
strike if the liquidity of the companies becomes compromised,
although downgrades are not likely for another several weeks.
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.
GOL LINHAS: Unit Implements Sabre Airline Solutions
---------------------------------------------------
GOL Linhas Aereas Inteligentes S.A., the parent company of
Brazilian airlines GOL Transportes Aereos S.A. and VRG Linhas
Aereas S.A. reported that VRG Linhas implemented Sabre Airline
Solutions.
The SabreSonic suite is a comprehensive, modern solution that
helps airlines attain their top priorities, delivering an
advanced customer-focused and efficient solution. From powerful
multi-channel sales to comprehensive reporting and analysis, the
SabreSonic suite provides the operational flexibility VRG Linhas
aspiries in today's competitive marketplace.
The solution will establish sales and customer service systems
integration -- which used to be a combination of two different
systems, now is just a unique platform. That means shorter and
faster operations in a single environment. Another important
factor is that the platform will not be locally installed,
therefore, the company will have no costs for maintaining
equipment and servers; instead, Sabre Airline Solutions will be
in charge of this service.
SabreSonic capabilities, such as Automated Exchange and Refund,
Frequent Traveler Profiles, traveler Check-In and many other
features located within an easy-to-use graphical user interface,
will help the company enhance productivity while exceeding
customers' expectations with superior customer service.
"The SabreSonic solution has an advanced sales suite via
Internet that will provide customers with a positive experience
on using this sales channel. As a result, the company expects a
highly increment on sales via Internet, either directly to end
users or through travel agents, with a subsequent reduction on
selling costs," says VRG Linhas Commercial director, Lincoln
Amano.
VRG Linhas will also become a member of Sabre Airline Solutions'
advanced customer community, a forum for member airlines to
collaborate with each other to help drive the investment
prioritization of Sabre Airline Solutions' technology projects.
Based in Sao Paulo, Brazil, GOL Intelligent Airlines aka GOL
Linhas Areas Inteligentes S.A. (NYSE: GOL and Bovespa: GOLL4) --
http://www.voegol.com.br-- through its subsidiary, GOL
Transportes Aereos S.A., provides airline services in Brazil,
Argentina, Bolivia, Uruguay, and Paraguay. The company's
services include passenger, cargo, and charter services. As of
March 20, 2006, Gol Linhas provided 440 daily flights to 49
destinations and operated a fleet of 45 Boeing 737 aircraft.
The company was founded in 2001.
* * *
As reported in the Troubled Company Reporter-Latin America on
July 25, 2007, Fitch Ratings affirmed the 'BB+' foreign and
local currency issuer default ratings of Gol Linhas Aereas
Inteligentes S.A. Fitch also affirmed the outstanding US$200
million perpetual bonds and US$200 million of senior notes due
2017 at 'BB+' as well as the company's 'AA-' (bra) national
scale rating. Fitch said the rating outlook is stable.
NORTEL NETWORKS: Inks Settlement Agreement with Vonage
------------------------------------------------------
Vonage Holdings Corp. said in a regulatory filing that on
March 10, 2008, the company, Nortel Networks Inc., and Nortel
Networks Limited entered into a settlement agreement effective
Jan. 1, 2008, to implement the terms of a Memorandum of
Understanding entered into by the parties on Dec. 28, 2007.
Pursuant to the terms of the agreement, the company and Nortel
agree to file within five days of the agreement between the
parties joint stipulations for dismissal, without costs,
dismissing without prejudice all claims and counterclaims in:
-- Vonage Holdings Corp. v. SBC Internet Services Inc., et
al., pending in the United States District Court for the
Northern District of Texas, Fort Worth Division; and
-- Vonage Holdings Corp. v. Nortel Networks Inc., et al.,
pending in the United States District Court for the
District of Delaware.
Further, the company agrees to dismiss without prejudice Central
Telephone Company of Texas from all claims related to three of
the company's patents in the Texas Action.
Pursuant to the agreement, the company grants to Nortel and its
affiliates a worldwide, non-exclusive, paid-up, transferable --
subject to certain limitations -- license under three of the
company's patents relating to Voice over Internet Protocol
technology.
Nortel has the right to grant limited sublicenses to its
customers to use the licensed products and services when
manufactured or sold by Nortel, and to transfer the license
rights in conjunction with a change of control of Nortel.
Pursuant to the agreement, Nortel grants to the company and its
affiliates a worldwide, non-exclusive, paid-up, transferable
license under three of Nortel patents relating to VoIP
technology. The company has the right to grant limited
sublicenses to its customers to use the licensed products and
services, and to transfer the license rights in conjunction with
a change of control of the company.
Either party may terminate the licenses described above if the
other party:
(a) brings a patent infringement suit against that party with
respect to patents not licensed thereunder; or
(b) brings a patent infringement suit against a third party
which third party asserts a good faith claim of
indemnification against either the company or Nortel or
any of their affiliates.
The company covenants not to sue Nortel customers for patent
infringement of the three licensed Vonage Patents by reason of
Nortel customers using licensed products or services and will
not seek any damages or costs either during the term of the
license or prior to Jan. 1, 2008, from Nortel customers for such
use; provided, however, such covenant will become ineffective
should Nortel bring a patent infringement suit against the
company or any of its customers, prior to the company bringing
any such suit against Nortel.
Nortel covenants not to sue suppliers of products or services to
the company, during the term of any Nortel Patent, for
infringement of any Nortel Patent to the extent the company
indemnifies them for patent infringement for providing products
or services to the company.
The company also releases Central Telephone Company of Texas and
its customers from all claims, demands and rights of action with
respect to any act of infringement or alleged infringement of
any of the Vonage Patents by Central Telephone Company of Texas
or its customers prior to Jan. 1, 2008.
About Vonage Holdings
Headquartered in Holmdel, New Jersey, Vonage Holdings Corp.
(NYSE:VG) -- http://www.vonage.com/-- provides broadband
telephone services with nearly 2.6 million subscriber lines.
The company's Residential Premium Unlimited and Small Business
Unlimited calling plans offer consumers unlimited local and long
distance calling, and features like call waiting, call
forwarding and voicemail for a flat monthly rate. Vonage's
service is sold on the web and through national retailers
including Best Buy, Circuit City, Wal-Mart Stores Inc. and
Target and is available to customers in the U.S., Canada and the
United Kingdom.
* * *
At Dec. 31, 2007, the company had US$462.3 million in total
assets and US$537.4 million in total liabilities, resulting in a
US$75.1 million total stockholders' deficit.
About Nortel Networks Corporation
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- is a recognized
leader in delivering communications capabilities that enhance
the human experience, ignite and power global commerce, and
secure and protect the world's most critical information.
Serving both service provider and enterprise customers, Nortel
delivers innovative technology solutions encompassing end-to-end
broadband, Voice over IP, multimedia services and applications,
and wireless broadband designed to help people solve the world's
greatest challenges. Nortel does business in more than 150
countries including Indonesia, Australia, Brazil, China, Hong
Kong, India, Philippines, Singapore, Taiwan and Thailand.
* * *
Nortel Networks Corp. still carries Moody's Investors Service's
B3 senior unsecured debt rating assigned on July 6, 2005.
Outlook is Stable.
USINAS SIDERURGICAS: Will Install Hot Strip Mill at Cosipa
----------------------------------------------------------
Usinas Siderurgicas de Minas Gerais SA said that works for the
deployment of a new hot strip mill at Companhia Siderurgica
Paulista aka Cosipa will begin in August.
Business News Americas relates that Cosipa signed a
US$1.0 billion contract with Japan's Mitsubishi Corporation for
the supply of equipment for the project.
According to Usinas Siderurgicas, the mill will have output
capacity of 2.3 million tons per year of coils in a first stage
of operations and could churn out 4.7 million tons per year. It
will provide products to the automobile and household appliances
industries. Operations at the mill reportedly will begin in
April 2011.
BNamericas says that the mill's output will target the Brazilian
market.
Meanwhile, Cosipa is investing some US$100 million in new
continuous casting equipment that will be launched in April,
Usinas Siderurgicas said.
About Cosipa
Companhia Siderurgica Paulista aka Cosipa is forging ahead with
its steel operations. Cosipa is among Brazil's largest
steelmakers, along with ArcelorMittal Brasil and Companhia
Siderúrgica Nacional. The company manufactures cold- and hot-
rolled steel sheets, as well as heavy plates and slabs. Cosipa
sells its products internationally to auto, home appliance, and
pipe manufacturers, with most exports going throughout the
Americas and to Europe, Asia, and Oceania. It also runs its own
domestic port terminal for receiving raw materials used in steel
production and for exporting steel products. Usiminas had owned
just under half of the company until 2005, when it made Cosipa a
wholly owned subsidiary.
About Usinas Siderurgicas
Headquartered in Minas Gerais, Brazil, Usinas Siderurgicas de
Minas Gerais SA is among the world's 20 largest steel
manufacturing complexes, with a production capacity of
approximately 10 million tons of steel. Usiminas System
companies produces galvanized and non-coated flat steel products
for the automotive, small and large diameter pipe, civil
construction, hydro-electronic, rerolling, agriculture, and road
machinery industries. Brazil consumes 80% of its products and
the company's largest export markets are the US and Latin
America. The company also sells in China and Japan.
* * *
As reported in the Troubled Company Reporter-Latin America
on Feb. 5, 2008, Moody's Investors Service assigned a Ba1 local
currency rating and an Aa1.br rating on its Brazilian national
scale to the BRL500 million non-guaranteed subordinated
debentures due 2013 to be issued by Usinas Siderurgicas de
Minas Gerais S.A. (aka Usiminas). Net proceeds from the
debentures issuance will be used to partially fund the
company's capex program. Moody's said the rating outlook is
stable.
As reported in the Troubled Company Reporter-Latin America
on Jan. 3, 2007, Standard & Poor's Ratings Services revised
its outlook on Brazil-based steelmaker Usinas Siderurgicas
de Minas Gerais S.A., aka Usiminas, to positive from stable.
Standard & Poor's also it affirmed its 'BB+' local and
foreign cur