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/raid1/www/Hosts/bankrupt/TCRLA_Public/021015.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 Tuesday, October 15, 2002, Vol. 3, Issue 204 Headlines A R G E N T I N A ARGENTINE BANKS: Central Bank Reports Improved Liquidity AT&T LATAM: Shares Will Trade on Nasdaq's Small Cap Market BANCO SUQUIA/BISEL/BERSA: Transfers to Private Hands This Year IRSA: Company Profile METRORED ARGENTINA: Still Awaits New Ownership *IMF's Krueger Calls for Argentine Debt Restructure B E R M U D A GLOBAL CROSSING: Signs Private Line Service Agreement With BCP TYCO INTERNATIONAL: Ex-CFO Out on Bail B R A Z I L AES CORP.: Moody's Concludes Review With A Cut On Ratings BEC: Central Bank Lowers Base Price to BRL274 Million C H I L E ENDESA CHILE: PSEG Not Eyeing Canutillar ENERSIS: Chilectra To Issue $40M In Bonds To Pay Back Loans ENERSIS: Stocks Suffer On Debt-Reduction Plan MADECO: Concludes Preemptive Rights Offer With CLP38 Billion SCL TERMINAL: Moody's Anticipates Eventual Default C O L O M B I A *Colombia Seeks Hedging Assurance to Resume Domestic Debt Sales D O M I N I C A N R E P U B L I C EDESUR/EDENORTE: Spanish Ambassador Defends Parent From Critics M E X I C O AHMSA: Shareholders Meeting Delayed Despite Creditor Demands GRUPO TMM: Announces Favorable Ruling in VAT Lawsuit GRUPO TMM: S&P Maintains CreditWatch Negative - - - - - - - - - - ================= A R G E N T I N A ================= ARGENTINE BANKS: Central Bank Reports Improved Liquidity -------------------------------------------------------- Argentina's central bank declared an overall improvement in the liquidity status of the country's banks. According to Business News Americas, deposits in Argentine banks grew 8.2 percent to ARS58.9 billion (US$15.8 billion) in the period of July 17 to October 7 this year. About 73 percent of the new deposits are short-term time deposits bearing high interest rates. Foreign banks in Argentina had saw a decrease their share of deposits from 51.1 percent at year-end 2001 down to 43.7 percent this October. Locally-owned private banks also held less of the overall deposits with 15 percent this October, down from 17 percent at the end of last year. Federal bank Banco Nacion's share of nationwide deposits increased from 15 percent last year, to 19 percent in October, according to the bank's president Horacio Pericoli. Pericoli also said that "The public has turned its savings and confidence to the [government] banks and some competitors have also left the market." The results indicate that the public sees the state banks as a safer haven for their money. However, some representatives from private banks have questioned the methods the central bank used for calculating the announced figures. AT&T LATAM: Shares Will Trade on Nasdaq's Small Cap Market ---------------------------------------------------------- AT&T Latin America Corp. (Nasdaq: ATTL) filed Friday to transfer its Class A common stock listing from Nasdaq's National Market to the Nasdaq Small Cap Market. The shares will continue to trade under the symbol ATTL. AT&T Latin America Corp., headquartered in Washington, D.C., is a facilities-based provider of integrated high-bandwidth business communications services in five countries: Argentina, Brazil, Chile, Colombia and Peru. The company offers data, Internet, voice, video-conferencing and e-business services. Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This press release includes "forward-looking statements" which are based on management's beliefs as well as on a number of assumptions concerning future events made by and information currently available to management. Readers are cautioned not to put undue reliance on these forward-looking statements, which are not a guarantee of performance. The statements involve known and unknown risks and uncertainties, many of which are outside of AT&T Latin America's control that may cause its actual results or outcomes to materially differ from such statements. The risks and uncertainties include but are not limited to our ability to comply with Nasdaq's listing requirements and other risks and uncertainties described in the company's filings with the Securities and Exchange Commission which readers are urged to read carefully in assessing the forward-looking statements contained in this press release. These statements are made as of the date of this press release, and AT&T Latin America undertakes no obligation to update or revise them, whether as a result of new information, future events or otherwise. This information is presented solely to provide additional information to further understand the results of the company. CONTACT: AT&T Latin America Corp. Media: Jim McGann, +1-202-689-6337 Cell: +1-202-256-9972 Lydia Rodriguez, +1-202-689-6323 Cell: +1-305-613-6767 Investors: Catherine Castro, +1-202-689-6336 Cell, 202-320-7936 Web site: http://www.attla.com BANCO SUQUIA/BISEL/BERSA: Transfers to Private Hands This Year -------------------------------------------------------------- Banco Nacion will sell to the private sector this year the three Argentine banks that Credit Agricole walked away from. The French financial group made the decision to stem losses following the government's default last year on US$95 billion of bonds and devaluation of the currency in January, local financial daily El Cronista reports, citing Nacion chairman Horacio Pericoli. The three local banks affected are Banco Suquia, Banco Bisel and Banco de Entre Rios SA (BERSA). The government opted to hand the banks over to Banco Nacion, rather than suspending operations, considering the important role they play in their respective provinces' local economies. Suquia, considered the most attractive among the three, has drawn the interests of local banks Banco Hipotecario, Banex, Comafi, Macro and business group Petersen and one international bank - International Bank of Miami. The strongest interest in Bisel has come from a group of Santa Fe-based cooperatives and Hipotecario, which is the only bank eyeing the third Credit Agricole unit BERSA. "The interested parties are many but still nothing has been decided," Pericoli said, adding the liquidity situation at the banks is stable, but Nacion does not want to drag out the sales process more than necessary. CONTACT: BANCO SUQUIA S.A 25 de Mayo 160 Cordoba 5000 Cordoba Argentina Phone: 0351-422-2048 Fax: 0351-420-0279 E-mail: relacioninversores@bancosuquia.com.ar Home Page: http://www.bancosuquia.com.ar/ Contact: Bernard Pierre Jean Brousse, Vice-President Nestor Jose Belgrano, Director BANCO DE ENTRE RIOS S.A. (BERSA) Monte Caseros 128 Parana 3100 Entre Rios Argentina Phone: 0343-4201200 Fax: 0343-4213869 Contact: Alberto Roque Ferrero, Vice-President BANCO BISEL S.A. Mitre 602 Rosario 2000 Santa Fe Argentina Phone: 0341-4200300 Home Page: http://www.bancobisel.com.ar/ Contact: Guillermo Harteneck, President Jean Luc Perron, Vice President Bernard Brousse, Vice President IRSA: Company Profile --------------------- NAME: IRSA Inversiones y Representaciones SA Bolivar 108 1066) Buenos Aires, Argentina PHONE: (54-11) 4323-7555 FAX: (54-11) 4323-7597 WEBSITE: http://www.irsa.com.ar EXECUTIVE MANAGEMENT TEAM: Eduardo Sergio Elsztain - Executive Chairman M. Marcelo Mindlin - Executive Vice Chairman Atty Saul Zang - Vice Chairman TYPE OF BUSINESS: IRSA Iversiones y Representaciones Sociedad Anonima is a real estate company engaged, directly or indirectly through subsidiaries, joint ventures and international strategic alliances, in real estate activities in Argentina and Brazil. The Company's principal activities consist of the acquisition and development of residential properties, primarily for sale; the acquisition, development and operation of office and other non- shopping center retail properties, primarily for rental purposes; the acquisition, development and operation of shopping center properties; the acquisition and operation of luxury hotels, and the acquisition of undeveloped land reserves for future developments or sale. TRIGGER EVENT: It recently revealed a plan to issue US$100 million in five-year convertible bonds to refinance debt and obtain working capital. SIC CODES AND DESCRIPTION: 6552 - Subdividers and developers, nec 6513 - Apartment building operators 6531 - Real estate agents and managers NO. OF EMPLOYEES: 1,873 AUDITOR: Abelovich Polano & Asociados To see latest financial statements: http://bankrupt.com/misc/Irsa.pdf Last TCRLA Headline: Monday, Oct. 14, 2002, Vol. 3, Issue 203 METRORED ARGENTINA: Still Awaits New Ownership ---------------------------------------------- The sale of MetroRed Argentina, the bankrupt Argentine unit of regional corporate communications provider MetroRed Telecom, didn't go through last week, reports Business News Americas. Argentine daily La Nacion had reported that the Company's creditors and the bankruptcy court handling the case would authorize a new owner for the subsidiary last week. Companies interested in acquiring MetroRed Argentina are America Movil's Techtel, the local units of Spain's Telefonica and AT&T Latin America, Argentine corporate communications providers Iplan and Datco, and the Argentina-based Dolphin investment fund. La Nacion however indicted that the likely buyer would be Techtel, which reportedly offered to pay the unit ARS2 million (US$530,000), a figure, which comes in far below than the ARS10 million Techtel originally offered. Analysts agreed that MetroRed Argentina would not likely sell for a large sum, but that the final sale price would likely be higher than the figure quoted by La Nacion. "However, this has to do with a firm offer, without doing any audit," La Nacion quoted a source as saying. Argentine Research senior analyst Rafael Ber told Business News Americas that Techtel's offer was probably too low to be realistic. Ber estimated a more realistic offer would be around US$7 million - US$8 million (ARS26 million - ARS30 million). While Ber said the Company would be acquired at "liquidation prices," Pyramid Research analyst Alejandro Rodriguez told Business News Americas that the current market price of MetroRed's investments would bear no relationship to their original value. MetroRed invested more than US$170 million in Argentina since launching operations there in 1997. The Company's assets include a 300km metropolitan fiber network and two Internet Data Centers (IDCs) in Buenos Aires. MetroRed Argentina reported more than 400 corporate clients when it opened its second IDC in November 2001. Techtel certainly has the money to make the acquisition thanks to its relationship to America Movil, Rodriguez said. Techtel might use its parent's deep pockets to acquire the assets now, even if they are not expected to perform in the immediate future, Rodriguez added. Metrored was forced to file for bankruptcy protection after it failed to restructure close to US$30 million in debt. The bankruptcy filing was also attributed to the refusal of the Company's largest creditor, U.S.-based Fleet Financial, to take control of the struggling company. MetroRed also offers service in Sao Paulo, Rio de Janeiro, Belo Horizonte and Mexico City. CONTACT: METRORED TELECOMUNICACIONES Paseo Col>n 746 Piso 4 (C1063ACU) Buenos Aires Argentina Phone: (5411) 4876-7700 Fax: (5411) 4876-7767 Home Page: metrored@metrored.com.ar *IMF's Krueger Calls for Argentine Debt Restructure --------------------------------------------------- International Monetary Fund Deputy Managing Director Anne Krueger said that countries facing debt crisis should negotiate with private creditors before receiving aid from the IMF. "IMF financial support would be futile and counterproductive in the absence of a change in the financial terms of the government's obligations to private creditors," Krueger said. According to Bloomberg, Krueger presented Spanish and Latin American economists and academics in Madrid a proposal to create a sovereign bankruptcy regime for defaults by countries. The plan, conceptualized after the IMF was criticized for failing to foresee and prevent Argentina's default, would be voluntary for the debtor country, and would facilitate a freeze on debt payments if creditors agree to start negotiations. Krueger added that opposition from private lenders to the IMF plan for a sovereign bankruptcy regime is easing. She also said that financial assistance is justifiable for countries like Brazil, having implemented "sound and credible" economic programs. A number of international bondholders have criticized the proposal on concern that it would increase the number of states defaulting. They also said that the plan protects the interest of the large investors only. Under the plan, debts of the defaulting country would be gathered as one and a majority of creditors would agree on the method of restructuring it. This allows a more efficient debt restructure and faster return to capital market after the default. Investor would also be reassured when buying sovereign bonds. The plan is expected to be finalized for the IMF's meeting in April 2003, according to Krueger. A few hours after Krueger's speech, IMF spokesman William Murray reported "progress has been made" on the two-week negotiation on an aid package between the IMF and Argentina. Argentine Finance Secretary Guillermo Nielsen said Argentina and the IMF maintained ``a cordial and favorable work environment throughout these two weeks, despite some different points of view.'' Adding that he will be bringing a draft of the agreement on his return to Buenos Aires. Argentina has US$935 million loan payment due to the IMF, World Bank and Inter-American Development Bank this month. Government officials have proposed to default on the debt unless granted a new aid package. The government has expressed the need for help to end its recession, which has lasted four years. So far, no new funding has been received for the last nine months. The IMF has cited the fight between the Supreme Court, the congress and President Eduardo Duhalde as one of the reasons for denying Argentina aid. To eliminate this reason, Congress has voted to end the impeachment proceedings against the Supreme Court. ============= B E R M U D A ============= GLOBAL CROSSING: Signs Private Line Service Agreement With BCP -------------------------------------------------------------- Global Crossing announced Friday it reached a two-year agreement with BCP Telecomunica�oes, the second largest cellular service provider in Brazil, for private line service connecting Sao Paulo, Brazil to Miami. BCP Telecomunica�oes is a BellSouth affiliate in Brazil, providing service in the northeast region of the country, as well as Sao Paulo, Brazil's largest cellular market and one of the world's largest cities. The new private line service will interconnect BCP's Sao Paulo POP with BellSouth's POP in Miami. "Our network facilitates extraordinary growth by allowing BCP to connect one of the world's largest cities with the United States. This is a classic example of how Global Crossing's powerful network is bringing the world together," said John Legere, CEO of Global Crossing. "We are pleased that BCP chose us to provide such a critical link between two of the world's major telecom markets." ABOUT GLOBAL CROSSING Global Crossing provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. Global Crossing operates throughout the Americas and Europe, and provides services in Asia through its subsidiary, Asia Global Crossing. On January 28, 2002, Global Crossing and certain of its affiliates (excluding Asia Global Crossing and its subsidiaries) commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court) and coordinated proceedings in the Supreme Court of Bermuda (Bermuda Court). On the same date, the Bermuda Court granted an order appointing joint provisional liquidators with the power to oversee the continuation and reorganization of the Bermuda- incorporated companies' businesses under the control of their boards of directors and under the supervision of the Bankruptcy Court and the Bermuda Court. On April 23, 2002, Global Crossing commenced a Chapter 11 case in the Bankruptcy Court for its affiliate, GT UK, Ltd. On August 4, 2002, Global Crossing commenced a Chapter 11 case in the United States Bankruptcy Court for the Southern District of New York for its affiliate, SAC Peru Ltd. On August 30, 2002, Global Crossing commenced Chapter 11 cases in the Bankruptcy Court for an additional 23 of its affiliates (as specified in the July Monthly Operating Report filed with the Bankruptcy Court) in order to coordinate the restructuring of those companies with its restructuring. Global Crossing has also filed coordinated insolvency proceedings in the Bermuda Court for those affiliates that are incorporated in Bermuda. The administration of all the cases filed subsequent to Global Crossing's initial filing on January 28, 2002 has been consolidated with that of the cases commenced in Bankruptcy Court on January 28, 2002. Global Crossing's Plan of Reorganization, which it filed with the Bankruptcy Court on September 16, 2002, does not include a capital structure in which existing common or preferred equity would retain any value. ABOUT BCP TELECOMUNICA?OES BCP Telecomunica�oes, a Brazilian company, has the license to operate B Band Mobile services. BCP acts on two concession areas, obtained though a public bidding process opened by Federal Government: Area 1 (Sao Paulo Metropolitan Area - code 011) and Area 10 (States of Alagoas, Pernambuco, Para�ba, Rio Grande do Norte, Cear e Piau�). CONTACT: GLOBAL CROSSING Press Contacts: Fernanda Marques Brazil + 55 21 3820-4712 fernanda.marques@globalcrossing.com Analysts/Investors Contact Ken Simril +1 310-385-3838 investors@globalcrossing.com TYCO INTERNATIONAL: Ex-CFO Out on Bail -------------------------------------- State Supreme Court Judge Michael Obus has finally accepted the bail posted by Tyco International Ltd.'s former chief finance officer Mark Swartz, reports the Associated Press. After Swartz's initial offer of US$5 million in Tyco shares as security for his US$50 million bail bond was rejected, his parents and in-laws raised US$5 million in stock and real estate for his bail. Swartz's initial attempt was disallowed by the Court over concerns the collateral was gained by the alleged fraud. "I'm satisfied that this is an appropriate bail package," said state Supreme Court Justice Michael Obus. "The court is satisfied that these provisions will assure the defendant's appearance in court, which ultimately is all that all of this is about." Swartz, along with Tyco's former CEO Dennis Kozlowski is indicted on charges of enterprise corruption and grand larceny, allegedly stealing some US$600 million in company funds. The two men had difficulties posting bail as all their assets have been frozen by court. Kozlowski's ex-wife posted his US$10 million security using proceeds from their divorce settlement, which were accepted. Earlier, Assistant District Attorney John Moscow has argued that all the money both men received from Tyco should be presumed tainted until proven otherwise. However, Moscow did not file a formal objection to Swartz's bail this time though he said that he might still ask for a hearing on the issue. A hearing on pretrial motions was scheduled November 7. 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 CORP.: Moody's Concludes Review With A Cut On Ratings --------------------------------------------------------- Moody's Investors Service finalized its review of The AES Corporation, a global power company with generation and distribution assets in Europe, Asia, Latin America, and the United States, with the following rating actions: - Senior Implied Rating downgraded to B2 from Ba3 - Senior Unsecured Rating downgraded to B3 from Ba3 - Senior Subordinated Rating downgraded to Caa1 from B2 - Junior Subordinated Rating downgraded to Caa2 from B2 - Preferred Stock Rating downgraded to Ca from Caa1 - Assigned B2 to US$1.6 billion of proposed senior secured bank credit facilities - Assigned B2 to proposed senior secured bond offering of up to US$500 million. The rating outlook for AES is negative. Moody's took the rating actions on concern of AES' high debt burden amid difficult economic and power market conditions in several countries, and diminishing financial flexibility. The Company's credit measures have deteriorated due to difficult wholesale power markets in Argentina, Brazil, Venezuela, the U.S., and the United Kingdom. The ratings also anticipate the creation of a new secured class of creditors at the holding company level as noted above. The negative outlook reflects the possibility of a negative rating action, if AES is unable to do any of the following: maintain its expected dividend stream from subsidiaries and investments; (1) execute the sale of Cilcorp in the first quarter of 2003; (2) complete additional asset sales on a timely basis; (3) maintain capital spending at more sustainable levels consistent with a debt reduction strategy; (4) refinance bank credit facilities and near term bond maturities. The company's success in restructuring will primarily be determined by its success in executing asset sales sooner rather than later. In addition to the previously mentioned CILCORP transaction, AES has committed to sell as much as US$1 billion in additional assets. Moody's actions followed a recent downgraded by Fitch Ratings on AES' debt. Fitch downgraded the Company's ratings after it announced the 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. 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 BEC: Central Bank Lowers Base Price to BRL274 Million ----------------------------------------------------- The Brazilian central bank reduced the minimum bid price for Ceara state bank BEC (Banco do Estado Do Ceara SA) from BRL324 million, originally set in May, to BRL274 million, says Business News Americas. The central bank's move came after the Ceara state governor said the winning bidder would not enjoy exclusive rights to handle state government accounts through 2010, as originally stipulated in the bidding rules. But another factor seen weighing on the price of BEC was a decision by the federal accounts bureau obliging the central bank to calculate the minimum bid price according to BEC data from May of this year. Under privatization rules, at least 10% of total shares held by the federal government must be offered to bank employees at a 50% discount. BEC, which operates 70 branches, of which 26 are in the state capital Fortaleza, had total assets of BRL978 million, a loan portfolio of BRL127 million, deposits of BRL513 million, and net equity of BRL158 million end September 2001, as revealed by BEC and central bank figures. BEC is scheduled to be sold on November 12. Pre-qualified bidders include Brazil's top three private banks in terms of assets: Bradesco, Itau and Unibanco. The Brazilian central bank still has three state banks left to be sold. These are Banco do Estado de Santa Catarina SA (BESC) Banco do Estado do Maranhao (BEM) and Banco do Estado Do Piaui SA. The sale of BESC is expected to take place November 20, while the other two may not go through this year. Brazil was supposed to have concluded the sale of all four banks in June but a Federal Audit Court order demanded the central bank re-evaluate the value of all the banks because previous valuations were out of date. The court mandate held up the transaction. Furthermore, appetite for the state institutions is weak as Brazil's biggest banks hold back on lending and building up provisions at a time when external credit is hard to come by, local borrowing costs are rising and investors fret about the nation's debt burden and the outcome of the presidential elections. Whether the government will be able to sell off its banks by the end of the year, an outcome that analysts have said is very possible, still remains to be seen. ========= C H I L E ========= ENDESA CHILE: PSEG Not Eyeing Canutillar ---------------------------------------- US energy company PSEG contradicted reports by the local press that suggested it is planning to buy Endesa Chile's Canutillar hydroelectric plant, relates Business News Americas. "In the next 18-24 months we do not plan any additional investment to what we have already committed to," Paul Rosengren, PSEG spokesman, said. PSEG controls the Saesa distribution group in Chile, and local executives have gone on record in the past as saying the company is interested in entering the generation sector. Endesa Chile is putting some of its assets, including Canutillar, in Chile's Region X, on the block as part of a plan to generate US$600mn-700mn to shore up its balance sheet. Early last week, Endesa Chile also revealed plans to sell Edegel, Peru's biggest private electricity generator. Enersis S.A., which controls Endesa Chile, said it was considering selling some of Edegel's transmission lines to help ease debts of US$10.8bn. That sum includes a US$1.4bn loan payment to Enersis' parent, Spain's largest power group, Endesa. Endesa Chile, which owns about 60% of Edegel, has consolidated debts of US$4.5bn. 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 ENDESA CHILE: Transelec Sets Sights On Transmission Lines --------------------------------------------------------- A source from Chilean transmission company HQI Transelec confirmed that the utility is eyeing Endesa Chile's transmission lines in the north of Chile and Peru, reports local daily La Tercera. "Yes, we are interested, but we are not in talks yet," Transelec CEO Guillermo Espinosa said. Transelec, a subsidiary of Canada's Hydro Quebec, dominates Chile's central grid system (SIC). It is not clear what lines Endesa would sell in Chile, although company executives have said that in Peru, the company is looking to sell the transmission assets of its Edegel generation subsidiary. ENERSIS: Chilectra To Issue $40M In Bonds To Pay Back Loans ----------------------------------------------------------- Chilean distributor Chilectra is making an effort to raise funds to reimburse its parent company, Enersis. According to Business News Americas, Chilectra plans to issue US$400mn bonds on the local market in two US$200mn series before the end of the year. Chilectra recorded a net income of US$55mn as of June 30, 2002, US$9mn lower than first half 2001, mainly related to lower Non- Operating Income of US$31mn, primarily due to: provisions accounted to record the economic situation related to Chilectra's Brazilian and Argentinean subsidiaries of US$39mn; lower price level restatement of US$16mn; lower goodwill amortization of US$7mn, and higher net financial expenses of US$1mn. Enersis, the parent, is looking to replace up to US$500mn in inter-company loans with alternative financing as part of an overall refinancing. Current plans also include a capital increase of up to US$1.5bn, selling off up to US$1bn of assets by end-2003, and saving US$130mn/year by increasing efficiency. ENERSIS: Stocks Suffer On Debt-Reduction Plan --------------------------------------------- After revealing considered a "painful strategy" aimed at reducing its debt, Enersis shares plunged. According to Reuters, the firm's stock price was down by 16% last week, and is likely to drop further as investors continue to punish the Company since announcing the plan. Investors at the Latin American investment arm of Spain's Endesa don't quite buy its strategy. "The financial restructuring plan is good, but it doesn't shine in the markets because there are short-term factors, like doubts about operating flows due to exposure to the region, that worry investors more," Rodrigo Rojas, analyst at FIT Research, told Reuters. The Santiago-based utility, which has subsidiaries in Argentina, Brazil, Colombia and Peru, has seen its revenues shrink because of the economic downturn in the region. Another factor seen to hamper Enersis' plans is the possible move by minority shareholders, mainly pension funds, to snub any invitation to participate in the capital increase under current prices. If the minority shareholders opt not to subscribe their US$520 million share of the capital increase, "we hope they will have the vision and the generosity to let the controlling shareholder occupy that space," said Enersis Chairman Pablo Yrarrazaval. MADECO: Concludes Preemptive Rights Offer With CLP38 Billion ------------------------------------------------------------ Chilean copper wire and cable manufacturer Madeco closed the pre- emptive rights period of its CLP63-billion capital increase on October 8, raising only nearly CLP38 billion. The voluntary subscription period has subsequently started and will remain open until October 15. Nevertheless, given the results of the recently concluded transaction, it is obvious that the cash-strapped company will fail to meet its initial objective of raising a minimum of CLP47 billion. Madeco has been undergoing financial restructuring after problems in Argentina and Brazil hit company earnings, making payment on its US$330 million in debt difficult. Under the equity increase, Madeco issued 1.8 billion shares at CLP35 each. The aim had been to raise US$90 million, but even if all the shares are taken up the total will not be more than US$84 million at current exchange rates. As part of a deal with its creditors to pay off its US$120 million in bank debts, through the capital increase Madeco will pay 50% of that debt up front and have seven years to pay the remainder, with a three-year grace period. During the final round of offers Oct. 9-15, all remaining shares will be offered to bondholders willing to capitalize bonds, to other debtholders and to shareholders who seek to buy additional shares. Beyond 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. Madeco is controlled by holding company Quinenco SA (LQ), which will pump some US$50 million into the capital increase, according to previous company announcements. 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 SCL TERMINAL: Moody's Anticipates Eventual Default -------------------------------------------------- Officials of Santiago's international airport, SCL Terminal Aereo, are forecasting a second half of 2002 net deficit of US$8.3 after payment of debt service and operating expenses. The officials based their projections on the continuing slump in traffic and revenues that the airport is experiencing due to the economic recession and sustained effects of 9/11. In view of the possible net deficit, company officials have indicated that they will be using approximately US$5.5 million of the US$21.5 million debt service reserve fund to meet the upcoming US$12.3 million debt service payment due January 2003. But, according to credit rating agency Moody's Investors Service, barring any significant positive trends in traffic and compensation measures from the Ministry of Public Works, the Company is expected to eventually default on its debt. Moody's has downgraded the public underlying rating of the outstanding US$198.94 million in long term bonds of SCL Terminal Aereo to B3 from Ba3, reflecting the project's worsening financial situation. The rating outlook for the underlying rating is negative. The bonds are insured by MBIA, and remain Aaa, based on the financial strength of the insurance company. Airport officials revealed they are now in talks with the Ministries of Finance and Public Works but didn't ensure that the outcome will be enough to avert a default. SCL was formed by an international consortium in 1998, specifically for the construction, renovation, and operation of the Santiago airport. New York Daniel Gates Managing Director Corporate Finance Group Moody's Investors Service JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 New York Adam Whiteman Senior Vice President Corporate Finance Group Moody's Investors Service JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 =============== C O L O M B I A =============== *Colombia Seeks Hedging Assurance to Resume Domestic Debt Sales --------------------------------------------------------------- Colombia's incoming director of public debt Carlos Alberto Rodriguez announced that the country would not resume selling domestic Treasury notes until hedging contracts are available to protect against price swings. The hedging contracts will be drawn by a panel composed of the Finance Ministry, banking and stock exchange regulators and the country's central bank, reports Bloomberg. The contracts may also cover futures, forwards and swaps, said Rodriguez. Rodriguez also said that auctions could be expected by December, if the contracts are done in a short period of time. He added that the panel would move at "forced march" speed. The hedge contracts are required to protect Colombia's COP42 trillion (US$15 billion) Treasury note market from sharp price declines, keep finance costs to a minimum, and limit investor losses. Sales were halted in August, as investors were reluctant to buy the notes, or TES, because of a fall in prices. The country lost COP160 billion on dollar denominated debt and Treasury note holdings due to a dive in yields on concern over regional economic instability and speculation that the country might not be able to finance its budget deficit. Rodriguez also said that the government was negotiating US$200 million in early multilateral loan disbursement or a possible bridge loan to fund a gap in Colombia's international borrowings. Due to higher borrowing costs, Colombia sold only US$2 billion out of the US$2.2 billion international bond it intended to float this year. Also for this year, COP5.2 trillion (US$1.8 billion) in Treasury notes has been sold, out of the COP5.5 trillion planned. Out of the COP7.3 trillion worth of notes to be sold through pre-arranged sales to state-run companies, COP5.7 trillion has been sold. Rodriguez said that the remaining notes may be sold through pre-arranged sales. Bloomberg reports that Colombia's 15 percent coupon TES due in January 2012 fell to a low of 88.3 to yield 17.58 percent on October 1 from a high of 112.95 on June 18. Today it traded at 90.13 to yield 17.14 percent, according to central bank pricing. Rodriguez, who will replace Juan Mario Laserna as public credit director, has a master's degree in economics from Los Andes University. He has work experience from Lehman Brothers and the central bank. =================================== D O M I N I C A N R E P U B L I C =================================== EDESUR/EDENORTE: Spanish Ambassador Defends Parent From Critics --------------------------------------------------------------- Maria de Jesus Figa Lopez-Palop, Spain's ambassador to the Dominican Republic, spoke in defense of Union Fenosa's track record in the development of the country's power sector, reports Business News Americas. The Spanish power company, which owns local distributors EdeSur and EdeNorte, has come under attack by critics, who blame the companies for high rates and constant blackouts. In response, Figa Lopez-Palop said that the days of state subsidies are over and an independent, self-financing power sector is needed. Union Fenosa has helped strengthen the sector. "The problem with the power sector is that there is a culture among residents of `not paying' for public services," Figa Lopez- Palop added. The government itself, through ministries, departments and agencies, is known to be one of the worst offenders when it come to late payments. On September 17, Dominican Republic President Hipolito Mejia announced that the government could not continue subsidizing power users, except for householders in the country's poorest neighborhoods. Immediately afterwards, the country's power regulator issued a resolution stating that a new rate mechanism, linking bills to inflation, fuel costs and the exchange rate, would come into force on October 1. =========== M E X I C O =========== AHMSA: Shareholders Meeting Delayed Despite Creditor Demands ------------------------------------------------------------ Cash-strapped Mexican steelmaker Altos Hornos de Mexico SA (AHMSA) is deliberating the appropriateness of holding a special shareholders meeting, as requested by the Company's creditors. AHMSA, in a filing with the Mexican Stock Exchange, had planned a meeting on Nov. 7 in Monclova. The scheduled meeting was due to "interests and pressures of some creditor banks," according to the debt-ridden company. The meeting was announced Tuesday, after lenders, in an effort to bring about a change in control, asked a judge last month to declare the Company bankrupt. The planned meeting includes the designation of new board members in its agenda. AHMSA's top bank creditors include Bank of America Corp. (BAC), Grupo Financiero BBVA-Bancomer SA (E.GFB) and Grupo Financiero Banamex SA, a unit of Citigroup Inc. (C), according to Dow Jones Newswires. Creditors have been clamoring for the expulsion of Chairman Xavier Autrey and Chief Executive Alonso Ancira, saying that the management hasn't honored agreements made when AHMSA defaulted on US$1.8 billion in debt three years ago. The filing also stated the meeting was delayed due to legal problems, which "could result in serious damages to creditors and shareholders". The decision on a change of management control may depend on Grupo Acererop del Norte (GAN), if it could vote the AHMSA shares offered in guarantee on past due loans to GAN. Gan has about three quarters of AHMSA's stock. GRUPO TMM: Announces Favorable Ruling in VAT Lawsuit ---------------------------------------------------- Grupo TMM, S.A. ("Grupo TMM") (NYSE: TMM) and Kansas City Southern ("KCS") (NYSE: KSU), owners of the controlling interest in Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V. ("Grupo TFM"), announced Friday that a three judge panel of the Mexican Magistrates Court has unanimously ruled in favor of Grupo TFM in its Value Added Tax lawsuit. The claim dates back to January 1997. As a result of this decision, Grupo TFM expects to receive a certificate that may be used against future taxes or, under existing regulations, may be exchanged for cash. The decision is not subject to appeal by the government. In response to the court ruling, Jose Serrano, Chairman and CEO of Grupo TMM and Grupo TFM said, "The decision of the court affirms that the Rule of Law is alive and well in Mexico. This ruling is a victory for our country and should serve as encouragement and validation for all investors throughout the world that the current Government of Mexico is serious about transparency and adhering to the laws of the nation." Michael Haverty, Chairman, CEO and President of KCS stated, "We are pleased with the fairness of the Mexican judicial system. By removing the uncertainty that has surrounded the VAT credit issue, the decision of the three judge panel enhances the opportunity for KCS and Grupo TMM to further grow the value of their investment through the development of TFM and the NAFTA rail network." Headquartered in Mexico City, Grupo TMM is Latin America's largest multimodal transportation company. Through its branch offices and network of subsidiary companies, Grupo TMM provides a dynamic combination of ocean and land transportation services. Grupo TMM also has a significant interest in Transportacion Ferroviaria Mexicana (TFM), which operates Mexico's Northeast railway and carries over 40 percent of the country's rail cargo. Visit Grupo TMM's web site at www.grupotmm.com.mx and TFM's web site at www.tfm.com.mx. Both sites offer Spanish/English language options. KCS is a transportation holding company that has railroad investments in the United States, Mexico, and Panama. Its primary holding is Kansas City Southern Railway. Headquartered in Kansas City, Missouri, KCS serves customers in the central and south central regions of the U.S. KCS's rail holdings and investments are primary components of a NAFTA Railway system that links the commercial and industrial centers of the United States, Canada, and Mexico. CONTACT: Grupo TMM Jacinto Marina, 011-525-55-629-8790 jacinto.marina@tmm.com.mx Investor Relations Brad Skinner, 011-525-55-629-8725 brad.skinner@tmm.com.mx Media Relations Luis Calvillo, 011-525-55-629-8758 luis.calvillo@tmm.com.mx DRESNER CORPORATE SERVICES Kristine Walczak, 312/726-3600 kwalczak@dresnerco.com KCS Company Contact Ronald Russ, 816/983-1702 ronald.g.russ@kcsr.com William H. Galligan, 816/983-1551 william.h.galligan@kcsr.com GRUPO TMM: S&P Maintains CreditWatch Negative --------------------------------------------- Standard & Poor's Ratings Services said Friday that the single- 'B'-plus corporate credit and senior unsecured debt ratings on Grupo TMM S.A. (TMM) remain on CreditWatch with negative implications, where they were placed Oct. 10, 2002, until the company satisfactorily completes its short-term debt refinancing, and the final terms and conditions of the planned exchange offer of its $176 million notes due May 15, 2003, are reviewed by Standard & Poor's. Nevertheless, Standard & Poor's recognizes the positive credit implications of TMM's recent announcement that a three-judge panel of the Mexican Supreme Court unanimously ruled in favor of TFM S.A. de C.V., TMM's railroad subsidiary, in its value-added- tax lawsuit. Although the associated amount, timing, and form of payment by the Mexican government are still to be precisely defined, the announced tax recovery could have a positive impact on TMM's current financial measures once TFM is capable of paying dividends to TMM. Credit Analyst: Federico Mora, Mexico City (52) 55-5279-2036; Manuel Guerena, Mexico City (52) 55-5279-2011 *********** 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 * * *