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/raid1/www/Hosts/bankrupt/TCRLA_Public/020812.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, August 12, 2002, Vol. 3, Issue 158 Headlines A R G E N T I N A BANCO GALICIA: Deepening Recession Prompts Further Cutbacks BANCO VELOX: Magister/Bankwatch Assigns `D' to $10.5M of Bonds GRUPO GALICIA: To Appeal Nasdaq Delisting Decision SIDERAR: Reports Financial Results for First Half of FY02 B E R M U D A GLOBAL CROSSING: Reviewing At Least Two Purchase Offers GLOBAL CROSSING: Asian Bidders To Buy Assets At A Lower Price * TYCO INTERNATIONAL: A Perfectly Tyco-ish Drama B R A Z I L CSN: IMF Bailout Prompts Bear Stearns `Buy' Recommendation C H I L E AES GENER: Commission To Discuss Plans To Build Plant COEUR D'ALENE: Reports 2Q02, 6-Month Results M E X I C O AEROMEXICO: Occupancy Rates Down By Nearly 6% ALESTRA: Cash Crunch Causes Moody's To Cut Ratings to Ca ALESTRA: Company Profile AVANTEL: SCT Undersecretary Defends Position in the Market EMPRESAS ICA: Fitch Ratings Downgrades Empresas ICA to 'CC' HYLSAMEX: Alfa Not Ruling Out Search For Partner T R I N I D A D & T O B A G O BWIA: Cashflow, Profitability Battle Continues U R U G U A Y BANCO DE CREDITO: Grupo Moon To Take Control In Next Two Years URUGUAYAN BANKS: Central Bank Measure Spurs Concern From Bankers - - - - - - - - - - ================= A R G E N T I N A ================= BANCO GALICIA: Deepening Recession Prompts Further Cutbacks ----------------------------------------------------------- Struggling to survive Argentina's chaotic four-year recession, Banco Galicia may further reduce the number of its branches as well as its total workforce in the coming months, Reuters reports, citing unnamed sources. "There will be cutbacks. How many depends on what happens with the political situation," one Galicia source said, saying that the bank has already closed 30 branches this year, and the current total of 276 could soon be reduced by 20 to 25 more. Another source close to Galicia confirmed the estimates. According to sources, the bank, Argentina's No.1 privately held bank, has already suspended about 300 of its 5,800 total workers for a 180-day period during which they are paid 70% of their salaries. They estimated 500 more suspensions could be made before the end of the year. When the suspensions expire, the bank will then make a decision whether to fire workers based on the political outlook in the run-up to elections in March to replace interim President Eduardo Duhalde, widely criticized in the financial sector for making banks bear the brunt of the crisis. The bank, a unit of holding Grupo Financiero Galicia, has suffered from a run on deposits that has continued despite a government-ordered freeze on deposits in place since last December. 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. Galicia has reportedly seen a small turnaround in deposits in recent months, with new fixed-term deposits in the last three months totaling about ARS400 million (US$110 million) out of a total of ARS4 billion in the bank. Galicia has been paying out annual interest rates between 25 and 50% - depending on the volatility of the peso currency - for seven-day term deposits, one source said. The bank has 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.ar 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/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 J〉gen-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 BANCO VELOX: Magister/Bankwatch Assigns `D' to $10.5M of Bonds -------------------------------------------------------------- Magister/Bankwatch Calificadora de Riesgo S.A. has assigned a "D" rating to US$10.5 million worth of series and/or class corporate bond of Banco Velox. The bond matures Oct. 11, 2002. The rating was based on the bank's financial standing as of March 31, 2002. At the request of the bank, Argentina's Central Bank suspended Banco Velox's operations for 30 days beginning June 28 due to liquidity issues. The Company's president, Juan Peirano, together with his brother Jose have been accused of taking US$20 million in Banco Aleman funds, a subsidiary of Velox, to cover losses at other Velox operations in the region. Juan Peirano holds 78% of the bank's corporate capital. Banco Velox employs 400 people and has 14 branch offices in Argentina. CONTACT: BANCO VELOX S.A Sarmiento 532 (1041) Capital Federal Buenos Aires Phone: 4321-1800 Fax: 4321-1820 E-mail: mailto:servicioalcliente@velox.com.ar Home Page: http://www.bancovelox.com.ar/ Contacts: Juan Peirano, President Carlos Peterson, Representative GRUPO VELOX Burgos 80, piso 5, Of. 501 Las Condes Santiago, chile Phone: 208-8380 Fax: 208-8332 Home Page: http://www.finambras.com.br/grupo_velox.html GRUPO GALICIA: To Appeal Nasdaq Delisting Decision -------------------------------------------------- A group of executives of Grupo Financiero Galicia and a team from accounting firm PriceWaterhouseCoopers will appeal on Thursday the U.S. Nasdaq's possible decision to suspend Grupo Galicia's listing on the New York exchange, Reuters reports, citing sources. In early July, Galicia disclosed that the Nasdaq had threatened to delist its shares unless it met specific accounting standards. Like other Argentine banks, Galicia has seen its balance sheet shattered by the government's default and decision to turn debts denominated in dollars into pesos at par. Before the devaluation, one peso was worth one U.S. dollar for a decade. Now, one dollar is worth ARS3.63. "It's very difficult to explain to someone in the United States how the government just decided to turn dollars into pesos. You have to ask them to suspend belief. Our balance sheet meets Argentine norms, but (in the United States) it will be more difficult," one source said. Galicia expects a final ruling from the Nasdaq this week. CONTACT: GRUPO FINANCIERO GALICIA S.A. Teniente General Juan D. Per>n 456, Piso 3 1038 Buenos Aires, Argentina Phone: (54 11) 4343 7528 / 9475 Home Page: http://www.gfgsa.com Contacts: Eduardo J. Escasany, Chairman and CEO Sergio Grinenco, CFO, Banco de Galicia y Buenos Aires SIDERAR: Reports Financial Results for First Half of FY02 --------------------------------------------------------- Buenos Aires, August 7, 2002. Siderar S.A.I.C. (Buenos Aires Stock Exchange: ERAR), on Wednesday announced its earnings for the semester ended June 30, 2002. These results are expressed in constant June 30, 2002 Argentine pesos by applying the variation in the Argentine wholesale price index (WPI) from the time of the applicable operation until the end of the period. The results of the corresponding semester of the prior year have been adjusted by the cumulative variation (95.6%) in the WPI over the first semester of 2002. Results from operations in foreign currency are converted to Argentine pesos at the exchange rate prevailing at the time of the applicable operation. Siderar estimates that the average buying rate used for the conversion of its foreign currency operations during the semester was ARP2.54 for one US dollar. The bank buying rate for US dollars at the end of the semester was ARP3.7 and the bank selling rate was ARP3.8. When Siderar reported its results for the first quarter of 2002, the Argentine Securities Commission (CNV) had not authorized companies under its jurisdiction to make adjustments to reflect the effects of changes in the WPI in their accounts and did not do so until July 25, 2002. Accordingly, in its previously reported first quarter results, Siderar expressed its results in nominal Argentine pesos and did not reflect in its income statement the effects of the conversion of the financial statements of its foreign equity holdings. In these results, Siderar has restated its results for the first quarter in constant June 30, 2002 Argentine pesos reflecting these effects in its income statement in accordance with the accounting standards now in effect. Highlights: First Half ended June 30, 2002 � Consolidated net loss of ARP49.9 million � Consolidated ordinary income of ARP117.8 million � EBITDA of ARP224.3 million (21.7% of net sales) � Net sales of ARP1,035.8 million � Net loss per share at ARP 0.1437 per share (ARP1.1497 per ADS) Results for Semester ended June 30, 2002 Siderar's results for the semester ended June 30, 2002, expressed in constant Argentine pesos of that date, have been significantly affected by the fact that the devaluation of the Argentine peso has been substantially in excess of inflation as measured by the variation in the WPI since the start of the semester, which coincided with the effective termination of the Convertibility Law under which for a period of more than 10 years the Argentine peso was convertible to US dollars at the rate of one to one. Siderar recorded a consolidated net loss of ARP49.9 million in the first half of the fiscal year 2002. Earnings per share (EPS) and per ADS were a loss of ARP 0.1437 and ARP1.1497 respectively based on a total of 347,468,771 shares outstanding as of June 30, 2002. Each ADS represents 8 (eight) class "A" shares. Results for the first half of the year developed in a context of considerable uncertainty, as a result of the difficult political and economic situation Argentina undergoes. The important changes in economic regulations, the sharp currency devaluation, which had a significant impact in the prices of goods and services, together with the deep changes in the financial system, had a strong effect on the already persistent recessive situation in the domestic market. Total shipments were 1,042 thousand tons, down 9% compared to the same period ended June 30, 2001. Domestic market shipments totaled 358 thousand tons, down 32% compared to those of the same period last year. Export shipments totaled 684 thousand tons, up 11% compared to the same period last year. The increase in the level of exports took place in a global steel market dominated by the protectionist measures adopted by the largest consuming countries, particularly the U.S. which was followed by Europe. Consolidated net sales in the period amounted to ARP1,035.8 million. Consolidated operating margin in the period was 11.4% on an operating profit of ARP117.8 million, which compares to the 4.1% achieved in the same period last year. This result, although it reflects a depressed level of domestic market shipments, showed an improvement as a result of higher export shipments and the recovery of international prices as from the second quarter of the period, even after considering the effects of the reduction of 50% in tax rebates and the application of a 5% withholding tax on exports of industrial manufactured goods. The economic measures that included a devaluation and a forced conversion into pesos had also a one time negative impact on the Company's results. The theoretical benefit to competitiveness from the devaluation was partially offset by a high imported content in the production costs. In this context EBITDA was ARP224.3 million and EBITDA margin was 21.7% in the period, which compares to an EBITDA margin of 12.6% in the same period of the previous year. Financial and holding results reflect the strong impact generated by the devaluation of the peso, the changes in the prices of goods and services and the effects of inflation. Net financial results excluding foreign exchange results were a loss of ARP114.9 million. Net foreign exchange results were a loss of ARP725.8 million, ARP607.3 million of which were related to foreign exchange debt incurred in capital expenditure financing and as such were capitalized in fixed assets according to accounting standards; as a result of this the net foreign exchange result was a loss of ARP118.5 million. Net inventory and fixed asset spares holding results were a gain of ARP77.7 million. Result from exposure to inflation, mainly on certain trade receivables and net tax credits, generated a loss of ARP64.3 million. Foreign exchange gains generated by investments in related companies of ARP58.4 million were included under Net foreign exchange results on equity holdings. Consolidated equity holdings result for the period was a gain of ARP19.4 million. This amount includes an operating loss of ARP22.4 million and a partial adjustment of ARP41.7 million of the provision set up as of December 31, 2001. Siderar's investment in Amazonia equity and equity convertible loans was, as of June 30, 2002, US dollar 36.7 million. Please find attached Financial Tables as of June 30, 2002. http://bankrupt.com/misc/siderar.pdf CONTACT: Leonardo Stazi Siderar S.A.I.C. Phone: 54 (11) 4018-2308/2249 Home Page: www.siderar.com ============= B E R M U D A ============= GLOBAL CROSSING: Reviewing At Least Two Purchase Offers ------------------------------------------------------- Judge Robert Gerber, of the U.S. Bankruptcy Court in Manhattan, was scheduled Friday to hear Global Crossing's case. Global Crossing Ltd. and its creditors are reviewing at least two offers for the bankrupt fiber-optic network operator. Asian companies Hutchison Whampoa Ltd. and ST Technologies Telemedia Pte. are offering about US$250 million to US$300 million in cash and about US$200 million in notes for about 60% of the reorganized company, according a Wall Street Journal report. Under the proposal, Global Crossing bondholders would get about 32% of the Company, the newspaper said. David Walsh, chairman of Moneyline Telerate, backed by Bank One Corp.'s private equity unit, One Equity Partners, is also vying for Global Crossing's assets, the Journal said. Walsh is a former Global Crossing chief operating officer. Global Crossing's eventual owners will need to revive sales at a company that sought protection from creditors after failing to generate enough revenue to repay US$12.4 billion in debt. At the same time, the Hamilton, Bermuda-based firm is also considering a plan to emerge from Chapter 11 on a stand alone basis without a significan asset sale. However, some are skeptical about the plan. "It's hard to imagine they'd be able to pull it off without a sale," said Nicholas Kajon, a partner at the law firm Salomon, Green & Ostrow. "There are other companies that are well financed and could scoop up at a bargain the assets that have a fraction of the value Global Crossing spent to assemble them." CONTACT GLOBAL CROSSING: Press Contacts Tisha Kresler +1 973-410-8666 Tisha.Kresler@globalcrossing.com Kevin Burgoyne Latin America +1 305-808-5925 Kevin.Burgoyne@globalcrossing.com Mish Desmidt Europe +44 (0) 7771-668438 Mish.Desmidt@globalcrossing.com Analysts/Investors Contact Ken Simril +1 310-385-3838 investors@globalcrossing.com GLOBAL CROSSING: Asian Bidders To Buy Assets At A Lower Price ------------------------------------------------------------- Asian firms, Hong Kong's Hutchison Whampoa Ltd and Singapore Technologies Telemedia (STT), affirmed their interest in buying Global Crossing. However, according to a Reuters report, the Asian firms are now prepared to buy the bankrupt company at a much lower price than the US$750 million originally offered at the start of the year. That offer was subsequently rejected by creditors who thought that the offer was too low for a company with estimated assets of US$22.4 billion. "Hutch and STT were always interested, if the price was right," said a source familiar with the talks. "Of course, the price is going to be a lot lower than the first time." "We have not made a decision on the investment yet," Melinda Tan, a spokeswoman for state-owned STT, said in reply to a Reuters query. Hutchison spokeswoman Laura Cheung said: "We are keeping our options open, but we have not submitted any bid." Sources said Global Crossing creditors made the mistake of rejecting Hutch and STT's bid the first time round when the price was higher. "They should have done the deal then -- it would have made Hutch and STT look very stupid. But now they just look very stupid themselves and make the two look good," one source said. CONTACT: HUTCHISON WHAMPOA LIMITED Ms Nora Yong Tel: (852) 2128 1289 Email: noray@hwl.com.hk SINGAPORE TECHNOLOGIES TELEMEDIA Ms Melinda Tan Tel: (65) 6723 8690 Email: tanmelinda@stt.st.com.sg * TYCO INTERNATIONAL: A Perfectly Tyco-ish Drama ------------------------------------------------ Had Tyco's story been purely fiction, it would have made a good novel - the story includes all the obligatory elements: grand scope, dramatic twists of fate, and controversial characters. Tyco's tale, even from the beginning, had the flair that is so characteristic of its present day exploits. From a small Massachusetts-based investment boutique in the 1960s, the company rapidly grew to become a global-scale business in the middle of 1980s. With funding coming initially from U.S. government contracts, it went on an acquisition spree that enabled the company to increase annual sales from US$34 million to US$500 million in 1982, just ten years later. In 1986, Tyco changed its name to Tyco International. The conglomerate's success, however, did not stop there. In fact, the company had yet to reach the apex of its business success when the main character of Tyco's cast, Dennis Kozlowski, appeared in 1992. He provided more acquisitions to Tyco, but the deal that was most celebrated was the US$5.4 billion merger with ADT, the world's largest supplier of home security alarm systems. The company that emerged from the merger reported combined sales of US$8.5 billion. It was the same deal, however, that first sparked investors' curiosity about the company's bookkeeping. In 1999, the U.S. Securities and Exchange Commission investigated Tyco's accounting. Regulators wanted to review exactly how Tyco accounted for the $30 billion worth of charges and reserves in the 120 acquisitions completed during Mr. Kozlowski's term. The inquiry resulted to slight alterations in Tyco's published financial reports. But the regulatory run in did not shake Tyco's position. In 2001, Tyco's shares were still flying high at US$62, far from its US$5-value when Mr. Kozlowski took over the company in 1992. Yet doubts over Tyco's accounting lingered in the rumor mill. Then, when Enron collapsed over questionable financial transactions, Tyco's stock also suffered over suspicions and continued bad press. The company launched a rescue effort in January by announcing a plan "unlock shareholder value" by breaking into four parts. The move, however, uncovered more damaging issues including the disposal of US$100 million worth of shares without prompt notification to investors, the payment of US$20 million to one outside director and to its CEO's charities, and a billion dollars worth of undisclosed acquisitions. By April, the company's market value sank dramatically from US$120 billion in December 2001 to a little more than US$40 billion. Troubled Company Reporter-Latin America picked up Tyco's story when its sale of a plastic unit to raise US$3 billion for debt payment was delayed by lack of audited financial reports regarding the unit. A few days later, TCR-LA again reported that Tyco was out of Fidelity Magellan's Top 10 Holdings, the largest actively managed mutual fund. Then came the announcement that the plastic unit may not be sold after all. The auction had attracted buyers such as Bain Capital, Thomas H. Lee Partners of Boston and the Blackstone Group of New York, but none offered more than US$2.5 billion on the first bidding. The second bidding had to be suspended because of the delay in the submission of the audit of the unit. The company finally called off the auction and the failure to unload the plastic unit started speculation on the partial reversal of the company's plan to break-up into four parts. In late April, the company announced an initial public offering of its financial services arm, CIT Group Inc., with the hope of raising US$6 billion to US$7 billion. At that point, the company had reversed its earlier break-up plan and decided monetize CIT through a 100% public offering with cash proceeds going to Tyco. The reversal of the breakup plans and the announcement of 7,100 job-cuts sent the company's share plummeting to a new five-year low. An analyst in Chicago-based MorningStar commented that, "investors are running away because it looks like management doesn't have a strong strategic plan for the long-run." Tyco insists it is still in a position to operate and meet debt payments, saying "over the next nine months, there is not a liquidity issue;" that "there is no debt... coming due that cannot be satisfied with amounts of cash already on our balance sheet;" that "when we do get to next February, we do realize that there is US$3.25 billion that needs to be refinanced." When S&P labeled Tyco as one of the companies that is most vulnerable to cash crunch because of "triggers," Tyco spokesman Peter Ferris declared that the clauses "are nothing new from a perspective of our disclosure." The company banks on its US$4 billion cash on hand and on the availability of projected free cash flow to meet its financing arrangements. The company's stock rose more than 13% after it announced payment of US$10 billion of its US$27 billion debt from proceeds of the sale and cash. But shares slid again when Lehman Brother Holdings withdrew its US$5 billion offer for CIT after the proposal was made public (when Lehman was still not in a position to do the deal quickly). And if things could not get worse -- or perhaps even more interesting -- Tyco's top executive for 10 years, Dennis Kozlowski, who grew the company into a US$36 billion manufacturer and service provider, was charged of evading US$1 million in sales for a high-brow art collection just a day after he resigned as CEO of the company. The sales taxes owing were on a US$13.5 million worth of artwork, including pieces by Renoir and Monet. But the tax investigation was just the tip of the iceberg for Kozlowski. Subsequent discoveries have uncovered such irrgularities as Tyco paying the utility bills of Mr. Kozlowski's US$10.5 million house at Boca Raton, Florida. Most recent revelations indicate as much as $135 million of company funds may have been used or improperly directed by the former CEO. Mr. Kozlowski's indictment drove the SEC to open a formal investigation regarding the issue. The company also conducted its own internal investigation. This turned the limelight to transactions done by board members, particularly John Fort who acted as interim chief executive after Mr. Kozlowski resigned. The transaction involved sales of real property, purchase of Tyco operations and questions about leased planes. Shortly thereafter, lawsuits were filed against former lawyer Mark Belnick and outside director Frank Walsh. Mr. Belnick was previously ousted by Tyco on grounds that he refused to cooperate with the internal investigation conducted by the company. He was accused of hiding a criminal investigation from the board of directors, deleting documents, and concealing payments to company insider. The cover-up charge includes concealing US$35 million in unauthorized compensation. Frank Walsh was accused of negotiating a US$20 million fee with Mr. Kozlowski for the acquisition of CIT Group Inc. This revelation alone caused Tyco's stock lose US$17 billion in market capitalization in January. In a bid to streamline corporate operations, the company, in a statement, outlined plans to consolidate and maximize offices, reduce manpower and shed assets including all company aircraft. In the first week of July, the company was finally able to offer 200 million shares of CIT Group Inc. in the IPO at US$23.00 per share. The deal raised US$4.6 billion -- short of the US$5-5.8 billion expected. Tyco took a US$1.9 billion charge reflecting part of the loss it took over the CIT deal. Despite the cash from the CIT stock offering, S&P still confirmed that the triple -`B'-minus corporate credit ratings on Tyco and its industrial subsidiaries remain on CreditWatch with negative implications. Just like a novel, when the drama seems most intense, a new hero rushes in. The Tyco drama is reading like the classic book. Coming to the rescue now is Edward Breen, who was named the company's new chief executive officer July 25. After months of bad news, Mr. Breen's appointment was such a great relief that one could imagine his entrance accompanied with a soundtrack from a superhero movie. His timing was perfect: his appointment came just hours after the company was widely rumored to file for bankruptcy. Mr. Breen is highly regarded, especially for restoring Motorola to profitability. He vowed to "restore confidence in Tyco." Analysts, however, warned that Mr. Breen doesn't have an easy task ahead amidst weakening cash flows, lack of investor confidence, accounting and management scandals and class-action suits. And although Tyco's shares surged 45.8% to US$12.03, the day after his appointment, most analysts consider TYC an extremely volatile stock. John Atkins, a corporate bond market analyst for Ideaglobal Inc., had voiced "concerns about their (Tyco's) debt service capacity in 2003." He said, "until we see some evidence of progress towards what [Tyco sees] as their cash flow potential, I don't think there'll be much comfort in the bond market." According to Atkins, "the stock could face continued volatility and remain trapped in a range between US$10 and US$15 until the liquidity issue is resolved." S&P also anticipates these difficulties as it pegs Tyco's debt with a 'BBB-'. According to the agency, the rating "would be resolved based on how management addresses the gap between cash balances plus free cash flow and obligations coming due in the next 18 months." The conclusion of Tyco's story remains unclear as it may still develop unforeseen twists and turns. Whatever happens, the mighty conglomerate has reminded investors that a once-rosy story will have to endure many thorny chapters if there is any hope of returning to its former glory. =========== B R A Z I L =========== CSN: IMF Bailout Prompts Bear Stearns `Buy' Recommendation ---------------------------------------------------------- Bear Stearns raised Thursday its equity recommendation on Brazilian steelmaker Companhia Siderurgica Nacional (CSN) to `buy' from `neutral,' relates Dow Jones Newswires. The move came after the International Monetary Fund (IMF) agreed to provide a US$30-billion rescue package aimed at restoring investor confidence in Brazil that has rapidly evaporated in recent months at the prospect of a left-wing candidate winning October's presidential elections. Bear Stearns thinks the package will be "warmly accepted by the market for materially lowering Brazil risk." Bear Stearns now believes that the odds have improved that CSN will go ahead with plans announced earlier this month to merge with Anglo-Dutch rival Corus Group PLC. As reported earlier, Corus said it would buy CSN in an all-share deal worth US$1.83 billion, implying a US$630-million premium on the Brazilian company's US$1.2 billion market capitalization. The merger, which is seen producing the fourth- or fifth-largest steel company in the world, is expected to be concluded in the first quarter of 2003. Under the terms of the proposed merger, existing Corus shareholders will hold 62.4% of the enlarged group. The operation will be structured so that CSN shareholders will receive shares in a new Brazilian listed holding company, called TopCo, which will, in turn, hold 37.6% of the share capital of the enlarged Corus. The proposal is subject to a number of conditions. Corus and CSN hope to be in a position to present shareholders with a definitive proposal by late 2002. The transaction will be implemented in two steps: CSN shareholders will exchange their existing shares in CSN for shares in TopCo, making CSN a wholly- owned subsidiary of TopCo. Corus will then acquire CSN from TopCo in exchange for new Corus shares, representing 37.6% of Corus' enlarged share capital. The first step will require the approval of CSN's shareholders while the second step will require the approval both of Corus and TopCo's shareholders. Although neither Corus nor CSN will pay an interim dividend for the year ending December 2002, the enlarged Corus is expected to adopt a policy of distributing 40% of its earnings to its shareholders. The companies estimate the merger will generate annual cost savings of around US$250 million by the end of the third full year of trading. The one-off cost of securing these savings is estimated at approximately US$300 million. To see latest financial statements: http://bankrupt.com/misc/CSN.pdf CONTACT: CIA SIDERURGICA NACIONAL (CSN) Rua Lauro Muller 116-36 Andar, PO Box 2736 Rio De Janeiro, Brazil, 22299-900 Phone: +011-55-21-2586-1442 +011-55-21-2586-1347 Home Page: http://www.csn.com.br/english/index.htm Contact: Antonio Mary Ulrich, Exec. Officer - Investor Relations ========= C H I L E ========= AES GENER: Commission To Discuss Plans To Build Plant ----------------------------------------------------- Fernando Meza, chairman of the Chilean lower house's agriculture commission, said he would invite AES Gener representatives and officials from Region VI environment authority Conama to participate in a meeting to be held soon. The meeting will discuss generator AES Gener's plans to build the Totihue thermoelectric plant in central Chile's Cachapoal Valley, a prime wine producing area. "Just the presence of this plant, consuming 30 million liters of water a day, impacting the environment and damaging vines, means we are especially sensitive on the matter," Meza said. The upper house has requested that the commission draw up a report detailing the damage that Totihue and other thermoelectric plants would cause in the Cachapoal Valley. CONTACT: AES GENER S.A. Mariano Sanchez Fontecilla 310 Piso 3 Santiago de Chile Phone: (56-2) 6868900 Fax: (56-2) 6868991 Home Page: www.gener.com Contact: Robert Morgan, Chief Executive Laurence Golborne Riveros, Chief Financial Officer COEUR D'ALENE: Reports 2Q02, 6-Month Results ------------------------------------------ Coeur d'Alene Mines Corporation (NYSE:CDE): 2002 Second Quarter Highlights -- Generated positive cash flow from operating activities -- Commenced production at new, low-cost Cerro Bayo (Chile) and Martha (Argentina) mines -- Produced a record 3.3 million ounces of silver during the quarter and 6.2 million ounces of silver during the first six months of 2002 -- 28% and 19% higher than the comparable periods last year, respectively -- Achieved consolidated silver cash costs of $3.34 per ounce during the second quarter, compared to $3.75 per ounce in last year's second quarter and $3.85 per ounce during the first quarter of this year -- Increased percentage of total revenues derived from silver to 63%, up from 56% during last year's second quarter -- Retired 6% Debentures and secured $16.0 million of new financing -- Met all New York Stock Exchange listing requirements Dennis E. Wheeler, Chairman, President, and Chief Executive Officer, said, "The end of the second quarter marked the beginning of the 'New Coeur.' For the full year, we remain on track to produce a record 15.0 million ounces of silver, representing a 40% increase over last year, at a consolidated average cash cost of approximately $2.95 per ounce. Our new generation of low-cost mines, Cerro Bayo and Martha, were successfully brought on-stream by our operations group during the quarter. These mines will fuel continued decreases in our operating costs and will generate considerable positive cash flow throughout the remainder of the year. In addition, we continue to experience significant silver production and reduced cash costs at our existing operations in Nevada and Idaho. Second quarter company-wide cash costs were 13% lower than the first quarter and we expect continued reduction in our cash costs throughout the remainder of the year. Our balance sheet has been strengthened, providing us with improved financial and strategic flexibility going forward. With improving silver and gold prices, continued reductions in our operating costs, dramatic silver production growth, and substantial exploration potential near our existing operations, we remain enthusiastic about our future." Financial Summary For the second quarter, Coeur d'Alene Mines Corporation ("Coeur" or "the Company") (NYSE:CDE) generated $0.1 million of positive cash flow from operations compared with negative cash flow from operations of $10.0 million in the second quarter of 2001 and negative cash flow of $5.5 million in the first quarter of 2002. For the first six months of 2002, Coeur reported negative cash flow from operations of $5.4 million compared to negative cash flow from operations of $16.0 million for the first six months of 2001. For the quarter, Coeur preliminarily reports a net loss of $10.9 million ($0.16 per share). This compares to a net loss during the second quarter of 2001 of $3.6 million ($0.08 per share). For the first six months of 2002, Coeur preliminarily reports a net loss of $22.8 million ($0.38 per share). This compares to a net loss of $11.7 million ($0.29 per share) for the first six months of 2001. The above net loss amounts may be required to be adjusted prior to finalization of Coeur's financial statements as a result of a possible accounting change that may be announced by FASB. The Company has recently learned that the accounting for any conversion of convertible debt on terms other than the original conversion terms is currently being rediscussed by FASB and additional clarification is expected shortly. The result may be that the Company will have to adjust, possibly retroactively, the determination of its debt extinguishment gains and losses prior to issuing the Company's Form 10 Q for the second quarter of 2002. If an adjustment is necessary, it would likely substantially increase reported debt extinguishment expense. However, it is not expected the adjustment would materially affect Coeur's shareholders' equity. The increase in cash flow is primarily due to the following factors: -- Increased silver production -- Coeur increased its silver production 28% during the second quarter to a record 3.3 million ounces. During the quarter, silver production from Coeur Silver Valley increased 34%, while silver production from Coeur's Rochester mine increased 10% over 2001 second quarter levels. -- Lower operating costs -- Overall silver cash costs for the second quarter decreased to $3.34 per ounce, down from $3.75 per ounce during the second quarter of 2001 and a significant reduction from 2002 first quarter's cash costs of $3.85 per ounce. Rochester's cash costs were reduced 24% to $2.81 per ounce during the second quarter compared to the first quarter. The second quarter cash costs per ounce reflect the Company's adoption of the Gold Institute standard for calculating cash costs per ounce treating gold as a by-product. This calculation reduces cash costs by the revenue generated by gold as a by-product. The prior periods have been calculated to show the comparable cash costs per ounce using this method. -- Higher metals prices -- During the second quarter, Coeur sold its silver production at an average price of $4.82 per ounce compared to an average realized price during the second quarter of 2001 of $4.37 per ounce. For its gold production, Coeur realized an average price of $304 per ounce during the second quarter compared to an average gold price of $273 per ounce during the same period last year. In June 2002, Coeur secured $16.0 million of financing by issuing Series II 13.375% Convertible Senior Subordinated Notes. The proceeds were used to repay the remaining 6% Convertible Subordinated Debentures that matured on June 10, 2002 as well as for general working capital purposes. At June 30, 2002, working capital was $46.7 million, compared with $28.6 million at the end of 2001 and $26.3 million at March 31, 2002. Cash, cash equivalents, and short-term investments (excluding restricted investments) totaled $12.7 million at the end of the second quarter compared to $10.7 million at the end of the first quarter. Operations During the Second Quarter South America Cerro Bayo (Chile) -- Commenced production on April 18, 2002 -- 260,500 ounces of silver and 6,000 ounces of gold produced -- Cash costs of $2.34 per silver ounce -- Projecting 3.6 million ounces of silver and 52,000 ounces of gold production during 2002 at an average cash cost of under $0.50 per silver ounce Operations commenced at Cerro Bayo on April 18, 2002, approximately one month ahead of schedule. During the quarter, mining took place primarily from the main Lucero and Luz Eliana veins, which are proving to be wider than originally anticipated. Cash costs during the quarter were $2.34 per silver ounce. However, the Company expects these operating costs to decrease during the third and fourth quarters as grades and tons to the mill increase. During underground ramp development, Coeur intersected several significant vein structures that contain high-grade mineralization. Positive results were generated from Coeur's surface exploration work during the first six months of 2002, which was focused on expanding the ore reserves within the immediate area of operation. As a result of the Company's continued exploration success, it will be conducting an aggressive $1.2 million exploration program at Cerro Bayo throughout the remainder of 2002. The objectives of this program are to (i) increase existing reserves by focusing on the known and newly identified vein structures located within the immediate area of operations; and to (ii) establish the presence of resources and confirm the geological potential along strike extensions of the known vein structures 500 to 600 meters to the north and south of the existing operations. Thus far this year, Coeur has spent $268,000 on exploration at Cerro Bayo, which resulted in the discovery of 2.2 million silver equivalent ounces, representing a 15% increase in reserves. Since commencing exploration at Cerro Bayo in 2000, the Company's average discovery cost per ounce has averaged approximately $0.09/oz of silver. Martha (Argentina) -- Acquisition of Martha was completed during the second quarter -- Began trucking ore to Cerro Bayo, located approximately 270 miles to the northwest, for blending and processing -- Projected to contribute 1.6 million ounces of silver production to Cerro Bayo during 2002 Coeur completed the acquisition of 100% of the Martha high-grade silver mine on April 3, 2002 for $2.5 million in cash. The first truck left Martha for Cerro Bayo during the last week of June, and 37 trucks were sent from Martha in July containing a total of 900 tons of high-grade ore. Mine development continues and an exploration program designed to identify deeper and lateral extensions of the Martha vein began August 6, 2002. This program will also drill into a new parallel vein located approximately thirty meters away from the Martha vein. Finally, these exploration efforts during the second half of 2002 will include a review of the 202,000 acres of prospective property Coeur acquired as part of its transaction with Yamana Resources. At the time Coeur acquired Martha, the Company estimated total reserves of 2.7 million ounces at an average silver equivalent grade of 140 ounces per ton. North America Rochester Mine (Nevada) -- World's 7th largest silver mine -- 1.6 million ounces of silver and 17,000 ounces of gold produced during the second quarter -- 3.1 million ounces of silver and 33,500 ounces of gold produced during the first six months of 2002 -- Cash costs of $2.81 per ounce of silver during the second quarter -- a 24% decrease from first quarter -- Projecting approximately 6.5 million ounces of silver and 50,000 ounces of gold production for 2002 at an average cash cost of approximately $3.70 per ounce of silver After a slow start to the year, Rochester rebounded with an exceptional second quarter, reducing cash operating costs by over 24% to $2.81 per ounce and increasing silver production 16% to 1.6 million ounces compared to the first quarter of 2001. Mine management made several modifications to the mine plan, plant and heaps during the first six months of the year in order to generate the efficiencies reflected in these second quarter results. Mining at the Nevada Packard satellite deposit, located one and one-half miles to the south of Rochester, is expected to commence late in the third quarter. Road construction and development of access to the pit is currently underway. Coeur Silver Valley -- Galena Mine (Idaho) -- World's 11th largest silver mine -- 1.4 million ounces of silver produced during the quarter, representing a 34% increase over 2001 second quarter production levels -- Cash costs of $4.14 per ounce during the second quarter -- an 11% decrease from last year's second quarter -- Projecting 5.0 million ounces of silver production for 2002 at an average cash cost of approximately $3.92 per ounce -- a 15% decrease over 2001 levels Coeur Silver Valley continued to exceed anticipated levels of production at historically low cash operating costs during the second quarter. Mechanized mining continues to be the primary reason for these significant operational improvements. Year to date, Silver Valley has realized silver grades that are 3 to 4 ounces per ton higher than historical levels. In addition, several compilation studies that were implemented over the past two years have allowed Coeur to mine old areas of the mine that contain higher-grade mineralization that were not reflected in the mine's 2002 mine plan. One such area that has significant potential to impact future operations is the "upper country" of the mine, which is currently being developed. Development and Exploration Projects San Bartolome (Bolivia) -- Feasibility study expected to be completed during the fourth quarter -- Expect to make a financing decision by year-end -- Impact of tin continues to be studied. Preliminary results indicate that 80% of the deposit can yield an economic tin concentrate Puchuldiza (Chile) -- Consistent with Coeur's focus on silver, the Company signed an exploration agreement with Barrick Gold Corporation late in 2001 covering Coeur's Puchuldiza gold property located in northern Chile. -- During the second quarter, Barrick reported encouraging results from initial field work at Puchuldiza and believes that there are positive implications for the potential for a significant mineralized gold system at depth. Reclamation and Environmental Liability Coeur has no material reclamation or environmental issues at any of its existing operations or properties and has recorded estimated reclamation and environmental liabilities for all of its properties. As described in the Company's 2001 Form 10-K, the insurance company that issued the surety bond at the Rochester Mine filed for liquidation in 2001. During the quarter, the Company reached agreement in principle for an alternative financial assurance for its reclamation obligations at Rochester. Hedging Coeur does not currently have any of its silver production hedged. The Company currently has 14,000 ounces of gold sold forward at an average price of $320 per ounce. Coeur d'Alene Mines Corporation is the country's largest silver producer, as well as a significant, low-cost producer of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. Supplemental Cash Flow disclosure During the 2nd quarter of 2002 the Company repurchased $10.3 million, $0.8 million and $0.3 million principal amount of its outstanding 6%, 6-3/8% and 7-1/4% Convertible Subordinated Debentures, respectively, in exchange for 11.9 million shares of common stock and recorded an extraordinary loss of approximately $2.9 million. In addition, holders of $10.3 million of the 13- 3/8% Convertible Senior Subordinated Notes voluntarily converted into approximately 7.7 million shares of common stock. In addition, 2.7 million shares were issued as payment for $4.2 million of interest expense on the 13 3/8% Notes. In May 2002, the Company issued $21.5 million principal amount of New 13 3/8% Notes due December 2003, for proceeds of approximately $14.1 million, net of discount of $5.5 million and net of offering costs of approximately $1.9 million. During the 1st quarter of 2002 the Company repurchased $3.5 million principal amount of its outstanding 6% Convertible Subordinated Debentures in exchange for approximately 3.4 shares of common stock. In addition, holders of $5.7 principal amount of 13-3/8% Convertible Senior Subordinated Notes voluntarily converted their Notes into 5.1 million shares of common stock. During the 2nd quarter of 2001 the Company repurchased $11.0 million principal amount of its outstanding 7-1/4% Convertible Subordinated Debentures in exchange for 4,257,618 shares of common stock. During the 1st quarter of 2001, the Company repurchased $5.0 million principal amount of its outstanding 7-1/4% Convertible Subordinated Debentures in exchange for 1,787,500 shares of common stock. To see financial statements: http://bankrupt.com/misc/COEUR.htm CONTACT: COEUR D'ALENE MINES CORPORATION Mitchell J. Krebs Phone: 208/769-8155 =========== M E X I C O =========== AEROMEXICO: Occupancy Rates Down By Nearly 6% --------------------------------------------- Aeromexico is seeing a drop of between 5% and 6% in its occupancy rates compared to last year even though it has increased by 7% the capacity of its routes and flights. According to Mexican daily El Financiero, the average rate this year has been 63%, due to the fact that the business travel area has dropped 10% following the terrorist attacks last September 11. In an attempt to recover the loss, Aeromexico is focusing on marketing activities, including its Club Premier program. The Company has no plans for new routes this year, intending instead to consolidate its operations in its three Latin American destinations: Santiago de Chile; Lima, Peru, and Sao Paulo, Brazil. Aeromexico recently announced it will replace 15 planes in its fleet with new generation Boeing airplanes, a move, which requires investment of some US$500 million. Replacement of all DC-9 airplanes would be done gradually during October and November this year. The Company, which currently has Boeing models 757 and 767, MD80 and DC9, said in a press release that contract signing would be finalized soon once both parties have defined certain operating issues. Aeromexico is one of the two main units of Mexican government- owned airline holding company Cintra. The airline is scheduled to be sold-off this year. CONTACT: AEROMEXICO Mayte Sera Weitzman of AeroMexico, +1-713-744-8446, or mweitzman@aeromexico.com ALESTRA: Cash Crunch Causes Moody's To Cut Ratings to Ca -------------------------------------------------------- Concluding a review, which was initiated March 14, 2002, on the ratings of Alestra, S. de R.L., Moody's Investors Service downgraded the following ratings: - Senior Implied Rating to Ca from Caa1 - Issuer Rating to Ca from Caa1 - US$ 270 million Senior Unsecured Notes due 2006 to Ca from Caa1 - US$ 300 million Senior Unsecured Notes due 2009 to Ca from Caa1 The outlook is negative. The downgrade came after Alestra admitted July 30 that it doesn't have enough cash to make November 2002 coupon payments totaling US$35 million. At the end of June 2002, Alestra recorded cash of US$26 million. On July 1, 2002, it made a US$12.5 million payment under its US$25-million bank credit facility and has announced that it will permanently retire the remaining balance of US$12.5 million by October 1, 2002. Alestra has retained Morgan Stanley to assist in analyzing available options to address the Company's financial condition, including its liquidity position. Alestra has been pursuing a proposed US$50-US$70 million syndicated bank loan, however management now advises that the terms of the proposed facility did not fulfill Alestra's needs. Alestra's equity sponsors include AT&T Mexico, and a joint venture between Grupo Alfa and Bancomer. These sponsors have not, to date, publicly indicated any explicit intention to provide additional funding. As of June 30, 2002, Alestra recorded net capital assets of approximately US$536 million to support $570 million in senior notes. Based upon current long distance network asset valuations, unsecured debt holders face poor recovery prospects in a distress scenario, said Moody's. CONTACT: New York Julia Turner Managing Director Corporate Finance Group Moody's Investors Service JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 New York John Page Vice President - Senior Analyst Corporate Finance Group Moody's Investors Service JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 ALESTRA: Company Profile ------------------------ NAME: Alestra S.A. de R.L. de C.V Av. Paseo de las Palmas No. 405 Col. Lomas de Chapultepec 11000 Mexico, D.F. PHONE: 5201-5020 5201-5019 FAX: 5201-5031 5201-5027 WEBSITE: http://www.alestra.com.mx/cgi- bin/inetcgi.cgi/attcom/index.jsp TYPE OF BUSINESS: Alestra offers AT&T services in Mexico through a 4,500 km. fiber optic network. It carries 250 million voice and data messages everyday. In January 1999, Alestra became the first carrier in Latin America to expand its voice capacity using Lucent's WaveStar with technology DWDM (Dense Wavelength Division Multiplexing). Capacity was expanded 16 times, allowing the network to carry 500,000 phone calls simultaneously or 320,000 text pages per second. EXECUTIVES: Rolando Zubiran, Chief Executive Officer Eduardo Lazos, V.P. Engineering & Operations INVESTOR RELATIONS: Alberto Guajardo Phone: (52-818) 625-2219 E-mail: aguajard@alestra.com.mx NUMBER OF EMPLOYEES: 2000 DEBTS: Alestra faces debt payments this year of US$47.5 million. These include a US$12.5-million payment on the principal of a loan from French bank BNP Paribas in October, plus two interest payments amounting to US$35 million in November, for the Company's US$270 million in 12.1% eurobonds maturing in 2006 and US$300 million in 12.6% eurobonds maturing in 2009. SHAREHOLDERS: AT&T Corp. - 49% Onexa S.A. de C.V. - 51% FINANCIAL ADVISOR: MORGAN STANLEY Worldwide Headquarters 1585 Broadway New York, NY 10036 Phone: (212) 761-4000 Fax: (212) 761-0086 Home Page: http://www.morganstanley.com/ Contact: Investor Relations Phone: (212) 762-8131 In Mexico: Morgan Stanley & Co. Incorporated Oficina de Representaci｢n en MＹico Andres Bello 10 8� Piso Colonia Polanco 11560 MＹico, D.F. Phone: 011-525-282-6700 Fax: 011-525-282-9200 To see Financial Statement: http://bankrupt.com/misc/ALESTRA.pdf AVANTEL: SCT Undersecretary Defends Position in the Market ---------------------------------------------------------- Jorge Alvarez Hoth, undersecretary of the Transport and Communications Secretariat (SCT), assured that Avantel's position in the market is not in peril, relates Mexico City daily el Economista. Hoth's assurance came amid reports suggesting that Avantel is at risk not only because of the bankruptcy of WorldCom, but also because of its liquidity problems and the definition of its foreign ownership, which currently exceeds the limits set under the Telecommunications Law. Under the law, foreign owners can only have up to 49% ownership in a fixed line operator. But in Avantel's case, the phone company is now 100% foreign-owned following the acquisition by US-based Citigroup of Mexican financial group Banamex-Accival in July last year. Banamex-Accival controlled Avantel with a 55% stake. The remaining 45% of Avantel is held by WorldCom, also a foreign owner. The Mexican government had given Citigroup a year after closing the acquisition to resolve the carrier's ownership conundrum. Hoth said that Avantel and the Secretariat of Economy are looking for "satisfactory schemes for both parties," through the National Foreign Investment Commission (CNIE). The deadline for the Company to settle its ownership structure has been extended from August to the first week of September. CONTACT: WORLDCOM 500 Clinton Center Drive Clinton, MS 39056 1-877-624-9266 Phone: (601) 460-5600 Fax: (601) 460-8350 E-mail: http://www.worldcom.com/ Contact: John Sidgmore, President and CEO AVANTEL SERVICIOS LOCALES, S.A. (AVANTEL LOCAL) Reforma No. 265, 6o piso, Col. Cuauhtemoc, 06500, M,xico, D.F. Tel: 5242-1004 Fax: 5242-1060 Home Page: www.avantel.com.mx/ EMPRESAS ICA: Fitch Ratings Downgrades Empresas ICA to 'CC' ----------------------------------------------------------- Fitch Ratings has downgraded the senior unsecured long-term foreign currency and senior unsecured local currency ratings of Empresas ICA Sociedad Controladora, S.A. de C.V. (ICA) to 'CC' from 'B' Rating Watch Negative. The rating actions apply to the subordinated convertible debentures due 2004. The rating actions reflect continued limitations on ICA's financial flexibility and credit protection measures, delays in Mexican public sector spending, cancellation and/or postponement of key infrastructure projects, significant reduction in backlog and uncertain regional economic outlook. The assigned ratings also consider management's commitment to financial discipline, including debt reduction and successful asset divestments, and industrial construction partnership with Fluor Daniel. A weakening domestic macroeconomic environment, coupled with delays in public spending, continue to pressure ICA's profitability and financial flexibility. Notwithstanding management's proactive efforts to improve the company's cost structure and reduce leverage levels, the current environment in Mexico and Latin America continue to negatively affect ICA's financial performance. Credit protection measures remain under pressure, as reflected by an EBITDA-to-interest expense ratio of 0.9 times (x) and a total debt-to-EBITDA ratio of 10.7x. Although profitability has improved, it remains at very low levels, with an operating margin of two percent and an EBITDA margin of seven percent. As of June 30, 2002, ICA's cash balance equaled US$305 million. However, it is important to note that 87% of this total was held at its ICA Fluor Daniel subsidiary and 45% reflected advance payments on project work to be performed. Access to this cash may require approval from its partner, Fluor Daniel. ICA's backlog continues to decrease, reflecting the lack of public spending in Mexico and delays or cancellations in a number of important projects. The reduced consolidated backlog also reflects the removal of MXP280 million corresponding to the 'Los Caracoles' project in Argentina, in response to that country's sovereign volatility. As a result, through the first six months of 2002, backlog decreased 37% and currently represents eight months of work (based on depressed volume of work performed in the 2Q02). The outlook for investment in infrastructure and civil projects in Mexico remains uncertain, as the government continues to reduce public spending. This austerity is exacerbated by the absence of a supportive regulatory framework that may encourage private investment in the nation's energy sector. Recent events, including the cancellations of the new Mexico City airport in Texcoco and construction of the second level of the Periferico, further reduced an already limited portfolio of potential EPC business opportunities. Empresas ICA (ICA) is Mexico's largest engineering, procurement and construction company in terms of revenues and assets. Established in 1947, the company is engaged in a full range of construction and related activities, including the construction of infrastructure, industrial, urban and housing facilities. ICA also participates in the development and marketing of real estate, the construction, maintenance and operation of highways, bridges and tunnels and in the management and operation of water supply systems and automobile parking facilities under concessions granted by governmental authorities. CONTACT: Fitch Ratings Alejandro Bertuol Phone: 212/908-0393 (New York) Roberto Guerra Phone: 312/368-3343 (Chicago) HYLSAMEX: Alfa Not Ruling Out Search For Partner ------------------------------------------------ An executive of Alfa group, whose name was not disclosed, denied that the Mexican industrial group is selling its stake in the Venezuelan steel maker Siderurgica del Orinoco (Sidor), relates Business News Americas. He admitted, however, that the conglomerate is maintaining its decision to seek a partner for its steel unit Hylsamex. Hylsamex owns 35% of the Amazonia consortium, which holds a 70% stake in Sidor, the other 30% of which is owned by Venezuelan state heavy industry holding CVG. The executive said that if a strategic partner is found for Hylsamex, obviously its share in Sidor would be automatically diluted. "The idea is to form a partnership but through Hylsamex. We're not looking for a partner in Sidor, we already have excellent partners. Our problem is that we need to find a partner for our Hylsamex steel unit, in Mexico," the spokesperson said. Alfa is upholding its decision to seek a partner for Hylsamex despite the agreement announced in July between the Venezuelan government and Sidor to restructure the latter's debts. The deal will see a reduction in Sidor's debts from US$1.45 billion to US$750 million, with a large part being capitalized by the state, which could result in CVG's share in Sidor rising to 42%. "With respect to Sidor, we haven't changed our strategy or our position. For quite some time we've made clear our intention to seek a partner that can help us capitalize our business unit Hylsamex, in Mexico, which in turn owns a stake in Sidor through one of its subsidiaries," an Alfa group spokesperson told BNamericas. The Sidor agreement, signed by President Hugo Chavez, is still at the letter of intent stage, and is expected to be finalized within a couple of months. The Alfa official declined to comment on what the Mexican group plans following the Sidor agreement, except to say: "Definitely Alfa won't change its strategy." CONTACT: SIDERURGICA DEL ORINOCO, C.A. (SIDOR) Edificio General, Piso 9 Avda. La Estancia Chuao, Caracas 1060 Venezuela Tel: (582) 902 3800/3917/3955 Fax: (582) 993 2930 Home Page: www.sidor.com.ve/ ALFA, S.A. de C.V. Ave. Gomez Morin 1111 Sur, Col. Carrizalejo Garza Garcia, N. L. Mexico C.P. 66254 Tel: 52 8748-1111 Fax: 52 8748-2552 HYLSAMEX Investor Relations Margarita Gutierrez E-Mail: mgutierrez@hylsamex.com.mx Ricardo Sada E-Mail: rsada@hylsamex.com.mx Phone: (52) 81 8865 1224 (52) 81 8865 1201 Munich 101, San Nicolas de los Garza N.L., 66452 Mexico ================================= T R I N I D A D & T O B A G O ================================= BWIA: Cashflow, Profitability Battle Continues ---------------------------------------------- Trinidad national carrier BWIA, which is yet to recover from an US$8.4-million (TT$51.8 million) first-half loss in the aftermath of the September 11 terrorist attacks in the US, comes face to face again with another financial crisis. The problem stems from several delayed and cancelled flights after pilots' work-to-rule began following a request for a salary increase, which they say is long overdue. They have accused management of "dragging its feet". The delays and cancellations have led the airline to lose TT$6 million in revenue to competing airlines from July 12-31. In the first four days of August alone, the airline lost another TT$2.2 million, an employee communiqu� indicated on Tuesday. The figures do not include refunds and some other associated airline expenses incurred when flights are affected. Employees and senior officials have previously engaged in meetings, however, according to BWIA's communications manager Clint Williams, no resolution had been reached following the meetings. Now, the two sides are again engaging in talks with the Ministry of Labor acting as mediator. The pilots have been complaining of the airline's lack of response to their needs, and the unfair demands made by BWIA on them. The pilots have been experiencing problems with scheduling of fleets. They attributed the problem to bad rostering on the part of the airline. CONTACTS: BWIA West Indies Airways Phone: + 868 627 2942 E-mail: mailto:mail@bwee.com Home Page: http://www.bwee.com/ Contacts: Conrad Aleong, President and CEO (Trinidad) Beatrix Carrington, VP Marketing and Sales (Barbados) Paul Schutz, Chief Financial Officer (Trinidad) ============= U R U G U A Y ============= BANCO DE CREDITO: Grupo Moon To Take Control In Next Two Years -------------------------------------------------------------- Uruguayan bank Banco de Credito, which was suspended by the Central Bank less than two weeks earlier amid an emergency banking holding to curb a run on deposits, will soon get a shot in the arm aimed at boosting its liquidity. According to a Business News Americas report, St. George Limited, a division of Grupo Moon, will raise its 49% stake in Credito up to 100% over the next two years through government mandated capital increases. Under the plan, St. George would inject US$100 million in two US$50-million tranches, said Credito VP Eliseo Cristiano. The bank's deposits currently stand at US$100 million. Business News Americas suggests that the ownership restructuring will earn the bank the right to reprogram its deposits in line with a partial deposit freeze placed on state-run banks. URUGUAYAN BANKS: Central Bank Measure Spurs Concern From Bankers ---------------------------------------------------------------- After operations of Uruguayan banks returned to normalcy, bankers are still concerned about a central bank measure that call for all financial institutions to provision new dollar-denominated deposits 100% and peso-denominated deposits 75%, BNAmericas reported. Although the measure, drafted to ensure liquidity, is only temporary, the banks are wary it would reduce their capacity to provide loans. Given the scenario, they may opt to transfer deposits to offshore accounts that are free of such regulation. Recently, crisis in Uruguay's financial system has clearly been shown by the 4-day banking holiday that the government declared following panicked withdrawals late in July. According to the central bank, those withdrawals could have drained US$2 billion of the US$34 billion of the state banks Banco de la Republica and Banco Hipotecario del Uruguay this month. Banco de la Republica was reported to have lost US$70 million of the estimated US$100 million total withdrawals after the banks opened on Monday. The two banks had already shed US$1 billion since January. Some US$2 billion in the form of time deposits are also scheduled to come due between July 23 and August 20. As a solution to the drain on deposits, Uruguay's Congress passed an emergency legislation that analysts estimate would freeze approximately US$2.2 billion in the country's two state banks, Banco de la Republica and Banco Hipotecario del Uruguay. The account, which is similar to certificates of deposit in the United State will pay higher interest than normal deposits during the 3-year freeze. Meanwhile, the central bank has allowed other banks to partially resume operations, says BNAmericas. Private bank Banco de Credito was allowed to transact salary and debt payments on behalf of clients. The bank's clients as well as that of Banco Montevideo and Banco Caja Obrera were also permitted to use credit cards that were already active before the banking freeze. Banco ACAC has reported it had opened 3,000 new accounts two days after the banking holiday, including 1,000 corporate accounts. Banco Comercial, Uruguay's largest privately held bank, however remained shuttered for 30 days. CONTACT: BANCO A.C.A.C 25 de Mayo 552 Montevideo URU 1100 Phone: 96 48 92 96 48 93 Home Page: www.bancoacac.com.uy BANCO HIPOTECARIO DEL URUGUAY Phone: (598-2) 401- 4219/2904 Fax: (598-2) 400-5675 Home Page: info@bhu.net BANCO COMERCIAL Cerrito 400 - Montevideo Phone: (598-2) 140* Fax: (598-2) 915.35.69 Telex: "COMERAL UY" 26.911 - 26.668 Home Page: http://www.bancocomercial.com.uy Contact: Sr. Nelson Franco Iglesias, Gerente General BANCO DE LA REPUBLICA ORIENTAL DEL URUGUAY Avda. 18 de Julio 1670 19 de Julio Montevideo Uruguay Phone: 400 90 90 / 99 409 68 35 Email: cartbrou@adinet.com.uy Home Page: http://www.brounet.com.uy/ *********** 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 * * *