/raid1/www/Hosts/bankrupt/TCRLA_Public/021009.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
Wednesday, October 9, 2002, Vol. 3, Issue 200
Headlines
A R G E N T I N A
ANDERSEN: Ex-Members Choose Deloitte Over Ernst & Young
AOL LATIN AMERICA: Presents Capitalization Plan To NASDAQ
ARGENTINE BANKS: Offering New Loans to SMEs
HSBC HOLDINGS: Says LatAm Investments Pose Biggest Risks
PEREZ COMPANC: Pecom EnergĦa Completes Debt Financing
*Argentina Likely To Pay $809M Loan To World Bank On Time
B E R M U D A
TYCO INTERNATIONAL/FOSTER WHEELER: On U.S. Govt.'s Watch List
TYCO INTERNATIONAL: Considering HQ Move
TYCO INTERNATIONAL: Filing Arbitration Claim Against Ex-CFO
B R A Z I L
AES SUL: Moody's Cuts Ratings To B3
CEMAR: Data Room Now Open
EMBRATEL: Welcomes New CFO
EMBRATEL: Kicks Off Local Telephony Services In November
RHODIA-STER: Parent Bids Goodbye To Polyester Sector
C H I L E
ENERSIS: Parent's Shares Down Following Revelation of Plans
ENERSIS: Ditches Plans to Expand In Latin American
ENERSIS: Peruvian Asset May Not Escape Divestment Plan
M E X I C O
BANRURAL: Replacement Awaits Bill Submission
DIXON TICONDEROGA: Announces Successful Debt Restructuring
VENTURE HOLDINGS: Moody's Downgrades All Ratings
T R I N I D A D & T O B A G O
CLEVELAND-CLIFFS INC.: Expects Non-Cash Charge for Facility
- - - - - - - -
=================
A R G E N T I N A
=================
ANDERSEN: Ex-Members Choose Deloitte Over Ernst & Young
-------------------------------------------------------
Instead of joining the agreed merger partner Ernst & Young, some
forty former members of Argentinean Anderson firm are joining
Deloitte & Touche, reveals an article released by the Legal Media
Group.
The article named five Andersen partners; Daniel Albarellos,
Horacio Dinice, Jorge Ferro, Carlos Iannucci and Pablo Tonina,
two former managers who have been elected to partner, Daniel
Caracciolo and Norberto Lucero, as well as 10 managers and
additional staff.
According to Tonina, the group decided to take the move because
so many other Andersen partners across the globe have joined
Deloitte.
"I think Deloitte & Touche is joining some of the most important
tax practices of Andersen including the UK, some of the US,
Mexico and Brazil and I think that we need to be in the same
network as them."
Many of Andersen in Argentina's biggest clients are joining the
team at Deloitte. These include, Repsol, Carrefour, Fiat, Cadbury
and Fleet Boston Bank.
AOL LATIN AMERICA: Presents Capitalization Plan To NASDAQ
---------------------------------------------------------
AOL Latin America issued the details of of its new capitalization
plan, which relates to:
-- Stock Conversion Agreement by Major Stockholders
-- America Online, Inc. and the Cisneros Group of Companies
-- The Company Expects the Proposal, If Accepted by NASDAQ, Will
Benefit Class A Common Stockholders
America Online Latin America, Inc. (NASDAQ-SCM:AOLA), a leading
interactive services provider in Latin America, announced Monday
that it has presented a plan to the NASDAQ Listing Qualifications
Panel designed to remedy its noncompliance with the $35 million
market capitalization requirement for continued listing of its
Class A Common Stock on the NASDAQ SmallCap Market (Marketplace
Rule 4310(c)(2)(B)(ii)).
The plan presented to NASDAQ includes an agreement by its two
largest stockholders, America Online, Inc. and the Cisneros Group
of Companies, to convert a sufficient number of shares of
preferred stock to Class A Common Stock so that the market
capitalization of the Class A Common Stock exceeds the required
$35 million threshold. Completion and implementation of this
agreement is contingent upon, among other things, NASDAQ's
acceptance of the Company's proposed plan and the requirement
that the closing bid price of the Class A Common Stock be above a
certain level on the day the NASDAQ Panel issues its decision.
The Company expects to receive NASDAQ's decision on the proposed
plan within four weeks, during which time AOL Latin America's
Class A Common Stock will continue to trade on the NASDAQ
SmallCap Market.
The Company noted it will also have to come into compliance with
the minimum bid price requirement rule of $1.00 for 10
consecutive trading days by January 13, 2003 in order to continue
to trade on the NASDAQ SmallCap Market. The Company addressed its
non-compliance with this requirement in its presentation to the
Panel, noting that it is considering various alternatives,
including a potential reverse stock-split, if necessary.
AOL Latin America noted that under the preferred share conversion
proposal the total number of shares outstanding would remain
unchanged; however, the number of shares of Class A Common Stock
would increase. The Company believes the proposal would benefit
Class A common holders as it includes the forfeiture of
dividends, liquidation preferences and other preferential rights
associated with the converted preferred stock by the Cisneros
Group of Companies and America Online.
Charles Herington, President and CEO of AOL Latin America, said:
"The stock conversion plan clearly underscores the commitment of
our major stockholders -- America Online and the Cisneros Group
of Companies. With their active support, we have continued to
narrow losses through a business strategy designed to target
higher value members. We believe this plan will benefit the
Company and our stockholders, as we continue to play an important
role in the development of the online medium in Latin America."
There can be no assurance that the Panel will accept the
Company's plan or that implementation of the plan will result in
continued listing on the NASDAQ SmallCap Market. In the event
that the Panel does not grant continued listing, AOL Latin
America expects that its Class A Common Stock would trade on the
Over-the-Counter Bulletin Board (OTCBB). The OTCBB is a regulated
quotation service that displays real-time quotes, last-sales
prices, and volume information for more than 3,600 equity
securities.
About AOL Latin America
America Online Latin America, Inc. (NASDAQ-SCM:AOLA) is the
exclusive provider of AOL-branded services in Latin America and
has become one of the leading Internet and interactive services
providers in the region. AOL Latin America launched its first
service, America Online Brazil, in November 1999, and began as a
joint venture of America Online, Inc., a wholly owned subsidiary
of AOL Time Warner Inc. (NYSE:AOL), and the Cisneros Group of
Companies. Banco Itau, a leading Brazilian bank, is also a
minority stockholder of AOL Latin America. The Company combines
the technology, brand name, infrastructure and relationships of
America Online, the world's leader in branded interactive
services, with the relationships, regional experience and
extensive media assets of the Cisneros Group of Companies, one of
the leading media groups in the Americas. The Company currently
operates services in Brazil, Mexico and Argentina and serves
members of the AOL-branded service in Puerto Rico. It also
operates a regional portal accessible at www.aola.com. America
Online's 35 million members worldwide can access content and
offerings from AOL Latin America through the International
Channels on their local AOL services.
CONTACT: America Online Latin America, Inc., Fort Lauderdale
Financial Community
Monique Skruzny, 954/689-3256
aolairr@aol.com
or
News Media
Fernando Figueredo, 954/689-3200
LatAmPressMail@aol.com
ARGENTINE BANKS: Offering New Loans to SMEs
-------------------------------------------
A number of banks in Argentina are offering credit lines worth a
total of ARS152 million (US$40 million) to small and medium
enterprises (SMEs).
Local banks Credicoop, Macro and Ciudad among those that offer
new loans with interest rates of 14% dollar-denominated loans,
and 60% for loans in pesos.
The new credit offering is brought about by the banks' improving
liquidity and the central bank allowing banks with central bank
debt are allowed to resume lending.
The funds are most likely to used for the SMEs working capital
and for export financing.
Economists say that many Argentine exporters have been very
competitive in the international because of the peso devaluation.
However, they have not reached their full potentials due to lack
of foreign trade financing.
HSBC HOLDINGS: Says LatAm Investments Pose Biggest Risks
--------------------------------------------------------
HSBC Holdings Plc Finance Director Douglas Flint said that the
Company's assets in Latin America are the greatest potential
risks they face.
Bloomberg quoted Flint saying that the single biggest issue HSBC
is facing is South America.
Flint said that "Argentina remains a complex and very difficult
situation," and that the London-based bank is "cautious on
Brazil."
HSBC has lost US$1.12 billion from Argentina's debt default and
currency devaluation. The Company now fears the possibility of
more losses as Brazilian Bonds and currency is under pressure as
polls indicate a possible victory for Workers Party's Lula da
Silva.
Flint said that "things will be bumpy" until the political
situation is resolved. The Brazilian presidential elections will
have its round off on October 27.
Earlier this year, HSBC Chief Executive Officer Keith Whitson
said that the Company has been cutting back in Brazil as the real
declined. The Company had invested US$5.8 billion in Brazil, as
of June 30 this year.
HSBC's Argentine unit is receiving the promised state bonds as
compensation for losses due to the currency devaluation. However,
they have not yet listed the bonds as assets, as they cannot
assign a value to them, according to Flint.
The recent lifting of the withdrawal restrictions has compounded
HSBC losses in Argentina. The local unit's executive director
Emilio Cardenas is prohibited from leaving the country, as courts
are investigating allegations that senators received bribes from
bankers. HSBC's Buenos Aires Spokesperson Angelica Ocampo denied
knowledge of the allegations.
CONTACT: HSBC Holdings Plc
10 Lower Thames Street
London
United Kingdom
EC3R 6AE
Tel +44 (0)20 7260 0500
Fax +44 (0)20 7260 0501
Homepage: http://www.hsbc.com/
Contact:
Sir John Bond - Executive Chairman
K. R. Whitson - Chief Executive Officer
Douglas J. Flint - Executive Director of Finance
PEREZ COMPANC: Pecom EnergĦa Completes Debt Financing
-----------------------------------------------------
Perez Companc S.A. (Buenos Aires: PC NYSE: PC), informs that
Pecom Energia S.A. (Buenos Aires: PECO) announced Friday that it
has successfully completed the refinancing of its financial
liabilities for the amount of US$ 848,562,000, by means of the
issue of four notes in the amount of US$ 599,412,000 and the
issue of other medium term credit instruments in the amount of
US$ 249,150,000, having simultaneously cancelled approximately
US$ 93,000,000.
Refinancing of such liabilities significantly improves the
company's debt maturity profile, extending US$ 848,562,000 dollar
short term liabilities for a final term of up to 5 years.
This transaction, in addition to the Notes exchange completed
early in August, represents the end of the global refinancing
process of the company's financial commitments that involved an
amount of approximately US$ 2,000 million. This shows the
confidence of local and international investors and financial
institutions on the company's business prospects.
These issues are made under the program for the issue of medium
term notes for a maximum outstanding amount of 2,500 million
dollars of Class J notes in an amount of US$ 75.7 million, Class
K notes in an amount of US$ 286.3 million, Class L notes in an
amount of US$ 55.6 million and Class M notes in an amount of US$
181.8 million.
Classes J and L notes shall have a term of one year and shall
bear interest at a three-month LIBOR plus a 3.75% and 4% spread,
respectively, while Class K and M are for a 5-year term with
quarterly payments as from January 2004 and final maturity in
October 2007, and shall accrue interest at a three-month LIBOR
plus a 4% and 4.75% spread, respectively.
In addition, the other credit instruments for US$ 249,150,000
will be due within the October 2003 - October 2007 term.
CONTACT: PECOM ENERGIA S.A. DE PEREZ COMPANC S.A.
Maipo 1 - Piso 22 - C1084ABA
Buenos Aires, Argentina
Phone: (54-11) 4344-6000
Fax: (54-11) 4344-6315
URL: http://www.pecom.com.ar
*Argentina Likely To Pay $809M Loan To World Bank On Time
---------------------------------------------------------
A spokesman for the World Bank said Monday the institution
expects Argentina to make an US$809 million loan payment due to
the bank on October 15.
Aside from that, Argentina is expected to make a US$250 million
payment to holders of a World Bank guaranteed bond on the same
date. He added that the bank would have to cover the payment to
the bondholders, if the country fails to pay on the said date.
"We're assuming that they will pay and we don't want to speculate
on what would happen otherwise," bank spokesman, Chris Neal told
Reuters. "We haven't heard any indication to the contrary. Our
assumption is that they will pay."
Argentina will have a 30-day grace period from October 15 on the
US$809 million loan. If no payments are made after that,
Argentina will not be granted any more loans from the bank.
Sixty days after the grace period, the bank would stop
reimbursement of existing loans to the country.
Argentina is trying to reach an agreement with the International
Monetary Fund by the end of this month. The country needs aid to
cover the payments to multilateral lenders.
The country's economy collapsed by the end of last year, causing
it to default on some of its bonds.
=============
B E R M U D A
=============
TYCO INTERNATIONAL/FOSTER WHEELER: On U.S. Govt.'s Watch List
-------------------------------------------------------------
Tyco International and Foster Wheeler Ltd. are two of the three
Bermuda companies that are now on the U.S. Government's hit list.
According to a report by the Bermuda Sun, the General Accounting
office, the investigative arm of the U.S. Congress, revealed in a
report that the two companies have contracts with the U.S.
Government but are incorporated in tax havens.
The report was issued following requests by Representative Henry
Waxman of California and Representative Jim Turner of Texas. The
Democratic Party is pushing legislation to punish U.S.-based
companies that move their headquarters to another location to
reduce its tax bill.
The other Bermuda company is Accenture. Foster Wheeler, Tyco and
Accenture had US$780 million in U.S. Government contracts for
2001.
A bill sponsored by Senator Paul Wellstone of Minnesota would bar
companies that performed corporate inversions from receiving U.S.
Government defense contracts.
Tyco had more than $200 million in U.S. Government contracts, of
which more than US$150 million were in with the U.S. Defense
Department. Tyco has been Bermuda-based since 1997, when it
completed a merger with ADT.
CONTACT: TYCO INTERNATIONAL, LTD.
The Zurich Center, Second Floor
Pembroke HM 08, Bermuda
Phone: (441) 292-8674
FOSTER WHEELER
Media: Sherry Peske, 908/730-4444
Other Inquiries: 908/730-4000
TYCO INTERNATIONAL: Considering HQ Move
---------------------------------------
Tyco International Ltd. is currently deliberating on moving the
Company's headquarters to the United States, after being based in
Bermuda since 1997.
The Financial Times reported Monday that the move is part of the
Company's effort to remove doubts on its transparency and
corporate governance.
Tyco incorporated in Bermuda five years ago after its reverse
takeover of ADT, which was already registered there. Since
Bermuda is considered as a tax haven, there are speculations that
the Company evaded tax and regulatory scrutiny under its former
CEO L. Dennis Kozlowski, who was indicted last month on
corruption charges.
The Company confirmed that its new CEO Edward Breen is "taking at
fresh look" at the issue of where Tyco should be registered, but
has not made decisions for changes.
Jack Krol, one of Tyco's lead directors said that reincorporating
somewhere else would improve the Company's image with regards to
its accountability. The United States is a likely candidate as to
where the Company should reincorporate. However, Krol added that
if the cost of reincorporating somewhere else would be too
expensive, Tyco would remain in Bermuda.
In Bermuda, Tyco would enjoy a lower effective tax rate.
Earlier, Breen had said that they are conducting a "top-to-
bottom" review of the tax structure.
The Company had expected the tax rate for the recent fiscal year
to be 22 percent, rather than 18.5 percent. Because of this, the
Company had cut its earnings projection for this year's final
quarter.
TYCO INTERNATIONAL: Filing Arbitration Claim Against Ex-CFO
-----------------------------------------------------------
Tyco International is planning to file an arbitration claim
against its former chief financial officer, Mark Swartz, by this
week, if not today.
According to a report released by the Wall Street Journal, the
Company seeks repayment of severance and other compensation paid
to Swartz, amounting to tens of millions of dollars.
Swartz, along with the Company's former chief executive officer
Dennis Kozlowski, was indicted last month on charges of grand
larceny and enterprise corruption. Both of them pleaded not
guilty.
Tyco prepared the arbitration claim after facing criticism for
paying Swartz about US$45 million in severance pay.
Tyco had earlier said that the amount was justified, as it was
under a binding contract. Swartz received US$9.1 million in a
lump-sum severance deal, plus US$24.5 million from an executive
life- insurance plan and US$10.4 million from a deferred-
compensation plan under the said departure agreement.
The severance agreement between Swartz and Tyco provides that the
Company can't sue Swartz. However, the Company must file any
claim against him with an arbitrator.
Legal experts say Tyco is seeking repayment of the US$45 million
severance pay, and may even go after the money Swartz had
allegedly swindled from the Company.
The arbitration proceedings would not be public.
CONTACT: Tyco International Ltd.
Corporate Office
The Zurich Centre, Second Floor
90 Pitts Bay Road
Pembroke HM 08, Bermuda
Phone: 441-292-8674
Home Page: http://www.tyco.com
===========
B R A Z I L
===========
AES SUL: Moody's Cuts Ratings To B3
-----------------------------------
AES Sul Distribuidora Gaucha de Energia S.A., a Brazilian
electric distribution company based in Rio Grande do Sul, had its
ratings downgraded by Moody's Investors Service.
The ratings agency lowered AES Sul's senior secured BRL250
million debt issue to B3 from B1 (global local currency scale)
with a negative rating outlook.
The downgrade reflects mounting pressure that AES Sul is facing
in an environment in which new financing is difficult, the
Company's weakened financial performance due to rationing related
lower electricity consumption, and the uncertain regulatory
prospects for the full recovery of power costs.
AES Sul currently has a US$300-million US dollar denominated bank
loan. Its near term liquidity is contingent upon its bankers'
willingness to extend the maturity of the loan, as well as its
ability to restructure the repayment of the BRL187.5 million in
debentures.
AES Sul is 96.7%-owned by U.S.-based AES Corp.
New York
Daniel Gates
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Robert Johnson
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
CEMAR: Data Room Now Open
-------------------------
Maranhao state distributor Cemar revealed that Brazil's power
regulator Aneel has opened a data room containing information
about the utility and will keep it open until October 21, relates
Business News Americas.
Cemar, which is 90%-owned by US power company PPL Global, filed
for protection from creditors in August this year after Aneel
rejected the proposed sale of the Company to U.S.-based
investment company Franklin Park for US$1. Rejection came after
creditors claimed that the terms of the deal were unacceptable.
Subsequently, Aneel intervened Cemar and appointed Sinval Zaidan
Gama to run the Company and seek new investors.
Companies have until October 24 to present pre-qualification
documents, including their proposals for the Company and their
agreement to abide by terms set by PPL Global.
Aneel expects to publish the list of pre-qualifiers by November
1. Companies will then have until November 29 to present their
financial proposals and confirmation of their agreement with
creditors.
Aneel will then select the best proposal by December 16, and
expects to complete the transfer of control by December 20.
TCR-Latin America reported Cemar has been hurt by declining power
demand and losses triggered by nine months of power rationing
that ended in March. The drop in revenue forced the Company to
miss payments on its BRL560 million (US$180 million) debt and
forced PPL Corp. to write off all of its US$317 million
investment in the unit.
CONTACT: COMPANHIA ENERGETICA DO MARANHAO
Av. Colares Moreira, 477
65075-441 - Sao Luiz- MA
PHONE: (98) 217-2119
FAX: (98) 235-3024
WEBSITE: http://www.cemar.com.br/
CREDITORS: CENTRAIS ELETRICAS BRASILEIRAS S.A. - ELETROBRAS
Avenida Presidente Vargas 409, 13 Andar
20071-003 Rio de Janeiro Brazil
Phone: (21) 2514-5151
Fax: +55-21-2242-2697
Home Page: http://www.eletrobras.gov.br
Contacts:
Cladio da Silva avila, President
Jose Alexandre Nogueira de Resende, Director of
Financial and Market Relations
Investor Relations Division
Phone: (0XX21) 2514-6207 / 2514-6333
Av. Presidente Vargas, 409 - 9 andar
20071-003 - Rio de Janeiro - RJ
Email: arlindo@eletrobras.gov.br
CENTRAIS ELETRICAS DO NORTH DO BRAZIL - ELETRONORTE
Av. Presidente Vargas, 489 -13 andar.
20071-003- Rio do Janeiro RJ
Phone: + (55+61) 429 5139
Fax: +(55+61) 328 1373
E-mail: elnweb@eln.gov.br
Home Page: http://www.eln.gov.br/
Contact:
Mr. Arlindo Soares Castanheira, Investor Relations
Phone: 55 21 2514.6331
55 21 2514.6333
Fax: 55 21 2242.2694
E-mail: arlindo@eletrobras.gov.br
FLEETBOSTON FINANCIAL CORP.
100 Federal Street
Boston, MA 02110
Phone: (617) 434-2200
Fax: (617) 434-6943
URL: http://www.fleet.com/home.asp
MAJOR SHAREHOLDERS:
PPL GLOBAL (90%)
11350 Random Hills Road
Suite 400
Fairfax, VA 22030
Phone: 703-293-2600
Fax: 703-293-2659
William F. HechtChairman, President/CEO
John R. Biggar, Executive Vice President/CFO
EMBRATEL: Welcomes New CFO
--------------------------
Norbert Glatt, a former chief financial officer at Globo.com, the
Internet arm of Latin America's largest media company
Organizacoes Globo, joined Embratel Participacoes SA as the
Company's chief financial officer.
Glatt, according to Bloomberg, replaced Jose Maria Zubiria, the
CFO since August 2000, who now will be in charge of small
business and residential service.
The management shakeup comes as Brazil's largest long-distance
telephone company tries to cut costs, reduce debt and boost
revenue from new businesses such as its local service.
Embratel, a unit of the embattled U.S.-based WorldCom Inc., has
posted losses every quarter for the past 18 months and has seen
expenses soar the past months because of the effect of a weaker
currency in its dollar-denominated debt.
At the end of June, the long distance operator had BRL4.38
billion (US$1.19 billion) in debt. In a bid to increase sales
this year, it began offering local services to corporations.
CONTACT: EMBRATEL PARTICIPACOES S.A.
Investor Relations
Silvia Pereira
Tel. (55 21) 2519-9662
Fax: (55 21) 2519-6388
Email: Silvia.Pereira@embratel.com.br
invest@embratel.com.br
or
Press Relations:
Helena Duncan/Mariana Palmeira
Tel: (55 21) 2519-3653/3654
Fax: (55 21) 2519-8010
Email: hduncan@embratel.com.br
mpalm@embratel.com.br
EMBRATEL: Kicks Off Local Telephony Services In November
--------------------------------------------------------
Roberto Duraes, Embratel's local services director, informed
telecoms news agency World Telecom Online that the Brazilian long
distance operator will launch next month local telephony
services, relates Business News Americas.
The launching was originally scheduled to take place at an
earlier date but tough interconnection negotiations hampered the
plans.
Initially, Embratel will offer local services in two cities, the
names of which were not disclosed. Next year, it will expand to
all state capitals.
Though the corporate segment will be Embratel's priority in its
new local services unit, a later move into residential local
telephony is not out of the question, Duraes said. An entrance
into the residential segment will be more likely if unbundling
regulations become more favorable for those operators needing to
rent last-mile coverage from local incumbents, he added.
RHODIA-STER: Parent Bids Goodbye To Polyester Sector
----------------------------------------------------
Rhodia made its exit from the polyester sector following the
recent closure of the sale of its Rhodia-ster polyester business
in Brazil to Gruppo Mossi Ghisolfi.
The value of the transaction wasn't disclosed but according to a
report by the Bermuda Sun, Rhodia was forced to lower the sale
price originally agreed in July due to the Brazilian downturn.
Nevertheless, the transaction is expected to cut the company's
debt by EUR190 million.
Separately, in an interview with Les Echos, Rhodia Chairman Jean-
Pierre Tirouflet announced that with the completion of the sale,
three-quarters of its EUR500-million disposals program is now
complete.
He said businesses sold to date generated five times their
average annual EBITDA.
He said he expects the program to raise more than EUR500 million
by the end of the year and that Rhodia does not "rule out going
even further", selling more assets, if demand is favorable.
However, he said that a break-up of the group by activity would
be misguided and "risky". Tirouflet said group net debt will fall
by around a third, to below EUR2 billion, from the level at end-
2001, but said that while the financial situation is improving
rapidly it is too early to say whether Rhodia will break even
after posting a EUR218-million net loss last year.
He said the group has just rescheduled its debt repayments.
=========
C H I L E
=========
ENERSIS: Parent's Shares Down Following Revelation of Plans
-----------------------------------------------------------
Shares of Endesa SA, Spain's largest power company, on Monday
fell as much as 24 cents, or 2.5%, to EUR9.31, and were down 2%
as of 9:51 a.m. in Madrid.
The dip in the Company's shares, according to Bloomberg, came
after Endesa revealed plans to exchange loans given to its
Chilean unit into stock, increasing its investment in the region,
where earnings are falling because of devaluations.
On Friday, Chile's Enersis SA unit, South America's second-
biggest energy company, said it will sell assets and shares worth
as much as US$1.5 billion as part of an effort to cut its US$9.3-
billion debt. Endesa, which controls 65% of the unit, is willing
to exchange as much as US$1.5 billion of debt owed by its unit,
Chief Financial Officer Jose Luis Palomo said last month.
To see financial statements:
http://bankrupt.com/misc/Enersis.pdf
CONTACT: ENERSIS
Investor Relations:
Ricardo Alvial
Chief Investments & Risks Officer of Enersis
Email: ram@e.enersis.cl
Phone: (562) 353-4682
Susana Rey, srm@e.enersis.cl
Ximena Rivas, mxra@e.enersis.cl
Pablo Lanyi-Grunfeldt, pll@e.enersis.cl
ENERSIS: Ditches Plans to Expand In Latin American
--------------------------------------------------
Enersis SA discarded plans to expand in Latin America as it
battles with plunging currencies in Brazil and Argentina, and
lower Argentine energy prices, says Bloomberg.
Enrique Garcia, Enersis chief executive, announced that
investment next year will be a "little less" than this year. In
August, the Company announced investment next year would rise to
US$400 million from US$350 million this year.
The plan is "not to grow now," Garcia said.
Enersis, which began an expansion abroad with the purchase of a
Buenos Aires distributor in 1992, hasn't begun to negotiate an
increase in energy prices with the Argentine government. Enersis
asked the government, which sets energy prices, to increase rates
to end-users by 30%. Garcia said that earlier in the year, the
company expected the talks to be completed by now. At this point,
he said, no new rates are likely before June.
Enersis' revenue from Argentina accounted for almost 30% of sales
prior to the peso devaluation. The currency has plunged 73% this
year.
Revenue during the second-quarter fell 26% to CLP548.4 billion
from CLP745 billion a year ago after currency declines in the
countries in which it has businesses. Net income rose 14% to
CLP7.7 billion from CLP6.7 billion a year earlier because of one-
time gains related to changes in Chilean accounting rules.
ENERSIS: Peruvian Asset May Not Escape Divestment Plan
------------------------------------------------------
Edegel, the Peruvian unit of the Santiago-based Latin American
energy group Enersis, could also go on the auction block,
suggests Reuters.
Enersis, although it only named Chilean subsidiaries in its
divestment plan, said it is now considering the sale of its
Peruvian asset.
"In Peru, we're looking at the possibility of selling the
transmission lines of our subsidiary Edegel," Hector Lopez,
Endesa Chile's Chief Executive Officer, told reporters.
Edegel is controlled by the Enersis unit, Endesa Chile.
The Company, which has a generating capacity of more than 850
megawatts with 10 power stations, supplies Peru's northern
transmission grid via its own transmission lines.
Edegel supplies 22% of the energy in the grid.
===========
M E X I C O
===========
BANRURAL: Replacement Awaits Bill Submission
--------------------------------------------
The Mexican government is yet to submit a bill that would create
a replacement for Banrural, the agricultural development bank
that it decided to liquidate in June.
According to Business News Americas, legislators are still
debating how to finance the new entity and address the issue of
pensions for the 2,000-3,000 Banrural employees who will lose
their jobs.
To liquidate Banrural would require some MXN38 billion - MXN43
billion (US$3.7bn-4.2bn), rather than the MXN30 billion estimated
in June.
At the end of May this year, past-due loans made up 45% of the
100,442 loans in Banrural's portfolio, amounting to MXN6.1
billion out of a total portfolio of MXN14.5 billion. By year-end,
the bank is expected to register a loss of MXN36 billion, up from
MXN27 billion in 2001.
The bank has a total workforce of 3,489 active employees and
8,556 pensioners. The latter account for 34% of the bank's
operating costs.
CONTACT: BANRURAL
Agrarianism No. 227
Col. Escandsn
Deleg. Miguel Hidalgo
11800 Mexico, D.F.
Lada 01
Phone: 57-23-13-00
Home Page: www.banrural.gob.mx/
Contact:
Dr. Jose Antonio Meade Kuribreqa, Main
Directorate
Agrarianism no. 227 70 floor
Ext. 2000
Fax Dir. 5230-1639
Fax 1639
DIXON TICONDEROGA: Announces Successful Debt Restructuring
----------------------------------------------------------
Dixon Ticonderoga Company (Amex: DXT) announced Monday that it
closed the refinancing and restructuring of its U.S. debt through
2005. The company's new senior lender, Foothill Capital
Corporation, has provided a three-year $28 million senior
facility which replaced the company's previous senior debt with a
consortium of banks. The new senior debt agreement provides the
company with an estimated $5 million in increased working capital
liquidity that will be available both for operations and to make
certain subordinated debt payments. At the same time, the
company completed an agreement with its subordinated lenders to
extend the maturity date of its subordinated notes to
2005. Under the agreement, the Company expects to pay up to $8
million to its subordinated lenders (in addition to $1 million in
principal and accrued interest of approximately $2 million paid
at closing) over the next three years. As part of the new
agreement, should the company be unable to make any portion of
the $8 million when due, the subordinated lenders will receive
new warrants equivalent to approximately 1.6% of the Company's
outstanding common stock for each $1 million in unpaid
principal. The subordinated lenders will also continue to hold
warrants (expiring September 2003) to purchase 300,000 shares of
company common stock at a price of $7.24 per share. Other terms
of the new debt agreements are generally consistent with the
description in the company's last quarterly report on Form 10-Q.
Commenting on the closing, Chairman and Co-Chief Executive
Officer Gino N. Pala said: "The successful completion of this
major debt restructuring stabilizes our capital structure and
provides us the liquidity necessary to now move our company
forward towards growth and enhanced profitability."
Dixon Ticonderoga Company, with operations dating back to 1795,
is one of the oldest publicly held companies in the U.S. Its
consumer group manufactures and markets a wide range of writing
instruments, art materials and office products, including the
well-known Ticonderogar, Prangr and Dixonr brands. Headquartered
in Heathrow, Florida, Dixon Ticonderoga employs approximately
1,450 people at 12 facilities in the U.S., Canada, Mexico and the
U.K. The company has been listed on the American Stock Exchange
since 1988 under the symbol DXT.
CONTACT: DIXON TICONDEROGA COMPANY
Gino N. Pala, Chairman
+1-407-829-9000
Web site: http://www.dixonticonderoga.com
VENTURE HOLDINGS: Moody's Downgrades All Ratings
------------------------------------------------
Moody's Investors Service downgraded all ratings for Venture
Holdings Company, LLC, the ratings agency said following a
recently concluded review for possible downgrade of Venture's
ratings.
Moody's rating outlook is negative.
The downgrade follows an October 1, 2002 ruling by the German
district court to start formal insolvency proceedings against
German automobile parts producer Peguform, Venture's largest
subsidiary.
The following rating actions were taken:
- Caa1 Downgrade to Caa1, from B2, of the ratings for Venture's
approximately $390 million of remaining guaranteed senior secured
bank credit facilities, consisting of:
(a) $175 million guaranteed senior secured revolving
credit facility maturing 2004;
(b) $75 million ($32 million remaining) guaranteed senior
secured term loan A maturing 2004;
(c) $200 million ($182 million remaining) guaranteed senior
secured term loan B maturing 2005
- Caa3 Downgrade to Caa3, from Caa1, of the rating for $125
million of 11% guaranteed senior notes due 2007, issued by
Venture and guaranteed by its material domestic subsidiaries;
- Caa3 Downgrade to Caa3, from Caa1, of the rating for $205
million of 9.5% senior notes due 2005, issued by Venture together
with its material domestic subsidiaries;
- Ca Downgrade to Ca, from Caa2, of the rating for $125 million
of 12% guaranteed senior subordinated notes due 2009, issued by
Venture and guaranteed by its material domestic subsidiaries;
- Caa1 Downgrade to Caa1, from B2, of Venture's senior implied
rating;
- Caa3 Downgrade to Caa3, from Caa1, of Venture's senior
unsecured issuer rating
The German district court has retained the previously appointed
temporary administrator to act as the administrator in the formal
insolvency proceeding, says Moody's. The administrator now
officially controls decisions regarding Venture's operations
within Germany, France, Spain, Mexico and Brazil.
Preliminary insolvency proceedings had been initiated against
Venture's Peguform subsidiaries on or about May 28, 2002. Despite
indications that significant progress had been made with
negotiations among the company's bankers, customers, and possibly
other constituents with regard to efforts to obtain the
approximately 200 million of additional financing commitments
determined by the administrator to be necessary to extract the
Peguform assets from insolvency, the company was unable to comply
with the September 30, 2002 deadline.
The institution of formal insolvency proceedings against
Venture's largest subsidiary therefore occurred and has
furthermore triggered an event of default under the company's US-
based senior secured bank credit agreement.
As a result, the Company's bank group now has the ability, but
not the obligation, to accelerate repayment of all of the
outstanding guaranteed senior secured bank debt. Acceleration of
the bank debt would invariably result in bankruptcy proceedings
for the company's US operations. Moody's expects that without a
substantial reduction in bank outstandings the banks could not
avoid acceleration in the absence of an indefinite deferral of
the approximately US$24 million of aggregate bond interest
payments coming due in December 2002 and January 2003.
=================================
T R I N I D A D & T O B A G O
=================================
CLEVELAND-CLIFFS INC.: Expects Non-Cash Charge for Facility
-----------------------------------------------------------
Cleveland-Cliffs Inc (NYSE: CLF) announced Monday that it
anticipates it will record a significant non-cash charge against
its results of operations for the third quarter ended September
30, 2002. This non-cash charge is the outcome of the Company's
continuing analysis of the potential impairment of its Trinidad
HBI plant, Cliffs and Associates Ltd. (CAL).
Cliffs also expects that this charge will be followed in the
fourth quarter ending December 31, 2002 by a significant non-cash
charge to equity for required increases to its minimum liability
under its defined benefit pension plans. The Company remains in
compliance with its $70 million senior notes; however, once the
Company is required to record the minimum pension liability, the
Company will need to negotiate a waiver of one of the financial
covenants in its senior notes. In addition, various studies are
currently underway with respect to the Company's investment in
the Empire Mine, located in Michigan, which could result in
additional charges in 2002.
Cliffs currently has over $70 million of cash on hand, which is
in excess of its anticipated seasonal needs. The Company has
repaid its outstanding borrowings under its revolving credit
agreement, which was then terminated by the Company.
Cliffs has determined that its investment in CAL, which is 82
percent owned, is impaired as of September 30, 2002. CAL's HBI
plant continues its extended shutdown of operations, and no final
decision has been made with respect to the facility. Cliffs does
not currently believe that HBI product pricing is sufficient to
justify resuming operations at the plant. The Company has
concluded that it will record an asset impairment charge in the
third quarter as future cash flows are no longer expected to
exceed the carrying value of the assets, and that its investment
in CAL must be written down to market value. The Company expects
that the impairment charge will be for its entire investment in
CAL, resulting in a loss of approximately
$100 million recorded in the third quarter and a corresponding
reduction in shareholders equity by $100 million. The Company
does not expect to record an offsetting deferred tax asset for
this write-down. In addition, there could be additional shutdown
costs, currently not expected to exceed $30 million, if the
decision were made to permanently close the facility.
Like many other publicly held companies with defined benefit
pension plans, Cliffs has been reviewing its return on assets and
discount rate assumptions for the defined pension benefit plans
for its employees and those of its associated companies in light
of current conditions in the financial markets. Due to the sharp
decline in the value of the equity holdings of its various
pension trusts and lower interest rates, Cliffs expects that the
December 31, 2002 value of the assets for pension plans will be
lower than previously anticipated and will be lower than the
accumulated benefit obligation (ABO). When the ABO exceeds the
market value of the assets of the plans, SFAS No. 87 "Employer's
Accounting for Pensions" requires that an additional minimum
liability equal to this excess amount plus the previously
recognized pension asset be recorded. This expected liability
will be calculated and recorded at the next measurement date of
the plan, which is year-end. Based on current asset values,
management expects that a required additional minimum liability
of between $125 million and $150 million and an intangible asset
of about $25 million will be recorded, resulting in a charge to
equity of between $100 and $125 million without any tax
benefits. The actual return on plan assets for the year 2002 and
changes in the calculated liability due to assumed discount
(interest) rates could materially affect these amounts. This
charge does not affect pension funding requirements in the near-
term. In 2001, the Company, including its share of associated
companies, funded $.4 million, compared to pension expense of
$4.4 million. In 2002, the Company, including its share of
associated companies, expects to fund about $1.5 million,
compared to pension expense of about $7.5 million. In 2003, the
Company's expected pension funding is less than $3 million.
The Empire Mine, located in Palmer, Michigan, is owned by
subsidiaries of Ispat International N.V. and Cliffs. LTV
Corporation, formerly a 25 percent owner in Empire, ceased
operations and rejected its interest in the mine earlier this
year. Cliffs is currently in discussion with Ispat regarding the
future of the Empire Mine. The Empire Mine has been operating
since earlier this year under an interim agreement between Cliffs
and Ispat, which terminates at the end of 2002. The mine is
expected to produce nearly 3.7 million tons of pellets this year.
Cliffs periodically conducts a formal evaluation of its iron ore
reserves at all mining locations, which includes the effect of
changes in the cost of producing pellets from the respective ore
reserves. In the case of Empire, the impact of any rise in cost
is particularly significant. Various mine planning studies are
underway to determine the economic mine life at Empire. The
studies have not yet been completed, but are expected to result
in a shortened mine life at Empire, which combined with rising
costs, may require an impairment charge for all or some portion
of Cliffs' investment in Empire. If Cliffs were to take an
impairment charge for its entire investment in the mine, the
potential impact would be in the $40 million to $50 million
range. These charges assume the continued operation of the mine;
there would be substantial additional costs associated with
closure of the mine in the near term. Cliffs does not currently
expect closure to occur.
Additionally, if the Company elects to implement SFAS No. 143
"Accounting for Asset Retirement Obligations" this year, there
would be an additional non- cash charge presently estimated at
$20 million relating to its various mine ownerships, including
the Empire Mine.
John S. Brinzo, Cliffs' Chairman and Chief Executive Officer,
said, "The write-down of our investment in CAL is unfortunate,
but dictated by market realities. However, we want to reiterate
that our iron ore business fundamentals are improving. Neither
the asset impairment charge nor the pension liability charge will
adversely affect 2002 or 2003 cash flow. Our sales outlook is
improving. We are likely to sell 15 million tons of pellets this
year. Our mining operations have been operating at capacity
since August, and we expect to continue to operate all of the
mines at capacity in 2003, except possibly Empire, where future
operations are subject to a mutually acceptable agreement between
Cliffs and Ispat. We currently expect to be sold-out for
2003. All of these factors give me confidence that we can
achieve a satisfactory resolution with our senior note holders."
Brinzo added, "In the meantime, we continue to focus on servicing
the steel industry and meeting our obligations to customers,
suppliers and employees. To compete successfully, we must
challenge our existing business practices, streamline operations,
improve productivity, and reduce our cost structure at an
accelerated pace. We are committed to our business of supplying
raw materials to the steel industry and restoring value."
Cleveland-Cliffs is the largest supplier of iron ore products to
the North American steel industry. Subsidiaries of the Company
manage and hold equity interests in five iron ore mines in
Michigan, Minnesota and Eastern Canada. Cliffs has a major iron
ore reserve position in the United States and is a substantial
iron ore merchant. References in this news release to "Cliffs"
and "Company" include subsidiaries and affiliates as appropriate
in the context.
CONTACT: CLEVELAND-CLIFFS INC
Media: Ralph S. Berge, +1-216-694-4870
Investor Relations: Fred B. Rice, +1-800-214-0739
+1-216-694-5459
Web site: http://www.cleveland-cliffs.com
***********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter Latin American is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ,
and Beard Group, Inc., Washington, DC. John D. Resnick, Edem
Psamathe P. Alfeche and Ma. Cristina Canson, Editors.
Copyright 2002. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Latin America subscription rate is $575 per half-year,
delivered via e-mail. Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are $25 each. For subscription information,
contact Christopher Beard at 240/629-3300.
* * * End of Transmission * * *