/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/011106.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, November 6, 2001, Vol. 2, Issue 217 Headlines A R G E N T I N A AEROLINEAS ARGENTINAS: New Suit Could Lead To Bankruptcy AEROLINEAS ARGENTINAS: Resumes Flights After 5-Month Suspension EPEC: Privatization Delays Reflect Bleak Economic Outlook Fitch Downgrades Argentine Banks After Sovereign Rating Action B R A Z I L CVRD: Searching For Partner To Proceed With Copel Bid GLOBO CABO: Subscribers Drop In 3Q01 On Weakening Economy TRANSBRASIL: Suspends Brazilian Flights Due To Lack Of Planes VESPER: High Interconnection Fees Create Unfair Conditions VESPER: Kaufmann Denies Restructuring Involves Debt Forgiveness C O L O M B I A VALORES BAVARIA: Shares Expected To Drop On Secondary Issue News VALORES BAVARIA: Breaks Away From Bavaria J A M A I C A AIR JAMAICA: Still Operating At A Loss AIR JAMAICA: Sees Increase In UK Landing Fees M E X I C O VITRO SA: Enters JV With Asahi Unit To Produce Floating Glass P E R U NUEVO MUNDO: Regulator To Disclose Liquidator November 16 SIDERPERU: Export Push Increases Sales, Cuts Losses In 3Q T R I N I D A D & T O B A G O YORK RESEARCH: Moody's Cuts York Funding Sr Secured To Caa1 V E N E Z U E L A AVENSA: Precariously Balanced Even After Debt Reduction - - - - - - - - - - - ================= A R G E N T I N A ================= AEROLINEAS ARGENTINAS: New Suit Could Lead To Bankruptcy -------------------------------------------------------- Aerolineas Argentinas suffered another financial blow after Aeropuertos Argentina 2000, the firm managing most of Argentina's airports, filed a lawsuit Wednesday against the Argentine airline to recover $5.53 million in back airport fees, EFE News Service said in a report. Aeropuertos Argentina 2000 alleges it is owed airport fees dating back to June 22, shortly after Aerolineas Argentinas sought protection from its creditors. In the event Aerolineas incurred the debt after it filed for protection, the management company could request that the airline be forced into bankruptcy, according to an Aeropuertos spokesperson. Aeropuertos Argentina 2000 is also claiming that the airline owes it an additional $11.22 million plus interest that will be dealt with by the courts in a meeting of the airline's creditors. Argentine businessman Eduardo Eurnekian, who once expressed an interest in acquiring Aerolineas Argentinas, owns Aeropuertos Argentina 2000. AEROLINEAS ARGENTINAS: Resumes Flights After 5-Month Suspension --------------------------------------------------------------- Aerolineas Argentinas resumed flights between Buenos Aires and Madrid starting November 4. The move signaled the beginning of renewed service and perhaps even an increase in the company's international and domestic flights, EFE said in a report. Resumption of flights between the cities came after a five-month suspension of service. During the second week of November, Aerolineas is also expected to resume service to Brazil (Rio de Janeiro and Sao Paulo) as well as New Zealand (Auckland) and Australia (Sydney). EPEC: Privatization Delays Reflect Bleak Economic Outlook --------------------------------------------------------- The series of delays in Epec's privatization are indicative of the uncertainties in the Argentinean economy. Troubling times are scaring investors, making large-scale financial transactions difficult according to an El Cronista report. As a result, the government is forced to undertake the much-needed US$129-million investment to improve the company itself. Epec, which operates in electric power transportation and distribution in Cordoba province, has 600,000 customers. An asset coveted by Union Fenosa, AES and Tractebel, the potential suitors nevertheless declined to make offers under the current clouds of crisis. Epec's privatization was scheduled for this year but now the process will remain suspended at least until 2003. Fitch Downgrades Argentine Banks After Sovereign Rating Action -------------------------------------------------------------- Fitch, the international credit rating agency, has downgraded the Long-term foreign and local currency ratings of the banks listed below to `CC', Rating Watch Negative from `CCC-', Rating Outlook Negative. These rating actions follow a similar action taken with Argentina's sovereign ratings, which constrain the ratings in question. Fitch has also lowered the Support ratings of the banks owned by Argentine private and government shareholders from `4T' to `5T'. This action reflects the continued deterioration in local creditworthiness, as well as the continuing restrictions imposed by the Convertibility regime on authorities' capacity to provide full support to the banking system. Ratings Affected: Banco Bisel --Short-term `C'; --Long-term downgraded to `CC', Rating Watch Negative from `CCC-', Rating Outlook Negative; --Support `3T'. Banco Credicoop -- Support from `4T' to `5T'. BBVA Banco Frances --Short-term `C'; --Long-term downgraded to `CC' Rating Watch Negative, from `CCC-' Rating Outlook Negative; --Individual rating `C/D'; --Support `3T'. Banco de Galicia y Buenos Aires --Short-term `C'; --Long-term downgraded to `CC' Rating Watch Negative, from `CCC-', Rating Outlook Negative; --Individual Rating `D'; --Support from `4T' to `5T'. Banco de Galicia y Buenos Aires (Local Currency) --Short-term `C' ; --Long-term downgraded to `CC' Rating Watch Negative, from `CCC-', Rating Outlook Negative. Banco Bansud --Individual `D/E'; --Support from `4T' to `5T'. Banco Hipotecario --Short-term `C'; --Long-Term downgraded to `CC' Rating Watch Negative, from `CCC-', Rating Outlook Negative; --Individual Rating `D'; --Support from `4T'to `5T'. Banco Hipotecario (Local Currency) --Short-term `C'; --Long-Term downgraded to `CC' Rating Watch Negative, from `CCC-', Rating Outlook Negative. Banco de Inversion y Comercio Exterior --Long-term downgraded to `CC' Rating Watch Negative, from `CCC-', Rating Outlook Negative. Banco de la Provincia de Buenos Aires --Long-Term downgraded to `CC' from `CCC-'and remains on Rating Watch Negative; --Support from `4T' to `5T'. Banco Rio de la Plata --Short-term `C'; --Long-Term downgraded to `CC' Rating Watch Negative; from `CCC-`, Rating Outlook Negative; --Individual Rating `C/D'; --Support `3T'. HSBC Bank Argentina --Long-Term downgraded to `CC' Rating Watch Negative, from `CCC-`, Rating Outlook Negative. Fitch's Support Ratings do not assess the quality of a bank, but rather represent its opinion of whether the bank would receive support should this be necessary. A `3' Support rating states Fitch's opinion that the bank concerned has institutional owners of sufficient reputation and possessing such resources that support would be forthcoming, if necessary. A Support rating of `4' opines that such support is likely, but not certain, while a `5' opines that support is possible, but cannot be relied upon. A `T' suffix is added as qualifier to Support ratings in many emerging markets to indicate that transfer risk may prevent support for foreign currency creditors. CONTACT: Fitch, New York Peter Shaw, 212/908-0553 Agatha Pontiki, 212/908-0306 or Lorna Martin/Ana Gavuzzo, +5411-4327-2444 (Buenos Aires) =========== B R A Z I L =========== CVRD: Searching For Partner To Proceed With Copel Bid ----------------------------------------------------- Brazilian mining group Companhia Vale do Rio Doce (CVRD) decided not to participate in the auction of the Brazilian electricity company Companhia Paranaense de Energia Electrica (Copel), according to a report in De Financieel Ekonomische Tijd. However, a report in Business News Americas Wednesday suggested that the Brazilian iron ore miner could re-enter the race if it finds a suitable partner. CVRD president Roger Agnelli announced the company's withdrawal last Tuesday on the eve of a deadline to submit bidding guarantees, but then revived the possibility of competing after Parana issued a last minute extension of the guarantees. "CVRD will participate in the sale of Copel provided it finds a partner interested in the distributor, transmission and other assets, as [CVRD] is only interested in the generation assets," revealed a CVRD corporate advisor. The government of Brazil's Parana state has confirmed November 6 as the new deadline for qualified companies to deposit the US$150 million financial guarantee to participate in the auction of integrated power company Copel. CONTACT: Roberto Castello Branco: castello@cvrd.com.br +55-21-3814-4540 Andreia Reis: andreis@cvrd.com.br +55-21-3814-4643 Barbara Geluda: geluda@cvrd.com.br +55-21-3814-4557 Daniela Tinoco: daniela@cvrd.com.br +55-21-3814-4946 GLOBO CABO: Subscribers Drop In 3Q01 On Weakening Economy --------------------------------------------------------- Brazilian cable television provider Globo Cabo saw the number of its subscribers fall 2.6 percent in the third quarter as the country's economy slowed more than expected, according to a Bloomberg report Friday. In a press release, the company disclosed the decline from the previous quarter compared with a 3.7 percent increase in the same period last year. Globo Cabo had 1.45 million subscribers at the end of the quarter, less than the 1.49 million that Merrill Lynch analyst Whitney Johnson forecast earlier. The number of subscribers blocked from using their cable television service due to non-payment of bills jumped more than fourfold to 20,100 from 4,800, Globo Cabo stated. INVESTOR RELATIONS CONTACTS: Augusto Rocha, or Marcio Minoru Miyakava, or Luis Henrique Martinez all of Globo Cabo S.A. Rua Verbo Divino, 1356 Sao Paulo - SP - 04719-002 - Brazil Phone: (5511) 5186-2681 TRANSBRASIL: Suspends Brazilian Flights Due To Lack Of Planes ------------------------------------------------------------- Of the eight jets that make up Transbrasil's fleet, only five are in working condition, O Globo reported Friday. As a consequence, the Brazilian transportation company suspended flights in Brazil. Servicing $947 million worth of debts is apparently crippling Transbrasil's ability to maintain its equipment. VESPER: High Interconnection Fees Create Unfair Conditions ---------------------------------------------------------- Brazilian phone company Vesper is blaming high interconnection fees for creating unfair market conditions to new companies, O Globo reported. The company is complaining that the disparity is hampering potential profitability. According to the company's chairman, Luiz Kaufmann, a recently established company that has three percent of the market pays the same interconnection fee as other operators, which have the remaining 97 percent. He complained that interconnection fees absorb about 50 percent of the company's overall turnover. VESPER: Kaufmann Denies Restructuring Involves Debt Forgiveness --------------------------------------------------------------- Vesper is currently undertaking a financial restructuring, but the process does not involve debt forgiveness, according to Chairman Luiz Kaufmann, AFX-Europe reported Friday. Kaufmann's statement came in reaction to a report that LM Ericsson AB, Nortel Networks Corp, Lucent Technologies Inc and Harris Corp were considering forgiving 80 percent of Vesper's US$1.2-billion debt, while the remaining 20 percent would be paid back by Qualcomm Inc, a 16.2-percent shareholder in Vesper. According to Kaufmann, restructuring will consist of a recapitalization of Vesper, combined with the repurchase of its debt. Kaufmann didn't provide details on the transaction, but the report said that debts are generally repurchased at a discount. Kaufmann said that Vesper is targeting operational breakeven by the end of 2002. As part of its restructuring, Vesper has fired 2,000 staff. =============== C O L O M B I A =============== VALORES BAVARIA: Shares Expected To Drop On Secondary Issue News ---------------------------------------------------------------- Shares of Valores Bavaria SA, a Colombian holding company for the non-beverage investments of the Santo Domingo family, are likely to fall again following the company's announcement that it would issue more stock to pay down debt, Bloomberg reported Friday. "Investors are upset that they will have less of the company after this move to issue new shares," said Sandra Hurtado, a Multivalores SA analyst. The Valores' shares took a beating after shareholders passed a resolution to issue new shares in exchange for writing off an 816-billion-peso debt owed to brewer Bavaria SA, Valores former parent company. The stock has lost 43 percent of its value since Valores first announced its plan early in October. The Santo Domingos control both companies. The capitalization move will more than triple Valores Bavaria's outstanding shares to 894 million from 251 million in exchange for Bavaria forgiving the debt. Each Bavaria shareholder will receive 2.17 shares of Valores. VALORES BAVARIA: Breaks Away From Bavaria ----------------------------------------- Investment group Valores Bavaria and beer producer Bavaria S.A. will now go their separate ways, according to a report in Portafolio. The proposal was approved during an extraordinary shareholders' meeting held last week by both companies. A total of 196 million shares 'voted' in favor of the separation, while only 11,000 voted against it. The decision will allow cancellation of a debt Valores Bavaria owes Bavaria S.A. totaling 816.267 billion pesos in exchange for new equity to be issued. ============= J A M A I C A ============= AIR JAMAICA: Still Operating At A Loss -------------------------------------- Despite the measures taken by Air Jamaica to overcome fallout in the industry following the September terrorist attacks in the US, the national airline still continues to operate at a loss, RJR Radio Jamaica reported Friday. Current measures, including staff agreeing to give back a portion of their pay, are expected to save the airline over 20 million Jamaican dollars over a three month period. However, the savings will not be enough to get the airline out of its current financial trouble. As a result, Chairman Gordon Butch Stewart said that the airline would be introducing additional measures to reduce operational costs. According to Stewart, the airline has seen a reduction of between 15 and 16 percent in passenger travel since the attacks and revenue for the airline is down by 19 percent. Projections for the company have also fallen by 18 percent or US$35 million below budget for the second half of this year. Stewart also revealed that the airline has reduced travel on several routes following the fallout. This includes a reduction in the number of weekly flights. But despite the economic difficulties at Air Jamaica, Stewart said he is not looking to the government for any bail out at this time. AIR JAMAICA: Sees Increase In UK Landing Fees --------------------------------------------- Air Jamaica might soon have to pay more to land in the United Kingdom. The news follows an announcement Friday that a possible change in aviation regulations may increase the cost of landing charges at many of UK's major airports, RJR Radio Jamaica revealed in a report. The Civil Aviation Authority (CAA) has proposed that money from shops and other commercial activities should no longer be used to keep landing charges down. The CAA is responsible for setting a price cap on landing charges, in consultation with the Competition Commission. Airports can then determine their own charges but are prohibited from going above the price cap. Up until now, the CAA has taken commercial revenues from airport shops into account when setting the price cap. The new proposal means revenues would no longer be considered by the CAA, although airports will be free to take them into account when imposing their own charges. Additionally, parking charges for the aircraft are also expected to increase as a result of the changes. =========== M E X I C O =========== VITRO SA: Enters JV With Asahi Unit To Produce Floating Glass ------------------------------------------------------------- Vitro SA, Mexico's largest glass producer, agreed to enter a 50:50 joint venture with AFG Industries Inc, a U.S. unit of Asahi Glass Co Ltd., for the production of floating glass in Mexico, Bloomberg reported Friday. Vitro and AFG plan to convert Vitro's glass bottle factory in the Baja California border city of Mexicali to produce float glass. According to Vitro, the floating glass will be sold in Mexico, the U.S. and Canada. Operations in the converted plant are expected to begin in the second quarter of 2003. Financial details of the venture were not immediately available. Vitro executives told analysts last week the company was looking to sell assets to pay down part of its $1.6 billion debt and refinance a $175 million bond that matures in May. CONTACT: Vitro S.A. de C.V. financial community: Gerardo Guajardo, 011 (52) 8329-1349 gguajardo@vto.com Beatriz Martinez, 011 (52) 8329-1258 bemartinez@vto.com or Vitro, S. A. de C.V. media: Albert Chico, 011 (52) 8329-1335 achico@vto.com ======= P E R U ======= NUEVO MUNDO: Regulator To Disclose Liquidator November 16 --------------------------------------------------------- Peru's banking regulator is expected to name the winner of the contract to handle the liquidation of intervened Peruvian bank Banco del Nuevo Mundo by November 16, according to Business News Americas. Banking regulator Luis Cortavarria disclosed that one accounting firm, one liquidation firm and two law firms have shown interest in the contract so far. Nuevo Mundo was intervened in December last year after former President Alberto Fujimori's unexpected departure for Japan triggered a deposit run on some smaller banks. An attempt by the banking regulator to sell Nuevo Mundo to another Peruvian bank failed after a drawn-out legal battle with Nuevo Mundo's former majority shareholders, who claimed that Fujimori's management was to blame for their bank's fate. SIDERPERU: Export Push Increases Sales, Cuts Losses In 3Q --------------------------------------------------------- Peruvian steelmaker Siderperu told the Lima Stock Exchange that the company was able to increase sales and cut losses in the third quarter due to an aggressive export drive to Chile, Business News Americas said in a report. However, with the continuing decline in the domestic market, the net gain on sales income was only 1.9 percent to 108.7 million soles (US$31.5 million) in the third quarter, compared to the second. But with the benefits of ongoing financial restructuring being implemented under protective bankruptcy, along with "cost optimization" and other measures, Siderperu's third-quarter loss was 73 percent less at 2.13 million soles (US$618,000) compared to 7.9 million in the second quarter. The Jan-Sep net loss was 14.4 million soles (US$4.17 million). Capital expenditures are ongoing, said Siderperu's general manager Abraham Chahuan. Siderperu is planning to install an electric blast furnace next year to take sheet-steel production to more than 1Mtpy. Current liquid steel capacity is 520,000tpy. Siderperu is currently operating under bankruptcy protection to refinance its estimated US$100-million debt. ================================= T R I N I D A D & T O B A G O ================================= YORK RESEARCH: Moody's Cuts York Funding Sr Secured To Caa1 ----------------------------------------------------------- Moody's Investors Service cut the rating on the senior secured debt of York Funding (Cayman) Limited (Funding) to Caa1 from Ba3 and has removed the rating from review for further downgrade. The rating outlook is negative. Moody's was prompted to take the action following the October 30 disclosure by Funding's parent, York Research Corporation (York), that the scheduled October 30, 2001 payment of $10.3 million to Funding's bondholders was not paid. Moody's does not anticipate that this payment default will be cured during the ten-day grace period. York also disclosed that approximately $17.5 million generated by the company's Trinidad Project over the last 18 months was advanced to York for its general corporate purposes, an event of default under the bond documents. The Caa1 rating also reflects the credit rating service's belief that the value of the collateral package associated with Funding's securities is, in all likelihood, sufficient to repay bondholders principal at or near par, Moody's said. The collateral for Funding's approximately $145 million of outstanding debt consists of York's interest in its Trinidad Project, Brooklyn Navy Yard Project, Big Spring Project and Warbasse Project. New York Susan D. Abbott Managing Director Corporate Finance Moody's Investors Service JOURNALISTS: (215) 967-6233 SUBSCRIBERS: (215) 967-6233 New York A.J. Sabatelle VP - Sr Credit Officer Corporate Finance Moody's Investors Service JOURNALISTS: (215) 967-6233 SUBSCRIBERS: (215) 967-6233 ================= V E N E Z U E L A ================= AVENSA: Precariously Balanced Even After Debt Reduction -------------------------------------------------------- Although it has managed to reduce its liabilities by 44 percent, cutting debts from US$26 million to US$14.5 million, Venezuelan airline Avensa remains in a very delicate position, El Nacional reported Thursday. The company's condition remains critical especially after the September 11 terrorist attacks in the US since its primary assets in terms of routes are its flights to Miami and New York. In addition to that, there have been calls for it to declare itself insolvent. However, Avensa has adjusted its focus to work more with Europe and the Andean region of South America. But the company still needs much goodwill from workers, its 254 creditors, shareholders and the government to pull through the current challenges. According to El Nacional, although the airline has reduced its debts, it failed to address its debt with suppliers and ex- employees. 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 240/629-3300. * * * End of Transmission * * *