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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 27, 2001, Vol. 2, Issue 231
Headlines
A R G E N T I N A
ACINDAR: Shares Jump Following Sale Of Assets
AMERICO VICTORIO: Calls In Receivers To Solve Financial Problems
B R A Z I L
BANCO ECONOMICO: Ciquine Priced Out Of Reach, Petrom Claims
CEMIG: Forms Subsidiary To Develop Projects Outside Minas Gerais
CVRD: May Ask Financial Aid From BNDES For Sossego Project
CVRD: To Pay Interest on Shareholders' Equity
EMBRAER: Gets More Government Protection For Exports
EMBRAER: Brazil, Canada To Resume Talks Over Aircraft Dispute
RFFSA: Conclusion Of Liquidation Still Out Of Reach
TELEMAR: Investors Begin To Show Confidence In Stock
TRANSBRASIL/VASP/VARIG: Infraero Draws Up Debt Guarantee Plan
C H I L E
TELEFONICA CTC: May Sue Chilean State On Alleged Decree Errors
C O L O M B I A
AVIANCA: To Open Up Bogota-Caracas-Bogota Route This Year
M E X I C O
AEROMEXICO/MEXICANA: Legislators Issue Warning On Airline Aid
BANCA QUADRUM: Shareholders Seek Extension For Requirements
CAZE/GAM: Agriculture Ministry Explains Expropriation Plans
GRUPO TRIBASA: Advent Makes Progress In Restructuring Efforts
INDUSTRIAL/ANAHUAC/SURESTE: Sell-off Cheaper Than Liquidation
STARMEDIA: Investigation Will Not Hamper Mexican Operations
SUGAR INDUSTRY: Urging Government To Bail Out Sector Quickly
P A R A G U A Y
ANTELCO: Union, Telecel Reach Agreement To Form Joint Bid
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A R G E N T I N A
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ACINDAR: Shares Jump Following Sale Of Assets
---------------------------------------------
The share price of Argentine steelmaker Acindar rose 0.005 to
0.16 after it said it had sold an unused laminator and other
equipment to stakeholder Cia. Siderurgica Belgo Mineira for
US$13.36 million, AFX-Europe reports.
Acindar posted a net loss of 20.7 million pesos for the first
nine months ended September 30 period due to lower production
volume as well as lower prices in both domestic and export
markets. In addition, the company incurred higher financial
charges, partly offset by cost reductions in administration and
by less depreciation.
Acindar said it still continues to carry out a "turnaround plan"
that was introduced by its new partner, the Brazilian steel
company Belgo-Mineira. So far, the plan has included staff cuts,
cost reductions and increases in output.
AMERICO VICTORIO: Calls In Receivers To Solve Financial Problems
----------------------------------------------------------------
In order to solve its dire financial situation, the construction
company Americo Victorio Gualtieri decided to call in the
receivers, South American Business Information reports.
The Company, according to the report, has liabilities of US$400
million, excluding the US$140 million owed to the banks Nacion
and Provincia de Buenos Aires.
Americo reached an agreement with its creditors to capitalize
part of its debt for US$51 million and to issue negotiable bonds
for another US$210 million.
Other significant bank creditors include Citibank, Bansud and
Banca Nazionale del Lavoro.
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B R A Z I L
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BANCO ECONOMICO: Ciquine Priced Out Of Reach, Petrom Claims
-----------------------------------------------------------
Petroquimica de Mogi das Cruzes (Petrom) says that the base price
of US$16 million (40.2 million reais) for a stake in the
Brazilian petrochemicals firm Ciquine is too high, Business News
Americas reports.
Petrom is reportedly the only party interested in acquiring
Ciquine, one of the last assets of bankrupt bank Banco Economico
that are being sold off by the Brazilian Central Bank.
The auction for the stake is slated for November 28.
Petrom has hired Brazilian law firm Machado, Meyer, Sendacz e
Opice Advogados and consultancy PricewaterhouseCoopers as
advisors.
CEMIG: Forms Subsidiary To Develop Projects Outside Minas Gerais
----------------------------------------------------------------
Companhia Energetica de Minas Gerais (Cemig) is creating a new
subsidiary, Horizontes Energia, and will launch this business at
the end of this month, Gazeta Mercantil reports.
According to the report, the subsidiary, which will be teamed by
the small facilities Salto do Passo Velho and Salto Voltao, is
being created to develop projects outside Minas Gerais state.
Cemig registered a net loss of R$194 million between January and
September 2001, in contrast to the R$324 million net profit
posted in the comparable period of the previous year.
In order to face the drop in its performance, the Company reduced
investment and operating costs by 20 percent.
For this year, the company is expected to invest between R$550
million and R$600 million, instead of its original prospects of
up to R$750.5 million.
Cemig has a net worth of R$6.451 billion, while total debts stand
at R$4.001 billion.
To see company's financial statements:
http://www.bankrupt.com/misc/Cemig.pdf
CONTACT: Luiz Fernando Rolla, Investors Relations of CEMIG,
+011-5531-299-3930, Fax, +011-5531-299-3933 or
lrolla@cemig.com.br; or
Vicky Osorio of The Anne McBride Company,
+1-212-983-1702, Fax, +1-212-983-1736, or
vicky@annemcbride.com, for CEMIG
CVRD: May Ask Financial Aid From BNDES For Sossego Project
----------------------------------------------------------
U.S.-based Phelps Dodge's withdrawal earlier this month from the
Sossego copper project is likely to see Companhia Vale do Rio
Doce (CVRD) asking for financial help from Brazil's National
Development Bank (BNDES), Reuters reports.
Sossego, expected to be Brazil's first world class copper mine,
is a joint venture between the two companies.
"CVRD may get financing from BNDES to bridge the gap left by
Phelps Dodge," said an analyst who asked not to be named. "But a
six-month delay in start-up is likely as CVRD waited quite a few
months for Phelps Dodge's formal position," the analyst added.
Meanwhile, a local press report suggested that the Sao-Paulo-
based Brazilian office of Anglo American may consider replacing
Phelps Dodge in the Sossego project. However, Anglo American
declined to comment on this report.
CONTACT: Roberto Castello Branco
+55-21-3814-4540
castello@cvrd.com.br
Andreia Reis
+55-21-3814-4643
andreis@cvrd.com.br
Barbara Geluda
+55-21-3814-4557
geluda@cvrd.com.br
Daniela Tinoco
+55-21-3814-4946
daniela@cvrd.com.br
CVRD: To Pay Interest on Shareholders' Equity
---------------------------------------------
The Board of Directors of Companhia Vale do Rio Doce (CVRD)
approved Friday the proposal of the Executive Board for payment
of interest on shareholders' equity. Such payment is based on the
financial statements of the nine months ended on September 30,
2001, according to the following terms:
1. Distribution of interest on shareholders' equity in the amount
of R$ 1,773,475,629.40 (one billion, seven hundred seventy three
million, four hundred seventy five thousand, six hundred and
twenty nine reais and forty cents), equal to R$ 4.61 (four reais
and sixty one cents) per share.
2. The payment will be done in two equal installments. The first
will take place on December 10, 2001. The second will occur until
April 30, 2002, in accordance with the limits set by the law. The
Company will inform the payment date in the future. The
distribution of interest on shareholders' equity is subject to
withholding income tax at a rate of 15%, in accordance to the Law
9,249 of December 26, 1995.
EMBRAER: Gets More Government Protection For Exports
----------------------------------------------------
Empresa Brasileira de Aeronautica (Embraer) is to gain more
breathing space following the government's decision to increase
the protection it provides for the Brazilian aircraft
manufacturer's exports to 100 percent of their value, AFX-Europe
reports.
Currently, the insurance coverage provided to Embraer's exports
is limited to 90 percent in the case of political risks and 95
percent for commercial risks.
Chamber of Foreign Trade executive secretary Roberto Giannetti
explained that the measure was taken to enable Embraer to
finalize contracts currently under negotiation.
"We could not miss this opportunity to export," Giannetti added.
However, implementation of the government's decision still awaits
President Fernando Henrique Cardoso's approval.
To see company's latest financial statements:
http://www.bankrupt.com/misc/Embraer.pdf
CONTACT: Investor Relations Department
Phone: 55-12-3945-1216
e-mail: mercapit@embraer.com.br
EMBRAER: Brazil, Canada To Resume Talks Over Aircraft Dispute
-------------------------------------------------------------
Negotiators from both countries, Brazil and Canada, will meet
again in January to find a solution to their long-standing
dispute over subsidies to their respective regional jet
manufacturers, Bloomberg reports.
Brazil's top trade negotiator Jose Alfredo Graca Lima revealed
that the countries decided to resume talks due to the
cancellation of orders to aircraft makers after the terrorist
attacks in the U.S. on Sept. 11 and a World Trade Organization
decision to be announced in December regarding the dispute.
Lima warned, though, "We will not rescind our complaints. We must
protect our trade rights."
Graca Lima and Deputy Canadian Trade Minister Claude Carriere
earlier indicated about resuming talks over the feud involving
rival planemakers Bombardier Inc. and Empresa Brasileira de
Aeronautica SA, known as Embraer.
According to Lima, the meeting between the countries at a date to
be set in the New Year will take place in Toronto or New York.
The two countries have been locked in a fight since 1996,
accusing each other of unfairly subsidizing aircraft sales by
their plane manufacturers, a dispute that was taken before the
World Trade Organization.
Both sides broke off negotiations aimed at resolving the impasse
after Bombardier in April used low-interest loans by the Canadian
government to beat Embraer for a $1.68 billion order from Air
Wisconsin Airlines Corp.
RFFSA: Conclusion Of Liquidation Still Out Of Reach
---------------------------------------------------
The liquidation of the Brazilian state railroad RFFSA (Rede
Feroviaria Federal), which began two years ago, is a complicated
process, says South American Business Information.
The company is dealing with 36,663 legal actions brought about by
its liquidation, and has to spend R$700,000 monthly because of
the suits.
RFFSA reportedly has 30,500 buildings to sell, many of which
cannot be sold because of the legal proceedings. The Company also
owns cemeteries, farms, soccer fields, nature reserves and an
island.
The Company has an annual income of R$250 million and assets of
over R$21 billion. Most of its income comes from sale of assets.
The annual R$250 million in leasing fees paid to it by private
companies which now operate the rail system are deposited and
held by the judiciary because of the large number of lawsuits
underway.
TELEMAR: Investors Begin To Show Confidence In Stock
-----------------------------------------------------
Some investors are now betting on shares like Tele Norte Leste
Participacoes SA, according to a report by Bloomberg.
The report cites Greg Heywood, a Latin America fund manager with
Montgomery Asset Management LLC in San Francisco, who has been
buying telephone stocks like Tele Norte Leste, Brazil's biggest
phone company. Heywood predicts that the company stands to
benefit from a strengthening currency -- up 7.8 percent against
the dollar this month.
A rising real combined with an improving trade balance - up to
$1.5 billion in 2001 through October compared to $134 million in
the same year-ago period -- will cut Brazil's financing costs,
and possibly prompt the central bank to cut interest rates from
19 percent. Lower rates would cut company costs and boost profit.
"The mood has improved so dramatically, that anything can
happen," said Heywood, who helps manage $250 million in Latin
American shares.
TRANSBRASIL/VASP/VARIG: Infraero Draws Up Debt Guarantee Plan
-------------------------------------------------------------
Infraero, which operates the main Brazilian airports, drew up a
securitization plan in order to guarantee the payment of R$342.5
million worth of current debts by the country's airlines, O Globo
reports.
The airlines' total debts with the Company are equivalent to a
third of its annual turnover, which will stand at R$1.5 billion
in 2002.
Vasp, which owes R$90.5 million, is now negotiating its debts
with Infraero.
Varig and Transbrasil, which owe R$155 million and R$97 million,
respectively, will begin repaying their debts through airport tax
payments starting in January 2002.
The airlines wanted their debts with Infraero to be reviewed, but
the Company drew up the plan, saying it will receive payment via
debentures.
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C H I L E
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TELEFONICA CTC: May Sue Chilean State On Alleged Decree Errors
--------------------------------------------------------------
Telefonica CTC Chile may lodge a legal action against the Chilean
State, due to alleged errors in the charges and tariffs
regulatory decree valid from 1999 to 2004, El Diario reports.
Accordingly, the Company could take action in Chilean courts or
in international courts.
Last month, Telefonica CTC submitted a request, to the Ministries
of Economy and Public Works, Communications and Transport, to
modify six aspects: the charges for phone lines, charges for
access and local calls, tax costs, locationsof telecommunication
centers, slow recovery in the system 'who calls, pays' and the
publication of the 'white pages' phone directory.
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C O L O M B I A
===============
AVIANCA: To Open Up Bogota-Caracas-Bogota Route This Year
---------------------------------------------------------
Colombia's money-losing airline Avianca revealed plans to open
its own Bogota-Caracas-Bogota route this year, El Nacional
reports.
Accordingly, the airline will fly daily from Bogota to Caracas
and projects carrying 149,000 passengers in the year with an
occupation rate of 62 percent.
Meanwhile, Avianca also informed that it will offer Venezuelan
`interior' connections with Colombia.
The airline has a tariff deal with Aserca but is talking to other
Venezuelan airlines about possible alliances to help it with
plans to fly to cities such as Valencia, Maracaibo, Puerto Ordaz
and San Cristobal.
Avianca is currently seeking a merger deal with Colombia's No. 2
airline, Aces. The merger was initially rejected by the
government's anti-trust body over fears it would create a
monopoly power in the domestic market. Avianca and Aces have
appealed the ruling.
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M E X I C O
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AEROMEXICO/MEXICANA: Legislators Issue Warning On Airline Aid
-------------------------------------------------------------
Mexican legislators warned that the government's support of the
airlines is becoming a "negative precedent for other sectors or
activities that could find their operations affected by diverse
adverse circumstances," Mexican financial daily El Economista
reports.
The warning came following the Chamber of Deputies Finance and
Transport commissions' approval of the decree, which authorizes
the government to issue up to 1 billion pesos to support Mexican
airlines.
Airline industry experts deemed the measure necessary because, in
the next quarter, the majority of companies will have to review
their insurance contracts. Mexicana spokesperson Fernando
Martinez also agreed, saying that the approval of the decree is
absolutely necessary for the country's airlines.
Mexicana and Aeromexico, both owned by holding company Cintra,
face increased competition from U.S. carriers that have already
received government support.
The decree is to be presented to the entire Chamber of Deputies
for its approval on November 27.
The legislators required that the funds be administered through a
trust in order to ensure their appropriate and transparent use.
CONTACT: AEROMEXICO
Mayte Sera Weitzman of AeroMexico, +1-713-744-8446, or
mweitzman@aeromexico.com
MEXICANA DE AVIACION
Jenny Jenks, Marketing Director, International
Division of Mexicana Airlines, +1-210-491-9764, or
ennyjenks@mexicana.com
BANCA QUADRUM: Shareholders Seek Extension For Requirements
-----------------------------------------------------------
Banca Quadrum shareholders supposedly had only until November 21
to find a way to comply with the bank's financing requirements.
However, in a report by Mexican financial daily El Economista,
the bank's founder, Ignacio Nunez Anta, revealed that the
shareholders requested from the Finance ministry an extension of
the deadline.
The sticking point, according to the National Banking and
Securities Commission (CNBV) Vice President Pablo Escalante, is
that half of Quadrum's shareholders are foreign investors,
considering that 50 percent of the company's outstanding shares
are traded as American Depository Receipts (ADR) in the United
States.
"The timing is secondary. The important thing is that the process
and all of the corporate actions are done well, independent of
the time it takes," said Escalante.
According to a report released earlier by Mexican financial daily
El Economista, Quadrum will be placed under the control of bank
bailout agency IPAB in order to be liquidated if the financing
requirements are not met, or if an alternative plan, such as a
strategic alliance, is not presented.
CAZE/GAM: Agriculture Ministry Explains Expropriation Plans
-----------------------------------------------------------
Sources at the Agriculture ministry revealed that the Mexican
government had on its original plan the expropriation of only the
refineries belonging to GAM and CAZE, Mexico City daily Reforma
reports.
However, the refineries belonging to Grupo Machado and Grupo
Santos were added to the list in order to brush aside
speculations that the government is being unfair to PepsiCo.
GAM and CAZE are PepsiCo.'s main suppliers of sugar. The
agriculture ministry says it didn't want to appear to be ganging
up on the soft drink company.
GRUPO TRIBASA: Advent Makes Progress In Restructuring Efforts
-------------------------------------------------------------
Investment fund Advent has met with the representatives of the
creditors of the struggling Mexican construction company Tribasa,
Mexico City daily Reforma reports.
According to the report, the fund, which is headed by Juan Carlos
Torres and Alfredo Alfaro, offered to pay 30 cents on the dollar
on secured debt and 20 cents on the dollar for unsecured debt.
Tribasa reportedly has debts of more than $1.2 billion. The
Company's creditors include Bancomer, Bital, Societe Generale,
Bank of America and Deutsche Bank.
INDUSTRIAL/ANAHUAC/SURESTE: Sell-off Cheaper Than Liquidation
-------------------------------------------------------------
Failed banks Industrial, Sureste and Anahuac have yet to see what
the future holds for them as Mexico's Bank Savings Protection
Institute (IPAB) still has to analyze options in order to decide
on the best course of action, Mexico City daily El Universal
reports.
The financial regulator the National Banking and Securities
Commission (CNBV) believes that selling these banks would be
cheaper than liquidating them.
CNBV Vice President Pablo Escalante noted that domestic and
foreign companies have expressed interest in acquiring the banks,
because they are operating businesses, with market niches and
name recognition.
Losses at Industrial, Anahuac and Sureste have reached 4.55
billion pesos, 878 million pesos, and 737 million pesos
respectively, the IPAB revealed.
STARMEDIA: Investigation Will Not Hamper Mexican Operations
-----------------------------------------------------------
New York-based Internet media and solutions company Starmedia
will not close its Mexican operations, a spokesperson of the
company revealed in a Business News Americas report.
The announcement came following a recent declaration from the
company that it plans to restate unaudited financial statements
for 2Q01 and 3Q01, and its audited financial statements for the
fiscal year 2000 due to problems with revenue recognition at
Mexican subsidiaries AdNet S.A. de C.V. and StarMedia Mexico,
S.A. de C.V. A special committee of the company's board of
directors is conducting an investigation.
"The effect on company operations depends on the results of the
ongoing investigation," the spokesperson said.
Starmedia's business plan remains unchanged, the spokesperson
disclosed, adding that Mexico is still one of the company's most
important markets.
CONTACT: Press and Investor Inquiries:
Romi Schutzer, Senior Vice President,
Corporate Communications of StarMedia Network,
+1-212-905-8269, or
romi.schutzer@starmedia.net
SUGAR INDUSTRY: Urging Government To Bail Out Sector Quickly
------------------------------------------------------------
National Chamber of the Sugar Industry President Carlos Seoane is
urging the federal government to act fast to reactivate the sugar
sector on expectations that sugar refineries may face financial
crunch due to recent losses, Mexican financial daily El
Economista reports.
Seoane is aware that the federal government is pursuing several
alternatives, including the new financing program to be announced
on December 10. While he said he knows very little of the
options, he suggested that these should provide credits of
between 250 million and 300 million pesos to support the market.
The industry may consider alliances with Mexican soft drink
bottlers to be their exclusive suppliers of sugar, Seoane added.
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P A R A G U A Y
===============
ANTELCO: Union, Telecel Reach Agreement To Form Joint Bid
----------------------------------------------------------
Mobile phone company Telecel and the workers of state-owned
Antelco have reached a tentative agreement to form a joint bid in
the upcoming privatization of the telephone service, EFE reveals.
Accordingly, the Antelco workers union was able to consider
buying the company due to a preferential option granted it by the
Paraguayan constitution.
The union, which is seriously questioning the actions of Reform
Minister Juan Ernesto Villamayor, is made up of at least 5,000
workers who are simultaneously involved in a conflict with
authorities over severance pay.
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.
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