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/raid1/www/Hosts/bankrupt/TCRLA_Public/021011.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Friday, October 11, 2002, Vol. 3, Issue 202 Headlines A R G E N T I N A AEROLINEAS ARGENTINAS: Majority of Creditors Approve Debt Plan BELLSOUTH CORP.: Sticking With LatAm Despite Economic Woes IMAGEN SATELITAL: Claxson Extends Sr. Notes Exchange Offer BANCO SUDAMERIS: Two Groups Struggle For Control * Argentina to Default on $250M WB-Guaranteed Bonds * S&P To Put Argentina On CreditWatch, Developing Implications B E R M U D A TYCO INTERNATIONAL: Auditors Probed B O L I V I A COTEL: Committee To Set Date For Board Election KORI KOLLO: To Be Mined-Out Early Next Year B R A Z I L AES CORP.: LatAm Subs Ratings Remain Unchanged Following Cut EMBRATEL: Wins US$12.9mn Basa Contract NET SERVICOS: Postpones Extraordinary Meeting to October 28th C H I L E AES GENER: S&P Warns Of Possible Rating Cut ENAMI: Codelco Not Keen On Taking Over Ventanas MADECO: Fitch Cuts Ratings On Tightening Liquidity C O L O M B I A EMCALI: Government Expedites Solution To Financial Problems M E X I C O VITRO: To Issue Six-Year MXN360M Medium Term Note P E R U EDEGEL: Sale Part Of Bid To Improve Parent's Financial Standing MINERA VOLCAN: Workers End Strike After Accepting Wage Proposal V E N E Z U E L A FERTINITRO FINANCE: Moody's Cuts Ratings; Outlook Negative - - - - - - - - - - ================= A R G E N T I N A ================= AEROLINEAS ARGENTINAS: Majority of Creditors Approve Debt Plan -------------------------------------------------------------- Aerolineas Argentinas SA, Argentina's largest airline, got most of its creditors to agree to its debt proposal aimed at ending bankruptcy proceedings, company spokesman Julio Scaramella explained in a Bloomberg report. According to the spokesman, the airline, which filed for creditor protection in June 2001, proposed to write down 60% of its debt with banks and suppliers and pay the remainder by the end of 2004. Aerolineas has debts of some ARS2.5 billion (US$674 million) with banks and suppliers, such as oil company Repsol YPF SA. However, a spokesman for Aeropuertos Argentina 2000 SA said that the country's biggest airport operator will not sign the proposal. "We're not going to sign," said Sergio Resumil, spokesman for Aeropuertos Argentina 2000 SA, adding, "We hoped for a better proposal." The operator is one of several creditors that lent to Aerolineas in dollars and now will be repaid in pesos at below-market rates, Resumil said. Government decrees allowed the airline to convert US$50 million owed to Aeropuertos into ARS50 million, or US$13.5 million at today's exchange rate. "That means the 60% write-off is more like 85%," Resumil said. Shareholders and creditors must formally approve the debt accord in meetings later this month, said Ariel Basteiro, an Argentine congressman and leader of the airline workers' labor association. The Spanish government sold Aerolineas Argentinas SA to Air Comet for US$615 million in debt. SEPI, the Spanish government holding company that owned Aerolineas since 1990, kept the other half of the airline's US$1.2 billion debt. According to Scaramella, Aerolineas began to show a profit in July following losses that reached US$1 million a day last year. CONTACT: AEROLINEAS ARGENTINAS Torre Bouchard 547, 1106 Buenos Aires, ARGENTINA Phone: (54-11) 4310-3000 Fax: (54-11) 4310-3585 E-mail: volar@aerolineas.com.ar Home Page: www.aerolineas.com.ar Contact: Patricio Zabalia Lagos, President AIR COMET Baha de Pollensa, 21-23 Edificio Airplus 28042 Madrid Phone: 913 993 674 Fax: 913 291 146 E-mail: airplusops@jet.es Contact: Antonio Mata, presidente de Air Comet BELLSOUTH CORP.: Sticking With LatAm Despite Economic Woes ---------------------------------------------------------- Despite posting a 19.8% drop in Latin American revenue and writing off US$354 million from currency devaluations last quarter, BellSouth is choosing to remain in the recession plagued region. The announcement prompted market observers to ask what an Atlanta-based local phone company is doing so far from home, in a region plagued by economic volatility and political uncertainty. The Company, which has wireless operations in 11 Latin American countries, arrived in the region 14 years ago, investing billions buying wireless licenses, building networks and establishing its brand. Now, it could not recoup that money if it bailed out now, said Bill Norton, a telecommunications analyst who worked for the Baby Bell for 18 years. "BellSouth finds itself with an asset that, if put on the market now, would be significantly undervalued," Norton said. However, some believe that if Latin America can right itself, opportunities for BellSouth are enticing. Telecommunications research firm Yankee Group estimates 16% of the region's population uses wireless phones. It predicts penetration will grow to 26% by 2006. BellSouth is the second-largest wireless brand in a region with a need for better phone service, said financial analyst Drake Johnstone of Davenport & Co. "It would seem silly to throw in the towel because they hit a rough spot." The Company expected tough times when it entered Latin America in the late 1980s. But back then, BellSouth's local phone business in nine Southeast states was a moneymaker that mitigated the risk. Today, the same wireless technology that made Latin America so promising a market is eating away at BellSouth's core business at home. Businesses and consumers are replacing wired lines with wireless phones. They also are tightening belts and spending less on telecommunications. Competitors are wooing BellSouth's customers, and many are getting to those customers via lines BellSouth is required to lease. "We've had all of these things happen, and so many are outside of our control. We can't control economic conditions here or in Latin America," said BellSouth spokesman Jeff Battcher. "We can control our costs." To that end, BellSouth has cut jobs throughout the region and consolidated customer service, network and billing operations across several countries. It is launching multicountry advertising campaigns. It also sliced this year's capital expenditure in the region to US$300 million from the US$500 million spent in 2001. Still, it's a struggle. In Argentina, once considered a model of Latin American economic reform, wireless phone companies have lost 800,000 customers, said Alejandro Prince, an Argentine telecom analyst. Movicom-BellSouth has lost a fifth of its Argentine customers since last year. Some of the region's losses are offset by impressive growth. In Ecuador, BellSouth nearly doubled its wireless customer base between mid-2001 and mid-2002. But across Latin America, customer rolls grew just 2 percent during the same period. In September, BellSouth withdrew a plan to sell up to US$1 billion of its Latin America Group common stock. Issuing shares that track the Latin America wireless operations no longer fits its strategy, BellSouth said. CONTACT: BELLSOUTH CORPORATION 1155 Peachtree St. NE Atlanta, GA 30309-3610 Phone: 404-249-2000 Fax: 404-249-5599 Home Page: http://www.bellsouth.com Contacts: Investor Relations Phone (US): 800.241.3419 Fax: 404.249.2060 E-mail: investor@bellsouth.com IMAGEN SATELITAL: Claxson Extends Sr. Notes Exchange Offer ---------------------------------------------------------- Claxson Interactive Group Inc. (Nasdaq: XSON) ("Claxson") announces an extension of its pending exchange offer and consent solicitation (the "Exchange Offer") for all U.S.$80 million outstanding principal amount of the 11% Senior Notes due 2005 (144A Global CUSIP No. 44545HHA0 and Reg S Global ISIN No. USP52800AA04) (the "Old Notes") of its subsidiary, Imagen Satelital S.A. ("Imagen"). The expiration date for the Exchange Offer has been extended from 5:00 p.m. New York City time on October 8, 2002, to 5:00 p.m. New York City time on October 11, 2002, unless further extended. As of 5:00 p.m. October 8, 2002, Claxson had received tenders from holders of approximately U.S.$12.8 million principal amount of the outstanding Old Notes. Informational documents relating to the Exchange Offer will only be distributed to eligible investors who complete and return an Eligibility Letter that has already been sent to investors. If you would like to receive this Eligibility Letter, please contact Tom Long at D.F. King & Co., the Information Agent for the Exchange Offer, at +(1) 212-493-6920, or Eduardo Rodriguez Sapey at Banco Rio de la Plata, the Trustee and Rep. Exchange Agent in Buenos Aires, Argentina at +(54) 11-4341-1013. The new notes will not be registered under the U.S. Securities Act of 1933, as amended, and will only be offered in the United States to qualified institutional buyers and accredited investors in private transactions and to persons outside the United States in off-shore transactions. The new notes will be listed on the Buenos Aires Stock Exchange. Claxson is a multimedia company providing branded entertainment content targeted to Spanish and Portuguese speakers around the world. Claxson has a portfolio of popular entertainment brands that are distributed over multiple platforms through its assets in pay television, broadcast television, radio and the Internet. Claxson was formed in a merger transaction, which combined El Sitio, Inc. and other media assets contributed by funds affiliated with Hicks, Muse, Tate & Furst Inc. and members of the Cisneros Group of Companies. Headquartered in Buenos Aires, Argentina, and Miami Beach, Florida, Claxson has a presence in all key Ibero-American countries, including without limitation, Argentina, Mexico, Chile, Brazil, Spain, Portugal and the United States. CONTACT: Claxson Interactive Group Inc. Press: Alfredo Richard, SVP, Communications +1-305-894-3588 Investors: Ezequiel Paz, AVP, Corporate Finance +1-305-894-3574 BANCO SUDAMERIS: Two Groups Struggle For Control ------------------------------------------------ Two local banks are reportedly vying for the control of Banco Sudameris SA, the local unit of the Italian financial group IntesaBci SpA. IntesaBci, which is planning to announce by the end of October "a total exit from Argentina," is selling its majority stake in Banco Sudameris, a Buenos Aires-based bank, which listed ARS2.1 billion (US$567 million) of assets as of December, making it the country's 14th largest bank. Banco San Luis SA said it is interested in buying the IntesaBci unit. Simultaneously, reports are coming out that Argentine provincial bank Banco Patagonia is already in talks with IntesaBci to acquire the ailing local unit. According to reports, IntesaBci has selected Patagonia on the recommendation of a French consulting firm. Patagonia is one of the banks that has suffered least from Argentina's financial meltdown, and is seen by analysts as a bank that could take advantage of depressed prices to acquire assets. IntesaBci is selling units in Argentina and Brazil, as well as shedding as many as 8,000 jobs worldwide, in a bid to return to profitability after its 1999 purchase of Banca Comerciale Italiana SpA and an increase in bad loans. IntesaBci joins France's Credit Agricole and other banks that sought to limit losses by walking away from their Argentine businesses following the government's default last year on US$95 billion of bonds and devaluation of the currency in January. IntesaBci said it will spend US$100 million to capitalize its Argentine unit before selling a majority stake. The group would also separately inject an unspecified amount of working capital into the bank and may keep a stake in Banco Sudameris. CONTACT: IntesaBci SpA Piazza Paolo Ferrari 10 20121 Milano Italy Tel +39 02 88 441 Fax +39 02 8844 3638 Homepage: http://www.intesabci.it/ Contact: Corrado Passera - Chief Executive Officer Giampio Bracchi - Vice Chairman Gianfranco Gutty - Vice Chairman *Argentina to Default on $250M WB-Guaranteed Bonds -------------------------------------------------- The Argentine government expressed its intention to default on US$250 million zero coupon bonds due October 15. The World Bank will fully pay the bonds, as they are under its guarantee. Argentina will have to pay the amount within 60 days to avoid falling in arrears with the bank, according to a Bloomberg report. The country's economy minister Armando Torres said that the country will pay the World Bank on day 60, the latest possible date. "We will pay on day 60," Economy Ministry spokesman Armando Torres said regarding the guarantee. Should the government fail to pay as required, the World Bank would not be guaranteeing related bonds coming due in 2003 and 2004. World Bank spokesman Christopher Neal said that Argentina had not formally informed the World Bank of its intention to default on the any other bonds. According to the Wall Street Journal, the country is delaying all payments as much as possible, as negotiations with the IMF loans is on its ninth month, with no signs of success. Argentina had also defaulted on US$95 billion worth of bonds last year. While owing US$2.4 billion to the IMF, the World Bank and the Inter-American Development Bank, the country has not missed a single payment to Washington lenders since. * S&P To Put Argentina On CreditWatch, Developing Implications -------------------------------------------------------------- After Argentina announced that it would default on its US$250 million zero coupon Series D notes, Standard and Poor's Rating Service said Thursday that it put on CreditWatch with developing implications the Argentina's US$250 million zero coupon Series E notes with a rating of triple-`C'-plus. The said bonds are due on October 15, 2003. Argentina's US$250 million zero coupon Series F notes due October 15, 2004, rated triple-'C'-plus were also place on CreditWatch with negative implications. The World Bank would pay the Series D notes in full, on its due date, under its guarantee. The Series D, E, and F notes were the last of six US$250 million series issued in October 1999 under the World Bank's "partial rolling reinstatable guarantee" program, under which the World Bank guaranteed in full the first US$250 million Series A notes. The government of Argentina paid the Series A notes, "rolling" the guarantee over to the Series B notes, then to Series C, and finally to Series D. The guarantee would be rolled to Series E only if the Argentine government reimburses the payment on the Series D notes within 60 days. If reimbursement comes after the 60-day period, the guarantee would not be rolled over to the Series E notes. Argentina had announced its intention to reimburse the World Bank within 60 days. Standard & Poor's said that in the event of the payment, the Series E notes would be increased to triple-`A' rating, while the Series F note would be affirmed at triple-`C'- plus. If Argentina fails on its promise to pay, the Series E and F notes would be lowered to triple-`C'-plus, as with the country's other unsecured debt not in default. The rating agency expects to resolve the CreditWatch actions within sixty days, waiting for Argentina's actions on the said reimbursement. ============= B E R M U D A ============= TYCO INTERNATIONAL: Auditors Probed ----------------------------------- PricewaterhouseCoopers LLP auditors in New York face investigation on their involvement with Tyco International Ltd. The Manhattan district attorney is probing whether the auditors should have disclosed a proxy statement that Tyco's former CEO Dennis Kozlowski was paid a bonus worth US$32 million. An unknown source revealed to the Associated Press reports that the inquiry is looking at individual auditors, not the entire firm itself, and that criminal charges are unlikely to be filed. Dabid Nestor, a spokesman for the auditing firm said, "We've been cooperating with the Manhattan district attorney's office on the basis that the firm is simply a witness, a provider of information." Kozlowski, and Tyco's former finance chief Mark Swartz face charges of grand larceny and enterprise corruption. Conviction would require them 25 years in prison. The probe into Tyco's activities had widened to include its auditors. Prosecutors want to know if the auditing form knew of the inaccuracy of Tyco's proxy filings, and of the improper loans and bonuses granted to Kozlowski and other employees. 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 O L I V I A ============= COTEL: Committee To Set Date For Board Election ----------------------------------------------- The electoral committee of Bolivia's La Paz-based local telephony cooperative Cotel was to due to decide yesterday when the election for the Company's administrative and oversight boards should take place. The cooperative, according to Business News Americas, operates under a unique governing structure where power is divided between the two boards. But that structure was thrown into disorder when the Bolivian government intervened Cotel in August 2000 due to a strike that threatened to disrupt services. Less than a year after, Cotel's government appointed manager signed a five-year administrative contract with German telecoms consultancy Detecon. The boards have challenged the legality of the contract and the limits the government set on their powers ever since. "There is enough evidence that the [government's intervention authorities] and the executives of Detecon broke the nation's laws," administrative board chairman Pierre Chain said. "They ran the Company for the last 10 years and accumulated US$60 million in losses, and did nothing about it," Detecon consultant and Cotel CEO Jurgen Kurz said. The election committee has its work cut out because Cotel's charter is unclear on the timing of elections. Articles 60 and 84 stipulate the terms of oversight board members end on October 30, while the administrative board has another year before its next election. However, Article 56b indicates that half the members of each board are to be replaced this year. CONTACT: COOPERATIVA DE TELEFONOS DE LA PAZ-COTEL Avenida Mariscal Santa Cruz 980 La Paz Bolivia Phone: 591 2373432 Fax: 591 2310331 Home Page: Homepage: http://www.cotel-bo.net/ Contact: Jurgen Kurz DETECON Germaniastra? 18 - 20 D-12099 Berlin Telephone : (+49-30) 7508-1100 Fax : (+49-30) 7508-1444 Home page: http://www.detecon.com/ Contact: Karen Litters Phone: (0049) (0)6196-903-131 Fax: (0049) (0)6196-903-465 E-Mail: info@detecon.com KORI KOLLO: To Be Mined-Out Early Next Year ------------------------------------------- Kori Kollo gold mine in western Bolivia's Oruro department will be mined out by early 2003 and the sulfide mill stopped later on the same year, reports Business News Americas. Closure comes, after Denver-based Newmont Mining, holder of 88% of the JV company Inti Raymi and owner of Kori Kollo, saw that exploration at existing and near-mine sites aren't producing enough positive results this year to continue the operation, said spokesperson Doug Hock The open-pit operation is set to produce 250,000oz of gold at cash costs of US$150/oz for Newmont this year, according to Hock. It was originally developed in 1985 by the US's Battle Mountain as an open-pit oxide resource utilizing heap leaching. A mill and processing plant were developed in 1992 to accommodate sulfide resources. Newmont, the world's largest gold producer, took on the mine when it acquired Battle Mountain in early 2001. =========== B R A Z I L =========== AES CORP.: LatAm Subs Ratings Remain Unchanged Following Cut ------------------------------------------------------------ The credit ratings of The AES Corporation's (AES) Latin American subsidiaries remain unchanged following Fitch Rating's downgrade of AES and its US-based subsidiaries. AES' subsidiaries continue to operate normally and, while many have had their own credit issues, have not been affected by the credit pressures on AES. Fitch recently lowered ratings on AES' debt, following the company's announced launch of a $1.6 billion multi-tranche three- year senior secured credit facility and offer to exchange up to $500 million of senior notes with a combination of cash and secured notes. Fitch provides international credit ratings on a number of AES' larger investments in Latin America. The ratings of AES' Latin American subsidiaries are based on the stand-alone credit quality of each company and do not rely on explicit or implicit support from AES. Further, some are already at or below the ratings of AES. The ratings of the subsidiaries generally reflect their individual financial situations, their positions within their respective countries, and the operating characteristics of their businesses. Further factored into the ratings is the exposure of these companies to currency, political, regulatory and economic risks in Latin America, as well as these companies' track records in responding to these risks. The ratings of the subsidiaries may be separated from those of AES by considering three main points. First, these subsidiaries do not have any interdependency with AES or rely on AES for additional capital or other support. Second, various loan agreements at the operating company levels assert the rights of lenders to the cash flow of the operating company prior to distribution to AES. Also, in some cases, such as Brazil where the company has acquired a concession, regulations generally prevent the impairment of credit quality for the sake of increased equity distributions. And third, the subsidiaries benefit from ring-fencing and insulation under local laws and regulations, which significantly limit the ability of foreign proceedings, bankruptcy or otherwise, to attach assets owned by foreign companies and domiciled abroad. While a US bankruptcy court will have jurisdiction over a US company and could direct it to take action with respect to its own assets (i.e., sell ownership stakes), the US court would not have jurisdiction over the assets of a foreign company, which would allow these companies to avoid a substantive consolidation into the US bankruptcy. The various types of structural insulation of these companies are supportive in assigning a stand-alone credit rating to AES' subsidiaries and limits AES' flexibility to receive extraordinary cash flows from subsidiaries. To illustrate the point and ability of these companies to stand alone, AES is for various reasons unlikely to receive dividends in the near future from AES Gener, Eletropaulo Metropolitana (Eletropaulo), AES Tiete, AES Panama and possibly Electricidad de Caracas (EDC). At AES Gener in Chile, new loan agreements have capped future dividends at the 30% minimum of net income required under Chilean law and require proceeds from asset sales to be used to reduce debt. Fitch maintains local and foreign currency ratings of AES Gener at 'BBB-' with a Negative Rating Outlook. At Eletropaulo, new loan agreements, recent accounting changes that will suppress net income for the next five years, and significant intermediate holding company debt will essentially prohibit distributions up to AES. The current rating of Eletropaulo is 'C'. AES Tiete has intermediate holding company debt that has a priority claim on dividends and will likely use all funds available for debt service in the short-term. The current rating of the structured transaction, AES Tiete Certificates Grantor Trust, is 'BB-' Rating Watch Negative. AES Panama closed a bank loan transaction in September 2002, which was assigned a rating of 'BBB-' that includes a cash sweep to repay lenders, which supports the projects credit rating. This loan is expected to be refinanced in the near term, but until then operating cash flow will be used to repay debt only. Although, EDC paid $60 million of dividends in April 2002, dividends for the remainder of the year may be limited by dividend restriction covenants with multilateral lenders; continued devaluation of the Bolivar may further restrict dividends based on the impact on net income and cash balances. Additionally, AES' ability to extract value from EDC is constrained by the company's by-laws and the required approval of independent directors for agreements between EDC and AES. EDC has local and foreign currency ratings of 'BB-' and 'B', respectively. While dividends are expected to continue to come from AES Clesa in El Salvador, the structural insulation of AES Clesa and minimum net worth covenants with direct lenders to the operating company are supportive in assigning a stand-alone credit rating to AES Clesa and limits AES' flexibility to receive extraordinary cash flows. AES Clesa generally pays dividends based on the prior period's net income (approximately $6 million during 2002). AES Clesa has local and foreign currency ratings of 'BBB-' and 'BB+', respectively. Fitch believes these various protections, country related and structural, provide a measure of insulation for AES's Latin American subsidiaries from the credit issues at AES and at current rating levels, should not pressure the ratings of these entities. CONTACT: FITCH RATINGS Jason Todd, 312/368-3217 (New York) Daniel Kastholm CFA, 312/368-2070 (Chicago) James Jockle, 212/908-0547 (Media Relations/New York) EMBRATEL: Wins US$12.9mn Basa Contract -------------------------------------- Embratel, Brazil's incumbent long distance operator, won a BRL50- million (US$12.9 million contract) with Banco da Amazonia (Basa) reports Business News Americas. Using a variety of access technology, Embratel is set to create a private telecoms network linking the Basa's 100 points of presence in nine states in the Amazon Region. The network would also connect links in Rio de Janeiro and Porto Alegre. Brazil's largest long-distance telephone company has lately been trying to cut costs, reduce debt and boost revenue from new businesses such as its local service, after posting losses for the past six quarters. Problems were compounded when the local currency depreciated, as the company's debts were in dollars. At the end of June, the long distance operator had BRL4.38 billion (US$1.19 billion) in debt. However, things seem to be picking up for Embratel as demands for its services have grown. Earlier, the company had said that they are expecting to increase their network capacity to meet the growing demands. Basa, which is responsible for nearly 80% of all financing in northern Brazil, installed the most extensive private communications network via satellite in the region. CONTACT: EMBRATEL PARTICIPACOES S.A. Investor Relations Silvia Pereira Tel. (55 21) 2519-9662 Fax: (55 21) 2519-6388 Email: Silvia.Pereira@embratel.com.br invest@embratel.com.br or Press Relations: Helena Duncan/Mariana Palmeira Tel: (55 21) 2519-3653/3654 Fax: (55 21) 2519-8010 Email: hduncan@embratel.com.br mpalm@embratel.com.br NET SERVICOS: Postpones Extraordinary Meeting to October 28th ------------------------------------------------------------- Net Servicos de Comunicacao S.A. (the "Company") shareholders are hereby made aware that the Extraordinary General Shareholders Meeting which would be held on October 11th, 2002, at 10 am (Brazilian Time) at the Company's headquarters summoned through the summoning notice, published on September 26th, 2002, has been postponed to be held on October 28th, 2002, maintaining the same time and place to deliberate on the following AGENDA: 1. Approval of the amendments on the Company's 3rd public issue of debentures deed, in the scope of the debt restructuring, which was subject of the relevant notice published on the "Valor Econ�mico" Newspaper on July 16th, 2002, and the amendments of the Company's 2nd public issue of debentures deed, referring to the rendering of guarantees by the Company as in clause 8.1.11 of the first addendum to the first referred deed of the 2nd public issue. 2. To amend the 5th article of the Company By-laws, in order to reflect the capit al stock increase in the amount of R$ 1,223,411,170.80, increasing from R$ 1,525,239,629.31 to R$ 2,748,550,800.11, comprised of 828,371,343 common shares and 1,200,484,187 preferred shares, all being nominatives, inscribed and without nominal value, accordingly to approvals of the Company's Board of Directors' meetings, held on 8.09.2002, 8.19.2002 and 9.25.2002, respectively. 3. To amend the 2nd article of the Company's By-Laws, in order to authorize the Board of Directors to deliberate about the transfer of the Company's headquarters. 4. To elect the new member, as well as, the alternate member of the Company's Board of Directors. In the terms of CVM instruction n# 165/91, amended by instruction n# 282/98, the percentage for the adoption of the multiple voting process, for the election of Board of Directors members is 5% of the voting capital. Shareholders of the Company who are participants of the Brazilian Stock Exchange Custody Program, and who intend to attend the Meeting, will be required to present a statement issued by the Custodian dated no less than 48 (Forty eight) hours prior to the Meeting, showing their holding positions in the Capital Stock of the Company. Sao Paulo, October 9th, 2002 Roberto Irineu Marinho - Chairman of the Board of Directors ========= C H I L E ========= AES GENER: S&P Warns Of Possible Rating Cut ------------------------------------------- AES Gener, a Chilean subsidiary of U.S. company AES Corp., could face a cut on its ratings if it fails to "substantially improve" its liquidity situation by asset sales or other committed funding alternatives by year-end, said credit ratings agency Standard & Poor's. S&P maintains its credit watch negative outlook on AES Gener's BB rating due to the company's tight liquidity situation forecast for 2H03. According to analyst Sergio Fuentes, AES Gener will have to face interest and debt payments for approximately US$140 million in 2003. Fuentes expects that the Company "may have difficulties facing those obligations without sales of non-core assets or other funding sources. This scenario assumes that AES Gener will continue to have restricted access to the credit market." S&P put AES Gener on creditwatch negative on concerns over two put options held by ABN AMRO and Bank of America for US$40 million and US$72 million, respectively. These were renegotiated in July and August 2002, and although this reduced AES Gener's high liquidity contingencies in the short term, they implied higher debt maturities for the period 2002-2004, S&P said. AES Gener is the second largest electricity generation group in Chile in terms of operating revenue and generating capacity with an installed capacity of 1,757 MW composed of 1,512 MW of thermal and 245 MW of hydro generating capacity. The company operates most of the thermal electric power plants in the country. AES Gener serves both the Central Interconnection System (SIC) and Northern Interconnection System (SING) through various subsidiaries and related companies. CONTACT: AES GENER S.A. Mariano Sanchez Fontecilla 310 Piso 3 Santiago de Chile Phone: (56-2) 6868900 Fax: (56-2) 6868991 Home Page: www.gener.com Contact: Robert Morgan, Chief Executive Laurence Golborne Riveros, Chief Financial Officer ENAMI: Codelco Not Keen On Taking Over Ventanas ----------------------------------------------- Apparently, Chile's state copper corporation Codelco is losing an interest in taking over Ventanas copper smelter-refinery on central Chile's coast currently run by state minerals company Enami. Codelco's chief executive Juan Villarzu told Santiago business paper El Diario that the company had been thought to be keen an expanding Ventanas to process more concentrates from the company's Andina division, as part of a plan to boost output at the mine from 250,000t/y to over 400,000t/y. But "Ventanas does not figure in our portfolio," Villarzu told the paper. "I believe it suffers from a basic problem in that it is located in a very narrow place, in a predominantly tourist zone, and so investing in it doesn't make much sense." He said the environmental demands on the plant will become increasingly strict, "and one should think about reducing Ventanas" rather than expanding it. Chile had been considering offloading Ventanas to Codelco as a way to slash Enami's US$480 million debt burden. CONTACT: ENAMI (Empresa Nacional de Mineria) MacIver 459, Santiago, Chile Phone: 637 52 78 637 50 00 Fax: 637 54 52 Email: webmaster@enami.cl Home Page: www.enami.cl/ Contact: Jorge Rodriguez Grossi, President MADECO: Fitch Cuts Ratings On Tightening Liquidity -------------------------------------------------- Mounting uncertainties about Madeco's financial situation prompted credit ratings agency Fitch to downgrade the ratings of the Chilean copper wire and cable manufacturer. According to Business News Americas, Fitch downgraded Madeco's bond rating from BBB- to B and share rating from First Class Level 2 to Second Class Level 5. Fitch indicated in a statement that it is skeptical about Madeco's solvency given the difficulties it is facing to restructure its debts. After completing the first stages of a capital increase of CLP63 billion (US$83.8 million at today's exchange rate) without having met the initial objective of raising a minimum of CLP47 billion, Madeco has had to change its tactics in negotiations with creditors, which has increased doubts about its capacity to meet its financial obligations, Fitch said. Late last year, Madeco hired investment bank Salomon Smith Barney to help it restructure its US$325 million in debts, which consists of roughly US$100 million in long-term bonds, US$120 million in bank loans and US$100 million related to Madeco's subsidiaries. As part of its strategy to raise funds to pay off debts it issued 1.8 billion shares at CLP35 each that were available for take-up from September 9 to October 8. By the end of the first phase of the capital increase that ended on September 23, the Company had only raised CLP37 billion. Also Wednesday, Madeco Series A and Series C bondholders were called to separate extraordinary meetings on October 28 to deal with the Company's financial restructuring plan, via announcements published in local newspapers by Banco Santander- Chile which represents the bondholders. Among other things, bondholders will be asked to agree that bank credits or debts rescheduled under the restructuring plan do not start to be paid off before January 1, 2005. Moreover, bondholders will be asked to agree that Madeco meet all its operational, financial and investment commitments, including long-term financial debts, before pre-paying financial commitments to third parties. Madeco is controlled by the Luksic group's Quinenco holding and its subsidiaries, which have a 56.5% interest in the Company. In addition to cables, Madeco makes finished and semi-finished non-ferrous products based on copper, aluminum, related alloys and optical fiber as well as flexible packaging products for use in the mass consumer market for food, snacks and cosmetics products. To see latest financial statements: http://bankrupt.com/misc/Madeco.doc CONTACT: MADECO S.A. Ureta Cox, 930 San Miguel, Santiago, Chile Phone: 56-2 5201461 Fax: 56-2 5516413 E-mail: mfl@madeco.cl Home Page: http://www.madeco.cl Contacts: Oscar Ruiz-Tagle Humeres, Chairman Albert Cussen Mackenna, Chief Executive Officer Investor Relations Phone: 56-2 5201380 Fax: 56-2 5201545 E-mail: ir@madeco.cl RESTRUCTURING ADVISER: SALOMON SMITH BARNEY HOLDINGS INC. 388 Greenwich St. New York, NY 10013 Phone: 212-816-6000 Fax: 212-793-9086 Home Page: http://www.smithbarney.com Contact: Michael A. Carpenter, Chairman and CEO Michael J. Day, EVP and Controller =============== C O L O M B I A =============== EMCALI: Government Expedites Solution To Financial Problems ----------------------------------------------------------- The Colombian government is accelerating its efforts to help solve the trouble at the insolvent telecoms, water, and power utility Emcali. In a Business News Americas report, national planning director Santiago Montenegro revealed that a rescue plan for the Cali-based utility is expected next month. The plan would include a possible capitalization of the Company, which is expected to begin this March. According to Montenegro, the government is willing to inject COL700 billion (some US$246 million) it has secured from international banks to help the Company deal with its US$316 million pension debt. However, the official said this would only be feasible if the other parties concerned - such as users, the municipality and unions - do their part. Emcali currently has debts totaling US$313 million, of which 54% is with foreign creditors and the remainder with domestic creditors. Public services regulator Superservicios took over control of Emcali in April 2000 to ensure efficient and uninterrupted service, and in April this year, it extended its control of Emcali for another year. Superservicios is helping Emcali regain its financial health. It embarked on a debt restructuring with national banks and suppliers, appraised and sell Emcali's share portfolio; worked on its pension program and revised and renegotiated collective work agreements. URL: http://www.emcali.com.co/ =========== M E X I C O =========== VITRO: To Issue Six-Year MXN360M Medium Term Note ------------------------------------------------ Vitro, S.A. de C.V. (NYSE: VTO; BMV: VITROA) announced that on Thursday it will issue a medium term note (Certificados Bursatiles) in the Mexican market for approximately Ps.360 million maturing on October 2, 2008. The note will bear an interest rate of 325 basis points over the 182-day Mexican CETES. Proceeds from the issue to be used to refinance short-term debt with longer term maturities. The Company says the issue reaffirms its commitment to improving its debt profile. This issue was granted a rating of AA-(mex) by Fitch Mexico, S.A. de C.V., the rating agency. The rating implies a more solid credit rating relative to other issuers or issues in Mexico. Proceeds from this issue will be used to extend the average life of Vitro's debt profile by replacing short-term debt with long- term maturities. Additionally, this transaction is part of Vitro's previously stated strategy to reduce its debt, strengthen the Company's financial position while maintaining a presence in the capital markets. Vitro, S.A. de C.V. (NYSE: VTO; BMV: VITROA), through its subsidiary companies, is one of the world's leading glass producers. Vitro is a major participant in three principal businesses: flat glass, glass containers, and glassware. Its subsidiaries serve multiple product markets, including construction and automotive glass; fiberglass; food and beverage, wine, liquor, cosmetics and pharmaceutical glass containers; glassware for commercial, industrial and retail uses; plastic and aluminum containers. Vitro also produces raw materials, and equipment and capital goods for industrial use. Founded in 1909 in Monterrey, Mexico-based Vitro has joint ventures with major world-class partners and industry leaders that provide its subsidiaries with access to international markets, distribution channels and state-of-the-art technology. Vitro's subsidiaries have facilities and distribution centers in seven countries, located in North, Central and South America, and Europe, and export to more than 70 countries worldwide. CONTACT: VITRO, S.A. DE C.V. Investor Relations - Beatriz Martinez +52-81-8863-1258, bemartinez@vitro.com Media Relations - Albert Chico +52-81-8863-1335, achico@vitro.com Media - Eduardo Cruz +52-55-5089-6904, ecruz@vitro.com Web site: http://www.vitro.com or BREAKSTONE & RUTH INTERNATIONAL Luca Biondolillo +1-646-536-7012, Lbiondolillo@breakstoneruth.com Susan Borinelli +1-646-536-7018, Sborinelli@breakstoneruth.com ======= P E R U ======= EDEGEL: Sale Part Of Bid To Improve Parent's Financial Standing --------------------------------------------------------------- The move to sell Edegel, Peru's biggest private electricity generator, is part of an effort to help alleviate the financial woes of its parent, Endesa Chile. The announcement was made by Edegel Managing Director Jose Griso in an effort to explain the plan. Earlier this week, Enersis S.A., which controls Endesa Chile, said it was considering selling some of Edegel's transmission lines to help ease debts of US$10.8 billion. That sum includes a US$1.4 billion loan payment to Enersis' parent, Spain's largest power group, Endesa. Endesa Chile, which owns about 60% of Edegel, has consolidated debts of US$4.5 billion. Griso said Edegel declined to comment on how much the company hoped to net from the sale of the transmission lines. According to him, the proceeds from this transaction were not needed to rescue Edegel but would be used in part to help out Endesa Chile. "Edegel has a phenomenal (financial) position and very low debt. But we are a unit of another company and ... that company (Endesa Chile) has a high debt level," he said. Edegel's debt stands around US$257 million, Griso said, adding that total assets were around three times that figure. Griso also forecast Edegel's 2002 profit would be around US$37 million, down 19.5% from nearly US$46 million in 2001, because of higher tax payments. But he said the company was doing well despite economic woes across Latin America. MINERA VOLCAN: Workers End Strike After Accepting Wage Proposal --------------------------------------------------------------- Peruvian zinc miner Volcan Cia. Minera SA struck a wage deal with the workers at its Yauli mine, bringing a halt to a strike that began Sept 30, says Bloomberg. The operations manager at Peru's second biggest zinc miner, Victor Gobitz, revealed that 500 workers agreed to end the week-old strike after accepting the Company's offer of a PEN1.1 hike in pay a day. The company has 2,500 workers at the mine, Volcan's second biggest unit after Paragsha. The Company, which is already battling with losses from weaker zinc prices, saw a reduction in its monthly output by 5% due to the strike. "We plan to compensate (for lost zinc production) by the end of the month," Gobitz said. The Company had as much as US$100,000 in daily losses because of the strike, he said. Volcan had a first-half net loss of PEN16.2 million (US$4.5 million) compared with 623,000 soles in net earnings a year earlier. The Company said last month it cut its short-term need for cash to meet debt payments after refinancing US$110 million in borrowings to extend its maturity by five years with a grace period of 18 months. The strike at the Yauli mine is the second this year at Volcan mines. In May, workers at Volcan's Paragsha mine, the Company's biggest, went on strike for 12 days to demand higher pay. ================= V E N E Z U E L A ================= FERTINITRO FINANCE: Moody's Cuts Ratings; Outlook Negative ---------------------------------------------------------- FertiNitro Finance Inc., a financing vehicle whose debt is guaranteed by Fertilizantes Nitrogenados de Venezuela, Fertinitro, C.E.C ("FertiNitro"), had its ratings downgraded by Moody's Investors Service. Moody's, on expectation that a default will occur in the near term without specific sponsor support actions or refinancing of the current debt, cut FertiNitro Finance's US$250 million secured bonds to Caa2 from B2. The rating outlook is negative. The project, according to Moody's, continues to perform far short of expectations. Even if its operating problems can be resolved for the longer term, market prices for ammonia and urea are sufficiently depressed that Moody's does not believe that the project can generate sufficient cash to meet its debt obligations without a substantial improvement in prices. Fertinitro used US$17 million of the US$20 million in available sponsor support as part of the funding needed to meet its October debt payment. While Fertinitro has a $60 million line of credit, which it may be able to utilize to meet the April 2003 debt service payment, any borrowings under the facility would be due and payable on April 20, 2003, the current expiry date of the facility. The negative outlook reflects concern that operational problems, gas supply constraints, and product price weakness may continue to result in weak cash flows for an extended period of time. FertiNitro is 35%-owned indirectly by Koch Jose Cayman Limited, ultimately majority-owned by Koch Industries Inc. through other Koch subsidiaries ("Koch"), 35%-owned by Petroquimica de Venezuela, S.A. ("Pequiven"), a wholly-owned subsidiary of PDVSA, 20%-owned by Snamprogetti, a wholly-owned subsidiary of Snamprogetti S.p.A., and 10%-owned by Polar Jose Investments, Limited ("Polar"), ultimately owned directly and indirectly by the Polar Group. *********** 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 * * *