/raid1/www/Hosts/bankrupt/TCRLA_Public/080529.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Thursday, May 29, 2008, Vol. 9, No. 106
Headlines
A R G E N T I N A
ACEROS STEELGRAF: Proofs of Claim Verification Is Until Aug. 18
CARCARANA SA: Court Names Iglesias - Martinetti as Trustee
CONES ARGENTINA: Proofs of Claim Verification Deadline Is Aug. 5
INVESTIGACIONES WECKESSER: Claims Verification Is Until July 21
LA BOUTIQUE: Proofs of Claim Verification Deadline Is July 3
PACO REEL: Proofs of Claim Verification Is Until July 14
PANIFICADORA 1997: Proofs of Claim Verification Is Until June 26
TERRA NATURE: Proofs of Claim Verification Is Until July 18
W.R. GRACE: Sealed Air May Borrow Money to Pay US$700MM
W.R. GRACE: Wants to Contribute US$24MM to Pension Plan
B O L I V I A
MILLICOM INTERNATIONAL: Re-Elects Five Non-Executive Directors
B R A Z I L
BANCO NACIONAL: Okays BRL768MM in Loans for Sanitation Projects
COMPANHIA ENERGETICA: Inks Supply Deal With ArcelorMittal
GERDAU SA: Stocks Up 1.41% to BRL82.2 on Monday
GOL FINANCE: Moody's Cuts Senior Unsecured Debt Rating to Ba3
GOL LINHAS: Moody's Drops Corp. Family Rating to Ba3 From Ba2
PRIMUS TELECOMMUNICATIONS: Reduces Debt by US$63.2 Million
USINAS SIDERURGICAS: Companhia Vale to Sell Shares in Firm
C H I L E
CODELCO: Privatization Not Up for Discussion, Minister Says
D O M I N I C A N R E P U B L I C
PRC LLC: Wants to Reject BGTX Lease; BGTX Files Damage Claim
PRC LLC: Wants to Employ Grant Thornton as Accountants
J A M A I C A
AIR JAMAICA: Workers Want Politicians' Flight Privileges Removed
CABLE & WIRELESS: Unit Loses J$4.1B in Year Ended March 31, 2008
SUGAR COMPANY: Unions to Discuss Divestment With Minister
WEST CORP: Additional Loan Prompts S&P to Hold 'BB-' Rating
M E X I C O
BANCO DEL BAJIO: S&P Ranks Average as Residential Loan Servicer
KANSAS CITY: Moody's Assigns B2 Rating to Unit's US$275MM Notes
* IXTLAHUACA: Moody's Withdraws Ba3 Rating for Business Reasons
P U E R T O R I C O
HEALTHSOUTH CORP: Reduces High Cost Debt to US$2BB by Q4 2007
JOSE RUSSE: Case Summary & 10 Largest Unsecured Creditors
V E N E Z U E L A
PETROLEOS DE VENEZUELA: Cienfuegos to Have Storage Tanks & Plant
PRIDE INT'L: Closes US$66 Mil. Platform Rig Fleet Sale
* S&P Reviews Characteristics of Brazilian Insolvency Regime
* S&P Sees Stable Outlook on U.S. & Bermuda Reinsurance Markets
- - - - -
=================
A R G E N T I N A
=================
ACEROS STEELGRAF: Proofs of Claim Verification Is Until Aug. 18
---------------------------------------------------------------
Liliana Oliveros Peralta, the court-appointed trustee for Aceros
Steelgraf SA's bankruptcy proceeding, will be verifying
creditors' proofs of claim until Aug. 18, 2008.
Ms. Peralta will present the validated claims in court as
individual reports. The National Commercial Court of First
Instance No. 14 in Buenos Aires, with the assistance of Clerk
No. 27, 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 Aceros Steelgraf 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 Aceros Steelgraf's
accounting and banking records will be submitted in court.
La Nacion didn't state the submission dates for the reports.
The debtor can be reached at:
Aceros Steelgraf SA
Pacheco de Melo 2533
Buenos Aires, Argentina
CARCARANA SA: Court Names Iglesias - Martinetti as Trustee
----------------------------------------------------------
The National Commercial Court of First Instance No. 6 in Buenos
Aires has appointed Iglesias - Martinetti y Asociados as trustee
for Carcarana SA's bankruptcy proceeding.
Iglesias-Martinetti will verify creditors' proofs of claim and
present the validated claims in court as individual reports.
The court, with the assistance of Clerk No. 12, 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 Carcarana and its creditors.
Inadmissible claims may be subject for appeal in a separate
proceeding known as an appeal for reversal.
Iglesias-Martinetti will also submit to court a general report
containing an audit of Carcarana's accounting and banking
records.
The trustee can be reached at:
Iglesias - Martinetti y Asociados
Avenida Paseo Colon 505
Buenos Aires, Argentina
CONES ARGENTINA: Proofs of Claim Verification Deadline Is Aug. 5
---------------------------------------------------------------
Ines Clos, the court-appointed trustee for Cones Argentina
S.R.L.'s bankruptcy proceeding, will be verifying creditors'
proofs of claim until Aug. 5, 2008.
Ms. Clos will present the validated claims in court as
individual reports on Sept. 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 Cones Argentina and its creditors.
Inadmissible claims may be subject for appeal in a separate
proceeding known as an appeal for reversal.
A general report that contains an audit of Cones Argentina's
accounting and banking records will be submitted in court
Oct. 27, 2008.
Ms. Clos is also in charge of administering Cones Argentina's
assets under court supervision and will take part in their
disposal to the extent established by law.
The debtor can be reached at:
Cones Argentina SRL
Avenida San Juan 4377
Buenos Aires, Argentina
The trustee can be reached at:
Ines Clos
Sarmiento 944
Buenos Aires, Argentina
INVESTIGACIONES WECKESSER: Claims Verification Is Until July 21
---------------------------------------------------------------
The court-appointed trustee for Investigaciones Weckesser S.A.'s
bankruptcy proceeding will be verifying creditors' proofs of
claim until July 21, 2008.
The trustee will present the validated claims in court as
individual reports on Sept. 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 Investigaciones Weckesser 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 Investigaciones
Weckesser's accounting and banking records will be submitted in
court Oct. 27, 2008.
LA BOUTIQUE: Proofs of Claim Verification Deadline Is July 3
-----------------------------------------------------------
The court-appointed trustee for La Boutique del Pan S.R.L.'s
bankruptcy 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 Sept. 8, 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 La Boutique 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 La Boutique's
accounting and banking records will be submitted in court
Oct. 20, 2008.
PACO REEL: Proofs of Claim Verification Is Until July 14
-------------------------------------------------------
The court-appointed trustee for Paco Reel S.A.'s bankruptcy
proceeding will be verifying creditors' proofs of claim until
July 14, 2008.
The trustee will present the validated claims in court as
individual reports on Sept. 8, 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 Paco Reel 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 Paco Reel's
accounting and banking records will be submitted in court
Oct. 20, 2008.
PANIFICADORA 1997: Proofs of Claim Verification Is Until June 26
----------------------------------------------------------------
The court-appointed trustee for Panificadora 1997 S.A.'s
bankruptcy proceeding will be verifying creditors' proofs of
claim until June 26, 2008.
The trustee will present the validated claims in court as
individual reports on Aug. 25, 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 Panificadora 1997 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 Panificadora 1997's
accounting and banking records will be submitted in court
Oct. 6, 2008.
TERRA NATURE: Proofs of Claim Verification Is Until July 18
-----------------------------------------------------------
The court-appointed trustee for Terra Nature S.A.'s bankruptcy
proceeding will be verifying creditors' proofs of claim until
July 18, 2008.
The trustee will present the validated claims in court as
individual reports on Sept. 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 Terra Nature 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 Terra Nature's
accounting and banking records will be submitted in court
Oct. 27, 2008.
The debtor can be reached at:
Terra Nature SA
Brandsen 1190
Buenos Aires, Argentina
W.R. GRACE: Sealed Air May Borrow Money to Pay US$700MM
-------------------------------------------------------
Sealed Air Corporation intends to borrow money to help pay its
settlement with W.R. Grace & Co., Bloomberg News reports,
quoting David Kelsey, Sealed Air's chief financial officer.
As widely reported, W.R. Grace settled its asbestos liabilities
in early April 2008. Part of the settlement will be funded by
more than US$700,000,000 cash payments from Sealed Air, the
company that purchased W.R. Grace's Cryovac Division in 1998.
Bloomberg related that Mr. Kelsey gave assurance that Sealed Air
could meet its obligation under the settlement with more than
US$400,000,000 cash on hand and short-term borrowing. "We have
ample liquidity to fund that cash portion," Bloomberg quoted Mr.
Kelsey.
In 2002, Sealed Air, which became target of numerous asbestos-
related claims when it acquired Grace's Cryovac packaging
business, settled with W.R. Grace's asbestos committees.
The asbestos committees filed a complaint against Sealed Air
seeking to recovering transfers that W.R. Grace made to the
company in connection with the Cryovac acquisition. In exchange
for payments, W.R. Grace released all of its claims against
Sealed Air.
About W.R. Grace
Headquartered in Columbia, Md., W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally, including Argentina,
Australia and Ireland.
The Company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and
Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The
Debtors hired Blackstone Group, L.P., as financial advisor.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and
Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the
Official Committee of Asbestos Personal Injury Claimants. The
Asbestos Committee of Property Damage Claimants tapped Scott
Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena
Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq.,
at Kramer Levin Naftalis & Frankel, LLP, represents the Official
Committee of Equity Security Holders.
The Debtors filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The Debtors' exclusive period to file
a chapter 11 plan expired on July 23, 2007.
The Bankruptcy Court adjourned plan-related proceedings pending
an estimation of W.R. Grace's asbestos-related personal injury
liabilities. PI estimation proceedings commenced on January 14,
2008.
In early April 2008, W.R. Grace and the PI Committee entered
into a settlement-in-principle regarding the PI asbestos claims.
The settlement calls for the creation of a Section 524(g) trust
and payments of about US$3,000,000,000 in cash and stocks from
W.R. Grace. The PI estimation trial was discontinued.
At Dec. 31, 2006, the W.R. Grace's balance sheet showed total
assets of US$3,620,400,000 and total debts of US$4,189,100,000.
As of Nov. 30, 2007, W.R. Grace's balance sheet showed total
assets of US$3,335,000,000, and total debts of US$3,712,000,000.
(W.R. Grace Bankruptcy News, Issue No. 158; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
W.R. GRACE: Wants to Contribute US$24MM to Pension Plan
-------------------------------------------------------
W.R. Grace Co. and its debtor-affiliates seek authority from the
U.S. Bankruptcy Court for the District of Delaware to contribute
US$24,000,000 to their defined benefit retirement plans covering
employees in the United States.
The contributions are due January 15, 2009, and are necessary to
assure compliance with the minimum funding requirements under
applicable federal law, Laura Davis Jones, Esq., at Pachulski
Stang Ziehl & Jones, LLP, in Wilmington, Delaware, says.
The Court previously authorized the Debtors to contribute up to
US$302,700,000 to the Retirement Plans since 2003:
Date Contribution
---- ------------
2003 US$48,500,000
2004 20,000,000
2005 24,100,000
2006 101,400,000
2007 76,000,000
2008 32,700,000
------------
Total US$302,700,000
============
Ms. Jones relates that the legally required minimum
contributions to the Grace Retirement Plans for the 2008-2009
Funding Period are:
Due Date Plan Year Contribution
-------- --------- ------------
July 15, 2008 2008 US$20,284
September 15, 2008 2008 10,528,926
October 15, 2008 2008 5,820,937
January 15, 2009 2008 7,604,629
------------
Total US$23,974,776
============
According to Ms. Jones, the contributions have been finalized,
and are not subject to change as a result of future market
performance of the assets of the Grace Retirement Plans or any
anticipated changes in applicable law. However, she explains,
it is necessary to secure the Court's approval for the payment
of legally required minimum contributions for the January 15,
2009 Period at this time because the first due date with respect
to the contribution is July 15, 2008.
The Debtors contend that continuing to make at least the legally
required minimum contributions to each of the Grace Retirement
Plans is essential to maintaining the morale of their workforce
and the workforce' confidence in management.
About W.R. Grace
Headquartered in Columbia, Md., W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally, including Argentina,
Australia and Ireland.
The Company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and
Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The
Debtors hired Blackstone Group, L.P., as financial advisor.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and
Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the
Official Committee of Asbestos Personal Injury Claimants. The
Asbestos Committee of Property Damage Claimants tapped Scott
Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena
Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq.,
at Kramer Levin Naftalis & Frankel, LLP, represents the Official
Committee of Equity Security Holders.
The Debtors filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The Debtors' exclusive period to file
a chapter 11 plan expired on July 23, 2007.
The Bankruptcy Court adjourned plan-related proceedings pending
an estimation of W.R. Grace's asbestos-related personal injury
liabilities. PI estimation proceedings commenced on January 14,
2008.
In early April 2008, W.R. Grace and the PI Committee entered
into a settlement-in-principle regarding the PI asbestos claims.
The settlement calls for the creation of a Section 524(g) trust
and payments of about US$3,000,000,000 in cash and stocks from
W.R. Grace. The PI estimation trial was discontinued.
At Dec. 31, 2006, the W.R. Grace's balance sheet showed total
assets of US$3,620,400,000 and total debts of US$4,189,100,000.
As of Nov. 30, 2007, W.R. Grace's balance sheet showed total
assets of US$3,335,000,000, and total debts of US$3,712,000,000.
(W.R. Grace Bankruptcy News, Issue No. 158; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
==============
B O L I V I A
==============
MILLICOM INTERNATIONAL: Re-Elects Five Non-Executive Directors
--------------------------------------------------------------
Millicom International Cellular S.A. held its Annual General
Meeting and an Extraordinary General Meeting of shareholders in
Luxembourg.
The AGM resolved to re-elect Kent Atkinson, Mia Brunell Livfors,
Donna Cordner, Daniel Johannesson, and Michel Massart as Non-
Executive Directors, and to elect Marten Pieters and Allen
Sangines-Krause as new Non-Executive Directors of the company.
Mr. Pieters was CEO of MSI, which became Celtel, from 2003
through its acquisition by MTC in early 2007. During this time,
he was a driving force in Celtel's development as one of the
leading pan-African telecommunications operators, serving some
20 million customers in 14 countries. Previously, from 1989 to
2003, Mr. Pieters worked at KPN where, from 2000, he was a
member of the executive management board of KPN Telecom with
specific responsibility for KPN's Business Solutions Division.
Prior to this he was EVP, KPN International Operations, covering
Central and Eastern Europe, Asia and the US. Before this he was
Managing Director of two Telecoms districts, having joined KPN
as Secretary to the Board of Management. Before starting his
career in telecommunications, Mr. Pieters worked for 11 years at
Royal Smilde Foods as Director of Finance and Strategic Planning
and eventually as CEO in the Netherlands. He has a Law degree
from Groningen University, The Netherlands.
Mr. Sangines-Krause worked for Goldman Sachs between 1993 and
2007, working in a variety of senior positions from COO for
Latin America based in Mexico City and New York and most
recently as Managing Director out of London. Prior to joining
Goldman Sachs, Mr Sangines-Krause was with Casa de Bolsa
Inverlat, in Mexico, and before that he was a Founding Partner
of Fidem, S.C., a Mexican investment bank, which was acquired by
Casa de Bolsa Inverlat in 1991. Mr. Sangines-Krause currently
sits on the Board of Investment AB Kinnevik and is Chairman of
Rasaland, a real estate investment fund. He is a member of the
Council of the Graduate School of Arts and Sciences of Harvard
University. He has a Ph.D. in Economics from Harvard University
and an undergraduate degree in Economics from Instituto
Tecnologico Autonomo de Mexico. While at Harvard, he was
economic advisor to the Bolivian President for three years,
focused on successfully reducing hyperinflation from some
20,000% to single digit levels.
PricewaterhouseCoopers Sarl was re-elected as external Auditor.
All other resolutions proposed to Millicom's AGM of shareholders
today in Luxembourg were passed. In particular, the AGM
authorized the payment of a per share gross cash dividend of USD
2.40 to eligible shareholders. The dividend will be paid on
June 9, 2008 to shareholders of record as of June 2, 2008. As
the required quorum of two-thirds of the issued and outstanding
share capital was not met, the Board resolved to reconvene the
EGM in order to amend Article 21 (Procedure, Vote) of the
articles of association of Millicom. Further notice will be
given promptly regarding the reconvened EGM. For details of the
proposed amendment to Article 21, please refer to item I. of
the EGM agenda in the AGM/EGM convening notice published by
Millicom on May 9, 2008 available at the company's web site.
About Millicom International
Headquartered in Bertrange, Luxembourg, and controlled by
Sweden's AB Kinnevik, Millicom International Cellular S.A.
-- http://www.millicom.com/-- is a global telecommunications
investor with cellular operations in Asia, Latin America and
Africa. It currently has cellular operations and licenses in 16
countries. The Group's cellular operations have a combined
population under license of around 391 million people.
The Central America Cluster comprises Millicom's operations in
El Salvador, Guatemala and Honduras. The population under
license in Central America at December 2005 is 26.4 million.
The South America Cluster comprises Millicom's operations in
Bolivia and Paraguay. The population under license in South
America at December 2005 is 15.2 million.
* * *
As reported in the Troubled Company Reporter-Europe on
Nov. 16, 2007, Moody's Investors Service upgraded ratings of
Millicom International Cellular S.A. The corporate family
rating was upgraded to Ba2 from Ba3 and the rating on the
existing senior notes was upgraded to B1 from B2. Moody's said
the outlook on the ratings is stable.
===========
B R A Z I L
===========
BANCO NACIONAL: Okays BRL768MM in Loans for Sanitation Projects
---------------------------------------------------------------
Banco Nacional de Desenvolvimento Economico e Social SA has
authorized three loans totaling BRL768 million for sanitation
projects.
Business News Americas relates that the projects are included in
the Brazilian federal government's growth acceleration plan.
They will create 3,300 direct and indirect jobs, and provide
services to 4.8 million people.
According to BNamericas, the biggest loan is for BRL578 million.
It will be for Minas Gerais state water utility Copasa. The
loan will be used to improve water supply and sanitation in 34
cities in Minas Gerais. Project investment will total almost
BRL682 million. Copasa eyes 2,000 jobs for construction works.
BNamericas notes that a BRL104 million loan will go to Caxias do
Sul in Rio Grande do Sul. Caxias do Sul will wants to implement
a water supply system with a capacity of 1,000 liters per
second. The system will provide potable water to about 245,000
people. It will boost capacity by 60%. Works for the project
would last for 36 months. The Banco Nacional loan is 80% of the
total required investment of BRL130 million.
The report says that a BRL85.7 million loan will be given in
financing to Espirito Santo state water company Cesan. The loan
will be used to increase water supply and the sanitation
treatment system in Espirito Santo. Works will benefit 460,000
people in Vitoria, Serra, Viana, and Guarapari. The loan from
Banco Nacional is 83.1% of the BRL103 million required for the
project. Cesan expects to create 1,300 direct and indirect jobs
for the project.
Banco Nacional is considering another eight projects that
require BRL844 million. The projects will need BRL644 million
in loans from the bank, BNamericas states.
Banco Nacional de Desenvolvimento Economico e Social SA is
Brazil's national development bank. It provides financing for
projects within Brazil and plays a major role in the
privatization programs undertaken by the federal government.
* * *
Banco Nacional currently carries a Ba2 foreign long-term bank
deposit rating from Moody's Investors Service, and a BB+ long-
term foreign issuer credit rating from Standards and Poor's
Ratings Services. The ratings were assigned in August and May
2007.
COMPANHIA ENERGETICA: Inks Supply Deal With ArcelorMittal
---------------------------------------------------------
Companhia Energetica de Minas Gerais told Reuters that it has
signed a long-term power supply agreement with ArcelorMittal's
Brazilian units.
According to Companhia Energetica, it would supply
ArcelorMittal's units "with an average of 313.5 megawatts,
double current levels, through 2020".
The deal with ArcelorMittal could be worth BRL4.4 billion,
Reuters states, citing Companhia Energetica.
About ArcelorMittal
ArcelorMittal is a global steel producer. The company has
steel-making operations in 20 countries on four continents,
including 65 integrated, mini-mill and integrated mini-mill,
steel-making facilities. It produces a range of finished and
semi-finished carbon steel products and stainless steel
products. Specifically, Mittal Steel produces flat products,
including sheet and plate, long products, including bars, rods
and structural shapes, and stainless steel products. The
company sells its products primarily in local markets and
through its centralized marketing organization to a range of
customers in approximately 170 countries, including the
automotive, appliance, engineering, construction and machinery
industries. Mittal Steel operates its business in six segments:
Flat Carbon Americas; Flat Carbon Europe; Long Carbon Americas
and Europe; Asia, Africa and CIS (AACIS); Stainless Steel, and
Arcelor Mittal Steel Solutions and Services (trading and
distribution).
About Companhia Energetica
Companhia Energetica de Minas Gerais aka Cemig --
http://www.cemig.com.br/-- is one of the largest and most
important electric energy utilities in Brazil due to its
strategic location, its technical expertise and its market.
Cemig's concession area extends throughout nearly 96.7% of the
State of Minas Gerais, Brazil. Cemig owns and operates 52 power
plants, of which six are in partnership with private
enterprises, relying on a predominantly hydroelectric energy
matrix. Electric energy is produced to supply more than 17
million people living in the state's 774 municipalities. In
addition to those 52 plants, another three are currently under
construction.
Cemig is also active in several other states, through ventures
for the generation or the commercialization of energy in these
Brazilian states: in Santa Catarina (generation), Rio de Janeiro
(commercialization and generation), Espirito Santo (generation)
and Rio Grande do Sul (commercialization).
* * *
In March 2007, Moody's Investors Service assigned corporate
family ratings of Ba2 on its global scale and Aa3.br on its
Brazilian national scale to Companhia Energetica de Minas
Gerais aka CEMIG. The rating action triggered the upgrade of
CEMIG's outstanding debentures due in 2009 and 2011, and of the
BRL250 million 2014 senior unsecured guaranteed debentures of
its wholly owned subsidiary, Cemig Distribuicao S.A. to Ba2 from
B1 on the global scale and to Aa3.br from Baa2.br on the
Brazilian national scale, concluding the review process
initiated on Aug. 8, 2006.
GERDAU SA: Stocks Up 1.41% to BRL82.2 on Monday
-----------------------------------------------
Gerdau S.A.'s stocks climbed 1.41% to BRL82.2, leading the
increase of Brazilian stocks on Monday, Reuters reports.
Citing the Brazilian Steel Institute, Reuters relates that the
country's raw steel output has 7.1% increase in April from the
year-earlier period amid robust economic growth.
Other steelmaker, CSN, gained 1.38% to BRL82.84, while Usiminas,
jumped 1.26% to BRL82.84, buoyed by expectations that demand for
home appliances and automobiles that use steel will help
increase the sector's expansion, the report adds.
About Gerdau SA
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.
GOL FINANCE: Moody's Cuts Senior Unsecured Debt Rating to Ba3
-------------------------------------------------------------
Moody's Investors Service has downgraded all debt ratings of Gol
Linhas Aereas Inteligentes S.A. -- corporate family rating to
Ba3 from Ba2 -- and downgraded the senior unsecured debt of Gol
Finance to Ba3 from Ba2. The outlook has been changed to
negative from stable.
The rating downgrades reflect that despite weaker recent
financial performance, including operating losses in the 4th
quarter of 2007 and first quarter of 2008 and declines in
financial metrics, Gol's low-cost business model and status as
one of the leading carriers in its region with a still growing
network in Brazil and across South America is likely to provide
meaningful benefit as the Brazilian economy continues to grow.
Although Gol's labor costs remain low relative to other
airlines, the company's large, non-unionized workforce has grown
and wage and benefit costs have increased. As well, incremental
costs associated with the integration of VRG Linhas Aereas S.A.,
and regulatory restrictions on Gol's operations at Congonhas
Airport have pressured operating profits and generated negative
funds from operations and free cash flow. The integration and
regulatory issues are being addressed and should improve.
The company is returning older aircraft, integrating its routes
and fleets with VRG, and established new interline agreements
which should appeal to a broader customer base. Although Gol is
still struggling to improve traffic results in VRG's operations
by focusing its route network, load factors and yields for Gol
Linhas are improving. As well, Gol's installment purchase plans
for ticket purchases have allowed the company to stimulate local
passenger traffic and increase its market share during a period
of sustained robust economic growth in Brazil. Although Moody's
notes that the company's fuel hedging program is modest relative
to other airlines, the increase in unit fuel costs has been
mitigated by the appreciation of the Brazilian Real against the
U.S. Dollar and the addition of new, more fuel efficient
winglet-equipped Boeing 737 next-generation aircraft. The
company has slowed its ambitious expansion plan and now has firm
orders for 40 aircraft through 2010.
Nonetheless, costs have risen due to meaningful increases in the
size of Gol's workforce, wage increases and lower aircraft
productivity due to inefficiencies associated with the Brazilian
air traffic control and regulatory restrictions placed on
Congonhas Airport during 2007. As well, the increase in Gol's
unit costs relate to the increased complexity of operating a
larger international network with multiple aircraft types. Gol
has several planned initiatives to increase its revenues by
strengthening its position in key markets, increasing sales to
customers through its installment-purchase plan and increasing
cargo and ancillary revenues. As well, the company is reducing
costs by discontinuing intercontinental flights and returning
its fleet of long-range Boeing 767 aircraft, increasing sales
through Internet channels, and returning the entire fleet of
Boeing 737-300 aircraft by the end of 2008. These actions and
the expectation of continued demand strength in Brazil are
likely to help the company improve levels of profitability and
cash flow generation to levels consistent with the rating
despite the higher costs.
Debt to EBITDA of 8.6 and EBIT to interest expense of 0.7 for
the 12 months to March 31, 2008, both weakened from the previous
year and in light of the potential for continued negative free
cash flow are no longer consistent with the Ba2 rating and
remain weak for the Ba3 category.
Gol's liquidity is currently adequate, but is likely to weaken
over the course of the next 12 months in light of the expected
generation of negative cash from operations at VRG. The company
had cash, cash equivalents and deposits associated with future
aircraft deliveries of approximately BRL1.2 billion at
March 31, 2008. The company faces approximately BRL350 million
in planned non-aircraft 2008 capital spending, and approximately
BRL410 million in aircraft deliveries have been financed. The
company is reducing 2008 aircraft financing costs through a
combination of sale-leasebacks and financings guaranteed by the
Brazilian export-import bank. As well, Gol expects to refinance
all debt maturing in 2008. The company's 3 revolving lines of
credit, which allow for total borrowings of approximately BRL577
million which was undrawn at March 31, 2008, contain no
financial covenants. Nonetheless, other loans contain a number
of covenants that, among other things, require Gol to maintain
defined debt liquidity and interest expense coverage ratios.
Gol was in compliance with all of the financial ratios related
to the loans at March 31, 2008. The company allows customers to
purchase seats on its flights under an installment-payment plan.
Although Gol is not subject to any financial covenants relating
to agreements with third-party credit card processors, Gol
occasionally needs to finance the sale-to-cash collection cycle
through working capital loans secured by credit card
receivables, which exposes the company to working capital
fluctuations.
The negative outlook reflects the substantial challenges
associated with integrating VRG, the difficult operating
environment facing Gol due to air traffic control issues and
infrastructure problems and the impact of higher fuel costs on
costs and passenger traffic. Although load factors at Gol have
declined to levels that allow Gol to operate with incremental
operational flexibility, unless load factors at VRG reach
breakeven levels they could challenge Gol's efforts to maintain
consolidated profitability, particularly if competitive
pressures mitigate opportunities to implement fare increases.
Gol's rating could be lowered further if it is unable to achieve
and sustain positive cash flow from operations and free cash
flow or if the company is unable to maintain its current
liquidity profile. The rating could also be lowered if Gol is
unable to resolve the negative pressure on its financial
performance imposed by VRG.
Gol's rating could be stabilized with a sustainable reduction in
the losses stemming from the VRG incorporation that leads to
increased consolidated operating profits, or requires less
material draws on the cash balance or incremental borrowing to
satisfy near term debt maturities or capital spending.
Downgrades:
Issuer: Gol Finance
-- Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3
from Ba2
Issuer: Gol Linhas Aereas Inteligentes S.A.
-- Corporate Family Rating, Downgraded to Ba3 from Ba2
Outlook Actions:
Issuer: Gol Finance
-- Outlook, Changed To Negative From Stable
Issuer: Gol Linhas Aereas Inteligentes S.A.
-- Outlook, Changed To Negative From Stable
Based in Sao Paulo, Brazil, GOL Intelligent Airlines aka GOL
Linhas Areas Inteligentes S.A. (NYSE: GOL and Bovespa: GOLL4) --
http://www.voegol.com.br-- through its subsidiary, GOL
Transportes Aereos S.A., provides airline services in Brazil,
Argentina, Bolivia, Uruguay, and Paraguay. The company's
services include passenger, cargo, and charter services. As of
March 20, 2006, Gol Linhas provided 440 daily flights to 49
destinations and operated a fleet of 45 Boeing 737 aircraft.
The company was founded in 2001.
GOL LINHAS: Moody's Drops Corp. Family Rating to Ba3 From Ba2
-------------------------------------------------------------
Moody's Investors Service has downgraded all debt ratings of Gol
Linhas Aereas Inteligentes S.A. -- corporate family rating to
Ba3 from Ba2 -- and downgraded the senior unsecured debt of Gol
Finance to Ba3 from Ba2. The outlook has been changed to
negative from stable.
The rating downgrades reflect that despite weaker recent
financial performance, including operating losses in the 4th
quarter of 2007 and first quarter of 2008 and declines in
financial metrics, Gol's low-cost business model and status as
one of the leading carriers in its region with a still growing
network in Brazil and across South America is likely to provide
meaningful benefit as the Brazilian economy continues to grow.
Although Gol's labor costs remain low relative to other
airlines, the company's large, non-unionized workforce has grown
and wage and benefit costs have increased. As well, incremental
costs associated with the integration of VRG Linhas Aereas S.A.,
and regulatory restrictions on Gol's operations at Congonhas
Airport have pressured operating profits and generated negative
funds from operations and free cash flow. The integration and
regulatory issues are being addressed and should improve.
The company is returning older aircraft, integrating its routes
and fleets with VRG, and established new interline agreements
which should appeal to a broader customer base. Although Gol is
still struggling to improve traffic results in VRG's operations
by focusing its route network, load factors and yields for Gol
Linhas are improving. As well, Gol's installment purchase plans
for ticket purchases have allowed the company to stimulate local
passenger traffic and increase its market share during a period
of sustained robust economic growth in Brazil. Although Moody's
notes that the company's fuel hedging program is modest relative
to other airlines, the increase in unit fuel costs has been
mitigated by the appreciation of the Brazilian Real against the
U.S. Dollar and the addition of new, more fuel efficient
winglet-equipped Boeing 737 next-generation aircraft. The
company has slowed its ambitious expansion plan and now has firm
orders for 40 aircraft through 2010.
Nonetheless, costs have risen due to meaningful increases in the
size of Gol's workforce, wage increases and lower aircraft
productivity due to inefficiencies associated with the Brazilian
air traffic control and regulatory restrictions placed on
Congonhas Airport during 2007. As well, the increase in Gol's
unit costs relate to the increased complexity of operating a
larger international network with multiple aircraft types. Gol
has several planned initiatives to increase its revenues by
strengthening its position in key markets, increasing sales to
customers through its installment-purchase plan and increasing
cargo and ancillary revenues. As well, the company is reducing
costs by discontinuing intercontinental flights and returning
its fleet of long-range Boeing 767 aircraft, increasing sales
through internet channels, and returning the entire fleet of
Boeing 737-300 aircraft by the end of 2008. These actions and
the expectation of continued demand strength in Brazil are
likely to help the company improve levels of profitability and
cash flow generation to levels consistent with the rating
despite the higher costs.
Debt to EBITDA of 8.6 and EBIT to interest expense of 0.7 for
the 12 months to March 31, 2008, both weakened from the previous
year and in light of the potential for continued negative free
cash flow are no longer consistent with the Ba2 rating and
remain weak for the Ba3 category.
Gol's liquidity is currently adequate, but is likely to weaken
over the course of the next 12 months in light of the expected
generation of negative cash from operations at VRG. The company
had cash, cash equivalents and deposits associated with future
aircraft deliveries of approximately BRL1.2 billion at
March 31, 2008. The company faces approximately BRL350 million
in planned non-aircraft 2008 capital spending, and approximately
BRL410 million in aircraft deliveries have been financed. The
company is reducing 2008 aircraft financing costs through a
combination of sale-leasebacks and financings guaranteed by the
Brazilian export-import bank. As well, Gol expects to refinance
all debt maturing in 2008. The company's 3 revolving lines of
credit, which allow for total borrowings of approximately BRL577
million which was undrawn at March 31, 2008, contain no
financial covenants. Nonetheless, other loans contain a number
of covenants that, among other things, require Gol to maintain
defined debt liquidity and interest expense coverage ratios.
Gol was in compliance with all of the financial ratios related
to the loans at March 31, 2008. The company allows customers to
purchase seats on its flights under an installment-payment plan.
Although Gol is not subject to any financial covenants relating
to agreements with third-party credit card processors, Gol
occasionally needs to finance the sale-to-cash collection cycle
through working capital loans secured by credit card
receivables, which exposes the company to working capital
fluctuations.
The negative outlook reflects the substantial challenges
associated with integrating VRG, the difficult operating
environment facing Gol due to air traffic control issues and
infrastructure problems and the impact of higher fuel costs on
costs and passenger traffic. Although load factors at Gol have
declined to levels that allow Gol to operate with incremental
operational flexibility, unless load factors at VRG reach
breakeven levels they could challenge Gol's efforts to maintain
consolidated profitability, particularly if competitive
pressures mitigate opportunities to implement fare increases.
Gol's rating could be lowered further if it is unable to achieve
and sustain positive cash flow from operations and free cash
flow or if the company is unable to maintain its current
liquidity profile. The rating could also be lowered if Gol is
unable to resolve the negative pressure on its financial
performance imposed by VRG.
Gol's rating could be stabilized with a sustainable reduction in
the losses stemming from the VRG incorporation that leads to
increased consolidated operating profits, or requires less
material draws on the cash balance or incremental borrowing to
satisfy near term debt maturities or capital spending.
Downgrades:
Issuer: Gol Finance
-- Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3
from Ba2
Issuer: Gol Linhas Aereas Inteligentes S.A.
-- Corporate Family Rating, Downgraded to Ba3 from Ba2
Outlook Actions:
Issuer: Gol Finance
-- Outlook, Changed To Negative From Stable
Issuer: Gol Linhas Aereas Inteligentes S.A.
-- Outlook, Changed To Negative From Stable
Based in Sao Paulo, Brazil, GOL Intelligent Airlines aka GOL
Linhas Areas Inteligentes S.A. (NYSE: GOL and Bovespa: GOLL4) --
http://www.voegol.com.br-- through its subsidiary, GOL
Transportes Aereos S.A., provides airline services in Brazil,
Argentina, Bolivia, Uruguay, and Paraguay. The company's
services include passenger, cargo, and charter services. As of
March 20, 2006, Gol Linhas provided 440 daily flights to 49
destinations and operated a fleet of 45 Boeing 737 aircraft.
The company was founded in 2001.
PRIMUS TELECOMMUNICATIONS: Reduces Debt by US$63.2 Million
----------------------------------------------------------
PRIMUS Telecommunications Group, Incorporated reduced its
outstanding principal amount of indebtedness by
US$63.2 million through private exchange transactions.
In aggregate, US$67.1 million principal amount of 14-1/4% Senior
Secured Notes were newly issued under an existing indenture by
Primus Telecommunications IHC, Inc., an indirect wholly owned
subsidiary of Primus Telecommunications Group, and were
exchanged, together with US$4.7 million in cash, for a total of
US$130.3 million of outstanding debt comprised of these:
* US$5.3 million principal amount of 12-3/4% Senior Notes
due 2009 issued by Primus Telecommunications Group;
* US$43.0 million principal amount of 3-3/4% Convertible
Senior Notes due 2010 issued by Primus
Telecommunications Group;
* US$33.0 million principal amount of 5% Exchangeable
Senior Notes due 2010 issued by Primus
Telecommunications Holding, Inc., a wholly owned
subsidiary of Primus Telecommunications Group; and
* US$49.0 million principal amount of 8% Senior Notes due
2014 issued by Primus Telecommunications Holding.
Thus, in the aggregate, US$67.1 million principal amount of
newly issued debt, plus US$4.7 million in cash, was exchanged
for US$130.3 million principal amount of outstanding debt.
Primus Telecommunications Group estimates, as a result of the
exchange transactions, the company's annualized cash interest
expense will increase by approximately US$1.7 million.
Headquartered in McLean, Virginia, Primus Telecommunications
Group (OTC: PRTL) -- http://www.primustel.com/-- is an
integrated communications services provider offering
international and domestic voice, voice-over-Internet protocol,
Internet, wireless, data and hosting services to business and
residential retail customers and other carriers located
primarily in the United States, Canada, Australia, the United
Kingdom and western Europe. The company has operations in
Brazil and Mexico.
PRIMUS provides services over its global network of owned and
leased transmission facilities, including approximately 500
points-of-presence (POPs) throughout the world, ownership
interests in undersea fiber optic cable systems, 18 carrier-
grade international gateway and domestic switches, and a variety
of operating relationships that allow it to deliver traffic
worldwide.
* * *
As reported in the Troubled Company Reporter on April 17, 2008,
Moody's Investors Service downgraded Primus Telecommunications
Group Incorporated's corporate family rating to Ca from Caa3.
USINAS SIDERURGICAS: Companhia Vale to Sell Shares in Firm
----------------------------------------------------------
Companhia Vale do Rio Doce will sell its shares in Usinas
Siderurgicas de Minas Gerais SA, Business News Americas reports.
BNamericas relates that Companhia Vale owns a 2.9% stake in
Usinas Siderurgicas. Companhia Vale holds 5.89% of Usinas
Siderurgicas' common stock.
Companhia Vale's plan to sell the stake wasn't surprising,
BNamericas says, citing Meta Asset Management's Director
Leonardo Messer. SLW Corretora analyst Kelly Trentin commented,
"This was waiting to happen, especially considering the fact
that Usiminas is expected to be self-sufficient in iron ore
production by 2012 or 2013."
Since Usinas Siderurgicas bought iron ore miners J Mendes,
Somisa, and Global Mineracao earlier this year, it didn't "make
much sense" for Companhia Vale to be part of the steel group,
Mr. Messer explained to BNamericas. "When Vale bought a stake
in Usiminas [Usinas Siderurgicas], it's objective was to
stimulate growth by supplying iron ore. Once Usiminas was able
to develop its own iron ore mines, there were conflicting
interests, "Mr. Messer added.
Companhia Vale is likely to sell its stake in Usinas
Siderurgicas to preferential shareholders or to the market,
BNamericas notes, citing Mr. Messer.
The fact that Brazilian steelmakers are developing their own
iron ore mines shouldn't be a problem for Companhia Vale, Mr.
Trentin told BNamericas. Companhia Vale has a "huge market"
outside Brazil, Mr. Trentin added.
Headquartered in Minas Gerais, Brazil, Usinas Siderurgicas de
Minas Gerais SA -- http://www.usiminas.com.br-- is among the
world's 20 largest steel manufacturing complexes, with a
production capacity of approximately 10 million tons of steel.
Usiminas System companies produces galvanized and non-coated
flat steel products for the automotive, small and large diameter
pipe, civil construction, hydro-electronic, rerolling,
agriculture, and road machinery industries. Brazil consumes 80%
of its products and the company's largest export markets are the
US and Latin America. The company also sells in China and
Japan.
* * *
As reported in the Troubled Company Reporter-Latin America on
Feb. 5, 2008, Moody's Investors Service assigned a Ba1 local
currency rating and an Aa1.br rating on its Brazilian national
scale to the BRL500 million non-guaranteed subordinated
debentures due 2013 to be issued by Usinas Siderurgicas de Minas
Gerais S.A. (aka Usiminas). Net proceeds from the debentures
issuance will be used to partially fund the company's capex
program. Moody's said the rating outlook is stable.
=========
C H I L E
=========
CODELCO: Privatization Not Up for Discussion, Minister Says
-----------------------------------------------------------
In answer to reports that suggested privatizing or listing 20%
of Corporacion Nacional del Cobre in the stock market, Finance
Minister Andres Velasco said the state firm's privatization is
not up for discussion, Dow Jones Newswires reports.
According to Dow Jones, various reports last weekend disclosed
that well-known political and economic figures in Chile were in
favor of privatization.
Mr. Velasco, however, assserted Codelco must remain fully owned
by the state.
Dow Jones notes that the Finance Minister said the Chilean
government is currently focused on pushing a bill to modernize
the copper firm's corporate governance, which bill has been in
Congress since March of last year. The bill reportedly proposes
reforms including a revamp of the company's board and greater
corporate transparency.
The discussion on privatization "gives us space to generate
consensus, work with legislators ... and approve the corporate
governance reform," the news agency further cites Mr. Velasco as
saying.
As previously reported in the Troubled Company Reporter-Latin
America, Codelco's workers went on a drawn-out strike starting
April 16 to demand bonuses and benefits. Work stoppage brought
closure of some of Codelco's mines, resulting in the company
incurring almost US$100 million on supply services as of
April 29, and contributed to the rising of copper prices.
Protests, however, stopped after the government proposed, and
Codelco agreed, that subcontract employees get an advance on a
CLP500,000 bonus that was due to be paid by year-end, with the
CLP300,000 to be advanced by suppliers. On May 320, Codelco said
92% of its approximately 30,000 contract workers its contract
workers have already received the agreed 2008 production bonus
payments.
Corporacion Nacional del Cobre -- Codelco -- explores, develops,
mines and processes copper in Chile. The principal product of
the company is Grade A copper cathodes. The company, which is
owned by Chilean government, exports most of its production to
companies in Europe and Asia.
==================================
D O M I N I C A N R E P U B L I C
==================================
PRC LLC: Wants to Reject BGTX Lease; BGTX Files Damage Claim
------------------------------------------------------------
PRC LLC and its debtor-affiliates sought permission from the
U.S. Bankruptcy Court for the District of Delaware to reject,
effective July 31, 2008, their seven-year commercial lease with
BGTX Project L.P. for an office space located at 3350 Boyington,
in Carrolton, Texas.
On April 28, 2008, BGTX Project filed a proof of claim for
US$875,000 in damages to the Leased Premises, including damage
to certain property to which BGTX Project asserts a direct
ownership interest.
According to BGTX Project agent Carlos Villareal, BGTX Project
has not received a notice from the Debtors regarding their
intent to sell or dispose of any of the property located within
the Carrolton Premises. Mr. Villareal notes that the Carrolton
Lease provides that, "on the last day of the term . . . or any
sooner termination, Tenant shall surrender the Premises . . . to
the Landlord in the same condition as received, ordinary wear
and tear and casualty damage excepted, clean and free of debris
and Tenant's personal property, trade fixtures and equipment . .
. . Tenant shall repair any damage to the Premises occasioned by
the installation or removal of Tenant's trade fixtures,
furnishings and equipment."
Accordingly, BGTX Project asks the Court to condition rejection
of the Carrolton Lease on the Debtors' confirmation and
provision of adequate protection that they:
(i) will leave the Premises in good condition and repair;
(ii) repair any damage to the Premises occasioned by the
installation or removal of their trade fixtures,
furnishings and equipment; and
(iii) comply with their obligation under the Lease and the
Bankruptcy Code.
Debtors Talk Back
The Debtors, having investigated BGTX Project's allegations
about lease violations and property damage, have determined that
they are neither accurate nor true, Alfredo R. Perez, Esq., at
Weil, Gotshal & Manges LLP, in Houston, Texas, says. The
Debtors maintain that they are current on all of their rental
obligations. In addition, the Debtors inform the Court that
they are unaware of any postpetition physical damage to the
property, other than some drywall that was patched and painted
and a parking-lot lamp that was repaired recently after
inclement weather.
The Debtors further aver that they are not bound to comply with
the lease surrender provisions triggered at the termination of
the lease because, as Mr. Perez points out, "[i]t is well
established in the Second Circuit and elsewhere that rejection
operates as a breach, rather than a termination, of a lease or
contract. Upon rejection, the estate is freed from the
obligation to perform under a lease, and the landlord is given a
prepetition claim for the damages resulting from the Debtors'
deemed breach of the lease."
The only support offered by BGTX Project for its arguments about
property damage concern a statutory lien for rent, Mr. Perez
points out. Although BGTX Project cites no legal authority,
Section 54.021 of the Texas Property Code creates a "preference
lien on the property of the tenant or subtenant in the building
for rent that is due and for rent that is to become due . . . ."
Section 545(3) of the Bankruptcy Code, however, makes these
liens for rent unenforceable against the estate, he says.
Moreover, parties cannot recover administrative expenses based
on the theory that the estate has received a benefit from the
property subject to a statutory lien for rent, Mr. Perez
contends.
Accordingly, the Debtors ask the Court to overrule BGTX
Project's objection to the rejection motion.
About PRC LLC
Founded in 1982 and based in Fort Lauderdale, Florida, PRC, LLC
-- http://www.prcnet.com/-- is a leading provider of customer
management solutions. PRC markets its services to brand-
focused, Fortune 500 U.S. corporations and delivers these
services through a global network of call centers in the U.S.,
Philippines, India, and the Dominican Republic.
PRC is the sole member of each of PRC B2B, LLC, and Precision
Response of Pennsylvania, LLC, and the sole shareholder of
Access Direct Telemarketing, Inc., each of which is a debtor and
debtor-in-possession in PRC's joint Chapter 11 cases.
Panther/DCP Intermediate Holdings, LLC, is the sole member of
PRC.
PRC, together with its operating subsidiaries PRC B2B, Access
Direct, and PRC PA, is a leading provider of complex,
consultative, outsourced services in the Customer Care and Sales
& Marketing segments of the business process outsourcing
industry. Since 1982, the company has acquired and grown
customer relationships for some of the world's largest and most
brand-focused corporations in the financial services, media,
telecommunications, transportation, and retail industries.
The company and four of its affiliates filed for Chapter 11
protection on Jan. 23, 2008 (Bankr. S.D.N.Y. Lead Case No. 08-
10239). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP,
represents the Debtors in their restructuring efforts. The
Debtors chose Stephen Dube, at CXO LLC, as their restructuring
and turnaround advisor. Additionally, Evercore Group LLC
provides investment and financial counsel to the Debtors.
The Debtors' consolidated financial condition as of Dec. 31,
2007 showed total assets of US$354,000,000 and total debts of
US$261,000,000.
The Debtors submitted to the Court a Chapter 11 Plan of
Reorganization on Feb. 12, 2008. (PRC LLC Bankruptcy News,
Issue No. 13; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
PRC LLC: Wants to Employ Grant Thornton as Accountants
------------------------------------------------------
PRC LLC and its debtor-affiliates ask authority from the U.S.
Bankruptcy Court for the Southern District of Florida to employ
Grant Thornton LLP, as their auditors and accountants, nunc pro
tunc to May 9, 2008.
As auditors and accountants to the Debtors, Grant Thornton is
expected to:
(i) conduct an audit of the Debtors' consolidated
financial statements as of Dec. 31, 2007;
(ii) review certain of the Debtors' federal and state tax
returns for the year ended Dec. 31, 2007; and
(iii) perform other services as the Debtors and Grant
Thornton may agree on.
Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, in
Houston, Texas, tells the Court that the Debtors have been
advised by Grant Thornton that it will endeavor to coordinate
with the other professionals retained in these Chapter 11 cases
to eliminate unnecessary duplication or overlap of work.
In connection with the Grant Thornton retention, the Debtors
relate that they will incur certain cost for transitioning
relevant documents and services from the their previous
auditors, Ernst & Young LLP, to Grant Thornton. The Debtors
anticipate that the Transition Costs will not exceed US$10,000.
Accordingly, the Debtors seek the Court's authority to pay Ernst
and Young for any reasonable Transition Costs.
Mr. Perez says that the employment of Grant Thornton, under a
retainer and pursuant to the terms of engagement letters dated
April 28, 2008 and May 9, 2008, are appropriate and necessary to
enable the Debtors to execute faithfully their duties as debtors
in possession and to implement their restructuring and
reorganization. The Debtors relates that Grant Thornton
requires from the Debtors a US$50,000 retainer of US$50,000
prior to commencement of the contemplated audit services and a
US$7,500 retainer prior to the commencement of the contemplated
accounting services.
Grant Thornton's services will be paid according to the firm's
hourly rates, which are:
Professional Hourly Rates
------------ ------------
Partners/Principals/Directors US$470 to US$515
Senior Managers US$385 to US$425
Managers US$285 to US$335
Senior Associates US$210 to US$240
Associates US$170 to US$190
Para-Professionals US$120
With respect to the Audit Services, Grant Thornton has agreed to
discount its hourly billing rates to approximate a blended rate
of US$196 per hour and the Accounting Services to approximate a
blended rate of US$256 per hour.
Grant Thornton will seek reimbursement for reasonable out-of-
pocket expenses.
Circo Buttacavoli, a partner of Grant Thornton LLP, assures the
Court that his firm a "disinterested person," as that term is
defined in Section 101(14) of the Bankruptcy Code, as modified
by Section 1107(b) of the Bankruptcy Code.
About PRC LLC
Founded in 1982 and based in Fort Lauderdale, Florida, PRC, LLC
-- http://www.prcnet.com/-- is a leading provider of customer
management solutions. PRC markets its services to brand-
focused, Fortune 500 U.S. corporations and delivers these
services through a global network of call centers in the U.S.,
Philippines, India, and the Dominican Republic.
PRC is the sole member of each of PRC B2B, LLC, and Precision
Response of Pennsylvania, LLC, and the sole shareholder of
Access Direct Telemarketing, Inc., each of which is a debtor and
debtor-in-possession in PRC's joint Chapter 11 cases.
Panther/DCP Intermediate Holdings, LLC, is the sole member of
PRC.
PRC, together with its operating subsidiaries PRC B2B, Access
Direct, and PRC PA, is a leading provider of complex,
consultative, outsourced services in the Customer Care and Sales
& Marketing segments of the business process outsourcing
industry. Since 1982, the company has acquired and grown
customer relationships for some of the world's largest and most
brand-focused corporations in the financial services, media,
telecommunications, transportation, and retail industries.
The company and four of its affiliates filed for Chapter 11
protection on Jan. 23, 2008 (Bankr. S.D.N.Y. Lead Case No. 08-
10239). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP,
represents the Debtors in their restructuring efforts. The
Debtors chose Stephen Dube, at CXO LLC, as their restructuring
and turnaround advisor. Additionally, Evercore Group LLC
provides investment and financial counsel to the Debtors.
The Debtors' consolidated financial condition as of Dec. 31,
2007 showed total assets of US$354,000,000 and total debts of
US$261,000,000.
The Debtors submitted to the Court a Chapter 11 Plan of
Reorganization on Feb. 12, 2008. (PRC LLC Bankruptcy News,
Issue No. 13; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
=============
J A M A I C A
=============
AIR JAMAICA: Workers Want Politicians' Flight Privileges Removed
---------------------------------------------------------------
Air Jamaica's employees have supported unions' demand that
Parliamentarians' flight privileges be removed to cut costs,
Radio Jamaica reports.
As reported in the Troubled Company Reporter-Latin America on
May 20, 2008, unions are demanding that Air Jamaica stop
providing complementary first class tickets to Parliamentarians,
as part of the cost-cutting measures presented to the airline's
management. The government has been giving free travel to
politicians, costing Air Jamaica up to J$50 million per year,
according to the National Workers' Vice President Granville
Valentine. The unions want the savings passed on Air Jamaica's
workers who have not been given a salary raise in almost two
years.
Radio Jamaica relates that the National Workers believes that
once the free travel policy for the politicians are removed, Air
Jamaica will be able to save millions of dollars. The airline
will then be able to pay employees increased salaries.
Mr. Valentine told Radio Jamaica that a suggestion was made for
Air Jamaica to recover the cost of free airline tickets issued
to Parliamentarians in the past. Mr. Valentine commented, "They
are bleeding the country dry and this money should be paid
retroactively for all those years that they (benefited from this
arrangement with) the company . . . this is direct cash that
they have taken away from the company by not paying for their
travel." If the flight privileges continue, the revenue of Air
Jamaica can't be maintained, Mr. Valentine added.
Headquartered in Kingston, Jamaica, Air Jamaica --
http://www.airjamaica.com/-- was founded in 1969. It flies
passengers and cargo to almost 30 destinations in the Caribbean,
Europe, and North America. Air Jamaica offers vacation packages
through Air Jamaica Vacations. The company closed its intra-
island services unit, Air Jamaica Express, in October 2005. The
Jamaican government assumed full ownership of the airline after
an investor group turned over its 75% stake in late 2004. The
government had owned 25% of the company after it went private in
1994. The Jamaican government does not plan to own Air Jamaica
permanently.
* * *
As reported in the Troubled Company Reporter-Latin America on
June 12, 2007, Moody's Investors Service assigned a rating of B1
to Air Jamaica Limited's guaranteed senior unsecured notes.
On July 21, 2006, Standard & Poor's Rating Services assigned a
"B" long-term foreign issuer credit rating on Air Jamaica Ltd.,
which is equal to the long-term foreign currency sovereign
credit rating on Jamaica, based on the government's
unconditional guarantee of both principal and interest payments.
CABLE & WIRELESS: Unit Loses J$4.1B in Year Ended March 31, 2008
----------------------------------------------------------------
Cable & Wireless PLC's Jamaican unit posted a J$4.1 billion loss
in the financial year ended March 31, 2008, compared to a
J$2 billion profit in the previous financial year, Radio Jamaica
reports.
Radio Jamaica relates that increased competition in the Jamaican
telecommunications market affected Cable & Wireless Jamaica's
results in the financial year ended March 2008. The firm's loss
was also blamed on the:
-- J$5 billion "impairment cost",
-- drop in revenues, and
-- J$1.7 billion increase in operating expenses.
According to Radio Jamaica, Cable & Wireless Jamaica's revenues
declined by J$1.8 billion to J$22.8 billion in the financial
year ended March 2008, from J$24.6 billion in the previous
financial year.
Headquartered in London, Cable & Wireless Plc
-- http://www.cw.com/new/-- operates through two standalone
business units -- International and Europe, Asia & US. The
International business unit operates integrated
telecommunications companies in 33 countries offering mobile,
broadband, domestic and international fixed line services to
residential and business customers, with principal operations in
the Caribbean, Panama, Macau, Monaco and the Channel Islands.
The Europe, Asia & U.S. business unit provides enterprise and
carrier solutions to the largest users of telecoms services
across the U.K., U.S., continental Europe and Asia -- and
wholesale broadband services in the U.K.
Specifically, the company's operations are in the United
Kingdom, India, China, the Cayman Islands and the Middle East.
Headquartered in London, Cable & Wireless Plc
-- http://www.cw.com/new/-- operates through two standalone
business units -- International and Europe, Asia & US. The
International business unit operates integrated
telecommunications companies in 33 countries offering mobile,
broadband, domestic and international fixed line services to
residential and business customers, with principal operations in
the Caribbean, Panama, Macau, Monaco and the Channel Islands.
The Europe, Asia & U.S. business unit provides enterprise and
carrier solutions to the largest users of telecoms services
across the U.K., U.S., continental Europe and Asia -- and
wholesale broadband services in the U.K.
Specifically, the company's operations are in the United
Kingdom, India, China, the Cayman Islands and the Middle East.
* * *
As of Feb. 12, 2008, Cable & Wireless Plc carries a Ba3 long-
term corporate family rating, a B1 senior unsecured debt rating
and a Ba3 probability of default rating from Moody's Investors
Service, which said the outlook is stable.
As reported in The Troubled Company Reporter-Latin America on
May 27, 2008, Standard & Poor's Ratings Services revised its
outlook on U.K.-based telecommunications provider Cable &
Wireless PLC to developing from stable. The 'BB-' long-term and
'B' short-term corporate credit ratings remain unchanged.
SUGAR COMPANY: Unions to Discuss Divestment With Minister
---------------------------------------------------------
Radio Jamaica reports that The Bustamante Industrial Trade
Union, the National Workers Union, and the University and Allied
Workers Union will meet with Jamaican Agriculture Minister
Christopher Tufton to discuss the divestment of the Sugar
Company of Jamaica Limited's factories.
The unions told Radio Jamaica that they want to be updated on
the Sugar Company's divestment process. The unions also want to
discuss what will happen to the firm's employees, RJR News
relates, citing the National Workers' President and Island
Supervisor Vincent Morrison. "As you know there is one company,
a Brazilian company, that is looking at taking over the whole
sugar estates. We would want to deal with issues like continued
employment for the 7,000 workers in the sector, the whole
question of the notice and redundancy and the way forward. What
kind of industry are we going to have with the divestment. Are
we going to be producing other products such as ethanol and so
forth," Mr. Morrison added.
The Sugar Company of Jamaica Limited a.k.a. SCJ was formed in
November 1993 by a consortium made up of J. Wray & Nephew
Limited, Manufacturers Investments Limited and Booker Tate
Limited. The three companies each held 17% equity in SCJ, with
the remaining 49% being held by the government of Jamaica. In
1998, the government became the sole shareholder of SCJ by
acquiring the interests of the members of the consortium. Its
stated goal was to maximise efficiency, productivity and
profitability of the three sugar factories, within three years.
The principal activities of the company are the cultivation of
cane and the manufacture and sale of sugar and molasses.
The Sugar Company of Jamaica Limited registered a net loss of
almost US$1.1 billion for the financial year ended Sept. 30,
2005, 80% higher than the US$600 million reported in the
previous financial year. Sugar Company blamed its financial
deterioration to the reduction in sugar cane production.
According to published reports, the Jamaican government has
taken responsibility for the payment of the firm's debts. Radio
Jamaica has said that to date, the five sugar factories have
incurred J$3 billion in debts. The government is now selling
the factories.
WEST CORP: Additional Loan Prompts S&P to Hold 'BB-' Rating
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB-' loan
rating on the senior secured first-lien bank facility of West
Corp. (B+/Stable/--), following the announcement that the
company will add US$134 million to its first-lien term loan.
The bank loan Omaha-Nebraska-based company. The '2' recovery
rating on the loan rating is one level higher than the corporate
credit rating on the remains unchanged and indicates our
expectation of substantial (70%-90%) recovery of principal in
the event of a payment default.
Pro forma for the proposed add-on term loan, the facility will
consist of a US$250 million revolving credit facility due 2012
and a US$2.5 billion term loan B due 2013.
Proceeds from the add-on term loan, an unrated US$75 million
multicurrency revolving credit loan facility due 2011, and
US$80 million of cash from the balance sheet will be used to
finance the acquisition of Genesys SA (not rated). Genesys is
an international conferencing service provider with significant
presence in Europe and Asia. West plans to combine Genesys with
its InterCall subsidiary.
"Currently, West has a good cushion of compliance with its bank
covenant to ensure access to its revolving credit facility,"
said Standard & Poor's credit analyst Andy Liu, "but if West is
unable to lower its leverage ratio by at least 0.25x-0.5x in
2009, the cushion of its bank covenant compliance could narrow
and risk access to its revolving credit facility."
Headquartered in Omaha, Nebraska, West Corporation --
http://www.west.com/-- is a provider of outsourced
communication solutions to many companies, organizations and
government agencies. West has a team of 42,000 employees based
in North America, Europe, and Asia. West helps its clients
communicate effectively, maximize the value of their customer
relationships and drive greater profitability from every
interaction.
The company also has operations in Australia, Canada, China,
Hong Kong, India, Jamaica, Mexico, Philippines, Singapore,
Switzerland and the United Kingdom.
===========
M E X I C O
===========
BANCO DEL BAJIO: S&P Ranks Average as Residential Loan Servicer
---------------------------------------------------------------
Standard & Poor's Ratings Services has assigned its AVERAGE
ranking to Banco del Bajio S.A. Institucion de Banca Multiple,
Division Hipotecaria, as a residential loan servicer for the
Mexican mortgage market. The outlook is stable.
The ranking reflects the company's noteworthy strengths:
-- Senior management averages more than 20 years of experience
in the banking sector;
-- Banco del Bajio's adequate staffing and training programs
include both formal and informal courses and training
sessions;
-- The company has adequately documented policies, procedures,
and business contingency/disaster recovery plans;
-- The company's comprehensive loan servicing platform and
technological support provide solid support for the bank's
operating standards; and
-- The company's robust processes and internal controls are
consistent with banking standards.
Constraining the ranking is the currently high amount of
nonperforming and delinquent loans in the bank's portfolio.
Although the amounts of nonperforming and delinquent loans in
Banco del Bajio's portfolio are high, these figures primarily
reflect the performance of loans the bank acquired in the past
from several originators. Nonetheless, it's S&P'S opinion that
the bank should enhance its collection efforts to contain these
figures.
Banco del Bajio's mortgage loan unit benefits from the
technological platform and operational standards of its
commercial bank parent, which allow for economies of scale in
certain aspects of mortgage loan servicing. This is a trait
common to mortgage loan units belonging to commercial banks in
Mexico, which provides for additional strengths in servicing
metrics. The bank is a clear example of a commercial bank that
aligns its strategy to growing its mortgage portfolio.
Banco del Bajio's servicing capabilities are aligned with
industry averages.
The company has a proper organizational structure; well-defined
and implemented business contingency/disaster recovery plans; a
very good, established training plan; and effective business
controls. These strengths are reflected in the company's good
reporting capabilities; its adequate customer service systems
infrastructure, which promotes agile responses to customers; and
its dedicated origination procedures.
Outlook
The outlook is stable. The residential loan division will be
aligned with the bank's overall strategies, which prioritize
adding branches and expanding the bank's presence. The bank
aims to increase the number of total individual loans by pushing
origination in its core product, which focuses on middle- and
high-net-worth individuals, and to double originations from
institutions (such as INFONAVIT and FOVISSSTE) that promote the
deduction of mortgage payments directly from borrowers'
paychecks. The company also targets a 70% individual loan and
30% bridge loan portfolio composition, compared with the current
50%/50% breakdown.
The bank will maintain its current strategy of avoiding
mortgages to low-income borrowers and loan originations from
regions where the bank does not have branches. Given that the
bank itself is still undergoing consolidation, S&P expects that
the operational procedures and efficiencies specific to
servicing in the mortgage loan division will continue to improve
over the next 12 to 18 months.
About Banco del Bajio
Banco del Bajio is the eighth largest bank in Mexico with an
o0verall market share of roughly 2% of loans and deposits. It
is one of the largest and fastest growing regional banks in
Mexico. Three groups of national investors own a 49% stake in
the bank, Sabadell and the IFC control 20% and 10%,
r0espectively, and the balance is widely held. Banco del Bajio
has entered into the mortgage and construction sectors through
the acquisition of two specialized mortgage lenders in 2004 and
2005. These companies and a factoring entity are Banco del
Bajio's sole subsidiaries, while it also has a 50% stake in the
pension fund management company Afore Afirme Bajio, created in
2005. As of September 2007, Bajio had roughly US$3.9 billion in
assets, loans for US$3 billion and equity of US$418 million.
KANSAS CITY: Moody's Assigns B2 Rating to Unit's US$275MM Notes
---------------------------------------------------------------
Moody's Investors Service has assigned a B2 rating (LGD5-71%) to
Kansas City Southern Railway Company's US$275 million notes due
2015.
Kansas City Southern Railway Co. intends to use the net proceeds
from the offering to repurchase US$200 million aggregate
principal amount of its 9 1/2% Senior Notes due 2008 (rated B2
by Moody's), to pay the fees and expenses associated with such
repurchase, to reduce borrowings under the company's revolving
credit facility, and for general corporate purposes. Since the
purpose of these notes are to refinance existing senior
unsecured debt of the company, this offering has no impact on
the corporate family rating of parent Kansas City Southern, or
any of the other ratings at Kansas City Southern, Kansas City
Southern Railway Co., or Kansas City Southern, de Mexico, S.A.
de C.V.
The rating on these notes is one notch below Kansas City
Southern's B1 corporate family rating, reflecting the junior
priority of this class of debt to approximately US$437 million
of senior secured debt obligations.
Assignments:
-- Senior Unsecured Regular Bond/Debenture, B2 (LGD5, 71%)
Headquartered in Kansas City, Missouri, Kansas City Southern --
http://www.kcsouthern.com/en-us-- is an international
transportation holding company comprised of three primary
railroads: The Kansas City Southern Railway Company, Kansas City
Southern de Mexico, and Panama Canal Railway Company.
* IXTLAHUACA: Moody's Withdraws Ba3 Rating for Business Reasons
---------------------------------------------------------------
Moody's Investors Service has withdrawn the issuer ratings of
Baa1.mx (Mexico National Scale) and Ba3 (Global Scale, local
currency) assigned to the municipality of Ixtlahuaca, State of
Mexico. Moody's has withdrawn these ratings for business
reasons.
====================
P U E R T O R I C O
====================
HEALTHSOUTH CORP: Reduces High Cost Debt to US$2BB by Q4 2007
-------------------------------------------------------------
According to a Securities and Exchange Commission filing,
Healthsouth Corp. disclosed that it has prioritized reducing
high cost debt such as the purchase of US$5 million of 10.75%
senior notes in January and February in 2008, and the plan to
repay US$30 million of 10.75% senior subordinated notes in the
fourth quarter of 2008.
Healthsouth also disclosed future debt reduction from sale of
corporate campus, additional income tax recoveries, excess cash
from operations, and derivative proceeds.
A "new" HealthSouth emerged after a turnaround progra, which
included the election of a new, independent board and a new
management; resolution of a bond holder dispute; a settlement
with the Department of Justice and the SEC; reconstruction of
financial statements; and sale of non-core assets.
The old HealthSouth was described as a complex company with four
operating divisions and no synergies -- some actual dis-
synergies. The old company was heavily levered with
US$3.5 billion of debt and had more than US$1 billion total cash
outflows related to government settlements and professional
fees. The old company was also riddled with corporate
governance issues.
The new HealthSouth is a post-acute provider with emphasis on
inpatient rehabilitation, with a reduced debt of $2 billion in
the fourth quarter of 2007. The new company created
comprehensive internal controls from ground up.
According to the regulatory filing, excess cash flow will be
used for:
* reducing debt,
* upgrading existing hospitals
* building new hospitals, and acquiring competitors.
About HealthSouth Corp.
HealthSouth Corp. (NYSE: HLS) -- http://www.healthsouth.com/--
is United States' largest provider of inpatient rehabilitation
services. Operating in 26 states across U.S. and in Puerto
Rico, HealthSouth serves more than 250,000 patients annually
through its network of inpatient rehabilitation hospitals, long-
term acute care hospitals, outpatient rehabilitation satellites,
and home health agencies.
* * *
As reported in the Troubled Company Reporter-Latin America on
March 17, 2008, Moody's Investors Service affirmed the B3
Corporate Family Rating of HealthSouth Corporation. Moody's
also upgraded the rating on the company's senior secured credit
facility to Ba3 from B2 and affirmed the rating on the company's
senior unsecured notes at Caa1 in accordance with the
application of Moody's Loss Given Default Methodology.
JOSE RUSSE: Case Summary & 10 Largest Unsecured Creditors
---------------------------------------------------------
Debtors: Jose Ramon Marrero Russe
aka Chemon Marrero
aka Dr. Jose Ramon Marrero Russe
Sylvia Martinez Collazo
PO Box 8928
Humacao, PR 00792
Bankruptcy Case No.: 08-02599-11
Chapter 11 Petition Date: April 28, 2008
Court: District of Puerto Rico (Old San Juan)
Debtors' Counsel: Victor Gratacos Diaz, Esq.
PO BOX 7571
Caguas, PR 00726
Tel: 787 746-4772
e-mail: vgratacd@coqui.net
Total Assets: US$1,272,664
Total Debts: US$1,414,199
A copy of the Debtors' petition and list of their 10 largest
unsecured creditors is available for free at:
http://bankrupt.com/misc/prb08-02599-11.pdf
=================
V E N E Z U E L A
=================
PETROLEOS DE VENEZUELA: Cienfuegos to Have Storage Tanks & Plant
----------------------------------------------------------------
Cienfuegos, Petroleos de Venezuela SA's joint venture with
Cubapetroleo in Cuba, will have two more storage tanks and a new
plant to produce turbo diesel fuel, ACN News reports.
Cienfuegos' Plant Deputy-Director Raul Perez del Prado told ACN
that two tanks will be deployed with an oil capacity for 10 days
of operation. ACN relates that the setting up of a hydraulic
unit will ensure higher quality fuel oil supplied to the Carlos
Manuel de Cespedes power generating plant.
Petroleos de Venezuela SA -- http://www.pdv.com/-- is
Venezuela's state oil company in charge of the development of
the petroleum, petrochemical and coal industry, as well as
planning, coordinating, supervising and controlling the
operational activities of its divisions, both in Venezuela and
abroad. The company has a commercial office in China.
* * *
In March 2007, Standard & Poor's Ratings Services assigned its
'BB-' senior unsecured long-term credit rating to Petroleos de
Venezuela S.A.'s US$2 billion notes due 2017, US$2 billion notes
due 2027, and US$1 billion notes due 2037.
Also in March 2007, Fitch Ratings gave a BB- rating to PdVSA's
Senior Unsecured debt.
On Feb. 7, 2007, Moody's Investors Service affirmed the
company's B1 global local currency rating.
PRIDE INT'L: Closes US$66 Mil. Platform Rig Fleet Sale
------------------------------------------------------
Pride International Inc. has completed the sale of its platform
rig fleet to Blake International, LLC for US$66 million in cash.
Proceeds from the sale are expected to be utilized for general
corporate and strategic purposes, including potential funding
for the construction of the company's three ultra-deepwater
drillships and other future growth opportunities.
Headquartered in Houston, Texas, Pride International Inc.
(NYSE: PDE) -- http://www.prideinternational.com/-- provides
onshore and offshore contract drilling and related services in
more than 25 countries, operating a diverse fleet of 64 rigs,
including two ultra-deepwater drillships, 12 semisubmersible
rigs, 28 jackups, 10 platform rigs, five managed deepwater rigs
and seven Eastern Hemisphere-based land rigs. The company has
subsidiaries in France, Netherlands, Venezuela, Bahamas, Mexico,
Malaysia and Singapore, among others.
* * *
To date, Pride International carries Standard & Poor's Ratings
Service's BB+ corporate credit rating. The company's unsecured
debt is also rated BB+ by S&P. The outlook on the ratings is
stable.
* S&P Reviews Characteristics of Brazilian Insolvency Regime
------------------------------------------------------------
As part of a continuing series of articles on insolvency regimes
around the world, Standard & Poor's Ratings Services has
recently published an article that reviews the distinctive
characteristics of Brazil's insolvency regime from a secured and
unsecured creditor's perspective and assesses how they may
affect post-default recovery prospects.
Brazil, which has undergone the most far-reaching changes of any
Latin American country to its insolvency regime over the past
three years, now ranks among the friendlier jurisdictions for
creditors in the region. Before the enactment of a new
bankruptcy law in 2005 and other creditor-friendly legal reforms
in 2007, recoveries for creditors were among the lowest in the
region, primarily due to the absence of efficient reorganization
mechanisms, protracted delays in formal court proceedings, and a
relatively low ranking of creditor claims in liquidation.
Following the reforms, however, secured creditors in particular
have encountered a far more hospitable environment in Brazil,
with effective out-of-court foreclosure procedures that
facilitate speedier post-default creditor recoveries, greater
creditor influence over the insolvency process, and more timely
and effective reorganization proceedings.
While many aspects of the new regime still remain untested, and
the predictability and efficiency of formal court proceedings is
uncertain, the recent practical experience has been largely
positive for creditors.
In connection with its global assignment of recovery and issue
ratings, S&P has assessed Brazil's insolvency regime as a Group
B jurisdiction, based on its relative degree of "creditor-
friendliness" as defined in S&P's report titled "Jurisdiction-
Specific Adjustments To Recovery And Issue Ratings," published
July 5, 2007.
The complete insolvency article, "Debt Recovery For Creditors
And The Law Of Insolvency In Brazil," was published May 27,
2008.
* S&P Sees Stable Outlook on U.S. & Bermuda Reinsurance Markets
---------------------------------------------------------------
The United States and Bermuda reinsurers had another record-
breaking operating year in 2007. Banking on two straight years
of strong profitability, these markets have delivered operating
returns to their shareholders not seen in over a decade. As
profits continue to pile up, these reinsurers are also enjoying
record high capitalization levels. Further into 2008, however,
concerns over softening market conditions across most lines of
business and geographic regions are bringing into question
global reinsurers' ability to maintain strong, sustainable
earnings. In addition, while price adequacy and competitive
conditions are pertinent to U.S. and Bermuda reinsurers alike
each of these regions has its own challenges in coming years.
Standard & Poor's Ratings Services maintains its stable outlook
on the global reinsurance sector, but S&P will continue to
monitor premium-rate and terms-and-conditions deterioration in
coming months. Depending on how significant this deterioration
is over the remainder of 2008, S&P might revise the outlook on
some reinsurers to negative by year-end, and could possibly
downgrade companies if the deterioration persists in the sector
in 2009. This reflects the fact that current ratings are based
on S&P's expectation that reinsurers will be able to achieve
better cross-cycle earnings this time around, and that future
soft pricing cycles will be shorter and shallower than they have
been in previous decades. The upcoming June and July 2008
renewals, as well as the Jan. 1, 2009, renewal season, should
offer significant clues as to whether underwriting discipline
will ultimately prevail.
Cross-Cycle Profitability: Is It A Realistic Goal?
A combination of low catastrophe losses, adequately priced
business, and favorable loss reserve emergence contributed to
most U.S. and Bermuda reinsurers posting strong combined ratios
in the mid 80% to low 90% range and returns on revenue (RORs)
upwards of 15% in 2007. For the Bermuda market, which includes
companies writing both insurance and reinsurance and several
players focusing on property writings, underwriting results were
even stronger. According to the Bermuda Insurance Survey 2008
recently published by Bermudian Business magazine, (re)insurance
players based on the island averaged a combined ratio of 74% and
return on equity (ROE) of 20% for 2007. This led to record
aggregate net earnings of US$12 billion posted by these 24
companies.
U.S. reinsurers, traditionally plagued by underwriting losses,
also performed well in 2007 with companies reporting to the
Reinsurance Association of America (RAA) posting an average
combined ratio of 94.7% and aggregate pretax earnings of US$9.7
billion. Returns were less impressive, however, when removing
the results from National Indemnity Co. (AAA/Stable/--), which
typically writes non-traditional lines of reinsurance and alone
accounted for US$4.2 billion of the industry's earnings.
Excluding National Indemnity, the U.S. reinsurance sector still
posted a reasonable 99% combined ratio and strong 20% ROR, with
pretax earnings also at a strong US$5.5 billion in 2007 (10%
ROE). This follows good performance in 2006 with a not so
impressive combined ratio of 100% but good ROR of 13.6%, setting
these two years apart relative to a decade of largely
disappointing results.
Although unusually mild catastrophe years could largely explain
reinsurers' strong performance in 2006 and 2007, significant
improvements in the underlying quality of the business
underwritten by the sector in recent years should not be
underestimated. With the benefit of the experience of massive
underwriting losses stemming from the soft cycle in the late
1990s and record catastrophe losses resulting from events such
as Sept. 11, 2001, and Hurricane Katrina, most reinsurers have
significantly revamped their risk management processes and fine-
tuned their risk monitoring tools over the past six years.
Shareholders, boards of directors, and senior management teams
have also become more conscious of the sector's exposure to
increasingly frequent and severe catastrophe losses and the need
to focus on bottom line profitability.
With all these incentives in place, it is disappointing to see
continued and accelerated reinsurance premium rate reductions
almost across the board as 2008 unfolds. Furthermore, aside
from a major loss event occurring later in 2008, it isn't yet
clear what may stop reinsurance pricing from further erosion
both in the U.S. and international markets.
Although S&P believes most property/casualty reinsurance lines
still are underwritten at price-adequate levels, similar high
single-digit/low double-digit price reductions into 2009 would
be likely to place several lines of business at an underwriting
loss position, compromising the sector's goal of returning
strong earnings to their shareholders and maintaining
sustainable profitability across the cycle. If global
reinsurers are to achieve this goal, more will need to be done
to curb competitive pressures in the reinsurance sector over the
next few years.
The increased competition in the reinsurance sector of late is
partly a result of increased cedant retention, which reflects
strong business margins and the very strong capitalization the
primary markets currently enjoy. Although this development is
outside the control of reinsurers, the sector can influence
competitive pressures in other ways. One of the most important
pertains to how the industry decides to manage its excess
capital position. Currently the majority of Bermuda and U.S.
reinsurers that S&P's rates have their capital adequacy position
well into the 'AA' and 'AAA' levels as measured by S&P's capital
adequacy model. In 2007, several reinsurers-including a
significant number of Bermuda-based companies-announced share
buyback programs, a trend that is continuing into 2008. So far,
however, the amount of share repurchases has been significantly
below what reinsurers have earned, so absolute capital is still
growing while exposure is declining.
After many years in which the sector mostly shunned the idea of
acquisitions, they are again at the top of the agenda for
several reinsurance management teams as at least worthy of
serious consideration. The market only saw a few announcements
over the past year, including SCOR SE's (A-/Stable/A-2) bid for
Converium AG, and Validus Holdings Ltd. and Ariel Holdings
Ltd.'s purchase of two Lloyd's businesses: Talbot Holdings Ltd.
and Atrium Underwriting PLC. The latter also exemplifies a more
recent trend among Bermuda writers to expand geographical reach
outside their Bermuda operations as a means of gaining greater
flexibility of product and client reach. For instance,
Montpelier Re Holding Ltd. and Aspen Insurance Holdings Ltd.
recently announced the formation of new Lloyd's Syndicates, and
Allied World Assurance Co. Holdings Ltd. (BBB/Stable/--) has
established a new company in the U.S. to underwrite and expand
some of the U.S.-related reinsurance business it previously
wrote out of its Bermuda operations. S&P won't know how
successful these strategies are-and how they'll reshape the
industry-for a few years.
A few macro-economic trends may contribute to restraining deeper
price declines in the reinsurance industry at least over the
near term. In particular, S&P expects the current volatility in
the capital markets as a result of subprime losses to weaken
investment returns for the sector this year. In previous soft
cycles, the ability of reinsurers to make up for underwriting
losses with high investment returns was an important factor
fueling further competition.
Global reinsurers as a whole are expected to have limited
exposure to subprime losses from their investment portfolio,
given the generally high quality of their invested assets. With
the exception of XL Capital Ltd. (A-/Stable/--) and Scottish Re
(B-/Watch Neg/--), which have posted relatively large losses
related to subprime, most other U.S. and Bermuda reinsurers have
reported relatively small losses in this area. However, most
companies in the sector have recorded modest investment losses
over the past six months related to declining values of
securities held. This uncertain investment environment is
expected to continue at least through the remainder of 2008.
On the liability side, reinsurers' losses related to directors
and officers and errors and omissions covers affected by
subprime are also expected to be moderate, partially reflecting
the fact that many of the entities involved have traditionally
self-funded these coverages. Amid many challenges for 2008, the
likelihood of relatively limited losses from subprime exposure
is welcome news to the reinsurance sector.
The U.S. Market: Fighting Stagnation
Following a period of deep underwriting losses and the exit of
many players from the U.S. reinsurance market in the past
decade, in the last two years U.S. reinsurers have enjoyed
greater stability. Still, the 20 companies reporting to the RAA
at the end of 2007 constituted half the number of reinsurance
players operating in the U.S. a decade ago. In addition, U.S.
reinsurers' writings have continued to contract as other markets
such as Bermuda and London continue to write increasing amounts
of U.S. risk on a direct basis. At year-end 2007, gross
writings of US$32 billion, reported by U.S. reinsurers providing
data to the RAA, constituted a 29% decline from the US$45
billion reported by the sector at year-end 2003.
On the positive side, companies operating in the U.S.
reinsurance market today enjoy a much stronger capital position,
with aggregate policyholders' surplus of US$40.4 billion
supporting net writings of US$19.1 billion in 2007, compared
with US$32.8 billion in surplus supporting US$27.9 billion in
net premiums for 2003. In addition to stronger capitalization,
the quality of the balance sheet is better as most reserve
deficiencies for the soft cycle years have been recognized and
many reinsurers are beginning to see the emergence of favorable
reserve development for business written in more recent years.
Finally, with most restructuring actions behind the longer
standing U.S. reinsurers-such as Munich Re America Corp. (A-
/Stable/--) and General Re Corp.(AAA/Stable/A-1+)-these
companies are now better focused and able to fully participate
in the marketplace.
For several years there have been no independent U.S.
reinsurers, with the market essentially consisting of
subsidiaries of larger U.S., Bermuda, or European conglomerates.
Although the formation of new, independent U.S.-based reinsurers
is unlikely over the near term, the softening cycle is
increasing interest by some competitors-particularly Bermuda
companies-to set up new subsidiaries or enhance the role of
existing subsidiaries in the U.S. This is because, as the
market softens, some of the business previously going directly
to Bermuda is being placed more easily in the local U.S., U.K,
and European markets. To compete for this business, some
Bermuda companies are likely to increase their direct U.S. and
European presence.
Is Bermuda At A Turning Point?
Although the U.S. reinsurance market has lost some of its luster
over the past decade, Bermuda has significantly increased its
profile in the global reinsurance marketplace during the same
period. With two classes of formation since 2001, the market
has more than doubled its writings over the past decade,
reaching an aggregate net of about US$46 billion in 2007.
Taking advantage of a period in which operating losses and
restructuring weighed down U.S. reinsurers, the Class of 2001
players (reinsurance start-ups during 2001/2002 period) quickly
established themselves in a wide range of products in the
insurance and reinsurance markets around the world, and
particularly in the U.S. These are very large companies in
their own right, with large premium volume and capital bases.
And although Class of 2005 competitors (those formed between
2005/2006) have a narrower scope with greater focus on property
writings, most of them are fairly large companies with capital
in excess of US$1 billion.
Among the key advantages Bermuda has been able to offer over the
U.S. and other domiciles, are its tax-free status and the speed
with which companies are able to set up operations. While these
advantages are still attractive, evolving market forces are
likely to make investors consider other potential domiciles for
future formations beyond just Bermuda. Among these increasingly
attractive domiciles are Ireland, Switzerland, and Dubai, which
offer access to an affordable, educated workforce and access to
other markets such as Europe and the Middle-East. Bermuda is
also becoming increasingly crowded, leading many companies to
rely on staff commuting into the island on a weekly basis or
using other geographic locations for back-office and noncore
activities. In addition, if the U.S. were to change its tax-
treatment of U.S. business underwritten by Bermuda companies-
although it seems to be a remote possibility-this change could
make the island a less attractive place to do business.
Such possibilities are causing some Bermudan insurers to
diversify the domiciles within their group structures. Finally,
with the increased use of non-traditional capital sources such
as insurance-linked securities and sidecars, a significant
proportion of new capital entering the reinsurance industry in
future years will likely take this form.
Tougher Conditions Will Test Profit Margins
Although the past two years have provided U.S. and Bermuda
reinsurers with much-needed profits and better quality balance
sheets, companies operating in these markets face several near-
and medium-term challenges. Over the near term, how
significantly premium rates and terms and conditions deteriorate
over the next six to 12 months will have a direct impact on
potential profit margins and is certain to provide some clues as
to whether sustainable cross-cycle earnings are truly achievable
by this sector. Over the medium term, the U.S. reinsurance
sector is likely to continue to experience growth stagnation,
while Bermuda might not be able to sustain the growth rates of
the past six years.
For companies operating in both regions, the commitment of their
senior management to bottom-line profitability and the strength
of their enterprise risk management programs are sure to be key
ingredients in the formula for those who will develop successful
business plans over the long run.
***********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter - Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA. Tara Eliza E. Tecarro, Sheryl Joy P. Olano,
Rizande de los Santos, and Pamella Ritah K. Jala, Editors.
Copyright 2008. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
The TCR Latin America subscription rate is US$625 per half-year,
delivered via e-mail. Additional e-mail subscriptions for
members of the same firm for the term of the initial
subscription or balance thereof are US$25 each. For
subscription information, contact Christopher Beard at
240/629-3300.
* * * End of Transmission * * *