/raid1/www/Hosts/bankrupt/TCRLA_Public/020510.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, May 10, 2002, Vol. 3, Issue 92
Headlines
A R G E N T I N A
ARGENTINE BANKS: Government Plan Meets Industry Opposition
BANCO GALICIA: To Honor Missed Payment After CB Authorization
PECOM ENERGIA: Olivo Discusses Recently Unveiled Farm Out Plans
REPSOL YPF: Methanol Production Suffers Transport Setback
TGN: Default Lowers US$50-Mln Series III Notes To 'D'
TGS: S&P Says 1Q02 Loss Won't Affect Ratings
B E R M U D A
GLOBAL CROSSING: Streamlining, Cost Reductions "On Target"
B R A Z I L
CELG: Contemplating Various Capitalization Options
COPEL: Merrill Cuts Recommendation Citing Gloomy Outlook
COPEL: To Issue Debentures To Cover This Year's Investments
INEPAR: Delays Decision On BRL9 Million Debenture Sale
VARIG: Head Stays Optimistic Amid Turbulent Times
XEROX: Fitch Affirms Ratings; Exits Financing Biz Mexico, Brazil
C H I L E
MADECO S.A.: 1Q02 Results Reflect 30% Shareholder Equity Drop
M E X I C O
GRUPO BITAL: SCH Looks To Up Ownership To Increase Market Share
MAXCOM TELECOMUNICACIONES: To Double Lines, Cut Spending In 2002
P E R U
MIP: Proposes Equity, Warrant Swap for US$40M Debentures
- - - - - - - - - -
=================
A R G E N T I N A
=================
ARGENTINE BANKS: Government Plan Meets Industry Opposition
----------------------------------------------------------
Economy Ministry officials met with major banking associations on
Tuesday to discuss measures to end the country's financial
plight.
Argentine President Eduardo Duhalde revealed a plan Tuesday
saying that "within four months at most," restrictions would be
lifted for on-sight deposits while at the same time he called for
"explicit guarantees" from banks on the fixed-term bonds which
the government plans to force on savers.
However, the bankers were opposed to releasing savings and
current account deposits, even gradually, before the end of
September.
The government is trying to exchange fixed-term deposit holders'
funds for five and 10-year bonds, jointly guaranteed by the state
and the banks.
Economy Minister Roberto Lavagna wants the banks to guarantee at
least 30 percent of these bonds. However, banks counter that
proposal saying they should endorse a smaller percentage.
Regarding on-sight deposits, the government will offer holders
high-yield, five-year bonds on an optional basis.
The government proposal to raise the limits on the cash
Argentines are allowed to withdraw, at present about ARS1,200
(some US$400) a month, was not well received by the banks.
BANCO GALICIA: To Honor Missed Payment After CB Authorization
-------------------------------------------------------------
Standard & Poor's has learned that Banco de Galicia y Buenos
Aires S.A. (SD/-/-) is expected to honor the missed interest
payment on its $200 million, 9% senior unsecured notes maturing
November 2003, once the Central Bank of Argentina authorizes the
cross-border transfer of funds. The $9 million payment came due
on May 1, 2002. A 30-day grace period will end on May 31, 2002,
as stated on the debt issue documentation.
The bank is immersed in a profound restructuring process (Plan
Galicia), closely supervised by the Central Bank, under which it
states it will keep all its outstanding debt current. The plan
was accepted by the Central Bank on May 3, 2002. The key points
of Plan Galicia include an Argentine peso 700 million increase in
the bank's liquidity and $300 million debt capitalization with
international banks. The controlling shareholders have resigned
from the board of directors, and control of the bank may change
in favor of the financial institutions participating in the debt
capitalization.
Despite these efforts, the bank continues to operate in a hostile
environment for financial institutions. If the authorization for
payment does not materialize, and the interest remains unpaid at
the end of the grace period, Standard & Poor's will downgrade
this debt issue to 'D' and will change the bank's counterparty
credit rating to 'D', signaling the bank's inability to comply
with the terms of Plan Galicia, and increasing the likelihood of
a higher degree of intervention in the bank's operations by the
Argentine Central Bank.
Analyst: Gabriel Caracciolo, Buenos Aires (54) 114-891-2100
PECOM ENERGIA: Olivo Discusses Recently Unveiled Farm Out Plans
---------------------------------------------------------------
Juan Olivo, business development executive at Argentine energy
company Pecom Energia, said that the oil and gas asset divestment
and farm out plan unveiled earlier this month, doesn't have a
timeframe.
In an interview with Business News Americas, Olivo said, the
operation involving more farm outs than sales, is "an open
process, a call for interest."
"The timeframe depends on the people," Olivo said.
When asked by Business News Americas if its safe to assume that
the reason for farming out and selling the assets is to help
Pecom overcome the difficulties posed by Argentina's financial
crisis, Oliva responded: "Well, every Argentine company has
financial difficulties, but that's not the only reason. We want
to recover and we need partners, for their human resources as
much as their economic resources."
Olivo declined to reveal how much Pecom expects to earn from the
process.
"We don't have an overall target, but if we did it would be
confidential," he said.
ABOUT PECOM
Pecom Energia is the main asset of Argentine company Perez
Companc, and operates in the oil and gas and electric power
sectors. It is offering 17 blocks in Argentina's Austral and
Neuquen basins, Bolivia and Peru for farm out or sale.
CONTACT: 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.ar
REPSOL YPF: Methanol Production Suffers Transport Setback
---------------------------------------------------------
The production of methanol at Spanish oil company Repsol YPF's
US$160-million Huincul plant in Argentina's Neuquen province
remains frozen and is unlikely to restart this week, according to
a report released by Business News Americas.
Operations at the plant were halted after injunctions stopped the
transport of the methanol by rail to the port of Ensenada in
Buenos Aires province.
Mayors of towns along the train route to Ensenada are trying to
make sure that the train does not pass their towns, due to
environmental concerns.
Transport contractor Ferrosur Roca reportedly invested some US$26
million in buying necessary equipment and upgrading lines.
Repsol-YPF plans to place 100,000 tonnes/year production from the
400,000 tonnes/year Huincul plant on the domestic market and
export the rest, mainly to Brazil.
CONTACTS: REPSOL YPF
Alfonso Cortina De Alcocer, Chairman & CEO
Ramon Blanco Balin, Vice Chairman
Carmelo De Las Morenas Lopez, CFO
Their Address:
Paseo de la Castellana 278
28046 Madrid, Spain
Phone +34 91 348 81 00
Home Page: http://www.repsol.com
or
Av. Roque S enz Pe a, 777.
C.P 1364. Buenos Aires
Argentina
TGN: Default Lowers US$50-Mln Series III Notes To 'D'
-----------------------------------------------------
International credit rating agency Standard & Poor's (S&P) cut
the rating on Argentine gas transporter TGN's US$50-million
Series III notes to 'D' from 'CC,' says Business News Americas.
The rating cut follows a default by TGN on a May 6 interest
payment of US$1 million, which was a result of the restrictions
on funds transfers imposed by the Argentine government.
On April 29, TGN asked permission from the government's central
bank to make the payment, but had not received permission by the
due date of May 6.
TGN, which holds a 35-year license to operate northern
Argentina's gas transport system, has been severely hit by the
measures taken by the government, particularly the pesofication
of tariffs, the free-floating of the peso and debt that is
financed in dollars.
But according to S&P, on May 2, the government passed a measure
that reverts the pesofication of gas export related revenues,
which should offset some of the devaluation effects.
CONTACT: TRANSPORTADORA DE GAS DEL NORTE (TGN)
Don Bosco 3672, (C120ABF) Buenos Aires, Argentina.
Phone: (+54 11) 4959-2000
Fax: (+54 11) 4959-2242
Home Page: www.tgn.com.ar/
TGS: S&P Says 1Q02 Loss Won't Affect Ratings
--------------------------------------------
The US$515-million 1Q02 loss posted by Argentine gas transporter
TGS' will not have an impact on its credit ratings, says Standard
and Poor's (S&P), which rates the Company's foreign currency
rating at 'SD,' and local currency at 'CC' with a negative
outlook.
The international credit rating agency explained that the rating
already accounted for the Company's weak financial situation.
TGS' loss is primarily due to the effect of the peso devaluation
on the Company's US$1.1-billion dollar-denominated debt during
the first quarter. The negative foreign exchange effects are non-
cash items, so they have not affected the company's cash flow,
S&P said.
Furthermore, new accounting rules allow companies to partially
offset devaluation effects by capitalizing losses caused by
foreign currency indebtedness used to finance investments in
certain fixed assets. Accordingly, TGS capitalized US$1.5
billion.
S&P warned though that TGS still faces uncertainty surrounding
the renegotiation of concession contracts, new tariff-setting
mechanisms, inflation adjustment of tariffs, the pass-through of
dollar-related costs and the effects of devaluation.
TGS is owned by Compania de Inversiones de Energia SA, or Ciesa,
which last month said it missed paying its final interest and
principal payment due April 22 on a US$220-million corporate
bond.
CIESA is co-owned by Perez Companc SA (PC), the Argentine oil and
natural gas company, and the collapsed Enron Corp.
CONTACTS: IN BUENOS AIRES
Investor Relations:
Eduardo Pawluszek, Finance & Investor Relations Manager
Gonzalo Castro Olivera, Investor Relations
(gonzalo_olivera@tgs.com.ar)
Mara Victoria Quade, Investor Relations
(victoria_quade@tgs.com.ar)
Tel: (54-11) 4865-9077
Media Relations:
Rafael Rodriguez Roda
Tel: (54-11) 4865-9050 ext. 1238
=============
B E R M U D A
=============
GLOBAL CROSSING: Streamlining, Cost Reductions "On Target"
----------------------------------------------------------
Global Crossing, which earlier this year announced plans to
streamline operations, reduce costs and optimize cash as part of
a turn-around strategy, released an update on business
performance Wednesday as part of its continued restructuring
efforts. The announcement included the following highlights and
explanations:
- Over sixty potential investors expressed interest while Global
Crossing continued implementation of business integration and
cost reduction initiatives.
- First quarter performance in line with targets presented to
creditors.
- Cash approximately $894 million (excluding Asia Global
Crossing) at the end of March.
- Approximately 475 new service agreements signed during the
first quarter.
- Customer service and network availability earn high marks in
third party surveys.
- 40% growth in Voice over IP; global voice network grows to over
4 billion minutes a month.
"On March 8th, we released information describing our plans to
restructure and streamline our business operations," said John
Legere, chief executive of Global Crossing. "As part of this
turn-around strategy we made a commitment to keep our customers,
employees and the business community updated on the state of our
business. We continue to fulfill that commitment, and are pleased
to report Wednesday that Global Crossing's overall performance
for the first quarter of 2002 was well in line with the goals
contained in the operating plan that we had previously presented
to our creditors. We said we would aggressively restructure costs
and cash management and we did so - without compromising service
or quality."
For continuing operations in the first quarter of 2002, Global
Crossing expects to report consolidated revenue of approximately
$788 million, including service revenue of approximately $754
million. Excluding Asia Global Crossing and reflecting certain
eliminations and adjustments, these amounts were approximately
$768 million for revenue and $736 million for service revenue.
Figures from continuing operations exclude Global Marine. (These
figures should be read in conjunction with the Notes appearing
below).
In addition, Global Crossing expects to report a cash balance as
of March 31, 2002 of approximately $894 million which includes
$485 million unrestricted cash, $335 million restricted cash and
$74 million from Global Marine. This number excludes $350 million
of Asia Global Crossing cash. These cash balance amounts
represent preliminary Generally Accepted Accounting Principles
(GAAP) book balances as of March 31, 2002.
On Tuesday, Global Crossing filed its Monthly Operating Report
(MOR) for the month ended March 31, 2002 with the United States
Bankruptcy Court for the Southern District of New York. In
addition, the MOR will be attached as an exhibit to a Current
Report on Form 8-K that will be filed with the United States
Securities and Exchange Commission (SEC).
STATUS OF REORGANIZATION
Global Crossing continues to work with creditors and potential
investors to develop a plan of reorganization to be filed with
the Bankruptcy Court to restructure approximately $8 billion of
claims against those Global Crossing companies that filed for
chapter 11 protection. More than sixty potential new investors
have expressed interest. Global Crossing does not expect that any
plan of reorganization, if and when approved by the Bankruptcy
Court, would include a capital structure in which existing common
or preferred equity would retain any value.
RETAINING CUSTOMERS, WINNING NEW CONTRACTS
During the quarter, Global Crossing's resources and personnel
were primarily focused on ensuring that existing customers were
satisfied and continued to turn to Global Crossing for additional
services.
In addition to maintaining a steady base of existing customer
business, Global Crossing signed approximately 475 new service
agreements during the period, including both renewals and new
business. Included are Convergia, a new carrier customer
announced earlier this week, and FAPESP, the largest research
network in Brazil, which chose Global Crossing to provide an
ExpressRoute IP-VPN solution between Brazil and the United
States. Global Crossing also announced during the quarter network
service agreements with Agnostic Media, Club Med, Washingtonpost-
Newsweek Interactive, Jabil, NBC News Channel, DANTE, Nextel
Argentina, and ABZ Ingenieros. Global Crossing also signed
renewal contracts during the quarter with Techtel, Radiant, OPEX
and CNBC Europe.
"In a very difficult market and during a very challenging time
for Global Crossing, our sales teams and sales support personnel
kept their focus on ensuring that our existing customers were
well served and satisfied," noted Mr. Legere. "This effort paid
off in our low customer turn-over rate and high number of renewed
contracts. As we predicted, new sales slowed on a relative basis
during our restructuring effort; however, we are very pleased to
have signed up some valuable new customers. We appreciate the
support of our customers, existing and new, and would like to
publicly thank our employees who have worked so diligently to
ensure customer satisfaction."
NETWORK PERFORMANCE, PRODUCT PERFORMANCE
On Tuesday, Global Crossing announced that traffic on its global
voice network surpassed 4 billion minutes per month on average
during the first quarter. Nearly 25% of those minutes were
packet-based Voice Over IP (VoIP) calls on what is believed to be
the world's most extensive commercial VoIP network. This
represented approximately 40% growth compared to the previous
quarter with over 900 million VoIP minutes logged in March.
Global Crossing also released Tuesday results from Atlantic ACM's
Annual "2002 Wholesale Carrier Report Card" survey. The
telecommunication analyst firm's annual survey asked six hundred
wholesale customers to rate carriers on billing, provisioning,
network, customer service, products, and pricing for 2001. Global
Crossing's scores displayed a dramatic, 31% year over year
improvement in network availability, a category that includes
both geographic reach and available capacity.
On Wednesday, Global Crossing announced that the IP network
Global Crossing provides to one of its customers - SURFnet based
in the Netherlands - was named the world's fastest by Internet2,
a not-for-profit consortium being led by over 190 universities
working in partnership with industry and government to develop
and deploy advanced network applications and technologies.
Global Crossing's sub-sea and terrestrial transport, data and
voice network performance remained at peak levels throughout the
first quarter, with network availability running consistently
above the 99.99% mark.
"Far from standing still during this period, our dedicated
employees have enabled us to restructure without compromising our
service levels and network performance - in fact, service and
quality have continually improved during this period," said Mr.
Legere. "In particular, we were extremely pleased to see the
growth in VoIP usage as we continue to convert those 4 billion
minutes per month into an increasing percentage of VoIP minutes.
The convergence of voice, data and video into streamlined data
applications over a unified protocol illustrates the true
potential of our global fiber optic network. The record we broke
in March was an exciting milestone for Global Crossing."
Global Crossing also noted that several product enhancements were
launched during the first quarter. Enhancements included:
- FreeIPdb, a free software tool that can help manage and assign
Internet Protocol (IP) address space to customers more
efficiently;
- Direct Dial Services, an enhanced voice service that delivers
high-quality international and national long distance voice
connections to 240 countries over Global Crossing's secure fiber
optic network; and,
- IP Origination, which provides wholesale customers with an IP-
to-IP interface for voice services via access to Global
Crossing's Voice over IP (VoIP) network.
In addition, Global Crossing expanded two services into new
regions:
- Carrier Outbound Services, which provides complete global
termination capabilities for facilities-based carriers to more
than 450 destinations, was introduced in Latin America; and,
- Ready-Access Global 800 Service expanded its toll-free
reservationless audio conferencing offering to more than 60
countries worldwide.
OPERATIONAL IMPROVEMENTS, SIGNIFICANT COST REDUCTIONS
Global Crossing implemented several efficiency measures during
the first quarter of 2002, including voluntary and involuntary
layoffs totaling approximately 2,000 employees, real estate
consolidations, and process improvements. These initiatives are
expected to enable Global Crossing to cut operating expenses
(excluding Asia Global Crossing) by 42 percent to approximately
$900 million in 2002, as compared to $1,550 million reported in
2001. Global Crossing forecasts the annual run-rate for operating
expense to come in at $720 million by the end of 2002. Office
consolidations alone are estimated to save Global Crossing over
$100 million in 2002. Total costs in 2001 ran over $300 million.
By the end of March 2002, 181 offices had been closed; 217
offices are expected close by year-end, effecting ongoing
annualized savings of approximately $121 million.
"These cost-cutting initiatives are part of an effort to
streamline business operations that will prove important as
Global Crossing emerges at the end of the restructuring process
as a lean, healthy, globally competitive data communications
provider. We were able to reduce operating costs significantly
during the first quarter, although the choices were often
difficult," explained Mr. Legere. "We realize this has been a
painful time for former employees, and a challenging time for
those employees who remain in place and continue to work harder
than ever to turn our business around."
"Global Crossing is leading the way for recovery in the
telecommunications sector," concluded Mr. Legere. "By focusing on
our customers, concentrating on our service offerings, and
carefully controlling our costs, we're building a formidable
operation in preparation for our successful restructuring."
BOARD OF DIRECTORS UPDATE
Global Crossing announced Wednesday that Joseph P. Clayton has
resigned from its board of directors due to the demands of his
other professional responsibilities. On April 8, 2002 Global
Crossing announced three new board members:
- Alice T. Kane, a consultant for investment banking firm
Blaylock & Partners, L.P. and former chairman and president of
three mutual fund and variable annuity businesses within American
International Group;
- Jeremiah D. Lambert, formerly a senior partner with the law
firm of Shook, Hardy & Bacon L.L.P.; and
- Myron E. "Mike" Ullman, III, a former director general of LVMH
and former chairman of the Board of DeBeers LV.
The announcent included the following notes:
The estimates of revenue, service revenue and cash balances are
preliminary and unaudited and have not been reviewed by Global
Crossing's independent public accountants. On April 2, 2002
Global Crossing announced that the filing with the SEC of its
2001 Annual Report on Form 10-K would be delayed pending
investigations by a special committee of its board of directors,
by the SEC and by the U.S. Attorney's Office for the Central
District of California into allegations regarding Global
Crossing's accounting and financial reporting practices made by a
former employee. Among these allegations are claims that Global
Crossing's accounting for purchases and sales of fiber optic
capacity and services with its carrier customers has not complied
with GAAP. Until it prepares its 2001 financial statements,
completes the related Form 10-K disclosures and receives an audit
report, Global Crossing will be unable to file its 2001 Annual
Report on Form 10-K or to file subsequent quarterly reports on
Form 10-Q.
"Service revenue" refers to Revenue less (i) revenue recognized
immediately for circuit activations that qualified as sales-type
leases and (ii) revenue recognized due to the amortization of
IRUs 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.
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.
CONTACT GLOBAL CROSSING:
Press Contacts:
Cynthia Artin
+1 973-410-8820
Cynthia.Artin@globalcrossing.com
Becky Yeamans
+ 1 973-410-5857
Rebecca.Yeamans@globalcrossing.com
Tisha Kresler
+ 1 973-410-8666
Tisha.Kresler@globalcrossing.com
Teresa Mueller
Latin America
+ 1 305-808-5947
Teresa.Mueller@globalcrossing.com
Mish Desmidt
Europe
+44 (0) 7771-668438
Mish.Desmidt@globalcrossing.com
Analysts/Investors Contact:
Ken Simril
+ 1 310-385-3838
investors@globalcrossing.com
===========
B R A Z I L
===========
CELG: Contemplating Various Capitalization Options
--------------------------------------------------
Jose Walter Vazquez Filho, president of Companhia Energetica de
Goias (CELG), announced that the Brazilian state distributor is
exploring several capitalization alternatives, relates Business
News Americas.
The possibilities under consideration include: an intervention by
the federal government, the sale of the Company's assets, and
sharing management with federally-nominated executives, who would
take over the presidency and financial administration of Celg.
The first option has been under study for sometime now, according
to Vasquez.
Celg, which is owned by the state of Goias, is also negotiating a
BRL50-million capital increase from the federal development bank
BNDES.
Celg has offered to transfer some BRL314 million (US$129 million)
worth of assets to settle debts with federal power company
Furnas.
CONTACT: COMPANHIA ENERGETICA DE GOIAS (CELG)
Rua 2 - Qd. A-37 - Edificio Gileno Godoi
Jardim Goias - Goiania - Goias
Brazil
CEP: 74805-180
Phone: (0XX62) 243-2222
Fax: (0XX62) 243-2100
Email: celg@celg.com.br
Home Page: www.celg.com.br/
Contact:
Jose Walter Vazquez Filho, President
Phone: (0XX62) 243-1001
Samuel Albernaz, Administrative Director
Phone: (0XX62) 243-1031
Javahe de Lima, Economic-Financial Dir./Investor
Relations
Phone: (0XX62) 243-1041
COPEL: Merrill Cuts Recommendation Citing Gloomy Outlook
--------------------------------------------------------
A disappointing intermediate term outlook for Companhia
Paranaense de Energia prompted Merrill Lynch to lower its equity
recommendation on Copel, as the Company is known, to `neutral'
from `buy.'
According to a Business News Americas report, the U.S.-based
investment bank is expecting Copel's first quarter results to
reflect a slower-than-expected recovery in consumer demand for
the Company's services. Also, Copel's tariff increase forecast
for June 24 is now 11.1 percent down from 12.5 percent earlier.
The downgrade by Merrill Lynch also reflected Brazil's political
uncertainty. Political concerns aren't helping matters.
"We believe the current election environment is likely to limit
upside given uncertainty about post-election regulatory
conditions," Merrill said in a research note.
Copel's stock price has fallen 11 percent over the past three
months. Its American Depositary Receipts recently traded at
US$6.00.
Brazilian share values have been hit recently due to concerns
about government-backed presidential candidate Jose Serra's poor
popularity. The trade unionist Worker's Party candidate Luiz
Inacio Lula da Silva has long led the race for October's
elections.
Copel has 17 hydroelectric plants and one thermoelectric plant
with a total capacity of over 4,500 megawatts.
CONTACTS: Ingo Henrique Hobert, Chief Executive Officer
Deni Lineu Schwartz, Chief Government Relatins Officer
Ferdinando schauenburg, CFO
THEIR ADDRESS:
Companhia Paranaense de Energia (COPEL)
Dulcidio, 800
Batel 80420-170 Curitiba - PR
Brazil
Phone +55 41 322-3535
Home Page http://www.copel.com
INVESTOR RELATIONS
Ricardo Portugal Alves
Email: Ricardo.portugal@copel.com
AND
Othon M,der Ribas
Email: othon@copel.com
COPEL: To Issue Debentures To Cover This Year's Investments
-----------------------------------------------------------
Brazil's Parana state integrated power company Copel was
scheduled to issue non-convertible debentures Thursday, according
to a report by Business News Americas. The issue, led by Banco
Itau, is expected to raise BRL 550 million (US$205 million).
Copel spokesperson Julio Malhadas revealed that proceeds from the
transaction will be used to meet Copel's BRL334-million
investment program for 2002 and to cover the put options on
eurobonds issued in 1997, which begin this month.
INEPAR: Delays Decision On BRL9 Million Debenture Sale
------------------------------------------------------
For the fourth time, Brazilian construction company Inepar
decided to postpone the deliberation on the sale of BRL9 million
(US$3.75 million) in debentures to be used to restructure debts,
says Business News Americas. Deliberation is now scheduled to
take place on June 5 during a general assembly.
The upcoming debenture issuance is part of an overall
restructuring process for Inepar, encompassing some BRL560-
million (US$233mn) in liabilities.
Already, Inepar's controllers, which include pension funds,
state-run development bank BNDES and private banks, have
presented a proposal to ten private institutions to which it is
indebted. The Company's administration hopes to reach an
agreement with its creditors soon.
Last year, the construction company posted losses of BRL128-
million (US$53 million), mainly owing to its failure to clean up
its debt situation.
CONTACT: INEPAR S/A - INDUSTRIA E CONSTRUCOES
Av. Juscelino K. de Oliveria, 11400
81450-900 Curitiba Parana Brasil
Phone: 55-41-341-1487
Fax: 55-41-341-1271
Home Page: www.inepar.com.br/
Contact:
Mauro Rezende Lopes (Operacoes em Telecom)
Phone: +55 (41) 350-7564
E-mail: maurotel@inepar.com.br
BNDES
Main Office
Av. Republica do Chile,
100 Rio de Janeiro - RJ
Phone: (021) 2277-7447/6978
Home Page: http://www.bndes.gov.br/english/welcome.htm
VARIG: Head Stays Optimistic Amid Turbulent Times
-------------------------------------------------
Brazil's flagship airline Varig is looking to raise about US$400
million through a global stock offering to pay half of its
US$800-million debt by the end of June. According to Varig
President, Ozires Silva, the Company will be able to find
financing despite the current difficult financial climate.
Silva managed to stay confident despite the fact that investors
have been wary of putting capital into Brazil ahead of
presidential elections in October with a leftist candidate
currently leading in polls.
The president noted that the airline, which turned 75 on Tuesday,
had emerged unshaken from turbulent times before.
"In these 75 years, Varig has faced various crises, numerous
economic plans, seven different currencies and we got here with
our market leadership intact," Silva said.
Silva expects international investment funds, not creditors such
as Boeing Co. or General Electric Co., to come up with the new
funds. However, experts say the issue will only be successful if
it is backed by Brazil's powerful BNDES national development
bank.
Although the BNDES has yet to spell out its position in the deal,
market experts say the bank is likely to back the capital
increase one way or another.
Unable to post a profit in four years, Varig is yet to get back
on firm footing since the country's domestic air travel market
was opened to competition in the early 1990s and after a currency
devaluation in 1999. The Company also faces the threat of a
strike by pilots, who are asking for higher pay.
CONTACT: VARIG (Viacao Aerea Rio-Grandense, S.A.)
Rua 18 de Novembro No. 800, Sao Joao
90240-040 Porto Alegre,
Rio Grande do Sul, Brazil
Phone: (51) 358-7039/7040
(51) 358-7010/7042
Fax: +55-51-358-7001
Home Page: www.varig.com.br/english/
Contacts:
Dorival Ramos Schultz, EVP Finance and CFO
E-mail: dorival.schultz@varig.com.br
Investor Relations:
Av. Almirante Silvio de Noronha,
n 365-Bloco "B" - s/458 / Centro
Rio de Janeiro, Brazil
XEROX: Fitch Affirms Ratings; Exits Financing Biz Mexico, Brazil
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Fitch Ratings has changed its Rating Outlook on Xerox Corp. and
its subsidiaries (see below) to Negative from Stable. The
company's and its subsidiaries' 'BB' senior unsecured debt and
'B+' convertible trust preferred ratings are affirmed.
The Rating Outlook Negative reflects the company's on-going
negotiations with its bank group to refinance the $7.0 billion
revolver due October 2002 which Fitch expects will ultimately be
successful, the potential that Xerox's core operating cash flow
could limit access to the capital markets and the delay of the
company's public annual and quarterly filings following the
settlement with the Securities and Exchange Commission (SEC) that
will include financial restatements. As revenues are forecasted
flat to down, it is crucial that Xerox continues executing its
cost cutting programs in order to return the core operations to
consistent profitability levels. Cash flow remains strained and
will have to increase significantly in order to support debt
obligations.
The ratings also consider the company's weakened credit
protection measures, refinancing risk of the revolver,
significant debt maturities for the next three years, the
competitive nature of the printing industry, the necessity for
constant new product introductions, and overall weak economic
conditions. Fitch continues to recognize the company's improving
operational performance, strong, technologically competitive
product line and business position, completed asset sales,
execution of the cost restructuring program, and progress in
exiting the financing business. Xerox continues to improve its
core operations as core EBITDA for the fourth quarter of 2001 was
approximately $420 million, compared to $61 million in the third
quarter, mainly as a result of higher gross margins and a lower
cost structure.
As of March 30, 2002, Xerox's cash position was $4.7 billion with
total debt of approximately $17 billion, of which more than half
is from customer financing, supported by significant financing
receivables. The company has a finance receivable monetization
program with GECC which could provide an additional $1.6 billion
in funding in 2002. Debt maturities for second quarter of 2002
are $1.3 billion and $1.5 billion for the second half of the
year. The company's $7 billion revolver expires on October 22,
2002, and Xerox is currently in compliance with all covenants and
refinancing is expected to occur by late June 2002. Any extension
of this timeline could result in negative rating actions. Fitch
anticipates core credit protection measures will continue to be
challenged for the near term, despite continued anticipated cost
reductions from the company's ongoing restructuring programs.
Xerox continues to make progress in exiting the customer
financing business, with GECC eventually being the primary source
of customer financing in the U.S., Canada, Germany, and France,
and De Lage Landen International BV managing equipment financing
for Xerox customers in the Netherlands. The company has also made
arrangements for third-party financings in Nordic Region, Italy,
Mexico, and Brazil. In addition, Xerox has made significant
progress with its turnaround strategy as the previously announced
$1 billion cost cutting program was achieved ahead of schedule
and larger than anticipated, including a more than 10% headcount
reduction from year-end 2000. Asset sales have totaled more than
$2.0 billion, including an agreement to outsource approximately
half of its manufacturing, the common stock dividend has been
eliminated, and the company exited the ink-jet market, which was
a significant cash drain.
In addition to Xerox Corp., the ratings affected are: Xerox
Credit Corp. and Xerox Capital (Europe) plc's rated senior debt.
CONTACT: FITCH RATINGS
Nick P. Nilarp 1-212-908-0649
Brendan Buckley 1-212-908-0640, New York
(for info regarding Xerox Corp.)
Philip S. Walker, Jr., CFA 1-212-908-0624, New York
(for info regarding Xerox Credit Corp.)
James Jockle 1-212-908-0547, New York, Media Relations
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C H I L E
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MADECO S.A.: 1Q02 Results Reflect 30% Shareholder Equity Drop
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Madeco S.A. ("Madeco") (NYSE ticker: MAD) recently announced its
consolidated financial results in Chilean GAAP for the first
quarter ended March 31st, 2002. All figures are expressed in
Chilean pesos as of March 31st, 2002 (the year-over-year CPI
variation totaled 2.5%) and US dollar conversions expressed in
this report are based on the exchange rate effective on that same
date (US$1.00 = Ch$655.90).
Madeco's Highlights
For the first quarter of the year 2002, Madeco's EBITDA amounted
to approximately US$7.8 million despite the fact that sales of
both copper and optical fiber telecommunications cables were
almost zero. Subsequent to a marked drop-off in the Company's
business activity beginning in 3Q2001 as a product of the
slowdown in the regional and international economy as well as the
depressed telecommunications sector investment activity, the
Company generated 1Q02 revenues in three of its four business
units (Wire and Cable, Brass Mills and Flexible Packaging)
superior to its 4Q01 levels.
The Company implemented a series of rationalization measures in
its varied operations at year-end 2001 in an effort to adjust
fixed cost structures to the diminished sales activity levels.
On a consolidated basis, total SG&A expenses for 1Q02 have been
reduced 24% in Chilean peso terms compared to the same period a
year ago. Moreover, the operating results in each of the four
businesses improved versus the last quarter of 2001, both in
absolute terms as well as a percentage of sales.
The Aluminum Profiles unit has had the most marked improvement,
with consistently increasing operating results (in both absolute
terms and as a percentage of sales) over the last three quarters;
these improvements reflect the successful implementation of
Indalum's new commercial strategy as well as the Company's exit
from the complementary curtain wall business. Comparing year-
over-year first quarter results, the Flexible Packaging unit also
improved, due to its stronger orientation towards client service
and a restructuring of its Argentine operation.
Argentina's economic and political crisis continue to negatively
impact the Company in the first quarter of 2002; in total, Madeco
registered non-operating charges amounting to approximately
Ch$8,500 million stemming from the neighboring country's ongoing
crisis. Specifically, Madeco recorded an approximately Ch$5,800
million translation loss as a consequence of the Argentine peso
devaluation versus the US dollar. The Company also incurred
expenses such as severance payments as well as provisions related
to the Argentina situation amounting to approximately Ch$2,700
million.
The Company has also advanced in its financial restructuring
activities. Salomon Smith Barney, the investment bank hired as
advisors on this subject, has completed its first stage, which
included an analysis of Madeco's financial situation, future
perspectives and operating projections. Currently, the
investment bank is in the process of analyzing the terms of the
financial restructuring and the amount of additional capital
required in conjunction with the Company's various stakeholders.
Consolidated Income Statement Highlights (Exhibit 1)
The Company's 2002 results are significantly impacted by two
strategic actions implemented at year-end 2001 and the beginning
of 2002, respectively: the temporary closure of the Company's
Argentine subsidiary Decker-Indelqui (manufacturer of wire and
cable as well as brass mills products) and the Company's exit
from the curtain wall business. As a consequence, the year over
year analyses are not directly comparable given the fact that
this year's consolidated totals exclude the figures of three
previously active operating entities.
REVENUES
1Q Amounted to Ch$63,346 million in 1Q02, a 29.9% decrease
compared to Ch$90,338 million generated in the same period last
year. In addition to the revenue reduction stemming from the
cessation of the aforementioned businesses, each of the Company's
remaining businesses have been negatively impacted by the
economic slowdown that began in the second half of 2001 and was
further exacerbated by Argentina's economic and political crisis.
The only exception has been the aluminum profiles unit, which
improved its sales activity despite the overwhelming negative
factors through a series of commercial initiatives; revenues for
the unit increased 2.4% versus the same period last year.
GROSS INCOME AND GROSS MARGIN
1Q Gross income amounted to Ch$7,797 million in 1Q02, a 41.7%
decrease versus the Ch$13,370 million generated during the same
period last year. Despite the restructuring measures targeted
towards reducing the Company's fixed cost structure, both the
wire and cable and brass mills operations were severely impacted
by the lower investment activity of their principal client
sectors (especially the telecom and construction industries), and
registered a decline in year over year gross income results. On
the other hand, gross income results for the Flexible Packaging
and Aluminum Profiles units improved, both in absolute terms and
as a percentage of net sales.
OPERATING INCOME AND OPERATING MARGIN
1Q The Company's operating income amounted to Ch$2,133 million in
1Q02, compared to Ch$5,918 million generated in the same period
of 2001. The weaker performance reflects lower operating income
in the Company's largest business units (Wire and Cable and Brass
Mills), partially compensated by improved results in both the
Flexible Packaging and Aluminum Profiles units.
NON-OPERATING RESULTS
1Q The Company's non-operating loss in 1Q02 totaled Ch$12,995
million, versus a Ch$4,583 million loss in the same period 2001.
Price-level restatement and translation losses: amounted to a
Ch$5,412 million loss in 1Q02 versus a Ch$2,311 million loss in
1Q01. In 2002, the translation losses resulted primarily from the
devaluation of the Argentine peso against the US dollar.
Other non-operating expenses: amounted to Ch$3,017 million in
1Q02, which compares unfavorably versus the Ch$191 million
expense recorded in 1Q01. In 2002, the Company registered
severance payments (Ch$1,523 million) as well as a provision
related to the Argentina situation (Ch$1,202 million).
Net financial expenses: amounted to Ch$4,126 million in 1Q02,
8.6% lower than the Ch$4,513 million recorded in 1Q01; the
decrease reflects a reduction of interest rates.
Other non-operating income: amounted to Ch$30 million in 1Q02,
versus Ch$3,068 million in 1Q01. Last year, the Company sold to
Corning a 25% interest in Optel Ltda. (the Company's Brazilian
subsidiary dedicated to the production and sale of optical fiber
cables), recording an extraordinary gain of Ch$2,986 million.
NET INCOME
1Q Net loss before taxes in 1Q02 amounted to a loss of Ch$10,862
million, versus a gain of Ch$1,335 million in 1Q01.
The income tax in 1Q02 and 1Q01 amounted to Ch$310 million and
Ch$1,947 million, respectively.
The Company's minority interest primarily reflects the share of
net income/loss corresponding to the minority shareholders of the
Company's subsidiaries Alusa and Optel. The Company's minority
interest in 1Q02 amounted to a Ch$948 million credit versus a
Ch$185 million expense in 1Q01; for the first quarter of this
year, both Alusa and Optel registered losses.
The Company's net loss after taxes and minority interest in 1Q02
amounted to Ch$10,219 million, versus a Ch$792 million loss a
year ago.
Foreign Currency Translation
The cumulative adjustments from foreign currency translation
resulted from the adoption in 1998 of Technical Bulletin 64 and
corresponds to the net differences between changes in the Chilean
Consumer Price Index (CPI) and the devaluation or revaluation of
the Chilean peso against the US dollar arising from foreign
investments and related liabilities which have been designated as
hedges.
1Q At the equity level, the positive adjustment from foreign
currency translation for the Company amounted to Ch$960 million
in 1Q02.
BUSINESS UNIT ANALYSIS (Exhibits 2 & 3)
The following discussion of the Company's four business units
focuses on year-over- year performance for the first quarter
period. The complete tables of figures are included in the
exhibits following the text of this report.
WIRE & CABLE
Consolidated revenues in 1Q02 for the Wire and Cable unit were
Ch$32,837 million, representing a 39.6% decrease versus Ch$54,386
million generated in 1Q01, reflecting the closure of the
Company's Argentine cable operations as well as a volume sales
decrease in the Brazilian and Peruvian cable operations. The most
pronounced cause of the volume decrease resulted from the drop-
off in demand of telecom cable in Brazil (both copper and optical
fiber cables). The sales decline was partially compensated by
increased demand of the mining sector and durable good
manufacturers in Chile as well as higher bare aluminum cable
sales in Brazil, as electric companies continued making
significant transmission network investments in response to the
country's energy crisis.
Gross income totaled Ch$3,450 million in 1Q02, versus Ch$8,710
million in the same period last year, reflecting the decrease in
volume sales. Moreover, as a consequence of the fall-off in
telecommunications cable demand in Brazil, the sales mix for all
of the Company's cable operations include a higher proportion of
relatively lower value-added products.
In response to the decline in product demand, the Company
implemented multiple restructuring measures at the end of the
fourth quarter 2001, most particularly in Brazil and Argentina;
as a consequence of the restructuring, overall SG&A expenses for
the Wire and Cable unit dropped 24.3%. Nevertheless, due to the
dramatic decline in sales activity in 1Q02, operating income for
the unit amounted to Ch$366 million, versus Ch$4,637 million in
1Q01.
Brazil: Revenues amounted to Ch$18,430 million in 1Q02,
representing a 29.1% decrease compared to Ch$25,987 million
generated in 1Q01. The revenue decline reflects the first
quarter year-over-year Chilean peso devaluation and a 23.3% drop
in volume sales; specifically, the unit registered lower volume
sales of copper telecom cables, copper bare wire and aluminum
thermo-stable cables. The volume decreases were partially offset
by higher volume sales of copper thermo-stable and aluminum bare
wire as the country's energy companies continued making
transmission network installation investments in response to the
country's energy crisis. Given the remaining requirements in
terms of energy transmission capacity, the Company expects
continued elevated demand levels for energy cables in Brazil.
COGS dropped 27.6%, from Ch$22,611 million in 1Q01 to Ch$16,363
million in 1Q02. The COGS decrease resulted from lower volume
sales as well as the personnel reduction implemented in the
second half of 2001. The cost decreases were partially offset by
higher energy costs (+27% in US dollar terms).
SG&A expenses dropped 22.6%, from Ch$1,541 million in 1Q01 to
Ch$1,193 million in 1Q02. The SG&A reduction reflects the
Company's restructuring measures, which decreased salary
expenditures (-31%), third party services (-93%) and maintenance
expenses (-49%) in US dollar terms.
The Company's operating income generated by the Brazilian unit
totaled Ch$875 million in 1Q02, versus a Ch$1,835 million
operating income in 1Q01.
Optical Fiber: For 1Q02, Optel's registered revenues of Ch$95
million, only a fraction of the revenues totaling Ch$9,071
million generated in 1Q01. The 99.7% decline in volume sales is
the product of the Brazilian telecom demand collapse since the
second half of 2001.
COGS amounted to Ch$296 million in 1Q02 versus Ch$5,914 million
in 1Q01, reflecting the lower volume sales. SG&A expenses
amounted to Ch$252 million in 1Q02, a 52.5% drop versus Ch$531
million in 1Q01. The unit's operating loss for 1Q02 amounted to
Ch$453 million, versus operating income of Ch$2,626 million
generated in 1Q01.
Chile: Revenues grew 14.3%, from Ch$9,543 million in 1Q01 to
Ch$10,910 million in 1Q02 due to a 22.7% increase in volume
sales, partially offset by a decline in average prices. Volume
sales of both copper rod and copper thermo-stable cables
increased, but were partially offset by lower copper telecom
cable sales. The growth in copper thermo-stable cable sales
reflects higher demand from the Chilean mining sector as well as
two durable goods manufacturers that are in the process of plant
expansions. The average price decline reflects a shift in the
sales mix toward relatively lower value-added products and more
competitive pricing within certain product segments in order to
gain market share.
COGS amounted to Ch$10,194 million in 1Q02, a 16.0% increase from
the Ch$8,786 million incurred in 1Q01, and results from higher
volume sales, a rise in the average LME copper price (3.3% in
Chilean peso terms compared to 1Q01) and higher costs for other
raw materials. The COGS increase was partially offset by a
reduction in plant personnel and productivity improvements (from
19.8 to 20.7 kg/man-hour).
SG&A expenses declined 8.4%, from Ch$837 million in 1Q01 to
Ch$767 million in 1Q02 due mainly to lower third-party service
expenses (-16.7%) and a reduction in salary expenses (-16.5%);
both reductions reflect the implementation of restructuring
measures in the second half of 2001.
The unit's operating loss for 1Q02 amounted to Ch$51 million, an
improvement over the Ch$81 million loss recorded in the same
period last year.
Argentina: Revenues amounted to Ch$189 million in 1Q02,
representing a 95.9% decrease versus Ch$4,627 million in 1Q01.
As discussed earlier, the Company's Argentine operations have
been temporarily closed as a consequence of the country's
political and economic crisis. The minimal operating figures
reflect the sales of product inventory.
COGS dropped from Ch$4,273 million in 1Q01 to Ch$182 million in
1Q02. SG&A expenses decreased 51.8%, from Ch$382 million in 1Q01
to Ch$184 million in the 1Q02. The COGS and SG&A figures reflect
the minimal sales activity to sell-off product inventory. The
Company's operating loss in 1Q02 amounted to Ch$177 million
versus Ch$28 million in the same period a year ago.
Peru: Net sales in 1Q02 dropped 20.6% versus the same period a
year ago (Ch$8,270 million in 1Q01 to Ch$6,563 million in 1Q02).
The revenue decline primarily reflects the 13.8% decline in
volume sales resulting from lower copper telecom cable sales to
Brazil, lower export sales to Venezuela and lower domestic demand
of copper thermo-stable cables. The volume decreases were
partially compensated by higher sales of copper thermo-plastic
cables due to increased construction activity and copper bare
wire resulting from energy transmission line installations.
COGS decreased 20.9%, from Ch$7,109 million in 1Q01 to Ch$5,621
million in 1Q02. The reduction in COGS reflects lower volume
sales, productivity improvements (from 17.4 to 19.8 kg/man-hour)
and lower copper scrap levels (from 7.0% to 4.9%). SG&A expenses
dropped 7.6%, from Ch$512 million in 1Q01 to Ch$473 million in
1Q02, caused by lower sales activity, lower export duties and a
reduction in provisions for obsolescence and uncollectibles.
Operating income amounted to Ch$470 million in 1Q02, a 27.5% drop
versus Ch$648 million in 1Q01.
BRASS MILLS
The brass mills business unit generated revenues in 1Q02
amounting to Ch$13,825 million, representing a 24.7% decrease
versus the Ch$18,348 million generated in 1Q01. The unit's 2002
revenues exclude the Company's Argentine brass mills operations,
which was temporarily closed at the beginning of the year as a
consequence of the country's political and economic turmoil.
Additionally, the decline reflects lower proforma volume sales
(13.1%), most notably lower export sales of pipes, bars and sheet
products as well as coin sales; both decreases are the
consequence of the 2001 economic slowdown, which was intensified
by the September 11th tragedy.
Gross income declined from Ch$2,666 million in 1Q01 to Ch$1,646
million in 1Q02. This year's poorer performance reflects lower
volume sales, absorption of fixed costs and a decline in the coin
unit's productivity levels due to the closed plant in February
for maintenance activities.
The brass mills unit's operating income for 1Q02 totaled Ch$501
million, compared to a Ch$1,007 million income obtained in 1Q01.
Chile-PB&S: Revenues decreased 21.5%, from Ch$13,966 million in
1Q01 to Ch$10,965 million in 1Q02, reflecting a 24.3% drop in
volume sales. International demand levels for the Company's
products have been depressed since the economic slowdown in the
United States and Europe beginning last year. In addition,
domestic sales of aluminum sheets have been negatively impacted
by the devaluation of the Argentine peso versus the US dollar,
which results in increased competitive pricing of aluminum
products imported from our neighboring country.
COGS totaled Ch$9,358 million in 1Q02, a 16.9% decrease versus
Ch$11,260 million incurred in 1Q01, reflecting the reduced sales
activity as well as productivity improvements in the pipe, bar
and sheet plants (from 29.5 to 33.8 kg/man-hour). In addition,
the Company reduced salary expenses due to a cutback in plant
personnel (from 489 to 378 employees) and decreased over-time
charges. SG&A expenses decreased 3.4%, from Ch$762 million in
1Q01 to Ch$736 million in 1Q02, reflecting the lower salary
expenses (-5.2%) resulting from personnel reductions. Due to the
absorption of fixed costs, SG&A expenses dropped less than
revenues.
In Chile, operating income for the first quarter 2002 totaled
Ch$871 million, unfavorable versus Ch$1,944 million in 1Q01.
Argentina-PB&S: Given the temporary cessation of Decker-
Indelqui's operations, revenues in 1Q02 amounted to Ch$676
million, 80.1% lower than the Ch$3,393 million. The minimal
operating figures reflect the sales efforts of the unit's product
inventory.
COGS decreased 82.2%, from Ch$3,661 million in 1Q01 to Ch$651
million in 1Q02. SG&A expenses amounted to Ch$115 million in 1Q02
compared to Ch$593 million in 1Q01. The COGS and SG&A decreases
reflect the significantly reduced activity and includes the costs
and expenses related to the sales of existing product inventory.
The Argentine unit's operating loss in 1Q02 amounted to Ch$90
million, significantly less than the Ch$861 million operating
loss recorded in 1Q01.
Coin unit: The coin unit's revenues dropped 22.8%, from Ch$3,036
million in 1Q01 to Ch$2,343 million in 1Q02, reflecting a 22.8%
drop in volume sales. The volume decline reflects the
maintenance activities undertaken in February which required a
halt in production operations.
COGS for the unit dropped 9.9%, from Ch$2,602 million in 1Q01 to
Ch$2,344 million in 1Q02, and reflected in great part the
aforementioned volume sales decline. Cost decreases were
partially offset by the increased costs associated with higher
mintage costs. In 2002, the sales of minted coins increased 115%
versus last year. SG&A decreased 26.1%, from Ch$264 million in
1Q01 to Ch$195 million in 1Q02, reflecting the lower sales
activity and the Company's goal to reduce third party and over-
time expenses.
The coin unit's operating income dropped from Ch$170 million in
1Q01 to a loss of Ch$196 million in 1Q02.
FLEXIBLE PACKAGING
Chile: Net revenues for 1Q02 amounted to Ch$7,445 million,
representing a 9.1% increase versus the Ch$6,822 million
generated in the same period of 2001, reflecting primarily a 6.3%
growth in volume sales. The Chilean unit recovered market share
after making efforts to improve both product quality and customer
service. As a result of the development of closer relationships
with some of its international clients (i.e., Mexico and
Colombia) as well as new higher value-added products (stickers),
export volume sales grew 31.3%.
COGS increased 7.2%, from Ch$6,112 million in 1Q01 to Ch$6,554
million in 1Q02. The increase in COGS was less than the rise in
revenues, reflecting less third party services (i.e., the Company
terminated the outsourcement of maintenance services), lower
vacation provisions and reduced depreciation costs. SG&A
expenses remained almost flat (Ch$457 million in 1Q01 and Ch$455
million in 1Q02).
The Chilean packaging unit's operating income almost doubled,
from Ch$254 million in 1Q01 to Ch$436 million in 1Q02, reflecting
the Company's commercial efforts and the restructuring measures
undertaken during 2001. Operating margin grew from 3.7% to 5.9%.
Argentina: Net revenues dropped significantly (50.2%), from
Ch$3,420 million in 1Q01 to Ch$1,702 million in 1Q02. The
decline in revenues was directly caused by the economic crisis in
Argentina and its restricting effect on the country's credit
policies.
COGS dropped at a rate similar to the decline in revenues
(48.4%), from Ch$3,248 million in 1Q01 to Ch$1,675 million in
1Q02. SG&A amounted to Ch$116 million in 1Q02, representing a
54.7% decline versus the Ch$256 million incurred in 1Q01. While
the drop-off in production provoked declines in efficiency, this
negative effect was offset by a reduction in personnel as well as
a salary adjustment, both implemented as a consequence of the
country's political/economic turmoil.
The Argentine packaging unit registered an operating loss
amounting to Ch$90 million in 1Q02, similar to the Ch$84 million
loss incurred the previous year.
ALUMINUM PROFILES
Aluminum Profiles: Revenues amounted to Ch$7,173 million in 1Q02,
a 22.7% increase versus Ch$5,848 million in 1Q01. Higher
revenues generated by the aluminum profiles unit reflects a 4.4%
growth in volume sales as well as a rise in average prices. The
two gains were the fruits of the Company's year-long commercial
effort, "Indalum Building Systems". The program entails efforts
to improve Indalum's image, and focuses on providing solutions to
customers as well as launching of new higher value-added
products.
COGS increased 14.6%, from Ch$4,725 million in 1Q01 to Ch$5,413
million in 1Q02. The increase in COGS was lower than the rise in
revenues due primarily to productivity improvements (from 24 to
26 kg/man-hour) and a reduction in the use of production
materials, partially offset by higher aluminum costs in Chilean
peso terms (+5.6% in average). SG&A amounted to Ch$738 million
in 1Q02, representing a 1.8% increase versus Ch$725 million
incurred last year. Despite the significant increase in
revenues, the Company kept SG&A expenses in line with last year's
figures.
Operating income for the profiles unit amounted to Ch$1,023
million in 1Q02, a notable improvement versus Ch$398 million
generated in the previous year. Moreover, operating margin more
than doubled (6.8% in 1Q01 and 14.3% this year).
Curtain Walls: At the beginning of the year 2002, as a
consequence of the strategic decision to focus solely on the
fabrication of aluminum profiles, the Company decided to exit the
complementary curtain wall business segment. The operating
figures registered during 1Q02 reflect the termination of the
Company's final curtain wall projects.
Revenues for 1Q02 amounted to Ch$364 million, significantly lower
than the Ch$1,518 million generated in 1Q01; the year 2002
revenues include the completion of the Uruguayan project.
COGS decreased 77.8%, from Ch$1,530 million in 1Q01 to Ch$340
million in 1Q02. SG&A amounted to Ch$33 million in 1Q02,
representing an 84.6% decline versus the same period of the
previous year (Ch$214 million). The operating loss for the
curtain wall unit amounted to Ch$9 million for 1Q02, versus the
loss of Ch$225 million for the same period a year ago.
Balance Sheet Analysis (Exhibit 4)
Assets: Total assets of the Company as of March 31, 2002
amounted to Ch$392,705 million, a 14.9% decrease compared to
Ch$461,520 million at March 31, 2001. The principal differences
were:
Current assets amounted to Ch$145,044 million at March 2002, a
24.6% decrease compared to Ch$192,404 million at March 2001. The
drop in current assets includes the decrease in total accounts
receivables (38.7%) and reflects both the Company's efforts to
improve its customer credit payments and lower sales activity
levels.
Fixed assets decreased 7.3% in 2002 versus the same period last
year, from Ch$210,390 million at March 2001 to Ch$195,089 million
at March 2002. Assets declined in part due to the extraordinary
provisions for valuation adjustments to the Company's Argentine
assets. Moreover, the capital expenditures for the year 2001
were lower than the year's depreciation expense.
Other assets amounted to Ch$52,571 million in 2002, 10.5% lower
than the Ch$58,726 million in 2001. The primary variations were
a decrease in the recovery of tax benefits in Argentina and a
lower income tax credit in Argentina.
Liabilities: Total liabilities of the Company as of March 31,
2002 were Ch$265,437 million, a 6.0% decrease compared to
Ch$282,325 million at March 31, 2001. The primary differences
were:
Current liabilities amounted to Ch$144,745 million in 2002, a
20.7% decrease versus Ch$182,545 million recorded in 2001. This
decrease reflects the Company's bond issuance, the proceeds of
which were used to pay short-term debt.
Long-term liabilities were Ch$120,692 million in 2002, a 21.0%
increase compared to Ch$99,780 million last year, due in great
part to a bond placement in the local market for a total of
US$35.5 MM. The bond's interest payments are due every six
months, its annual interest rate is 6.2% and the principal is
payable on May 1st, 2004.
Shareholders' Equity: Total Shareholders' Equity of the Company
as of March 31, 2002 was Ch$113,591 million, down 30.3% compared
to Ch$163,384 million at March 31, 2001. The main difference
was:
Retained earnings amounted to a Ch$46,398 million loss in 2002
versus a Ch$12,913 million gain in 2001.
Madeco, formerly Manufacturas de Cobre MADECO S.A., was
incorporated in 1944 as an open corporation under the laws of the
Republic of Chile and currently has operations in Chile, Brazil,
Peru and Argentina. Madeco is a leading Latin American
manufacturer of finished and semi-finished non-ferrous products
based on copper, aluminum and related alloys, as well as a
manufacturer of flexible packaging products for use in the
packaging of mass consumer products such as food, snacks and
cosmetics products.
To see financial statements and exhibits:
http://bankrupt.com/misc/Madeco.doc
CONTANCT: Marisol Fern ndez
Investor Relations
Voice: (56 2) 520-1380
Fax: (56 2) 520-1545
E-mail : mfl@madeco.cl
Web Site: www.madeco.cl
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M E X I C O
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GRUPO BITAL: SCH Looks To Up Ownership To Increase Market Share
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As part of an effort to increase its market share in Mexico,
Spanish financial group SCH is looking to acquire the maximum
amount possible in Grupo Financiero Bital, in which it already
owns 31 percent of the voting shares, said SCH CEO Alfredo Saenz.
An acquisition of majority control in Bital would automatically
raise SCH's market share in Mexico by 7 percentage points.
Saenz expects the company to make a decision on Bital in the next
two or three months.
Bital, which has traditionally been one of the most poorly
capitalized Mexican banks, said it completed the first phase of
its US$400-million capitalization program in the first quarter.
Part of the plan included selling a 17.5 percent stake in the
group in mid-March to Dutch Insurance giant ING for US$200
million. The ING transaction is expected to be finalized by the
end of this month.
In early April, a Bital executive said that the bank still needed
to raise US$93 million to complete its capitalization in order to
meet Mexican regulatory requirements.
CONTACT: GRUPO FINANCIERO BITAL
Paseo De La Reforma
No. 243, Cuauhtemoc,
06500, Mexico ,D.F.
Phone: 57.21.52.86
Fax: 57.21.57.83
Home Page: www.bital.com.mx
Contact:
Investor Relations
Act. Ricardo Garza Galindo Salazar
Phone: 57.21.26.40
Fax:57.21.26.26
E-mail: ricaggs@bital.com.mx
MAXCOM TELECOMUNICACIONES: To Double Lines, Cut Spending In 2002
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Eloisa Martinez, CFO of Maxcom Telecomunicaciones, revealed that
the Mexican competitive local exchange carrier wants to double
its number of telephone lines in the country this year to
155,000.
To that end, Maxcom will invest US$74 million that has already
been funded and will decrease other spending by 10 percent,
allowing the company to generate revenue of US$70 million.
Amidst the controversy surrounding the foreign investment clause
in the new Telecommunications Law, Maxcom has received
authorization for 95 percent foreign capital through a system of
neutral investments.
Investors' neutral status means they have no control of the
Company, said Maxcom chairman Fulvio del Valle.
Maxcom posted a 1Q02 net loss of US$15.4 million, compared to
US$23 million for the same period last year, while revenues
almost doubled for the same period from US$7.3 million in 1Q01 to
US$11.5 million in the quarter just ended.
Maxcom had 85,339 lines in service at end 1Q02.
Maxcom Telecomunicaciones, S.A. de C.V, headquartered in Mexico
City, Mexico, is a facilities-based telecommunications provider
using a "smart- build" approach to deliver last-mile connectivity
to small- and medium-sized businesses and residential customers
in the Mexican territory. Maxcom launched commercial operations
in May 1999 and is currently offering local, long distance and
data services in Mexico City and the City of Puebla.
To see latest financial statements:
http://bankrupt.com/misc/MAXCOM.htm
CONTACT: MAXCOM TELECOMUNICACIONES, S.A. DE C.V.
Mexico City, Mexico
Jose-Antonio Solbes
Phone: (5255) 5147-1125
E-mail: investor.relations@maxcom.com
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P E R U
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MIP: Proposes Equity, Warrant Swap for US$40M Debentures
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Oil and gas exploration and production company Mercantile
International Petroleum Inc. (MIP) reported Wednesday a proposed
restructuring of its outstanding U.S. $40,000,000 11.5 percent
senior unsecured debentures due May 11, 2002, says a report
released by Canada NewsWire.
MIP has prepared a Plan of Arrangement under the Companies Law of
the Cayman Islands pursuant to which its 42,521,442 issued and
outstanding common shares will be consolidated on a 10 for 1
basis, 33,631,000 common shares and 43,604,000 new B Warrants of
MIP will be issued to the debentureholders in full satisfaction
of all principal and accrued interest owing on the debentures,
MIP's existing 12,000,000 warrants, expiring May 11, 2002, will
be exchanged for 1,200,000 new A Warrants and 710,000 new A
Warrants will be issued to the shareholders of MIP.
MIP will also issue 773,000 common shares and 1,285,000 new B
Warrants to its non-executive Chairman, Jeffrey Waterous, to
settle amounts owing to him for past services and to purchase his
4% working interest in Block III Talara, Peru.
Canada NewsWire also reveals that Mercantile has obtained
agreement in principle to the restructuring from the holders of
over 70 percent of the debentures.
On April 29, 2002 Mercantile applied to the Grand Court of the
Cayman Islands and obtained an Order to convene special meetings
of its shareholders, debentureholders and warrantholders to
consider and, if thought fit, approve the Plan of Arrangement.
The meetings will be held on June 3, 2002 in George Town, Grand
Cayman.
MIP ended December 31, 2001 with a net loss of U.S.$6,580,000 or
U.S. $0.15 per share, as compared to a net loss of U.S.
$9,532,657 or U.S. $0.22 per share for the prior year.
MIP is incorporated in the Cayman Islands. Through its wholly-
owned subsidiaries MIP holds oil and gas interests in Peru and
Colombia.
CONTACT: MIP
c/o Maricorp Services Ltd., 4th Floor,
West Wind Building, 70 Harbour Drive, George Town,
Grand Cayman
Rudolph Berends, Chief Executive Officer
Phone: 1-345-949-2141
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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 Ma. Cristina Canson, Editors.
Copyright 2002. All rights reserved. ISSN 1529-2746.
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