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/raid1/www/Hosts/bankrupt/TCRLA_Public/010309.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 Friday, March 9, 2001, Vol. 2, Issue 48 Headlines B R A Z I L CESP: S&P Rates US$700M Note B+; Placed On CreditWatch CVRD: To Review Docenave Activities GLOBO CABO: Broadens Client Base By 60 Percent In 2000 GLOBO CABO S.A.: Company Profile M E X I C O AHMSA: Will Not Increase Production Volume This Year ASUR: Former Tribasa Stake To Be Sold In Several Weeks ASUR: Entering Negotiations With Selected Potential Operators BANCRECER: IPAB Sells 9,793 Bancrecer Mortgage Portfolios BUFETE: Mendoza Blames Pemex For Financial Difficulties ENTREGAMOS: Ceases To Operate In Mexico GRUPO PROTEXA: Attempts To Reach Agreement With Creditors PEMEX: Energy Ministry Official Defends President's Appointments V E N E Z U E L A MADECO: Reports 16.8B Peso Unconsolidated Net Loss In 2000 MAVESA: Board Hands Down Regulations During Tender Offer Period - - - - - - - - - =========== B R A Z I L =========== CESP: S&P Rates US$700M Note B+; Placed On CreditWatch ------------------------------------------------------ Standard & Poor's--March 7, 2001-- Standard & Poor's assigned its single-'B'-plus foreign currency rating to Companhia Energetica de Sao Paulo's (CESP) US$700 million medium-term note program. The rating has also been placed on CreditWatch with developing implications. The notes are senior-unsecured obligations of CESP. CESP is Brazil's and Latin America's third-largest electricity generator, providing electricity to the four main distribution companies serving the key State of Sao Paulo. Debt guaranteed by the State of Sao Paulo or the government of Brazil (approximately 75% of total debt) is expected to diminish over time. The rating reflects CESP's current business and financial profile and does not incorporate credit enhancement from its status as a state- owned company. The rating reflects: -- A high nominal debt service burden -- As a result, gross cash flow interest coverage is low at approximately 1.8 times estimated for Dec. 31, 2000; comparing cash flow to the stock of debt, the debt payback period is lengthy at 15 years. -- High foreign currency exposure -- CESP is exposed to fluctuations in the value of the real, in which it derives its earnings, while about 75% of its debt is in foreign currencies. -- Fundamental uncertainties regarding the structure and regulation of the power market -- CESP sells all of its assured energy to its distribution customers under initial contracts that end in 2006. Brazil is forecast to be short of power, and the buying and selling of energy post-2006 should be at a market rate. These conditions suggest a seller's market, which should benefit CESP; but the regulation for pricing and contracting for power is untested. -- Potential environmental and associated litigation concerns -- CESP's inability to raise the water level behind the Porto Primavera hydroelectric plant to the design height of 259 meters from the currently licensed 257 meters highlights a source of regulatory risk. While the affect on capacity from the two-meter differential should be fractional, a related issue is the possibility of additional, unexpected expenditures as the other plants undergo environmental relicensing. These weaknesses are offset by the following strengths: -- CESP's generation sources are fairly new, in good condition, and evidence strong availability rates. CESP has always generated more than its designated "assured energy". As a hydro producer, CESP has a negligible marginal cost of production. -- A tight energy market suggests that for the near-term future, CESP should have no trouble in finding buyers for its output. -- The market, consisting of the greater Sao Paulo metropolitan area and, eventually, the south-southeastern region of Brazil, is large and growing; this region is Brazil's richest and most industrialized. -- CESP participates in a risk-sharing mechanism with all other hydro plants in the nation to minimize the risk of poor hydro conditions occurring in any one hydrological basin. All of CESP's generating plants are hydroelectric, and four stations generating 98% of CESP's energy are located either within or near the Parana River. Currently, CESP provides power to much of the Sao Paulo metropolitan area through its sales to four distribution companies. Growth in electricity demand is high as the city and its environs continue to industrialize. In a liberalized market, CESP will sell power to the entire south-southeastern market of Brazil, which is still the most developed and rapidly growing in the country. The national government, in an effort to create a competitive generation market, restructured the contracts between government- owned generation entities and distributors. Energy sales are currently made under initial contracts that mandate an annual decline of 25% in contracted volume beginning in 2003 to provide a transition to a competitive wholesale market. Distributors and generators must negotiate contracts to replace the initial contracts. CESP to date has refrained from entering into replacement contracts as it expects prices to become more favorable with the passage of time. The pricing of these contracts and the availability of energy, particularly from potential thermal sources, are uncertainties bondholders face. CESP was to have been privatized in December 2000. The attempt to privatize CESP failed because of concerns surrounding a bullet amortization of US$500 million due in May 2001 and uncertainties regarding CESP's ability to raise the water level behind the Porto Primavera plant. Issuances under this medium-term note program refinance the bullet. Now that CESP is again able to raise the water level behind Porta Primavera, all major impediments to privatization have been removed, and the State of Sao Paulo plans to privatize the company during the first six months of 2001. CESP's CreditWatch Developing status reflects uncertainties surrounding the creditworthiness of the purchaser of CESP, the manner in which the acquisition will be financed, and the resultant capital structure, Standard & Poor's said. CVRD: To Review Docenave Activities ----------------------------------- The investor relations department of CVRD (Companhia Vale do Rio Doce) announced that the company is reevaluating the transport activities of its marine transport unit Docenave (Navegacao Vale do Rio Doce SA), Bloomberg said Wednesday. As previously reported, CVRD is selling off its interest in the shipping company Docenave, in which it has 99 percent ownership. Docenave is one of Latin America's largest shipping companies. It carries much of CVRD's iron ore to markets in Europe and Asia aboard a large fleet of bulk carriers. It also operates ports and container ships. GLOBO CABO: Broadens Client Base By 60 Percent In 2000 ------------------------------------------------------ Brazilian pay-TV and high-speed Internet provider Globo Cabo in 2000 saw its client base increased by 60.8 percent owing to its acquisitions of cable companies Net Sul and Unicabo as well as to the group's organic growth of 16.1 percent. In a Brazil Financial Wire report released Wednesday, the company informed it registered 1.505 million subscribers. This week, the company said its net losses in 2000 had declined by 30.3 percent from a year before, totaling R$ 366.59 million. GLOBO CABO S.A.: Company Profile -------------------------------------- Name: Globo Cabo S.A. Rua Verbo Divino, 1356 first Floor Sao Paulo, SP, Brazil (212) 688-6840 Website: http://globocabo.globo.com/index_english.htm Type of Business: Globo Cabo is the largest cable television operator in Brazil, operating under the brand name NET in the major Brazilian cities, including operations in Brazil's largest cities, Sao Paulo, Rio de Janeiro and Belo Horizonte. The company also offers broad band Internet services under the brand name VIRTUA, and data communications and multimedia services for corporate networks through VICOM. With close to 1.5 million connected subscribers, Globo Cabo's NET cable network extends over 34,000 kilometers and passes through approximately six million homes. SIC: Telecommunications - Cable TV and Satellite Systems Employees: 24,000 (1999) Net Loss: R$366.6 million year ending Dec. 31, 2000 Net Revenues: R$890.9 million year ending Dec. 31, 2000 Trigger Event: 1999 has begun with deep impacts in the national economy, due to the maxi-devaluation of the local currency compared to the American dollar. To minimize and offset the economic and financial impacts of this crisis, the Management has promptly promoted a number of positive actions such as: centralization of the operational and administrative activities; unification of the offices; and the consolidation of the operational and administrative centers - "clusters". It also suspended investments and restricted on expenditures, implemented new commercial and credit policies, intensified the combat to piracy of signals and restructured indebtedness through a recapitalization process. CEO: Moyses Pluciennik CFO: Leonardo Pereira Last TCRLA Headline DATE: Thursday, March 8, 2001, Vol.2, Issue 47 =========== M E X I C O =========== AHMSA: Will Not Increase Production Volume This Year ---------------------------------------------------- Due to a slump in international steel prices, former state-owned enterprise Altos Hornos de Mexico (AHMSA) will not increase production volume this year from year-2000 levels. The new forcast was announced by Francisco Orduna, company spokesperson, in a Reforma/Infolatina report Wednesday edition. According to Orduna, while production volumes will remain unchanged from last year, the company does not expect to accumulate excess inventories during the current year. Early this month, the company reported just 11.6 million pesos in operating profits in the fourth quarter of the year 2000, a 97- percent decrease from the previous year's 404.4 million pesos due to a 30-percent drop in international steel prices and higher energy costs. According to reports, low profit could likely cause further complications to the company's debt restructuring talks with banks and bondholders, which have dragged on since the company defaulted on a 1.85-billion-peso debt in April 1999. ASUR: Former Tribasa Stake To Be Sold In Several Weeks ------------------------------------------------------ Aaron Dychter, Communications and Transport ministry senior official, revealed in an Infolatina report Wednesday that an 11.1 percent stake in Aeroportuario del Sureste (Asur) is soon to be sold. Shares of the Mexican airport operator, which Tribasa formerly owned, will be put up for sale in several weeks. The decision was reached in order to make way for another Mexican partner taking a substantial position in Asur. Previous reports suggested that the U.S.-based investment fund Advent was looking to buy the stake, which was ceded by Tribasa to state-run development bank Nacional Financiera (Nafin) last year. Tribasa forfeited the position after failing to make good on interest payments it owed Nafin. ASUR: Entering Negotiations With Selected Potential Operators -------------------------------------------------------------- Grupo Aeroportuario del Sureste, S.A. de C.V. (NYSE: ASR; BVM: ASUR) (ASUR) today announced that, after a period of thorough analysis, during which the bids submitted in the retail tender have been carefully assessed by an evaluation team in ASUR, the company will go into negotiations with a few selected potential operators. The tender, launched by the company in December 2000, covers the operation of all retail shops - with the exception of newspaper and magazine stores - at Cancun, Cozumel and Merida, ASUR's three largest airports, for 10 years of operation. Frantz Guns, CEO of ASUR, commented: "The retail contract, which will be valid for 10 years, is of huge importance for ASUR with regard to revenues. Image and passenger perception are to a great extent dependent on the retail outlets in an airport. Therefore, ASUR has decided to go into a negotiation phase with a few operators to determine which one will provide the types of concepts and service that will best meet the needs of the passenger and maximize revenue generation for our company." Retailing is one of the most important sources of commercial income for any airport company. Grupo Aeroportuario del Sureste, S.A. de C.V. (ASUR) is a Mexican airport operator with concessions to operate, maintain and develop the airports of Cancun, Merida, Cozumel, Villahermosa, Oaxaca, Veracruz, Huatulco, Tapachula and Minatitlan in the southeast of Mexico. The company is listed both on the Mexican Bolsa, where it trades under the symbol ASUR, and on the NYSE in the U.S., where it trades under the symbol ASR. One ADS represents ten (10) series B shares. BANCRECER: IPAB Sells 9,793 Bancrecer Mortgage Portfolios --------------------------------------------------------- Mexican bank bailout agency IPAB announced it had sold 9,793 home-mortgages from the bad-loan portfolio of government- intervened Bancrecer for a total of 815.73 million pesos, Reforma/Infolatina said Wednesday. Among the successful bidders for mortgage packages were FirstCity Commercial Corporation, Lone Star US Acquisitions and Solida Administracion de Portafolios. According to IPAB, the mortgages are denominated in pesos or inflation-indexed investment units, known as UDIs. The total amount paid for the mortgages, which were sold in six separate packages, is approximately 29 percent of their combined book value, the agency added. BUFETE: Mendoza Blames Pemex For Financial Difficulties --------------------------------------------------------- Jose Mendoza Fernandez, founder and chairman of the struggling Mexican construction company Bufete Industrial, blamed state- owned energy conglomerate Petroleos Mexicanos (Pemex) for its financial woes and its forthcoming takeover, Reforma/Infolatina reported Wednesday. According to Mendoza, had Pemex awarded Bufete major contracts such as the Ciudad Madero and Cadereyta refinery projects, instead of granting them to South Korean firms, it wouldn't be saddled with the enormous amounts of debt it faces today. Mendoza recalled that Pemex in 1999 decided to allow foreign companies to bid for energy-sector construction and engineering projects and subsequently awarded a string of major contracts to foreign firms whose bids did not comply with appropriate technical standards. Bufete is recently the subject of an imminent takeover by Sergio Bolanos Quesada of Mexico's Corporacion Serbo. ENTREGAMOS: Ceases To Operate In Mexico --------------------------------------- After an unsuccessful attempt to resolve financial problems, Mexican Internet-based delivery service Entregamos (www.entregamos.com) decided to close its Mexican office in December, Business News Americas related Wednesday. The site is currently down and an answering machine responds to all telephone calls. Entregamos was founded in February 2000 by a group of Mexican Harvard graduates and received an initial investment from Vineyard Ventures investment fund, Latin Idea (www.latinidea.com), LLC (www.llc.com), Sun Technology Investors (www.suntechnologies.com) and Wasabi Fund (www.wasabifund.com). GRUPO PROTEXA: Attempts To Reach Agreement With Creditors --------------------------------------------------------- Grupo Protexa is still trying to reach an agreement with creditors to restructure the terms of a $90million eurobond issue the company conducted three years ago, Reforma/Infolatina said Wednesday. However, both parties have agreed in principle to an outline of the negotiations. Protexa already made a $6million prepayment last year. Additionally, it has also initiated talks with the Mexican federal Finance ministry on the company's estimated $90million tax debt. PEMEX: Energy Ministry Official Defends President's Appointments ---------------------------------------------------------------- The four prominent Mexican businessmen who were named into the board of state-owned energy conglomerate Petroleos Mexicanos (Pemex) by President Vicente Fox will remain on the board. This was stressed by Energy ministry senior official Juan Antonio Barges in a Reforma/Infolatina report published Wednesday despite the opposition-controlled Congress's approval of the recommendation to revoke the President's recent appointments. Barges defended the president's recent move saying the new directors' extensive financial experience is essential to turning Pemex into a world-class company. ================= V E N E Z U E L A ================= MADECO: Reports 16.8B Peso Unconsolidated Net Loss In 2000 ---------------------------------------------------------- Chilean copper producer Madeco S.A. reported an unconsolidated net loss of 16.786 billion pesos in 2000 versus the previous year's net loss of 54.486 billion pesos, Reuters reported Wednesday. No other figures were released. The company issued a statement saying that consolidated results for 2000 will be published on March 16. Madeco operates in four business segments that include wire and cable, pipes, bars and sheets (brass mills), flexible packaging and aluminum profiles. MAVESA: Board Hands Down Regulations During Tender Offer Period --------------------------------------------------------------- Mavesa S.A. (the "Company"), one of the leading Venezuelan food products manufacturers, today announced that its Board of Directors has adopted an internal regulation (the "Regulation") governing the general business conduct of the Company during the tender offer by Primor Inversiones, C.A. for all of the Company's outstanding shares and American Depository Shares. The Regulation is also applicable in the event the tender offer is successful and in the event a competing offer is made for Mavesa. Among other things, the Company and its subsidiaries must conduct their operations in a manner consistent with practices employed during the previous 12 months, and are restricted from (i) taking any action which would result in the dissolution of the Company or its subsidiaries; (ii) disposing of material fixed assets of the Company and its subsidiaries; (iii) modifying, rescinding or failing to comply with certain types of contracts; and (iv) incurring or assuming any indebtedness other than in the regular course of business. The Company published the Regulation in two newspapers in Caracas, Venezuela on March 6, 2001 and communicated the same to the Venezuelan Securities Commission on March 7, 2001. Investors and security holders are strongly advised to read the Mavesa's Recommendation Solicitation Statement on Schedule 14D-9 which was filed with the Securities and Exchange Commission (SEC) and the tender offer statement on Schedule TO referred to in this news release filed with the SEC by Primor Inversiones, C.A. because they contain important information. Investors and security holders may obtain a free copy of those statements and other documents filed by Mavesa and Primor at the SEC's website, www.sec.gov , and directly from the filing party, upon request. 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 American is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. John D. Resnick, Edem Psamathe P. Alfeche and Janice Mendoza, Editors. Copyright 2001. 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 $575 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 $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *