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/raid1/www/Hosts/bankrupt/TCRLA_Public/020916.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, September 16, 2002, Vol. 3, Issue 183 Headlines ARGENTINE BANKS: Government Renews Talks, Pursuing IMF Aid BANCO SUQUIA: First Bidder Submits Offer EDENOR-EDEMSA: Parent Sues Argentina To Limit Losses REPSOL YPF: Sells Methanol Locally Pending Court Ban Reversal B E R M U D A GLOBAL CROSSING: House Committee Subpoenas CEO Winnick TYCO INTERNATIONAL: Board Nominates Five to Fill Vacancies TYCO INTERNATIONAL: Files Suit Against Former Chairman TYCO INTERNATIONAL: Names Lytton As Exec. VP And General Counsel B R A Z I L CSN: Implements Voluntary Layoff Program CSN: UBS Raises Recommendation On Current Valuation ELETROPAULO METROPOLITANA: May Not Pay Dividends In Coming Years EMBRATEL: Telemar Files Suit For Payment Of Network Usage Fees VARIG: Pilots Move To Expedite Restructuring Plan Execution C H I L E DISPUTADA: Exxon Mobil, Government Reach Agreement Over Sale C O L O M B I A PAZ DEL RIO: German Group May Invest $1.5B V E N E Z U E L A SIDOR: Workers Lodge Third Strike In Three Weeks - - - - - - - - - - ================= A R G E N T I N A ================= ARGENTINE BANKS: Government Renews Talks, Pursuing IMF Aid ---------------------------------------------------------- The Argentine government renewed talks aimed at obtaining much- awaited aid from international lenders. The expectation of assistance has increased since announcing a partial easing of the controversial banking restrictions. According to IMF spokesman Thomas Dawson, talks between the IMF and Argentina are continuing but no deadline has been set for their conclusion. Dawson said a mission headed by Argentine Central Bank Governor and Finance State Secretary Guillermo Nielsen is in Washington now and will be meeting with IMF deputy chief Anne Krueger. The Argentine government just announced measures designed to end gradually the restrictions tying up savings of millions of people since December. Having savings returned to their rightful owners is one of the IMF's prerequisites for sealing a deal. But Argentine Cabinet chief Alfredo Atanasof on Wednesday tried to defend the move saying that the decision "wasn't made to satisfy a request from anyone," and was instead "an act of justice that will expedite progress toward the definitive normalization of the financial system." The banking restrictions are but one of the concerns the IMF has voiced regarding the situation in Argentina, which is hoping to reschedule some US$18 billion in debt repayments. The Fund's representative in Argentina, Gilbert Terrier, lobbied Wednesday for the adoption of a package of measures aimed at laying the basis for a sound economy and enabling Buenos Aires to regain access to international credit markets. BANCO SUQUIA: First Bidder Submits Offer ---------------------------------------- Banco Suquia drew its first potential bidder for new ownership. The bank's operations were handed over to Banco Nacion when its French owner, Credit Agricole, decided to leave recession-plagued Argentina earlier this year. According to Business News Americas, local business group Petersen Inversiones (PISA) has submitted an offer to both Banco Nacion and the central bank, since the two entities are disputing which should handle the sale of the former Credit Agricole subsidiary. Meanwhile, Argentina's Supervielle family, owner of local bank Banex, is also expected to make a bid for Suquia in the next couple of days. Suquia is one of three banks that were taken over by federally- owned Banco Nacion earlier this year when the French Agricole decided to pull out of Argentina. The two other local banks are Banco Bisel and Entre Rios. The government opted to hand the banks over to Banco Nacion, rather than suspending operations, considering the important role they play in their respective provinces' local economies. Credit Agricole was among the foreign banks that stopped funding Argentine units after a run on deposits late last year that was followed by a US$95-billion government debt default and currency devaluation. CONTACT: BANCO SUQUIA S.A 25 de Mayo 160 Cordoba 5000 Cordoba Argentina Phone: 0351-422-2048 Fax: 0351-420-0279 E-mail: relacioninversores@bancosuquia.com.ar Home Page: http://www.bancosuquia.com.ar/ Contact: Bernard Pierre Jean Brousse, Vice-President Nestor Jose Belgrano, Director BANCO DE ENTRE RIOS S.A. (BERSA) Monte Caseros 128 Parana 3100 Entre Rios Argentina Phone: 0343-4201200 Fax: 0343-4213869 Contact: Alberto Roque Ferrero, Vice-President BANCO BISEL S.A. Mitre 602 Rosario 2000 Santa Fe Argentina Phone: 0341-4200300 Home Page: http://www.bancobisel.com.ar/ Contact: Guillermo Harteneck, President Jean Luc Perron, Vice President Bernard Brousse, Vice President EDENOR-EDEMSA: Parent Sues Argentina To Limit Losses ---------------------------------------------------- French state-owned power company Electricite de France (EDF) sued Argentina to limit losses on its EUR1-billion (US$974 million) investment in the country, newspaper Les Echos said, citing a person familiar with the matter. EDF controls local companies Edenor SA and Edemsa. Edenor, which generates and distributes electricity in greater Buenos Aires, has missed a number of interest payments this year after the government imposed a freeze on any rate increases that affected all utility sectors. The unit has been seeking to raise power tariffs to stave off an impending bankruptcy. According to the Company's managing director, Henri Ducre, Edenor could go bankrupt unless it is allowed to hike power tariffs to offset the effects of inflation and the depreciation of the peso. Edemsa, on the other hand, decided to suspend payments on all financial obligations in July as a result of the devaluation of the peso. With half of its total US$120 million in debt denominated in dollars, Edemsa admitted that its peso-denominated income cannot match dollar-denominated expenses. CONTACT: EDENOR S.A. Azopardo Building Azopardo 1025 (1107) Capital Federal Phone: (54-11) 4346-5000 Fax: (54-11) 4346-5300 E-mai: to ofitel@edenor.com.ar Home Page: http://www.edenor.com. EDEMSA San Martin 322 5500 Mendoza Phone: (54) 261 4 497 300 REPSOL YPF: Sells Methanol Locally Pending Court Ban Reversal ------------------------------------------------------------- Repsol-YPF, which is currently barred by two federal injunctions from producing methanol for export at a new $170-mil plant in Neuquen, Argentina, has been selling the product locally in recent weeks, Platts reports, citing a company spokesman. Accordingly, the Company opens the plant to produce enough of the methanol to fill trucks for domestic shipments, and then shuts it down until the next sale. The deliveries account for 1% of the plant's 400,000 mt/yr production capacity, the spokesman revealed. Repsol has been facing two injunctions preventing it from railing the product through Buenos Aires -- the only route to port -- since April on the grounds that the train operator Repsol would utilize is not safe enough. The Company must resolve the present court orders in order to return the plant to full capacity. To see financial statements: http://bankrupt.com/misc/Repsol.pdf CONTACT: 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 ============= B E R M U D A ============= GLOBAL CROSSING: House Committee Subpoenas CEO Winnick ------------------------------------------------------ The House Energy and Commerce Committee issued a subpoena Thursday requesting Global Crossing Chairman Gary Winnick to appear to testify at a hearing scheduled for Sept. 24, the AP reports, citing committee spokesman Ken Johnson said. The panel also served subpoenas to Jim Gorton, former general counsel of Global Crossing, and Greg Casey, a former executive vice president of Qwest Communications. The panel said it has expanded its investigation to include Western phone company Qwest and other companies. The Justice Department and the Securities and Exchange Commission are investigating Global Crossing's accounting. Quest also has acknowledged major accounting errors and is under investigation by the SEC. The committee also is looking into similar deals Global Crossing had with other telecom companies, Johnson said. "We're concerned that these capacity swaps were merely sham transactions meant to artificially increase revenue and mislead investors," said Rep. Jim Greenwood, R-Pa., chairman of the panel's investigative subcommittee. Winnick's attorney, Gary Naftalis, said his client "will respond in an appropriate manner" to the subpoena. Winnick "continues to cooperate with this and other inquiries by making available all relevant documents," Naftalis said in a statement. "There is absolutely not a shred of evidence that Gary Winnick has done anything improper. All records and reports demonstrate that Gary acted at all times legally, ethically and honorably." On August 9, Global Crossing was sold for US$250 million to Hutchison Whampoa of Hong Kong and Singapore Technologies, much lower than an initial offer of US$750 million. The deal was approved by the judge overseeing Global Crossing's bankruptcy case. Under the original deal with the two Asian firms, announced in January with the bankruptcy filing, Global Crossing's debtholders would have split US$300 million in cash and an additional US$800 million in new notes from the Company. Now, they will still get US$300 million in cash, but only US$200 million in notes. They will, however, retain a larger stake of the equity in the new firm: 38.5% rather than the 21% envisioned under the earlier deal. Meanwhile, although Hutchison and Singapore will receive a smaller controlling stake - 61.5% instead of the 79% stake rejected in the first deal - they will only being paying US$125 million each in cash rather than the combined US$750 million they were willing to pay in January. Owners of Global Crossing's existing stock will receive no stake in the reorganized company. Lawyers for Global Crossing told the court last month that the Company expects to file a Chapter 11 plan of reorganization this month and to emerge from bankruptcy in early 2003, subject to satisfying various contractual and regulatory conditions. CONTACT: GLOBAL CROSSING Press: Becky Yeamans, +1-974-410-5857, Email: Rebecca.Yeamans@globalcrossing.com Tisha Kresler, +1-973-410-8666 Email: Tisha.Kresler@globalcrossing.com Analysts/Investors: Ken Simril, +1-310-385-5200 Email: investors@globalcrossing.com TYCO INTERNATIONAL: Board Nominates Five to Fill Vacancies ---------------------------------------------------------- Tyco International Ltd. (NYSE: TYC; BSX, LSE: TYI) announced that its Board of Directors on Thursday passed a resolution nominating five leading figures in the business community to fill expected vacancies on the Board. The Board also voted not to nominate or support for re-election at the Company's 2003 annual meeting any of the nine current members of the Board who were members of the Board prior to July of this year. The Board also elected a new lead outside director. The company said it expects some vacancies to occur on the Board through resignations before the next annual meeting. As vacancies occur before and at the annual meeting, the nominees announced today will be among those to fill such vacancies. Of the current directors, only Chairman and CEO Ed Breen and Jack Krol will be nominated and supported for re-election. The company also announced that Mr. Krol, the former Chairman and Chief Executive of E.I. du Pont de Nemours & Company, who was appointed to the Board as an independent director in August, has also been elected Chairman of the Board's Corporate Governance and Nominating Committee and the Company's lead outside director. "The Board recognizes the need for new independent directors who will bring a wide range of perspectives to Tyco, and today's action is a significant step toward meeting that goal," said Mr. Breen. "The five individuals nominated today are highly respected and experienced business leaders who will help set the strategic vision for this company and ensure that we adhere to the highest standards of corporate governance. They are people of extraordinary wisdom, integrity and judgment, and I look forward to working closely with them. The fact that Tyco was able to attract such outstanding leaders in the business community is solid testimony to the underlying strength and potential of this company." Mr. Breen added, "I appreciate Jack Krol taking on the leadership of the Board's Corporate Governance and Nominating Committee. In the brief period he has been a director, he has played a very active and constructive role in helping us to address governance issues and identify candidates for the Board." Mr. Breen also stated: "I want to thank the current members of the Board for their service to the company and their support for the actions I have been taking since coming to Tyco. During a very difficult time, they have acted quickly and diligently to address the issues facing the company." Michael Useem, Director of the Wharton School Center for Leadership and Change Management and an advisor to Tyco on corporate governance and leadership issues, said: "I believe Tyco has done an impressive job of selecting new nominees for its Board. They represent many years of high-level business experience in diverse industries. They have demonstrated the ability to lead through good times and bad and have strong reputations for independence and integrity." The nominees and the order in which they are to be appointed to the Board are: * Jerome York - Mr. York is the Chairman, President and CEO of Micro Warehouse, Inc., a seller of computer products through catalogs, the Internet, and telemarketers. Micro Warehouse offers more than 30,000 items and distributes more than 120 million catalogs worldwide each year. Before Mr. York joined Micro Warehouse he was the Vice Chairman of Tracinda Corporation from 1995 to 1999, Chief Financial Officer of IBM Corporation from 1993 to 1995 and held various positions at Chrysler Corporations from 1979 to 1993. Mr. York graduated from the United States Military Academy, and received an M.S. from the Massachusetts Institute of Technology and an M.B.A. from the University of Michigan. * Mackey McDonald - Mr. McDonald serves as the Chairman, President and CEO of VF Corporation. A designer, manufacturer and marketer of jeanswear, intimate apparel, playwear, workwear and daypacks. VF has a number of principal brands including Lee, Wrangler, Riders, Rustler, Vanity Fair, Bestform, Lily of France, Healthtex, Jansport and The North Face. Mr. McDonald began his tenure at VF Corporation in 1982 and was named Chairman, President and CEO in 1998. He also was a Director, Operations at Hanes Corporation. Mr. McDonald graduated from Davidson College and received his M.B.A. in Marketing from Georgia State University. And then (in alphabetical order): * George Buckley - Mr. Buckley is the Chairman and CEO of Brunswick Corporation, a manufacturer and marketer of recreational equipment, including pleasure boats, fishing boats, fishing reels, bowling equipment, billiard supplies and bicycles, as well as an operator of a chain of retail bowling centers. Formerly serving as the Chief Technology Officer and President of two divisions throughout his career at Emerson Electric Company from 1993 to 1997, Mr. Buckley joined Brunswick in 1997 and has held the role of Chairman and CEO for over two years. Mr. Buckley is a graduate of the University of Huddersfield and received his Ph.D from Southhampton University. * Bruce Gordon - Mr. Gordon is the President of Retail Markets at Verizon Communications, Inc., a provider of wireline and wireless communications in the United States that has a presence in 40 countries. Previous to the merger of Bell Atlantic Corporation and GTE, which formed Verizon in July of 2000, Mr. Gordon fulfilled a variety of positions at Bell Atlantic Corporation, including Group President, VP Marketing and Sales and VP Sales. Mr. Gordon graduated from Gettysburg College and received a Masters of Science from Massachusetts Institute of Technology (MIT). * Sandra Wijnberg - Ms. Wijnberg is a Senior Vice President and Chief Financial Officer at Marsh & McLennan Companies, Inc., a professional services firm with insurance and reinsurance broking, consulting and investment management businesses. Before joining Marsh & McLennan Companies, Inc. in January 2000, Ms. Wijnberg served as a Senior Vice President and Treasurer of Tricon Global Restaurants, Inc. and held various positions at PepsiCo, Inc., Morgan Stanley Group, Inc. and American Express Company. Ms. Wijnberg is a graduate of the University of California, Los Angeles and received an M.B.A. from the University of Southern California. ABOUT TYCO INTERNATIONAL LTD. Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2001 revenues from continuing operations of approximately $34 billion. CONTACT: Gary Holmes (Media) 212-424-1314 Kathy Manning (Investors) 603-775-2159 TYCO INTERNATIONAL: Files Suit Against Former Chairman ------------------------------------------------------ Tyco International (NYSE: TYC; BSX; LSE: TYI) announced Thursday that it has filed suit against its former Chairman and Chief Executive Officer, L. Dennis Kozlowski, charging that he misappropriated money and assets from the Company and engaged in a concerted pattern of conduct to conceal larcenous acts from the Board of Directors. The lawsuit accuses Kozlowski of fraud and self-dealing that included, among other actions: abusing Tyco's relocation and Key Employee Loan programs and obtaining under false pretenses loans that he used to fund personal expenditures; misappropriating for himself over $100 million, including unauthorized bonuses totaling $58 million and unauthorized loans of over $43 million; taking personal credit for more than $43 million in charitable donations that actually were made by Tyco; and engaging in a number of self-dealing transactions involving property he sold the Company at inflated prices and real estate that was used by him and his family without compensating Tyco. The lawsuit seeks to recover all funds misappropriated from Tyco for Kozlowski himself or awarded by Kozlowski to his senior executives and key managers without appropriate authorization from the Compensation Committee of the Board of Directors, plus damages and other forms of relief. Although the actual amounts are to be determined when the lawsuit goes to trial, the Company specified that it will seek, at a minimum, the recovery of all unauthorized compensation paid by Kozlowski to other employees from 1997 to 2002, repayment of outstanding loans he improperly borrowed from Tyco, and the forfeiture of all income and benefits received by him from 1997 to 2002. This filing is a result of the previously announced internal investigation being conducted by the outside law firm Boies, Schiller & Flexner. The Company said that Mr. Kozlowski's misuse of funds and assets, while unauthorized, have already been expensed in Tyco's prior financial statements. It does seek through the lawsuit to recover these monies plus damages. The Company does not expect to make material adjustments to its prior financial statements as a consequence of the internal investigation to date. Kozlowski Breached Fiduciary Duties and Violated Trust In a statement, the Company said, "As Tyco's Chairman and Chief Executive Officer from July 1992 through June 3, 2002, Mr. Kozlowski was one of the highest, if not the highest, compensated executive in the country. Despite his being paid handsomely, he misappropriated hundreds of millions of dollars from Tyco that have not been repaid. He failed to inform, and actively concealed from, the Compensation Committee the true facts about his compensation." The Company also said, "Kozlowski was required to act honestly and in good faith with a view to the best interests of the Company and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Kozlowski breached these duties to the Company and, as a result, the Company has been damaged in an amount that far exceeds the amounts that Kozlowski directly misappropriated for himself. To hold him accountable for his misconduct, we seek not only full payment for the funds he misappropriated but also punitive damages for the serious harm he did to Tyco and its shareholders." Specific Actions by Kozlowski Among the specific actions through which Kozlowski failed in his duties to Tyco are: * Abuse of New York Relocation Program -- In 1995, after he decided to relocate to New York City, Kozlowski transformed a Compensation Committee-approved relocation program intended for all employees into a special program for a few senior executives that was never sanctioned by the Board. Kozlowski obtained these substantial benefits under the unapproved, transformed plan: -- Beginning in July 1997, he rented a lavish Fifth Avenue apartment in New York at an annual rent of $264,000, paid for by the Company. -- He used an interest-free loan to buy a Company-owned, $7- million Park Avenue apartment, at depreciated book value and without appraisals, which he never occupied and instead deeded to his ex-wife a few months after the purchase. -- He sold his Exeter, New Hampshire home to the Company for significantly more than its market value, resulting in a $3- million overpayment to him by Tyco. -- He had the Company purchase a second, more extravagant, Fifth Avenue apartment in 2001 for $16.8 million, plus $3 million in improvements and $11 million in furnishings, without disclosing to the Board or its Compensation or Audit Committees that this home was paid for by Tyco and carried by the Company as a corporate asset. -- He "grossed up" the benefits he received under the program to insulate himself from New York State income tax liability related to the relocation to New York. Kozlowski knew that the benefits to him and other key executives under such a program required Compensation Committee approval and never sought such approval from the Board. * Abuse of Key Employee Loan Program -- The long-standing Key Employee Loan Program (KEL) was designed to encourage stock ownership by executives by obviating their need to liquidate shares to meet tax liabilities. However, Kozlowski systematically abused this program, turning it into a personal line of credit. From 1997 to 2002, he took more than 200 loans from the program, borrowing more than $274 million, of which more than $245 million was not used in accordance with the purpose of the program. Instead, he used these funds for a wide variety of personal needs, including purchases of everything from homes, yachts, antiques and furniture to payments to his domestic help. * Unauthorized Credits to KEL Program -- To offset his indebtedness to Tyco, without the knowledge or approval of the Board, Kozlowski directed Chief Financial Officer Mark Swartz to effect credits of $25 million to Kozlowski's KEL account and $12.5 million to Swartz's account. (When the Board learned of these unauthorized journal entries during the course of the investigation, it directed that they be reversed.) Kozlowski continued to abuse the KEL program, and when he left the Company on June 3, 2002, he owed this program $43,840,461, plus interest, all of which is due. * Unauthorized Florida Relocation Program -- After the 1997 reverse merger with ADT, Kozlowski decided to relocate more than 40 corporate employees to ADT's U.S. headquarters in Boca Raton, Florida and created a new relocation program by appropriating the terms of the earlier New York program. He circumvented the need for Compensation Committee approval of this program by creating a program somewhat similar to the New York program. As in New York, he created two versions of the program, one for general use that met the IRS standards and a second for the use of a few executives. Without changing his primary residence, Kozlowski used this program to obtain $29,756,110 in interest-free loans to assemble five lots into a compound and build an estate in an exclusive Boca enclave called "The Sanctuary." Kozlowski did not obtain Compensation Committee approval of this program and concealed these benefits from the Board. * "TyCom Bonus" -- Unauthorized Forgiveness of Relocation Loans - - In September 2000, Kozlowski still owed Tyco more than $37 million, so he "contrived, promoted and fraudulently executed" a plan to obtain relief. He falsely informed the Senior VP of Human Resources that the Board had decided to forgive all of the Florida relocation loans to the more than 40 employees - and to "gross up" this benefit by making each employee whole on an after-tax basis for the forgiveness -- as a reward for completion of the TyCom IPO. The unauthorized loan and gross-up program was in addition to a more limited program of cash bonuses and restricted stock awards that the Compensation Committee -- unaware of the Kozlowski program -- approved the next month. Kozlowski's unauthorized program cost Tyco close to $100 million, including Kozlowski's share of $32,644,338. * Unauthorized "ADT Automotive Bonus" -- In November 2000, still pressed by his indebtedness to Tyco, Kozlowski contrived another special bonus program. This bonus was supposed to recognize executives for contributions to the divestiture of Tyco's ADT Automotive business via cash and "relocation" benefits, even though the beneficiaries had already recovered the grossed-up cost of their "relocations" under the TyCom forgiveness bonus. This "bonus" cost Tyco nearly $56 million, of which $25.6 million benefited Kozlowski. As with the "TyCom Bonus," Kozlowski led other executives to believe the program was Board approved, which it was not. Adding everything up, including his authorized compensation and the money misappropriated as purported compensation, Kozlowski's income from Tyco in 2000, as reported to the IRS, was an incredible $137,491,353.39. * Fraudulently Procured Retention Agreement -- In 2001, Kozlowski pressed the Company to sign a retention agreement, which among other things, provided for ongoing compensation and benefits for three years following age 62. The monetary value of this provision, as approved by the Compensation Committee, would have been approximately $20 million. However, he fraudulently deceived the Committee into amending the compensation formula that, unbeknownst to the Committee, would have resulted in a ten-fold increase in the compensation that would be due to him. * Unauthorized Payment to Walsh -- In early 2001, Kozlowski approved the payment of a $20-million finder's fee to then- director Frank Walsh in connection with the acquisition of The CIT Group. Kozlowski and Walsh concealed this payment from the Board, which did not become aware of it until reading a draft proxy in January 2002 and demanded immediate repayment. The Board was galvanized into action by this payment and, in February 2002, undertook a review of all transactions involving senior management. Also, in early May 2002, the Board hired independent counsel, Boies Schiller & Flexner, to represent the Company with regard to the Walsh matter. * Frustration of Board's Investigation -- As a result of the Walsh payment, the Board began a wide-ranging investigation into the activities of Kozlowski and other senior managers. Throughout early 2002, while paying lip service to the heightened Board oversight, at no time did Kozlowski disclose the enormous compensation he had taken for himself and others over the past several years. From February through May 2002, Kozlowski continued to conceal the facts from the Board and attempted to delay and frustrate the investigation. * Failure to Report Subpoena to Board -- On May 3, 2002, in the course of investigating Kozlowski's failure to pay state sales taxes, the Manhattan District Attorney served Kozlowski with a subpoena for records relating to his compensation and his recent purchases. Kozlowlski had an affirmative duty to inform the Board of this, but failed to do so. In fact, he did not inform the Board until May 31, the day he learned he was to be indicted. * Charitable Contributions -- From 1997 to 2002, Kozlowski committed donations and pledges to charitable organizations with Company money amounting to more than $106 million. At least $43 million of these donations were made for his personal benefit or were represented as his personal donations. For example, in 2001, Kozlowski donated $1.3 million of Company money to the Nantucket Conservation Foundation, Inc., which in turn purchased property adjacent to Kozlowski's own Nantucket estate to prevent future development of the land. He also pledged $10 million to the California International Sailing Association in his name. Other Tyco contributions were made in his name to schools, colleges, hospitals, and Nantucket institutions with which he had a personal connection. * Other Elements of Kozlowski's Fraud and Self-Dealing -- Other actions by Kozlowski that formed a pattern of fraud and self- dealing included expensing to the Company the following items, among others: -- Millions of dollars for the personal use of his various residences and purchases of furniture and other items for these residences; -- $700,000 for a personal investment in the movie, "Endurance;" -- More than $1 million for a lavish celebration of his wife's birthday in Sardinia, Italy; -- Reimbursement for $1 million of business expenses without proper documentation for such items as jewelry, clothing, wine, club membership dues, flowers and a private venture; and. -- At least $110,000 for the corporate use of his personal yacht, the "Endeavour." CONTACT: TYCO INTERNATIONAL LTD. Media - Walter Montgomery, +1-212-424-1314 Investors - Kathy Manning, +1-603-778-9700 TYCO INTERNATIONAL: Names Lytton As Exec. VP And General Counsel ---------------------------------------------------------------- Tyco International Ltd. (NYSE: TYC; BSX: TYC; LSE: TYI) announced Thursday that William B. Lytton has been appointed Executive Vice President and General Counsel for the company. Mr. Lytton has a wide range of experience as a corporate counsel at major industrial companies and most recently served as Senior Vice President and General Counsel for International Paper Company. Mr. Lytton is also a former federal prosecutor who served eight and a half years in Chicago and Philadelphia. Tyco's Chairman and Chief Executive Officer, Edward D. Breen, said, "To fulfill its potential as a great company, Tyco must have the best possible management team. In choosing a General Counsel for Tyco, I wanted a person with outstanding credentials as a corporate counsel and an impeccable reputation for personal integrity. Bill clearly fulfills both criteria. He is a man who can be trusted to make the right decisions on the challenges and opportunities facing the company, and he will play a vital role in helping us to establish and maintain the best practices of corporate governance. I'm very pleased that he is now part of the team we are building for the future." Mr. Lytton said, "I'm very excited to be joining Ed Breen and his new team at this critical juncture in Tyco's history. I share Ed's commitment to establishing the highest standards of corporate governance and integrity at Tyco. This is a company with many strengths and opportunities. I look forward to working with the people throughout the organization to help Tyco realize its full potential." Mr. Lytton succeeds Irving Gutin, who had been asked to assume the role of General Counsel in June on a temporary basis. Mr. Gutin is retiring after more than 28 years of service to Tyco. Mr. Lytton has served as Senior Vice President and General Counsel for International Paper, the world's largest forest- products company, since 1999. Mr. Lytton began his tenure with the company in 1996, as vice president and general counsel. Previously, Mr. Lytton held general counsel positions at operating divisions of Lockheed Martin and Martin Marietta, as well as at GE Aerospace. He has worked throughout federal government, including an assignment as deputy special counselor to President Ronald Reagan in 1987. Mr. Lytton received his undergraduate degree from Georgetown University in 1970 and a law degree from American University in 1973. He is chair of the American Corporate Counsel Association's board of directors and a member of the Washington, DC, and Pennsylvania Bars. =========== B R A Z I L =========== CSN: Implements Voluntary Layoff Program ---------------------------------------- Brazil's steel giant Companhia Siderurgica Nacional (CSN) kicked off a voluntary layoff program aimed at slashing up to 600 jobs, reports Dow Jones. The program, limited to the Company's main mill in Volta Redonda, in the state of Rio de Janeiro, and the Casa da Pedra mine, in the state of Minas Gerais, targets employees who are qualified to retire, CSN said. Union leaders, however, fear that CSN's layoff program could be extended to the whole company and may reach 10% of the steelmaker's 9,000 employees. "My feeling during the negotiations was that they wanted to cut more jobs, but after the talks they agreed to our demands and we were satisfied with the (voluntary layoff) plan," Carlos Perrut, a spokesman for the Volta Redonda Steelworkers Union, said. "Still, the Company may decide to fire more people in the future as restructuring continues," Perrut added. The program is part of CSN's preparation for the merger with Anglo-Dutch Corus Group PLC (CGA), CSN said. In mid-July, CSN announced in mid-July a merger with Corus in an all-share deal worth $1.83 billion at that date's closing price, implying a US$630 million premium on the Brazilian company's US$1.2 billion market capitalization. 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 CSN: UBS Raises Recommendation On Current Valuation --------------------------------------------------- Even though CSN's shares, which now trade at around US$12.25, have lost 24% of their value in U.S. dollar terms so far this year, UBS Warburg raised its recommendation on the Brazilian steel giant. According to Dow Jones, UBS raised its recommendation on CSN to "buy" from "hold" Thursday on belief that the shares have cheapened enough to become attractive, even as investors worry about Brazil's debt burden, presidential election campaign, and weak currency. On CSN's planned merger with Anglo-Dutch Corus Group PLC, UBS said: "Though we believe the CSN/Corus merger uncertainty still adds volatility, our forecast for a stronger Real should drive the shares higher." UBS is optimistic that the Real will appreciate to BRL2.80 per US dollar by the end of 2003 from its current level at around BRL3.13 per dollar. ELETROPAULO METROPOLITANA: May Not Pay Dividends In Coming Years ---------------------------------------------------------------- Brazilian power distributor Eletropaulo Metropolitana SA, which has come under attack from creditors calling it to pay its maturing debt, is considering ceasing dividend payments in the coming years, Bloomberg suggests. The decision however, depends on the outcome of the talks with creditors. "In reference to the dividend payments, the Company is at this time in discussions with creditors to outline certain parameters that will allow us to evaluate our liquidity and then determine our policy of dividend distribution," Eletropaulo said in the statement. Eletropaulo, whose corporate debt rating was lowered to selective default from CC by Standard & Poor's last month, is negotiating to extend payments on about US$470 million in debt. Of that amount, US$191 million matured last month and another US$280 million is due by the end of the year. The utility, a unit of AES Corp., has extended talks until Sept. 23 on the payment of US$191 million in debt with a group of banks led by J.P. Morgan Chase & Co. Eletropaulo, which had net income of BRL567.4 million in 2001, didn't pay dividends last year because it didn't have enough cash, the utility said in filings with Brazilian regulators. Eletropaulo distributes electricity to about 14 million people in Sao Paulo, Brazil's most populous city and financial center, and 23 surrounding municipalities. CONTACT: ELETROPAULO METROPOLITANA Avenida Alfredo Egidio de Souza Aranha 100-B, 13 andar 04726-270 San Paulo Brazil Phone: +55-11-548-9461, +55 11 5696 3595 Fax: +55-11-546-1933 URL: http://www.eletropaulo.com.br Contacts: Luiz D. Travesso, Chairman and President Orestes Gonzalves Jr., VP Finance/Investor Relations J.P. MORGAN CHASE & CO. 270 Park Avenue New York, NY 10017 Phone: (212) 270-6000 Fax: (212) 270-1648 Home Page: http://www.jpmorganchase.com/ Contact: William Harrison, Jr., Chairman and CEO Dina Dublon, Chief Financial Officer Geoffrey Boisi, Co-CEO of the Investment Bank Investor Relations Phone: (1-212) 270-6000 EMBRATEL: Telemar Files Suit For Payment Of Network Usage Fees -------------------------------------------------------------- Tele Norte Leste Participa�oes, S.A. (NYSE: TNE) announced that its subsidiary Telemar Norte Leste S.A (TMAR) filed today a collection lawsuit against Embratel, in civil court, for a total of R$ 219.4 million. The amount represents the total past-due amount receivable related to the use of Telemar's network by Embratel. All telecommunication companies in Brazil use a clearing system known as "Detraf" (Traffic Measurement Statement) to determine the appropriate remuneration for the reciprocal use of their network. The "Detraf" statement generates the monthly receivables and payables based on the reported traffic, thus guaranteeing the integrated operation of all telecom companies in Brazil. The company that renders this clearing service to Telemar and to other telecom companies in Brazil is Cleartech, an independent company run by the EDS Group and CPqD - Funda�ao Centro de Pesquisa e Desenvolvimento das Telecomunica�oes, a research and development center formerly operated by Telebr s. In addition to the conditions defined in the interconnection agreements, on August 2, 2001, following Anatel's (the Brazilian National Telecommunications Agency) determination, the telecom companies signed a "Code of Conduct", an agreement setting the rules for the remuneration related to the usage of each company's network. However, since August 2001, Embratel has not been paying Telemar the full amount reported in the monthly "Detraf" statements, resulting in a nominal accumulated receivable of R$ 219.4 million. In an attempt to collect this receivable, Telemar filed an administrative proceeding with Anatel. On July 12, 2002, the regulatory Agency determined that Embratel should pay, within 72 hours, the past due amounts related to the respective "Detraf" statements and to make full payments going forward. As the payment has not been effected by Embratel, TMAR's management had no other alternative, in order to protect its shareholders' interests, than to take the matter to the courts, to ensure it receives the proper payment for the use of its network. CONTACT: TNE - INVESTOR RELATIONS Roberto Terziani Email: terziani@telemar.com.br Tel: 55 21 3131 1208 Carlos Lacerda Email: carlosl@telemar.com.br Tel: 55 21 3131 1314 Fax: 55 21 3131 1155 THOMSON FINANCIAL CORPORATE GROUP Rick Huber (richard.huber@tfn.com) Mariana Crespo (mariana.crespo@tfn.com) Tel: 1 212 807 5026 Fax: 1 212 807 5025 VARIG: Pilots Move To Expedite Restructuring Plan Execution ----------------------------------------------------------- In a bid to expedite the implementation of a restructuring plan at Brazilian airline Viacao Aerea Rio Grandense SA (Varig), the pilots union filed a court action Thursday to intervene in the Company's pension fund, reports Dow Jones. In late August, Varig named Arnim Lore chief executive, as part of an attempt to obtain investor support for a proposed financial restructuring. The union, which has proposed its own sweeping restructuring plan, calls the Company's restructuring model timid. Lore, a former finance chief, replaced Ozires Silva, who had been pressured by unions and shareholders in recent months to turn around the struggling carrier's finances. Varig, which has posted a profit only twice since 1990, has US$900 million in debt and is currently negotiating with Brazil's development bank and creditors. Varig's biggest creditors are Petroleo Brasileiro SA, Banco do Brasil SA, and General Electric Capital Corp. Varig is based in Porto Alegre, and employs 14,500 people. CONTACT: VARIG (Viacao Aerea Rio-Grandense, S.A.) Rua 18 de Novembro No. 800, Sao Joao 90240-040 Porto Alegre, Rio Grande do Sul, Brazil Phone: (51) 358-7039/7040 (51) 358-7010/7042 Fax: +55-51-358-7001 Home Page: www.varig.com.br/english/ Contacts: Dorival Ramos Schultz, EVP Finance and CFO E-mail: dorival.schultz@varig.com.br Investor Relations: Av. Almirante Silvio de Noronha, n 365-Bloco "B" - s/458 / Centro Rio de Janeiro, Brazil ========= C H I L E ========= DISPUTADA: Exxon Mobil, Government Reach Agreement Over Sale ------------------------------------------------------------ Exxon Mobil Corp. agreed to pay Chile US$40-45 million in capital gains taxes for the planned US$1.3-billion sale of its Disputada de las Condes Limitada copper mine, Dow Jones reports, citing Chile's Finance Minister, Nicolas Eyzaguirre. The agreement puts an end to this particular conflict between the company and the Chilean government that started after the U.S. oil giant agreed in May to sell Disputada to South African miner Anglo-American in an offshore transaction that would have been exempted from the country's capital gains tax. On the insistence of socialist President Ricardo Lagos, Exxon has agreed to subject the deal to domestic legislation and will contribute between US$40 million and US$45 million in taxes on profits from the sale, Eyzaguirre said. "Disputada is going to carry out the sale in the domestic market, an option that was always available", Eyzaguirre said, adding, "They are going to obey the law of Chile, because we were able to stand up to the big multinationals and tell them to respect the law." Meanwhile, Exxon Mobil still has to resolve another conflict it has with the Chilean government. The government wants Exxon to recognize an option held by state-owned miner Enami to buy back up to 49% of Disputada. Enami acquired the option in 1978 when it sold Disputada to Exxon for US$98 million. Their court battle to resolve this spat has held up the Exxon- Anglo sale. Anglo said this week it expects to close the deal within weeks. The principal assets of Disputada include Los Bronces copper mine, El Soldado copper mine and the Chagres smelter, all located in Chile's central region. Disputada's two copper mines produced 252,000 tonnes of copper in 2001. Chile is the world's No.1 copper producer. CONTACT: EXXONMOBIL (U.S.) Cynthia Langlands Phone: 972/444-1107 DISPUTADA (CHILE) Guillermo Garcia Phone: 562/230-6488 =============== C O L O M B I A =============== PAZ DEL RIO: German Group May Invest $1.5B ------------------------------------------ Carlos Uribe, president of mining association Asomineros, disclosed that a German group is considering of investing some US$1.5 billion in the ailing Colombian steel maker Acerias Paz del Rio, relates Business News Americas. The group, which Uribe refused to identify, would also be interested in developing coal mining projects in the country. The group may have been enticed to invest in the troubled Colombian company after the country's president, Alvaro Uribe, told industries' association ANDI he would be prepared to guarantee Paz del Rio's rescue on two conditions: that management is handed over to an administrator, and that the administrator stays out of politics. The Paz del Rio board will study the president's proposal, as well as "listening to other ideas that may arise" at the first national congress for the defense of the steel industry on September 12-13 in Paipa, steel association Andi-Fedemetal president Juan Manuel Lesmes told BNamericas. Acerias has debts with creditors totaling US$47 million, while it owes employees and former employees some US$85 million. After years of being in the red, the Company managed to eek out a profit of COL483 million (US$212,000) in the first quarter of 2002. The results were attributed to improvements in efficiency and an increase in the price of metals, as well as the devaluation of the Colombian peso currency in the final months of 2001. CONTACT: ACERIAS PAZ DEL RIO S.A. Carrera 8 # 13-31, Pisos 7 al 11 Bogota, D.C. Phone: (091) 282-8111 Fax: (091) 282-6268 282-3480 E-mail: apdr@multi.net.co ================= V E N E Z U E L A ================= SIDOR: Workers Lodge Third Strike In Three Weeks ------------------------------------------------ Workers at Venezuela's largest steel maker Siderurgica del Orinoco (Sidor) went on strike the whole day Thursday and threatened to continue the work stoppage to Friday, reports Reuters. The walkout is the third in as many weeks over alleged wage discrepancies, a union leader said. In late August, workers at the plant, located in Venezuela's southeastern Bolivar State, staged a five-hour strike and walked out again on Monday after complaining that management was miscalculating salary rates and violating their contract. But a spokesperson for Sidor rejected worker complaints over pay calculations and said they had hammered out an agreement to settle the dispute. Union officials denied a deal had been reached. Sidor did not release a figure for losses caused by the strikes, but insisted that national and international deliveries had not been affected. The protracted labor dispute comes as the steel maker is negotiating the refinancing of much of its US$1.45 billion debt with a group of banks and the Venezuelan state. Sidor, which has been battered by the sharp slide in steel prices and the shrinking domestic economy, had failed to meet the terms of an earlier 2000 debt restructuring deal. Sidor, a former state operation, was privatized in 1997 when the Consorcio Amazonia acquired a majority stake. Shareholders are Mexican companies Hylsamex and Tamsa, Brazil's Usiminas, Argentina's Siderar and Venezuela's Sivensa. 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/ *********** 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. 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