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/raid1/www/Hosts/bankrupt/TCRLA_Public/011001.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, October 1, 2001, Vol. 2, Issue 191 Headlines A R G E N T I N A IMPSAT: Signs US$4M Deal With Convexx B A R B A D O S APW LTD.: Amends Multi-Currency Credit Facility B R A Z I L CVRD: Bethlehem Steel Sells Iron Ore Interest In MBR GLOBO CABO: Registers R$389.2M Loss In 1H01 MOULINEX SA: SEB Likely To Make Last-Minute Bid VARIG: VarigLog To Increase Operations Amid Crisis C H I L E EDELNOR: Drop In AES' Equity Won't Affect Ongoing Bid C O L O M B I A ACES: Closes Technological Integration Deal With Bellsouth M E X I C O ALLEGRO REGIONAL: Halts Operations Indefinitely BANCRECER: Banorte To Start Network Reduction This Year HYLSA S.A.: S&P Lowers Ratings to 'CCC+'; Outlook Negative HYLSA S.A.: Likely To Face Default HYLSAMEX: Current Outlook Difficult At Best P E R U AEROCONTINENTE: Owner Testifies In Money-Laundering Case NBK BANK/BANCO NUEVO: NBK Valuation Pending, Nuevo's Questioned PESQUERA MARIA: Creditors Agree Postponemen, Merger Process - - - - - - - - - - - ================= A R G E N T I N A ================= IMPSAT: Signs US$4M Deal With Convexx ------------------------------------- Telecommunications company Impsat signed a contract with Convexx to allow the use of its fiber optic network connecting Sao Paulo, Campinas and Curitiba, Valor Economico reported Tuesday. The contract, valued at US$4 million, gives the irrevocable right of use for 25 years. The two companies now have access to a fiber network loop of 2,700 kilometers, enabling data transmission as far as Argentina. Impsat dismissed over 13 percent of its total workforce, or 214 employees, in August following the release of a dismal second quarter performance. Impsat registered turnover of US$78.5 million during the period. EBITDA for the quarter stood at US$100,000, sharply lower than the US$4.3 million in the previous quarter, due to one-time severance charges. To see company's latest financial statement: http://www.bankrupt.com/misc/Impsat.doc =============== B A R B A D O S =============== APW LTD.: Amends Multi-Currency Credit Facility ------------------------------------------------ APW Ltd. (NYSE: APW), a leading Technically Enabled Manufacturing Services "TEMS" Company based in St. Michael, Barbardos, announced Thursday the amendment of certain covenants to its existing Multi-Currency credit facility. The amendments provide APW the ability to expand its current restructuring efforts beyond those previously announced. The amendments also provide APW greater opportunity to benefit from potential future capital raising initiatives. Included in the amendments are provisions that allow APW to record up to an additional $25 million of non-recurring charges associated with restructuring initiatives. The amendments also permit additional plant consolidations. Certain other financial covenants were also amended, including sales, EBITDA and free cash flow. Although APW was in complete compliance with all covenants prior to these amendments, the Company approached the Lending Group to revise the covenants to better reflect the current economic environment. Rick Carroll, Vice President and Chief Financial Officer for APW Ltd. commented, "We are very pleased with the high level of cooperation between APW and our Lending Group that allowed us to quickly amend the original covenants. APW's ability to produce the significant economic benefits from our restructuring initiatives was a key factor in getting these amendments approved by the Lending Group. These amendments give APW the ability to take additional restructuring actions in response to the uncertainties in the current economic environment and to protect the positive financial progress the Company has made, going forward." Carroll continued, "Other revisions were made in anticipation of possible future strategic operating decisions. For example, net proceeds from the sale of a business or from external equity raising transactions will now create additional borrowing availability for APW. These types of modifications provide APW greater flexibility in meeting potential future capital requirements." The complete Amendment to the Amended and Restated Multi-Currency Credit Facility is expected to be filed as an exhibit to Form 8-K with the SEC by the close of business October 2, 2001. About APW Ltd. APW Ltd. is a Technically Enabled Manufacturing Services ("TEMS") company that designs and manufactures large, complex infrastructure products for OEM's in the communications, large enterprise hardware and Internet markets. APW Ltd. has particular skills in the areas of manufacturing enclosures, thermal management, backplanes and power supplies; as well as core competencies in product and system design, integration and supply chain management. APW Ltd. operates in over 40 locations throughout North America, South America, Europe and Asia. CONTACT: APW Ltd. Mike Gasick 262-523-7631 www.apw.com =========== B R A Z I L =========== CVRD: Bethlehem Steel Sells Iron Ore Interest In MBR ---------------------------------------------------- Bethlehem Steel Corporation (NYSE: BS) announced Thursday that it has completed the sale of its 5% interest in Mineracoes Brasileiras Reunidas (MBR) to Companhia Vale do Rio Doce (CVRD), of Rio de Janeiro, the world's largest iron ore producer. The transaction is valued at $25 million comprised of $4.4 million in cash that was received at closing and credits which will be applied against future ore purchases all of which are expected to be realized within the next nine months. CONTACT: Robert W. Bilheimer, Public Affairs Department, +1-610-694-3711; or Jeff Faloba, Investor Relations, +1-610-694-2206, both of Bethlehem Steel Roberto Castello Branco, +55-21-3814-4540, or castello@cvrd.com.br, or Andreia Reis, +55-21-3814-4643, or andreis@cvrd.com.br, or Barbara Geluda, +55-21-3814-4557, or geluda@cvrd.com.br, or Daniela Tinoco, +55-21-3814-4946, or daniela@cvrd.com.br, all of Companhia Vale do Rio Doce GLOBO CABO: Registers R$389.2M Loss In 1H01 ------------------------------------------- Cable TV and Internet firm Globo Cabo, which has lost almost 70 percent of its stock value this year due to swelling debt ratios and energy rationing, announced that losses during the first half grew 285.3 percent, to R$389.2 million, against the comparable period of last year, Valor Economico reported Thursday. The company said it has been harmed by the retraction of the cable TV market responsible for more than 90 percent of its turnover. Globo Cabo has been extending the term of its debts and according to BES Securities, its shares might be priced at R$1,21 per lot of 1,000 in June 2002 against the current R$0,59, a growth of 105 percent. INEPAR: Some Assets Could Go On The Block Due To Restructuring -------------------------------------------------------------- The restructuring process and a newly-revised business plan for all of its companies could see Brazilian business group Inepar Holding selling some assets, revealed Inepar Energia director Ricardo Aquino in a report Thursday in Business News Americas. Inepar Holding's new president, Roberto Procopio Lima Netto, has taken charge of the new business plan, which will detail the group's priorities. Aquino confirmed the revised plan should not alter the company's earlier decision to sell its stakes in the distribution business, with the sale of its respective stakes 18 percent and 52 percent in Mato Grosso state distributor Cemat and Para state's Celpa. "Everyone is convinced that, with the implementation of the restructuring process we have begun, Inepar will return to the profitability levels of the past and become a profitable company, with a healthy financial situation, and will provide an example of an open company on the Brazilian capitals market," Inepar administration committee president Atilano de Oms Sobrinho said in a statement. MOULINEX SA: SEB Likely To Make Last-Minute Bid ----------------------------------------------- French home-appliance maker SEB was predicted to make an 11th hour offer to salvage the near-bankrupt Moulinex, Reuters reported Thursday. "The group (SEB) is finalizing its offer. It will probably make an offer on Friday," the source said, a week after SEB said that it might be interested in part of Moulinex but needed more time to consider an offer. In an attempt to search for a white knight to save ailing Moulinex from liquidation, French legal administrators had earlier on Thursday re-extended their deadline for bids until 1200 GMT on Friday. An initial deadline had been set for last Friday, September 21, but was extended by four days until Tuesday after SEB asked for more time. The fate of Moulinex and of about 21,000 workers in France and abroad, has been hanging in the balance since September 7 when it filed for protection from its creditors. VARIG: VarigLog To Increase Operations Amid Crisis -------------------------------------------------- VarigLog, the logistics company created by Varig, is not affected by the crisis that has impacted the rest of the companies in the air transportation sector, according to its CEO Mr. Jose Carlos Rocha Lima in a report Wednesday in Gazeta Mercantil. The company expects to increase operations due to the stoppage of United Airlines, American Arlines, and Continental Airlines. VarigLog has business on cargo transportation sector, and accounts for 17 percent of Varig's turnover. ========= C H I L E ========= EDELNOR: Drop In AES' Equity Won't Affect Ongoing Bid ----------------------------------------------------- Shares of AES Corp. on Wednesday plummeted to nearly half their value after the global energy producer warned it would fall well short of earnings estimates, reported Reuters. However, the drop in AES' share price is unlikely to jeopardize the company's bid of $375 per $1,000 of the debt of Chilean power producer Edelnor, analysts said. AES was down $11.74, or 48.4 percent, to $12.51 in afternoon trade on the New York Stock Exchange, helping push the 40-company Standard & Poor's utility index down 4.7 percent to 239.53. On Tuesday, AES cut its earnings estimate for 2001 by about one-fourth, citing a weak real currency in Brazil, lower British power prices and its inability to replace earnings anticipated from the planned acquisition of the Mohave power plant. After AES slashed its earnings forecast to a range of $1.25 to $1.45 per share from a previous range of $1.75 to $1.90, analysts cut their ratings and earnings estimates. UBS Warburg analyst Ron Barone cut his 2001 earnings estimate to $1.35 a share from $1.75, while Morgan Stanley cut its rating on the shares to "neutral" from "strong buy." Barone said he is less comfortable with AES' bid for Edelnor. =============== C O L O M B I A =============== ACES: Closes Technological Integration Deal With Bellsouth ---------------------------------------------------------- Colombian airline Aces and BellSouth have just concluded a technological integration that will permit Aces clients to check on flight times, etc. via their BellSouth mobile phones. The information will be deliverd using the Mensajes en Pantalla (MEP) (on-screen messaging) service BellSouth offers, Portafolio reported Wednesday. The integration was completed with the help of Microsoft. Microsoft Colombia will aid the two firms in expanding the service, with BellSouth hoping to cover the whole corporate sector and Aces wanting to be able to take reservations, via mobile phone. Aces is looking to merge with another Colombian airline, the cash-strapped Avianca. The two airlines earlier said that the merger is needed to help them compete with U.S. carriers encroaching on international routes. =========== M E X I C O =========== ALLEGRO REGIONAL: Halts Operations Indefinitely ----------------------------------------------- Following a loss of approximately 8 million pesos after attempting to establish interstate services in Mexico, Allegro Regional, an airline owned by Lineas Area Allegro, decided to cease operations indefinitely, Mexico City daily Reforma reported Thursday. The company began operations in March 2000 in Monterrey, flying to Tampico, Matamoros, Victoria City and Valles City, San Luis Potosi. "It didn't work. The occupations were very low, and we decided to stop and close," said Allegro Chairman Fernando Padilla Villarreal. The objective of the company was to offer regional service at a price below competitors, he said. BANCRECER: Banorte To Start Network Reduction This Year ------------------------------------------------------- Mexican financial group Banorte will begin reducing its distribution network this year after acquiring local operator Bancrecer from the Mexican government on Monday for US$174 million, according to a report in Business News Americas. Banorte disclosed its banking unit will absorb Bancrecer, but will not know exactly how many branches will be closed until the second quarter of 2002. However, in a statement, Banorte said 250 branches would close their doors as part of a first phase. Analyst Patrick Boucher from Santander Investment believes the closures will come this year because Banorte will want to reduce its cost structure as soon as possible. Bancrecer's acquisition puts Banorte in fourth place in Mexico's financial industry, with 1,207 branches, 2,486 ATMs and some 13 percent of total deposits. HYLSA S.A.: S&P Lowers Ratings to 'CCC+'; Outlook Negative ---------------------------------------------------------- Standard & Poor's lowered Thursday the corporate credit and senior unsecured debt ratings on Hylsa S.A. de C.V. to triple-'C'-plus from single-'B'-minus. At the same time, the rating on the company's $300 million bonds due 2007 was lowered to triple-'C'-plus from single-'B'-minus also. The outlook remains negative. The downgrade reflects the further deterioration of the steel company's credit protection measures, evidenced by its high debt leverage, limited financial flexibility, and low interest coverage. The lowered ratings also reflect the expected additional contraction of both international and domestic demand, heightened by an increased refinancing risk under a longer than expected U.S. recession, that will put added pressures on the U.S. and Mexican financial markets. Additionally, Standard & Poor's believes that any further financial support from Alfa, Hylsa's parent company, will be limited. OUTLOOK: NEGATIVE The company is currently negotiating the rollover of its short-term debt that is due at the beginning of 2002. Standard & Poor's will monitor closely the result of such negotiations, since its success is key for Hylsa to deal with its currently heavy amortization schedule for 2002. Analyst: Federico Mora, Mexico City (52) 5-279-2036; Santiago Carniado, Mexico City (52) 5-279-2013 HYLSA SA: Likely To Face Default -------------------------------- Hylsa, the primary steel unit of Hylsamex SA, is one of the Mexican companies more likely to face default as creditors shun emerging market debt and banks are unwilling to lend on concern that Sept. 11 terrorist attacks could push the U.S. into recession and send Mexican exports tumbling. According to a report in Bloomberg Thursday, Hylsa has to pay or refinance $80 million in debt this year and $286 million next year. The company may have trouble raising the money as steel sales and profits decline amid a global economic slowdown. "It's very likely that Hylsa will default," said Rodrigo Quevedo, an analyst with Invex Casa de Bolsa SA in Mexico City. "The company's going to have to provide more information to convince the market otherwise." The steelmaker's largest creditors include Citigroup Inc.'s Citibank NA, Grupo Financiero BBVA Bancomer SA, Banco Santander Central Hispano SA, Grupo Financiero Santander Serfin SA, Grupo Financiero Bital SA and government import-export bank Bancomext. HYLSAMEX: Current Outlook Difficult At Best ------------------------------------------- Mexican steelmaker Hylsamex is facing a bleak outlook as it struggles to stay afloat amid tight markets, weak cash flow and looming debt payments, Business News Americas reported Thursday. The company is scheduled to make a US$115-million debt payment next January to its creditor banks, but analysts are apprehensive about its ability to meet obligations without outside help, as its cash flow has just not been sufficient. The company may be looking to renegotiate its debt with the banks, led by Mexico's Banamex, according to stockbroker Carlos Hermosillo. However, the banks may be running out of patience with Hylsamex, which was already granted a waiver on a debt payment earlier this year, according to Standard & Poor's metals analyst Federico Mora. A possible rescue option would be that parent company Mexican industrial conglomerate Grupo Alfa injects more capital into Hylsamex. But, despite having some leverage with the banks, Alfa may not be in a position to offer more cash, as two of its other subsidiaries - an autoparts manufacturer and a petrochemicals firm - are also in difficult financial positions and facing tight markets, said Mora. ======= P E R U ======= AEROCONTINENTE: Owner Testifies In Money-Laundering Case -------------------------------------------------------- The owner of the Peruvian airline Aerocontinente, Fernando Zevallos, volunteered to testify before a Chilean judge as a defendant in a money-laundering case brought by the attorney general's office, EFE reported Thursday. Judge Victor Montiglio is the one leading the investigation. At the same time, the airline's executive director, Carlos Morales, has asked for government assistance in obtaining a $37-million credit line. The airline is trying to recover from losses arising from a court order halting operations for one month and from the industry-wide crisis sparked by the Sept. 11 terrorist attacks in the United States. NBK BANK/BANCO NUEVO: NBK Valuation Pending, Nuevo's Questioned ---------------------------------------------------------------- The Peruvian banks commission SBS has until September 30 to determine the final current valuation of NBK Bank and Banco Nuevo. The two banks which were intervened late last year after political and economic turmoil in the country sparked a run on deposits, El Comercio reported Tuesday. SBS is prepared to submit NBK Bank's valuation in due time, but Banco Nuevo Mundo's will probably be delayed. The banks' valuation will help define their deficits. Treasuries worth up to US$300 million will be issued to cover savings accounts. Banco Nuevo Mundo will be merged with Banco Interamericano de Finanzas (BIF), while NBK Bank will be merged with Banco Financiero. PESQUERA MARIA: Creditors Agree Postponemen, Merger Process ------------------------------------------------------------ Creditors of the fishing company Pesquera Maria Milagros agreed to postpone for 60 days the conclusion of the company's restructuring plan, reported Gestion Tuesday. The fishing company reportedly has debts of US$12.3 million and the payment is subject to the company's production forecast for the next 10 years. Meanwhile, the company's creditors have also given their preliminary consent to a merger between Pesquera Maria Milagros and Pesca Peru Tambo de Mora Norte. 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 * * *