/raid1/www/Hosts/bankrupt/TCRLA_Public/020301.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 1, 2002, Vol. 3, Issue 43
Headlines
A R G E N T I N A
AGUAS ARGENTINAS: Fitch Downgrades Ratings
PECOM ENERGIA: Swaping Shares To Gain Strong Foothold On Sector
TGN: Fitch Downgrades IFC Trust Certificates To 'DD'
B E R M U D A
GLOBAL CROSSING: Former Executive Sues Certain Officers
GLOBAL CROSSING: Preliminary Unaudited Revenue Estimates Posted
B R A Z I L
EMBRAER: Reduces 10-Yr. Passenger Jet Demand Forecast
C H I L E
MANQUEHUE NET: Fitch Lowers Ratings To `B+' From `BB-'
M E X I C O
BANCA QUADRUM: IPAB Readies To Assume Control
BANCO UNION/BANCA CREMI/BANCO DE ORIENTE: IPAB Auctions Loans
CINTRA: IPAB Wants Clear Definition On Airlines' Sale
CYDSA: Struggles To Get Creditors' Approval To Extend Bonds
GRUPO MEXICO: Posts Weak `01 Results On Lower Prices, Volumes
GRUPO MEXICO: DBRS Report Says Company Over Leveraged
GRUPO SIMEC: Preliminary 01 Results Show Sales Down, Income Up
SANLUIS: Manages To Restructure, Refinance Debts At Units
SAVIA: YE01 Results Show Some Recovery, Uncertainty Remains
- - - - - - - - - -
=================
A R G E N T I N A
=================
AGUAS ARGENTINAS: Fitch Downgrades Ratings
------------------------------------------
Fitch Ratings has downgraded the foreign and local currency
ratings of Aguas Argentinas S.A. (Aguas) to 'DD' from 'CC' and
'CCC+', respectively. Fitch has concurrently downgrade the IDB
'B' loan participation certificates to 'CC' Rating Watch Negative
from 'CCC+' Rating Watch Negative.
The rating action reflects the non-payment of $1.6 million
interest due last week to an international bank. While transfer
restrictions were in place during the payment date, such
restrictions have been lifted for various issuers this week.
Despite having sufficient cash balances, Aguas has yet to make
the transfer of funds. Aguas Argentinas is negotiating with the
Argentine government on the possibility of implementing a fixed
exchange rate regime for the repayment of the company's external
debt, primarily multi-lateral debt. Successful negotiations could
reduce the amount of pesos needed by the company to make the US
dollar interest payment and lessen the negative effect of
devaluation. Positive outcome of the negotiations is highly
uncertain at this time.
Aguas Argentinas is not in payment default on the IDB 'B' loan.
The next payment date for the IDB 'B' loan is March 15, 2002.
None of the company's creditors have given notice of default.
Aguas Argentinas has been adversely affected by the impact of the
devaluation, restrictions on bank withdrawals, implementation of
the currency transfer controls as well as the prolonged recession
and government default. Aguas Argentinas and other market
participants are expected to negotiate some type of revenue
recovery or renegotiate their concession agreements to provide
compensation for the government's actions with the goal of
generating sufficient cash flow to service all debt obligations.
The result and timing of the negotiations is uncertain.
Aguas Argentinas is the sole provider of potable water and
sewerage services in the city of Buenos Aires and 17 surrounding
districts. Aguas is 35%-owned and operated by Suez Lyonnaise des
Eaux S.A. (Lyonnaise), a leading French water services and
construction group.
CONTACT: Fitch Ratings
Jason T. Todd, 312/368-3217 (Chicago)
Ana Paula Ares, +54 11 4327-2444 (Buenos Aires)
Cecilia Minguillon, +54 11 4327-2444 (Buenos Aires)
James Jockle, 212/908-0547 (Media Relations/New York)
PECOM ENERGIA: Swaping Shares To Gain Strong Foothold On Sector
---------------------------------------------------------------
Argentine oil and natural gas company Pecom Energia awaits
approval from its board of directors, as well as from its parent
company Perez Companc Holding, on a plan to swap shares owned by
its controlling shareholder. The goal of the transaction is to
strengthen its hold on the energy sector while shedding assets in
agriculture.
Reuters reports that Pecom Energia plans to give up its 50
percent stake in agribusiness company Pecom Agra to investment
company IRHE Holdings and a company IRHE controls, Gentisur, in
exchange for the their shares in electric companies.
"The operation will allow Pecom Energia to optimize its stock
portfolio, incorporating investments that would strengthen its
position in the energy sector (and) in compensation, dispose of
shares that do not fall in line with its main business," the
Company said in a statement.
The swap, according to Reuters, also involves shares in companies
owned by Perez Companc Holding.
Standard & Poor's rating agency, which rates Pecom
CCC+/Negative/--, said the swap plan would not affect the
Company's rating.
"As announced today, the swap will help Pecom to consolidate its
position in the energy business, therefore the rating is not
affected," the agency said.
The operation also needs the approval from the National Defense
of Competition Commission, and the national electricity regulator
must authorize the transfer of Citelec's shares.
CONTACTS: Pecom Energia S.A. de Perez Companc S.A.
Maipo 1 - Piso 22 - C1084ABA
Buenos Aires, Argentina
Phone: (54-11) 4344-6000
Fax: (54-11) 4344-6315
URL: http://www.pecom.com
TGN: Fitch Downgrades IFC Trust Certificates To 'DD'
----------------------------------------------------
Fitch Ratings has downgraded the rating assigned to the IFC Trust
I & II Certificates issued by Transportadora de Gas del Norte
S.A. (TGN) to 'DD' from 'C'. The rating action reflects the non-
payment of $1.76 million in principal due yesterday to the IFC
and IFC Trust Certificate holders. TGN was able to meet the
interest payments on Tranches A and B of the IFC Trust
Certificate, but defaulted on the interest due under the
subordinated Tranches (Tranches C and D). TGN is not in payment
default on the CRIBs and the rating is maintained at 'C' Rating
Watch Negative. The next payment date for the CRIBs is July 25,
2002.
TGN's inability to fully serve both its principal and interest
payments is a result of the combination of devaluation impact,
the pesification and withdrawal of the tariff indexation
mechanism and an accute shortage of liquidity for Argentine
corporates. TGN's financial flexibility has been adversely
affected by restrictions on bank withdrawals, implementation of
the currency transfer controls as well as the prolonged recession
and government default. TGN is not prohibited to transfer dollars
due to its preferred creditor status but its ability to convert
and transfer dollars abroad is limited to strained operating cash
flow as cash balances and new bank lines of credit are
nonexistent. TGN and other market participants are expected to
negotiate some type of revenue recovery or renegotiate their
concession agreements to provide compensation for the
government's actions with the goal of generating sufficient cash
flow to service all debt obligations. The result and timing of
the negotiations is uncertain.
Transportadora de Gas del Norte, S.A. (TGN) is a natural-gas
pipeline company serving the Northern and Central regions of the
Republic of Argentina. The company is 70.4% owned by Gasinvest
S.A., a consortium of TotalFinaElf (27.2%), Compania General de
Combustibles (27.2%), Organization Techint (27.2%), and Petrolium
Nasional Berhad (18.4%). CMS Energy also owns a large stake in
the company (29.4%).
CONTACTS: Jason T. Todd 1-312-368-3217, Chicago
Alejandro Bertuol 1-212-908-0393, New York
Ana Paula Ares +54 11 4327-2444, Buenos Aires
Cecilia Minguillon +54 11 4327-2444, Buenos Aires
MEDIA RELATIONS: James Jockle 1-212-908-0547, New York
=============
B E R M U D A
=============
GLOBAL CROSSING: Former Executive Sues Certain Officers
-------------------------------------------------------
Former Global Crossing Ltd. executive, Roy Olofson, who claims
the telecommunications giant fired him for raising concerns about
its accounting practices, sued several officers and directors of
the now-bankrupt company for defamation and interference with his
contract, reports Reuters.
Named as defendants of the suit, which was filed Wednesday in the
U.S. District Court in Los Angeles, are Global Crossing Chairman
Gary Winnick and Executive Vice President of Finance Joseph
Perrone.
Olofson, whose recent accusations of misleading accounting
practices against the troubled telecom firm helped launch a
Securities and Exchange Commission investigation, is seeking
compensatory and special damages in the suit.
Olofson also claimed in the suit that Winnick defamed him by
publicly calling him "an extortionist" during a meeting this
month with about 70 employees.
However, Global Crossing spokeswoman Janis Burenga denied the
claims in a statement.
"As we've said before, the financial and accounting topics raised
by Mr. Olofson have been reviewed by our internal accounting
personnel and by Arthur Anderson in connection with the audit of
the company's annual financial statements and its review of the
company's internal financial statements," the statement said.
"Global Crossing believes Mr. Olofson's allegations are without
merit and we have no further comment at this time."
GLOBAL CROSSING: Preliminary Unaudited Revenue Estimates Posted
---------------------------------------------------------------
Global Crossing reported Tuesday in an official company news
release its preliminary unaudited estimates of Revenue for the
fourth quarter and full year ended December 31, 2001. Such
estimates are subject to the final review of Arthur Andersen,
Global Crossing's independent public accountants, which has not
completed its audit of Global Crossing's financial statements for
2001. Global Crossing had previously announced that it would
release earnings on February 26, but said today that it will
release its complete fourth quarter and full year 2001 results
when it files its Annual Report on Form 10-K.
On January 28, 2002, certain companies in the Global Crossing
Group (excluding Asia Global Crossing and its subsidiaries)
commenced Chapter 11 cases in the United States Bankruptcy Court
for the Southern District of New York and coordinated proceedings
in the Supreme Court of Bermuda.
Global Crossing noted that it is still evaluating the appropriate
write-down of certain of its tangible assets. In addition, the
accounting treatment of certain of its capacity transactions is
under investigation by an independent committee of its board of
directors, the U.S. Securities and Exchange Commission and the
U.S. Attorney's Office for the Central District of California.
For Continuing Operations in the fourth quarter of 2001, Global
Crossing expects to report Revenue of approximately $804 million,
which includes Service Revenue of approximately $764 million. For
the full year 2001, Global Crossing expects to report Revenue
from Continuing Operations of approximately $3.2 billion,
including approximately $3.1 billion in Service Revenue.
Global Crossing also announced that it expects to report a
significant Net Loss Applicable to Common Shareholders for the
fourth quarter and the full year 2001. The 2001 loss will reflect
items previously reported during the first three quarters,
including restructuring charges of $294 million, $545 million
related to the impairment of goodwill associated with its Global
Marine unit, and $2,084 million due to the write down of Global
Crossing's equity investment portfolio, including its investment
in Exodus Communications. In addition, Global Crossing's net loss
for both the fourth quarter and the full year are expected to
reflect the write-off of Global Crossing's remaining goodwill and
other identifiable intangible assets (approximately $8 billion)
as well as a multi-billion dollar write-down of its tangible
assets. The write-off of goodwill and other identifiable
intangible assets and write-down of tangible assets will be non-
cash charges. These pending write-downs were previously discussed
in Global Crossing's September 30, 2001 Quarterly Report on Form
10-Q.
Commenting on the quarter's performance, John Legere, CEO of
Global Crossing said, "You can take a company's measure by how it
responds to adversity. I'm proud of the way Global Crossing
employees have maintained outstanding service to our customers as
we restructure and work through the Chapter 11 process. In the
fourth quarter, we overcame a number of challenges to show
strength in Service Revenue, which is the vast majority of our
revenue mix and the expected source of our growth for the future.
We're pleased that customers have continued to choose our network
over many others, demonstrating the appeal of our service
offerings to our targeted customers -- global enterprises and
carriers. As we look forward to successfully emerging from
Chapter 11, we'll maintain our focus on serving customers."
CASH POSITION
Global Crossing reported that it holds approximately $1,520
million of cash in its bank accounts on a consolidated basis as
of February 25, 2002. Included in that amount is approximately
$492 million of cash in Asia Global Crossing bank accounts and
approximately $327 million in other bank accounts that are
restricted. These amounts do not represent Generally Accepted
Accounting Principles (GAAP) cash balances as of February 25,
2002.
CONFERENCE CALL UPDATE
Global Crossing will not conduct the conference call previously
scheduled for Wednesday, February 27, 2002, due to the need to
defer the release of complete results until the filing of the
Annual Report on Form 10-K. In light of the Chapter 11 filing on
January 28, 2002 and the other matters discussed in this release,
guidance previously issued by Global Crossing should be
disregarded.
BOARD OF DIRECTORS UPDATE
Global Crossing announced today that it is actively recruiting
additional outside directors to join its board. Global Crossing
also announced that Mark Attanasio has submitted his resignation
as a member of the board, due to the requirements of his other
professional responsibilities.
DEFINITION OF TERMS USED
Results from Continuing Operations exclude GlobalCenter, the
incumbent local exchange carrier (ILEC) business, IPC Trading
Systems and Global Marine.
In this press release, Revenue refers to revenue reported on
Global Crossing's statements of operations under GAAP. Service
Revenue, which excludes all impacts of IRU sales, refers to
Revenue less any revenue recognized immediately for circuit
activations that qualified as sales type leases, as well as the
revenue recognized due to the amortization of IRU's sold in prior
periods and not recognized as sales-type leases.
ABOUT GLOBAL CROSSING
Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network, which reaches
27 countries and more than 200 major cities around the globe.
Global Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services. Global Crossing operates throughout the Americas and
Europe, and provides services in Asia through its subsidiary,
Asia Global Crossing (NYSE: AX).
On January 28, 2002, certain companies in the Global Crossing
Group (excluding Asia Global Crossing and its subsidiaries)
commenced Chapter 11 cases in the United States Bankruptcy Court
for the Southern District of New York and coordinated proceedings
in the Supreme Court of Bermuda.
CONTACTS: GLOBAL CROSSING
Press Contacts:
Dan Coulter
+1 973-410-5810
Daniel.Coulter@globalcrossing.com
Becky Yeamans
+1 973-410-5857
Rebecca.Yeamans@globalcrossing.com
Analysts/Investors Contact:
Ken Simril
+1 310-385-5200
investors@globalcrossing.com
===========
B R A Z I L
===========
EMBRAER: Reduces 10-Yr. Passenger Jet Demand Forecast
-----------------------------------------------------
Brazil's Embraer, the world's fourth largest aircraft
manufacturer, predicted demand for small passenger jets over 10
years would be about 4000, roughly 20 percent lower than the
Company's previous projections of 4,900.
Embraer has revised its 10-year outlook on demand for regional
jets following the September 11 attacks in the US. The terrorist
activity is blamed for a downturn in the airline sector
worldwide.
According to Federico Curado, Embraer's executive vice president
for the airline market, some 500 jets will be placed in the Asia
Pacific, and the region would represent some 15 percent of future
growth over the next 10 years.
"Half of that (500 jets) will go to China, and half of that will
go to the remaining countries," he said.
When asked how much risk Embraer was bearing on its aircraft
sales, Curado said the firm did not finance customers directly.
"We're not in the leasing business, we're not financing our
customers directly," he said.
CONTACTS: EMBRAER
Bob Sharp, Press office mgr.
bob.sharp@embraer.com.br
OR
Wagner Gonzalez, Press officer
wagner.gonzalez@embraer.com.br
Phone +55 12 3945 1311
Fax + 55 12 3945 2411
=========
C H I L E
=========
MANQUEHUE NET: Fitch Lowers Ratings To `B+' From `BB-'
------------------------------------------------------
Fitch Ratings, has downgraded the foreign currency and the
international scale local currency ratings of Manquehue Net S.A.
(Manquehue) to 'B+' Rating Outlook Negative from 'BB-' Rating
Outlook Stable.
The rating action reflects the company's weaker than expected
financial performance. Credit protection measures have declined
as the company increased debt by more than US$55 million to fund
its network buildout without achieving the anticipated revenue
growth. At 9M'01, EBITDA/Gross Interest and Debt/EBITDA was 0.8
times (x) and 18.6x, respectively. Manquehue's credit protection
measures may improve during 2002 as the benefits of its cost
reduction program and increased revenues from high growth sectors
materialize. The execution risk of the company's strategy is
uncertain. Absent a material improvement in 2002 financial
performance, the ratings will remain under pressure.
The company's financial performance has been impacted by strong
competition. Manquehue faces significant competition from the
incumbent operator, Compania de Telecomunicaciones de Chile,
which controls over 80% of the local exchange sector and is a
leading long distance and broadband service provider. In
addition, Manquehue's financial performance has been impacted by
slower than anticipated growth in demand and revenues, which are
partially due to macroeconomic conditions. Long-term support from
its shareholders, which include Williams Communications and
National Grid, is unclear at this time as their Latin America
strategy is being reviewed.
Manquehue benefits from its presence in selectively targeted
upper income residential markets and its growing presence as a
broadband communications provider to the corporate sector.
Manquehue has competitive interconnection rates, which are
regulated by Chilean regulator, Subtel. Recent regulatory rulings
have been designed to increase competition and lower
interconnection rates, which has somewhat benefited Manquehue.
The company is not subject to dominant carrier rules. Pricing for
local exchange service has roughly maintained parity with
competitors, but Manquehue benefits by its ability to provide
value added bundled services (e.g., third party cable, high-speed
Internet access, and voice telephony) to residential customers.
Manquehue has over 400km of fiber in and around Santiago and an
extensive underground duct system. The duct system, which
essentially acts as a conduit, provides the company significant
cost savings by allowing for rapid fiber deployment when demand
materializes while avoiding the need to obtain rights of way and
incurring the associated excavating and resurfacing costs.
During 2001, Manquehue issued the first of a two-tranche peso
denominated bond equivalent to approximately US$55 million to
finance its capital expenditures; the second tranche of
approximately US$35 million is expected to be issued during 2003-
2004. Recently, the company obtained a US$18 million equivalent
syndicated loan to refinance short-term debt.
Approximately 10% of total debt is in U.S. dollars while revenues
are in pesos and all foreign denominated debt is hedged.
Maturities should remain manageable as short-term debt represents
8% of total debt. No significant increase in debt is expected
during 2002. Going forward, EBITDA should remain positive, while
EBITDA/Gross Interest should remain over 1x. Meanwhile,
Debt/EBITDA will likely remain over 16x, which is high for the
category.
The company also has a 30.1% stake in the trans-Andean long-haul
operator, Silica Networks. Williams Communications and National
Grid directly, and indirectly through Manquehue, have a 24.85%
and 59% ownership stake in Silica Networks, respectively.
Manquehue expects no meaningful contribution to financials from
Silica Networks in the near-term as the long-haul sector has
experienced price erosion. Consequently, the shareholders of
Silica Networks are expected to monetize their investment in the
near-term.
Manquehue provides local exchange service in and around Santiago,
Chile. Manquehue has approximately 92,000 lines in service or
2.6% of the Chilean market. Through its affiliate, 122 Manquehue
Net, the company provides international and national long
distance service. Manquehue also provides Internet, cable TV and
public telephony services. The current ownership structure is as
follows: Metrogas S.A. (25.75%), Williams International Telecom
(16.3%), Rabat Family (21%), Xycom Development (6.87%) and
National Grid (30%).
CONTACT: Fitch Ratings
Randy Alvarado, 1-312-368 3117 (Chicago)
Daniel R. Kastholm, CFA 1-312-368-2070 (Chicago)
James Jockle, 1-212-908-0547 (New York, Media
Relations)
===========
M E X I C O
===========
BANCA QUADRUM: IPAB Readies To Assume Control
---------------------------------------------
Whatever the results are to Banca Quadrum's shareholders' meeting
scheduled Thursday, the board of the Bank Savings Protection
Institute (IPAB) is prepared to take over the bank, Mexico City
daily El Economista reports.
Shareholders are to decide during Thursday's meeting whether to
inject the much-needed MXN850 million (US$93.5 million) into the
ailing bank, but IPAB authorities expect the shareholders will
decide against the expenditure.
In that case, the National Banking and Securities Commission
(CNBV) will report the events to the Treasury, which will
subsequently revoke the bank's operating license. Quadrum will
then be transferred to IPAB, which will proceed to liquidate it.
Banca Quadrum currently has 1,000 clients.
To see company's financial statements:
http://bankrupt.com/misc/Bancaquadrum.doc
CONTACT: Ernesto Rodriguez, Investor Relations
Tel. +011-52-55-5284-5693
Email: erodrigu@quadrum.com.mx
BANCO UNION/BANCA CREMI/BANCO DE ORIENTE: IPAB Auctions Loans
-------------------------------------------------------------
The Bank Savings Protection Institute (IPAB) was scheduled to
auction off the rights of a credit packet previously owned by
intervened banks Banco Uni˘n, Banca Cremi and Banco de Oriente,
reports Mexico City daily El Universal.
The credit package consists of 4,145 commercial, industrial,
mortgage and consumer credits. This was originally bought by
FirstCity Comercial Corporation for MXN100.6 million (US$11.07
million), revealed IPAB.
According to the institution, which is headed by Julio Cesar
Mendez, the book value of the credits was MXN1.01 billion
(US$110.4 million).
Banco Uni˘n, Banca Cremi and Banco de Oriente are all in the
process of liquidation.
CINTRA: IPAB Wants Clear Definition On Airlines' Sale
-----------------------------------------------------
The Bank Savings Protection Institute (IPAB) will join other
banks, which also have shares in Cintra, to officially ask the
government-owned airline holding firm's board to define a
proposal of how to sell Mexicana and Aerom‚xico, reports Mexico
City daily el Economista.
According to IPAB spokesman Roberto Barrera, shareholders have
already agreed that the airlines be sold, as it is not in the
interest of any shareholders to maintain their equity postion.
Cintra will also have to approach the Federal Competition
Commission (CFC) for its opinion on the sale.
IPAB is looking to sell its 51-percent owned Cintra in a bid to
recover MXN18 billion (US$1.98 billion) this year from sales of
assets. Should the institution fail to sell Cintra, its debt,
which at present stands at more than MXN174 billion (US$19.16
billion), will grow.
Meanwhile, with the impending sale of Cintra, some 3,000 flight
attendants affiliated with the Flight Attendants Union (ASSA)
want to obtain a stock package through a loan from Nacional
Financiera (Nafin), said union leader Arturo Arag˘n.
Arag˘n recommended Cintra be sold as one company in order to
compete. "If not, in time we will be vassals of foreign aviation
companies," he said.
CONTACTS: CINTRA
Jaime Corredor Esnaola, Chairman
Juan Dez-Canedo Ruiz, CEO
Rodrigo Ocejo Rojo, CFO
Xola 535, Piso 16, Col. del Valle
03100 M,xico, D.F., Mexico
Phone: +52-5-448-8050
Fax: +52-5-448-8055
OR
C.P. Francisco Cuevas Feliu, Investor Relations
Xola 535, Piso 16
Col. del Valle
03100 M,xico, D.F.
Tel. (52) 5 448 80 50
Fax (52) 5 448 80 55
infocintra@cintra.com.mx
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
CYDSA: Struggles To Get Creditors' Approval To Extend Bonds
-----------------------------------------------------------
Negotiations between Grupo Celulosa y Derivados (Cydsa) and its
creditors over the Mexican chemical producer's aren't going so
well. The current proposal would extend the maturity of a US$200-
million bond, due in June 25 this year, to 2009, says a report by
Notimex.
The proposal spurred apprehension among bondholders when Cydsa
presented it on January 25. At that point, the creditors feared
they may be forced into an agreement on which they were never
consulted.
The bank restructuring is contingent on an agreement to refinance
the bonds by May 31, meaning that bondholders may force changes
in the offer or push Cydsa into bankruptcy if they can gather
enough opposition to the plan.
Cydsa fell into debt problems after an Asian economic slowdown in
the late 1990s caused demand and prices for its chemical and
textile products to plummet. The Company's earnings before
interest, taxes, depreciation and amortization, or cash flow, was
US$169 million in 1997, the year the bonds were sold. Ebitda
tumbled to US$73 million in 2000 and fell by a third in the first
nine months on 2001 compared with the same period in the previous
year, according to the proposal.
CONTACTS: CYDSA, S.A. DE C.V.
Tom s Gonz lez Sada, Chairman & CEO
Ces reo Fras Mendoza, CFO
Avenida Ricardo Margain Zozaya 325,
Colonia Valle del Campestre
66220 San Pedro Garza Garca,
Nuevo Le›n, Mexico
Phone: +52-(0)81-8152-4699
Fax: +52-(0)81-8152-4800
URL: http://www.cydsa.com
GRUPO MEXICO: Posts Weak `01 Results On Lower Prices, Volumes
-------------------------------------------------------------
Grupo Mexico SA, the world's third-largest copper producer with
mining operations in Mexico, the U.S. and Peru, has seen its 2001
performance dipping due to lower metals prices and volumes.
In a filing with the Mexican Stock Exchange, the Company
disclosed that during the fourth quarter, copper prices fell 25
percent from the year-ago period to 65.7 cents per pound, zinc
prices dropped 30.4 percent to 34.6 cents/lb, and silver prices
fell 10.4 percent to US$4.30 an ounce, compared with the like
2000 period.
Even so, in the fourth quarter, gold prices rose 2.5 percent to
US$278.40 an ounce, although they were down 2.9 percent for the
full year.
According to Grupo Mexico, positive results in its railroad
division and cost-cutting measures were insufficient to counter
the drop in metals prices and higher energy costs, as well as
some non-recurring costs.
Grupo Mexico posted a net loss of MXN1.99 billion ($1=MXN9.10)
for the full year 2001, compared with a MXN2.47 billion profit in
2000. Sales fell to MXN27.46 billion from MXN35.64 billion in
2000. The Company registered an operating loss of MXN267.1
million, compared with an operating profit of MXN5.57 billion in
2000.
Grupo Mexico said the decline in sales volumes accelerated in the
fourth quarter.
Fourth-quarter copper sales fell 9 percent to 241,751 metric
tons, and for the full year, sales fell 6.7 percent to 1.06
million metric tons. Zinc sales dropped 2 percent to 50,186
metric tons in the fourth quarter and 7.7 percent to 193,907
metric tons in 2001.
Silver sales fell 39.7 percent in the fourth quarter to 239,676
kilograms, and 32.4 percent in the full year to 1.1 million
kilograms. Gold sales dropped 53.7 percent in the fourth quarter
to 1,155 kilograms, and in 2001 dropped 43 percent to 6,851
kilograms.
Grupo Mexico, which is currently attempting to renegotiate debt
with creditors, ended 2001 with a net debt of US$2.56 billion.
CONTACTS: German Larrea Mota-Velasco, Chairman and CEO
Avenida Baja California 200, Colonia Roma Sur
06760 M,xico, D.F., Mexico
Phone: +52-5-264-7775
Fax: +52-5-264-7769
C.P. Hector Garcia De Quevedo Topete, Corporate Dir.
Av. Baja California No. 200, Colonia Roma Sur C.P.
06760 MEXICO, D.F.
Phone: 55-64-70 66 ext 7238
Fax: 55-64-3714
UNDERWRITER: ING BARRINGS
Corporate communication and public relations:
C.P. HECTOR GARCIA DE QUEVEDO TOPETE
CORPORATE DIRECTOR
AV. BAJA CALIFORNIA No. 200
Colonia ROMA SUR C.P. 06760
MEXICO, D.F.
Tel: 55-64-70 66 ext 7238 Fax: 55-64-3714
moram@gmexico.com.mx
GRUPO MEXICO: DBRS Report Says Company Over Leveraged
-----------------------------------------------------
Grupo Mexico, S.A. de C.V. ("Grupo" or "the Company"), through
its acquisition of ASARCO and Southern Peru Copper Corporation
("SPCC") in 2000, has become the world's third largest integrated
copper producer after Codelco and Phelps Dodge, says Dominion
Bond Rating Service Limited (DBRS), a Toronto-based, full-service
credit rating agency, in its report.
According to DBRS, Grupo Mexico is also the largest mining
company and rail operator in Mexico. Diversification into the
U.S. and Peru entails potential benefits. The Company has also
added debt (140 percent increase to US$3.2 billion from 1998),
which is a major challenge to be overcome.
The associated financing charges virtually wiped out all company
profits in a declining commodity market in 2001. The recent
rating downgrades triggered unscheduled prepayments of US$84
million in a US$450 million credit facility agented by Morgan
Chase, and a US$550 million bond issue led by John Hancock Life
Insurance. The latter non-compliance allows the bondholders to
withhold the Company's export revenues for debt repayments.
The Company is currently in negotiation with creditors in an
attempt to restructure and extend the term of these facilities.
The results are expected to be finalized within the next few
months. Increased operating costs attributable to acquisitions of
higher cost mines in the U.S. (although improvements have been
seen), faltering metal prices (average copper prices declined 9
percent over 2000 and 27 percent from 1997) coupled with high
capex resulted in a negative free cash flow for the last couple
of years. The Company's financial profile is weak.
Leverage (total debt/capitalization) of 66.8 percent in June 2001
is excessive for a company in a cyclical industry. Cash
flow/total debt protection is low at 0.12 (compared to 0.50 prior
to acquisition of Asarco and SPCC) with negative return on
equity.
Grupo's average cash cost per pound of copper for 2002 is
estimated to be about US$0.65/lb for 2002, which is about average
for the copper industry. The Company expects to improve cash
flows through cost savings and productivity improvements at all
three mining divisions and increased transportation volumes in
the rail operations. However, cash flow from operations is not
expected to cover the capex program estimated at US$500 million
for 2001 and 2002 respectively. Additional indebtedness is
likely, which would put further pressure on Grupo's balance
sheet.
Near term, the Company is faced with:
(1) depressed metal prices in an uncertain economy,
(2) high leverage and capital commitments, and
(3) a moderately high cost structure compounded by domestic
inflation (9 percent in 2000) and exchange rate movements in the
peso relative to the U.S. dollar (covering over 80 percent of
earnings).
In the longer term, the Company will benefit from the eventual
recovery in metal prices helped by a gradual recovery in the
global economy expected by 2003. Given its vast copper reserves
and diverse operations, the Company is viable, but must
reconfigure its balance sheet.
CONTACT: TEL: 416-593-5577 ext.2295 Esther M. Mui
TEL: 416-593-5577 ext.2244 David Smith
EMAIL: emui@dbrs.com
GRUPO SIMEC: Preliminary 01 Results Show Sales Down, Income Up
--------------------------------------------------------------
Grupo Simec, S.A. de C.V. (Amex: SIM) ("Simec") announced
Wednesday its results of operations for the year ended December
31, 2001. Net sales decreased 17% to Ps. 1,903 million in 2001
compared to Ps. 2,300 million in 2000. Simec recorded income from
other financial operations of Ps. 5 million in 2001 compared to a
loss from other financial operations of Ps. 108 million in 2000.
In addition Simec recorded a reserve for income tax and employee
profit sharing of Ps. 75 million in 2001 versus a reserve of Ps.
126 million in 2000. Primarily as a result of the foregoing, in
2001 Simec recorded net income of Ps. 172 million versus net loss
of Ps. 38 million for 2000.
Simec sold 562,035 metric tons of basic steel products during
2001 as compared to 619,598 metric tons in 2000. Exports of basic
steel products decreased to 48,385 metric tons in 2001 versus
65,942 metric tons in 2000. Prices of products sold in 2001
decreased 9% in real terms versus 2000.
Simec's direct cost of sales was Ps. 1,273 million in 2001, or
67% of net sales, versus Ps. 1,519 million, or 66% of net sales
for 2000. Indirect manufacturing, selling, general and
administrative expenses (including depreciation) decreased 14% to
Ps. 441 million during 2001 from Ps. 510 million in 2000.
Simec's operating income decreased 30% to Ps. 189 million during
in 2001 from Ps. 271 million in 2000. As a percentage of net
sales, operating income was 10% in 2001 and 12% in 2000.
Simec recorded financial income of Ps. 5 million in 2001 compared
to financial expense of Ps. 108 million in 2000 due principally
to (i) net interest expense of Ps. 157 million in 2001 compared
to net interest expense of Ps. 321 million in 2000, reflecting
lower debt levels in 2001 as described below, (ii) an exchange
gain of Ps. 51 million in 2001 compared to an exchange loss of
Ps. 16 million in 2000, resulting from an increase of 4.5% in the
value of the peso versus the dollar in 2001 compared to a
decrease of 0.6% in the value of the peso versus the dollar in
2000 and (iii) a gain from monetary position of Ps. 68 million in
2001 compared to a gain from monetary position of Ps. 229 million
in 2000, reflecting the domestic inflation rate of 4.4% in 2001
compared to the domestic inflation rate of 9% in 2000.
On March 29, 2001, Grupo Sidek, S.A. de C.V. consummated the sale
of its entire approximate 62% controlling interest in Simec to
Industrias CH, S.A. de C.V. ("ICH"). ICH also acquired additional
common shares of certain of Simec's bank creditors that, in
connection with the transaction, converted approximately U.S.
$95.4 million of bank debt (U.S. $90.2 million of principal and
U.S. $5.2 million of interest) into common shares of Simec at a
conversion price equivalent to U.S. $3.87 per American Depositary
Share. In the third quarter of 2001, ICH converted approximately
$69.5 million of loans to Simec plus accrued interest thereon
(which loans were made principally to fund the redemption of
Simec debt described below) into common shares of Simec at a
conversion price equivalent to U.S. $1.60 per American Depositary
Share.
At December 31, 2001, Simec's total consolidated debt consisted
of approximately $103 million of U.S. dollar-denominated debt,
while at December 31, 2000, Simec had outstanding $274 million of
dollar-denominated debt. The decrease in total debt reflects the
conversion of approximately U.S. $90.2 million of bank debt (plus
U.S. $5.2 million of accrued interest thereon) into common shares
of Simec, scheduled amortization payments in May 2001 on Simec's
bank debt and 10 1/2% Third Priority Notes due November 15, 2001
(the "CSG Notes") of Simec's wholly-owned subsidiary, Compania
Siderurgica de Guadalajara, S.A. de C.V. ("CSG"), the redemption
at par plus accrued interest of the entire outstanding amount of
$52.3 million of CSG Notes and the conversion to equity, as
described above, of a substantial portion of the debt owed to ICH
which was incurred to finance the redemption of the CSG Notes, as
well as the repayment of $16 million of bank debt in the third
quarter of 2001 and the repayment of $11 million of bank debt in
the fourth quarter of 2001. Substantially all of Simec's
remaining consolidated debt matures in 2009 and amortizes in
equal semi-annual installments.
All figures were prepared in accordance with Mexican generally
accepted accounting principles and are stated in constant Pesos
at December 31, 2001.
Simec is a mini-mill steel producer in Mexico and manufactures a
broad range of non-flat structural steel products.
CONTACTS: GRUPO SIMEC S.A. DE C.V.
Adolfo Luna Luna or Jose Flores Flores
Tel. 52-33-3669-5740
SANLUIS: Manages To Restructure, Refinance Debts At Units
---------------------------------------------------------
Sanluis Corporacion SA, a Mexican auto-parts producer, managed to
restructure most of the debt at its brake unit in December but
didn't provide further details.
The restructuring, according to Bloomberg, is part of an effort
to reorganize the debt of Sanluis' operating units before it
begins talks with holders of a US$200-million bond due in 2008 as
well as US$90 million of commercial paper it has issued.
Also in December, the Company obtained a US$6-million loan to
refinance debt of its Hendrickson Rassini suspension parts unit.
The loan will mature 15 months from September 2001 and bears the
same interest rate as the debt it replaces.
Sanluis ended December with a US$586-million debt, which included
US$46.5 million owed to J.P. Morgan Chase for swaps completed
during the fourth quarter on interest and exchange rates and
share prices. The Company said it expects to increase debt during
the first quarter as similar swaps are completed, but didn't say
by how much.
The Company also revealed it added US$17.8 million to its
liabilities as a reserve to cover interest payments it didn't
meet in the fourth quarter.
Sanluis' sales fell 11.6 percent to MXN4.74 billion ($517
million) last year from a year earlier as auto producers sold
down inventories and pressured suppliers into lower prices.
Earnings before interest, taxes, depreciation and amortization
(Ebitda) fell 39 percent to MXN678 million in 2001 from MXN1.11
billion a year earlier, Sanluis said.
CONTACTS: Antonio Madero, CEO (also concurrent chairman)
Francisco Garza Jim, CFO
THEIR ADDRESS:
Monte Pelvoux 220 8th Floor
Lomas de Chapultepec 11000
Mexico, D.F.
Tel. (52) 5229 5800
Fax. (52) 5202 6604
URL: http://www.sanluiscorp.com.mx
AUDITOR
Mariano Escobedo, PricewaterhouseCoopers
573 Rincon del Bosque 11580
Mexico, D.F.
Tel. (525) 263-6047
Fax. (525) 263-6010
SAVIA: YE01 Results Show Some Recovery, Uncertainty Remains
-----------------------------------------------------------
Savia, S.A. de C.V. (NYSE: VAI)(BMV: SAVIA), announced Wednesday
results for fiscal 2001. The results for Seguros Comercial
America and for Empaques Ponderosa are reported as discontinued
operations in the attached tables.
Main Business Indicators
Million Dollars as of December 2001
Jan-Dec Jan-Dec Variation
2001 2000 n
Sales 702 813 (111)
Gross Profit 257 294 (37)
Gross Profit 37% 36% -
Operating Expenses 330 405 75
Operating Income (73) (111) 38
Cash Flow (48) (81) 33
Non considering extraordinary expenses
Operating Income 2 (27) 29
Cash Flow 27 3 24
RESULTS FISCAL 2001
Net Consolidated Sales
Net consolidated sales reached 702 million Dollars, a reduction
of 14% compared with the same period last year. The reduction is
a result of lower sales in the Agro business division and the
sale of non-strategic assets in Savia. Foreign currency
denominated sales for the period accounted for 93% of total
sales.
Consolidated Operating Income
Consolidated operating income for fiscal 2001 reached 2 million
Dollars, without considering extraordinary expenses by Seminis.
When considering these extraordinary expenses, consolidated
operating income for fiscal 2001 reflected a loss of 73 million
Dollars, 38 million Dollars (34%) lower than the loss reported in
fiscal 2000. This improvement is the result of a reduction of
operating expenses of 19% and in the costs of sales by 14%. The
operating cash flow recovered 33 million Dollars (41%) and
reported a negative cash flow of 48 million Dollars for fiscal
2001.
Net Consolidated Income
Net consolidated loss for this period reported 338 million
Dollars, 136 million Dollars (29%) lower than the reported loss
for fiscal 2000. This result shows a relevant step in the
recovery of profitability in the business. The majority loss
reported 270 million Dollars, a reduction of 70 million Dollars
(21%) as compared to fiscal 2000.
RESULTS FOR THE FISCAL YEAR 2001 FOR THE PRINCIPAL SUBSIDIARIES
Seminis
The total sales for fiscal 2001 reached 448 million Dollars, a
figure similar to the one reported for fiscal 2000, when
excluding the effect of discontinued operations and exchange
rate. When considering the extraordinary expenses, sales showed a
decrease of 8%.
The operating expenses were reduced by 15% and reported 240
million Dollars for fiscal 2001. The operating loss reached 21
million Dollars, amount that reflects an improvement of 47% when
compared to fiscal year 2000. Cash flow from operations for
fiscal 2001 was negative and reported 4 million Dollars, an
improvement of 79% in comparison to fiscal 2000. The initiatives
implemented after September of 2000 keep improving the business
results. During the fourth quarter of 2001, Seminis reduced its
bank debt by 36.7 million Dollars, improving its financial
flexibility.
Bionova
The Bionova sales were 205 million Dollars that represented a
decrease of 10% in comparison to sales reported during fiscal
2000. The operating loss was of 8 million Dollars in comparison
with the loss of 24 million Dollars during the same period last
year; a reduction of 16 million Dollars (65%). During fiscal 2001
the company sold non-strategic assets that included Tanimura
Distributing and Interfruver de Mexico.
CONSOLIDATED FOURTH QUARTER RESULTS
Net Consolidated Sales
The net consolidated sales for continuous operations reached 130
million Dollars for the fourth quarter of 2001, 14% lower than
the sales reported for the same period in 2000, this reduction in
sales is a direct result of the sale of non-strategic assets in
Bionova. Foreign currency denominated sales for the period
accounted for 90% of total sales.
Consolidated Operating Income
The consolidated operating income for continuous operations
recovered 26 million Dollars (59%) during the quarter, and
reported an operating loss of 18 million Dollars in comparison to
a loss of 44 million Dollars reported in 2000. This important
reduction in the operating loss was a result of a recovery of 5%
in gross profits and a decrease of 24% in operating expenses. The
business recovery can be observed in the reduction of 25 million
Dollars (68%) in the negative operating cash flow. Operating cash
flow for the quarter resulted negative and reported 12 million
Dollars in comparison with a negative cash flow of 37 million
Dollars reported in the fourth quarter of 2000.
Net Consolidated Income
The net consolidated income for continuous operations recovered
almost 100 million Dollars (69%) and reported a loss of 47
million Dollars compared with a loss of 152 million Dollars
reported during the same period of fiscal 2000. The majority net
loss for the fourth quarter reported 47 million Dollars an
improvement of 73 million Dollars (61%) in comparison with the
fourth quarter of fiscal 2000. This represents a loss of 0.93
pesos per share or 0.40 dollars per ADR.
FORTH QUARTER RESULTS FOR THE PRINCIPAL SUBSIDIARIES
Seminis
Seminis improved its operating results for the fourth consecutive
quarter regardless that the fourth quarter reported the lowest
sales as consequence of the industry's seasonality. Sales for the
fourth quarter for 2001 were stable and reported 80 million
Dollars. The operating gross profit improved by 4% and reported
50 million Dollars, an amount that represents 62% of the business
sales. During the quarter, Seminis reduced its operating expenses
by 8 million Dollars (13%), in this same quarter Seminis achieved
a more efficient use of its working capital, this fact favors its
medium and long-term growth. The operating loss reported an
improvement of 10 million Dollars (63%) in comparison with the
same quarter of fiscal 2000, the operating cash flow improved by
10 million Dollars and reported a negative cash flow of only 2
million Dollars in comparison to a negative cash flow of 12
million Dollars reported for the fourth quarter of 2000.
Bionova
Bionova results showed for the fourth quarter of 2001 sales of 37
million Dollars, which represented a 38% reduction as compared to
the sales for last year. During the quarter, the gross profit
improved by 34%, operating income reported a loss of 1 million
Dollars, a reduction of 4 million Dollars (87%) as compared to a
loss of 5 million Dollars reported for the fourth quarter of
2000. These results are a clear indication of an improvement in
the business operation. During the period Interfruver de Mexico
was divested.
RELEVANT EVENT
In the preliminary accumulated results reported by Savia for its
fiscal year 2001 a 48 million Dollars reserve, regarding deferred
taxes for Seminis subsidiary was included. Of the 48 million
Dollars reserve, 42 million Dollars were charged retractably in
June 2001, and the other 6 million Dollars were charged in
September 2001. This amount was not reported by Seminis in its
previous results.
These reserves are provisions made at the value that reflects
fiscal losses carry forward in countries where Seminis operates,
mainly in the United States of America and the Netherlands. These
reserves were accounted by a methodology of deferred taxes that
takes into account the fiscal results achieved in the prior three
years in each country where the company operates. This reserve
does not imply cash out flow and it does not diminish the true
value of fiscal losses carried forward and the opportunity of
realizing these losses in the future.
Savia ( www.savia.com.mx) participates in industries that offer
high growth potential in Mexico and internationally. Among its
main subsidiaries are: Seminis a global leader in the
development, production and commercialization of fruit and
vegetable seeds. Bionova, a company focused in plant science for
the development and improvement of fruit and vegetable seeds; and
Omega, a real estate development company.
Savia's financial statements are prepared in compliance with
generally accepted accounting principles in Mexico. For the
consolidation of domestic subsidiaries, Savia follows the
guidelines set forth in bulletin B-10 and for foreign companies
follows the guidelines set forth in bulletin B-15. Seminis and
Bionova report following the generally accepted accounting
principles of Mexico. These results are adjusted to reflect the
above-mentioned guidelines. I addition, Seminis reports its
fiscal year the first quarter of October through the last of
September. Savia reports its fiscal year on a calendar basis,
including in its consolidated results the operations of Seminis
according to calendar year.
To see financial statements: http://bankrupt.com/misc/Savia.txt
CONTACTS: SAVIA S.A. DE C.V.
Investor Relations:
Francisco Garza
Tel. +52-818-173-5500
Fax. +52-818-173-5508
Email: fjgarza@savia.com.mx
Media Relations:
Francisco del Cueto
Tel. +52-555-662-3198
Fax. +52-555-662-8544
Email: delcueto@mail.internet.com.mx
***********
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 Fe Ong Va¤o, Editors.
Copyright 2002. All rights reserved. ISSN 1529-2746.
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