/raid1/www/Hosts/bankrupt/TCRLA_Public/020517.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 17, 2002, Vol. 3, Issue 97
Headlines
A R G E N T I N A
PATAGON.COM: Financial Problems, Lawsuits Threaten Future
REPSOL YPF: Initiates Divestment Plan To Battle Argentine Crisis
TELEFONICA DE ARGENTINA: Posts $767-Mln Loss 1Q02
VINTAGE PETROLEUM: BP Capital Proposes Creative Restrutcturing
B E R M U D A
DOV BERMUDA: Abbey Gardy, LLP Commences Class Action Suit
DOV BERMUDA: Faruqi & Faruqi, LLP Announces Class Action Lawsuit
STIRLING COOKE: 1Q02 Net Loss Widens, Legal Troubles Blamed
TYCO INTERNATIONAL: Vulnerable To Cash Crunch Due To `Triggers'
B R A Z I L
COPEL: 1Q02 Results Show Substantial YOY Net Income Increase
TELEGLOBE INC.: Receives Creditor Protection To Reorganize
TELEGLOBE INC.: Reorg Focuses On Core Business, Workforce Cut
C O L O M B I A
SEVEN SEAS: Shareholders Elect Directors
E C U A D O R
ECUATORIANA DE AVIACION: AeroContinente To Pay $42 Mln Plus Debt
M E X I C O
INSILCO HOLDING CO.: 1Q02 Results Show Weak Market, Loss Widens
ISPAT MEXICANA: Export Note Exchange Expiration Extended
LASON INC.: Sells Reprographics Business, Non-Core Businesses
SANLUIS: Dodges Bankruptcy, Signs $415 Million Refinancing Deal
P A R A G U A Y
COPACO: Congress Approves Resolution Delaying Sale
P E R U
AES CORP.: Withdraws From Peruvian Privatization Process
CONSORCIO TEXTIL: Debt Plan Awaits Legal Approval
- - - - - - - - - -
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A R G E N T I N A
=================
PATAGON.COM: Financial Problems, Lawsuits Threaten Future
---------------------------------------------------------
The weight of employee lawsuits and the plans of its Madrid-based
parent company to scale back its Latin American operations are
threatening the existence of Patagon.com.
Patagon.com, a financial services Internet portal that epitomized
Argentina's bold foray into e-commerce, was acquired by Spanish
bank Santander Central Hispano (SCH) in March 2000.
Now, in a bid to focus expansion efforts on the more-stable
European market, SCH looks to unload the Internet portal. As part
of the exit plan, SCH would pay US$65 million for the 17 percent
of Patagon it did not already own. Minority stakeholders include
founder Wenceslao Casares and directors Guillermo Kirchner,
Javier Bolzico, Meyer Malka and Michael Esrubizky.
In exchange, SCH would retain control of Patagon Euro and the
company's brand and free itself of certain contractual
obligations, Patagon Argentina chief Andres Valentini said.
Wednesday will be the final deadline for the negotiations but
according to SCH officials, the likelihood of finalizing a deal
had dropped by 20 percent.
Late last month, SCH Director Alfredo Saenz said, "we will either
close Patagon, or sell it to minority partners," adding, "either
of the two exit strategies was bad, because losses from the sale
or impairment will be recognized this quarter."
Patagon's other problems stem from Argentina's protracted
economic crisis and the currency devaluation.
Last week, a Buenos Aires court froze Patagon's corporate bank
accounts after employees filed a lawsuit claiming that the
management had embezzled US$45 million from a workers'
compensation fund.
Although management claims that the lawsuits will not hinder
Patagon's operations, the local business press reports that the
legal proceeding could derail the sale of the firm.
REPSOL YPF: Initiates Divestment Plan To Battle Argentine Crisis
----------------------------------------------------------------
Besieged by the ongoing Argentine economic crisis, Spanish oil
giant Repsol YPF is launching a divestment plan, which includes
the sale of a 20-percent stake in Gas Natural, in order to cut
its debts.
Repsol YPF has been heavily affected by the South American's deep
recession as half of its revenues come from there through its
unit YPF.
The divestment of the Gas Natural stake will bring Repsol's stake
in the firm down to 25 percent from 45 percent.
Although Spanish stock market authorities temporarily suspended
trading in Gas Natural on Wednesday, the company declined to
confirm the operation or explain the trading halt.
Financial analysts told EFE that Gas Natural's market
capitalization totals US$8.475 billion, which means that the 20
percent stake would be worth some US$1.695 billion.
Shares of Repsol YPF rose 6.79 percent to US$12.60 a share,
making it the second-biggest advancer in Wednesday's trading.
Financial analysts said Repsol YPF faces a liquidity squeeze just
as US$2.25 billion in bonds are scheduled to come due.
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
TELEFONICA DE ARGENTINA: Posts $767-Mln Loss 1Q02
-------------------------------------------------
Citing a sharp depreciation of the peso and the forced
pesification of its tariffs, Telefonica de Argentina, the
country's largest phone company, registered US$767 million in
losses in the first quarter of 2002.
In a report submitted to the Buenos Aires stock market
regulators, Telefonica de Argentina indicated a 93-percent plunge
in its net worth to around US$58 million during the period.
Early this month, Telefonica de Argentina cut off service to
about 540,000 clients citing non-payment of bills.
The Company has already asked the government for permission to
hike rates, partly to offset the loss of income from clients'
inability to pay and compensate for the devaluation of the peso
in January. However, the government has forbidden increases in
public utility rates as part of its efforts to fight inflation.
The rate restrictions have put severe financial pressure on the
Company leading to a drop on its credit ratings. The government
is currently in talks with the Company and with other utilities
as well over possible solutions.
Negotiations, according to the government's chief negotiator
Alberto Biagosh, are expected to conclude in mid-June and the new
rates will be implemented in August.
Telefonica de Argentina is controlled by Spain's Telefonica.
CONTACT: TELEFONICA DE ARGENTINA
Tucuman 1, 18th Floor, 1049
Buenos Aires, Argentina
Phone: (212) 688-6840
Home Page: http://www.telefonica.com.ar
Contacts:
Carlos Fernandez-Prida Mendez Nunez, Chairman
Paul Burton Savoldelli, Vice Chairman
Fernando Raul Borio, Secretary
VINTAGE PETROLEUM: BP Capital Proposes Creative Restrutcturing
--------------------------------------------------------------
Boone Pickens announced Wednesday a restructuring proposal for
Vintage Petroleum (NYSE: VPI) (VPI) on behalf of investment
partnerships controlled by BP Capital that together own 8.9% of
the common shares of VPI. Mr. Pickens said, "We believe that by
efficiently monetizing the Canadian and U.S. properties to
eliminate debt, Vintage's management can create a company that
would be worth $20 per share."
BP Capital has filed a 13D amendment with the Securities and
Exchange Commission concurrently with the mailing of the
restructuring proposal to the management of VPI. A copy of the
text from BP Capital's letter to the management of VPI follows:
May 15, 2002
Mr. Charles C. Stephenson, Jr., Chairman
Mr. S. Craig George, President
Vintage Petroleum, Inc.
110 West Seventh Street
Tulsa, OK 74119
Dear Messrs. Stephenson and George:
As your largest outside shareholders with 8.9% of the common
stock of Vintage Petroleum, Inc. (VPI), we hereby request that
the management and Board of Directors of VPI consider the
following proposal which we believe is demonstrably superior to
management's recently announced plans.
Specifically, BP Capital is proposing a restructuring plan, which
we believe will achieve a common stock price of more than $20 per
share, a premium of better than 65% to current market. The BP
Capital proposal recasts VPI as a company with little or no debt,
and continuing operations in Canada and South America. We believe
that our proposal is further supported by Rio Alto's May 13
announcement of the proposed spin-off of its South America
operations into a public company at an attractive valuation.
The BP Capital Proposal
The highlights of our proposal, described in detail in the
enclosed booklet, are
-- The creation of an Income Trust to hold all of VPI's
Canadian producing properties and undeveloped acreage.
-- The sale of VPI's mature U.S. producing properties and
a public offering of the Canadian Income Trust. Based on our
analysis of your tax basis, we believe these sales would be very
tax efficient.
-- The repayment of VPI's indebtedness. The amount of
debt targeted for repayment (we recommend 100%) will determine
the percentage of the Canadian Income Trust to be sold and the
timing and makeup of the U.S. property sales.
-- A new VPI with the Argentina, Bolivia, Ecuador and
Trinidad properties and the retained interest in the Canadian
Income Trust, including incentive rights to manage the Canadian
Income Trust.
We believe the values and potential of this restructuring
proposal are obvious and that the proposal will receive a
positive market response. We recommend that the proposal be
measured against management's proposals, a potential sale of the
company or any other significant transaction that the Board of
Directors may consider.
Background of the BP Capital Proposal
Management's Actions following the announcement of BP Capital's
Investment
When we disclosed our ownership on March 25, 2002, we stated our
belief that VPI's common stock is undervalued. Subsequent to our
announcement VPI has
-- amended the VPI poison pill to lower the trigger to 10%
from 15%
-- announced plans to sell certain foreign and California
assets and to repay $200 million of debt with the sales proceeds
and excess cash flow
-- announced a decreased capital budget
-- issued $350 million of senior notes to refinance
existing debt
-- announced that the California properties are under
contract for $18 million
Since these actions were announced, the common stock of VPI,
which performed poorly in 2001, has declined further.
BP Capital's Analysis of Management's Actions
We believe that the lack of positive market response clearly
demonstrates that recent management actions are insufficient and
will not result in enhancement of shareholder values.
Specifically,
-- Management's untimely proposed sale of South American
properties does little to improve shareholder value, and
leverage. To quote Cambridge Energy's spring report, "The
conditions in the market, with sellers far outnumbering buyers,
necessitate that companies be willing to accept low values for
their Latin American assets."
The recovering U.S. economy and increasing prices for
crude oil and natural gas make the more mature U.S. and Canadian
properties the better candidates for sale and debt repayment.
-- The decreased capital budget of $144 million ensures
declining production and reserves. Finding costs will need to be
less than $4.50 per Bbl to replace expected 2002 production.
-- The senior notes sale, which we assume must have been
urged by the banks, restrains financial flexibility and does
little to improve liquidity.
VPI will continue to be encumbered by too much debt.
Many of these same concerns were highlighted in a Merrill Lynch
May 10 report.
In our original 13D filing, we stated that we were reviewing the
feasibility of making a proposal to acquire all or a substantial
portion of the equity, and we plan to continue that review.
However, in light of management's recent actions, we believe this
restructuring proposal offers another alternative. We welcome the
opportunity to meet with management and its advisors to discuss
our proposal. We believe that, working together, we can refine
this plan so that all shareholders can achieve substantial
benefits.
We look forward to an early response.
Very truly yours,
BP Capital Energy Equity Fund, L.P.
BP Capital Energy Equity International Holdings I, L.P.
By: /s/ Boone Pickens
Boone Pickens, as Managing Director of the General Partner
CONTACT: Robert Stillwell, or Garrett Smith, both of BP Capital,
Phone: +1-214-265-4165 (VPI)
=============
B E R M U D A
=============
DOV BERMUDA: Abbey Gardy, LLP Commences Class Action Suit
---------------------------------------------------------
The law firm of Abbey Gardy, LLP has filed a class action against
DOV Pharmaceutical in the United States District Court for the
District of New Jersey, on behalf of all persons or entities who
purchased DOV common stock in or traceable to DOV's initial
public offering ("IPO") (the "Class"). A copy of the complaint is
available from Abbey Gardy, LLP or the Court.
The action charges DOV, certain of its officers and directors,
and the lead underwriters of DOV's IPO, with violations of
Sections 11 and 12 of the Securities Act of 1933. The violations,
as the complaint alleges, stem from the issuance of allegedly
misleading financial statements contained in DOV's IPO-related
Registration Statement and Prospectus (the "Prospectus") that
understated expenses arising from a joint venture in Bermuda (DOV
Bermuda Ltd.). The complaint alleges that DOV issued
approximately five million shares in its IPO on April 25, 2002 at
$13 per share, but failed to timely inform the Class of revisions
in its financial results. On April 25, 2002 when DOV shares began
public trading investors learned that DOV's previously issued
financial statements had been materially false and misleading. As
a result DOV shares lost approximately 33% of their value in one
day, falling from their offering price of $13.00 to close trading
at $8.70 per share.
Abbey Gardy, LLP has been retained as one of the law firms to
represent the Class. Questions concerning this Notice or rights
as a potential class member or lead plaintiff, may be directed to
Nancy Kaboolian, Esq. or Jennifer Haas of Abbey Gardy, LLP at
(800) 889-3701 or email JHaas@abbeygardy.com.
CONTACT: Abbey Gardy LLP
Nancy Kaboolian, Esq.
Jennifer Haas
Phone:(800) 889-3701
DOV BERMUDA: Faruqi & Faruqi, LLP Announces Class Action Lawsuit
----------------------------------------------------------------
Notice is hereby given that a class action lawsuit was commenced
in the United States District Court for the Southern District of
New York on behalf of all purchasers of DOV Pharmaceutical, Inc.
common stock who purchased DOV shares pursuant and /or traceable
to its April 24, 2002, initial public offering (the "Offering").
A copy of the complaint filed in this action can be viewed on the
firm's website at www.faruqilaw.com.
The complaint alleges that defendants violated Sections 11,
12(a)(2) and 15 of the Securities Act of 1933 by issuing a
materially false and misleading Registration Statement and
Prospectus in connection with the Offering. Specifically, the
complaint alleges that just before the Offering, DOV made a last-
minute change to its Offering documents to reflect a revision of
its 1999 financial results for a joint venture in Bermuda with
Elan Corp, known as DOV Bermuda Ltd. Moreover, defendants also
failed to disclose all material facts concerning: (i) a $10
million licensing fee paid to Elan; (ii) the fact that it would
have to pay more fees in the future; and (iii) the fact that it
had lost $1.3 million dollars in 2000 on the Bermuda investment
and filed restated financial statements for DOV Bermuda. As a
result, on the first day of exchange-based trading in DOV shares,
on Thursday April 25, 2002, DOV's stock plummeted approximately
33%, from $13 a share to as low as $8.70, inflicting enormous
damage on Class members.
Plaintiff seeks to recover damages on behalf of himself and all
other individual and institutional investors, other than
defendants and related parties, who purchased or otherwise
acquired DOV securities pursuant and/or traceable to the April
25, 2002, Offering. Plaintiff is represented by Faruqi & Faruqi,
LLP, a law firm with extensive experience in prosecuting class
actions, and significant expertise in actions involving corporate
fraud.
ANTHONY VOZZOLO, ESQ.
FARUQI & FARUQI, LLP
320 East 39th Street
New York, NY 10016
Telephone: (877) 247-4292 or (212) 983-9330
E-mail: Avozz@faruqilaw.com
STIRLING COOKE: 1Q02 Net Loss Widens, Legal Troubles Blamed
-----------------------------------------------------------
Stirling Cooke Brown Holdings Limited reported Wednesday results
for the three months ended March 31, 2002. The Company reported a
net loss from continuing operations of $3.5 million for the
quarter, compared to a net loss from continuing operations of
$1.5 million for the same period in 2001.
The Company reported a diluted net loss from continuing
operations of $0.37 per share for the quarter ended March 31,
2002, compared with diluted net loss per share from continuing
operations of $0.16 for the corresponding quarter of 2001.
The Company reported a diluted net loss from all operations of
$0.45 per share for the quarter ended March 31, 2002, compared
with diluted net loss per share from all operations of $0.20 for
the corresponding quarter of 2001.
The results for the quarter continued to be affected by factors
that adversely impacted the Company's results last year. The
Company continued to incur costs pertaining to run-off activities
and reinsurance-related disputes in which the Company and others
are involved, including certain litigation, the unanticipated
duration of which has placed a significant strain on the cash
resources of the Company.
For the quarter ended March 31, 2002, total revenues from
continuing operations were $10.5 million, a decrease of $0.9
million from $11.4 million in the first quarter of 2001. The
decline in revenues from continuing operations in 2002 reflected
capacity shortage and margin contraction in the brokerage and
program business segments. This decline was partially offset by
increased net premiums earned in the insurance segment as that
segment retained more business by reducing the amount of
reinsurance purchased for its programs.
Insurance revenues earned by the Company's U.S.-based insurance
carrier increased to $6.6 million in the first quarter of 2002,
from $5.3 million for the first quarter last year. The increase
in insurance segment revenues reflects the increase in net
premiums earned. Gross written premiums decreased due to the
decision to discontinue certain loss-making programs in 2000.
Despite the decrease in gross premiums, net premiums written and
earned increased as a result of reduced reinsurance ceded.
The Company's program business revenues were $2.9 million in the
first quarter, compared to $3.1 million in the first quarter of
2001. This decrease was due to a reduction in program business
volume due to management's decision to impose more selective
underwriting guidelines on continuing programs.
Brokerage revenues were $0.8 million in the first quarter,
compared to $1.6 million in the first quarter of 2001. The
segment has been adversely affected by the disruption caused by
widespread reinsurance market disputes and legal proceedings,
including those involving the Company. The decrease in brokerage
segment revenues was also the result of reduced business being
brokered due to significantly diminished reinsurance capacity for
workers' compensation business.
Segment Revenue
(Dollars in thousands)
Revenues For the Three Months
Ended March 31,
2002 2001
Continuing Operations:
Insurance $6,618 $5,277
Program Business 2,912 3,100
Brokerage 827 1,622
Other 137 1,422
Revenues from continuing operations $10,494 $11,421
Discontinued Operations:
Underwriting Management $31 $172
Reinsurance (8) 212
Revenues from discontinued operations $23 $384
For the quarter ended March 31, 2002, total expenses from
continuing operations, including insurance costs, were $14.4
million, compared to $13.3 million in the same period of 2001.
Insurance costs increased to $6.0 million in the first quarter of
2002, compared to $4.3 million in the first quarter of 2001. The
increase in insurance costs was primarily due to the increase in
net premiums earned in the Company's U.S.-based insurance
carrier.
For the quarter ended March 31, 2002, operating expenses
decreased to $8.4 million from $9.0 million in 2001. This
decrease in expenses from continuing operations reflects the
effects of the restructuring program begun in 1999, together with
a general reduction in administrative costs as a result of
reduced business volume. In addition, expenses from continuing
operations continued to be impacted by costs and provisions
pertaining to reinsurance- related disputes in which the Company
is involved, including certain litigation.
The loss from discontinued operations for the quarter ended March
31, 2002 is primarily due to the increased underwriting losses
incurred on discontinued programs following a strengthening of
reserves by the Company's Bermuda-based reinsurance company.
Stirling Cooke Brown Holdings Limited is a Bermuda holding
company, which, through its subsidiaries, provides insurance
services and products. The Company provides its range of services
and products to insurance and reinsurance companies, insurance
agents, and insureds. The Company is involved primarily in the
workers' compensation, occupational accident and health and
property/casualty insurance markets through its subsidiaries
located in the United States, Bermuda and London.
Stirling Cooke Brown Holdings Limited Ordinary Shares are quoted
on the NASDAQ market under the symbol "SCBHF."
To see financial statement:
http://bankrupt.com/misc/Stirling_Cooke.txt
CONTACT: Stirling Cooke Brown Holdings Limited
Stephen A. Crane, CEO
Phone: +1-212-422-0770
TYCO INTERNATIONAL: Vulnerable To Cash Crunch Due To `Triggers'
--------------------------------------------------------------
Tyco International Ltd. is among the three big companies that
Standard & Poor's consider most vulnerable to a cash crunch
because of so-called `triggers,' Bloomberg reports. The other two
companies at risk are Dynegy Inc. and Vivendi Universal.
According to the largest credit rating company, these three and
20 other companies have clauses in finance and trading agreements
that would force them to pay back billions of dollars if their
ratings fall, stock drops or earnings miss targets. Such triggers
have driven companies into bankruptcy.
"When things start to deteriorate, they can go pretty quickly,"
said Bentley Myer, who helps manage US$2.5 billion of fixed-
income investments at William Blair & Co. "If a company has
triggers, you really need to be watching closely."
S&P and Moody's Investors Service are under pressure to improve
their scrutiny of borrowers after failing to spot the collapse of
Enron Corp. last year. Enron's bankruptcy was fueled by the
presence of triggers, many of which were undisclosed or buried in
agreements.
Tyco's debt is mainly held by its Tyco Group SA unit, whose
``Baa2'' rating at Moody's may be cut and ``BBB'' rating is on
``watch developing'' at S&P, has three borrowing programs or
agreements that could be changed if its credit ratings fall below
investment grade, S&P said. The conglomerate, which is trying to
sell its CIT Group Inc. finance arm to stave off a cash crunch,
has a $566 million program backed by customer payments, 30
billion yen ($225 million) in notes due in 2030 and interest rate
swap agreements that all contain ratings triggers.
"If ratings are lowered below investment grade by Standard &
Poor's or Moody's, the securitization would terminate, the debt
become payable, and the swaps unwind,'' said Cynthia Werneth,
S&P's Tyco analyst, in a report.
The clauses "are nothing new from a perspective of our
disclosure," Tyco spokesman Peter Ferris said. The Company has
US$4 billion in cash and enough in projected free cash flow to
feel comfortable with its financing arrangements.
Tyco International is based in Bermuda and has headquarters in
Exeter.
To see financial statements: http://bankrupt.com/misc/Tyco.txt
CONTACT: TYCO INTERNATIONAL INC.
Media Relations:
J. Brad McGee or Peter Ferris
+1-212-424-1300
Investor Relations:
R. Jackson Blackstock
+1-212-424-1344
===========
B R A Z I L
===========
COPEL: 1Q02 Results Show Substantial YOY Net Income Increase
------------------------------------------------------------
Brazilian electric utility Cia. Paranaense de Energia (Copel) saw
its net income rise to BRL72 million (US$29 million), or about
26 centavos per 1,000 shares in the first quarter this year, from
BRL30 million, or 11 centavos per 1,000 shares, a year earlier,
according to a report by Bloomberg.
Sales of electricity rose 28 percent to BRL354.9 million, after a
17 percent increase in rates in June and improving demand from
customers in Parana state, where Copel is based.
Copel, controlled by the state of Parana, benefited from a stable
currency in the quarter that eliminated most foreign exchange
losses on dollar-denominated debts a year earlier. Copel has
BRL1.4 billion in debt, 62 percent of which is denominated in
U.S. dollars.
The Company also had BRL7.2 million in income from cash
management compared with a loss of BRL11 million a year earlier.
The real weakened 0.6 percent against the dollar in the first
quarter this year, down from 9.29 percent a year earlier.
Copel's preferred shares, its most-traded class of stock, rose
0.4 percent to close at BRL14.40 on the Sao Paulo Stock
Exchange.
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
TELEGLOBE INC.: Receives Creditor Protection To Reorganize
----------------------------------------------------------
Teleglobe Inc. confirmed Wednesday that the honorable Judge J.M.
Farley of the Ontario Superior Court of Justice has granted the
Company an Order providing creditor protection under the
Companies' Creditors Arrangement Act (CCAA). The Company will
initiate ancillary filings in the United States and United
Kingdom. These filings will provide the Company with time to
complete its reorganization plan.
The Company cautioned that certain statements made in its press
release, including, but not limited to, the statements regarding
the Company's reorganization of its business and financial
obligations, continuation of service to customers, its workforce
reductions and its ability to pay for future obligations, and
other statements that are not historical facts, are forward-
looking and are subject to important risks, uncertainties and
assumptions. The results or events predicted in these forward-
looking statements may differ materially from actual results or
events. There can be no guarantee that Teleglobe Inc. will be
successful in its efforts to effect a reorganization of its
business and financial obligations. Factors that could cause
results or events to differ materially from current expectations
expressed or implied by the forward- looking statements include,
among other things: Teleglobe Inc.'s ability to continue
operating its core business as a going concern while it attempts
to sell it or reorganize it as a stand-alone business; Teleglobe
Inc.'s ability to successfully renegotiate or restructure its
debt obligations; there is no assurance that the funding by BCE
Inc. announced herein will be advanced and, if advanced, will be
sufficient for Teleglobe Inc. to carry on its business during the
restructuring period; BCE Inc. has the ability, through its share
ownership, to control the affairs of Teleglobe Inc. and the
interests of certain affiliates of BCE Inc. may be in conflict
with those of Teleglobe Inc.; BCE Inc. is also a creditor of
Teleglobe Inc.; loss, and delays in deployment, of network
capacity or other interruption in service resulting from the
failure by key suppliers to continue to provide network capacity
to Teleglobe Inc. and any resulting loss of customers; the
intensity of competitive activity, and its resulting impact on
the ability to retain existing, and attract new, customers; the
duration and extent of the current economic downturn; the
possibility of further deterioration in the state of capital
markets and the telecommunications industry (in particular with
respect to international data and long distance services);
current negative trends in global market and economic conditions
that impact the demand for, and costs of, products and services;
the financial condition and credit risk of customers and
uncertainties regarding collectibility of receivables; the rate
of decline of prices for voice services the ability to dispose of
or monetize assets; risk factors relating to the recent sale of
Excel Communications Group; the availability of, and ability to
retain, key personnel; the impact of adverse changes in laws or
regulations or of adverse regulatory initiatives or proceedings;
the final outcome of pending or future litigation; and other
risks referenced from time to time in the filings of Teleglobe
Inc. with the Securities and Exchange Commission and with the
Canadian securities regulators.
The forward-looking statements contained in the press release
represent Teleglobe Inc.'s expectations as of May 15, 2002 and,
accordingly, are subject to change after such date. However,
Teleglobe Inc. disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Teleglobe operates throughout Latin America and has offices in
Mexico, Argentina, Brazil and Colombia.
CONTACT: Stephen Hewitt, NATIONAL Public Relations,
Tel: (416) 471-1819 (Cell)
Rachel Yates, NATIONAL Public Relations,
Tel. (514) 843-2314
TELEGLOBE INC.: Reorg Focuses On Core Business, Workforce Cut
------------------------------------------------------------
Teleglobe Inc. announced Wednesday a major reorganization
strategy to renew its focus on its core voice and related data
business to maximize stakeholder value.
Six elements support this reorganization strategy:
- The Company is exiting from its hosting business and portions
of its data transmission business to facilitate its renewed focus
on its core operations. By exiting these businesses, Teleglobe
will free itself from the high costs associated with recently
built infrastructure, primarily developed to support the
discontinued data and hosting operations.
- To facilitate this process, Teleglobe is applying to the
Ontario Superior Court of Justice for an Order providing creditor
protection under the Companies' Creditors Arrangement Act (CCAA).
The Company will initiate ancillary filings in the United States
and United Kingdom.
- As part of the reorganization strategy, Teleglobe reduced its
workforce by 850 people. Approximately 950 jobs will remain at
the Company to support the core business and its restructuring
process. Fifty percent of the job losses will occur in the
United States and 15 percent in Canada. Job losses are across all
organizational levels. These losses relate primarily to the
terminated data and hosting operations.
- John Brunette has been appointed Chief Executive Officer to
oversee the implementation of the overall strategy and to lead
the financial restructuring process and the sale of non-strategic
assets and businesses. Previously, he served as Teleglobe's
Executive Vice President and Chief Administrative Officer.
Executive Vice President of Voice, Serge Fortin, has been
appointed Chief Operating Officer with the mandate to lead the
operations of the core voice and related data business.
Teleglobe's board of directors has accepted the resignation of
Charles Childers, formerly the Company's president.
- Teleglobe has secured US$100 million of debtor-in-possession
(DIP) financing from BCE Inc. This financing will support the
continued operations of the core business, including the
servicing of customers and the payment of employee wages and
benefits.
- Teleglobe will ensure the orderly transition of customers of
discontinued services to new service providers.
"Our primary objective is to maximize the value of the Company
for all stakeholders," said Mr. Brunette. "This strategy allows
us to be free of a financial burden and focus on our core
business, which has been built over a 50 year period."
Returning to the Core Business
Teleglobe's key asset moving forward is its traditional wholesale
voice business, which provides voice and data services to other
telecom carriers in North America and around the world. This
business has a global base of longstanding customers and
generated approximately $750 million of the Company's US$1.3
billion in revenues last year.
"This strategy is good for our stakeholders and the customers of
our core business, who can expect to see no decline in the level
and quality of service as a result of today's developments. The
integrity of our services and customer relationships remain
intact. To these customers it is business as usual," added Mr.
Fortin.
Operating on a stand-alone basis, the Company's core business is
expected to generate free cash flow and be self-funding, once
freed from its current high cost structure. This business employs
approximately 600 people and will be headquartered in Montreal.
Immediate next steps for the Company include:
- Separation and sale of assets from discontinued data and
hosting businesses:
-- Exit the hosting business immediately
-- Rationalize the GlobeSystem network
-- Scale back the product suite, including enterprise services
- Maximization of stakeholder value through the enhancement and
potential sale of the core business:
- Continue discussions with potential buyers.
- Work closely with key customers to expand the Company's
commercial agreements
- Immediately begin transition of customers of discontinued
services to new providers:
- Establish dedicated migration teams
- Develop tailored communication programs
Fair and Equitable Treatment of Employees
Affected employees will receive separation benefits, including
severance pay and outplacement assistance. Approximately US$25
million of additional funding from BCE Inc. is intended for
employee retention and severance packages.
"The job losses are a difficult but necessary action to ensure
Teleglobe can focus its resources on operations that are
financially strong, including our core business," added Mr.
Brunette.
===============
C O L O M B I A
===============
SEVEN SEAS: Shareholders Elect Directors
----------------------------------------
Seven Seas Petroleum Inc. announced that at the 2002 annual
meeting of shareholders held Tuesday, Seven Seas shareholders
elected R. Randolph Devening, Brian F. Egolf, Gary F. Fuller,
Robert A. Hefner III, Larry A. Ray and James R. Schlesinger as
directors of the Company to serve until the next annual
meeting.
Seven Seas Petroleum Inc. is an independent oil and gas
exploration and production company operating in Colombia, South
America. The Company's primary emphasis is on the development
and production of the Guaduas Oil Field and exploration of the
Subthrust Dindal Prospect, both of which are located in
Colombia's prolific Magdalena Oil and Gas Basin.
CONTACT: Seven Seas Petroleum Inc.
Bryan Sanchez, Investor Relations
Tel. +1-713-622-8218
=============
E C U A D O R
=============
ECUATORIANA DE AVIACION: AeroContinente To Pay $42 Mln Plus Debt
----------------------------------------------------------------
AeroContinente SA, Peru's largest airline, is looking to acquire
70 percent of grounded Ecuadorian airline Ecuatoriana de Aviacion
SA. AeroContinente offered US$42 million in payments plus
assumption of debt in exchange for the stake, reports Bloomberg.
Carlos Morales, AeroContinente executive director, revealed that
the airline offered to pay the Ecuadorean government US$2.3
million in cash, make monthly installments totaling US$4.8
million over two years and assume about US$35 million in debt for
a controlling stake.
"We have the money to fund the operation and the money to take
the Ecuatoriana de Aviacion forward," Morales said. "We will
negotiate with creditors a flexible payment calendar to pay all
debt." The airline's creditors include the government, airports,
fuel providers and back payroll, he said.
According to Morales, the Ecuadorean government would retain a
25-percent stake and Ecuadorean investors the remaining 5
percent. An AeroContinente-operated Ecuatoriana could resume
flights within 90 days if the bid is successful, he said.
Ecuatoriana could report sales of between US$40 million and US$50
million in its first year once it resumes operations, Morales
said. AeroContinente has revenue of US$200 million a year, which
is sufficient to finance the purchase, he said.
===========
M E X I C O
===========
INSILCO HOLDING CO.: 1Q02 Results Show Weak Market, Loss Widens
---------------------------------------------------------------
Insilco Holding Co. reported sales and operating results for its
first quarter ended March 31, 2002.
In an effort to provide a better understanding of the changes in
its operating results, the Company reported the following results
on a proforma EBITDA basis to exclude certain non-recurring, non-
operating expense items, such as severance, significant legal and
professional fees and acquisition incentive expenses. Proforma
EBITDA excludes these items as well as the amortization of
goodwill, depreciation, interest and taxes. A complete bridge to
reported results is provided in the attached supplemental
financial tables.
The Company reported proforma first quarter sales of $51.3
million compared with $80.0 million recorded in last year's first
quarter. The decline reflects continued weak demand from the
Company's primary markets, in particular the telecommunications
market. Proforma EBITDA for the current quarter was $1.2 million
compared with $8.5 million recorded last year, reflecting the
weak sales volume.
REPORTED RESULTS
The net loss for the Company's current quarter was ($13.5)
million compared to a net loss of ($7.3) million recorded a year
ago in the first quarter. The current first quarter results
included $1.1 million in charges related to the write down of
inventory and severance costs. The loss available to common
shareholders for the first quarter of 2002 was ($15.7) million or
($10.51) per diluted share, versus a loss of ($9.2) million, or
($6.18) per diluted share, available to common shareholders for
the 2001 first quarter.
The Company is continuing to consider and evaluate its strategic
alternatives. In addition, it is continuing its on-going
discussions with its senior secured lenders and an ad hoc
committee of holders of the 12% Notes in an effort to reach an
agreement on a consensual restructuring of its capital structure.
However, as with any negotiation, there can be no assurance as to
when and if such an agreement will be reached.
Insilco Holding Co., through its wholly-owned subsidiary Insilco
Technologies, Inc., is a leading global manufacturer and
developer of a broad range of magnetic interface products, cable
assemblies, wire harnesses, high-speed data transmission
connectors, power transformers and planar magnetic products, and
highly engineered, precision stamped metal components.
Insilco maintains more than 1.5 million square feet of
manufacturing space and has 21 locations throughout the United
States, Canada, Mexico, China, Northern Ireland, Ireland and the
Dominican Republic serving the telecommunications, networking,
computer, electronics, automotive and medical markets.
To see Financial Statement: http://bankrupt.com/misc/INSILCO.htm
CONTACT: Insilco Holding Co.
Michael R. Elia, 614/791-3117 (Investors)
or
Melrose Consulting
ISPAT MEXICANA: Export Note Exchange Expiration Extended
--------------------------------------------------------
Ispat International N.V. ("Ispat") announced Wednesday that Ispat
Mexicana, S.A. de C.V. ("Imexsa"), Ispat's Mexican operating
subsidiary, has extended its exchange offer for all outstanding
101/8% Senior Structured Export Certificates due 2003 of Imexsa
Export Trust No. 96-1 (the "Senior Certificates"). The exchange
offer will now expire at 5:00 p.m., New York City time, on May
31, 2002, unless otherwise extended or terminated by Imexsa (the
"Expiration Date"). The exchange offer had been scheduled to
expire at 5:00 p.m., New York City time, on May 15, 2002. Under
the terms of the exchange offer, Imexsa has offered to exchange
its 101/8% Senior Notes due 2008 (the "Senior Notes") for Senior
Certificates validly tendered and accepted for exchange. The
Senior Notes will be fully and unconditionally guaranteed by
Ispat on a senior unsecured basis.
The exchange offer is conditioned upon the holders of not less
than 95% of the outstanding principal amount of Senior
Certificates having validly tendered and not withdrawn their
Senior Certificates prior to the Expiration Date and upon the
other terms and conditions set forth in Imexsa's Offering
Memorandum and Consent Solicitation Statement dated January 24,
2002.
In connection with the exchange offer, Imexsa is soliciting
consents from holders of Senior Certificates to amend the
agreements governing the Senior Certificates. Holders tendering
their Senior Certificates in the exchange offer must also deliver
consents. Consents may not be withdrawn after the earlier of (i)
the Expiration Date, or (ii) such time as the requisite consents
required to amend the agreements governing the Senior
Certificates are received.
Dresdner Kleinwort Wasserstein is the dealer manager and
solicitation agent and D.F. King & Co., Inc. is the information
agent for the exchange offer and consent solicitation. Requests
for documentation should be made to D.K. King & Co., Inc. at
(800) 847-4870. Questions regarding the transaction should be
directed to Dresdner Kleinwort Wasserstein at (212) 969-2700.
This announcement is not an offer to purchase or a solicitation
of consents with respect to any Senior Certificates or an offer
of Senior Notes for sale. Securities may not be offered and sold
in the United States absent registration or an exemption from
registration. Any public offering of securities to be made in
the United States must be made by means of a prospectus that may
be obtained from the issuer or selling security holder and will
contain detailed information about the company and management, as
well as financial statements.
CONTACT: Ispat International N.V.
Annanya Sarin, Head of Communications
Tel. +44-20-7543-1162
T.N. Ramaswamy, Director, Finance
Tel. +44-20-7543-1174
LASON INC.: Sells Reprographics Business, Non-Core Businesses
-------------------------------------------------------------
Lason, Inc. announced Wednesday in its Form 10-Q for the first
quarter that it completed the sale of its Consolidated
Reprographics business unit last week and nine other non-core
businesses year-to-date for net proceeds totaling approximately
$39.5 million. The proceeds from these sales will be used to
reduce the Company's new $90 million senior secured note under
its Plan of Reorganization ("Plan") and for working capital
purposes.
"We are very pleased with the completion of these sales. The
Company has done an excellent job over the past year in refining
its core operations and divesting its non-core business units. We
are nearing the culmination of this process and have now focused
our efforts on growing our core Imaging Services and Products,
Data Capture and Web-Based Document Repository businesses, and
remaining Output Processing facilities," stated Ronald D. Risher,
president and chief executive officer.
As noted in the Company's May 2, 2002, press release, Lason
expects its Plan of Reorganization to be effective on or about
June 30, 2002.
About the Company
Lason, headquartered in Troy, Michigan, is a leading provider of
integrated information management services, transforming data
into effective business communication, through capturing,
transforming and activating critical documents. Lason has
operations in the United States, Canada, Mexico, India and the
Caribbean. The Company currently has over 70 multi-functional
imaging centers and operates over 60 facility management sites
located on customers' premises.
CONTACT: Douglas S. Kearney of Lason, Inc.,
Phone: +1-248-597-5800
Home Page: http://www.lason.com
SANLUIS: Dodges Bankruptcy, Signs $415 Million Refinancing Deal
---------------------------------------------------------------
SANLUIS Corporacion, S.A. de C.V., a Mexican industrial company,
managed to head-off bankruptcy after it signed US$415 million
worth in refinancing agreements weeks ago. The Company, which
manufactures autoparts and mines gold and silver, has a total
debt of US$600 million, of which US$285 million are in euro
bonds, the interest of which went unpaid since last September.
According to company officials, after negotiating with bank
creditors, they negotiated with the bondholders. Sanluis
officials said that although they have not reached a concrete
agreement, they expect to do so soon. They denied they would use
the US$75 million coming in from the sale of Compania Minas
Luismin to pay off bondholders.
The decision to sell this business was based on the fact it
represented, on average, 10 percent of the total flow (17 percent
last year, due to the sluggish demand for auto parts).
SANLUIS has been advised by Rothschild Inc. since 1999.
CONTACT:
SANLUIS Corporacion
Hector Amador
Email: hamador@sanluiscorp.com.mx
N M ROTHSCHILD & SONS LIMITED
New Court, St. Swithin's Lane
London EC4P 4DU, United Kingdom
Phone: +44-20-7280-5000
Fax: +44-20-7929-1643
E-mail: infouk@rothschildco.uk
Home Page: http://www.nmrothschild.com
Contacts:
Sir Evelyn de Rothschild, Chairman
Andrew Didham, Executive Director, Finance Director Holdings
N M ROTHSCHILD & SONS (MEXICO) SA DE CV
Campos Eliseos 345-8o Piso
CP 11550 Mexico, DF Mexico
Phone: 52 5 327 1450
Fax: 52 5 327 1485
Home Page: www.rothschild.com.mx
===============
P A R A G U A Y
===============
COPACO: Congress Approves Resolution Delaying Sale
--------------------------------------------------
The Paraguayan congress signed a resolution Thursday calling for
a 60-day delay in the privatization process of the country's
state telecoms monopoly Copaco, Business News Americas report.
Congress wants to move the sale back from May 30 to July 30 in
order to investigate allegations that the process has lacked
transparency, a charge, which Carlos Saravia, a representative
for Spanish investment bank SCH, which is handling the process,
dismissed as unfounded.
"The procedures that have been followed were similar to those in
other countries in the region, just as transparent," he said,
adding that the World Bank has supervised the process.
Approval of the resolution spurred doubts as to whether the whole
privatization process is going to be concluded. Last week,
Paraguayan President Luis Gonzalez Macchi reiterated his support
for the sale but it is not clear whether he will push ahead with
the privatization process or not, said Saravia.
The president and ministers only said that it was very important
to continue with the current timetable, otherwise the government
could face a credibility crisis that would be detrimental to
future privatizations.
Political factors might motivate the president to side with
congress instead of rejecting their call for another
postponement, Saravia said.
But Saravia warned that Copaco's privatization has already been
postponed three times and another delay would not be well
received by interested buyers. According to him, investors could
be scared off and this could force the government to settle for a
lower price.
The government is hoping to raise US$400 million from the sale,
half of which the winner would reinvest in the company.
Five companies are pre-qualified to bid for Copaco: Brasil
Telecom; Paraguayan mobile operator and Millicom International
subsidiary Telecel; Compania de Telecomunicaciones, a consortium
between Paraguay's Citsa (Rieder Group) and Deustche Telekom's
consultancy Detecon; Spain's Telefonica; and Telecom Argentina.
CONTACT: COPACO S.A. (Ex. Antelco) - Paraguay
Phone: 595-21-2192175
595-21-2192010
Fax: 595-21-2192175
E-mail: teleinfo@copaco.com.py
=======
P E R U
=======
AES CORP.: Withdraws From Peruvian Privatization Process
--------------------------------------------------------
The AES Corporation issued the following statement Wednesday:
In response to media and investor questions regarding the
Peruvian privatizations of Egasa and Egesur, The AES Corporation
said today that it has informed the government of Peru that AES
does not intend to participate in the bids. The company said that
it is selectively limiting its near term investment commitments.
AES said it therefore intends to withdraw from the process.
CONTACT: The AES Corporation
Kenneth R. Woodcock, 703/522-1315
Web Site: www.aes.com
Investor Relations: investing@aes.com
CONSORCIO TEXTIL: Debt Plan Awaits Legal Approval
-------------------------------------------------
The Peruvian textiles company CTP (Consorcio Textil del Pacifico)
awaits the decision of the court to formalize the restructuring
of the Company's debts.
In November 2001, the creditors of CTP approved a restructuring
plan, which is geared toward refinancing US$36.1 million in debts
over a 15-year term. With the agreement, the Company will focus
its flat fabric production on the Huachipa plant and close down
the top knit plant, ceasing production on one kind of fabric
altogether.
Consorcio Textil also expects to receive bank credits of US$5
million to reinforce the Company's presence domestically and
abroad. The Company predicts sales to grow by 5 percent in 2002,
and by between 2.5 percent and 3.5 percent annually as of 2003.
***********
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.
This material is copyrighted and any commercial use, resale or
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re-mailing and photocopying) is strictly prohibited without prior
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Information contained herein is obtained from sources believed to
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