/raid1/www/Hosts/bankrupt/TCRLA_Public/080630.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Monday, June 30, 2008, Vol. 9, No. 128
Headlines
A R G E N T I N A
AES GENER: Salta Plant Electricity Redirected to Argentina
CARLOS Y ANTONIO: Concludes Reorganization Process
CGL SA: Proofs of Claim Verification Deadline Is Aug. 11
DACASA SA: Proofs of Claim Verification Is Until Aug. 26
GONZALO FINDLAY: Proofs of Claim Verification Is Until Aug. 15
LA BALADA: Concludes Reorganization Process
LANAPE SA: Proofs of Claim Verification Deadline Is Aug. 22
MEDICAL POWER: Proofs of Claim Verification Deadline Is Aug. 18
RMI ELECTRONICA: Files for Reorganization in Buenos Aires Court
TYSON FOODS: To Sell Alberta Beef Business to XL Foods
B R A Z I L
BANCO NACIONAL: BRL10.2BB Invested in Northern Region Dev't
CENTRAIS ELETRICAS: To Study Namibia's Kunene Hydro Project
FORD MOTOR: Fitch to Review Ratings Over Next Six Weeks
FURNAS CENTRAIS: To Conduct Study for Namibia's Hydro Project
GENERAL MOTORS: Fitch Trims IDR to B- & Assigns Negative Outlook
GENERAL MOTORS: Investors See 75% Chance of Default in 5 Years
NAVISTAR INT'L: Board Promotes Terry Endsley to EVP and CFO
SHARPER IMAGE: Receives Go-Signal to Implement Severance Program
SHARPER IMAGE: Court Terminates June 17 Interim Order
SHARPER IMAGE: Vice-Presidents Gary Chant, Drew Reich Resign
UNIAO DE BANCOS: Reports BRL3.5 Billion Net Income in 2007
* S&P: Brazil's Ethanol Biz Has Retained Competitive Advantage
C A Y M A N I S L A N D S
ACEH (BLOCK A): Deadline for Proofs of Claim Filing Is July 1
ACEH (BLOCK A): Will Hold Final Shareholders Meeting on July 2
FCM JAPAN KACHI: Proofs of Claim Filing Deadline Is July 1
FCM JAPAN KACHI MASTER: Deadline for Filing Claims Is July 1
MAXSTAR HOLDING: To Hold Final Shareholders' Meeting on July 1
C H I L E
EASTMAN KODAK: S&P's Rating Unmoved by Stock Repurchase Program
G U A T E M A L A
* GUATEMALA: Fitch Holds BB+ Local & Foreign Currency ID Ratings
J A M A I C A
AIR JAMAICA: Union Blames Minister Wehby for Airline's Problems
NATIONAL WATER: Seeks to Reduce Electricity Bill
NATIONAL WATER: High Energy Bills Eat Away Firm's Revenues
SUGAR COMPANY: Government to Divest Assets Starting July 1
M E X I C O
CHRYSLER LLC: Denies Rumors of Possible Bankruptcy Filing
CHRYSLER LLC: Steep Sales Decline Cues Fitch to Cut Rating to B-
EMPRESAS ICA: Reports MXN200MM 1st Qtr. Consolidated Net Income
FEDERAL-MOGUL: Court Denies Asbestos PI Trust Injunction Demand
MESA AIR: Gets Nasdaq Noncompliance Notice on Bid Price Protocol
P E R U
GOODYEAR TIRE: To Invest US$2BB in Plant Expansion & Improvement
P U E R T O R I C O
ROYAL CARIBBEAN: Stifel Reaffirms Buy Rating on Firm's Shares
V E N E Z U E L A
CITGO PETROLEUM: Restarts Lake Charles Plant After Power Outage
CITGO PETROLEUM: May Have to Pay Millions on June 2006 Oil Spill
PETROLEOS DE VENEZUELA: Inks Joint Venture Pact With Belorusneft
* Latin America Remains Resilient to Credit Crunch, Fitch Says
* BOND PRICING: For the Week June 30 - July 4, 2008
- - - - -
=================
A R G E N T I N A
=================
AES GENER: Salta Plant Electricity Redirected to Argentina
----------------------------------------------------------
Electricity from AES Gener SA's Salta plant was redirected to
northern Argentina, Dow Jones Newswires reports, citing the
Chilean Energy Ministry.
Dow Jones relates that AES Gener's Salta plant is in Argentina,
near the Chilean border. It supplies both countries.
According to the Chilean Energy Ministry, the Argentine
government requested its Chilean counterpart to redirect the
electricity after its Embasle plant was shut down last
Wednesday.
?In light of the supply situation in Argentina and the fact that
the SING grid is operating normally and without any foreseeable
problems, Chilean authorities granted Argentina's petition,? Dow
Jones quoted the Chilean Energy Ministry.
AES Gener SA is the second-largest electricity generation group
in Chile in terms of generating capacity (20% market share) with
an installed capacity of 2,428 megawatts. Gener serves both the
Central Interconnected System or SIC and the Northern
Interconnected System or SING through various subsidiaries and
related companies, including affiliate Guacolda and the
TermoAndes subsidiary. TermoAndes has a generation capacity of
642.8 megawatts, which while located in Argentina serves Chile's
SING via InterAndes transmission line. Gener also participates
in electricity generation in Colombia through Chivor
hydroelectric plant of 1,000 megawatts, and a 25% participation
in Itabo's facilities in the Dominican Republic (432.5
megawatts). Gener is 91.2% owned by AES (IDR rated 'B+' by
Fitch).
* * *
To date, AES Gener carries Moody's Investors Service's Ba2 long-
term foreign bank deposit rating with a stable outlook. The firm
also carries Standard & Poor's Ratings Services' BB+ long-term
foreign issuer credit rating with a positive outlook.
CARLOS Y ANTONIO: Concludes Reorganization Process
--------------------------------------------------
Carlos y Antonio Mauri S.H. has concluded its reorganization
process, according to data released by Infobae on its Web site.
The closure came after the National Commercial Court of First
Instance in Cordoba homologated the debt plan signed between the
company and its creditors.
CGL SA: Proofs of Claim Verification Deadline Is Aug. 11
--------------------------------------------------------
The court-appointed trustee for CGL S.A.'s bankruptcy proceeding
will be verifying creditors' proofs of claim until Aug. 11,
2008.
The trustee will present the validated claims in court as
individual reports on Sept. 22, 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 CGL 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 CGL's accounting
and banking records will be submitted in court on Nov. 3, 2008.
DACASA SA: Proofs of Claim Verification Is Until Aug. 26
--------------------------------------------------------
Fernando Marziale, the court-appointed trustee for Dacasa S.A.'s
bankruptcy proceeding, will be verifying creditors' proofs of
claim until Aug. 26, 2008.
Mr. Marziale will present the validated claims in court as
individual reports on Oct. 7, 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 Dacasa 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 Dacasa's accounting
and banking records will be submitted in court on Nov. 18, 2008.
Mr. Marziale is also in charge of administering Dacasa's assets
under court supervision and will take part in their disposal to
the extent established by law.
The debtor can be reached at:
Dacasa S.A.
Brandsen 457
Buenos Aires, Argentina
The trustee can be reached at:
Fernando Marziale
Avenida Callao 930
Buenos Aires, Argentina
GONZALO FINDLAY: Proofs of Claim Verification Is Until Aug. 15
--------------------------------------------------------------
The court-appointed trustee for Gonzalo Findlay Wilson y
Asociados S.A.'s bankruptcy proceeding will be verifying
creditors' proofs of claim until Aug. 15, 2008.
The trustee will present the validated claims in court as
individual reports on Sept. 29, 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 Gonzalo Findlay 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 Gonzalo Findlay's
accounting and banking records will be submitted in court on
Nov. 10, 2008.
The debtor can be reached at:
Gonzalo Findlay Wilson y Asociados S.A.
Tucuman 1455
Buenos Aires, Argentina
LA BALADA: Concludes Reorganization Process
-------------------------------------------
La Balada S.A.C.I. y A. has concluded its reorganization
process, according to data released by Infobae on its Web site.
The closure came after the National Commercial Court of First
Instance in Buenos Aires homologated the debt plan signed
between the company and its creditors.
LANAPE SA: Proofs of Claim Verification Deadline Is Aug. 22
-----------------------------------------------------------
The court-appointed trustee for Lanape S.A.'s bankruptcy
proceeding will be verifying creditors' proofs of claim until
Aug. 22, 2008.
The trustee will present the validated claims in court as
individual reports on Oct. 3, 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 Lanape 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 Lanape's accounting
and banking records will be submitted in court on Nov. 14, 2008.
MEDICAL POWER: Proofs of Claim Verification Deadline Is Aug. 18
---------------------------------------------------------------
Flora Marcela Pazos, the court-appointed trustee for Medical
Power S.A.'s bankruptcy proceeding, will be verifying creditors'
proofs of claim until Aug. 18, 2007.
Ms. Pazos will present the validated claims in court as
individual reports. 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 Medical Power
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 Medical Power's
accounting and banking records will be submitted in court.
Infobae did not say when the reports are due in court.
Ms. Pazos is also in charge of administering Medical Power's
assets under court supervision and will take part in their
disposal to the extent established by law.
The trustee can be reached at:
Flora Marcela Pazos
Montevideo 527
Buenos Aires, Argentina
RMI ELECTRONICA: Files for Reorganization in Buenos Aires Court
---------------------------------------------------------------
R.M.I. Electronica S.R.L. has requested for reorganization
approval after failing to pay its liabilities.
The reorganization petition, once approved by the court, will
allow R.M.I. Electronica to negotiate a settlement with its
creditors in order to avoid a straight liquidation.
The case is pending in the National Commercial Court of First
Instance in Buenos Aires.
The debtor can be reached at:
R.M.I. Electronica S.R.L.
Av. J.M. Rosas 2969 (Ex Av. Marquez)
Parque Suarez - Jose L. Suarez
Buenos Aires, Argentina
Web site: http://www.rmi.com.ar
TYSON FOODS: To Sell Alberta Beef Business to XL Foods
------------------------------------------------------
Tyson Foods, Inc., signed a letter of intent to sell the
packing, feedyard and fertilizer assets of Lakeside Farm
Industries Ltd. and its subsidiary Lakeside Packers, to XL Foods
Inc., a Canadian-owned beef processing business. The C$107
million transaction includes C$57 million, which will be paid at
closing. The remaining C$50 million, plus interest, will be
paid over a five-year period following closing. Tyson would
retain the finished product inventory, accounts receivables and
accounts payables of the Lakeside operations as of the closing
date. The transaction remains subject to government approvals,
the receipt of commercially reasonable financing by XL and the
execution of a definitive agreement by the parties. Both
companies anticipate completing the sale by the end of
September.
"Lakeside is one of the premier beef processing operations in
Canada and has operated successfully for many years," Richard L.
Bond, president and CEO of Tyson Foods, said. "However,
Lakeside no longer fits the long-term strategy of our company,
as our current international strategy is focused primarily in
Asia, Mexico and South America."
Lakeside Farm Industries, based in Brooks, Alberta, is a
diversified agribusiness involved in cattle feeding,
slaughtering and processing, as well as retail fertilizer
production and farming. Lakeside currently employs 2,300 Team
Members and currently has the capacity to slaughter and process
4,700 cattle per day. The commodity boxed beef produced by the
plant is primarily sold to customers in Canada and the U.S.
XL Foods plans to continue operating the Lakeside facility after
the sale is completed.
"We believe the Lakeside plant and cattle feeding operation will
complement our other beef operations in Alberta and
Saskatchewan," Brian Nilsson, co-chief executive officer of XL
Foods Inc. and Nilsson Bros. Inc., said. "In addition, it will
help strengthen our ability to meet the needs of our North
American customer base."
"We intend to make the transition of ownership as smooth as
possible," said Nilsson. "At the appropriate time, this will
include informational meetings with members of the Lakeside
staff."
About XL Foods
XL Foods Inc. is part of the Nilsson Bros. Group, a Canadian
cattle feeding and marketing company. Nilsson Bros. entered in
the meatpacking business in the late 1990's with the purchase of
Edmonton Meat Packing and XL Foods. The business currently
includes packing plants in Edmonton and Calgary, Alberta; Moose
Jaw, Saskatchewan; Omaha, Nebraska and Nampa, Idaho.
About Tyson Foods
Headquartered in Springdale, Arkansas, Tyson Foods Inc.
(NYSE:TSN) -- http://www.tysonfoods.com/-- is a processor and
marketer of chicken, beef, and pork. The company makes a wide
variety of protein-based and prepared food products at its 123
processing plants. Tyson has approximately 114,000 Team Members
employed at more than 300 facilities and offices in 26 states
and 80 countries.
Tyson's U.S. beef plants are located in Amarillo, Texas; Dakota
City, Nebraska; Denison, Iowa; Finney County, Kansas; Joslin,
Illinois, Lexington, Nebraska and Pasco, Washington. The
company also has a beef complex in Canada, and is involved in a
vertically integrated beef operation in Argentina.
* * *
As reported in the Troubled Company Reporter on April 7, 2008,
Moody's Investors Service confirmed Tyson Foods, Inc.'s
corporate family rating and probability of default rating at
Ba1. Moody's said the rating outlook remains negative.
===========
B R A Z I L
===========
BANCO NACIONAL: BRL10.2BB Invested in Northern Region Dev't
-----------------------------------------------------------
Banco Nacional de Desenvolvimento Economico e Social SA said
that Brazil's investment in developing the northern region has
increased 400% to BRL10.2 billion in the June 2007 to May 2008
period, compared to the previous 12 months, Xinhua News Agency
reports.
According to Banco Nacional, the BRL10.2 billion invested
represented 9% of the total investments the bank approved in the
June 2007-May 2008 period. The bank said that it had approved a
total of BRL9.8 billion in investments for the northeastern
region in the period, about 27% higher compared to the June
2006-May 2007 period.
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.
CENTRAIS ELETRICAS: To Study Namibia's Kunene Hydro Project
-----------------------------------------------------------
The Namibian reports that Centrais Eletricas Brasileiras SA will
conduct a study on the technical and economic viability of
Namibia's plan to construct a large hydro power on the Kunene
River near the Baynes Mountains.
According to The Namibian, Centrais Eletricas was among the four
Brazilian firms that formed the Cunene Consortium, which signed
an agreement with Namibia and Angola for the study. The other
members of the consortium are: Furnas, Engevix, and Odebrecht.
Cunene Consortium is given 18 months or until the end of 2009 to
complete the US$7.8 million study.
The Namibian relates that the Baynes project includes a hydro
power station and a storage dam, expected to eventually produce
some 480 megawatts of electricity. The project will cost some
N$8 billion and will be shouldered by Angola and Namibia. The
payment will be made after the submission of the study.
Centrais Eletricas Brasileiras SA aka Eletrobras operates in the
electric power sector in Brazil. The objective of Eletrobras is
to perform activities involving studies, projects, construction
and operation of electric power plants, transmission and
distribution lines as well as underlying trade operations
arising therefrom. Eletrobras is tasked with the preparation of
studies and with drawing up construction projects for
hydroelectric generation, transmission lines and substations to
supply Brazil. It engages areas involving granting loans and
financing, providing guarantees, locally or abroad, and
acquiring debentures of companies and holders of public electric
power services under their control; providing loans and
guarantees, locally or abroad, for technical and scientific
research institutions; and promoting and supporting researches
relating to the power sector, linked to the generation,
transmission and distribution of electric power.
* * *
As reported in the Troubled Company Reporter-Latin America on
May 22, 2007, Standard & Poor's Ratings Services raised its
long-term foreign currency counterparty credit rating on
Centrais Eletricas Brasileiras S.A. aka Eletrobras to 'BB+' from
'BB'. S&P said that outlook is positive.
FORD MOTOR: Fitch to Review Ratings Over Next Six Weeks
-------------------------------------------------------
Fitch Ratings has not taken a rating action on Ford Motor
Company and Ford Motor Credit Co LLC, but will be reviewing the
existing ratings over the next six weeks. Although Ford is
viewed as having more than adequate liquidity and resources to
weather current conditions through 2009, unrelenting industry
and economic pressures make it increasingly likely that Ford
will be unable to maintain its existing ratings. A key
determinant in the review will be the performance of Ford
Credit.
Among the domestic manufacturers, Ford is the most reliant on
the U.S. pickup truck market, which has seen steep declines due
to weak economic conditions in the homebuilding market and
soaring gas prices. Industry pickup sales have declined well
outside a range that could be explained by cyclical
fluctuations, confirming that a permanent market shift away from
pickup trucks has taken place. Ford has been aggressive in
addressing overcapacity in the pickup and SUV segments over the
last several years, but has been unable to stay ahead of a
rapidly deteriorating market. Fitch expects that there is some
pent-up demand accruing in the pickup market, although a rebound
is now expected to be more muted and more distant that expected,
and may not occur until 2010.
Ford's lineup at the lower end of the product spectrum, the
Escape, Fusion and Focus, as well as the Edge crossover, have
held up relatively well in the current environment, providing
Ford with the best product balance among the domestic
manufacturers over the intermediate term. The most recent surge
in gas prices and the corresponding shift in consumer
preferences has required an acceleration of restructuring
efforts, and shortened the timeline over which the domestic
manufacturers are required to transform their product lineups
and manufacturing footprint in line with market demand.
Commodity prices have continued to be a stronger headwind than
anticipated, and higher steel costs will now be contracted in
for the next several years. Recouping these cost increases
through pricing will be required over the long-term, but will be
unlikely in the current environment.
Fitch's ongoing assessment of Ford and Ford Credit will focus on
expected cash drains through 2009 and the performance of Ford
Credit. Ford's current cash cushion is expected to leave the
company with more than adequate liquidity through 2009, keeping
the company above a minimum comfort level of approximately
US$10 - US$11 billion. Incremental asset sales and financing
are expected over the near term to supplement existing
liquidity. Ford has been opportunistic in using equity-for-debt
swaps in muting the growth in debt. It should also be noted
that a portion of the cash drain in 2008 is associated with the
cash funding of the recent UAW healthcare agreement, as opposed
to issuing new short-term debt. In 2010, Ford will begin to
realize the benefits of this VEBA agreement, and could also
benefit from a rebound in economic conditions.
A primary focus of the review will be on Ford Credit and
continued access to cost-effective financing, either through the
securitization market or other sources. To date, Ford Credit's
underwriting standards have been consistent, and loss experience
has been in line with expectations given the economic cycle.
However, with the unsettled capital markets, the steep decline
in pickup and SUV residuals, extended contract terms and a
weakened consumer, underlying performance has weakened and may
diminish investor appetite for auto loans at economically
sustainable terms. In the event that the financing markets are
expected to be less accommodative over the near-to-intermediate
term, Fitch could potentially lower the IDR to 'CCC'.
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) --
http://www.ford.com/-- manufactures or distributes automobiles
in 200 markets across six continents. With about 260,000
employees and about 100 plants worldwide, the company's core and
affiliated automotive brands include Ford, Jaguar, Land Rover,
Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company
provides financial services through Ford Motor Credit Company.
The company has operations in Japan in the Asia Pacific region.
In Europe, the company maintains a presence in Sweden, and the
United Kingdom. The company also distributes its brands in
various Latin American regions, including Argentina and Brazil.
FURNAS CENTRAIS: To Conduct Study for Namibia's Hydro Project
-------------------------------------------------------------
The Namibian reports that Furnas Centrais Eletricas S.A. will
conduct a study on the technical and economic viability of
Namibia's plan to construct a large hydro power on the Kunene
River near the Baynes Mountains.
According to The Namibian, Furnas Centrais was among the four
Brazilian firms that formed the Cunene Consortium, which signed
an agreement with Namibia and Angola for the study. The other
members of the consortium are: Centrais Eletricas Brasileiras
SA, Engevix, and Odebrecht. Cunene Consortium is given 18
months or until the end of 2009 to complete the US$7.8 million
study.
The Namibian relates that the Baynes project includes a hydro
power station and a storage dam, expected to eventually produce
some 480 megawatts of electricity. The project will cost some
N$8 billion and will be shouldered by Angola and Namibia. The
payment will be made after the submission of the study.
Headquartered in Rio de Janeiro, Furnas Centrais Eletricas S.A.
is one of Brazil's largest electricity generation and
transmission utility companies. Furnas Centrais is closely
held, with 99.5% of its shares owned by Eletrobras, the
Brazilian Federal Government's holding company that controls
about 39% of the country's installed power generation capacity
and approximately 56% of high voltage energy transmission
countrywide. Furnas Centrais operates 10 hydro-power plants
representing some 92% of its total installed capacity of 9,458
megawatts (8% is represented by 2 thermal power plants). The
company also owns about 19,278 kilometers of transmission lines,
mainly in the southeast and mid-west regions of Brazil. These
assets include the transmission line connecting the Itaipu power
plant, which supplies energy consumption to the most
industrialized region of the country. Furnas is also
responsible for trading the nuclear energy generated by
Eletronuclear (99.8% Eletrobras), which represents about 23% of
energy sales volume. In 2006, Furnas reported net earnings of
BRL364 million (about US$165 million) on BRL5,325 million
(US$2,416 million) net revenues.
* * *
As reported in the Troubled Company Reporter-Latin America on
Aug. 20, 2007, Moody's America Latina Ltda. affirmed its Ba1
global local currency issuer rating for Furnas Centrais
Eletricas S.A.
GENERAL MOTORS: Fitch Trims IDR to B- & Assigns Negative Outlook
----------------------------------------------------------------
Fitch has downgraded the Issuer Default Rating of General Motors
Corporation to 'B-' from 'B', and assigned a Rating Outlook
Negative. The downgrade results from weak economic conditions,
the dramatic shift to fuel efficient vehicles and the resulting
cash drains at GM that are expected to persist at lest through
2009. Fitch expects that cash drains in 2008 will exceed
US$10 billion, and that new financing activity will be required
over the next 18 months to keep GM's cash position above the
minimum comfort level of US$12 - US$14 billion.
GM's product portfolio remains misaligned with market demand,
and the rapid shift to more fuel-efficient vehicles over the
last several months has exacerbated GM's market position. As a
result, ever-deeper restructuring will be required, and will
need to be accomplished on an accelerated time frame. Recently
announced production cuts will result in meaningful share and
revenue declines in North America in 2008 and 2009, heightening
the challenge and the urgency to drive down costs at a pace that
exceeds revenue declines. International operations in China,
Latin America and Eastern Europe continue to perform well, and
to generate healthy excess cash flow, although persistently
higher commodity costs will continue to impair margins globally
through 2010.
Factors that could trigger a downgrade:
-- Projections that show GM would dip below US$15 billion in
cash.
-- Inability to refinance s/t maturities over the next 18
months.
-- Expectations that North American gross margins continue to
shrink into 2009.
-- Material reversal in GM's overseas operating results.
-- Indications that GMAC's access to cost-effective financing
have diminished or if GM is required to provide material
financial support to GMAC.
Macro-economic factors and the shift in consumer buying
preferences have resulted in a severe drop in unit volumes among
the domestic manufacturers, particularly in the more profitable
segments. Although the weak construction market has produced a
steep cyclical decline in pickup sales, industry unit volumes
have moved outside of the range attributed solely to
recessionary conditions in the housing market, confirming that a
more permanent shift in market is taking place. A rebound in
industry pickup sales would certainly benefit GM volumes and
profitability at the time it occurs, but the impact is likely to
be more muted and more distant than originally anticipated. The
recent announcement that GM will close an additional four
assembly plants was expected, but reflect the fact that lost
volumes are permanent, limiting the potential cash flow capacity
over the longer term.
GM has made material improvements in its cost structure,
progress that will continue with an additional hourly workforce
reduction of 19,000 employees by July 1. In 2010, GM will
benefit from savings associated with the recent UAW healthcare
agreement, and an eventual rebound in economic conditions.
Supplier and labor issues, such as the recent American Axle
strike, the continuing Delphi situation, and disputes with the
UAW on local operating agreements have drained resources and
deferred efficiency and productivity savings.
Of primary concern is continuing financial deterioration at GMAC
due primarily to the turmoil in residential mortgage markets.
This has necessitated additional financial support from GM in
the form of capital injections and guarantees. While GMAC
continues to work through issues in its residential mortgage
business, Fitch believes that core automotive finance
fundamentals are also showing weakness, and that these trends
are expected to persist throughout 2008. While Fitch
acknowledges GMAC's recent bank line restructuring, which should
provide necessary near-term funding, Fitch is concerned that a
sustained lack of liquidity, particularly in the securitization
markets, may reduce GMAC's ability to provide financing for GM
customers. In this scenario, the Issuer Default Rating of GM
could be reviewed with an expectation of a downgrade to 'CCC'.
Entering 2008, Fitch anticipated that the rate of increase in
commodity costs would slow, thereby allowing more of the
company's restructuring actions to be realized. Instead,
commodity prices increases have continued to escalate in steel,
other metals, and a wide variety of inputs that are expected to
continue in the short term. Over the longer term, these costs
will have to be recouped at least in part through higher
pricing, which will remain a challenge.
Fitch expects that cash drains in 2008 will exceed US$10 billion
prior to any capital raising, and negative cash flow will
persist at least through 2009. Raising capital in excess of
maturities over the next two years is probable, but to a very
limited extent given the state of the capital markets, the
company's financial position, limited availability of
securitizable domestic assets and GM's market capitalization.
GM also retains access to approximately US$7 billion in
revolving credit agreements. Fund-raising options include the
likely extension of VEBA-related debt owed to the UAW, financing
related to profitable and growing international operations,
equity-related offerings and other modest asset-based
financings.
GM's balance sheet over the near term is likely to reflect more
than US$50 billion in consolidated debt (including VEBA-related
debt). Interest expense will continue to rise, reflecting
higher debt and higher pricing, and Fitch expects that interest
expense will exceed US$3.5 billion over the near term. Together
with capital expenditure requirements, this represents an
increasing financial hurdle given the continued shrinking of
GM's domestic earnings capacity. International operations have
become a solid contributor to the company's cash flow and credit
profile, but free cash flow from these operations will not be
sufficient to offset North American losses and the growth in
financial obligations. European operations are also expected to
be hurt by high oil prices and high commodity costs.
Fitch has downgraded these ratings:
General Motors
-- IDR to 'B-' from 'B';
-- Senior unsecured debt to 'CCC+/RR5 from 'B-/RR5';
-- Senior Secured to 'BB-/RR1' from 'BB/RR1'.
General Motors of Canada
-- IDR to 'B-' from 'B';
-- Senior unsecured to 'CCC+/RR5' from 'B-/RR5'.
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries, including the United Kingdom, Germany,
France, Russia, Brazil and India. In 2007, nearly 9.37 million
GM cars and trucks were sold globally under the following
brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden,
HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's
OnStar subsidiary is the industry leader in vehicle safety,
security and information services.
General Motors Corporation offers products under the Chevrolet
brand in India through its wholly owned subsidiary, General
Motors India. GM India has 95 sales points and over 110 service
centers.
At March 31, 2008, GM's balance sheet showed total assets of
US$145,741,000,000 and total debts of US$186,784,000,000,
resulting in a stockholders' deficit of US$41,043,000,000.
Deficit at Dec. 31, 2007, and March 31, 2007, was
US$37,094,000,000 and US$4,558,000,000, respectively.
GENERAL MOTORS: Investors See 75% Chance of Default in 5 Years
--------------------------------------------------------------
According to Anastasija Johnson at Reuters, credit investors see
a 75% chance General Motors Corp. would default on its debt in
the next five years despite GM's assurance on Thursday that it
has sufficient liquidity.
Various reports note that GM's shares sank to a 53-year low on
Thursday on concerns about liquidity, equity dilution and a
potential dividend cut, heightening speculation that GM doesn't
have enough cash to finance its turnaround. The Wall Street
Journal notes that GM stock fell US$1.38, or 11%, to US$11.43 at
4 p.m. composite trading on the New York Stock Exchange.
GM's syndicated loans due Nov. 27, 2013, trade at 91.96 cents on
the dollar as of June 20, 2008, according to loan pricing data
compiled by the Journal. The instrument carries interest at
LIBOR plus 275 basis points, and a Ba3 loan rating from Moody's
Investors Service and BB- rating from Standard and Poor's
Ratings Services.
John D. Stoll and Serena Ng at The Wall Street Journal relate
that, in a research note Thursday, Goldman Sachs said it
believes GM will try to raise more cash, which could lead to
"significant shareholder dilution" and possibly a cut to the
company's dividend.
GM indicated there are no debt covenants tied to the market
value of the company, WSJ notes.
WSJ further notes that, in an interview last month, George
Fisher, GM's lead independent director, said a takeover offer
isn't a concern given the large amount of debt GM carries on its
books. WSJ relates that Kenneth A. Elias, a partner at Maryann
Keller & Associates, an automotive-consulting firm, said any
buyer would have to invest billions of dollars beyond the
purchase price to restructure GM and pay off its liabilities.
GM, according to WSJ, is expected to end the second quarter with
about US$20,000,000,000 in cash, the lowest balance it has
reported in recent years. Analysts and ratings firms believe
the company will go through at least US$10 billion this year,
WSJ relates.
Buckingham Research analyst Joe Amaturo, according to WSJ, cut
his target on the stock to US$8 on Tuesday, saying, "We continue
to believe GM has liquidity issues and will have to raise
capital given the significant automotive cash burn that GM is
likely to experience in 2009 and 2010."
The cost to insure GM's debt with credit default swaps rose to
33.5% upfront, or US$3,350,000 per year for five years to insure
US$10,000,000 in debt, plus annual payments of 500 basis points,
Reuters says, citing Markit.
"What's most concerning about GM is that no one has a good sense
of how its (business) shift is going to affect its
profitability," said Geoffrey Gwin, principal of Group G Capital
Partners, a New York credit hedge fund, according to WSJ. Mr.
Gwin, WSJ relates, added that a change in the mix of vehicles GM
produces, toward more cars and fewer sport-utility vehicles and
light trucks, coupled with absolute declines in its auto sales
and rising oil prices are causing a lot of uncertainty among
investors.
Business Week says one GM executive, at a few recent meetings,
floated the idea of a GM-Ford merger, but it was deemed a
counter-productive distraction.
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries, including the United Kingdom, Germany,
France, Russia, Brazil and India. In 2007, nearly 9.37 million
GM cars and trucks were sold globally under the following
brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden,
HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's
OnStar subsidiary is the industry leader in vehicle safety,
security and information services.
General Motors Corporation offers products under the Chevrolet
brand in India through its wholly owned subsidiary, General
Motors India. GM India has 95 sales points and over 110 service
centers.
At March 31, 2008, GM's balance sheet showed total assets of
US$145,741,000,000 and total debts of US$186,784,000,000,
resulting in a stockholders' deficit of US$41,043,000,000.
Deficit, at Dec. 31, 2007, and March 31, 2007, was
US$37,094,000,000 and US$4,558,000,000, respectively.
* * *
As related in the Troubled Company Reporter on June 5, 2008,
Standard & Poor's Ratings Services said that its ratings on
General Motors Corp. (B/Negative/B-3) are not immediately
affected by the company's announcement that it will cease
production at four North American truck plants over the next two
years. These closures are in response to the re-energized shift
in consumer demand away from light trucks. GM previously said
only one shift was being eliminated at each of the four truck
plants. Production is being increased at plants producing small
and midsize cars, but the cash contribution margin from these
smaller vehicles is far less than that of light trucks.
NAVISTAR INT'L: Board Promotes Terry Endsley to EVP and CFO
-----------------------------------------------------------
The Board of Directors of Navistar International Corporation
promoted Terry M. Endsley to the position of Executive Vice
President and Chief Financial Officer to replace William A.
Caton, who accepted a new executive position within the company
as Chief Risk Officer. Mr. Endsley also assumed Mr. Caton's
seat on the company's Board of Directors. Mr. Endsley, age 52,
previously served as Senior Vice President and Treasurer of the
company since 2006 and Vice President and Treasurer of the
company since 2003.
Mr. Endsley also served as Senior Vice President and Treasurer
of Navistar, Inc., a wholly-owned subsidiary of the company,
since 2006 and Vice President and Treasurer of Navistar, Inc.
since 2003. Prior to that, Mr. Endsley served as Assistant
Treasurer of the company from 1997 to 2003 and as Assistant
Treasurer of Navistar, Inc. from 1997 to 2003. Mr. Endsley is
not a party to any transaction with the company or any of its
subsidiaries in which he had a direct or indirect material
interest requiring disclosure under this Item.
In connection with Mr. Endsley's appointment as Executive Vice
President and Chief Financial Officer, the Board of Directors of
the company, upon the recommendation of the Compensation
Committee:
(i) increased his annual base salary to US$560,000,
(ii) increased the long-term incentive grant made to him in
April of 2008 to 15,900 restricted stock shares or
restricted stock units (to be determined at management's
discretion) and
(iii) provided him with certain other benefits commensurate with
his Chief Financial Officer position.
In connection with Mr. Caton's appointment as Chief Risk
Officer, the Board of Directors of the company approved the
amendments to his Executive Severance Agreement:
* The 10 day window to notify the company that his new
[UTF-8?]appointment constitutes a ?Good Reason?? event or
condition under his ESA is extended until June 17, 2010;
* Any right to receive healthcare coverage under his ESA for a
period of 1 year is extended to a period of 3 years; and
* The company will make him whole for any losses incurred on
the sale of his home in Illinois.
In addition, on June 17, 2008, the Board of Directors of the
company appointed Mr. Steve J. Klinger as a member of the
company's
(i) Compensation Committee, effective June 17, 2008, and
(ii) Audit Committee, effective Aug. 15, 2008.
Mr. Klinger was previously elected as a member of the company's
Board of Directors on May 27, 2008.
2008 Annual Meeting
The company announced last month that the Board of Directors of
the company established Friday, Sept. 5, 2008 as the date of the
company's 2008 Annual Meeting of Stockholders. On June 17,
2008, the Board of Directors of the company determined that:
(i) the Annual Meeting will be held at the Hyatt Lisle Hotel,
located at 1400 Corporetum Drive, Lisle, Illinois 60532
and
(ii) the record date for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting
will be July 22, 2008.
About Navistar International
Based in Warrenville, Illinois, Navistar International Corp.
(NYSE:NAV) -- http://www.nav-international.com/-- is the parent
company of Navistar Financial Corp. and International Truck and
Engine Corp. The company produces International brand
commercial trucks, mid-range diesel engines and IC brand school
buses, Workhorse brand chassis for motor homes and step vans,
and is a private label designer and manufacturer of diesel
engines for the pickup truck, van and SUV market. The company
also provides truck and diesel engine parts and service sold
under the International brand. A wholly owned subsidiary offers
financing services. The company has operations in Brazil,
Iceland and India.
* * *
As reported in the Troubled Company Reporter-Latin Ameria on Jun
e 18, 2008, Standard & Poor's Ratings Services said that its
ratings on Navistar International Corp. (BB-/Negative/--) are
not affected by the company's announcement of a wide-ranging
truck and engine development and distribution alliance with
Caterpillar Inc. (A/Stable/A-1). Under the proposed alliance,
Navistar plans to produce heavy-duty trucks for severe service
applications, such as road construction or large infrastructure
or energy projects, which will be sold in the U.S. beginning in
2010 under the Caterpillar brand name.
SHARPER IMAGE: Receives Go-Signal to Implement Severance Program
----------------------------------------------------------------
Judge Kevin Gross of the U.S. Bankruptcy Court for the District
of Delaware held that The Sharper Image Corp. may implement its
severance program as amended upon record at the June 17, 2008
hearing.
Judge Gross overruled objections not otherwise resolved, and
authorized the Debtor to honor obligations under the Amended
Severance Program as to its executives.
Davis Street Land Company of Tennessee, L.L.C., and Gardens SPE
II LLC tried to block approval of the Amended Severance Program,
to the extent that their administrative claims against the
Debtor are not paid.
According to William A. Hazeltine, Esq., at Sullivan Hazeltine
Allinson LLC, in Wilmington, Delaware, the Debtor had entered
into separate non-residential property leases with Davis and
Gardens prior to the Petition Date. The Debtor had not paid the
Landlords the stub rent for its obligations on the Leases, nor
indicated whether the Leases will be assumed, assumed and
assigned, or rejected. The stub rent, which continue to accrue
under the Leases, is an administrative expense of the Debtor's
estate, Mr. Hazeltine maintained.
Mr. Hazeltine asserted that the Landlords should not be required
to wait for the payment of their administrative claims, while
employees are paid currently. Additionally, he said that the
Amended Severance Program should explicitly state that the
employees are not entitled to duplicative bonuses.
About Sharper Image
Based in San Francisco, California, Sharper Image Corp. --
http://www.sharperimage.com/-- is a multi-channel specialty
retailer. It operates in three principal selling channels: the
Sharper Image specialty stores throughout the U.S., the Sharper
Image catalog and the Internet. The company has operations in
Australia, Brazil and Mexico. In addition, through its Brand
Licensing Division, it is also licensing the Sharper Image brand
to select third parties to allow them to sell Sharper Image
branded products in other channels of distribution.
The company filed for Chapter 11 protection on Feb. 19, 2008
(Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at
Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the
Debtor in its restructuring efforts. An Official Committee of
UnsecuredCreditors has been appointed in the case. Whiteford
Taylor Preston LLC is the Committee's Delaware counsel
When the Debtor filed for bankruptcy, it listed total assets of
US$251,500,000 and total debts of US$199,000,000.
(Sharper Image Bankruptcy News, Issue No. 15; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
SHARPER IMAGE: Court Terminates June 17 Interim Order
-----------------------------------------------------
Upon the oral request of Sharper Image Corp. to withdraw the
interim approval of its motion to restrict transfers of
interest, the U.S. Bankruptcy Court for the District of Delaware
terminated the interim order as of June 17, 2008.
Judge Kevin Gross determined that the termination of the Interim
Order is in the best interests of the Debtor, its creditors, and
all parties-in-interest.
As reported by the Troubled Company Reporter on May 12, 2008,
the Debtor sought the authority of the U.S. District Court for
the District of Delaware to (i) establish procedures to protect
the potential value of its net operating tax loss carryforward
amounts, and (ii) notify all holders of its stock and claims via
a notice.
The Debtor estimated that it has NOLs in excess of
US$200,000,000. In addition, the Debtor has substantial tax
basis in its assets that exceeds the implied value of its assets
based on its current market capitalization.
About Sharper Image
Based in San Francisco, California, Sharper Image Corp. --
http://www.sharperimage.com/-- is a multi-channel specialty
retailer. It operates in three principal selling channels: the
Sharper Image specialty stores throughout the U.S., the Sharper
Image catalog and the Internet. The company has operations in
Australia, Brazil and Mexico. In addition, through its Brand
Licensing Division, it is also licensing the Sharper Image brand
to select third parties to allow them to sell Sharper Image
branded products in other channels of distribution.
The company filed for Chapter 11 protection on Feb. 19, 2008
(Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at
Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the
Debtor in its restructuring efforts. An Official Committee of
UnsecuredCreditors has been appointed in the case. Whiteford
Taylor Preston LLC is the Committee's Delaware counsel
When the Debtor filed for bankruptcy, it listed total assets of
US$251,500,000 and total debts of US$199,000,000.
(Sharper Image Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
SHARPER IMAGE: Vice-Presidents Gary Chant, Drew Reich Resign
------------------------------------------------------------
In a regulatory filing with the United States Securities and
Exchange Commission dated June 17, 2008, James Sander, senior
vice-president and general counsel of Sharper Image Corp.,
disclosed that two vice-presidents of Sharper Image stepped down
from their positions and left the company between June 11 and
13, 2008.
On June 11, 2008, Gary Chant, Sharper Image's senior vice-
president for human resources and administration, stepped down
from that position. On June 13, 2008, Drew Reich, Sharper
Image's executive vice-president for merchandising, also left
the company.
Based in San Francisco, California, Sharper Image Corp. --
http://www.sharperimage.com/-- is a multi-channel specialty
retailer. It operates in three principal selling channels: the
Sharper Image specialty stores throughout the U.S., the Sharper
Image catalog and the Internet. The company has operations in
Australia, Brazil and Mexico. In addition, through its Brand
Licensing Division, it is also licensing the Sharper Image brand
to select third parties to allow them to sell Sharper Image
branded products in other channels of distribution.
The company filed for Chapter 11 protection on Feb. 19, 2008
(Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at
Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the
Debtor in its restructuring efforts. An Official Committee of
UnsecuredCreditors has been appointed in the case. Whiteford
Taylor Preston LLC is the Committee's Delaware counsel
When the Debtor filed for bankruptcy, it listed total assets of
US$251,500,000 and total debts of US$199,000,000.
(Sharper Image Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
UNIAO DE BANCOS: Reports BRL3.5 Billion Net Income in 2007
----------------------------------------------------------
Uniao de Bancos Brasileiros S.A., a.k.a. Unibanco, reported
BRL3,448 million net income for 2007. Excluding the non
recurring events, the net income was BRL2,600 million in the
year, a 17.6% growth when compared to 2006.
The return on average equity (ROAE) totaled 31.7 % in 2007, and
24.5% excluding the non recurring events, better than the 22.4%
in 2006.
The gain from the Bovespa Holding, BM&F and Redecard's initial
public offerings, the sale of part of Serasa's stake and the
change in participation in our subsidiary Unibanco Participacoes
Societarias S.A. (UPS) represented the non recurring events in
2007. These results, deducted from additional provisions and
the full goodwill amortization of Sonaecred, company
incorporated in fourth quarter 2007, were accounted as non
recurring results in 2007, in the amount of BRL848 million.
The operating income before non recurring events totaled
BRL4,097 million in 2007, a 16.4% increase versus 2006.
Unibanco's stockholders' equity totaled BRL11,837 million on
Dec. 31, 2007, growing 19.3% from December 2006. Return on
average equity (ROAE) totaled 31.7% in 2007. Excluding non
recurring events, ROAE was 24.5%.
The financial margin after provision for loan losses was
BRL8,354 million in 2007, up 14.5%, when compared to 2006. This
improvement is mostly explained by a higher credit volume and an
improvement in the asset quality.
Total fees totaled BRL3,640 million in 2007, with highlight for
credit cards fees (Unicard and Hipercard), up 23.4% in the year,
influenced by the growth in the number of cards issued, and
revenues from capital markets transactions.
In 2007, personnel and administrative expenses increased only
0.1% compared to 2006. This is largely due to efficiency gains
and budgetary discipline. It is worth mentioning that, during
the period, there were organic growth of business activities,
Retail business commercial efforts and campaigns, and the wage
increase arising from the collective bargaining agreements of
September 2006 and September 2007.
Assets and Liabilities
Unibanco's total assets totaled BRL149,597 million in December
2007, up 44.2% when compared to December 2006. This growth is
mainly due to the BRL16.1 billion increase in total loans.
Return on average assets (ROAA) before non recurring events was
2.1% in 2007.
In December 2007, the securities portfolio was
BRL23,737 million, of which 45% were classified as trading
securities, 45% as securities available for sale and 10% as
securities held to maturity. The classification of a portion of
the portfolio as held to maturity is based on the financial
capability to hold in the portfolio until maturity, interest
rates (positive spread) and currency of their liability
positions.
In the past 12 months, Unibanco's total loans increased 35.4%,
reaching BRL61,435 million in December 2007. This growth
demonstrates the loan growth acceleration especially in the
individuals portfolio. The highlights were: payroll loans, auto
loans, Small and Medium Enterprises (SMEs) and credit card loan
portfolios.
The balance of allowance for loan losses at the end of December
2007 was BRL2,994 million, representing 4.9% of the total loan
portfolio. Of this total, BRL929 million are additional
allowance for loan losses, based on more conservative
percentages than those required by the regulatory authority, and
significantly higher than the BRL599 million registered in
December 2006.
The Unibanco's risk management policy, along with an increase in
lower risk portfolios, allowed a continued improvement in the
credit portfolio quality.
The non performing loans (credits overdue by 60 days or longer)
improved from 5.4% of the total loan portfolio in December 2006
to 3.9% in December 2007. The total allowance for loan losses
totaled 125% of the non performing loans (past due and falling
due credits) in December 2007, compared to 109% in December
2006.
Total funding and assets under management (AUM) stood at
BRL159,843 million in Dec. 31, 2007, BRL54,935 million of which
are assets under management. It is worth mentioning the
evolution of demand deposits in December 2007, influenced by the
CPMF tax extinguishment, which caused the postponing of
financial resources transfers. The debentures, an alternative
funding instrument for time deposits, increased 59.9% in the
last 12 months.
Unibanco's BIS ratio, as of Dec. 31, 2007, totaled 14.7%, above
the minimum 11% level determined by the Central Bank.
Retail
In December 2007, Unibanco's Retail segment totalled
approximately 29 million clients throughout the country.
Besides the increase in number of partnerships with retailers,
the client base growth is mainly explained by the expansion in
number of credit card clients and payrolls.
The full-service commercial bank serves individuals and small
and medium enterprises (SMEs); Unicard, Hipercard and Redecard
are credit card companies; Fininvest, PontoCred and LuizaCred
focus on consumer finance; Unibanco also operates nationwide in
the auto (cars and heavy vehicles) financing segment. In the
payroll loans segment, Unibanco operates through dealers
(including Fininvest), its branch network, and partnershiMXN
The main highlights in Retail portfolio were: payroll loans,
143.5% up in 2007 reaching BRL4,958 million, and auto loans,
91.6% up over the year, reaching BRL8,800 million on Dec. 31,
2007. The total retail loan portfolio totaled BRL38,835
million, with 49.7% evolution in the year.
Unibanco closed 2007 with a network of 952 branches and 293
corporate-site branches. Fininvest had 265 fully-owned stores
and more than 13 thousand points-of-sale. At the same date,
LuizaCred had 357 points-of-sale while PontoCred had 427.
Wholesale
The Wholesale segment serves companies with annual sales of over
BRL150 million, in addition to institutional investors. Its
business strategy is a blend of regional coverage and industry-
specific expertise designed to build long-term banking
relationships.
Differentiated products and services such as derivatives and
capital markets operations were the highlights in the year.
Derivatives revenues increased 41% and capital markets
transactions revenues increased 105% when compared to 2006.
Unibanco was the coordinator of Tegma Gestao e Logistica S.A.
primary and secondary equity offerings, in the amount of
BRL585 million and lead coordinator of Suzano Papel e Celulose
secondary equity offering, in the amount of BRL612 million.
Still during 2007, Unibanco was the lead coordinator of the
initial public offerings of Redecard, in the amount of
BRL4,643 million, and of SulAmerica S.A., in the amount of
BRL775 million, and coordinator of Tempo Participacoes S.A.
initial public offering, in the amount of BRL394 million.
As a financial agent for BNDES (Brazilian National Bank for
Social and Economic Development), Unibanco disbursed
BRL4.4 billion during the year, with a 11.6% market share,
maintaining its 3rd place in the BNDES overall ranking. During
2007, Unibanco also disbursed BRL560 million in BNDES-exim?
funded loans.
The Wholesale loan portfolio, excluding guarantees and
endorsements, totaled BRL22,600 million in December 2007, up
16.4% in the year, despite the dollar depreciation of 17.2% in
the period. This expansion is a result of the increasing number
of relationships with large companies, which include, in
addition to loans, product and service offerings in line with
the strategy of business with clients.
The Equity Research team of Unibanco InvestShop Corretora de
Valores Mobiliarios was recognized as one of the Top 10 Research
Houses in the 2007 All-Brazil Research Team ranking, from
Institutional Investor magazine, with awards to the analysts of
the Consumer Goods and Banking and Financial Services Sectors.
Wealth Management
Unibanco Asset Management (UAM) ended December 2007 with
BRL54,935 million in assets under management, up 25.5% in the
last 12 months. Its market share as of Dec. 31, 2007, stood at
4.7% (source: Anbid). Also according to Anbid, UAM increased
its market share in the Corporate business to 4.1% in December
2007 from 2.4% in December 2006.
The segment presented a record of BRL7.5 billion increase in
assets under management, mainly from the Corporate business and
the Private Bank business. In the Corporate business, the
highlight in 2007 was the launching of Petrobras credit
receivable investment fund (FIDC), with BRL2.2 billion in assets
under management.
At the Private Banking, assets under management grew 36% in
2007. According to Boston Consulting Group research, released
in October 2007, Unibanco Private Bank presented one of the
largest growth in assets under management in Latin America.
Insurance and Pension Plans
Results for the Insurance and Private Pension Plan businesses
stood at BRL302 million in 2007. Operating income totaled
BRL135 million in 2007, a 19.5% growth compared to 2006.
Combined revenues from the Insurance and Private Pension Plan
businesses were BRL5,691 million in 2007, up 17.5% from 2006.
Consolidated technical reserves totaled BRL10,302 million at the
end of December 2007, up 24.2% from December 2006. The loss
ratio was 44.8%, a 400 b.p. improvement in 2007 when compared to
2006. The combined ratio totaled 95.0% in 2007, better than the
industry average.
Unibanco market capitalization is BRL31 billion, estimated on
the Unit (UBBR11) closing quotation of BRL22.35, as of Feb. 13,
2008.
About Uniao de Bancos
Headquartered in Sao Paulo, Brazil, Uniao de Bancos Brasileiros
SA -- http://www.unibanco.com/-- is a full-service financial
institution providing a range of financial products and services
to a diversified individual and corporate customer base
throughout Brazil. The company's businesses comprise segments:
Retail, Wholesale, Insurance and Pension Plans and Wealth
Management. Uniao de Bancos and its associated companies
FinInvest, LuizaCred, PontoCred and Tecban (Banco 24 Horas)
offer a network composed of 17,000 points of service. It also
counts on 7,580 automated teller machines and all 30 Hours'
products and services, including the telephone service and the
Internet banking. The company's international network consists
of branches in Nassau and the Cayman Islands; representatives
offices in New York; banking subsidiaries in Luxembourg, the
Cayman Islands and Paraguay; and a brokerage firm in New York
-- Unibanco Securities Inc.
* * *
In April 2008, Moody's Investors Service assigned a Ba2 foreign
currency deposit rating to Uniao de Bancos Brasileiros SA.
* S&P: Brazil's Ethanol Biz Has Retained Competitive Advantage
--------------------------------------------------------------
Views on future world biofuel production are increasingly
mixed -- despite bright growth prospects -- as the link between
mounting fuel and food prices once again comes under closer
scrutiny, said Standard & Poor's Ratings Services in a report
"Global Ethanol Production: Rising Output, High Capital
Spending, Uncertain Earnings", published on RatingsDirect.
"The increasing correlation between fuel and food prices that
are moving ever higher has thrown the debate on biofuels'
sustainability into the spotlight," said S&P's credit analyst
Michael Seewald.
At the same time, biofuels, and especially the mainly grain- or
sugar-based gasoline additive ethanol, have become a preferred
way to diversify for global agricommodity companies. Since 2000,
rising and volatile fossil fuel prices and the call for
renewable energy sources as a remedy to carbon emissions have
triggered widespread government support to extend biofuel
production.
According to International Energy Agency estimates, global
biofuel production capacity will have doubled by 2012, versus
2006 levels. The United States, Brazil, and Europe are the top
three producers worldwide, with respective market shares of
roughly 40%, 30%, and 10%.
"The credit outlook for ethanol producers varies across regions
and business models, according the local production
environment," said Mr. Seewald. "Where ethanol production is
just one diversification source for large agribusiness
processors, the rating impact tends to be neutral to negative.
Smaller pure-play ethanol producers, however, face high business
and financial risks due to the volatile dynamics in this
market."
Political event risk could become a risk factor for the
industry, if the food versus fuel debate sways currently
positive public opinion.
Brazil's sugar cane-based ethanol has retained its competitive
advantages so far. This edge could widen in a scenario where
sugar prices move up on increasing world market demand,
improving Brazilian sugar and ethanol producers' ability to
increase their feedstock but especially their profitability.
Meanwhile, Europe's wheat and sugar-beet based production is
still in its infancy. Whether the European biofuel market will
confront issues of overcapacity resembling those in the U.S.
remains to be seen.
High input prices and the first signs of decreasing political
support have escalated the investment risk for agricommodity
companies that have diversified into biofuel production.
Agribusiness companies carry inherently higher-risk business
profiles compared with those in other consumer goods sectors,
due to their commodity orientation and resulting earnings
volatility. In addition, building biofuel production capacity
is capital intensive and typically entails long start-up
periods. This spending temporarily weighs on companies'
indebtedness, financial flexibility, and free cash flow
generation.
Glowing Growth Potential Across All Regions
The high growth potential for global ethanol production is the
main argument behind industry players' decisions to invest to
increase production capacity. The U.S., Brazil, and Europe
together have cornered 80% of global ethanol output, which grew
to 60 million cubic meters (15.9 billion U.S. liquid gallons) in
2007 from 51 million cubic meters (13.5 billion gallons) in
2006. The continuously healthy double-digit volume growth in
ethanol production isn't powered by purely economic demand but
by strategic or environmental political targets and protected by
government regulation. Regulation can take the form of
subsidies (U.S.), import tariffs (U.S., Europe), or mandatory
blending rates for biofuel add-ons to transport fuels (Latin
America).
Despite ethanol's rosy global growth prospects, there are no
dominant pure players in ethanol production. The potential for
vertical integration is an important feature for biofuels.
Consequently, ethanol production is typically one activity,
among others, for agribusiness companies active in producing and
processing soft commodities. Local ethanol markets are
therefore highly fragmented.
In response to the U.S. federal government's support for the
development of alternative energy sources, the U.S. ethanol
industry has become the world's No. 1 producer. National output
reached about 25 million cubic meters or 6.6 billion gallons in
2007. This is already close to the government's 2012 target of
28.5 million cubic meters (7.5 billion gallons), and ahead of
the Renewable Fuels Standard minimum requirements.
Archer Daniels Midland Co. (A/Stable/A-1) leads the U.S. market
with an estimated 10%-20% share. No pure-play producer has a
market share of more than 5%.
Brazil's ethanol production from sugar cane has gained high
strategic importance in the country's energy matrix. Brazilian
players have reported record high production following the
2007/2008 crop, confirming the crushing of more than 500 million
tons of sugar cane and production of about 23 million cubic
meters (6.1 billion gallons) of ethanol in the May 2007-April
2008 period. Brazil's local ethanol consumption of some 21
million cubic meters (5.5 billion gallons) absorbs the lion's
share of domestic production. The industry is very fragmented
and mostly concentrated in family-owned, small and midsize
companies. The largest player, Cosan S.A. Industria e Comercio
(BB/Watch Neg/--), retains about 10% of total crushing capacity.
However, larger international players, such as Bunge Ltd.
(BBB-/Stable/--), Cargill Inc. (A/Stable/A-1), Louis Dreyfus
Commodities (not rated), or Tereos Union de Cooperatives
Agricoles a Capital Variable (BB/Stable/--) have recently
expanded in the Brazilian ethanol market. These companies seek
to reap upside potential in Brazil by exploring low-cost and
globally competitive ethanol production in the country.
In Europe, ethanol production is still in its infancy. Industry
experts put European Union ethanol consumption of ethanol in
2007 at about 2.5 million cubic meters (660 million gallons),
while total production amounted to some 1.8 million cubic meters
(475 million gallons). Imports -- chiefly from Brazil -- bridged
the gap. The 5.75% European Union blending target by 2010
translates into potential production of about 7.9 million cubic
meters (2.1 billion gallons) by that year. The European Union's
current production capacity -- installed and under construction
-- represents roughly 7.5 million cubic meters (2 billion
gallons). A number of leading starch or sugar producers,
including Suedzucker AG (BBB/Stable/A-2), Tereos, Nordzucker AG
(not rated), and Roquette FrŠres (--/--/A-2), dominate the
market. Like its U.S. and Brazilian counterparts, the European
Union ethanol market is fragmented in terms of production and
regulation, with the six leading players splitting just 40% of
market share. Whether the European biofuel market will see
issues of overcapacity resembling those in the U.S. at this
early stage of the industry's development isn't clear. However,
the current ramp-up in production capacity essentially derives
from governmental support.
The supply and demand patterns in Brazil's sugar-cane market are
more favorable to ethanol production than elsewhere because the
world sugar market still generates surplus supply. In addition,
Brazilian ethanol producers benefit from an array of competitive
advantages, which support the local industry's potential for
continuous and sustainable growth. These factors make Brazilian
ethanol globally competitive as a result of:
* Ample availability of arable area;
* Favorable weather and steady water supply, as well as
progress in biogenetic improvements that should further
increase energy conversion productivity for sugar-cane
plantations; and
* Efficiency enhancements in sugar-cane planting and
crushing, as well as in the ethanol production process.
Despite these favorable trends, there is only limited upside for
regional players' profitability. Although Brazilian ethanol
producers benefit from a cost-competitive production base and
"captive" domestic consumption, low international sugar prices
are squeezing the industry's performance. In addition to the
worldwide supply overhang, sugar prices have been subject to
significant government protection in key producing regions such
as the U.S., Europe, and India. This has adversely affected
Brazilian ethanol producers since most also depend on sugar
production, which represents on average 60% of companies'
volumes.
Ethanol generally has a neutral-to-negative impact on the
ratings of agricommodity companies active in biofuel production.
In light of persistently high input prices and the industry's
capital intensity, the effects on ratings are unlikely to change
in the medium term. Related investments have had a strong
impact on these groups' indebtedness and cash generation
capacity, while the expected uplift to profitability has been
pushed further into the future. Where ethanol is a profitable
business, in Brazil for instance, investment and M&A activity
apply steady pressure on ratings. Expectations for continued
high input prices restrict the industry's earnings prospects,
except for Brazil where higher raw material costs have a strong
correlation with higher profitability. In addition, all
regional ethanol industries are fragmented in nature and have
low pricing power. Apart from the few large and diversified
international players, ethanol producers have to cope with
shrinking margins and upcoming consolidation. This requires
even more capital expenditure for those players who intend to
stay in the market.
==========================
C A Y M A N I S L A N D S
==========================
ACEH (BLOCK A): Deadline for Proofs of Claim Filing Is July 1
-------------------------------------------------------------
Aceh (Block A) Ltd.'s creditors have until July 1, 2008, to
prove their claims to Barry J. O?Donnell and Rashid I.
Mangunkusumo, the company's liquidators, or be excluded from
receiving any distribution or payment.
In their proofs of claim, creditors must indicate their full
names, addresses, the full particulars of their debts or claims,
and the names and addresses of their lawyers, if any.
Aceh's shareholder(s) decided on March 11, 2008, to place the
company into voluntary liquidation under The Companies Law (2004
Revision) of the Cayman Islands.
The liquidators can be reached at:
Barry J. O?Donnell
12 Sunset Walk
597178 Singapore
Singapore
and
Rashid I. Mangunkusumo
J1. MPR IV/4, Cilandak
Jakarta, Selatan
Indonesia
Contact for inquiries:
Fumio Okabe
2-14-16 Sekimachi-kita Nerimaku
Tokyo 177-0051, Japan
ACEH (BLOCK A): Will Hold Final Shareholders Meeting on July 2
--------------------------------------------------------------
Aceh (Block A) Ltd. will hold its final shareholders' meeting on
July 2, 2008, at 10:00 a.m., at C&C Towers, 8th Floor, Plot 1684
Sanusi Fafunwa Street, P.O. Box 74085, Victoria Island, Lagos,
Nigeria.
These matters will be taken up during the meeting:
1) accounting of the wind-up process, and
2) approval of the report and remuneration of the joint
liquidators.
Aceh's shareholder(s) agreed on March 11, 2008, to place the
company into voluntary liquidation under The Companies Law (2004
Revision) of the Cayman Islands.
The liquidators can be reached at:
Barry J. O?Donnell
12 Sunset Walk
597178 Singapore
Singapore
and
Rashid I. Mangunkusumo
J1. MPR IV/4, Cilandak
Jakarta, Selatan
Indonesia
Contact for inquiries:
Fumio Okabe
2-14-16 Sekimachi-kita Nerimaku
Tokyo 177-0051, Japan
FCM JAPAN KACHI: Proofs of Claim Filing Deadline Is July 1
----------------------------------------------------------
FCM Japan Kachi Fund Ltd.'s creditors have until July 1, 2008,
to prove their claims to David A.K. Walker and Lawrence Edwards,
the company's liquidators, or be excluded from receiving any
distribution or payment.
In their proofs of claim, creditors must indicate their full
names, addresses, the full particulars of their debts or claims,
and the names and addresses of their lawyers, if any.
FCM Japan Kachi's shareholder decided on May 30, 2008, to place
the company into voluntary liquidation under The Companies Law
(2004 Revision) of the Cayman Islands.
The liquidators can be reached at:
David A.K. Walker and Lawrence Edwards
PwC Corporate Finance & Recovery (Cayman) Limited
c/o PricewaterhouseCoopers Cayman Islands,
Strathvale House, George Town,
Grand Cayman, Cayman Islands
Contact for inquiries:
Skye Quinn
P.O. Box 258, Grand Cayman,
Cayman Islands
Telephone: (345) 914 8678
Fax: (345) 945 4237
FCM JAPAN KACHI MASTER: Deadline for Filing Claims Is July 1
------------------------------------------------------------
FCM Japan Kachi Master Fund Ltd.'s creditors have until July 1,
2008, to prove their claims to David A.K. Walker and Lawrence
Edwards, the company's liquidators, or be excluded from
receiving any distribution or payment.
In their proofs of claim, creditors must indicate their full
names, addresses, the full particulars of their debts or claims,
and the names and addresses of their lawyers, if any.
FCM Japan Kachi Master's shareholder decided on May 30, 2008, to
place the company into voluntary liquidation under The Companies
Law (2004 Revision) of the Cayman Islands.
The liquidators can be reached at:
David A.K. Walker and Lawrence Edwards
PwC Corporate Finance & Recovery (Cayman) Limited
c/o PricewaterhouseCoopers Cayman Islands,
Strathvale House, George Town,
Grand Cayman, Cayman Islands
Contact for inquiries:
Skye Quinn
P.O. Box 258, Grand Cayman,
Cayman Islands
Telephone: (345) 914 8678
Fax: (345) 945 4237
MAXSTAR HOLDING: To Hold Final Shareholders' Meeting on July 1
-------------------------------------------------------------
Maxstar Holding Co. Ltd. will hold its final shareholders'
meeting on July 1, 2008, at 10:00 a.m., at the representative
office, 11F, No.411, Rueiguang Road, Neihu, Taipai 114 Taiwan.
These matters will be taken up during the meeting:
1) accounting of the wind-up process, and
2) determining the manner in which the books, accounts and
documentation of the Company, and of the liquidator should
be disposed of.
Maxstar Holding's shareholder agreed on May 2, 2008, to place
the company into voluntary liquidation under The Companies Law
(2004 Revision) of the Cayman Islands.
The liquidator can be reached at:
Yi-Chung Chen
P.O. Box 268GT, Grand Cayman
Cayman Islands
Contact for inquiries:
Rhonda Laws
Tel: (345) 949 2648
Fax: (345) 949 8613
=========
C H I L E
=========
EASTMAN KODAK: S&P's Rating Unmoved by Stock Repurchase Program
---------------------------------------------------------------
Standard & Poor's Ratings Services said that Eastman Kodak Co.'s
(B+/Stable /--) announcement that its board of directors has
authorized a US$1 billion stock repurchase program does not
affect the ratings or outlook on the company at this time.
Eastman Kodak's last share repurchase program was completed in
2001.
The company received a US$581 million federal tax refund, of
which it expects to retain US$575 million after state income
taxes, and intends to use these proceeds to partially fund the
share repurchases. The balance will be funded with cash on
hand. Eastman Kodak had US$2.2 billion of cash on hand at
March 31, 2008.
At March 31, 2008, the company had US$1.6 billion in debt and
US$1.4 billion in debt-like obligations, including unfunded
postretirement obligations (retiree health care), the present
value of operating lease obligations, guarantees of third-party
obligations, and asset retirement obligations. S&P expect
Eastman Kodak's cash balance, even after the share repurchase
program is complete, to remain substantial. The company also
said it would provide investors with updated earnings guidance
in its second quarter earnings call on July 31, 2008. If the
new guidance is meaningfully below S&P's expectations, S&P could
revise the outlook to negative.
Headquartered in Rochester, New York, Eastman Kodak Co. (NYSE:
EK)-- http://www.kodak.com/-- develops, manufactures, and
markets digital and traditional imaging products, services, and
solutions to consumers, businesses, the graphic communications
market, the entertainment industry, professionals, healthcare
providers, and other customers.
The company has operations in Argentina, Chile, Denmark, Greece,
Jordan, Yemen, Australia, China among others.
=================
G U A T E M A L A
=================
* GUATEMALA: Fitch Holds BB+ Local & Foreign Currency ID Ratings
----------------------------------------------------------------
Fitch Ratings has affirmed Guatemala's local and foreign
currency Issuer Default Ratings at 'BB+'. The rating outlook is
stable. At the same time, Fitch has affirmed Guatemala's short-
term rating at 'B' and the country ceiling at 'BBB-'.
The government's track record of macroeconomic stability, low
public and external debt burdens, as well as a solid commercial
debt repayment history continue to support Guatemala's ratings.
These strengths have provided a sufficient buffer to deal with
adverse shocks and should continue to do so over Fitch's rating
horizon.
The country's key credit weaknesses include its low tax take,
high level of poverty and inequality, as well as its weak social
and governance indicators, factors which will take time to
address and are likely to constrain Guatemala's ratings to
sub-investment grade over Fitch's rating horizon. Fitch
believes the current policy framework could be vulnerable to
erosion of public support over the medium-term if notable
progress on these fronts is not forthcoming.
"Given Guatemala's comparably weak social indicators, the
government's prioritization of structural reforms to increase
tax revenues, strengthen fiscal management and improve the legal
framework for public/private partnerships is a step in the right
direction," Senior Director for Latin American Sovereign
ratings, Theresa Paiz Fredel said. Nevertheless, private sector
opposition and Guatemala's fragmented, multi-party system
complicates prospects for the near-term implementation of
substantive structural reforms as legislative approval requires
a broad process of consensus building.
Although Guatemala's macroeconomic performance continued to
strengthen in 2007, the country currently faces a more
challenging external environment, particularly in light of a
looming United States recession and still high commodity prices.
Last year, the benefits of the Dominican Republic-Central
America Free Trade Agreement (DR-CAFTA) and double-digit
remittance growth continued to fuel investment and consumption,
contributing to above trend GDP growth. As in other emerging
markets, Guatemala's nascent inflation targeting regime is
facing a challenging test as high international oil and food
prices, as well as domestic demand pressures, combine to prevent
the authorities from meeting inflation targets.
Reserve accumulation continued at a steady pace thanks to a
solid balance of payments performance, with official reserves
including gold reaching about US$4.3 billion by year-end 2007, a
record high for Guatemala. G radual reserve accumulation and
comparatively low debt service has maintained Guatemala's
liquidity ratio well above 180% since 2003. However, the
private sector's rising indebtedness, fuelled by the need to
finance moderate current account deficits, has put some downward
pressure on this ratio. Given economic and financial ties with
the U.S., a recession in that country will have adverse
implications for Guatemala in terms of lower export and GDP
growth.
"Despite a more challenging external environment, Fitch believes
that the country's sound macroeconomic fundamentals and the
authorities' commitment to managing downside risks should help
Guatemala's resilience in facing a US recession," said Ms. Paiz
Fredel.
Guatemala's public debt/GDP ratio has remained relatively stable
at around 22% of GDP since 2003, substantially below the 'BB'
median of 32.7% in 2007. However, GDP measures of public debt
understate Guatemala's debt burden due to the narrowness of the
country's tax base. While only about a quarter of the 'BB'
category sovereigns have lower debt/GDP ratios than Guatemala,
the government's debt/revenue ratio still exceeds the 'BB'
median of 136.6%, underpinning the importance of widening the
tax base. Limited public debt and a manageable fiscal deficit
also drive the sovereign's comparatively low financing
requirement. Similarly, as the public sector accounts for
two-thirds of Guatemala's external debt, gross external debt
ratios are also low relative to similarly rated peers, although
on a net basis, the country no longer compares as favorably due
to lower reserve accumulation relative to peers.
Easing of Guatemala's rating constraints, including a low tax
take, high poverty and poor social indicators, through the
implementation of reforms which strengthen public finances and
sustain higher rates of economic growth would be viewed
positively. Conversely, political gridlock which hinders the
implementation of needed structural reforms or a marked
deterioration in fiscal and external solvency, as well as
liquidity indicators could negatively affect Guatemala's
ratings.
=============
J A M A I C A
=============
AIR JAMAICA: Union Blames Minister Wehby for Airline's Problems
---------------------------------------------------------------
Radio Jamaica reports that the National Workers' Union has
blamed Don Wehby, the Minister Without Portfolio in Jamaica's
Finance Ministry, for Air Jamaica's problems.
According to Radio Jamaica, the union alleged that Minister
Wehby interfered with Air Jamaica's operations. This caused a
?rift? with the airline's board, the National Workers' Vice
President Granville Valentine said. "We are not surprised that
there is some level of disquiet regarding the Minister [Wehby]
and the board because we believe there was interference from the
point of view of the Minister and there were several
disagreements. [And with] Noel Hylton resigned a week or so ago
. . . we saw it coming," Mr. Valentine added.
The Jamaica Gleaner relates that Air Jamaica's Chairperson
Shirley Williams was also blamed for the rift in the board.
As reported in the Troubled Company Reporter-Latin America on
June 27, 2008, The Observer reported that its sources indicated
that the government hasn't been impressed with Ms. Williams'
performance. On June 5, 2008, Ms. Williams ordered a flight to
return to board an Inter-American Development Bank official
after the plane's doors were closed, which displeased the
government. The entire board at Air Jamaica was ordered to
resign. A new board is being put in place and the new members
would be appointed in a few weeks. The government decided to
change the board in preparation for Air Jamaica's divestment.
The government was reportedly displeased with how Air Jamaica
was being managed.
Marcia Forbes, a board member at Air Jamaica, told The Gleaner
that she was unaware of ?any kind of discrepancy? in the board.
According to Ms. Forbes, there were times when individuals
disagreed with particular points during board meetings, but
there weren't any confrontations or quarrels, The Gleaner
reports. ?I would venture to say that probably everybody on the
board fully supports Shirley and the work she has done,? Ms.
Forbes added.
Ms. Williams was leading Air Jamaica in a direction that would
have benefited the airline, The Gleaner says, citing Ms. Forbes.
?Air Jamaica is not an easy place to manage. To me, it's like
peeling an onion and it has many, many layers and for each layer
that you peel, sometimes, as with an onion, your eyes might
tear,? Ms. Forbes stated.
According to the report, another board member said that Ms.
Williams had provided strong leadership and was doing a good job
in a difficult situation. Ms. Williams was falling victim to
those opposed to women serving in some positions, the
unidentified board member told The Gleaner.
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 B1 rating
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.
NATIONAL WATER: Seeks to Reduce Electricity Bill
------------------------------------------------
The Jamaica Gleaner reports that the National Water Commission
seeks to reduce its energy usage as its monthly electricity bill
increased by an average of J$50 million.
According to The Gleaner, the Commission's President, E.G.
Hunter, said at a press conference in New Kingston that the
company's electricity bill increased to J$385 million in May
from the J$345 million in April. The company's chief blamed the
increase to rising oil prices. In April 2007, the Commission
was billed J$177 million by the Jamaica Public Service Company,
Mr. Hunter added.
Mr. Hunter said that the Commission's energy consumption has
risen by 4.5% in the past four years, The Gleaner notes.
According to Mr. Hunter, about 50% of current monthly collection
goes to the payment of electricity bills. The Commission needs
electricity to pump water, Mr. Hunter added.
The Gleaner relates that the Commission also warned that it
would be stepping up its payment collection drive. Mr. Hunter
said that the Commission was continuing its program to work on
communities that have a high level of delinquency. Mr. Hunter
commented, "We are trying to establish a covenant of service
with these communities. Their end of the bargain is to protect
our equipment and pay on time." Water-bill payment compliance
must increase for The Commission to remain in business, Mr.
Hunter added, the report notes.
The Gleaner identified three of the Commission's most delinquent
communities:
-- Windsor Heights, St. Catherine;
-- Barrett Hall, St. James; and
-- Old Braeton, St. Catherine.
The National Water Commission is a statutory organization
charged with the responsibility of providing potable water and
wastewater services for the people of Jamaica.
* * *
The National Water Commission of Jamaica had been criticized for
failing to act promptly in cutting its losses. For the fiscal
years 2002 and 2003, the water commission accumulated a net loss
of US$2.11 billion. The deficit fell to US$1.86 billion the
following year, and to US$670 million in 2004 and 2005.
Jamaican citizens have been complaining to the commission about
water disruptions in their communities, resulting to
restrictions of water use.
NATIONAL WATER: High Energy Bills Eat Away Firm's Revenues
----------------------------------------------------------
The Jamaica Observer reports that The National Water Commission
of Jamaica has admitted that high energy bills have been eating
away its revenues.
According to The Observer, The Commission was forced to come up
with new strategies to lessen electricity consumption. The
Commission's President EG Hunter said the firm's bill had almost
doubled in the past year. The Commission's consumption in the
last four years had increased by 4.5%, Mr. Hunter added.
The Observer relates that Mr. Hunter said at a press conference
in Kingston, ?The new mantra in the commission now is energy
reduction. In April 2007 our bill from the JPS was J$177
million, in April of 2008 the bill was J$345 million for the
same level of consumption and in May 2008 the bill skyrocketed
to J$385 million. So in one month we saw an increase of almost
J$50 million for the same or declining levels of energy
consumption. This (increasing electricity cost) has tremendous
implications for the NWC [The Commission] because at this rate
our monthly energy bill is fast approaching 50 per cent of our
monthly collection. It is tremendously difficult for us to
survive as an enterprise with regime billing.?
The Commission's high energy bill was partly due to the
settlement pattern in Jamaica, ?which impacts adversely on the
cost of service?, The Observer says, citing Mr. Hunter.
?Instead of nucleated settlements, where people live in defined
areas, Jamaica has ribbon settlements where persons live along a
line, which can prove to be challenging to supply water,? Mr.
Hunter added.
The National Water Commission is a statutory organization
charged with the responsibility of providing potable water and
wastewater services for the people of Jamaica.
* * *
The National Water Commission of Jamaica had been criticized for
failing to act promptly in cutting its losses. For the fiscal
years 2002 and 2003, the water commission accumulated a net loss
of US$2.11 billion. The deficit fell to US$1.86 billion the
following year, and to US$670 million in 2004 and 2005.
Jamaican citizens have been complaining to the commission about
water disruptions in their communities, resulting to
restrictions of water use.
SUGAR COMPANY: Government to Divest Assets Starting July 1
----------------------------------------------------------
The Jamaican government will begin divesting the Sugar Company
of Jamaica Limited's sugar factories to their new owners on
July 1, 2008, The Jamaica Gleaner reports, citing Jamaica's
Prime Minister Bruce Golding.
As reported in the Troubled Company Reporter-Latin America on
June 16, 2008, All-Island Jamaica Cane Farmers Association
Chairperson Allan Rickards said the divestment would be
completed by September 2008. According to Mr. Rickards, the
transfer of ownership should start as scheduled at the end of
June. The sole bidder for the sugar factories is Infinity Bio
Energy of Brazil, Mr. Rickards added.
According to The Jamaica House: "Mr. Golding said if an
agreement is arrived at, he intends to begin the process of
transferring the sugar assets to the new entity commencing
July 1. Mr Golding said the date was important, as certain
arrangements must be in place to secure the 2008/2009 crop. He
said he is satisfied that the team has done well, with only two
issues left to be resolved."
The Gleaner relates that the Sugar Company is leasing
accompanying cane lands and great houses for 50 years.
Meanwhile, "substantial issues" would be cleared during a
negotiating session scheduled in Kingston.
According to Jamaica Information Service, the government is at
the final stages of the negotiations for the divestment of the
factories, with just a few issues to be resolved. The
government met with the privatization team on Tuesday.
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 maximize 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.
===========
M E X I C O
===========
CHRYSLER LLC: Denies Rumors of Possible Bankruptcy Filing
---------------------------------------------------------
The Deal's Maria Woehr reports that Chrysler LLC denied rumors
that it may file for Chapter 11 protection. The Deal says a
Chrysler spokesperson told Reuters that the rumors were "without
merit" and that the third largest U.S. automaker had ample
liquidity.
According to Ms. Woehr, there have been rumors that Chrysler may
not have enough liquidity due to the downturn in auto sales, the
oil spike and the credit crunch.
Daimler AG also has said there are no signs that Chrysler LLC
will file for bankruptcy, Thomson Financial reports.
Daimler owns roughly 19% stake in Chrysler. Cerberus Capital
Management LP borrowed roughly US$7,000,000,000 to acquire about
81% of Chrysler in August 2007.
The Deal relates that Daimler has reported that Chrysler lost
US$2.9 billion from when Cerberus Capital Management bought an
81% stake in August 2007.
"I can clearly say that there are no signs at all that Chrysler
will file for Chapter 11," Thomson Financial quotes a Daimler
spokesman as saying.
Thomson Financial relates that shares in Daimler were lower in
afternoon deals on Thursday, as traders pointed to speculation
that Chrysler may face credit problems in the near future.
Cerberus has said early this year that Chrysler was exceeding
most of its financial targets.
Executive officer Robert Nardelli has set cost-cutting
initiatives to lessen the losses this year, which he expects
will be lower than 2007's US$1.6 billion, John Lippey and Mike
Ramsey of Bloomberg News reports.
Mr. Nardelli aims to cut purchasing costs by 25% in three years,
insisting that Chrysler must buy the lowest global price for
auto parts. He also intends to restrict new models, eyeing only
51% of new Chrysler models.
As disclosed in the Troubled Company Reporter on June 12, 2008,
Mr. Nardelli insisted the company is in good shape with US$9
billion in cash at the end of 2007, Mike Ramsey of Bloomberg
News, citing a CNBC interview, reports. Mr. Nardelli says he is
leading to get the automaker through 2008 and make it better
positioned to 2009.
Bloomberg News say Chrysler had reported a US$1.6 billion
operating loss for 2007 and a US$650 million net loss for 2006.
As related in the Troubled Company Reporter in December 2007,
the Wall Street Journal quoted Mr. Nardelli describing Chrysler
LLC as "operationally" bankrupt. The only thing, Mr. Nardelli
relates, that is keeping Chrysler from going into bankruptcy is
the US$10 billion investors entrusted the automaker with.
Bloomberg reports that shareholder Cerberus Capital Management
LP is not regretting its investment in Chrysler, stating that
the company is hitting its financial targets.
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K.,
Argentina, Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter-Latin America on
June 25, 2008, Moody's Investors Service affirmed the B3
Corporate Family Rating and Probability of Default Rating of
Chrysler LLC, but changed the outlook to negative from stable.
The change in outlook reflects the increasingly challenging
environment faced by Chrysler as the outlook for US vehicle
demand falls, and as high fuel costs drive US consumers away
from light trucks and SUVs, and toward more fuel efficient
vehicles.
TCR-LA also reported that DBRS has placed the ratings of
Chrysler LLC Under Review with Negative Implications. The
rating action reflects the structural deterioration of the
company's operations in North America brought on by high oil
prices and a slowing U.S. economy. Negative developments
include:
-- Issuer Rating: Under Review - Negative B
-- First Lien Secured Credit Facility: Under Review - Negative
B(high)
-- Second Lien Secured Credit Facility: Under Review -
Negative B(low)
CHRYSLER LLC: Steep Sales Decline Cues Fitch to Cut Rating to B-
----------------------------------------------------------------
Fitch Ratings has downgraded the Issuer Default Rating of
Chrysler LLC to 'B-' from 'B'. The Rating Outlook is Negative.
The downgrade reflects the steep decline in Chrysler's sales
resulting from weak economic conditions, high fuel prices, and
an accelerating shift to fuel-efficient vehicles. In the event
that 2009 industry sales remain flat with depressed 2008 levels,
negative cash flows could result in Chrysler's liquidity
position reaching minimal required levels in late 2009. Cost
reduction efforts have been aggressive, but have simply not been
able to keep up with the pace of declining sales volumes.
Despite weakening economic conditions in the U.S. market,
Chrysler was expected to get a degree of unit volume and revenue
support from a revamped minivan product, the new Dodge Journey
crossover, and a refreshed Dodge Ram pickup. Minivan volumes,
however, have been impacted by a continuing decline in the
category, as well as a planned pruning of the product line and
lower fleet sales. Recessionary conditions in the housing
market, as well as fuel price concerns, will weaken the impact
of the Dodge Ram reintroduction this fall. The decline in
industry pickup sales is also affected by a secular market shift
away from pickups, confirming that the timing and extent of a
recovery in this key segment remain uncertain. International
sales continue to grow at a healthy rate, benefiting unit sales
and capacity utilization.
Revenue pressures are compounded by the unrelenting rise in
commodity prices, primarily steel. Current market conditions
indicate that steel price contracts may continue to rise over
the near term -- costs that Chrysler is unlikely to recoup
through pricing. Although Chrysler has been aggressive in
reducing its fixed costs, margin pressures will result in
continuing cash drains through 2009.
Chrysler's product pipeline over the near term is relatively
modest, indicating that the company's lineup may remain
misaligned with the market. Limited cash resources and capital
constraints remain a distinct competitive disadvantage in a
period of rapid product migration and technological change.
Alliances are likely to be a primary goal in order to offer a
complete product array to the market, leverage Chrysler's
tangible and intangible assets, and reduce capital investment
requirements.
Fitch is also concerned with the uncertainty in the capital
markets, particularly that of the securitization market. Rising
industry delinquencies and loss severities on auto loans are
expected to continue through 2008, particularly related to SUV
and pickup loans. Sustained lack of liquidity on an economic
basis in this market could reduce the availability of retail
financing and strike a further blow to industry volumes. In
this scenario, the IDR of Chrysler could be reviewed with an
expectation of a downgrade to 'CCC'.
Chrysler's liquidity remains adequate for the short term, but
could reach minimum required levels in late 2009 if the market
remains flat with 2008 levels. Aggressive headcount cuts and
other cost reduction efforts have meaningfully lowered
Chrysler's fixed cost structure, although benefits will not be
realized until market volumes stabilize. Liquidity has been
boosted by drawing the company's US$2 billion delayed-draw term
loan, but asset sale and new financing opportunities are
limited. In 2010, Chrysler will begin to realize benefits from
the recent UAW healthcare agreement, and could benefit from any
rebound in economic conditions.
Fitch has downgraded these:
-- IDR to 'B-' from 'B';
-- Senior secured first-lien bank loan to 'BB-/RR1' from
'BB/RR1';
-- Senior secured second-lien bank loan to 'CCC/RR6' from
'CCC+/RR6'.
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K.,
Argentina, Brazil, Venezuela, China, Japan and Australia.
EMPRESAS ICA: Reports MXN200MM 1st Qtr. Consolidated Net Income
---------------------------------------------------------------
Empresas ICA S.A.B. de C.V.'s consolidated net income increased
39% to MXN200 million in the first quarter 2008, compared to
MXN144 million in the same quarter in 2007, according to its
unaudited results for that quarter.
During the first quarter, there were delays in the start up of
several construction projects, particularly in concessions, with
the result that these projects are not yet contributing
significantly to revenues. There have also been delays in the
publication of bidding documents for various projects,
particularly those related to Pemex, due to the Mexican
government's energy reform initiative for modernizing the
parastatal, which was delivered to Congress in April 2008 for
its discussion, modification, and eventual approval.
Results from the operation of concessions are also affected by
the initial investments and start-up costs and expenses that
generated initial operating margins that are lower than those
expected over the lifetime of the projects. In particular, the
unconsolidated affiliate Red de Carreteras de Occidente (RCO,
the operador of the 558 km FARAC I tollroads) is generating
losses as a result of these factors, as well as from the
financial costs related to the financing of the acquisition.
The appreciation of the peso against the dollar is affecting
revenues and value of projects denominated in dollars (46% of
projects in Backlog are denominated in foreign currency,
principally dollars).
Empresas ICA's revenues rose 8% to MXN5,221 million in this
year's first quarter, from last year's first quarter. The
increase in revenues was principally due to increases in
Industrial Construction, Rodio, Infrastructure, and Housing
revenues. This was partially offset by a decrease in Civil
Construction revenues, since the new projects awarded in this
segment are not yet contributing significantly to revenues.
Revenues generated in Mexico represented 85% of the total.
Revenues denominated in foreign currency, both dollars and other
currencies, were 37% of the total.
Cost of sales increased to MXN4,342 million in the first quarter
2008, compared to MXN4,144 million in the first quarter 2007.
Cost of sales was 83% of revenues in the first quarter 2008, as
compared to 86% in the prior year period.
General and administrative expenses totaled MXN490 million in
the first quarter 2008, a MXN55 million increase in the prior
year period. General and administrative expenses were
equivalent to 9% of revenues in both periods.
Operating income increased 48% to MXN389 million in this year's
first quarter, compared to the prior year period, principally as
a result of a reduction in costs as a percentage of revenues.
The Construction segment contributed 26% of operating income,
Housing 4%, and Infrastructure 81%. This was offset in part by
an (11%) contribution from Other operations (a MXN41 million
operating loss) reflecting corporate expenses, consolidation
effects, and disposals of non-strategic assets. The
consolidated operating margin was 7.5%, as compared to 5.4% in
first quarter 2007.
Other (income) expense, net was income of MXN94 million in the
first quarter 2008, compared to income of MXN33 million in first
quarter 2007. The increase was principally the result of the
cancellation of provisions for deferred employees' statutory
profit sharing (PTU) in the Airports sub-segment for MXN104
million, which was partially offset by provisions for deferred
PTU in other business units.
The integral financing cost in this year's first quarter
decreased to MXN123 million from MXN135 million in the prior
year's first quarter. This decrease is due mainly to lower
interest expense, despite the higher level of debt, and the
elimination of monetary correction as a result of the
application of NIF B-10, which offset an exchange loss of
MXN52 million. See debt discussion.
Share of net income (loss) of unconsolidated affiliates was a
loss of MXN98 million in the first quarter 2008, compared to a
loss of MXN2 million in the prior year period. The principal
factor was Empresas ICA's participation in Red de Carreteras de
Occidente, the operator of the FARAC I tollroads, as a result of
costs and expenses related to the acquisition of the tollroads
and the start up of operations, as well as debt service costs on
the project's debt. This was partially offset by income from
Pro Media Ambiente Mexico.
Income before taxes totaled MXN262 million in the first quarter
2008, an increase of MXN102 million compared to MXN159 million
in last year's first quarter.
Taxes were MXN61 million in the first quarter 2008, of which
income tax was MXN48 million, and the new flat rate corporate
tax (known by its Spanish acronym, IETU) was MXN13 million. The
effective tax rate was 23% in this year's first quarter.
Net Income of Minority interest was MXN172 million in the first
quarter 2008, compared to MXN119 million in the first quarter
2007. Minority interest was attributed primarily to Aiports
(MXN132 million).
Net income of majority interest was MXN28 million in the first
quarter 2008, compared to net income of MXN25 million in last
year's first quarter.
Adjusted EBITDA in the first quarter 2008 increased 32% to
MXN589 million with an Adjusted EBITDA margin of 11.3%, compared
to 9.2% in the previous year's first quarter. Increases in
Adjusted EBITDA generated by the Construction and Infrastructure
segments offset a lower Adjusted EBITDA contribution from
Housing and Other activities.
Adjusted EBITDA, further adjusted for net interest expense
included in cost of sales, in the first quarter of 2008
increased to MXN627 million with a 12% margin, compared to the
first quarter 2007. Pursuant to Mexican NIFs, net interest
expense is included in cost of sales for various projects in
Housing, Industrial Construction, and Other Concessions.
Construction segment revenues increased 5% in the first quarter
2008 compared to the prior year period. Civil Construction
declined by 2%, while Industrial Construction increased 10%.
Rodio revenues increased 13%. The operating margin increased to
2.4%. The segment generated Adjusted EBITDA of MXN161 million,
with an EBITDA margin of 3.9%.
The projects that contributed most to revenues were:
-- Queretaro - Irapuato PPP highway (4.6% of the first
quarter 2008 construction revenues, with a
scheduled completion date of October 2009);
-- Naval Specialties Hospital (4.2% of first quarter
2008 construction revenues, with a scheduled
completion date of March 2008); and
-- Aqueduct II in Queretaro (4.0% of first quarter
2008 construction revenues, with a scheduled
completion date of October 2009).
Revenues decreased 2% in the first quarter 2008, compared to
first quarter 2007. The operating margin was 1.2%. The decline
in the operating margin reflected several factors including,
principally:
(i) delays in some projects, as a result of clients
not delivering rights of way on a timely basis,
affecting several PPP projects and the Aqueduct II
in Queretaro;
(ii) increases in the price of raw materials,
particularly steel (which increased 33% in the
first quarter 2008 from December 2007), which have
not been reflected in the value of some contracts;
and
(iii) expenses related to some projects that were
recently awarded to Empresas ICA and are not yet
contributing significantly to revenues.
Civil Construction Adjusted EBITDA was MXN50 million in the
first quarter 2008, compared to MXN51 million during the first
quarter 2007.
The projects that contributed most to revenues in first quarter
2008 were:
-- Reynosa V and VI cryogenic plants for Pemex (13.9%
of first quarter 2008 construction revenues, with a
scheduled completion date of January 2009);
-- Package II of the Minatitlan refinery
reconfiguration, (11.9% of Empresas ICA's first
quarter 2008 construction revenues, with a
scheduled completion date of July 2008); and
-- The Cayo Arcas offshore housing platform (4.5% of
first quarter 2008 construction revenues, with a
scheduled completion date of June 2008).
Revenues increased 10% in the first quarter 2008 as a result of
the execution of projects and the low base of comparison in
first quarter 2007, when a number of projects had been
completed. The impact of the increase in the price of steel in
this subsegment is not material. This reflects the phase of
execution of current projects and the fact that there is a
higher proportion of unit price contracts in projects in their
final phase. The Industrial Construction operating margin was
3.7%. The margin increased as compared to first quarter 2007,
principally as a result of the cancellation of provisions
related to completed projects.
Industrial Construction Adjusted EBITDA was MXN87 million in the
first quarter 2008, an increase relative to the MXN28 million in
the first quarter 2007, and equivalent to an Adjusted EBITDA
margin of 4.5%.
Infrastructure revenues increased 29% to MXN761 million in the
first quarter 2008, compared to MXN590 million in the first
quarter 2007, principally as a result of a significant increase
in the volume of operations. Operating income was
MXN314 million in the first quarter 2008, a 40% increase as
compared to the same period of 2007. The operating margin
increased to 41.3%. Adjusted EBITDA was MXN445 million,
equivalent to an Adjusted EBITDA margin of 58.5%.
Revenues, including the operations of Grupo Aeroportuario del
Centro Norte (OMA), Aeroinvest, and Servicios de Tecnologia
Aeroportuaria (SETA), were MXN502 million in the first quarter
2008, with a 42.7% operating margin. Adjusted EBITDA was
MXN317 million, with an Adjusted EBITDA margin of 63.2%.
Aeronautical revenues during the first quarter 2008 were
MXN410 million, or 82% of the total. Non-aeronautical revenues
were MXN92 million, or 18% of the total.
Revenues from concessions increased 84% to MXN259 million in the
first quarter 2008 from MXN141 million in the first quarter
2007. The growth reflected:
-- the partial commencement of operations of the
Irapuato - La Piedad highway PPP (public-private
partnership) with revenues generated from the
availability of several of the highway's segments;
-- increases in Corredor Sur revenues;
-- the consolidation of the Mayab Tollroad (for the
month of March 2008 only); and
-- increases in operating and maintenance revenues
from the new concessions. Operating income was
MXN100 million, compared to operating income of
MXN35 million in the prior year period, reflecting
the increased scale of operations.
Total assets as of March 31, 2008, increased by
MXN8,474 million, total liabilities increased MXN3,524 million,
and capital increased by MXN4,949 million, compared to
March 31, 2007.
Cash and cash equivalents were MXN6,863 million at
March 31, 2008, an increase of 48% as compared to the first
quarter 2007. At March 31, 2008, 51% of cash and cash
equivalents were in these subsidiaries:
-- 24% in Airports;
-- 14% in ICA Fluor;
-- 12% in the reserves established to secure the
Acapulco Tunnel, Corredor Sur, and Mayab Tollroad
financings; and
-- 1% in Rodio.
Short-term accounts receivable declined MXN2,245 million, or 23%
in the first quarter 2008, compared to the first quarter 2007,
principally as a result of the payment of accounts related to
the El Cajon hydroelectric project. Civil Construction accounts
receivable decreased MXN3,804 million, which was partially
offset by the increase in Industrial Construction accounts
receivable of MXN982 million, as a result of advances in the
execution of projects. Housing accounts receivable increased
MXN418 million as a result of a higher level of activity.
Accounts receivable include deferred payments from clients that
are subject to reaching defined milestones and that, in large
part, require financing, since the contracts do not provide for
client advances. The main projects that are included in the
Industrial Construction segment totaled MXN1,906 million, of
which MXN 1,063 million is for Package II of the Minatitlan
refinery reconfiguration project, and MXN705 million is for the
Chicontepec I oil field project, and MXN138 million for the
Chicontepec II oil field project.
Inventories were MXN2,396 million in the first quarter 2008, an
increase of MXN351 million compared to the first quarter 2007.
Housing inventories increased MXN413 million as a result of an
increase in land reserves to be developed in the short term.
These increases were offset in part by decreases in the
Construction segment, particularly Industrial Construction.
Long-term assets were MXN17,900 million at March 31, 2008, an
increase of MXN4,427 million compared to the same period last
year, principally as a result of the investments in
unconsolidated affiliates including Red de Carreteras de
Occidente, Proactiva Medio Ambiente Mexico, and Suministros de
Agua de Queretaro (the concessionaire for the Aqueduct II).
This account also includes long term inventories of
MXN1,407 million for Housing land reserves.
Total liabilities increased MXN3,524 million to
MXN22,787 million as of March 31, 2008, as compared to
MXN19,263 million one year earlier.
Shareholders' equity increased by MXN4,949 million in the first
quarter 2008, compared to the same period last year, as a result
of the public placement of shares in September 2007, which
offset the net loss for 2007, which resulted principally from a
provision for deferred IETU tax.
Total debt increased MXN2,143 million to MXN12,446 million as of
March 31, 2008, as compared to MXN10,303 million one year
earlier. The increase a result of the consolidation of Mayab
Tollroad debt and the contracting of new debt for projects that
are under construction or are in their initial phase of
execution, which was partially offset by the payment of 100% of
the debt related to El Cajon hydroelectric project.
Net debt was essentially unchanged, and was MXN5,583 million as
of March 31, 2008, in the first quarter 2008.
As of March 31, 2008, 24% of Empresas ICA's total debt matures
in less than one year. Debt denominated in foreign currency,
principally dollars, is 30% of total debt, and 60% is securities
debt.
Based on source of repayment, all debt was project debt.
Empresas ICA had no parent company debt outstanding at
March 31, 2008.
The weighted average interest rate on Empresas ICA's debt during
the first quarter 2008 was 10%, as compared to 13.3% in the
first quarter 2007. The reduction in the weighted average
interest rate is primarily the result of new project finance
borrowings with lower rates of interest.
Empresas ICA, S.A.B de C.V. -- http://www.ica.com.mx/-- the
largest engineering, construction, and procurement company in
Mexico, was founded in 1947. ICA has completed construction and
engineering projects in 21 countries. ICA's principal business
units include civil construction and industrial construction.
Through its subsidiaries, ICA also develops housing, manages
airports, and operates tunnels, highways, and municipal services
under government concession contracts and/or partial sale of
long-term contract rights.
* * *
As reported in the Troubled Company Reporter-Latin America on
Sept. 20, 2007, Standard & Poor's Ratings Services affirmed its
'BB-' long-term corporate credit rating on Empresas ICA S.A.B.
de C.V. S&P said the outlook is stable.
FEDERAL-MOGUL: Court Denies Asbestos PI Trust Injunction Demand
---------------------------------------------------------------
The Hon. Judith K. Fitzgerald of the U.S. Bankruptcy Court for
the District of Delaware denies a request by the Federal-Mogul
Asbestos Personal Injury Trust for preliminary injunction after
finding that the Plan Documents are controlling on Cooper
Industries, LLC's right to implement the Plan B Settlement, and
correspondingly to terminate the Addendum of Additional
Provisions incorporated into the Plan.
Judge Fitzgerald holds that inasmuch as the Court has entered
the order confirming the Debtors' Plan of Reorganization, it
would be inappropriate to issue an order granting injunctive
relief, which would have the effect of changing the Plan
Documents and the Plan Settlement.
Judge Fitzgerald directs Cooper or any other party who claims to
have authority to either implement the Plan B Settlement or
terminate the Plan A Settlement to, within 24 hours of the
exercise any of authority, notify the Court of any action.
Judge Fitzgerald also denies the Trust's request for leave to
file an omnibus reply to the objections.
SimmonsCooper Claimants Respond
Certain asbestos-related personal injury claimants with claims
against Pneumo Abex LLC, represented by SimmonsCooper LLC, tell
the Court that they do not oppose the proposed Plan A
Settlement. The SimmonsCooper Claimants believe, and support,
the Plan A Settlement reflects the best compromise among the
Pneumo Abex Claims, the beneficiaries of the Federal-Mogul
Asbestos Personal Injury Trust, and the obligations of the
Debtors and the Pneumo Parties.
"[U]nless the Court is in a position to approve the Plan A
Settlement promptly, the SimmonsCooper Claimants cannot agree to
have their claims against the Pneumo Parties enjoined (albeit
temporarily) in vain," Robert W. Phillips, Esq., at
SimmonsCooper LLC, in East Alton, Illinois, tells the Court.
Mr. Phillips asserts that a group of SimmonsCooper Claimants --
those who hold trial dates scheduled for the remainder of 2008 -
- will be irreparably harmed by the issuance of a temporary
injunction due to the de facto cancellation of their scheduled
trials. He adds that another group of SimmonsCooper Claimants -
- those who hold trial dates scheduled during the calendar year
2009 -- will also be irreparably harmed by the issuance of an
injunction in that they will be unable to conduct discovery
against or regarding Pneumo Abex during the pendency of the
injunction, and will therefore be unable either to develop their
case or to comply with various state court case management
orders concerning the timing and completion of discovery and
preparation for trial.
In contrast, Mr. Phillips points out, the Pneumo Parties
bargained for, accepted, and implemented an agreement that
provides for either Plan A and Plan B, and further bargained for
the mechanism of "Cooper Resolved Claims" whereby the Pneumo
Parties will be reimbursed by the Asbestos PI Trust for any
Pneumo Abex Claims paid by the Pneumo Parties between January
2006 and the date the Trust is created. Thus, he asserts, there
is little economic justification for the Pneumo Parties to
complain about the delay in implementation of the proposed Plan
A Settlement.
"The [Asbestos PI] Trust is essentially arguing that the Court
should sacrifice the interests of the SimmonsCooper Claimants
and other Pneumo Abex Claimants for the benefit of the remaining
Trust claimants," Mr. Phillips contends.
Trust Wants to File Omnibus Reply
The PI Trust seeks leave to file an omnibus reply to address the
objections raised by DaimlerChrysler Corporation, Volkswagen of
America, Inc., Ford Motor Company, PepsiAmericas, Inc., the
Insurance Companies, the Pneumo Asbestos Claimants, and the
SimmonsCooper Claimants. According to the Trust, the issues
raised by the objections relate to jurisdiction, standing, and
other matters that were not fully addressed in the Preliminary
Injunction Motion.
About Federal-Mogul
Federal-Mogul Corporation -- http://www.federal-mogul.com/--
(OTCBB: FDMLQ) is a global supplier, serving the world's
foremost original equipment manufacturers of automotive, light
commercial, heavy-duty, agricultural, marine, rail, off-road and
industrial vehicles, as well as the worldwide aftermarket.
Founded in Detroit in 1899, the company is headquartered in
Southfield, Michigan, and employs 45,000 people in 35 countries.
Aside from the U.S., Federal-Mogul also has operations in other
locations which includes, among others, Mexico, Malaysia,
Australia, China, India, Japan, Korea, and Thailand.
The Company filed for chapter 11 protection on Oct. 1, 2001
(Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James
F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown
& Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl &
Jones, P.C., represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed US$10.15 billion in assets and
US$8.86 billion in liabilities. Federal-Mogul Corp.'s U.K.
affiliate, Turner & Newall, is based at Dudley Hill, Bradford.
Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and
Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M.
Sutty, Esq., at The Bayard Firm represent the Official Committee
of Unsecured Creditors.
On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan.
They submitted a Disclosure Statement explaining that plan on
April 21, 2003. They submitted several amendments and on
June 6, 2004, the Bankruptcy Court approved the Third Amended
Disclosure Statement for their Third Amended Plan. On July 28,
2004, the District Court approved the Disclosure Statement. The
estimation hearing began on June 14, 2005. The Debtors
submitted a Fourth Amended Plan and Disclosure Statement on
Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure
Statement on Feb. 6, 2007. The Fourth Amended Plan was
confirmed by the Bankruptcy Court on Nov. 8, 2007, and affirmed
by the District Court on Nov. 14. Federal-Mogul emerged from
Chapter 11 on Dec. 27, 2007. (Federal-Mogul Bankruptcy News,
Issue No. 168; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
* * *
Federal-Mogul's Corporate Family Rating is rated by Moody's
Investors Service at Ba3 with a stable outlook.
Standard & Poor's Ratings Services meanwhile puts the company's
corporate credit rating at BB-. S&P also put a stable outlook
on the rating.
MESA AIR: Gets Nasdaq Noncompliance Notice on Bid Price Protocol
----------------------------------------------------------------
Mesa Air Group, Inc. received a Nasdaq Staff Determination
letter on June 18, 2008 indicating that Mesa fails to comply
with the minimum bid price requirement for continued listing set
forth in Marketplace Rule 4450(a)(5). Therefore, in accordance
with Marketplace Rule 4450(e)(2), Mesa has been provided 180
calendar days, or until Dec. 15, 2008, to regain compliance.
If, at anytime before Dec. 15, 2008, the bid price of Mesa's
common stock closes at US$1.00 per share or more for a minimum
of 10 consecutive business days, Mesa will have regained
compliance with the Rule.
The Notice also states that if Mesa does not regain compliance
with the Rule by Dec. 15, 2008, Nasdaq Staff will provide Mesa
written notification that its securities will be delisted.
In the event of such a notification, Mesa intends to request a
hearing before a Nasdaq Listing Qualifications Panel to review
the Staff Determination. There can be no assurance the Panel
will grant the company's request for continued listing.
The Notice arises as a result of the fact that for the last 30
consecutive business days, the bid price of Mesa's common stock
has closed below the minimum US$1.00 per share requirement for
continued inclusion under the Rule.
About Mesa Air
Mesa Air Group Inc. -- http://www.mesa-air.com-- operates 172
aircraft with over 900 daily system departures to 144 cities, 38
states, the District of Columbia, Canada, the Bahamas and
Mexico. Mesa operates as Delta Connection, US Airways Express
and United Express under contractual agreements with Delta Air
Lines, US Airways and United Airlines, respectively. The
company, founded by Larry and Janie Risley in New Mexico in
1982, has approximately 5,000 employees and was awarded Regional
Airline of the Year by Air Transport World magazine in 1992 and
2005. Mesa is a member of the Regional Airline Association and
Regional Aviation Partners and has 5,000 employees overall.
Freedom Airlines currently operates 34 50-seat ERJ-145 and 7 76-
seat CRJ-900 aircraft for Delta Connection.
On May 14, 2008, Air Midwest, Inc., a wholly owned subsidiary of
Mesa Air, unveiled plans to discontinue all operations by June
30 including its current scheduled services, citing record-high
fuel prices, insufficient demand and a difficult operating
environment as the main factors in its decision.
Bankruptcy Warning
As disclosed in the Troubled Company Reporter on May 29, 2008,
Mesa Air Group Inc. president and chief operating officer
Michael Lotz warned the company could will file for bankruptcy
protection by July 20 if Delta Air Lines, Inc. successfully
terminated their Connection Agreement and Mesa can't redeploy
unused aircraft, Harry R. Weber of Associated Press reports.
As reported by the Troubled Company Reporter on May 23, 2008,
Delta had notified the company of its intent to terminate the
Delta Connection Agreement among Delta, the Company, and its
wholly-owned subsidiary, Freedom Airlines, Inc. In fiscal 2007,
the Connection Agreement accounted for approximately 20% of the
company's 2007 total revenues. Delta seeks to terminate the
Connection Agreement as a result of Freedom's alleged failure to
maintain a specified completion rate with respect to its ERJ-145
Delta Connection flights during three months of the six-month
period ended February 2008.
On April 7, 2008, the company filed a lawsuit against Delta
alleging breach of the Connection Agreement and seeking specific
performance by Delta of its obligations thereunder. On May 9,
2008, the Company filed a motion for a preliminary injunction in
the U.S. District Court for the Northern District of Georgia
against Delta to prevent its termination of the Delta Connection
Agreement. The hearing started on May 27 and ended on May 29,
2008. The company said in a regulatory filing it anticipates a
ruling to be issued by the Court upon completion of such
proceedings.
Mesa Air Group warned in the filing it may have to seek
protection if Delta Air successfully terminated their Connection
Agreement.
=======
P E R U
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GOODYEAR TIRE: To Invest US$2BB in Plant Expansion & Improvement
----------------------------------------------------------------
Goodyear Tire & Rubber Co. plans to invest over US$2 billion in
the next five years to expand and modernize its plants both in
the U.S. and around the world as it looks to boost production of
high-end products and output in low-cost countries, The Wall
Street Journal reports.
In a press statement, Robert J. Keegan, chairman and chief
executive officer, said: "given the challenges that the macro-
environment is presenting, particularly in North America, we are
performing well in a difficult environment. We respect the
magnitude of the market challenges we face. Our business model
changes over the past five years have positioned us to manage
through the current environment while continuing to drive our
long-term strategies."
"The company's strategy to drive profitable growth includes
significant plans to capitalize on worldwide increases in demand
for its innovative, high-value-added tires," Mr. Keegan said.
"Goodyear will leverage its innovation capabilities to
differentiate its products in the marketplace"
The company also plans to build on strength in its profitable
businesses in the emerging markets of Latin America, Eastern
Europe and Asia.
"Growth in markets such as China, Russia and Brazil and a
transition to increasingly high-value-added tires in these
markets represent significant opportunities," Mr. Keegan said.
"Our leadership teams in these markets have proven capability to
develop markets, build strong distribution networks, leverage
our brands and deliver high returns. We see many opportunities
for our businesses in emerging markets to continue to be a major
growth engine for Goodyear."
Goodyear leaders will also discuss the impact of higher fuel
prices, changing driving habits and a shift in vehicle
preferences in the U.S. in its investor presentation in New York
slated to start at 9 a.m. EDT.
Structural cost topics to be discussed in the meeting include:
-- Goodyear's decision to increase its cost savings target to
more than US$2 billion by 2009 from its prior goal of
between US$1.8 billion and US$2 billion through intensified
focus on efficiency throughout the supply chain and in back
office operations.
-- The closure of Goodyear's tire manufacturing plant in
Somerton, Australia, which completes the company's targeted
reduction of approximately 25 million units of high-cost
capacity as part of its 4-point cost savings plan.
High-return growth opportunities to be discussed include:
-- Investment of up to US$500 million to increase Goodyear's
presence in China through a relocation and expansion of its
manufacturing plant in Dalian to facilitate increased
production of high-value-added consumer and commercial
tires for the Asia-Pacific region.
-- Investments of US$500 million to US$700 million over five
years to modernize four U.S. manufacturing plants to
increase high-value-added tire production and improve cost
efficiency.
-- Investments of up to US$600 million to expand production in
Brazil and Chile.
-- Investments of approximately US$500 million to modernize
and expand production in Germany and Poland.
"Going forward, we anticipate capital investments totaling
between US$1 billion and US$1.3 billion per year from 2008 to
2010," stated Mr. Keegan.
"Our plans, however, are flexible so that we can adjust both the
pace and amount to reflect the macro-environment and market
trends while maintaining positive cash flow," he added. "We
will continue to be extremely analytic and hard-nosed with
respect to the allocation of capital and are focused on return
on invested capital as a key financial metric."
The company expects to increase high-value-added capacity by 50%
from 2006 levels and to increase its low-cost capacity to 50% of
its worldwide total by 2012.
About Goodyear Tire
Headquartered in Akron, Ohio, The Goodyear Tire & Rubber Company
(NYSE: GT) -- http://www.goodyear.com/-- is the world's largest
tire company. The company manufactures tires, engineered rubber
products and chemicals in more than 60 facilities in 26
countries and employs 80,000 people worldwide. Goodyear has
subsidiaries in New Zealand, Venezuela, Peru, Mexico,
Luxembourg, Finland, Korea and Japan, among others.
* * *
As reported by the Troubled Company Reporter-Latin America on
March 7, 2008, Fitch Ratings upgraded The Goodyear Tire & Rubber
Company's Issuer Default Rating to 'BB-' from 'B+' and senior
unsecured debt rating to 'B+' from 'B-/RR6'.
====================
P U E R T O R I C O
====================
ROYAL CARIBBEAN: Stifel Reaffirms Buy Rating on Firm's Shares
-------------------------------------------------------------
Stifel Nicolaus & Company analysts have reaffirmed their ?buy?
rating on Royal Caribbean Cruises Ltd.'s shares, Newratings.com
reports.
According to Newratings.com, Stifel Nicolaus reduced its target
price for Royal Caribbean's shares to US$35 per share from
US$42.
Headquartered in Miami, Royal Caribbean Cruises Ltd. (NYSE: RCL)
-- http://www.royalcaribbean.com/-- is a global cruise vacation
company that operates Royal Caribbean International, Celebrity
Cruises and Pullmantur Cruises, Azamara Cruises and CDF
Croisieres de France. The company has a combined total of 35
ships in service and seven under construction. It also offers
unique land-tour vacations in Alaska, Australia, China, Canada,
Europe, Latin America and New Zealand. The company has
operations in Puerto Rico.
* * *
As reported in the Troubled Company Reporter-Latin America on
April 8, 2008, Standard & Poor's Ratings Services lowered the
corporate credit rating on Royal Caribbean Cruises Ltd. to
'BB+' from 'BBB-'. S&P said the rating outlook is stable.
=================
V E N E Z U E L A
=================
CITGO PETROLEUM: Restarts Lake Charles Plant After Power Outage
---------------------------------------------------------------
Citgo Petroleum Corp. said that it has restarted its refinery in
Lake Charles, Louisiana, after it was shut down due to a power
outage, Reuters reports.
Reuters relates that Citgo Petroleum restarted most of the units
at its 430,000 barrel per day Lake Charles plant on Wednesday.
Another three units were restarted on Thursday.
Headquartered in Houston, Texas, Citgo Petroleum Corp. --
http://www.citgo.com/-- is owned by PDV America, an indirect,
wholly owned subsidiary of Petroleos de Venezuela S.A., the
state-owned oil company of Venezuela.
Petroleos de Venezuela 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.
* * *
As reported in the Troubled Company Reporter-Latin America on
Dec. 21, 2007, CITGO Petroleum Corporation's Issuer Default
Rating was lowered by Fitch to 'BB-' from 'BB' following the
company's announcement that it has taken out a US$1 billion
bridge loan and used the proceeds to make a US$1 billion loan to
parent Petroleos de Venezuela SA (PDVSA IDR 'BB-', Negative
Outlook).
CITGO PETROLEUM: May Have to Pay Millions on June 2006 Oil Spill
----------------------------------------------------------------
Citgo Petroleum Corp. may face millions of dollars in penalties
due to an oil spill at its Lake Charles plant in June 2006,
according to a report posted on Katc.com.
A federal Clean Water Act lawsuit has been filed for the oil
spill, which closed down parts of the Calcasieu Ship Channel for
over two weeks as crews worked to contain the oil and other
waste substances from the refinery process, 2theadvocate.com
relates. According to Katc.com, the U.S. Environmental
Protection Agency and the state Department of Environmental
Quality or DEQ want reimbursement and fines of up to US$4,300
for each of the 53 thousand barrels of oil that leaked into the
Calcasieu ship channel.
2theadvocate.com notes that the spill occurred after a storm.
DEQ records indicate that two slop oil tanks overflowed into a
containment area. A build-up in the tanks and faulty equipment
caused the spill, Katc.com says, citing government officials.
According to 2theadvocate.com, DEQ claimed that Citgo Petroleum
allowed too much waste oil to build up in the tanks.
Citgo Petroleum will meet with state and federal officials in
July to discuss a possible settlement, 2theadvocate.com says,
citing DEQ's legal representative Ted Broyles. The DEQ action
also includes past alleged environmental violations at the plant
from 2001 to 2006, Mr. Broyles added.
Citgo Petroleum is already facing an administrative compliance
order from DEQ. This could result in additional penalties,
2theadvocate.com notes.
Headquartered in Houston, Texas, Citgo Petroleum Corp. --
http://www.citgo.com/-- is owned by PDV America, an indirect,
wholly owned subsidiary of Petroleos de Venezuela S.A., the
state-owned oil company of Venezuela.
Petroleos de Venezuela 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.
* * *
As reported in the Troubled Company Reporter-Latin America on
Dec. 21, 2007, CITGO Petroleum Corporation's Issuer Default
Rating was lowered by Fitch to 'BB-' from 'BB' following the
company's announcement that it has taken out a US$1 billion
bridge loan and used the proceeds to make a US$1 billion loan to
parent Petroleos de Venezuela SA (PDVSA IDR 'BB-', Negative
Outlook).
PETROLEOS DE VENEZUELA: Inks Joint Venture Pact With Belorusneft
----------------------------------------------------------------
Petroleos de Venezuela SA has signed an accord with Belarus' oil
producer Belorusneft to form a joint venture, Russian state news
agency RIA Novosti reports, citing a Belorusneft spokesperson.
RIA Novosti relates that PDVSA Servicios, Petroleos de
Venezuela's subsidiary, will help in the joint venture.
According to RIA Novosti, Petroleos de Venezuela already has a
joint oil company with Belorusneft called Petrolera
BeloVenezolana and a seismic works joint venture, Sismica-
BeloVenezolana. Belorusneft increased collaboration with
Venezuelan partners after Belarusian President Alexander
Lukashenko visited Venezuela in 2007.
RIA Novosti notes that Petrolera BeloVenezolana said it would
produce 700,000 metric tons of oil at Guara Este and Lagomedio
fields in 2008. It also drafted business plans to included
three Venezuelan oil fields in the joint venture.
Petroleos de Venezuela S.A. -- http://www.pdvsa.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.
* Latin America Remains Resilient to Credit Crunch, Fitch Says
--------------------------------------------------------------
Fitch Ratings published its June 2008 Latin America Sovereign
Review as part of the semi-annual Fitch global Sovereign Review.
According to the report, Latin America remains resilient to the
10-month-long international credit crunch. The region's terms
of trade have continued to strengthen in 2008. As most
countries in the region still have comparatively high commodity
dependence, external and fiscal accounts continued to reap the
benefits of soaring commodity prices. Fitch expects the region
to maintain a relatively healthy growth rate of 4.1% in 2008,
although down from 5.2% last year.
"The upsurge in commodity prices continues to support the
region's fiscal and external accounts, while enhanced
macroeconomic stability and historically low interest rates are
fueling strong credit growth across the region, bolstering
domestic demand," according to Senior Director in Fitch's Latin
America Sovereign Group, Shelly Shetty.
However, inflation continues to rise in the region, posing a
serious challenge for central banks and testing the inflation-
targeting regimes adopted by many Latin American countries.
Fitch expects average inflation to rise to 6.4% in 2008 from
5.1% last year. Inflation is running above target for most
countries in the region. Jamaica and Suriname report inflation
rates over 15% while inflation rates in Venezuela and Argentina
are above 20%, reflecting the weaker policy frameworks in these
countries. On the other hand, Mexico and Brazil have among the
lowest inflation rates in the region.
The policy response to higher inflation has varied across the
region with most countries tightening monetary policy and
implementing fiscal measures to mitigate the impact of higher
energy and food prices. Some regional currencies have
appreciated although most countries remain averse to allowing
significant appreciation due to the fear of losing
competitiveness.
"It is critical that central banks tighten policies
appropriately to reduce risks associated with a wage-price
spiral, especially as inflationary expectations have been
deteriorating across the region," said Ms. Shetty.
While public sector revenue growth has been healthy in most
countries, Fitch will continue to monitor the degree to which
public finances are burdened by increasing subsidies,
particularly more generalized subsidies that may be politically
difficult to unwind in the future, as fiscal flexibility remains
constrained in most Latin American sovereigns.
Looking forward, Fitch believes that improvements in external
solvency and liquidity ratios will slow in the region due to
weaker export growth as well as less impressive accretion in
international reserves.
Since the last Sovereign Review published in December 2007,
rating momentum in the region has remained positive. Fitch has
taken no negative rating actions in the region over the last six
months, in contrast to most other emerging market regions. So
far this year Fitch has upgraded Brazil and Peru to investment
grade and has revised the Rating Outlook on Panama's 'BB+'
rating to Positive. As most countries in the region are
currently have a Stable Outlook, the upward momentum for
sovereign ratings in the region is gradually winding down. On
the other hand, pressures on creditworthiness could rise if
sovereigns do not appropriately address challenges related to
rising inflation.
* BOND PRICING: For the Week June 30 - July 4, 2008
---------------------------------------------------
Issuer Coupon Maturity Currency Price
------ ------ -------- -------- -----
ARGENTINA
---------
Alto Palermo SA 7.875 5/11/17 USD 70.87
Argnt-Bocon PR11 2.000 12/3/10 ARS 52.75
Argnt-Bocon PR13 2.000 3/15/24 ARS 51.93
Arg Boden 2.000 9/30/08 ARS 15.10
Bonar Arg $ V 10.500 6/12/12 ARS 69.75
Arg Boden 7.000 10/3/15 USD 69.99
Bonar X 7.000 4/17/17 USD 70.28
Argent-EURDIS 7.820 12/31/33 EUR 54.55
Argent-Par 0.630 12/31/38 ARS 32.43
Banco Hipot SA 9.750 4/27/16 USD 74.05
Banco Macro SA 9.750 12/18/36 USD 70.00
Buenos-EURDIS 9.250 4/15/17 USD 73.13
Buenos Aire Prov 9.375 9/14/18 USD 66.50
Buenos Aire Prov 9.625 4/18/28 USD 64.00
Autopistas Del Sol 11.500 5/23/17 USD 54.88
Mendoza Province 5.500 9/04/18 USD 67.38
BERMUDA
------
XL Capital Ltd. 6.500 12/31/49 USD 67.10
BRAZIL
------
CESP 9.750 1/15/15 BRL 68.71
Gol Finance 7.500 4/03/17 USD 73.50
CAYMAN ISLANDS
--------------
Barion Funding 0.250 12/20/56 USD 6.74
Barion Funding 0.250 12/20/56 USD 6.75
Barion Funding 0.250 12/20/56 USD 6.75
Barion Funding 0.250 12/20/56 USD 6.75
Barion Funding 0.250 12/20/56 USD 6.75
Barion Funding 0.250 12/20/56 USD 6.75
Barion Funding 0.250 12/20/56 GBP 15.28
Barion Funding 0.250 12/20/56 GBP 27.30
Shinsei Fin Caym 6.418 1/29/49 USD 68.81
Shinsei Finance 7.160 7/29/49 USD 68.93
Vontobel Cayman 9.900 7/25/08 CHF 51.40
Tam Capital INc. 7.375 4/25/17 USD 74.00
JAMAICA
-------
Jamaica Govt LRS 7.500 10/6/12 JMD 73.85
Jamaica Govt LRS 12.750 6/29/22 JMD 74.55
PUERTO RICO
-----------
Puerto Rico Cons. 5.900 4/15/34 USD 45.00
Puerto Rico Cons. 6.000 12/15/34 USD 34.25
VENEZUELA
---------
Petroleos de Ven 5.250 4/12/17 USD 68.90
Petroleos de Ven 5.375 4/12/27 USD 57.83
Petroleos de Ven 5.500 4/12/37 USD 56.95
Venezuela 6.000 12/09/20 USD 70.00
Venezuela 7.000 3/31/38 USD 70.00
***********
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, Pamella Ritah K. Jala, and Peter A.
Chapman, 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 * * *