/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/020715.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 Monday, July 15, 2002, Vol. 3, Issue 138 Headlines A R G E N T I N A BANCO FRANCES: BBVA Parent Considers Argentine Exit DISCO AHOLD: Sells Supermarkets Chain To Ecuadorian Groups GRUPO GALICIA: Faces Delisting Of ADRs on Nasdaq NORTHERN ORION: Restructuring Complete, Preserves LatAm Assets REPSOL YPF: S&P Warns of Further Cut On Credit Quality SCOTIABANK QUILMES: Employees Attack Parent For Not Paying Wages STARMEDIA NETWORK: Mexican Subsidiaries Misrepresented US$10M TELEFONICA DE ARGENTINA: Refinancing Bonds Will Be A Challenge TELEFONICA DE ARGENTINA: Parent To Buy Stake In Holding Co. B E R M U D A GLOBAL CROSSING: Continues To Fight For DREN Contract GLOBAL CROSSING: Two California-Based Entities Submit Offers GLOBAL CROSSING: Rabin & Peckel Sues SSB, Grubman for Fraud MUTUAL RISK: Schiffrin & Barroway Files Class Action Lawsuit B R A Z I L CEMIG: Establishes Joint Venture With Copasa CSN: BNDES Skeptical About Share Swap with Corus C O L O M B I A HORNASA: Expects No Profits For At Least Five Years M E X I C O ENRON: Azurix Buys Water Contracts Worth $93M From Mexican Ops PEGASO: Telefonica Gets CFC Nod To Buy 65% Stake VITRO: CFC Authorizes Sale Of Stake In JV To Vitromatic - - - - - - - - - - ================= A R G E N T I N A ================= BANCO FRANCES: BBVA Parent Considers Argentine Exit --------------------------------------------------- An executive from Banco Bilbao Vizcaya Argentaria SA (BBVA) announced that the Spanish bank pull out of Argentina. The parent of regional banking company BBVA Banco Frances SA is considering the move if the economic situation in the country goes unchanged. "A good banking practice and the commitment to shareholders calls for a bank to leave any project in which the expectations of profits in the medium and long term are not satisfactory," said BBVA President Francisco Gonzalez. In mid-June, the Spanish parent said it would help Banco Frances by increasing the ailing unit's capital through the conversion of US$209.3 million in debt for equity. A source, at that time, said that about US$130 million of Banco Frances' subordinated negotiable bonds held by BBVA would be swapped for shares in the Argentine bank as would US$79.3 million of a US$150 million loan BBVA previously made to the unit. In return, BBVA will increase its stake in Banco Frances to around 75% from 67%. Banco Frances recorded a loss of EUR4 million in the first quarter of the year, compared to a profit of EUR53 million in the previous year, BBVA said. CONTACT: BANCO FRANCES Maria Elena Siburu de Lopez Oliva Investor Relations Manager, in Argentina Tel. 5411-4341-5035 E-mail: mesiburu@bancofrances.com.ar Maria Adriana Arbelbide Investor Relations Tel. 5411-4341-5036 E-mail: marbelbide@bancofrances.com.ar DISCO AHOLD: Sells Supermarkets Chain To Ecuadorian Groups ---------------------------------------------------------- Disco Ahold International Holdings, an Argentine joint venture between Dutch company Royal Ahold NV and Velox Retail Holdings (VRH), a subsidiary of the embattled group Grupo Velox, sold its majority stake in the supermarkets chain Santa Isabel. The chain, which had 2 outlets in Guayaqyuil, was sold to Eljuri and Dasum groups. Eljuri group controls 20 companies in Ecuador, and recently set up a chocolate confectionery plant Ecuacocoa, at Guayaquil. Dasum group, on the other hand, controls the textiles company Textiles San Antonio, and has a majority stake in Hilton Colon hotel also at Guayaquil. TCR-LA previously reported that Disco Ahold has US$90 million in debt with D&S, the primary supermarket operator in Chile. The debt corresponds to the long-term part of the contract, through which Disco acquired the 10 branches of the supermarket chain Ekono from D&S in December 1999, expiring May next year. But with the current tight financial condition at the Velox group and the uncertain future of Disco Ahold, the Chilean market is wondering about the likelihood of the debt being paid. If Velox slips into default, Ahold will have to pay US$496.2 million for financial guarantees given to its Argentinean partner, keeping 100% of Disco Ahold and the control of the supermarket chains. CONTACT: DISCO S.A. Larrea 847, Piso 1 1117 Buenos Aires, Argentina Phone: +54-11-4964-8000 Fax: +54-11-4964-8039 Home Page: http://www.disco.com.ar Contacts: Eduardo R. Orteu, Chief Executive Officer Jose Sanch GRUPO GALICIA: Faces Delisting Of ADRs on Nasdaq ------------------------------------------------ Nasdaq advised it may delist the American Depositary Receipts (ADRs) of Grupo Financiero Galicia SA effective July 17. The warning came after Galicia, Argentina's largest private commercial bank, failed to include a signed audit opinion and U.S. GAAP reconciliation of its fiscal year 2001 financial results. Galicia, however, explained that its 2001 reporting omissions were "the result of uncertainty resulting from the current economic, political and legal crisis in Argentina and not the result of factors attributable to Grupo Galicia." "This uncertainty has made it impossible to obtain adequate and verifiable data necessary to value the assets and liabilities of Grupo Galicia and to complete the calculations necessary to present such information and to provide an audit opinion," the Company said. Galicia, in a brief statement, said it might appeal Nasdaq's ruling by the 4 p.m. EDT (2000 GMT) deadline July 16. That appeal would automatically postpone any delisting until the Nasdaq Listing Qualifications Panel reaches a final decision, the Company said. Galicia is still in the process of rebuilding its finances after running out of cash when depositors accelerated withdrawals. The run on deposits came over concerns that the bank lacked an international parent willing to back it after Argentina defaulted on US$95 billion in debt and devalued the peso. The bank asked creditors, including Barclay's Plc, Banco Santander Central Hispano SA, Dresdner Bank AG, the International Finance Corp. and J.P. Morgan Chase & Co. to convert part of about US$1.2 billion in debt into shares and refinance the rest to help strengthen its capital reserves. Analysts believe that converting debt owed by Galicia into equity may be the best way for international banks to recoup some of the billions of dollars in losses they have written off on assets in Argentina as a result of the default and devaluation. CONTACT: BANCO DE GALICIA Y BUENOS AIRES S.A., HEAD OFFICE Tte. Gral Juan D. Peron 407 1038 Buenos Aires, Argentina Phone: +54-11-6329-0000 Fax: +54-11-6329-6100 Home Page: http://www.bancogalicia.com.a CREDITOR BANKS: BARCLAYS PLC 54 Lombard St. London EC3P 3AH, United Kingdom Phone: +44-20-7699-5000 Fax: +44-20-7699-2721 Home Page: http://www.barclays.co.uk/ Contact: Cathy Turner, Head of Investor Relations Phone: (+44) (0)207 699 5000 Fax: ((+44) (0)207 699 2721 SANTANDER CENTRAL HISPANO S.A. Plaza de Canalejas,1 28014 Madrid, Spain Phone: +34-91-558-10-31 Fax: +34-91-552-66-70 Home Page: http://www.bsch.es Contacts: Ana P. Botn, Chairman, Banesto Emilio Botn-Sanz, Chairman Francisco G. Rold n, Financial Division General Manager Investor Relations: Phone: + 34.91.558.13.69 + 34.91.558.10.05 Fax: + 34.91. 558.14.53 + 34.91.522.66.70 J.P. MORGAN CHASE & CO. 270 Park Avenue New York, NY 10017 Phone: (212) 270-6000 Fax: (212) 270-1648 Home Page: http://www.jpmorganchase.com/ Contact: William Harrison, Jr., Chairman and Chief Executive Officer Dina Dublon, Chief Financial Officer Geoffrey Boisi, Co-CEO of the Investment Bank Investor Relations Phone: (1-212) 270-6000 DRESDNER BANK AG Jrgen-Ponto-Platz 1 D-60301 Frankfurt/Main, Germany Phone: +49-(0) 69/2 63-0 Fax: General enquiries +49-(0) 69/2 63-48 31 +49-(0) 69/2 63-40 04 Home Page: http://www.dresdner-bank.de/ Contact: Dr. Jur. Henning Schulte-Noelle Chairman of the Supervisory Board of Dresdner Bank AG Uwe Plucinski Deputy Chairman of the Supervisory Boa INTERNATIONAL FINANCE CORPORATION 2121 Pennsylvania Avenue, NW Washington, DC 20433 USA For directory service, call the IFC switchboard at Tel.: (202) 473-1000 Home Page: http://www.ifc.org/ Contact: Corporate Relations Unit Phone.: (202) 473-3800 Fax: (202) 974-4384 E-mail: Webmaster@ifc.org NORTHERN ORION: Restructuring Complete, Preserves LatAm Assets -------------------------------------------------------------- Northern Orion Explorations Ltd. ("Northern Orion") is pleased to announce that it has eliminated all of its outstanding indebtedness with the conversion of $6.9 million in secured convertible notes held by Miramar Mining Corporation ("Miramar"). The conversion was triggered with the completion today of the distribution of a minimum of 48 million of the 70 million shares of Miramar's control block. The option on Miramar's block was originally disclosed in Northern Orion's news release of February 23, 2001. The Company has now effectively completed its restructuring which commenced under current management in November 1999. Since that time, over $5 million has been raised, overhead costs have been significantly reduced, and over $50 million in debt has been removed from the balance sheet. Highlights include: - Conversion of a $21.4 million debenture into shares at a price of $1.47 per share; - Conversion of $4.5 million in debt at a price of $0.30 per share; - Settlement of $18 million in debt for a royalty capped at $15 million; - Redistribution of the Miramar control block to institutional investors; and - Conversion of all remaining $6.9 million debt at a price of $0.15 per share. Throughout the financial restructuring, Northern Orion has preserved its core copper and gold asset base in three advanced projects: Agua Rica and San Jorge. Northern Orion has attributable mineral resources containing approximately 8 billion pounds of copper and 5 million ounces of gold. Management believes that the recent strengthening of the precious metals sector may be indicative of a positive longer- term trend in the base metal market and underlying equities. Northern Orion's principal objective is to maximize the economic potential of its interest in the Agua Rica copper-gold-molybdenum project in Argentina. In addition, Northern Orion is assessing a number of potential base- and precious-metal transactions to provide the basis for a value-added acquisition. CONTACT: NORTHERN ORION EXPLORATIONS LTD. Stephen J. Wilkinson, President/CEO Tel: (604) 687-4622 Fax: (604) 687-4212 Email: info@northernorion.com REPSOL YPF: S&P Warns of Further Cut On Credit Quality ------------------------------------------------------ The worsening economic and political conditions in Argentina could drag down further the credit ratings of Spanish-Argentine oil group Repsol YPF SA. The news comes from Standard & Poor's Latin America Ratings director Eduardo Uribe despite the Company's improved liquidity as a result of the recent sale of its 23% stake in Gas Natural SDG SA. S&P's current outlook for Repsol YPF is "very negative," Uribe said, adding that the oil group's credit quality would be immediately reduced in the event that Argentina decides to re- nationalize YPF. Repsol-YPF, staggering under a debt load expected to be just under EUR10 billion at the end of the second quarter, has been hard hit by the meltdown of the Argentine economy where the Company holds over half its assets. Repsol, Europe's fifth- biggest oil company, bought YPF SA in Argentina for US$15 billion in 1999. Speculation is mounting that Repsol could try to exit Argentina. To see latest financial statements: http://www.bankrupt.com/misc/Repsol.pdf 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 SCOTIABANK QUILMES: Employees Attack Parent For Not Paying Wages ---------------------------------------------------------------- A labor group, representing 1,700 workers of Scotiabank Quilmes, attacked the offices of the Bank of Nova Scotia in Toronto to protest the parent company's failure to pay the employees of its Argentine subsidiary. "This institution is not respecting the essential rights of their employees in Argentina, namely the payment of back wages and the payment of severance," said Don Lee, a spokesman for the Central de los Trabajadores Argentinos Solidarity Canada. Lee claimed that the workers aren't being paid in a timely manner and that job uncertainty is a major fear of the employees. Two Argentine delegates, as well as one of the group's representatives, would be meeting with Scotiabank vice-president of Latin American operations and the bank's vice-president of human resources to discuss the future of the employees, Lee said. Even though the bank hasn't laid off the workers, Lee said Scotiabank needs to assure the Quilmes employees that they will receive pay in the event that they are terminated. Scotiabank Quilmes was the first foreign-owned bank to be halted amid Argentina's four-year recession that has pushed the entire banking system to the brink of bankruptcy after last year's bank run drained 20% of all deposits. Scotiabank owes depositors, the Central bank, and private creditors ARS3.7 billion. The obligation to the Central Bank consists of ARS200 million in repurchase agreements and ARS170 million in rediscount loans. The parent, which is the fourth-largest bank in Canada, has stopped financing its Argentine subsidiary after taking a CAD707- million write-down that erased most of its profits in the first quarter of this fiscal year. LATIN AMERICAN CONTACTS: SCOTIABANK QUILMES Alan Macdonald Chief Executive Officer Phone: (54-11) 4338-8000 Fax: (54-11) 4338-8033 Mail: 6th Floor Gral. J.D. Peron 564 (C1038AAL) Buenos Aires Roy D. Scott Vice-President and Managing Director, Latin America Phone: (54-11) 4394-8726 Fax: (54-11) 4328-1901 Mail: P.O. Box 3955 C1000WBN Correo Central Buenos Aires, Argentina E-mail: scotiarep@sinectis.com.ar STARMEDIA NETWORK: Mexican Subsidiaries Misrepresented US$10M ------------------------------------------------------------- The Company, in consultation with its independent accountants, determined to restate its unaudited consolidated financial statements or the fiscal quarters ended March 31, June 30, September 30, and December 31, 2000, as well as quarters ended March 31 and June 30, 2001, and its audited consolidated financial statements for the fiscal year ended December 31, 2000. The Company initially announced its intention to restate these consolidated financial statements on November 19, 2001. That announcement related to the preliminary conclusion of a Special Committee of the Board of Directors that approximately $10,000,000 in revenues was improperly recognized by two of the Company's Mexican subsidiaries during the period October 1, 2000 through June 30, 2001. Subsequent to that announcement, the Special Committee authorized the Company's management to undertake an additional investigation in order to confirm whether any additional accounting irregularities occurred during the periods in question. The Company's restated unaudited consolidated financial statements for quarters ended March 31, June 30, September 30, and December 31, 2000, as well as quarters ended March 31 and June 30, 2001, and for the audited fiscal year ended December 31, 2000 contain adjustments that fall into five categories. The first category of adjustments arises from the independent investigation conducted by a Special Committee of the Board of Directors and referred to in the Company's November 19, 2001 announcement. The findings of the Special Committee's investigation indicate that the Company improperly recognized certain revenues and pre-paid expenses. The majority of these revenues and pre-paid expenses were recognized by its Mexican subsidiary, SMN de Mexico (d/b/a StarMedia Mexico). The remainder was recognized by its other Mexican subsidiary, AdNet, S.A. de C.V. ("AdNet"). The other categories of adjustments arise from management's additional investigation to confirm the accuracy of the consolidated financial statements to be restated based on the Special Committee's investigation. The findings of management's investigation indicate that, in addition to the accounting irregularities identified by the Special Committee, the Company improperly (A) recognized certain revenues and related expenses that should have been classified as barter transactions in accordance with US GAAP; (B) recognized revenues from a number of sales that provided for future contingencies, were not appropriately authorized by the customer, or for some other reason should not have been recognized; (C) failed to write down the value of certain assets at March 31, 2001 upon shutting down of a subsidiary; and (D) recognized certain other transactions that management identified in the course of its review of the Company's financial statements. The following is a summary of the cumulative effect of the restatement of the Company's net loss for the quarter ended March 31, 2001. As previously reported As restated ------------- ------------ Net loss for quarter ended March 31, 2001 $(31,226,000) $(38,643,000) RECENT DEVELOPMENTS Since March 31, 2001, the Company has experienced the following developments set forth below. - In May 2001, the Company issued 1,431,373 shares of its Series A Convertible Preferred Stock at a price per share of $25.50 to Bell South Enterprises, Inc. ("BellSouth"), About.com, Inc. ("About.com") and certain other investors resulting in total proceeds of approximately $35,100,000 to the Company, net of issuance costs of approximately $1,400,000 (the "BellSouth Investment"). These shares are convertible into 14,313,730 shares of the Company's common stock at any time at the option of the holder. After 60 months from the date of issuance, the Company shall redeem the Series A Convertible Preferred Stock for cash or shares of the Company's common stock, in an amount equal to $36,500,000, plus accrued dividends thereon. Dividends accrue at 6% per annum. In addition, the Company agreed to issue warrants to BellSouth to purchase up to 4,500,000 shares of the Company's common stock, with exercise prices ranging from $4.55 to $8.55 per share that vest in May 2002 and expire during the period from May 2005 through May 2007. These warrants were valued, by an independent appraiser, at approximately $2,200,000 and are being amortized over 60 months. - In May 2001, the Company entered into an agreement with BellSouth to create multi-access portals in Latin America (the "BellSouth Strategic Agreement"). Under the terms of the five- year agreement, the Company will design and service the multi- access portals and mobile applications and provide content, software application integration and support to BellSouth's operating companies in Latin America. BellSouth will supply wireless communications, marketing of services and billing capabilities. The two companies will share revenues generated by the new multi-access portals. All revenues associated with design and maintenance activities and the technology licenses are being recognized ratably over the life of the specific agreements with BellSouth's operating subsidiaries, while the user fees and transaction revenues are being recognized when the services are rendered. - In June 2001, the Company entered into a five-year agreement with About.com to create a jointly operated co-branded website, within the About.com website. About.com granted the Company certain worldwide license rights to use its content and proprietary technology in exchange for $2,000,000 in cash and $3,000,000 in shares of the Company's common stock. As of December 31, 2001, $2,000,000 of such shares has been issued and $1,000,000 remains in common stock issuable. The aggregate purchase price of $5,000,000 was allocated to intangible assets ($3,500,000), prepaid maintenance ($700,000) and prepaid advertising expenses ($800,000). - Gerardo Rosenkrantz resigned from the board of directors in July 2001 and Marie Jose Kravis and Jack Chen resigned from the board of directors in August 2001. - In June 2001 Enrique Narciso was appointed as President and a director of the Company. He replaced Jack Chen as President. Subsequently, in August 2001 Mr. Narciso was appointed as CEO of the Company, replacing Fernando Espuelas. - On November 19, 2001, the Company announced that it planned to restate its unaudited financial statements for the quarters ended March 31 and June 30, 2001, and its audited financial statements for the fiscal year ended December 31, 2000 as a result of an investigation by a Special Committee of the Company's Board of Directors into accounting issues with respect to revenue recognition by two of the Company's Mexican subsidiaries, AdNet, S.A. de C.V. and StarMedia Mexico, S.A. de C.V. At that time, the Company had come to a preliminary conclusion that revenues aggregating approximately $10 million were improperly recognized by those subsidiaries during the period from October 1, 2000 through June 30, 2001, and that at that time, the financial statements or those periods should not be relied on. See note 2 of Notes to Unaudited Condensed Consolidated Financial Statements. Following the foregoing announcement: -- The Nasdaq National Market suspended trading of the Company's common stock effective as of the open of business on November 19, 2001 and delisting procedures commenced as a result of the Company's failure to make a timely filing of its report on Form 10-Q for the quarter ended September 30, 2001. Subsequently, effective as of February 1, 2002, our common stock was delisted from and ceased to be quoted by The Nasdaq National Market. Following delisting by The Nasdaq National Market shares of the Company's common stock have been quoted on the Pink Sheets LLC electronic quotation system for "over the counter" (OTC) securities, a market which is generally not as liquid as The Nasdaq National Market. -- The Securities and Exchange Commission (SEC) informed the Company that it had commenced an investigation into the circumstances leading up to the restatements referred to above. The investigation is ongoing. -- In late 2001 and early 2002, eleven lawsuits were filed against the Company in the Southern District of New York in connection with the Company's announcement relating to the Restatement referred to in "Restatement Information" above. A lead plaintiff for the class and lead plaintiff's counsel were subsequently selected and a motion filed to consolidate the various claims. The Consolidated Amended Complaint was filed on May 31, 2002 in the Southern District of New York under the caption In re StarMedia Network, Inc. Securities Litigation 01 Civ. 10556 (S.D.N.Y.). In June 2002, the lead plaintiffs and all defendants executed a settlement agreement that resolves all claims in the consolidated action. The settlement amount will be paid by the Company's directors and officers liability insurance carrier. This settlement agreement is subject to review and ratification by the Honorable Denny Chin of the United States District Court for the Southern District of New York. See "Legal Proceedings". - On November 19, 2001 the Company also announced as follows: -- That Steven J. Heller had resigned as Chief Financial Officer of StarMedia Network, effective November 15, 2001, on terms and conditions previously agreed with StarMedia Network. -- That the Company had terminated the employment of Justin Macedonia as General Counsel. See "Legal Proceedings". -- That the Company and the former stockholders of AdNet entered into a Termination Agreement pursuant to which the Company agreed to issue to the stockholders of AdNet 8,000,000 shares of the Company's common stock, in full satisfaction of the Company's obligations under earn-out and other provisions set forth in the agreement pursuant to which the Company had acquired AdNet. -- That Susan Segal had been appointed to serve as acting Chairman of the Board. She succeeded Fernando Espuelas, co- founder and former Chief Executive Officer of the Company, who, pursuant to his August 2001 agreement with the Company, resigned on November 15, 2001 as Chairman of the Board of Directors, and that Mr. Espuelas continued to serve as a Director on the Company's Board. - In November 2001 the Company vacated its headquarters at 75 Varick Street in New York City. Under terms negotiated with its landlord, the Company was released from any further obligations under the lease. The Company's headquarters are currently located in Miami, Florida, which was previously served as the headquarters of the Company's Mobile Solutions business. - In December 2001, the Company sold substantially all of the assets associated with Cade?, a Brazilian online directory, to Yahoo Brasil Ltda. - Effective as of April 19, 2002, Enrique Narciso resigned as CEO, President and director of the Company. As disclosed in the Report on Form 8-K filed by the Company on April 19, 2002, in tendering his resignation Mr. Narciso informed the Company that he needed to focus on a personal matter that has since resulted in his pleading guilty to a tax violation involving his 1998 individual federal tax return. Following Mr. Narciso's resignation, Jose Manuel Tost was appointed President of the Company and Jorge Rincon was appointed Chief Operating Officer of the Company. - Effective as of April 29, 2002, Ana Maria Lozano-Stickley was appointed as Chief Financial Officer of the Company. Prior to that time Ms. Lozano-Stickley had been Acting Vice President of Accounting and Administration of the Company since January 2002. - The Company has continued to undertake a realignment for the purposes of focusing its resources on its mobile solutions business. As part of this realignment, the Company reduced its number of full-time employees from 520 as of close of business on December 31, 2001 to 391 as of June 21, 2002. In addition, following the Company's change of its headquarters in late 2001 from New York to Miami, Florida, which was previously the headquarters of the Company's mobile solutions business, during 2002, the Company has substantially reduced its presence in New York. As of June 21, 2002, the Company currently had 30 employees based in its New York City offices, as compared to 118 employees based in such office as of close of business on December 31, 2001. - On July 1, 2002, Fernando Espuelas notified the Company that effective as of that date he resigned as a director of the Company. - On July 3, 2002 the Company sold most of its assets associated with starmedia.com, its Spanish- and Portuguese-language portal, and LatinRed, its Spanish language online community, to eresMas Interactive S.A. ("EresMas"). Following the sale of starmedia.com and LatinRed to EresMas, the Company is principally engaged in the business of providing integrated Internet solutions to wireless telephone operators targeting Spanish- and Portuguese- speaking audiences, principally in Latin America, and the Company retains only the following Internet media services: - batepapo.com.br, a Brazilian chat service, which the Company is considering either selling or closing; - the local city guides such as nacidade.com,.br; guiasp.com.br; guiarj.com.br; paisas.com; openchile.cl; panoramas.cl and AdNet.com.mx, which the Company anticipates that it will continue to operate in support of its mobile solutions business. As part of the terms of the sale, the Company has agreed to cease using the "StarMedia" brand commercially and, subject to shareholder approval, to amend its certificate of incorporation to change its name. Following the sale, the Company operates commercially under the name "CycleLogic." To see financial statements: http://bankrupt.com/misc/Starmedia_Network.htm CONTACT: STARMEDIA NETWORK Media - Romi Schutzer Tel. +1-212-905-8269 romi.schutzer@starmedia.net Mariana Cavin Tel. +1-212-905-8267 mariana.cavin@starmedia.net INVESTORS: Daniel Oehl of Zemi Communications for StarMedia Network Tel. +1-212-689-9560 djoehl@zemi.com TELEFONICA DE ARGENTINA: Refinancing Bonds Will Be A Challenge -------------------------------------------------------------- A recent move by Telefonica de Argentina to make cash payments to bondholders who rejected an offer to extend July maturities by four years, is likely to add to the Company's burden of refinancing its two other bonds, analysts suggested. A spokesman for the country's biggest phone company, Andres Alcaraz, revealed that Telefonica paid 16% of holders of the US$100 million of 9.875% bonds on time earlier this month after failing to persuade these holders to take new securities. Analysts believe that the move would make it harder for Telefonica to restructure its two other bonds if its finances continue to deteriorate in the wake of the country's peso devaluation and debt default. "This potentially lessens any coercive incentives Telefonica has if it decides to seek future exchanges," said Stephen Balinskas, an analyst with Bear, Stearns & Co. Inc. in New York. Telefonica de Argentina has bonds that mature in 2004 and 2008. Before the exchange, it had US$1.1 billion of debt coming due this year, mostly loans to its parent, according to a Standard & Poor's report. Telefonica de Argentina, which has decided to freeze investments, has been hard hit by the devaluation of the Argentine peso, plummeting sales and high debts. The Company reported first- quarter losses of ARS2.48 billion compared with a profit of US$44 million a year ago. CONTACTS: 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 TELEFONICA DE ARGENTINA: Parent To Buy Stake In Holding Co. ----------------------------------------------------------- Telefonica SA made an offer to purchase the 0.05% it doesn't already hold in Telefonica Holding de Argentina SA, which owns Telefonica de Argentina, Bloomberg reports, citing company filings released recently by the Buenos Aires Stock Exchange. The documents, which were confirmed by Telefonica Argentina spokesman Andres Alcaraz, stated that Madrid-based Telefonica said its international unit would pay ARS3.2 (90 cents) a share for the stake. The purchase, according to Bloomberg, would complete Telefonica's efforts started in January 2000 to take full control of its Argentine unit, which has cost the company EUR2.8 billion in reduced earnings and asset write downs because of the devaluation and recession. Acquiring all outstanding shares would allow Telefonica to take the holding company off the local stock exchange and stop filing statements with regulators. ============= B E R M U D A ============= GLOBAL CROSSING: Continues To Fight For DREN Contract ----------------------------------------------------- For the second time around, Hamilton, Bermuda-based Global Crossing Ltd., filed protests with the General Accounting Office over the Defense Information Systems Agency's decision to award the US$450-million Defense Research and Engineering Network (DREN) contract to WorldCom Inc. This time, according to an article released by Newsbytes, the foundation for Global Crossing's complaint is WorldCom's alleged financial misrepresentations. Global Crossing filed its new protest July 5, arguing that its disqualification as a bidder on the DREN contract because of its own bankruptcy should be reconsidered in light of WorldCom's woes and improvements in its own situation. "Having completed most of our restructuring activities, we are well on our way to completing a successful reorganization," Global Crossing said in a statement. "At the same time, we have met all of our financial targets, continued to serve approximately 85,000 customers, signed up new customers, and even improved network performance. We believe that our stability and outstanding performance warrants the reconsideration." The DREN contract is a 10-year contract to provide a telecommunications network for more than 6,000 scientists and engineers at laboratories, test centers, universities and engineering sites around the country. Global Crossing was originally awarded the contract in July 2001. The losing bidders, Sprint; AT&T Corp., New York; WorldCom; and Qwest Communications International Inc., Denver filed protests. DISA yanked the award before the GAO could issue a decision. The contract then went through a second evaluation, and DISA was on the verge of awarding it to Global Crossing again, but the Company filed for bankruptcy protection in January. The agency subsequently awarded the contract to WorldCom. 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, Global Crossing and certain of its affiliates (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. On the same date, the Bermuda Court granted an order appointing joint provisional liquidators with the power to oversee the continuation and reorganization of the Bermuda-incorporated companies' businesses under the control of their boards of directors and under the supervision of the U.S. Bankruptcy Court and the Supreme Court of Bermuda. On April 23, 2002, Global Crossing commenced a Chapter 11 case in the United States Bankruptcy Court for the Southern District of New York for its affiliate, GT UK, Ltd. 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. CONTACT: GLOBAL CROSSING Press Contacts Tisha Kresler Phone: + 1 973-410-8666 E-mail: Tisha.Kresler@globalcrossing.com Kevin Burgoyne Latin America Phone: + 1 305-808-5925 E-mail: Kevin.Burgoyne@globalcrossing.com Mish Desmidt Europe Phone: +44 (0) 7771-668438 E-mail: Mish.Desmidt@globalcrossing.com Analysts/Investors Contact Ken Simril Phone: + 1 310-385-3838 E-mail: investors@globalcrossing.com GLOBAL CROSSING: Two California-Based Entities Submit Offers ------------------------------------------------------------ Thursday's deadline for the submission of bids for Global Crossing saw two California investment firms among the parties making formal offers for the bankrupt fiber-optic network operator. Gores Technology Group and Platinum Equity, according to AP, submitted a combined offer that was "substantially higher" than an initial bid by two Asian companies. However, representatives for both companies declined to provide details of their bid, citing a nondisclosure agreement. The two Asian entities, Singapore Technologies Telemedia Pte Ltd and Hutchison Whampoa Ltd, had previously made a preliminary offer of US$750 million in cash for 79% of Global Crossing, which filed for bankruptcy in January. Creditors, who are owed more than US$12 billion, would have received US$300 million and a 21% stake. However, according to Terry Fahn, a spokesman for Gores Technology, creditors rejected the Asian bid deeming it inadequate. Meanwhile, a spokesman for ST Telemedia said the company and Hutchison Whampoa have reached a decision not to submit a bid for Global Crossing, citing current weak market conditions. "We would not be submitting a bid for Global Crossing," the spokeswoman said. "The conditions in the telecoms market have deteriorated since May when we last made our offer." Also, Verizon Communications Inc., which expected to bid, decided not to submit an offer for Global Crossing citing a rash of problems in the industry, like the recent accounting scandal at WorldCom for its shift in strategy. GLOBAL CROSSING: Rabin & Peckel Sues SSB, Grubman for Fraud ----------------------------------------------------------- A class action complaint has been filed in the United States District Court for the Southern District of New York, civil action number 02 cv 5339, on behalf of purchasers of Global Crossing Ltd. ("Global Crossing") securities between June 15, 1999 and November 10, 2001, inclusive (the "Global Crossing Class Period"). The suit named Salomon Smith Barney, Inc. and Jack Grubman as defendants. The Complaint alleged that defendants violated sections 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder, by the issuance of analyst reports regarding Global Crossing, which recommended the purchase of Global Crossing common stock and which set price targets for Global Crossing common stock without any reasonable factual basis. Furthermore, when issuing their Global Crossing reports, defendants failed to disclose significant, material conflicts of interest, which they had, in light of their use of Grubman's reputation and his Global Crossing analyst reports, to obtain investment banking business for Salomon. Furthermore, in issuing their Global Crossing reports, in which they were recommending the purchase of Global Crossing stock, defendants failed to disclose material, non-public, adverse information which they possessed about Global Crossing as well as their true opinions about Global Crossing. Defendants also failed to disclose that Grubman, while issuing reports on Global Crossing recommending that investors purchase Global Crossing common stock, had been intimately involved in the management of Global Crossing. Prchasers of Global Crossing during the Global Crossing Class Period described above, may, no later than July 23, 2002, move the Court to serve as lead plaintiff. CONTACT: RABIN & PECKEL LLP Eric J.Belfi or Sharon Lee 275 Madison Avenue New York, NY 10016 Tel.: (800) 497-8076 (212) 682-1818 Fax.: (212) 682-1892 E-mail: email@rabinlaw.com MUTUAL RISK: Schiffrin & Barroway Files Class Action Lawsuit ------------------------------------------------------------ A pending class action charges Mutual Risk Management Ltd. ("Mutual Risk") with misleading investors about its business and financial condition according to the law firm of Schiffrin & Barroway, LLP. The complaint was filed in the U.S. District Court for the Southern District of California (02-CV-1244). Plaintiff seeks damages for violations of the federal securities laws on behalf of all investors who purchased Mutual Risk Management Ltd. securities between February 16, 2000 through April 2, 2002 (the "Class Period"). The complaint alleges that the California-based Mutual Risk Management Ltd. and its most senior officers and directors disseminated materially false financial statements for each of Mutual Risk's interim quarters during that period and for the years ended December 31, 2000 and 2001, which materially overstated the Company's cumulative revenues and its net income. As a result of the materially false and misleading statements and omissions described herein, Mutual Risk stock was inflated to an all-time high of $23.75 per share. Mutual Risk also represented in each of its quarterly and annual filings with the SEC that the financial statements included therein had "been prepared in conformity with generally accepted accounting principles" and "reflected all adjustments necessary for a fair presentation of results for such periods." In reality, each of Mutual Risk's financial statements violated GAAP by understating reserves for potential claims. The financial results included in Mutual Risk's SEC filings during the Class Period were thereby rendered materially false and misleading. Then, on April 2, 2002, the Company admitted that even its disastrous Q4 2001 results (announced February 19, 2002) were not accurate, putting the Company's shares into another "free fall," trading at just pennies per share following the April 2, 2002 admission. CONTACT: SCHIFFRIN & BARROWAY, LLP Shareholder Relations Manager Toll Free: 888-299-7706 or (610) 822-2221 Email: info@sbclasslaw.com =========== B R A Z I L =========== CEMIG: Establishes Joint Venture With Copasa -------------------------------------------- Brazil power regulator Aneel announced that Minas Gerais state integrated power company Companhia Energetica de Minas Gerais (CEMIG) and state waterworks company Copasa have established a joint venture to build the US$5-million, 13MW Barreiro cogeneration thermoelectric plant, Business News Americas relates. The joint venture, named Central Termeletrica de Cogeracao (CTC), is 51% owned by Copasa and 49% by Cemig. Previously, Cemig announced it has signed a 20-year contract to build the plant at the facilities of steel tube manufacturer Vallourec & Mannesmann Tubes (V&M do Brasil), located in the Barreiro district of state capital Belo Horizonte. Cemig and Copasa will provide investments, while Cemig will operate and maintain the plant. V&M will supply gas from its steel plant, which is currently flared. Construction began in April 2002 and is scheduled for completion by July 2003. The plant will supply electricity to 108,000 people. Cemig, recently posted a first-quarter profit of BRL220 million (US$89 million), reversing a loss of BRL12.5 million in the same period in 2001. The company was scheduled to list on Spain's Latibex exchange July 12, making it the 23rd Latin American company to list on the Spanish bourse. In June, the Company received approval from its board of directors to use hedging operations to protect up to 100% of the Brazilian electric utility's dollar-linked debt against foreign exchange variations. In its first quarter financial statement, CEMIG revealed that its dollar-linked debt stood at about US$600 million. CONTACT: CEMIG Avenida Barbacena, 1200 Sto Agostinho 30123-970 Belo Horizonte - MG Brazil Phone +55 31 299 4900 Home Page http://www.cemig.com.br Contacts: Djalma Bastos De Morais, Chairman Geraldo De Oliveira Faria, Vice Chairman Cristiano Correa De Barros, Finance Director CSN: BNDES Skeptical About Share Swap with Corus ------------------------------------------------ The Brazilian steel company CSN (Companhia Siderurgica Nacional) and the English-Dutch company Corus confirmed they are both in negotiations, which according to market sources, involves a share swap between the companies. CSN would have 10% less than the 20% stake that Corus would have in the Brazilian company and Corus would take over part of CSN debt. Corus would also have access to CSN raw material and would compete with the European group Arcelor, which owns Acesita in Brazil and makes part of controller group of CST (Companhia Siderurgica de Tubarao). CSN, which production reaches 5mil m tons of steel per year, would penetrate Europe easier through the agreement. However, state-owned national development bank BNDES, is unsure whether to allow the Vincunha group swap its shares in CSN for Corus shares. BNDES and other creditors lent US$600 million to Vincunha group, which used its 46.5% stake in CSN as collateral. According to a BNDES source, BNDES and the other lenders want to make sure they do not lose out in the exchange. "Creditors have doubts about the swap of CSN shares for Corus'. What's certain may be exchanged for something uncertain," a senior financial executive close to the negotiations was quoted as saying. CONTACT: CIA SIDERURGICA NACIONAL (CSN) Rua Lauro Muller 116-36 Andar, PO Box 2736 Rio De Janeiro, Brazil, 22299-900 Phone: 55 21 5451707 Fax: 5521 5451529 Home Page: http://www.csn.com.br/english/index.htm Contact: Benjamin Steinbruch, CEO (interim basis) Antonio Mary Ulrich, Exec. Officer - Investors Relations =============== C O L O M B I A =============== HORNASA: Expects No Profits For At Least Five Years --------------------------------------------------- Steel maker Hornos Nacionales (Hornasa) admits it doesn't anticipate being profitable for at least five years while it pays off its US$10-million debt, says Business News Americas. In an interview, the Company CEO Ricardo Prada revealed that the Company is cutting expenses and keeping production volume sufficient to meet the obligation. As the Company is being hurt by weak demand from the construction sector, Prada hopes a brighter economic condition in Colombia is soon to surface following election of president Alvaro Uribe on August 6. Earlier, Hornasa was troubled about possible competition with foreign suppliers after US safeguards on imports was imposed in March. Hornasa, which is based in the city of Sogamoso, in the central Colombian department of Boyaca, has an installed capacity of 93,000 ty/y. It is currently aiming to increase production to more than 50% of its capacity in order to generate 55,0000 t/y of steel. In the first half of the year, the Company was able to produce and sell 29,000t, a feat Prada considered good considering market conditions. The Company's main creditors are the Colombian tax and customs service Dian, state industrial development agency IFI, private sector bank Bancolombia and the Company's own employees. CONTACT: HORNOS NACIONALES SA Calle 97 No. 10-48 OFC 502 Phone: (91)2565697 (91)2185247 DIAN Cr. 8 # 6 64 Edificio San Agustin Bogota, Colombia Phone: +57 (1) 297 1220 284 3400 Fax: +57 (1) 286 5789 E-mail: dian@dian.gov.co Home Page: http://www.dian.gov.co IFI Calle 16 No. 6-66 Santafe de Bogota Colombia Phone:(571) 282-2055 Fax:(571) 283-8553 BANCOLOMBIA Calle 50, No. 51-66 Medell¡n, Colombia Phone: +57-4-511-5516 Fax: +57-4-510-8779 Home Page: http://www.bancolombia.com.co/ Contact: Jorge Londono Saldarriaga, President and CEO Jaime A. Velasquez Botero, VP Finance =========== M E X I C O =========== ENRON: Azurix Buys Water Contracts Worth $93M From Mexican Ops -------------------------------------------------------------- ASIM, a Mexican joint venture between Ondeo, the water unit of Suez SA, and Industrias Penoles SA, Mexico's largest silver producer, will be buying contracts from Azurix Corp., a division of the bankrupt U.S. energy group Enron Corp. According to a report by Bloomberg, the contracts worth US$93 million include water services for the city of Cancun that will "immediately add to profits," Ondeo said in a statement. Other water contracts are for the center of Mexico City and for the building and operating of three water-treatment plants, the French company added. Enron filed for bankruptcy protection early December 2001 in the largest Chapter 11 case ever after Dynegy Inc. abandoned its US$23 billion takeover of the Houston-based energy trader. Enron listed about US$40 billion of debt, including off-balance-sheet project financing. CONTACTS: Mark Palmer of Enron Corp., +1-713-853-4738 Enron Corp. Investor Relations Dept. P.O. Box 1188, Suite 4926B Houston, TX 77251-1188 (713) 853-3956 Email: investor-relations@enron.com Enron Corp. Public Relations Dept. P.O. Box 1188, Suite 4712 Houston, TX 77251-1188 (713) 853-5670 PEGASO: Telefonica Gets CFC Nod To Buy 65% Stake ------------------------------------------------ Telefonica obtained authorization from the Federal Competition Commission to purchase 65% of Pegaso PCS equity, reports Mexico City daily El Universal. Telefonica will be paying US$87.1 million for the stake and will contribute additional capital expected to reach US$488 million. Subsequently, the Spanish company will control 90% of Pegaso and will integrate its operations with those of the Mexican firm. The remaining 10% will be in the hands of Grupo Burillo. Both companies will have a client portfolio of more than 2 million with which they will become the second largest mobile telephone operator in Mexico after Telcel, which has 17 million clients. The objectives of Telef¢nica and Pegaso are to double the number of users in less than 10 years. The Spanish company will invest US$500 million this year and US$2.5 billion over the next three years. CONTACT: PEGASO PCS, SA OF CV Stroll of the Tamarinds 400A, Floor 4, Forests of Hills Mexico, DF 05120 Phone: (55) 5806,8700 Fax: (55) 5806.9080 E-mail: atencionclientes@pegasopcs.com.mx Home Page: http://www.pegasopcs.com.mx/ Contact: Roberta Lopez Negrete Manager of Strategic Communication Phone: 261 66 38 Fax: 261 66 98 Email: rlopez@pegasopcs.com.mx Eduardo Jimenez Urias Phone: 261 66 34 Fax: 261 66 91 E-mail: ejimenez@pegasopcs.com.mx TELEFONICA MOVILES, S.A. Goya 24 28001 Madrid, Spain Phone: +34-91-423-4004 Fax: +34-91-423-4010 E-mail: webmaster@telefonicamoviles.com Home Page: http://www.telefonicamoviles.com Contact: Maria Garcia-Legaz, Head of Investor Relations Arantxa San Rom n Wong Raimundo de los Reyes Paseo de Recoletos, n§ 7-9 2¦ Planta 28004 Madrid Phone: +34 914 23 40 27 Fax: +34 914 23 44 12 E-mail: relaciones.inversores@telefonicamoviles.com VITRO: CFC Authorizes Sale Of Stake In JV To Vitromatic ------------------------------------------------------- Mexico's Federal Competition Commission (CFC) authorized Whirlpool Corporation to acquire 51% of Vitromatic S.A. de C.V., the country's second-largest appliance manufacturer and distributor, on the condition that Whirlpool participated in the home appliance market only through Vitromatic. The CFC also specified that the transaction will only allow the U.S. company to consolidate its stake in Vitromatic and thus will not negatively affect competition. Whirlpool Corporation earlier this month announced that it has completed its acquisition of Vitromatic, formerly a joint venture of Vitro S.A. and Whirlpool. Whirlpool purchased Vitro's 51% stake in Vitromatic for US$150 million in cash and the assumption of 100% of the former joint venture's US$170 million debt. Headquartered in Monterrey, Vitromatic manufactures ranges, refrigerators and laundry products for domestic and export markets under the Whirlpool, KitchenAid, Acros and Supermatic brand names. Vitromatic produces annual sales of more than US$600 million, including approximately US$150 million from inter-company sales. The acquisition is expected to be slightly accretive to Whirlpool's earnings beginning in the second half of 2002. CONTACT: To see Vitro's latest financial statements: http://bankrupt.com/misc/Vitro.txt CONTACT: VITRO (Media): Albert Chico Smith Vitro, S. A. de C.V. 011 (52) 81 8863-1335 achico@vitro.com (Financial Community): Rodrigo Collada Vitro, S. A. de C.V. +52 (81) 8863-1240 rcollada@vitro.com (U.S. Contacts): Luca Biondolillo/Susan Borinelli Breakstone & Ruth Int. (646) 536-7012 / 7018 Lbiondolillo@breakstoneruth.com sborinelli@breakstoneruth.com Whirlpool Corporation Media: Tom Kline, 616/923-3738 thomas_e_kline@email.whirlpool.com Financial: Thomas Filstrup, 616/923-3189 thomas_c_filstrup@email.whirlpool.com *********** 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 publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *