T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Monday, May 12, 2008, Vol. 9, No. 93 Headlines A R G E N T I N A ABALDRILLO SA: Proofs of Claim Verification Deadline Is Sept. 3 ALITALIA SPA: Multi-Long Offers EUR1 Billion for Italy's Stake BAIRES MEAT: Files for Reorganization in Buenos Aires Court BANCO MACRO: Books ARS151.6 Mil. Net Income in 1st Quarter 2008 CORTELLA SRL: Trustee Verifies Proofs of Claim Until May 23 EMDE SA: Files for Reorganization in Court FRIGORIFICO MAYOSOL: Files for Reorganization in Court GMAC LLC: R&I Cuts Long-Term Issuer Rating to B+ HOGAR SAN AUGUSTIN: Trustee Verifies Claims Until Sept. 2 INMECO SRL: Proofs of Claim Verification Deadline Is Aug. 15 LIWIN SA: Trustee Verifies Proofs of Claim Until June 25 MONROE 2444: Trustee Verifies Proofs of Claim Until July 3 PALMSITE SA: Proofs of Claim Verification Deadline Is Aug. 7 RESIDENTIAL CAPITAL: To Get US$750MM Bailout from GM & Cerberus SAUCO ARGENTINA: Files for Reorganization in Buenos Aires Court TELECOM ARGENTINA: Net Income Up 101% to ARS272 Mil. in 1Q 2008 TELECOM ARGENTINA: Implements SAP AG's Softwares B E R M U D A REFCO INC: TH Lee Partners, et al., Want Access to Secret Docs SECURITY CAPITAL: Posts US$96.8 Million Net Loss in 1st Qtr 2008 B R A Z I L BANCO ABC: Moody's Holds Foreign Currency Deposit Ratings at Ba2 BANCO DO BRASIL: Agribusinesses Paying Off Debts May Get Bonus BANCO NACIONAL: Signs BRL34.3 Million Contract With Metro Rio BANCO NACIONAL: May Launch Subsidiary in Uruguay BRASIL TELECOM: Conducting Pre-Launch Tests for Unico BRASIL TELECOM: Will Launch Internet Protocol Television BRASIL TELECOM: Will Use ERicsson's WCDMA/HSPA Network BRASKEM SA: Wants to Refinance US$1.2B Bridge Loan for Ipiranga COMPANHIA SIDERURGICA: To Invest US$10BB to Up Output Capacity FIAT SPA: To Source Auto Parts from India by 2010 GERDAU SA: Will Issue Bonds to Pay Back Bridge Loan GENERAL MOTORS: Liquidity Negatively Impacted by US$2.1 Billion GENERAL MOTORS: To Provide US$200 Million to Axle to End Strike GENERAL MOTORS: In Talks on US$750MM Pledge for ResCap Bailout PETROBRAS ENERGIA: Fitch Holds BB Foreign & Local Currency IDRs TAM SA: To Offer Additional Flights in Buenos Aires TAM SA: Teams Up With LAN Airlines to Benefit Frequent Flyers TELEMIG CELULAR: Earns BRL166.6 Million in First Quarter of 2008 TELE NORTE: Will Launch Oi Musica With MZA Music UNIAO DE BANCOS: Insurance Unit Earns BRL93 Mln. in 1st Quarter UNIAO DE BANCOS: May Raise Loan Growth Projections for 2008 * Fitch Says Suspension of Brazil Beef Buys Reduced Constraints C A Y M A N I S L A N D S ADELE SAILING: Will Hold Final Shareholders Meeting on May 15 COLUMBIA INTERNATIONAL: Final Shareholders Meeting is May 15 COLUMBIA LARGE: To Hold Final Shareholders Meeting on May 15 COLUMBIA MARSICO: Sets Final Shareholders Meeting on May 15 COLUMBIA MARSICO: Holds Final Shareholders Meeting on May 15 COLUMBIA SMALL: To Hold Final Shareholders Meeting on May 15 EOC CORP III: To Hold Final Shareholders Meeting on May 15 EOC CORP V: Will Hold Final Shareholders Meeting on May 15 FONDAZIONE FAMIGLIA: Holds Final Shareholders Meeting on May 15 HERBALIFE LTD: Names Andrew Speller as VP for Investor Relations PARMALAT SPA: Parma Judge Unites 2 Trials, Keeps Others Separate C H I L E AES CORP: Reports US$233 Mil. Net Income in Qtr. Ended March 31 GLOBAL CROSSING: Inks 4-Year Service Pact With Pedro de Valdivia C O S T A R I C A ANIXTER INT'L: May Repurchase Up to 1 Mil. of Outstanding Shares SIRVA INC: Court Sets June 16 as Class 5-A Claims Bar Date D O M I N I C A N R E P U B L I C TRICOM SA: Bancredito Panama Sends Subpoena to BDO Seidman TRICOM SA: Asks Court to Fix July 8 As Claims Bar Date J A M A I C A DYOLL GROUP: Shareholders Authorize Firm's Liquidation JAMAICA PRODUCERS: Loses J$312 Mln. in Quarter Ended March 2008 M E X I C O ADVANCED MARKETING: Seeks US$1.8M From 'Hooked on Phonics' Maker AMERICAN AXLE: Gets US$200M Aid from GM to Resolve Labor Dispute AUDIOVOX CORP: Relocates Mexican Unit to Miguel Hidalgo District BANCA MIFEL: S&P Affirms Counterparty & Credit Ratings at BB-/B CLEAR CHANNEL: Judge Okays Breach of Contract Suit Against Banks FRONTIER AIRLINES: Gets Court Okay to Assume Airbus Sale LOI KANSAS CITY: Unit Launches Tender Offer on US$200MM 9-1/2% Notes QUAKER FABRIC: Exclusive Plan Filing Period Moved to May 19 QUEBECOR WORLD: Seeks Extension of the CCAA Stay Until July 25 QUEBECOR WORLD: E&Y Reports Updates on CCAA Proceedings P A N A M A SOLO CUP: Moody's Holds B2 CF Rating, Revises Outlook to Stable P E R U DOE RUN: Closes 60++ Engineering & Admin. Control Measures P U E R T O R I C O HEALTHSOUTH CORP: March 31 Balance Sheet Upside-Down by US$1.5BB MAXXAM INC: Deloitte & Touche Raises Going Concern Doubt MERCURY GROUP: Case Summary & 19 Largest Unsecured Creditors ORLANDO POU: Case Summary & 8 Largest Unsecured Creditors SPANISH BROADCASTING: 1st Qtr. 2008 Operating Loss is US$2.8MM V E N E Z U E L A ARVINMERITOR INC: Gets Go-Signal to Buy American LaFrance Assets * BOND PRICING: For the Week May 5 - May 9, 2008 - - - - - ================= A R G E N T I N A ================= ABALDRILLO SA: Proofs of Claim Verification Deadline Is Sept. 3 --------------------------------------------------------------- The court-appointed trustee for Abaldrillo S.A.'s bankruptcy proceeding, will be verifying creditors' proofs of claim until Sept. 3, 2008. The trustee will present the validated claims in court as individual reports on Oct. 15, 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 Abaldrillo 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 Abaldrillo's accounting and banking records will be submitted in court on Nov. 26, 2008. The trustee is also in charge of administering Abaldrillo's assets under court supervision and will take part in their disposal to the extent established by law. ALITALIA SPA: Multi-Long Offers EUR1 Billion for Italy's Stake -------------------------------------------------------------- Multi-Long Corp. has submitted a EUR1 billion offer to acquire the Italian government's 49.9% stake in Alitalia S.p.A., various reports say. According to Multi-Long CEO Michael Breslow, the firm also submitted a business plan for Alitalia to the European Commission, Armorel Kenna writes for Bloomberg News. Mr. Breslow told Bloomberg News in an e-mail that Multi-Long's funds for the offer are "larger than anyone can imagine," adding that its interest in Alitalia is "rock solid and not an adventure or irresponsible bid." Mr. Breslow also told The Associated Press that Multi-Long could get funds for its offer from European and Brazilian banks. Mr. Breslow added to the AP that though Multi-Long has no experience running an airline, it can financially reorganize Alitalia. About Alitalia Headquartered in Rome, Italy, Alitalia S.p.A. -- http://www.alitalia.it/-- provides air travel services for passengers and air transport of cargo on national, international and inter-continental routes, including United States, Canada, Japan and Argentina. The Italian government owns 49.9% of Alitalia. Despite a EUR1.4 billion state-backed restructuring in 1997, Alitalia posted net losses of EUR256 million and EUR907 million in 2000 and 2001 respectively. Alitalia posted EUR93 million in net profits in 2002 after a EUR1.4 billion capital injection. The carrier booked annual net losses of EUR520 million in 2003, EUR813 million in 2004, EUR168 million in 2005, and EUR625.6 million in 2006. Italian Finance Minister Tommaso Padoa-Schioppa had said that if the sale to Air France fails, Alitalia may seek protection from creditors and the government would appoint a special commissioner to initiate bankruptcy proceedings BAIRES MEAT: Files for Reorganization in Buenos Aires Court ----------------------------------------------------------- Baires MEAT SRL has requested for reorganization approval after failing to pay its liabilities since Nov. 23, 2007. The reorganization petition, once approved by the court, will allow Baires MEAT to negotiate a settlement with its creditors in order to avoid a straight liquidation. The case is pending in the National Commercial Court of First Instance No. 1 in Buenos Aires. Clerk No. 2 assists the court in this case. The debtor can be reached at: Baires MEAT SRL Avenida Corrientes 1922 Buenos Aires, Argentina BANCO MACRO: Books ARS151.6 Mil. Net Income in 1st Quarter 2008 --------------------------------------------------------------- Banco Macro S.A. released its results for the first quarter period ended March 31, 2008. All figures are in Argentine pesos and have been prepared in accordance with Argentine GAAP. Summary: -- Banco Macro's net income totalled ARS151.6 million. This result was 23%, or ARS28.4 million higher than first quarter 2007's ARS123.2 million. The annualized first quarter 2008 ROAE and ROAA were 22% and 3%, respectively. -- The bank's net financial income was ARS354.9 million, increasing 37% year to year. Operating income of ARS177.7 million rose 27% year to year. -- The financing to the private sector showed an attractive growth of 52% year to year, or ARS3.3 billion and 4% quarter to quarter, or ARS342 million. Personal loans, which represent a strategic product for the bank, once again led private loan portfolio growth. This product grew 10% quarter to quarter and 100% year to year. -- Total deposits grew 7%, or ARS961.4 million quarter to quarter, totalling ARS14.5 billion and representing 78% of the bank's liabilities. Quarterly deposit growth was led by private sector CDs (13%). -- Banco Macro continued showing a strong solvency ratio, with an excess capital of ARS1.83 billion (27.3% capitalization ratio). In addition, the bank's liquid assets remained at a high level, reaching 55.2% of total deposits. -- The bank's non-performing loans to total loans ratio was 1.99% and the coverage ratio reached 128.3%. A longer version of this press release with detailed information is available on the company's web site: http://www.macro.com.ar Headquartered in Buenos Aires, Argentina, Banco Macro (NYSE: BMA; Buenos Aires: BMA) -- http://www.macro.com.ar/-- had consolidated assets of ARS11.6 billion (US$3.7 billion) and consolidated deposits of ARS6 billion (US$2 million) as of June 2007. * * * As reported in the Troubled Company Reporter-Latin America on Dec. 26, 2007, Fitch Ratings affirmed Banco Macro SA's Foreign and local currency long-term Issuer Default Ratings at 'B+', Foreign and local currency short-term IDRs at 'B', and Individual at 'D'. Fitch said the rating outlook is stable. CORTELLA SRL: Trustee Verifies Proofs of Claim Until May 23 ----------------------------------------------------------- The court-appointed trustee for Cortella S.R.L.'s reorganization proceeding, will be verifying creditors' proofs of claim until May 23, 2008. The trustee will present the validated claims in court as individual reports on July 8, 2008. The National Commercial Court of First Instance in Santa Fe 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 Cortella 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 Cortella's accounting and banking records will be submitted in court on Sept. 3, 2008. Creditors will vote to ratify the completed settlement plan during the assembly on June 24, 2009. EMDE SA: Files for Reorganization in Court ------------------------------------------ EMDE SA has requested for reorganization approval after failing to pay its liabilities since Feb. 11, 2008. The reorganization petition, once approved by the court, will allow EMDE to negotiate a settlement with its creditors in order to avoid a straight liquidation. The case is pending in the National Commercial Court of First Instance No. 15 in Buenos Aires. Clerk No. 30 assists the court in this case. The debtor can be reached at: EMDE SA Av. L. N. Alem 639 Buenos Aires, Argentina FRIGORIFICO MAYOSOL: Files for Reorganization in Court ------------------------------------------------------ Frigorifico Mayosol S.A.C.I. has requested for reorganization approval after failing to pay its liabilities. The reorganization petition, once approved by the court, will allow Frigorifico Mayosol to negotiate a settlement with its creditors in order to avoid a straight liquidation. The case is pending in the National Commercial Court of First Instance in Buenos Aires. GMAC LLC: R&I Cuts Long-Term Issuer Rating to B+ ------------------------------------------------ Rating and Investment Information Inc. downgraded GMAC LLC's long-term issue rating on its 6.875% Notes due 2012 to B+ from BB-. The rating remains on watch for possible downgrade. Co-issuers of the notes are GMAC International Finance BV, GMAC Australia LLC, General Motors Acceptance Corporation of Canada Limited, GMAC Bank GMBH and General Motors Acceptance Corporation (NZ) Limited. The rating agency noted that Residential Capital LLC, the wholly owned subsidiary of GMAC LLC, announced on May 5, that it has embarked on debt restructuring including a de facto extension of maturity on unsecured bonds. GMAC intends to provide credit facility worth US$3.5 billion and support ResCap; however, the liquidity of ResCap would remain extremely tight. R&I stated that the financial support for ResCap will continue to weigh considerably on GMAC's financial profile and liquidity. In light of such conditions, R&I downgraded the Foreign Currency Issuer Rating of GMAC to B+ from BB-, and the Rating Outlook remains on the Rating Monitor with a view to downgrading. According to R&I, the main pillars of the debt restructuring consist of: issuance of new Secured Guaranteed Notes due 2010 in exchange for US$3.3 billion old unsecured debts that mature by 2009, and issuance of new Secured Guaranteed Notes due 2015 in exchange for US$9.5 billion old unsecured debts maturing during 2010-2015. In addition, R&I said investors (holders participating in the exchange offers) may opt to receive cash in lieu of the new notes that they would otherwise receive, which is estimated to be far below the face value. The US$3.5 billion credit facility which ResCap is currently negotiating with GMAC will be used for funding the cash required for the exchange offers and repaying term loans borrowed from financial institutions and others. If the debt restructuring proves successful, the rating agency said it may ease ResCap's debt servicing in the medium-long term. Its liquidity, however, will remain rigid and ResCap has announced that additional US$600 million is required by the end of June 2008 through asset sales even if the debt restructuring proceeds well. There is a high possibility that GMAC will have to make further financial support besides the US$3.5 billion credit facility, and the concerns over its financial profile and liquidity are increasing, R&I added. About Residential Capital Headquartered in Minneapolis, Minnesota, Residential Capital LLC -- http://www.rescapholdings.com/-- is the home mortgage unit of GMAC Financial Services, which is in turn wholly owned by GMAC LLC. About GMAC LLC GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors Acceptance Corporation, is a global, diversified financial services company that operates in approximately 40 countries in automotive finance, real estate finance, insurance and other commercial businesses. GMAC was established in 1919 and employs approximately 26,700 people worldwide. Cerberus Capital Management LP bought 51% GMAC LLC stake from General Motors Corp. on December 2006. In Latin America, the company has operations in Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Venezuela. * * * As reported in the Troubled Company Reporter-Latin America on May 7, 2008, Fitch Ratings downgraded the long-term Issuer Default Rating of GMAC LLC and related subsidiaries to 'BB-' from 'BB'. Fitch also downgraded GMAC's unsecured long-term ratings to 'B+' from 'BB-', reflecting the potential for reduced recovery in a default scenario should the company encumber assets. Additionally, Fitch affirmed the 'B' short-term ratings. Fitch said the Rating Outlook remains Negative. As reported in the Troubled Company Reporter-Latin America on April 25, 2008, Moody's Investors Service downgraded GMAC LLC's senior rating to B2 from B1; the rating remains on review for further possible downgrade. The action follows Moody's rating downgrade of ResCap LLC, GMAC's wholly owned residential mortgage unit, to Caa1 from B2. HOGAR SAN AUGUSTIN: Trustee Verifies Claims Until Sept. 2 --------------------------------------------------------- The court-appointed trustee for Hogar San Agustin S.A.'s reorganization proceeding, will be verifying creditors' proofs of claim until Sept. 2, 2008. The trustee will present the validated claims in court as individual reports on Nov. 3, 2008. The National Commercial Court of First Instance in Santa Fe 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 Hogar San Agustin 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 Hogar San Agustin's accounting and banking records will be submitted in court on Oct. 2, 2008. Creditors will vote to ratify the completed settlement plan during the assembly on Feb. 2, 2009. INMECO SRL: Proofs of Claim Verification Deadline Is Aug. 15 ------------------------------------------------------------ Oscar Scally, the court-appointed trustee for Inmeco SRL's bankruptcy proceeding, will be verifying creditors' proofs of claim until Aug. 15, 2008. Mr. Scally will present the validated claims in court as individual reports. The National Commercial Court of First Instance No. 3 in Buenos Aires, with the assistance of Clerk No. 6, 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 Inmeco 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 Inmeco's accounting and banking records will be submitted in court. La Nacion didn't state the submission dates for the reports. Mr. Scally is also in charge of administering Inmeco's assets under court supervision and will take part in their disposal to the extent established by law. The debtor can be reached at: Inmeco SRL Caboto 631 Buenos Aires, Argentina The trustee can be reached at: Oscar Scally Arenales 875 Buenos Aires, Argentina LIWIN SA: Trustee Verifies Proofs of Claim Until June 25 -------------------------------------------------------- Amalia Beckerman, the court-appointed trustee for Liwin S.A.'s reorganization proceeding, will be verifying creditors' proofs of claim until June 25, 2008. Ms. Beckerman will present the validated claims in court as individual reports on Aug. 21, 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 Liwin 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 Liwin's accounting and banking records will be submitted in court on Oct. 2, 2008. Creditors will vote to ratify the completed settlement plan during the assembly on March 5, 2009. The debtor can be reached at: Liwin S.A. Alicia Moreau de Justo 1848 Buenos Aires, Argentina The trustee can be reached at: Amalia Beckerman Tucuman 1367 Buenos Aires, Argentina MONROE 2444: Trustee Verifies Proofs of Claim Until July 3 ---------------------------------------------------------- The court-appointed trustee for Monroe 2444 S.A.'s reorganization proceeding, will be verifying creditors' proofs of claim until July 3, 2008. The trustee will present the validated claims in court as individual reports on Aug. 27, 2008. The National Commercial Court of First Instance in Buenos Aires will determine if the verified claims are admissible, taking into account the trustee's opinion, and the objections and challenges that will be raised by Monroe 2444 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 Monroe 2444's accounting and banking records will be submitted in court on Oct. 8, 2008. Creditors will vote to ratify the completed settlement plan during the assembly on March 2, 2009. PALMSITE SA: Proofs of Claim Verification Deadline Is Aug. 7 ------------------------------------------------------------ Lydia Albite, the court-appointed trustee for Palmsite SA's bankruptcy proceeding, will be verifying creditors' proofs of claim until Aug. 7, 2008. Ms. Albite will present the validated claims in court as individual reports. The National Commercial Court of First Instance No. 3 in Buenos Aires, with the assistance of Clerk No. 6, 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 Palmsite 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 Palmsite's accounting and banking records will be submitted in court. La Nacion didn't state the submission dates for the reports. Ms. Albite is also in charge of administering Palmsite's assets under court supervision and will take part in their disposal to the extent established by law. The debtor can be reached at: Palmsite SA Suipacha 612 Buenos Aires, Argentina The trustee can be reached at: Lydia Albite Tacuari 119 Buenos Aires, Argentina RESIDENTIAL CAPITAL: To Get US$750MM Bailout from GM & Cerberus --------------------------------------------------------------- GMAC LLC, both owned by General Motors Corp. and Cerberus Capital Management LP, is currently negotiating to provide a new 2-year US$3.5 billion senior secured credit facility to its wholly owned subsidiary Residential Capital LLC, which would be conditioned on successful completion by ResCap of a debt tender and exchange offer for its outstanding unsecured notes. ResCap's financing plans also include seeking amendments to substantially all of its secured bilateral credit facilities to extend their maturities or to modify their tangible net worth covenants. GM and Cerberus are in discussions to acquire US$750 million first loss participation in GMAC's proposed senior secured credit facility, shared between Cerberus and GM on a pro rata basis. As reported in the Troubled Company Reporter on May 7, 2008, ResCap disclosed that it is highly leveraged relative to its cash flow, and its liquidity position has been declining. According to a Securities and Exchange Commission filing, ResCap said there is a significant risk that the company will not be able to meet its debt service obligations, be unable to meet certain financial covenants in its credit facilities, and be in a negative liquidity position in June 2008. ResCap anticipates that its new debt agreements will include covenants to maintain minimum cash balances. To comply with these covenants and to satisfy its liquidity needs, ResCap expects that it will be required, even if it successfully implements all of the proposed actions, to generate capital in the near term through asset sales or other actions in addition to its normal mortgage finance activities, to obtain additional cash of approximately US$600 million by June 30, 2008. This additional cash requirement is an estimate based upon ResCap's internal monthly cash forecasts targeting sufficient cash surpluses to prudently operate its business and remain in excess of anticipated cash covenants. According to GM, if ResCap is unsuccessful in executing the financing transactions, including additional liquidity actions, it would have a material adverse effect on GMAC, which could result in a further impairment of GM's investments in GMAC and could disrupt GMAC's ability to finance GM's dealers and customers. About GM 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. 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. About GMAC LLC GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors Acceptance Corporation, is a global, diversified financial services company that operates in approximately 40 countries in automotive finance, real estate finance, insurance and other commercial businesses. GMAC was established in 1919 and employs approximately 26,700 people worldwide. Cerberus Capital Management LP bought 51% GMAC LLC stake from General Motors Corp. on December 2006. About ResCap Headquartered in Minneapolis, Minnesota, Residential Capital LLC -- http://www.rescapholdings.com/-- is the home mortgage unit of GMAC Financial Services, which is in turn wholly owned by GMAC LLC. Its Latin American operations are located in Argentina, Brazil, Chile, Colombia, Mexico and Venezuela. * * * As reported in the Troubled Company Reporter-Latin America on May 7, 2008, Moody's Investors Service downgraded to Ca, from Caa1, its ratings on the senior debt of Residential Capital, LLC subject to the bond exchange announced by ResCap on May 2, 2008. The rating of ResCap's approximately US$1.2 billion of bonds maturing on June 9, 2008 was affirmed at Caa1. All ratings remain under review for downgrade. Standard & Poor's Ratings Services lowered selected ratings on Residential Capital LLC, including lowering the long-term corporate credit rating to 'CC' from 'CCC+', following the company's launch of an exchange offer for unsecured bonds that S&P interpret as a distressed debt exchange. The ratings remain on CreditWatch with negative implications, where they were placed on April 24, 2008. Fitch Ratings has downgraded Residential Capital LLC's Issuer Default Rating to 'C' from 'BB-' following the company's debt exchange offer announcement. ResCap remains on Rating Watch Negative pending execution of the debt exchange offer. Upon completion of the exchange, Fitch will downgrade ResCap's IDR to 'D' indicating a default has occurred in accordance with Fitch's criteria on distressed debt exchanges. SAUCO ARGENTINA: Files for Reorganization in Buenos Aires Court --------------------------------------------------------------- Sauco Argentina SA has requested for reorganization approval after failing to pay its liabilities. The reorganization petition, once approved by the court, will allow Sauco Argentina to negotiate a settlement with its creditors in order to avoid a straight liquidation. The case is pending in the National Commercial Court of First Instance No. 19 in Buenos Aires. Clerk No. 37 assists the court in this case. The debtor can be reached at: Sauco Argentina SA Talcahuano 1146 Buenos Aires, Argentina TELECOM ARGENTINA: Net Income Up 101% to ARS272 Mil. in 1Q 2008 --------------------------------------------------------------- Telecom Argentina S.A. reported a net income of ARS272 million for the three-month period ended March 31, 2008. Highlights: -- Telecom Argentina Group continues to improve its business, confirming the growth trend evidenced in previous periods. During first quarter 2008 Net Revenues grew 21% when compared to same period of the previous year (first quarter 2007), amounting to ARS2,480 million. Major revenue increase came from the Cellular business with an expansion of 27% and from Internet businesses with a growth of 33%, both with respect to first quarter 2007. -- The cellular subscribers increased by 18%, reaching 12.6 million, while broadband subscribers grew 60% totaling 841,000, meanwhile fixed lines in service increased by 3% to 4.2 million. -- Operating Profit before Depreciation and Amortization (OPBDA) reached ARS879 million (+28% vs. first quarter 2007), equivalent to 35% of Net Revenues, mainly fueled by the cellular telephony growth. On the contrary, fixed telephony profitability continues to weaken due to frozen tariffs and the inflation effect on the general cost structure. -- Net Income reached ARS272 million (+101% vs. first quarter 2007). -- Investments totaled ARS248 million during first quarter 2008 (+78% vs. first quarter 2007), where ARS144 million were allocated to fixed telephony (+121% vs. first quarter 2007). -- Net Financial Debt declined to ARS1,666 million (-ARS1,556 million vs. March 2007). The Net Financial Debt to OPBDA ratio declined from 1.2 as of the end of March 2007, to 0.5 as of the end March 2008. During first quarter 2008, Consolidated Net Revenues increased 21% (+ARS422 million vs. first quarter 2007) to ARS2,480 million, mainly fueled by the cellular and broadband businesses. Moreover, OPBDA increased by 28% (+ARS191 million) to ARS879 million (35% of Consolidated Net Revenues). This level of operating profits before depreciation and amortization is the consequence of the improvement in revenues, together with a better efficiency in costs despite increasing inflationary pressure. Consolidated Net Revenues The evolution in Consolidated Net Revenues reported by segments: Voice, Data Transmission & Internet Revenues generated by these services amounted to ARS863 million, +10% vs. first quarter 2007. Voice: Total Revenues for this service reached ARS651 million (+4% vs. first quarter 2007). The results of this line of business are affected by frozen tariffs of regulated services. During this three-month period, Telecom Argentina continued with the implementation of the fixed line renewal process, started last year with the launch of innovative terminals and value- added services, which before were available only for cellular telephony such as fixed SMS services and video call. Moreover, during this period the company continued with the deployment of the next generation technology (NGN) in its fixed telephony network that will allow the offering of convergent state-of-the-art services. Monthly Charges and Supplementary Services increased by ARS14 million or 8%, to ARS196 million, as a consequence of a higher number of lines in service (+3%), reaching 4.2 million of lines. Revenues generated by traffic (Local Measured Service, Domestic Long Distance and International Telephony) totaled ARS293 million, (-2% vs. first quarter 2007) mainly because a slight decrease in traffic volume and higher discounts granted to the customers. Interconnection revenues amounted to ARS94 million (+8%), mainly as a consequence of traffic originated in cellular lines but transported by and terminated in the company's fixed-line network. Public Telephony & Other: Other revenues, including public telephony reached ARS68 million (+19% vs. first quarter 2007). This amount was affected by an increase in billing and collection fees and voice, data and internet handset sales despite a decrease in Public Telephony revenues (-$6 million). Internet and Data Transmission: Total revenues coming from Internet services reached ARS158 million (+33% vs. first quarter 2007), mainly due to the substantial expansion of broadband service, driven by a better network coverage, commercial promotions, and innovation of the service portfolio. Telecom Argentina's broadband subscribers reached 841,000 as of March 2008 (+60% vs. March 2007). Therefore, lines with this type of connections represent approximately 20% of the company's fixed-lines in service. Revenues generated by Data transmission amounted to ARS54 million, (+32% vs. first quarter 2007). Related to the corporate market, during this period Telecom Argentina continued enhancing its positioning as integrated provider of communication solutions, focused on technology innovation in order to offer the most innovative services to both government sector and corporate clients. Cellular Telephony: The Cellular Telephony continues with its expansion, increasing its participation in the Group's total revenues (65% vs. 62% in first quarter 2007). During the first three-months of 2008 this business generated revenues of ARS1,617 million (+27% vs. first quarter 2007). Total subscribers reached 12.6 million. Telecom Personal in Argentina As of the three-month period ended March 31, 2008, Telecom Personal's subscribers reached 10.9 million in Argentina (+1.6 million or +17% vs. first quarter 2007). Approximately 66% of the overall subscriber base is prepaid and 34% is postpaid. Total voice traffic increased by 22% vs. first quarter 2007 while outgoing SMS traffic increased from an average of 762 million messages in first quarter 2007 to an average of 990 million (+30%) in first quarter 2008. Because of this enhancement in traffic and the use of value-added services, the Average Monthly Revenue per User increased by ARS40 in first quarter 2008, compared to ARS37 in first quarter 2007. Revenues totaled ARS1,510 million (+ARS330 million or +28% vs. first quarter 2007). Service revenues increased by ARS305 million or 29% vs. first quarter 2007, reaching ARS1,361 million; furthermore, value added services totaled ARS392 million (+ARS128 million or 48% vs. first quarter 2007), which means 26% of Revenues. In addition handset sales grew by ARS25 million (+20%) compared to first quarter 2007, reaching ARS149 million. During first quarter 2008, Telecom Personal enhanced its commercial offer, launching the "Tu Familia Personal" plan (Your Personal Family plan). It allows to make free, unlimited communications, both calls or SMS to a group of three telephone numbers of the company, previously selected by the client. Due to the summer season, Telecom Personal developed a plan for the expansion of the 3G/3.5G network in main Argentine tourist cities. Telecom Personal also continued reinforcing its strategy related to music downloads, as a platform for increasing the use of innovative value-added services, such as full MP3. Moreover, the company is successfully reaching the conclusion of the migration process of the network technology from TDMA to GSM technology. Nucleo Telecom Personal's controlled subsidiary that operates in Paraguay, generated revenues equivalent to ARS107 million during first quarter 2008 (+16% vs. first quarter 2007). By the end of March 2008, the subscriber base reached approximately 1.7 million, +27% vs. first quarter 2007. Prepaid and Postpaid customers represented 90% and 10%, respectively. During first quarter of 2008, Nucleo launched third generation services (3G) in Paraguay. Consolidated Operating Costs The Cost of Services Provided, Administrative Expenses and Selling Expenses totaled ARS1,946 million in first quarter 2008, which represents an increase of ARS246 million or +14% vs. first quarter 2007. Notwithstanding, in relative terms such increase is less than revenue growth due to an improvement in efficiency and a better distribution of costs. Consolidated Financial and Holding Results Financial and Holding Results resulted in a loss of ARS60 million, (-ARS72 million vs. first quarter 2007). Such improvement was due to a reduction in net interests and a lower impact of foreign currency exchange looser generated by liabilities. Consolidated Net Financial Debt As of March 31, 2008, Net Financial Debt amounted to ARS1,666 million, a reduction of ARS1,556 million as compared to March 2007. A substantial generation of operating cash flow allowed for the decrease in indebtedness. Telecom Personal Dividends As of the end of March 2008, the company paid a cash dividend distribution of ARS220 million. Consolidated Capital Expenditures During first quarter 2008, the Company invested ARS248 million (excluding material), in fixed and intangibles assets. Such amount was allocated to the Voice, Data and Internet businesses (ARS144 million) and to the cellular business (ARS104 million). Main Capex projects are related to the expansion of broadband services and to the upgrade of the network for next generation services (NGN), the improvement of the network (capacity, coverage and 3G), and the launch of new and innovative value- added services. Recent Relevant Matters On April 15, 2008, Telecom Argentina made, along with the interest payments of its financial debt, a principal prepayment of Notes, in the amount of US$ 260 million; such funds came from excess cash determined as of Dec. 31, 2007, and a voluntary prepayment, that includes the amount of dividends received from Telecom Personal. -- At the Shareholders' Meeting held on April 29, 2008 and the Board of Directors Meeting on the same date, the members of the Board of Directors, independent auditors, and members of the Audit Committee were named for the 20th fiscal year. Headquartered in Buenos Aires, Telecom Argentina S.A. -- http://www.telecom.com.ar/index-flash.html-- provides telephone-related services, such as international long-distance service and data transmission and Internet services, and through its subsidiaries, wireless telecommunications services, international wholesale services and telephone directory publishing. As of Dec. 31, 2006, its telephone system included approximately 4.09 million lines in service. As of 2007, current approximate ownership of Telecom Argentina is: * 54.74% by Nortel Inversora S.A., itself a consortium made up of: -- Werthein Group (48%) -- Telecom Italia -- France Telecom group (2%); * 41.5% publicly traded; and * 4.21% employee stock ownership program France Telecom sold its part of Telecom Argentina to the WertheinGroup, an Argentine agricultural concern owned in part by vice chairman Gerardo Werthein. As of 2007, current approximate ownership of Telecom Argentina is: * 54.74% by Nortel Inversora S.A., itself a consortium made up of: -- Werthein Group (48%) -- Telecom Italia group (50%) -- France Telecom group (2%); * 41.5% publicly traded; and * 4.21% employee stock ownership program. * * * As reported in the Troubled Company Reporter-Latin America on Feb. 21, 2008, Fitch Ratings upgraded Telecom Argentina's foreign and local currency issuer default ratings to 'B+' from 'B'. Fitch said the outlook is positive. TELECOM ARGENTINA: Implements SAP AG's Softwares ------------------------------------------------ Telecom Argentina SA has implemented SAP AG's enterprise service oriented architecture eSOA and applications integration platform NetWeaver to standardize its financial, management control, project management, network maintenance, human resources, and supply processes. Business News Americas relates that through SAP's softwares, Telecom Argentina will increase the efficiency of its purchasing authorization processes. Telecom Argentina will access the platform through mobile devices like BlackBerries. Telecom Argentina's Corporate Systems Information Technology Manager Alejandro Gozzo Bisso told BNamericas that the firm is considering a project. The firm wants to integrate other non- SAP applications that could work in the same mobile environment through NetWeaver, Mr. Bisso added. BNamericas notes that the implementation of SAP's softwares took two months. Through the softwares, Telecom Argentina's directors and managers will receive through their BlackBerry an e-mail requesting their signature to authorize a process. Telecom Argentina's officials will have access to detailed information about the process in a highly secure environment. About SAP AG SAP AG together with its subsidiaries is engaged in developing and licensing business software solutions. SAP also sells support, consulting, training and other services associated with its software products. SAP consisted of SAP AG and its network of 139 operating subsidiaries. The company has three segments: product, consulting and training. The company's softwares serve the customers in six industry sectors: process, discrete, consumer, service, financial services and public services. About Telecom Argentina Headquartered in Buenos Aires, Telecom Argentina S.A. -- http://www.telecom.com.ar/index-flash.html-- provides telephone-related services, such as international long-distance service and data transmission and Internet services, and through its subsidiaries, wireless telecommunications services, international wholesale services and telephone directory publishing. As of Dec. 31, 2006, its telephone system included approximately 4.09 million lines in service. As of 2007, current approximate ownership of Telecom Argentina is: * 54.74% by Nortel Inversora S.A., itself a consortium made up of: -- Werthein Group (48%) -- Telecom Italia -- France Telecom group (2%); * 41.5% publicly traded; and * 4.21% employee stock ownership program France Telecom sold its part of Telecom Argentina to the WertheinGroup, an Argentine agricultural concern owned in part by vice chairman Gerardo Werthein. As of 2007, current approximate ownership of Telecom Argentina is: * 54.74% by Nortel Inversora S.A., itself a consortium made up of: -- Werthein Group (48%) -- Telecom Italia group (50%) -- France Telecom group (2%); * 41.5% publicly traded; and * 4.21% employee stock ownership program. * * * As reported in the Troubled Company Reporter-Latin America on Feb. 21, 2008, Fitch Ratings upgraded Telecom Argentina's foreign and local currency issuer default ratings to 'B+' from 'B'. Fitch said the outlook is positive. ============= B E R M U D A ============= REFCO INC: TH Lee Partners, et al., Want Access to Secret Docs -------------------------------------------------------------- Thomas H. Lee Partners L.P., Grant Thornton LLP, and Mayer Brown LLP seek access to documents and transcripts that have been made available to Marc S. Kirschner, the Trustee for the Litigation Trust and Private Actions Trust of Refco, Inc., and its affiliates and subsidiaries. T.H. Lee, et al., ask the U.S. Bankruptcy Court for the Southern District of New York for relief from the first amended protective order governing the production and use of confidential material, dated March 19, 2007. T.H. Lee, et al., are parties to several litigations commenced by the Litigation Trustee, that are presently pending before the Judge Gerard E. Lynch in the United States District Court for the Southern District of New York. Discovery in litigations is ongoing on a coordinated basis, pursuant to a deposition protocol. As in the proceedings in the Bankruptcy Court, the treatment of confidential documents produced in the Litigations is governed by the amended stipulation and agreed confidentiality order dated February 8, 2008. The Confidentiality Order provides that all confidential discovery materials in the possession of any party may only be used for purposes of those actions, and disclosed only to specified recipients. According to Richard A. Rosen, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, in New York, although the March 19 Protective Order provides for the relief sought by T.H. Lee, et al., they have been unable to obtain access to the relevant documents and transcripts. He notes that The Litigation Trustee has access to materials produced to the Official Committee of Unsecured Creditors and the Bankruptcy Court-appointed Examiner. Mr. Rosen insists that T.H. Lee, et al., require access to all documents and other materials available to the Litigation Trustee. T.H. Lee, et al., have attempted to work with the Litigation Trustee, as well as the individuals and entities whose materials are in question, to gain access. However, the Litigation Trustee had contended that the Protective Order prevents him from disclosing the relevant materials. Consequently, T.H. Lee, et al., contacted the individual parties and sought their consent. Several parties have agreed to disclosure, and the remaining parties, except one, have failed to respond to the direct requests for disclosure. Specifically, Beckenham Trading Co., Deerhurst Management Co., Inc., EMF Financial Products/Delta Flyer Fund, Northbridge Capital Management, Inc., Coast Asset Management, McDermott, Will & Emery, Edward McElwreath/Sean O'Shea, Frank Mutterer, Stephen Grady, David Weaver, Sukhmeet Dhillon, Eric Lipoff, and Thomas Dittmer have failed to respond to the request. BAWAG has objected to the disclosure. Mr. Rosen maintains that the Withholding Parties do not face any prejudice or burden by the limited disclosure requested. T.H. Lee, et al., seek only to use the documents and transcripts in a manner consistent with the Confidentiality Order, in connection with the Litigations. T.H. Lee, et al., assert that they are not imposing any additional burden to the Withholding Parties, and ask the Bankruptcy Court to grant them access to the confidential material. A hearing to consider T.H. Lee, et al.'s request will be held at 10:00 a.m. on May 13, 2008, before U.S. Bankruptcy Judge Robert Drain. About Refco Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The company has operations in Bermuda. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its direct and indirect subsidiaries, including Refco Capital Markets Ltd. and Refco F/X Associates LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2006. SECURITY CAPITAL: Posts US$96.8 Million Net Loss in 1st Qtr 2008 ---------------------------------------------------------------- Security Capital Assurance Ltd. reported its results for the three-month period ended March 31, 2008. The net loss in the first quarter of 2008 was US$96.8 million versus net income of US$37.3 million in the first quarter of 2007. The net loss for the quarter was primarily due to non-cash, unrealized mark-to- market losses on financial guarantee obligations in credit derivative form of US$187.2 million. As of March 31, 2008, the company had total shareholders' equity of US$348.4 million and common shareholders' equity of US$101.8 million. "The credit environment in the first quarter of 2008 continued to be very difficult," said Security Capital's President and Chief Executive Officer, Paul S. Giordano. "We are focused on trying to restructure our company. In the first quarter, we also took steps to realign our operating costs with our present situation of writing almost no new business." For the first quarter of 2008, the company reported an operating loss of US$2.7 million compared to operating income of US$44.1 million for the first quarter of 2007. The deterioration in operating income was due to higher net losses and loss adjustment expenses, credit impairment charges associated with net credit default swap (CDS) exposure, and restructuring related expenses associated with severance, legal and advisory fees, offset by higher net premiums earned and net investment income. Net Change in Fair Value of Credit Derivatives and Credit Impairment Charges Associated with CDS Exposure The net loss during the quarter was primarily due to a US$187.2 million net unrealized mark-to-market loss on financial guarantee obligations executed in credit derivative form. This unrealized mark-to-market charge was partially offset by net realized and unrealized gains of US$72.5 million, attributable to the exercise of its option under XLFA's capital facility to issue XLFA Series B Perpetual Preferred Shares during the quarter. Of the first quarter 2008 mark-to-market loss, US$22.2 million represents credit impairment charges associated with the company's credit derivative exposures. These credit impairment charges represent accretion associated with the discounted amount of net anticipated claims and recoveries recorded during the fourth quarter of 2007 on its CDO of ABS portfolio and does not represent further adverse developments. Net Cash (Used) Provided by Operating Activities For the three months ended March 31, 2008, net cash used in operating activities was US$44.6 million compared to net cash flows provided by operating activities of US$58.8 million in the comparable three-month period in 2007. Net cash used in operating activities during the first quarter of 2008 was primarily due to the company's decision to cease writing substantially all new business, combined with higher expenses and claims payments made during the quarter. Gross claims paid during the quarter totaled US$63.3 million and does not reflect receivables from affiliated and third-party reinsurers of US$50.1 million, including US$44.9 million receivable under an excess of loss reinsurance agreement with XL Insurance (Bermuda) Ltd. Holding Company Liquidity As of March 31, 2008, the holding company parent, Security Capital Assurance Ltd,, on a stand-alone, unconsolidated basis, had cash and cash equivalents of US$17.4 million. Common and Preference Share Dividends. During the first quarter of 2008, Security Capital's Board of Directors elected to not declare a quarterly dividend with respect to the company's common shares and a semi-annual dividend with respect to the Security Capital Series A Preference Shares. This election by the company's Board of Directors reduced cash outflow by approximately US$9.9 million for the three- month period ended March 31, 2008. Any future dividends will be subject to applicable law and regulatory requirements, as well as the discretion and approval of Security Capital's Board of Directors. Merrill Lynch Litigation As previously announced, on Feb. 22, 2008 and March 6, 2008, the company issued notices terminating seven CDS contracts with Merrill Lynch International. The company issued each of the termination notices on the basis of Merrill Lynch's repudiation of certain contractual obligations under each of the CDS contracts. On March 19, 2008, Merrill Lynch filed a complaint in a New York federal court challenging the effectiveness of the company's terminations. On March 31, 2008, XL Capital Assurance Inc. filed a counterclaim seeking a judgment from the court that its terminations were effective along with an award of US$28 million in damages for Merrill Lynch's failure to make certain termination payments under the Merrill Lynch CDS contracts. On April 18, 2008, Merrill Lynch filed a motion for summary judgment, which the company will oppose, and that is scheduled to be argued to the court on June 4, 2008. The court has also entered a scheduling order under which the case will be ready for trial in August 2008. The notional amount of the Merrill Lynch CDS contracts at March 31, 2008 and Dec. 31, 2007, aggregated US$3.1 billion before reinsurance (US$3 billion after reinsurance.) First Quarter 2008 Financial and Operating Results Presentation of Credit Derivatives: In December 2006, the Securities and Exchange Commission contacted the Association of Financial Guaranty Insurers, of which the company is a member, and instructed its members to recommend a uniform approach for presenting credit derivatives issued by financial guarantee insurance companies in their financial statements. The Association of Financial Guaranty Insurers recommendation was developed in consultation with the staff of the Office of the Chief Accountant and the Division of Corporate Finance of the SEC and has been adopted by the company effective Jan. 1, 2008, in accordance with the transition the association discussed with the SEC. Although the new presentation does not affect the company's reported net income (loss) or shareholders' equity, it changes the presentation of revenues, expenses, assets and liabilities. Adjusted Gross Premiums: In the first quarter of 2008, the company ceased writing substantially all new business and realigned its current staffing levels to reflect this development. Accordingly, the presentation of adjusted gross premiums as a non-GAAP financial measure of new business production has been suspended. Net Premiums: Net premiums earned increased 50% in the first quarter of 2008 to US$58.4 million compared to US$38.9 million in the first quarter of 2007. The previously referenced reclassification of certain specific revenue, expense and balance sheet lines, including net premiums earned, were associated with the accounting treatment of the company's CDS contracts. These adjustments reduced net premiums earned by US$18.4 million in the first quarter of 2008 and US$7.5 million in the first quarter of 2007, when compared against the prior method for presentation of net premiums earned. Net premiums earned associated with the company's CDS contracts are now presented in the "realized gains and losses and other settlements" line of the statements of operations. Net premiums earned include accelerated premiums from refundings. Refunding premiums increased to US$20.4 million in the first quarter of 2008, compared to US$1.3 million in the first quarter of 2007. Refundings increased as a number of the company's insured auction rate and variable rate demand municipal bond insurance policies were refinanced. Net Losses and Loss Adjustment Expenses: Net losses and loss adjustment expenses were US$41.5 million in the first quarter of 2008, compared to abenefit of US$1.8 million in the first quarter of 2007. Additional case loss provisions are primarily associated with adverse development on one HELOC transaction and one CES transaction that experienced additional credit deterioration during the first quarter of 2008. The gain reported in the first quarter of 2007 was the result of a US$3.3 million reversal of a case reserve associated with a residential mortgage-backed securities transaction which experienced favorable development. Paid Claims: During the three months ended March 31, 2008, the company paid gross claims aggregating US$63.3 million on guarantees of obligations supported by five HELOCs. These claims primarily relate to transactions for which the company has established gross and net case loss reserves of US$193 million and US$62.8 million, respectively, at March 31, 2008. The gross paid claims do not reflect recoveries due from affiliated and third-party reinsurers, including XL Insurance (Bermuda) Ltd., totaling US$50.1 million. From November 2007, through April 25, 2008, the company paid gross claims aggregating US$112 million. Operating Expenses: Operating expenses in the first quarter of 2008 were US$40.9 million, a 70% increase compared to US$24.1 million of operating expenses for the same period in 2007. This quarter's operating expenses increase was driven by a US$10.3 million charge related to workforce reductions. Professional fees, primarily legal expenses and advisory fees, were US$5.2 million and US$1.8 million higher than in the first quarter of 2007, respectively. The increase in professional fees was primarily due to projects supporting restructuring and remediation efforts. No costs were deferred in the first quarter of 2008 because the company ceased writing substantially all new business, which led to a US$7.8 million unfavorable operating expenses variance in the first quarter of 2008 compared to the first quarter of 2007. Corporate expenses, which are included in operating expenses and are associated with Security Capital being a public holding company, were US$7.5 million in the first quarter of 2008 versus US$3.8 million in the comparable period in 2007. The increase was primarily due to the higher expenses associated with the company's restructuring efforts, which were partially offset by lower executive management compensation costs. Acquisition Costs: Acquisition costs were US$5.7 million for the first quarter of 2008, a US$1.7 million increase over the comparable period in 2007. The increase in acquisition costs in the first quarter of 2008 was primarily due to accelerated amortization of acquisition costs in the insurance segment due to refundings, calls and other accelerations which totaled US$1.6 million. Net Investment Income: Net investment income for the first quarter of 2008 was US$32.3 million, representing an increase of 24% from US$26.1 million in the comparable period of 2007. The increase in net investment income was attributable to higher invested asset balances. Average invested assets were US$2.7 billion in the first quarter of 2008, compared to US$2.2 billion in the first quarter of 2007. The increase was due to higher positive cash flows from investing activities and cash flows from financing activities in 2007 and the investment of US$246.6 million of net proceeds associated with the issuance of the Security Capital Series A Preference Shares in the second quarter of 2007 and net proceeds of US$200 million associated with the issuance of XLFA Series B Perpetual Preferred Shares in the first quarter of 2008. Security Capital's average book yield decreased to 4.71% in the first quarter of 2008 versus 4.75% in the first quarter of 2007. Income Taxes: The company has established a valuation allowance against its entire deferred tax asset at March 31, 2008 and Dec. 31, 2007. The company's cumulative loss in the most recent three-year period represented negative evidence sufficient to require a full valuation allowance under the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". The company intends to maintain a full valuation allowance for its net deferred tax asset until sufficient positive evidence exists to support reversal of all or a portion of the valuation allowance. Until such time, except for state, local and foreign tax provisions, the company will have no net deferred tax asset. Balance Sheet: The company's net loss reserves were US$167.4 million at the end of the first quarter of 2008, versus US$135.6 million at year- end 2007. The increase was primarily due to the additional loss reserve provisioning and loss reserve accretion which occurred during the first quarter of 2008 in connection with the company's insured HELOC and CES portfolios. During the first quarter of 2008, the credit impairment charges associated with the company's CDO of ABS portfolio were reclassified as a derivative liability on the company's balance sheet in order to comply with the recommendations by Association of Financial Guaranty Insurers and the SEC and adopted by the company. The gross credit impairment associated with the company's CDO of ABS portfolio, which is now included as a derivative liability, totaled US$837.1 million as of March 31, 2008. As of year-end 2007, the comparable liability that was previously reflected in the "unpaid loss and loss adjustment expenses" line on the company's balance sheet was US$829.8 million. The increase was primarily due to loss reserve accretion on insured CDO of ABS transactions executed in derivative form. As of March 31, 2008, total assets were US$3.8 billion, up 4.4% from US$3.6 billion in total assets as of Dec. 31, 2007. Book value, or common shareholders' equity, decreased to US$101.8 million as of March 31, 2008, from US$180.5 million at the end of 2007. Common shareholders' equity per share was US$1.58 as of March 31, 2008, versus US$2.81 at Dec. 31, 2007. The company's total shareholders' equity as of March 31, 2008 was US$348.4 million. Security Capital's adjusted book value was US$1.32 billion as of March 31, 2008, versus US$1.50 billion as of Dec. 31, 2007. Adjusted book value is a non-GAAP financial measure defined as common shareholders' equity, plus the after-tax value of deferred premiums, net of prepaid reinsurance premiums and deferred acquisition costs, plus the after-tax net present value of estimated future installment premiums in force discounted at 7%. Book value and adjusted book value per common share as of March 31, 2008, were based on the company's issued and outstanding shares of 64,259,009. This compares to 64,169,788 shares outstanding as of Dec. 31, 2007. About Security Capital Security Capital Assurance Ltd. (NYSE: SCA) -- http://www.scafg.com-- is a Bermuda-domiciled holding company whose primary operating subsidiaries, XL Capital Assurance Inc. and XL Financial Assurance Ltd, provide credit enhancement and protection products to the public finance and structured finance markets throughout the United States and internationally. * * * As reported in the Troubled company Reporter-Latin America on April 2, 2008, Standard & Poor's Ratings Services lowered its rating on Security Capital Assurance Ltd.'s series A perpetual noncumulative preference shares to 'D' from 'C'. At the same time, S&P removed the rating from CreditWatch with negative implications. The rating action follows the company's failure to make its March 31, 2008, dividend payment. =========== B R A Z I L =========== BANCO ABC: Moody's Holds Foreign Currency Deposit Ratings at Ba2 ---------------------------------------------------------------- Moody's Investors Service has changed to negative the outlook on its Baa2 global local currency deposit rating for Banco ABC Brasil S.A. Moody's also placed a negative outlook on the Aaa.br long-term Brazilian national scale deposit rating. Moody's also affirmed Banco ABC's D+ bank financial strength rating and Ba2/NP long and short-term foreign currency deposit ratings, with stable outlook. The outlook change of Banco ABC's ratings follows the rating action taken on the parent bank Arab Banking Corporation on April 30, 2008. According to Moody's, Banco ABC's local currency deposit ratings incorporates the benefits it draws from being part of the Arab Banking Corporation Group, and which are reflected in the support to the Brazilian subsidiary. The negative outlook on the parent bank's financial strength rating could potentially influence its capacity to provide support to its international subsidiaries. Moody's acknowledges that Banco ABC Brasil continues to report solid financial performance on the back of positive macro conditions and resilient credit growth in Brazil, as indicated by its adequate financial metrics and superior asset quality. The significant business and strategic integration of the bank with its foreign controlling shareholder is an important component of its funding cost, which is predominantly wholesale based. These ratings assigned to Banco ABC Brasil S.A. had the outlook changed to negative from stable: -- Long-Term Global Local-Currency Ratings: Baa2, negative outlook -- Long-Term Brazilian National Scale Deposit Ratings: Aaa.br, negative outlook These ratings to Banco ABC Brasil S.A. were affirmed and remain on stable outlook: -- Bank Financial Strength Rating : D+ -- Global Foreign Currency Deposit Ratings: Ba2 for long-term and Not Prime for short-term Established in 1983 and headquartered in Sao Paulo, Brazil, Banco ABC Brasil SA, controlled by the Arab Banking Corporation and with a branch on the Cayman Islands, is a multiple bank endowed to operate with commercial, investment, financial, housing loan and exchange portfolios. As of March 2008, the bank had total assets of approximately BRL5.88 billion and equity of BRL1.11 billion. BANCO DO BRASIL: Agribusinesses Paying Off Debts May Get Bonus -------------------------------------------------------------- Banco do Brasil SA's Agribusiness Director Jose Carlos Vaz said in a conference call with analysts that agribusinesses that pay off outstanding debts may get a bonus from the bank, Business News Americas reports. Mr. Vaz told BNamericas that to reduce the level of debt in Brazil's agricultural sector, Banco do Brasil could push back loan payment due dates. The bank may also cut interest rates, Mr. Vaz added. Banco do Brasil granted BRL56.5 billion in loans to agribusinesses as of March 2008, BNamericas says, citing credit director Luiz Gustavo Braz Lage. This translated into a 25.3% compound yearly growth rate since 2002, when Banco do Brasil had BRL16.8 billion, Mr. Lage added. Mr. Lage told BNamericas that Banco do Brasil's commercial loans in the segment increased "at a CAGR of 36.1%" to BRL15.8 billion in March 2008, compared to March 2007. Its loans to family farms grew "at a CAGR of 23.0%" to BRL40.7 billion. BNamericas notes that Banco do Brasil's loans to agribusinesses were one-third of the bank's entire loan book at the end of the first quarter this year. Banco do Brasil's Investor Relations Officer Marco Geovanne told BNamericas that the bank had BRL46.8 billion in loans to agribusinesses in the first quarter 2007. Mr. Vaz told BNamericas that Banco do Brasil will keep expanding loans to agribusinesses. The bank wants to increase exposure to the less-represented segments of sugarcane, lumber, fruits, cattle, and biofuels, Mr. Vaz added. BNamericas relates that Mr. Vaz said that Banco do Brasil wants to extend requirements for agribusinesses to buy insurance before securing a loan from the bank. "It's a cultural change. We have to convince agribusinesses to use insurance, and BB [Banco do Brasil] and other insurance companies are working hard towards that," Mr. Vaz added. Banco do Brasil is Brazil's federal bank and is the largest in Latin America with some 20 million clients and more than 7,000 points of sale (3,200 branches) in Brazil, and 34 offices and partnerships in 26 other countries. In addition to its traditional retail banking services, Banco do Brasil underwrites and sells bonds, conducts asset trading, offers investors portfolio management services, conducts financial securities advising, and provides market analysis and research. * * * On Feb. 29, 2008, Moody's Investors Rating Service assigned a Ba2 foreign currency deposit rating to Banco do Brasil. BANCO NACIONAL: Signs BRL34.3 Million Contract With Metro Rio ------------------------------------------------------------- Banco Nacional de Desenvolvimento Economico e Social has entered on May 7, a BRL34.3 million financing contract with Metro Rio, Rio de Janeiro�s subway concessionaire, for the company�s operational structure upgrading project, which will adopt new traffic and ticketing technologies. Railcar, IT, traffic management and maintenance redesign are also included in the project. The project's overall amount is BRL55.5 million. The project will allow the implementation of a single ticketing system and the replacement of traffic control systems currently used in lines 1 and 2. The existing fleet of 182 railcars will be redesigned, increasing passenger transport capacity by 2.84% in the entire system (lines 1 and 2). For line 1, separately, seats will have a 3.57% increase. In line 2, seats will have a 2.15% increase. The subway operational fleet makes up 33 railcars. The project, to be performed in around 12 months, will also provide network adjustment investments (including railways, stations and rolling stock) to the new systems to be implemented. Incorporated in January 1998, the concessionaire Metro Rio started offering underground railway transport in April of the same year through the concession of services for 20 years, which can extended to 40 years. The concession currently includes line 1, between Saens Pena and Cantagalo stations, and line 2, between Estacio and Pavuna stations. Additionally, the stretch between Estacio and Carioca stations (2.97 km) and the extension of line 1, between Cantagalo and General Osorio (0.81 km), are also concession object. Lines 1 and 2 together are 36.8 kilometer long, include 33 stations and offer 29 railcars at rush hours, with average interval between railcars of around 4 minutes. 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: May Launch Subsidiary in Uruguay ------------------------------------------------ Published reports say that Banco Nacional de Desenvolvimento Economico e Social may launch a subsidiary in Montevideo, Uruguay, before year-end to lower financing costs for Brazilian firms with investments abroad, including trade finance. Business News Americas relates that Banco Nacional said last year that it would launch an office in Montevideo by August 2008. Brazil's President Luiz Inacio Lula da Silva would disclose plans for the Montevideo unit on May 12. According to the reports, the launching of the Banco Nacional unit in Uruguay is in line with the Brazilian federal government's plans to form a sovereign fund for Brazilian firms to invest in foreign projects. Financial daily Valor Economico relates that the fund would purchase Banco Nacional bonds and other debt issues on international markets, giving the bank money to provide loans to Brazilian companies seeking to fund infrastructure and other projects, mainly in Latin America and Africa. The reports say that the fund may be launched in June with up to US$20 billion in investment. Brazilian Planning Minister Paulo Bernardo commented to news daily Folha de S Paulo, "BNDES [Banco Nacional] gets a return from this. We provide financing and we charge interest. We're not giving money away." 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. BRASIL TELECOM: Conducting Pre-Launch Tests for Unico ----------------------------------------------------- Brasil Telecom SA's Fixed Line Product Marketing Manager Rivo Manhaes told Business News Americas that the firm is carrying out pre-launch tests of a SIP Wi-Fi version of its fixed-mobile hybrid telephony service Unico. BNamericas notes that SIP Wi-Fi is the natural evolution of the Cordless Telephony Profile system. Brasil Telecom launched that system in 2006. The Cordless Telephony Profile system channels calls along the home's fixed line when used in the vicinity. It reverts to Brasil Telecom's GSM network when out of range. Brasil Telecom has over 50,000 homes using the Cordless Telephony Profile service. BNamericas relates that Brasil Telecom previously disclosed plans to launch the Wi-Fi version in February 2007, but later said it expected to launch the service before the end of 2007. Mr. Manhaes did not provide an explanation as to why the launch date keeps moving, and declined to give a definitive new date, but told BNamericas that the firm is still engaged in adapting product features. Headquartered in Brasilia, Brasil Telecom S.A. -- http://www.brasiltelecom.com.br-- is an integrated telecommunications company operating in nine states in the southern, mid-western and northern regions of Brazil. In 2007, the company reported consolidated net revenues of BRL11.1 billion. * * * In April 2008, Moody's Investors Service continues to review Brasil Telecom SA's Ba1 rating for possible upgrade after the announced acquisition of Brasil Telecom Participacoes SA by Tele Norte Leste Participacoes SA. BRASIL TELECOM: Will Launch Internet Protocol Television -------------------------------------------------------- Brasil Telecom SA will launch Internet Protocol television, Business News Americas reports. According to BNamericas, the launch depend on the approval of bill PL29, which would allow telecoms to transmit the full range of television channels. Brasil Telecom will launch a video on demand service if the bill is not approved. Brasil Telecom SA's Fixed Line Product Marketing Manager Rivo Manhaes told BNamericas that triple or quadruple play accounts are growing fast, whether video on demand in Brasilia or Sky+DirecTV elsewhere. Video on demand customers "are much less prone to churn" than basic broadband subscribers, Mr. Manhaes added. Headquartered in Brasilia, Brasil Telecom S.A. -- http://www.brasiltelecom.com.br-- is an integrated telecommunications company operating in nine states in the southern, mid-western and northern regions of Brazil. In 2007, the company reported consolidated net revenues of BRL11.1 billion. * * * In April 2008, Moody's Investors Service continues to review Brasil Telecom SA's Ba1 rating for possible upgrade after the announced acquisition of Brasil Telecom Participacoes SA by Tele Norte Leste Participacoes SA. BRASIL TELECOM: Will Use ERicsson's WCDMA/HSPA Network ------------------------------------------------------ Ericsson LM Tel Co. will provide Brasil Telecom Participacoes SA with a WCDMA/HSPA network. Business News Americas relates that Ericsson will be the main supplier for the WCDMA/HSPA radio access network in five Brazilian states. It will be the supplier of Brasil Telecom's 2G and 3G common core network. According to Ericsson, its Mobile Packet Backbone Network software will provide telecom- quality Internet protocol transport and allow the operator to introduce high quality multimedia services. BNamericas notes that Ericsson will be responsible for: -- network deployment, -- systems integration, -- training, and -- support services. According to Ericsson, it will deploy and integrate systems of IP Multimedia Subsystem in Brazil. IP Multimedia Subsystem will bring Brasil Telecom's networks into a single-service environment. It will allow the launching of new multimedia voice, data, audio, and video services across multiple networks, Ericsson stated. About Ericsson Ericsson provides of technology and services to telecom operators. It supplies communications services and manages networks that serve more than 185 million subscribers. The company's portfolio comprises mobile and fixed network infrastructure, and broadband and multimedia solutions for operators, enterprises and developers. The Sony Ericsson joint venture provides consumers with feature-rich personal mobile devices. About Brasil Telecom Headquartered in Brasilia, Brazil, Brasil Telecom Participacoes SA -- http://www.brasiltelecom.com.br-- is a holding company that conducts substantially all of its operations through its wholly owned subsidiary, Brasil Telecom SA. The fixed-line telecommunications services offered to the company's customers include local services, including all calls that originate and terminate within a single local area in the region, as well as installation, monthly subscription, measured services, public telephones and supplemental local services; intra-regional long-distance services, which include intrastate and interstate calls; interregional and international long-distance services; network services, including interconnection and leasing; data transmission services; wireless services, and other services. * * * To date, Brasil Telecom carries Moody's Investors Service's Ba1 senior unsecured and credit default swap ratings. BRASKEM SA: Wants to Refinance US$1.2B Bridge Loan for Ipiranga --------------------------------------------------------------- Braskem S.A.'s Finance Vice President Carlos Fadigas said during a press conference that the firm is seeking to refinance a US$1.2 billion bridge loan it took out in April 2007 to fund the acquisition of Ipiranga Petroquimica, Business News Americas reports. As reported by the the Troubled Company Reporter-Latin America on Feb. 29, Braskem acquired 60% of Ipiranga Group's petrochemical assets. The transaction gave Braskem a direct interest of 60% in Ipiranga Quimica, an indirect interest of 60% in Ipiranga Petroquimica, and a direct and indirect interest of 62.7% in Copesul. Mr. Fadigas commented to BNamericas, "We asked for a two-year limit to make the [acquisition] in stages and we were lucky to get the investment grade rating, which will reduce our costs." Brazil's recent investment grade rating from Standards & Poor's and lower interest rates in the U.S. make it a good time for refinancing the bridge loan, Mr. Fadigas added. BNamericas notes that Braskem will issue up to US$400 million in bonds in the international market "in addition to US$800 million in loans in the form of export pre-payments." Braskem wants to raise the money in up to four months. Braskem S.A. (BOVESPA: BRKM5; NYSE: BAK; LATIBEX: XBRK) -- http://www.braskem.com.br/-- is a thermoplastic resins producer in Latin America, and is among the three largest Brazilian-owned private industrial companies. The company operates 13 manufacturing plants located throughout Brazil, and has an annual production capacity of 5.8 million tons of resins and other petrochemical products. The company reported consolidated net revenues of about US$9 billion in the trailing twelve months through Sept. 30, 2007. * * * As reported in the Troubled Company Reporter-Latin America on Jan. 17, 2008, Fitch Ratings affirmed the 'BB+' foreign and local currency issuer default ratings of Braskem S.A. Fitch also affirmed the 'BB+' ratings on the company's senior unsecured notes 2008, 2014, and senior unsecured notes 2017. TCR-LA reported on Dec. 10, 2007, that Standard & Poor's raised Braskem's long-term corporate credit to 'BB+' from 'BB'. On Nov. 28, 2007, Moody's Investors Service assigned the company a corporate family rating of Ba1 on the agency's global scale. COMPANHIA SIDERURGICA: To Invest US$10BB to Up Output Capacity -------------------------------------------------------------- Companhia Siderurgica Nacional SA will invest US$10 billion over the next five years to increase its production capacity to 16.7 million tons per year in 2014, Business News Americas reports. Companhia Siderurgica's Executive Financial Director Otavio Lazcano told BNamericas that the construction pipeline includes: -- two Brownfield projects at its main plant at Volta Redonda; and -- two new mills, one at its Itaguai port in Rio de Janeiro and one at Congonhas in Minas Gerais. BNamericas notes that one of the Volta Redonda projects will add output capacity of 600,000 tons per year of long steel. Mr. Lazcano said in a conference call that Companhia Siderurgica is investing some US$113 million and the plant should be operational by 2009. According to BNamericas, the other Brownfield project involves the restoration of a facility closed down in 1991. Companhia Siderurgica bought new blast furnaces for the project. The facility will be able to produce 1.5 million tons per year of pig iron. The feasibility study for this project has been concluded and the mill will start operations by 2009. Mr. Lazcano told BNamericas that Companhia Siderurgica is constructing a 10,000-square-meter facility in Itaguai. The project will produce some 4.5 million tons per year of slabs, long steel, heavy plates, and steel sheets near the port on Sepetiba bay, Mr. Lazcano added. Headquartered Sao Paolo, Brazil, Companhia Siderurgica Nacional S.A. -- http://www.csn.com.br/-- produces, sells, exports and distributes steel products, like hot-dip galvanized sheets, tin mill products and tinplate. The company also runs its own iron ore, manganese, limestone and dolomite mines and has strategic investments in railroad companies and power supply projects. The group also operates in Brazil, Portugal and the U.S. * * * As reported in the Troubled Company Reporter-Latin America on Dec. 27, 2007, Standard & Poor's Ratings Services revised its outlook on Brazil-based steel maker Companhia Siderurgica Nacional and related entity National Steel S.A. to positive from stable. At the same time, Standard & Poor's affirmed its 'BB' corporate credit rating on CSN and its 'B+' rating on NatSteel. FIAT SPA: To Source Auto Parts from India by 2010 ------------------------------------------------- Fiat SpA intends to import EUR250 million worth of auto parts from India by 2010, which is eight times the current importation of EUR30 million, the Economic Times reports. The Economic Times adds that the move would enable Fiat to cut costs since parts from India are around 10-15% cheaper. Further, it could also aid Fiat "broadbase its global market for sourcing," ET says. Citing Fiat Group Purchasing SRL CEO Gianni Coda, ET relates that the sourcing would be implemented for the automaker's Europe, Brazil and North America manufacturing plants. About Fiat S.p.A. Based in Turin, Italy, Fiat SpA -- http://www.fiatgroup.com/-- designs, manufactures, and sells automobiles, trucks, wheel loaders, excavators, telehandlers, tractors and combine harvesters. Outside Europe, the company has subsidiaries in the United States, Japan, India, China, Mexico, Brazil and Argentina, among others. * * * As of March 13, 2008, Fiat S.p.A. and its subsidiaries carries Ba3 Corporate Family and Senior Unsecured ratings from Moody's Investors Service, which said the outlook is positive. GERDAU SA: Will Issue Bonds to Pay Back Bridge Loan --------------------------------------------------- Gerdau SA will issue bonds due 2017 to raise up to US$1 billion to partially pay back a bridge loan. Business News Americas relates that Gerdau took out the bridge loan to finance the US$1.7 billion purchase US-based Quanex Corporation's steel mill Macsteel. Headquartered in Porto Alegre, Brazil, Gerdau SA -- http://www.gerdau.com.br/-- produces and distributes crude steel and related long rolled products, drawn products, and long specialty products. In addition to Brazil, Gerdau operates in Argentina, Canada, Chile, Colombia, Uruguay, India and the United States. * * * As reported in the Troubled Company Reporter-Latin America on Nov. 26, 2007, Moody's Investors Service affirmed Gerdau S.A.'s Ba1 corporate family rating and stable outlook. GENERAL MOTORS: Liquidity Negatively Impacted by US$2.1 Billion --------------------------------------------------------------- The work stoppage at supplier American Axle & Manufacturing Holdings Inc. has negatively impacted General Motors Corp.'s liquidity by US$2.1 billion for the three months ended March 31, 2008. Approximately 30 of GM's plants in North America have been idled by the work stoppage. GM, however, said the work stoppage has not negatively impacted the company's ability to meet customer demand due to the high levels of inventory at its dealers. GM said GM North America's results were negatively impacted by US$800 million as a result of the loss of approximately 100,000 production units in the three months ended March 31, 2008. The automaker anticipates that this lost production will not be fully recovered after this work stoppage is resolved, due to the current economic environment in the United States and to the market shift away from the types of vehicles that have been most strongly affected by the action at American Axle. GM Shareholders' Deficit Rises At March 31, 2008, the automaker's balance sheet showed total assets of US$145,741,000,000 and total debts of US$186,784,000,000, resulting in a stockholders' deficit of US$41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was US$37,094,000,000 and US$4,558,000,000, respectively. For three months ended March 31, 2008, GM reported a net loss of US$3,251,000,000 on US$42,670,000,000 total net sales and revenue, compared to a net income of US$62,000,000 on US$43,387,000,000 total net sales and revenue for same period last year. As reported in the Troubled Company Reporter-Latin America on May 8, 2008, GM said that during the first quarter of 2008, it took a non-cash charge of US$731,000,000 to increase its liability for estimated net costs associated with its support of Delphi Corp.'s bankruptcy and restructuring efforts. GM disclosed that the charge primarily results from updated estimates reflecting uncertainty around the nature, value and timing of GM's recoveries. Delphi was scheduled to emerge from bankruptcy in mid-April but obtained problems with its exit equity financing from Appaloosa Management, PC, thus affecting the timing of GM's recoveries from Delphi. General Motors has now recorded charges totaling US$8,300,000,000 in connection with Delphi-related issues. About GM 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. * * * As reported in the Troubled Company Reporter-Latin America on April 29, 2008, Standard & Poor's Ratings Services said that its 'B' long-term and 'B-3' short-term corporate credit ratings on General Motors Corp. remain on CreditWatch with negative implications, where they were placed March 17, 2008. The CreditWatch update follows downgrades of 49%-owned subsidiaries GMAC LLC (B/Negative/C) and Residential Capital LLC (CCC+/Watch Neg/C). The rating actions on Residential Capital LLC and GMAC were triggered by the resignation of the only independent directors at Residential Capital LLC. GENERAL MOTORS: To Provide US$200 Million to Axle to End Strike --------------------------------------------------------------- General Motors Corp. disclosed in a Securities and Exchange Commission filing that it agreed to provide American Axle & Manufacturing Holding with upfront financial support capped at US$200 million to help fund employee buyouts, early retirements and buydowns to facilitate a settlement of the work stoppage. As reported in the Troubled Company Reporter-Latin America on April 25, 2008, the strike called by the UAW union at Axle's original U.S. locations continues into its 57th day on Tuesday. Approximately 3,650 associates are represented by the UAW at these five facilities in Michigan and New York. AAM and the UAW worked effectively last week with the objective of reaching a new collective bargaining agreement for the original U.S. locations. Tentative agreements were achieved on many issues and AAM was encouraged by the progress. Although AAM has made several economic proposals to the UAW with "all-in" hourly wage and benefit packages that were considerably higher than the market rate of AAM's UAW-represented competitors in the U.S., the UAW has repeatedly rejected these economic proposals. AAM needs a U.S. market competitive labor agreement for the original U.S. locations. This is necessary because the UAW previously negotiated market competitive labor agreements with many of AAM's U.S. competitors in the driveline market segment. This includes Dana, FormTech, Chinese-owned Neapco and Indian- owned Bharat Forge. The "all-in" wage and benefit package granted by the UAW to these companies averages approximately US$30 per hour. In order for AAM to be able to compete for new business and sustain employment at the original U.S. locations, the UAW must offer AAM economic terms and conditions that are comparable to those it has already granted to AAM's competitors. The UAW's latest economic proposal to AAM dated April 14, 2008, included an "all-in" wage and benefit package that is almost double the market rate established by the UAW with AAM's competitors. The TCR reported in March 2008 that GM president and chief operating officer Frederick A. Henderson said that although many of its assembly plants have been partially or fully shut down by the strike of United Auto Workers union members at Axle, GM won't interfere with the parties' labor dispute. Mr. Henderson explained that GM was not losing sales because of the strike, which started on Feb. 26, 2008, following expiration of a four- year master labor agreement. However, he said, if GM was struggling because of the union protest, the company would be one of those sitting on the negotiation table. According GM's recent quarterly results filing, Axle's work stoppage unfavorably impacted GM North America earnings by US$800 million. GM has about 30 facilities affected by the strike as the supplier attempts to negotiate with the union. About American Axle Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE:AXL) -- http://www.aam.com/-- and its wholly owned subsidiary, American Axle & Manufacturing, Inc., manufactures, engineers, designs and validates driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for light trucks, sport utility vehicles and passenger cars. In addition to locations in the United States (in Michigan, New York and Ohio), the company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea and the United Kingdom. About GM 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. * * * As reported in the Troubled Company Reporter-Latin America on April 29, 2008, Standard & Poor's Ratings Services said that its 'B' long-term and 'B-3' short-term corporate credit ratings on General Motors Corp. remain on CreditWatch with negative implications, where they were placed March 17, 2008. The CreditWatch update follows downgrades of 49%-owned subsidiaries GMAC LLC (B/Negative/C) and Residential Capital LLC (CCC+/Watch Neg/C). The rating actions on Residential Capital LLC and GMAC were triggered by the resignation of the only independent directors at Residential Capital LLC. GENERAL MOTORS: In Talks on US$750MM Pledge for ResCap Bailout -------------------------------------------------------------- GMAC LLC, both owned by General Motors Corp. and Cerberus Capital Management LP, is currently negotiating to provide a new 2-year US$3.5 billion senior secured credit facility to its wholly owned subsidiary Residential Capital LLC, which would be conditioned on successful completion by ResCap of a debt tender and exchange offer for its outstanding unsecured notes. ResCap's financing plans also include seeking amendments to substantially all of its secured bilateral credit facilities to extend their maturities or to modify their tangible net worth covenants. GM and Cerberus are in discussions to acquire US$750 million first loss participation in GMAC's proposed senior secured credit facility, shared between Cerberus and GM on a pro rata basis. As reported in the Troubled Company Reporter on May 7, 2008, ResCap disclosed that it is highly leveraged relative to its cash flow, and its liquidity position has been declining. According to a Securities and Exchange Commission filing, ResCap said there is a significant risk that the company will not be able to meet its debt service obligations, be unable to meet certain financial covenants in its credit facilities, and be in a negative liquidity position in June 2008. ResCap anticipates that its new debt agreements will include covenants to maintain minimum cash balances. To comply with these covenants and to satisfy its liquidity needs, ResCap expects that it will be required, even if it successfully implements all of the proposed actions, to generate capital in the near term through asset sales or other actions in addition to its normal mortgage finance activities, to obtain additional cash of approximately US$600 million by June 30, 2008. This additional cash requirement is an estimate based upon ResCap's internal monthly cash forecasts targeting sufficient cash surpluses to prudently operate its business and remain in excess of anticipated cash covenants. According to GM, if ResCap is unsuccessful in executing the financing transactions, including additional liquidity actions, it would have a material adverse effect on GMAC, which could result in a further impairment of GM's investments in GMAC and could disrupt GMAC's ability to finance GM's dealers and customers. About ResCap Headquartered in Minneapolis, Minnesota, Residential Capital LLC -- http://www.rescapholdings.com/-- is the home mortgage unit of GMAC Financial Services, which is in turn wholly owned by GMAC LLC. About GMAC LLC GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors Acceptance Corporation, is a global, diversified financial services company that operates in approximately 40 countries in automotive finance, real estate finance, insurance and other commercial businesses. GMAC was established in 1919 and employs approximately 26,700 people worldwide. Cerberus Capital Management LP bought 51% GMAC LLC stake from General Motors Corp. on December 2006. About GM 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. * * * As reported in the Troubled Company Reporter-Latin America on April 29, 2008, Standard & Poor's Ratings Services said that its 'B' long-term and 'B-3' short-term corporate credit ratings on General Motors Corp. remain on CreditWatch with negative implications, where they were placed March 17, 2008. The CreditWatch update follows downgrades of 49%-owned subsidiaries GMAC LLC (B/Negative/C) and Residential Capital LLC (CCC+/Watch Neg/C). The rating actions on Residential Capital LLC and GMAC were triggered by the resignation of the only independent directors at Residential Capital LLC. PETROBRAS ENERGIA: Fitch Holds BB Foreign & Local Currency IDRs --------------------------------------------------------------- Fitch Ratings has affirmed both the foreign currency and local currency issuer default ratings of Petrobras Energia S.A. at 'BB.' In addition, Fitch has affirmed the company's national scale rating at 'AA+(Arg)'. The rating outlook for all issuer default ratings is stable. These issuances are affirmed at 'BB': -- Senior unsecured notes due 2009; -- Senior unsecured notes due 2010; -- Senior unsecured notes due 2011; and -- Senior unsecured notes due 2013; Guaranteed notes due 2017 at 'BBB-'. Petrobras Energia's ratings reflect support from the company's majority shareholder, Petrobras Brasileiro, which has a foreign currency IDR of 'BBB-' by Fitch. Petrobras Energia is a strategic asset for Petrobras contributing to the diversification of Petrobras' international operations in Latin America. It will continue to benefit from Petrobras' leadership position in both upstream and downstream operations and consumer brand name awareness. In addition, Petrobras Energia benefits from technology sharing in the exploration and production segment with Petrobras. the company's unsecured foreign and local currency IDRs, as well as notes due in 2009, 2010, 2011 and 2013, are rated two notches above the 'B+' country ceiling of Argentina due to a number of factors. These factors include the company's strategic importance to Petrobras, its potential to keep dollars abroad via exports, plus its ability to borrow against the assets it owns outside of Argentina. On a stand-alone basis, Petrobras Energia's ratings are supported by solid credit metrics, an integrated business profile, and proven hard currency generating ability. Its credit ratings are constrained by the high business risk associated with operating in Argentina; profits are limited by price controls, export taxes and high government intervention in the energy sector. The company has not been able to benefit from high crude prices. Increasing inflation has eroded sales gains and has increased the company's cost structure. Macroeconomic concerns and government intervention in the Argentine energy sector are not likely to be resolved in the near term. Petrobras Energia also has operations in Peru, Ecuador, Venezuela and Bolivia. Both the Venezuelan and Bolivian operations have had to restructure their operating agreements with both governments. These restructurings have resulted in reduced crude oil production for the company. In Argentina, its crude oil production has decreased due to the natural decline of mature fields. The combination of reduced crude oil production, higher lifting costs, and increased cost structures across the petrochemical and refining segments resulted in a 29% decrease in fiscal year 2007 operating income. Positively, Petrobras Energia is one of the low cost producers in Argentina with a competitive cost structure. At Dec. 31, 2007, net debt-to-EBITDA was 2.2 times, and EBITDA-to-interest expense was 4.7. While the company operates fairly autonomously, it benefits from the financial strength of its majority shareholder, Petrobras. Petrobras Energia has ready access to the international capital markets; such support from its majority shareholder adds another dimension to its financial flexibility. Petrobras Energia, S.A. is headquartered in Buenos Aires, Argentina. Its majority owner, Petrobras, is based in Rio de Janeiro, Brazil. TAM SA: To Offer Additional Flights in Buenos Aires --------------------------------------------------- TAM S.A. will offer additional flights to Ezeiza International Airport in Buenos Aires, Argentina, with departures from Porto Seguro, Recife, Salvador, Sao Paulo and Rio de Janeiro, from June 19 to August 10 in order to meet the demands of the high season. In doing this, TAM will supplement availability of flights connecting Brazil's Northeast with Buenos Aires, expanding options for passengers wanting to take this route, as well as increasing the number of flights from Sao Paulo and Rio de Janeiro. TAM currently operates 49 weekly frequencies to Buenos Aires, with departures from Belo Horizonte, Brasilia, Florianopolis, Fortaleza, Porto Alegre, Rio de Janeiro, Salvador and Sao Paulo. With the additional flights, the airline will be offering 56 flights per week to the Argentine capital. On Mondays, Tuesdays, Wednesdays and Fridays, the flight will depart Recife at 3:30 p.m. and land in Salvador at 4:45 p.m., taking off at 5:30 p.m. en route to Tom Jobim (Galeao) International Airport in Rio de Janeiro, departing from there at 8:30 p.m. and landing at Ezeiza airport in Buenos Aires at 11:50 p.m. For the return trip, the flight will depart from Ezeiza at 6:30 a.m., landing in Rio at 9:30, in Salvador at 12:25 p.m. and in Recife at 2:25 p.m. On Saturdays, the flight will depart from Porto Seguro at 10:45 a.m. and arrive in Buenos Aires at 3:00 p.m. The return trip will be on flight, departing from Ezeiza at 6:00 a.m. and arriving in Porto Seguro at 9:45 a.m. On Thursdays and Sundays, the flight will leave Guarulhos International Airport in Sao Paulo at 11:20 p.m., arriving in Ezeiza at 2:10 a.m. For the return trip, the flight will depart from Buenos Aires at 7:45 a.m. and land at 10:25 in Guarulhos. TAM S.A. -- http://www.tam.com.br/-- currently has business agreements with the regional airlines