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/raid1/www/Hosts/bankrupt/TCRLA_Public/010911.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 Tuesday, September 11, 2001, Vol. 2, Issue 177 Headlines * A R G E N T I N A * AEROLINEAS ARGENTINAS: Sepi to Conclude Sale by Month's End, Early-Oct. EL SITIO: Shareholders Approve Merger With Ibero-American Media Partners EPEC/EPESF: Governments to Delay Privatization * B R A Z I L * CVRD: Laager to Head Logistics Executive Office EBSE: Privatization Yields Good Results GLOBO CABO: Moody's Revised Ratings Outlook GLOBO CABO: Rolls Out Red Carpet For New Officer MOULINEX-BRANDT: Failure in Negotiations Leads to Bankruptcy Filing MOULINEX-BRANDT: El.Fi Refutes Reports * C H I L E * ENERSIS: Pushes For Clear Vertical Integration Rules * M E X I C O * ACNET ENTITIES: Murdock Communications Corp. Announces Settlement GAM: Bancomext to Treat Debt in a Normal Way SL INDUSTRIES: Announces Sale of SL Waber * N I C A R A G U A * ENITEL: Supreme Court to Decide Sale's Legality in Two Weeks * V E N E Z U E L A * OPCO: To Settle Plant's Debts Before Handing It Back to CVG TELSCAPE: ATSI Provides Update on Acquisition ================= A R G E N T I N A ================= AEROLINEAS ARGENTINAS: Sepi to Conclude Sale by Month's End, Early Oct. ----------------------------------------------------------------- ------ Sociedad Estatal de Participaciones Industriales (Sepi) expects to complete the sale of its 92.1 stake in Aerolineas Argentinas by end-September or early-October at the latest, AFX-Europe reported Friday. According to Infrastructure Minister Carlos Bastos, Sepi has already shortlisted the bids for Aerolineas Argentinas and Austral units headed by businessmen Juan Carlos Pellegrini and Enrique Pescarmona. The Spanish company continues negotiations with all four bidders pre-selected last month. These also include Spain's Marsans and an unidentified US investment fund. EL SITIO: Shareholders Approve Merger With Ibero-American Media Partners ----------------------------------------------------------------- ------- El Sitio, Inc. (Nasdaq: LCTOD)* announced Friday that its shareholders approved the company's merger with Ibero-American Media Partners II, Ltd. ("IAMP") to form Claxson Interactive Group Inc. ("Claxson") at a shareholders meeting held this morning in Buenos Aires. El Sitio reported that more than 99% of its shareholders who voted at the meeting voted in favor of combining with IAMP to create Claxson, a multi-platform new media company that will provide integrated, branded entertainment content targeted to Spanish and Portuguese speakers around the world. Under the terms of the combination agreement, each El Sitio common share will be exchanged for one new Class A common share of Claxson. The combined company will have approximately 18.5 million Class A common shares outstanding. The transaction is expected to close by the end of September 2001. Subject to final approval by Nasdaq of Claxson's listing application, Claxson's Class A common shares are expected to begin trading on The Nasdaq National Market under the symbol "XSON" on the trading day following the closing. * Due to the 1-for-10 reverse share split effective as of August 22, 2001, Sitio's common shares are trading under the symbol "LCTOD" for an interim period of approximately 20 trading days. At the end of that period, El Sitio's common shares will resume trading under the symbol "LCTO." CONTACT: Press - Jennifer Gery of Brainerd Communicators, Inc., +1-212-986-6667, gery@braincomm.com; or Investors - Jeff Majtyka, majtyka@braincomm.com, or Leonardo Santiago, santiago@braincomm.com, both of Brainerd Communicators, Inc., +1-212-986-6667, all for El Sitio, Inc. To see company's latest financial statements: http://www.bankrupt.com/misc/El_Sition.pdf EPEC/EPESF: Governments to Delay Privatization ---------------------------------------------- In response to request made by prospective bidders, the governments of Argentina's Cordoba and Santa Fe provinces have postponed the privatization of their respective electricity utilities, Epec and Epesf, Business News Americas disclosed Friday. Cordoba will open technical offers for Epec on September 20, 10 days later than planned. The Epec delay has a knock-on effect on the Epesf privatization because under terms of an agreement between Cordoba governor Jose Manuel de La Sota and his Santa Fe counterpart Carlos Reuteman, the Epesf sale will only start once the Epec sale is completed. Fears that Argentina's government will default on its US$130 billion debt, compounded with the country's shaky economic situation, has led to considerable speculation about the success of the two privatization processes. =========== B R A Z I L =========== CVRD: Laager to Head Logistics Executive Office ----------------------------------------------- CVRD (Companhia Vale do Rio Doce) Chairman Roger Agnelli informed that the company's logistics executive office will now be headed by Mr. Guilherme Laager, Ambev logistics officer, O Globo reported Friday. Mr. Laager's post will be taken over by Mr. Mozart Litwinskz. The logistics office is in charge of CVRD's transportation structure through where the company transports 116 million m tons per year. The sale of services for third parties represented R$712 million to CVRD in 2000. The company expects a turnover of R$1 billion in 2001. EBSE: Privatization Yields Good Results --------------------------------------- EBSE (Empresa Brasileira de Solda Eletrica), which was privatized last year, managed to pay off almost all of its debts, with sales at $30 million, against last year's R$11 million, Valor Economico reported Wednesday. MBE Participacoes, which acquired 51 percent stake in the company in September 2000, attributed good performance to a change in focus, emphasizing quality over quantity. MPE is proposing to increase EBSE's capital by R$5.1 million in order to manage the remaining debt and to make further investments in personnel and equipment. The company does not have plans for great growth, preferring to continue with the strategy of pulling the company out of the red, focusing mainly on the oil and energy sectors, which account for 70 percent of its current orders. GLOBO CABO: Moody's Revised Ratings Outlook ------------------------------------------- Globo Cabo SA's ratings outlook has been revised to negative by Moody's Investors Service, AFX-Europe said Thursday, However, the ratings agency affirmed its current B3 rating for the company's senior notes. The company's senior implied rating is B3, and Globo Cabo's senior unsecured issuer rating is Caa1. According to Moody's, the rating outlook change primarily incorporates its heightened concerns about the company's exposure to the difficult Brazilian economy, including local recessionary and high interest rate conditions and material currency devaluation. It also warned that the situation is likely to be further exacerbated if macroeconomic conditions in the broader Latin American region worsen. Moody's also noted its concerns about the company's liquidity position and short-term refinancing needs, notwithstanding the successful recent initiatives and financing activities to improve this critical credit area. But while Globo Cabo is a strong competitor within the Brazilian pay television sector, Moody's said it is concerned with the potential negative effects that continued economic weakness could have upon the company's performance. It noted the slowdown has already resulted in the company lowering its earnings estimates, adding that the actual results may be reduced even more than the recently revised guidance levels. It said further increases in churn over that evidenced during the second quarter would exert further negative pressure on the ratings. Moody's said it is also important to consider the impact of electricity rationing on TV usage and the overall economy. The agency said it is also concerned about Globo Cabo's continued foreign exchange exposure. GLOBO CABO: Rolls Out Red Carpet For New Officer ------------------------------------------------ Paid TV network Globo Cabo disclosed it has a new officer in the person of Mr. Luiz Antonio Viana, who left BR Distribuidora, Jornal do Commercio informed Friday. Vianna will be replacing Mr. Moyses Pluciennick and will take over the company's administration in the wake of its restructuring, which resulted to the dismissal of 1,600 employees. GloboCabo has R$1.5 billion in debt and announced a cut of 25 percent on its 2001 investments. With almost 1.5 million subscribers, GloboCabo operates in 67 cities and more than 6 million residencies. MOULINEX-BRANDT: Failure in Negotiations Leads to Bankruptcy Filing ----------------------------------------------------------------- -- French-Italian household equipment maker Moulinex-Brandt announced on Friday it had filed for bankruptcy, Agence France Presse revealed in a report. Chief executive Patrick Puy disclosed that the administration took the decision to file for bankruptcy after the failure of negotiations with the main shareholder, Italian group El.Fi, on a financial plan. Puy said El.Fi failed to "keep its commitments" for a $312 million rescue package. Family-run El.Fi had backed Moulinex's restructuring until August, however, it was reconsidering its commitment. El.Fi's share of the package amounted to $89 million. "El.Fi bought a magnificent company that was in ruins," Puy said of Moulinex. "How could they think they could restructure Moulinex without injecting any money into it?" A restructuring plan, part of the rescue effort, called for the elimination of 4,000 jobs worldwide, 1,500 of them in France. El.Fi bought a 74.3 percent stake in Moulinex last year and merged the company with its own domestic appliance unit, Brandt, which makes larger appliances like washing machines and dishwashers. The company had filed for bankruptcy for its Moulinex and Brandt operations and subsidiaries. The commercial court of Nanterre, outside Paris, put Moulinex in receivership for a six-month period, naming two lawyers as receivers to assess operations and find ways to rescue the company. The group, which employs about 20,000 people and has interests in 11 countries from China to Brazil, had debt of 766 million euros (685.7 million dollars) at the end of 2000. MOULINEX-BRANDT: El.Fi Refutes Reports -------------------------------------- Contrary to reports, El.Fi said it has never interfered with the management of its unit or its negotiations with its banks, AFX- Europe reported Friday. "It has never managed relations with Moulinex' banks or even less has it signed any agreements, in any capacity, with the banking institutions," El.Fi said in a statement. However, El.Fi said the conditions, which it had presented to the Moulinex board on July 23 for its participation in a possible Moulinex capital hike, "unfortunately have not been met, particularly with regard to the conditions imposed by the banks." El.Fi said its first concern is for Moulinex' staff, clients, suppliers and its local community, but added it will pursue its own interests as a shareholder. This also means identifying the "subjective responsibilities" which have led to the current crisis situation at Moulinex, it said. ========= C H I L E ========= ENERSIS: Pushes For Clear Vertical Integration Rules ---------------------------------------------------- Enersis, a Chilean power holding company, is urging authorities to define right away regulations on the vertical integration in the electricity sector as clearly as possible, according to a company source in a Business News Americas report Friday edition. "The company wants to know the rules it must follow, since the antitrust commission is questioning the vertical integration of Enersis, which indicates the ambiguity and lack of clarity on this subject," the source said. Enersis has been under the commission's investigation for its vertical integration for over two years now. The commission has issued a precautionary measure prohibiting the sale of Endesa Chile shares by Enersis and stipulating the companies must have different directors and auditors. Enersis, through Endesa Chile and Chilectra, is present in the generation and distribution sectors, and until last year, was also in the transmission sector through Transelec. However, it sold Transelec and withdrew from transmission. "We sold Transelec to comply with the regulation issued by the authorities, but we have not done the same in the case of the distribution and for this reason we urgently want clear regulations," the source said. As the antitrust process has been stalled for more than a year, Enersis last month asked this body to lift its precautionary measure to give the holding complete autonomy in the control of its companies. However, the antitrust commission turned down the request. Nevertheless, this led to progress in the process and "we have now reached the hearing stage, which will be held next Wednesday, September 12," the source said. =========== M E X I C O =========== ACNET ENTITIES: Murdock Communications Corp. Announces Settlement ----------------------------------------------------------------- Murdock Communications Corporation (OTC Bulletin Board: MURC and MURCW) (the "Company") announced Thursday a Compromise Settlement Agreement and Full and Final Release (the "Agreement") with Intercarrier Transport Corporation, Ashton Communications Corporation, AcNet USA, Entree 1P de Mexico, S. de R. L. de C.V., formerly known as AcNet S.A. de C.V., and any and all of their national or international predecessors, successors, and/or affiliated entities (collectively, the "AcNet Entities"). The Company commenced legal action against the AcNet Entities in April 2000 in Iowa state court to collect on loans made to the AcNet Entities in 1998 and 1999 and the related interest. On March 29, 2001, AcNet USA filed for bankruptcy protection and the Company was informed that AcNet Mexico was in receivership. On May 31, 2001, the AcNet Entities filed a motion with the Iowa state court seeking permission to untimely file a counter-claim against the Company, and asking for damages against the Company of approximately $20 million plus punitive damages. Under the terms of the Agreement, the AcNet Entities paid a nominal consideration to the Company and both parties exchanged Full and Final Releases on all claims against the other party. GAM: Bancomext to Treat Debt in a Normal Way -------------------------------------------- Grupo Azucarero Mexcio (GAM), one of the four Mexican sugar producers to have their refineries expropriated by the federal government, owes Bancomext more than 42 million dollars, revealed Bancomext CEO Jose Luis Romero Hicks in a Mexico City daily Reforma report released Thursday. The bank will continue to treat the debt in the same way as usual, except that now it has a new owner, he said. "The bank doesn't need any negotiation or renegotiation of payment dates, because we have acted under the mandate of Sagarpa (the Agriculture ministry). Each of the payments has its own time, and we expect that this portfolio with GAM will be recovered quickly for the good of the bank," he said. SL INDUSTRIES: Announces Sale of SL Waber ----------------------------------------- SL Industries Inc. (NYSE:SL)(PHLX:SL) announced Friday the sale of its SL Waber business unit to Tripp Lite -- a world leader in the manufacture of power protection equipment. SL Waber is engaged in the design and sale of surge suppressors and power distribution units. The company sold substantially all of the operating assets of SL Waber and the stock of SL Waber's Mexican subsidiary, Waber de Mexico, for cash and future contingent cash payments. As a result, the company will record an additional non-cash impairment of asset charge in the third quarter. The amount of the additional charge, net of tax benefit, is anticipated to be less than $1,800,000. Owen Farren, president and chief executive officer of SL Industries Inc., said: "The sale of SL Waber is another step in the company's restructuring plans in response to the sudden slowdown in the telecommunications industry. "Last year SL Waber implemented a new business plan, which involved exiting the low-margin mass merchandise market and concentrating on higher margin sales to electronics distributors and original equipment manufacturers. Unfortunately, these markets have been severely depressed in the current economic environment. "As it became clear that this downturn would be prolonged, the company decided to sell SL Waber to reduce its overall exposure to these markets." Keelin Wyman, Tripp Lite executive vice president, said, "The acquisition of SL Waber adds additional breadth to Tripp Lite's already substantial line of surge suppressors and power strips. Additionally, SL Waber's success in the OEM power distribution (PDU) market creates many new opportunities for Tripp Lite." Farren added: "We believe the sale of SL Waber creates a win-win situation for all the parties. The sale will have an immediate impact on the financial performance and cash flow of SL Industries. In addition, SL Waber is now combined with Tripp Lite, an excellent organization with a proven 80-year history of market leadership focused on developing SL Waber's product niches. "The sale should allow Tripp Lite to diversify SL Waber's customer base and continue to offer the quality products and customer service that SL Waber's customers expect. We wish our former employees well with their new careers at Tripp Lite." About SL Industries SL Industries Inc. designs, manufactures and markets Power and Data Quality (PDQ) equipment and systems for industrial, medical, aerospace and consumer applications. For more information about SL Industries Inc. and its products, visit the company's Web site at www.SLpdq.com. CONTACT: SL Industries Inc. Owen Farren, 856/727-1500 www.SLpdq.com or Neil Berkman Associates Neil Berkman/Melanie Beeler, 310/277-5162 (Investor Relations) ================= N I C A R A G U A ================= ENITEL: Supreme Court to Decide Sale's Legality in Two Weeks ------------------------------------------------------------ The ruling regarding the legality of the August 31 privatization of telco Enitel will be decided by Nicaragua's Supreme Court in the next two weeks, according to Enitel chairman Salvador Quintanilla in a Business News Americas report released Friday. On September 5, a lower court upheld an injunction filed by Managua mayor Herty Lewites against the sale, at which Swedish- Honduran consortium Telia AB Swedtel/EMCE won a 40 percent stake in Enitel with an US$83.2-million bid. A week prior to the sale, judge Napoleon Sanchez ordered the seizure of Enitel's assets at Lewites' request over US$28 million in alleged back taxes owed to Managua City. "All previous injunctions filed by Mr. Lewites have been rejected by the Supreme Court. There are always judges of a single (political) tendency, which has led to us resorting to the Supreme Court," Quintanilla said. Telia Swedtel/EMCE representative Oswaldo Quiroga said: "The important thing is we have the support of the international community. Our decision to invest US$83 million in Nicaragua is a signal to the world that it's possible to do business and invest in Nicaragua." But still, the consortium is studying contingency plans in case the sale falls through. ================= V E N E Z U E L A ================= OPCO: To Settle Plant's Debts Before Handing It Back to CVG ----------------------------------------------------------- Opco, which is currently beset with difficulties due to weak international steel markets, must settle first the outstanding obligations of its hot-briquetted iron plant before returning it to the Venezuelan state heavy industry holding CVG. In a Business News Americas Friday report, a company spokesperson revealed that workers at the plant, also known as Minorca, are now demanding CVG to find a solution as soon as possible, claiming Opco owes them money. "Now they are at home on half pay. The workers are demanding payoffs or a return to work on full pay," the CVG official said. "CVG signed a contract with Opco to rent out the briquette plant, which expires in December 2005." The contract prevents Opco (Operaciones al Sur del Orinoco), a subsidiary of Japan's Kobe Steel, from laying off the workers. Ferrominera Orinoco, CVG's iron ore division through which the plant was rented out, says it is owed millions of dollars by Opco for iron ore supplies accumulated since 1998. Decisions at Opco must be taken by its administrators and Kobe Steel, CVG president Rafael Sanchez Marquez said, "because, despite the existence of a negotiating committee formed by CVG and Ferrominera Orinoco, no agreement has yet been reached" to resolve the problems. Should Minorca be handed back to CVG early, the contract also stipulates it would have to be in operation. At present it is only operating at a nominal rate. TELSCAPE: ATSI Provides Update on Acquisition --------------------------------------------- ATSI Communications Inc. (AMEX:AI) announced Friday that in anticipation of finalizing the sale of the Telscape Houston-based Teleport assets, ATSI and the Bankruptcy Trustee have signed an Interim Operating Agreement, allowing ATSI to manage the facilities, invoice customers and otherwise maintain service for Telscape's Houston-based Teleport customers. The Interim Operating Agreement is subject to Bankruptcy Court approval. Telscape's Houston-based Teleport assets to be sold include telecommunications equipment, accounts receivable and the related corporate customer base that extends into Costa Rica, El Salvador, Nicaragua, Panama and Venezuela. CONTACT: ATSI Communications Inc., San Antonio Karen R. Mella, 210/547-1000 kmella@atsi.net ********* 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 and Edem Psamathe P. Alfeche, 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 * * *