/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/021022.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 22, 2002, Vol. 3, Issue 209 Headlines A N T I G U A & B A R B U D A LIAT: Caribbean Star Exec Returns Price Fixing Accusations A R G E N T I N A AOL LATIN AMERICA: Expects Present Funding to Last Into 4Q03 ARGENTINE UTILITIES: Prices Going Up to Appease IMF, Providers BANCO SUDAMERIS: Patagonia Makes Binding Offer to Parent * Lavagna Predicts Successful IMF Loan Accord Soon B E R M U D A ANDERSEN: Another Client Terminates Connection B R A Z I L AES CORP.: S&P Rates Proposed Bank Facility, Exchange Notes BANCO ABN AMRO: Moody's Cuts BFSR To D+ BANCO BARCLAYS: BFSR Lowered To D-; Outlook Changed To Negative BANCO BNL: Moody's Reduces BFSR After CB Announces Measures BANCO BRADESCO: Moody's Changes Outlook To Negative BANCO CITIBANK: Outlook Changes To Negative, Strength Rate Drops BANCO DE INVESTIMENTOS: BFSR Lowered With Regional Banks BANCO DO BRASIL: Moody's Affirms BFSR, Shifts To Negative Stance BANESPA: Moody's Downgrades BFSR To D BANCO DO NORDESTE: BFSR Downgraded To E+ BANCO ITAU: BFSR Lowered to C-, Outlook Changed To Negative BANCO PACTUAL: Moody's Lowers BFSR To D- BANCO SAFRA: BFSR Lowered to D+ From C BANCO MULTIPLO: Moody's Reduces BFSR To D+ BANCO VOTORANTIM: Moody's Lowers BFSR BBV BRAZIL: Moody's Changes Outlook To Negative CEF: Moody's Affirms BFSR, Changes Outlook To Negative HSBC BANK BRASIL: Financial Strength Rating Down To D+ SANTANDER MERIDIONAL: Moody's Cuts Financial Strength Rating SUDAMERIS BRASIL: BFSR Lowered To D UNIBANCO: Moody's Changes Outlook To Negative CEMAR: Two Firms Visit Data Room for Due Diligence CEMIG: Announces Extraordinary General Shareholders' Meeting CSN: Competition Regulator Approves Corus' Purchase Plan IMPSAT: To Offer Digital Certification Services In Brazil KLABIN S.A.: S&P Lowers Local Currency Rating to 'B+' TELESP CELULAR: Portugal Telecom Sells Preferred Stake C H I L E DISPUTADA: Enami Resolves Conflict With Parent EDELNOR: Takeover Awaits US Justice Decision GASATACAMA: Argentine Difficulties Delay Refinancing C O L O M B I A * Colombia Gets $180M From World Bank T R I N I D A D & T O B A G O BWIA: Finally Gets Government Attention - - - - - - - - - - - ================================= A N T I G U A & B A R B U D A ================================= LIAT: Caribbean Star Exec Returns Price Fixing Accusations ---------------------------------------------------------- Caribbean Star Chief Executive Paul Moreira refuted allegations made by St. Vincent & the Grenadines Prime Minister Ralph Gonsalves and LIAT that the Caribbean Star has engaged in predatory pricing strategies. Mr. Moreira further responded saying that it was LIAT who engaged in the alleged practices, forcing at least three airlines out of business: Carib Express, Helen Air, and EC Express. Mr. Moreira claims that LIAT, along with its partner BWIA, lowers fares, until their competition drops out of business only to double the fares after eliminating their rivals. He added that he has proof to support his claims. According to Star's CEO, he bought a LIAT ticket for St. Lucia in Barbados for US$50, which is not approved by the ATLA in Barbados. The ATLA in Barbados has called a meeting with all the carriers to discuss pricing and approvals. Mr. Moreira accused LIAT chairman Wilbur Harrigan of hiding behind the Caribbean government. He added that the government had been ill informed of the facts in this matter. He also cited the decision made by the government of Antigua & Barbuda, that all airline fares should be submitted for approval. According to the report, the Permanent secretary in the Ministry of Aviation Hazel Spencer, wrote to Caribbean Star stating, "Please note that in accordance with the provisions of the Air Navigation (Licensing of Air Services) Regulations, and with the license issued under that instrument, that applicable fares and freight rates for air transportation in Antigua & Barbuda shall be those approved, from time to time, by the Air Transport Licensing Board. In this regard please ensure that all filings for fares are submitted to this Ministry for review by the relevant authority." However, according to Mr. Moreira, Caribbean Star will not be submitting such fares and not all carriers were given the letter. He went on to question LIAT's sudden interest in forming an alliance with Caribbean Star. "For many years we have been called "Brand X". We were not even considered an airline and all of sudden Wilbur Harrigan Chairman of LIAT's Board, wants to join with "Brand X". Is it going to be Brand X/Caribbean Star?" asks Moreira. CONTACTS: LIAT Corporate Headquarters V.C. Bird International Airport, P.O. Box 819, St. John's, Antigua West Indies Tel. 1 (268) 480-5600/1/2/3/4/5/6 Fax: 1 (268) 480-5625 Homepage: http://www.liatairline.com/ Contact: Garry Cullen - Chief Executive Officer David Stuart - Vice President of Marketing Caribbean Star Airlines Coolidge Industrial Estate P.O. Box 1628W, Airport Road, St. John's, Antigua West Indies Tel. 1 (268) 480-2500 Homepage: http://www.flycaribbeanstar.com/ Contact: Paul Moreira - Chief Executive Officer Sandra Scotland - Director of Marketing ================= A R G E N T I N A ================= AOL LATIN AMERICA: Expects Present Funding to Last Into 4Q03 ------------------------------------------------------------ In an interview conducted Friday by CEOcast, Charles Herington, President and CEO for America Online Latin America (NASDAQ-SCM: AOLA), provided an optimistic view of the future prospects for the Internet industry in Latin America. During the presentation he reiterated that AOL Latin America expected available funding to last into the fourth quarter of 2003 and that losses would again narrow for the third quarter of 2002. Mr. Herington told CEOcast that he was encouraged by initiatives implemented earlier in the year designed to strengthen the company's business fundamentals. The chief executive explained that the company now expects its cash on hand plus available financing to continue to fund operations into the fourth quarter of 2003 due in part to the positive outcome from some of those initiatives. He also explained that the company has benefited from regional currency devaluations since its available funds are in U.S. dollars while most of its costs are in local currencies, thereby having a positive impact on expenses. As a result, the company expects to report reduced losses for the third quarter of 2002, making this the ninth quarter in a row that the company has reported consecutive narrowing of losses per share. Mr. Herington also said that its total revenues are expected to weaken compared to the previous quarter primarily due to currency devaluations and lower advertising revenue. In addition, the company expects a modest reduction in membership as it continues to implement initiatives to improve its base of paying members. Mr. Herington told CEOcast that the company has taken significant measures to reduce operating expenses by realigning its network and introducing more efficient systems and procedures to its call center operations. In addition, the company continues to implement marketing initiatives designed to target higher quality paying members more efficiently, which is expected to result in better rates of collection and increased future revenue. The company currently has over 400 retail point-of-sale locations and expects to increase this number in the future. "I am pleased with the way some of our new new personalized marketing initiatives are working," the CEO stated. "For example, we have found that it is far more efficient to establish kiosks at hundreds of specially targeted retail outlets across Brazil, and to staff them with AOL Brazil representatives. These representatives can demonstrate to prospective new members how the AOL service works, the many benefits available to members, and the excitement of the AOL Internet experience. These new personalized marketing initiatives are proving to be much more cost effective in reaching and acquiring a higher valued member," he added. When asked about its prospects to remain listed on the NASDAQ stock exchange, Mr. Herington responded that the company has submitted a plan for NASDAQ's consideration. "We presented the plan Friday, October 4, and NASDAQ told us to wait two to four weeks for a decision," he stated. "We are encouraged by the commitment shown by our partners to our business. We expect a decision from NASDAQ in the next two weeks." According to Mr. Herington, future growth prospects for Latin America's Internet market continue to be promising given today's low penetration levels of Internet usage and the growing acceptance of the Internet by consumers. Industry analysts have forecasted that the number of Internet users in Latin America is expected to almost double over the next three years, from 21.7 million users at the end of 2001 to 44.1 million at the end of 2004. In addition, an important survey conducted by the Roper/ASW Research Company of Internet users in Brazil, the largest Internet market in Latin America, indicated that the Internet has become an important part of the daily lives of Brazilian online users. "I am very encouraged by the long term prospect of the Internet industry in Latin America," added Mr. Herington. "With regard to AOL Latin America, we expect to deliver our ninth straight quarter of narrowed losses, which is an important factor in our ability to continue to finance our operations into the fourth quarter of 2003 with our current funding. Despite the very difficult economic environment in the region, we continue to believe in the future of the Internet in Latin America and remain committed to playing an important role in the continued development of the industry." This news release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding (i) the expected results of recent initiatives to improve the revenue contribution of our membership base and further operating efficiencies, (ii) future losses, revenue, collection rates, point-of-sale locations and membership levels, (iii) future growth of the Internet in Latin America and (iii) our expectation that current funding will allow us to continue to finance operations into the fourth quarter of 2003. These forward-looking statements are subject to a number of risks and uncertainties, which are described in our Annual Report on Form 10-K for the period ended December 31, 2001, and from time to time in other reports we file with the SEC, as well as the following risks and uncertainties: our limited cash position, the impact our continued losses will have on our ability to finance our operations, currency exchange rates, uncertainty relating to our ability to convert our subscribers into paying subscribers, our limited operating history, uncertainty regarding the success of our targeting marketing initiatives and technology designed to improve validation, macroeconomic developments in Brazil and Mexico, the actions of our competitors, personal computer sales in Latin America and our ability to penetrate our markets. Actual results could differ materially from those described in the forward-looking statements. CONTACT: AMERICA ONLINE LATIN AMERICA, Fort Lauderdale Newsmedia: Fernando Figueredo, 954/689-3200 Investor Relations: Monique Skruzny, 954/689-3200 ARGENTINE UTILITIES: Prices Going Up to Appease IMF, Providers -------------------------------------------------------------- Argentina plans to raise the price of its utilities, reports Bloomberg Sunday. The price increase is one of the requirements instigated by the International Monetary Fund in its negotiations with Argentina. The country is asking the multilateral lender for a new aid package to help it cope with the ongoing economic crisis. The estimated utility price increase is as much as 10 percent for individuals, and up to 15 percent for companies. The increase will also help the utilities companies recover heavy losses sustained over the last year. Utilities have suffered huge losses since Argentine President Duhalde froze electricity and other utility prices in January after the country devalued the currency in an effort to stem inflation. Companies with dollar-denominated debts and earnings in the local currency suffered the most. BANCO SUDAMERIS: Patagonia Makes Binding Offer to Parent -------------------------------------------------------- IntesaBci SpA, Italy's largest bank, received a binding offer from Banco Patagonia SA, a provincial lender in southern Argentina, for its local unit Banco Sudameris Argentina. The proposed transaction, according to Dow Jones Newswires, calls for IntesaBci capitalizing Banco Sudameris with US$150 million before giving up control of the unit in a merger with Banco Patagonia. The new entity will include Banco Sudameris' ARS2.1 billion (US$584 million) of assets and 99 branches along with Banco Patagonia's ARS289 million of assets and about 30 branches. The Italian bank will keep a minority stake in the merged company. IntesaBci anticipates closing the deal by the end of the year. "The transaction adheres to the strategy of IntesaBci and at the same time constitutes the best possible response to the recent dramatic changes in the Argentine market, in so doing reinforcing the banking system," IntesaBci said in a statement. Milan-based IntesaBci is disposing of its units in Argentina and Brazil as well as shedding as many as 8,000 jobs in a bid to return to profit after it posted an unexpected loss in the second quarter. It has struggled to reorganize since the EUR9.9-billion (US$9.6 billion) acquisition of Banca Commerciale Italiana SpA in 1999. Its Latin American unit -- Sudameris -- and much of its other international businesses stem from that purchase. Banco Patagonia is based about 1,000 kilometers (622 miles) south of Buenos Aires in the province of Rio Negro. In a separate joint statement issued in Buenos Aires, the banks didn't explain how Patagonia's shareholders will have a majority of the new bank while providing less than a seventh of its assets, based on December 2001 data published by Argentina's central bank. 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 * Lavagna Predicts Successful IMF Loan Accord Soon -------------------------------------------------- Argentine Economy Minister Roberto Lavagna said he expects to sign a new loan accord with the International Monetary Fund in two weeks. Argentina has been negotiating with the IMF for a new loan package. To protect central bank reserves, the country needs to refinance its debt before the next payment to the IMF comes due in November, reports Bloomberg. Argentina also wants to roll over debt coming due in 2003 with the IMF, the World Bank and the Inter- American Development Bank, according to the report. The IMF has asked the country to increase utilities prices by as much as 10 percent for individuals and 15 percent for companies. The move would help utilities companies recover from losses it suffered after the government froze utilities rates to slow inflation after the currency devaluation in January. Lavagna said that Argentina had refused the IMF's request to increase taxes. The country's primary budget surplus would be less than what the IMF requires by 2.5 percent. Argentina's congress has also aborted its drive to impeach the Supreme Court after the IMF cited the dispute as one of the reasons that the multilateral lender may not grant the country's request for a new loan. However, Argentina's President Eduardo Duhalde said that he "will not accept any pressure" from the IMF's demands to increase utility rates. "The Fund never worried [before] when Argentine customers were paying twice international rates, that's why we're not going to accept any pressure of this kind," Duhalde said in a press conference Friday. Earlier, the Argentine president said that utility rates would not increase, contradicting its Economy ministry who had announced that the rates would increase on December 1. ============= B E R M U D A ============= ANDERSEN: Another Client Terminates Connection ---------------------------------------------- Arthur Andersen LLP and Arthur Andersen lost another large client, reports the Bermuda Sun. Accenture Ltd., which was set up in Bermuda by Andersen to separate its consulting and accounting arms to avoid conflicts of interest, said it has terminated its various service agreements with the accounting giant in light of the auditor's legal woes. Arthur Andersen was indicted by the U.S. Justice Department that it destroyed records related to its audits of fallen energy trader Enron Corp. A sentence is expected to be announced soon. Accenture is supposed to make a final payment to Andersen in connection with the termination of the agreements. The payment, according to Accenture, is reportedly within the amounts the amount had previously accrued and won't have a material impact on its income statement. CONTACT: ANDERSEN LLP Victoria Hall 11 Victoria Street Hamilton HM 11 Bermuda Hamilton mailing address: P.O. Box HM 1553 Hamilton HMFX Bermuda Phone: 1 441 295 0001 ARTHUR ANDERSEN LLP, Headquarters 33 W. Monroe Chicago, IL 60603 USA Phone: 1 312 580 0033 =========== B R A Z I L =========== AES CORP.: S&P Rates Proposed Bank Facility, Exchange Notes ----------------------------------------------------------- Services assigned its double-'B' preliminary rating to the AES Corp.'s proposed $1.62 billion senior secured bank facility and $350 million senior secured exchange notes. AES' single-'B'-plus corporate credit rating remains on CreditWatch with negative implications. Standard & Poor's views the default risk of the bank facility and exchange notes as 'B+', but the two-notch elevation of the ratings on these instruments reflects Standard & Poor's high degree of confidence that the collateral package provides enough value for secured lenders to realize 100% recovery in a default or stress scenario. The collateral package consists of 100% of AES' equity interests in its domestic businesses and 65% of the equity in its foreign businesses. The analysis assumes a bankruptcy court would accord priority to the senior lienholders in a bankruptcy. In addition to the liens granted, 50% of the proceeds of the CILCORP sale, which are not included in the collateral calculation, are to be used to pay down the bank facility AES' cash flow comes from a diversified mix of global businesses that include utilities, distribution companies, contract generation, and merchant generation. Political and currency instability in Latin America, soft power markets in the U.K., increasing credit concerns with some of AES' contract counterparties, and general market conditions in the power sector have all threatened AES' cash flow base and severely restricted AES' access to capital. "The successful execution of this transaction would give AES much needed flexibility by eliminating immediate liquidity pressure and pushing out any substantial maturities until 2005," said credit analyst Scott Taylor. "However, reliance on bank financing could present risks, as banks could exert increasing control over AES' financing and operations should AES be unable to reduce its debt burden to a more manageable level by selling assets," he added. If the transaction is successful, AES' corporate credit rating would remain 'B+', reflecting the company's cash flow profile relative to its debt burden, and the outlook would likely be negative, reflecting the continued need to sell assets and pay down debt. As asset sales are announced and executed and debt is paid down, the rating could change, reflecting the changing cash flow profile and debt burden. It should be noted that when the transaction is executed, Standard & Poor's will rate all unsecured debt 'B-', reflecting its disadvantaged position in a bankruptcy. Standard & Poor's will not differentiate between senior and subordinate unsecured issues in this regard. All subordinate unsecured debt will also be rated 'B-', not 'CCC+' as previously reported. Trust preferred securities would be rated 'CCC+', and not 'CCC' as previously reported. Analyst: Scott Taylor, New York (1) 212-438-2057; Arthur F Simonson, New York (1) 212-438-2094 BANCO ABN AMRO: Moody's Cuts BFSR To D+ --------------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (bfsr) of Banco ABN Amro Real S.A to D+ from C. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. BANCO BARCLAYS: BFSR Lowered To D-; Outlook Changed To Negative --------------------------------------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (bfsr) of Banco Barclays S.A to D- from D+. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. BANCO BNL: Moody's Reduces BFSR After CB Announces Measures ----------------------------------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (bfsr) of Banco BNL do Brasil S.A to D- from D. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. BANCO BRADESCO: Moody's Changes Outlook To Negative --------------------------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (bfsr) of Banco Bradesco S.A. to C- from C. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. BANCO CITIBANK: Outlook Changes To Negative, Strength Rate Drops ---------------------------------------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (bfsr) of Banco Citibank S.A. to D+ from C. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. BANCO DE INVESTIMENTOS: BFSR Lowered With Regional Banks -------------------------------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (BFSR) of Banco de Investimentos CSFB S.A. to D- from D+. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. BANCO DO BRASIL: Moody's Affirms BFSR, Shifts To Negative Stance ---------------------------------------------------------------- Moody's Investors Service affirmed Banco do Brasil S.A's bank financial strength of E+, and changed to outlook from stable to negative. BANESPA: Moody's Downgrades BFSR To D ------------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (BFSR) of Banco do Estado de Sao Paulo S.A. to D from D+. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. BANCO DO NORDESTE: BFSR Downgraded To E+ ---------------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (BFSR) of Banco do Nordeste do Brasil S.A. to E+ from D. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. BANCO ITAU: BFSR Lowered to C-, Outlook Changed To Negative ----------------------------------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (BFSR) of Banco Itau S.A. to C- from C. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. BANCO PACTUAL: Moody's Lowers BFSR To D- ---------------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (BFSR) of Banco Pactual S.A. to D- from D+. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. BANCO SAFRA: BFSR Lowered to D+ From C -------------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (BFSR) of Banco Safra S.A. to D+ from C. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. BANCO MULTIPLO: Moody's Reduces BFSR To D+ ------------------------------------------ Moody's Investors Service downgraded the bank financial strength ratings (BFSR) of BankBoston Banco Multiplo S.A. to D+ from C. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. BANCO VOTORANTIM: Moody's Lowers BFSR ------------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (BFSR) of Banco Votorantim S.A. to D- from D. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. BBV BRAZIL: Moody's Changes Outlook To Negative ----------------------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (BFSR) of Banco Bilbao Vizcaya Brazil S.A to D- from D. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. CEF: Moody's Affirms BFSR, Changes Outlook To Negative ------------------------------------------------------ Moody's Investors Service affirmed Caixa Economica Federal's bank financial strength of E+, and changed the outlook from stable to negative. HSBC BANK BRASIL: Financial Strength Rating Down To D+ ------------------------------------------------------ Moody's Investors Service downgraded the bank financial strength ratings (BFSR) of HSBC Bank Brasil S.A.- Banco Multiplo to D+ from C-. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. SANTANDER MERIDIONAL: Moody's Cuts Financial Strength Rating ------------------------------------------------------------ Moody's Investors Service downgraded the bank financial strength ratings (BFSR) of Banco Santander Meridional, S.A. to D from D+. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. SUDAMERIS BRASIL: BFSR Lowered To D ----------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (BFSR) of Banco Sudameris Brasil S.A. to D from D+. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. UNIBANCO: Moody's Changes Outlook To Negative --------------------------------------------- Moody's Investors Service downgraded the bank financial strength ratings (BFSR) of Unibanco-Uniao de Bancos Brasileiros to D+ from C. The bank's outlook was changed to negative but its foreign currency deposit rating of B3 remained unchanged. MOODY'S NOTES: The financial strength rating downgrades reflect Moody's concern that recent policy measures by the Brazilian Central Bank to support the Real and control inflation may limit the banks' intrinsic financial flexibility and may further erode their operating environment. Also, the implications are negative for the Brazilian banks' profitability and asset quality that are likely to result from a more adverse operating environment. The rating agency noted that recent Central Bank measures include the following initiatives: 1) an unexpected hike in the Selic rate to 21% from 18% on October 14, 2002; 2) raising the banks' reserve requirements for checking, savings, and term deposits on October 11, 2002; and 3) an increase in the banks' capital requirements for foreign currency positions on October 7, and October 11, 2002. Moreover, the Central Bank reduced the banks' foreign exchange exposure limit from 60% of capital to 30%. Moody's recognizes that these measures may correspond with sound monetary policy in light of the current situation. However, the ratings agency also noted that these actions would inevitably have a negative impact on the banks. The increased capital requirements and lower limits for foreign currency positions -- which may make the Brazilian banks' less likely to hold foreign currency positions -- will probably constrain their flexibility. Moreover, increased capital requirements are also likely to limit banks' earnings potential because long foreign currency positions have been a material source of profits for much of the system over the past three years. Moody's concern over the ultimate effect of boosting reserve requirements and the Selic rate relate more to the banks' operating environment. With higher reserve requirements, the banks will be tempted to cut down their already constrained lending to the private sector, the rating agency believes. Meanwhile, the rate hike will raise credit costs to borrowers. Taken together, these actions will have a negative affect on the banks' future asset quality as borrowers struggle to repay loans while laboring under higher interest costs. Profitability could also suffer as banks switch from higher yielding private sector loans and increase their already large holdings in government paper. Although the rate hike does not raise rates to prohibitive levels, or even to levels, which can be viewed as historically high, the hike does represent another threat to the operating environment. In essence, the menu of options that banks have to face the current difficulties has been curtailed by these actions. CEMAR: Two Firms Visit Data Room for Due Diligence -------------------------------------------------- Brazilian investment groups Brascan and GP Investimentos have visited the dataroom of Maranhao state distributor Cemar but neither have filed a request to pre-qualify for the sale. A report of the recent development was filed by Business News Americas, citing Romeu Rufino, head of financial and economic monitoring at Aneel. 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. Franklin Park Energy, which had agreed to buy Cemar but abandoned the deal after it was blocked by creditors, has not yet visited the dataroom. TCR-Latin America previously 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 CEMIG: Announces Extraordinary General Shareholders' Meeting ------------------------------------------------------------ CEMIG's shareholders are hereby summoned to the Extraordinary General Shareholders' Meeting to be held on October 24, 2002 at 10:00 a.m. (Belo Horizonte, Brazil time) at CEMIG's headquarters, located at Avenida Barbacena, 1200 - 18th floor, in the city of Belo Horizonte, State of Minas Gerais, Brazil, to deliberate on the following matters: 01- Amendment of the fifth and sixth paragraphs of Article 21 of CEMIG's By-laws, to provide that a power-of-attorney relating to the performance of acts necessary for the regular operation of the Company and to enter into contracts and other legal transactions may be performed by the Chief Executive Officer, in conjunction with one Executive Officer or by one duly empowered agent; and to create an exception to the provision stating that powers-of-attorney shall be granted only by the Chief Executive Officer in conjunction with one Executive Officer; and 02- The inclusion of a new Chapter VII in the By-laws containing a provision related to the responsibility of the Company to ensure the defense of the Company's directors, officers and employees with respect to legal and administrative proceedings arising from actions performed during the normal performance of their respective functions within the Company. CONTACT: COMPANHIA ENERGETICA DE MINAS GERAIS Luiz Fernando Rolla, Investor Relations Phone: + 011-5531-299-3930 Fax: + 011-5531-299-3933 E-mail: lrolla@cemig.com.br; CSN: Competition Regulator Approves Corus' Purchase Plan -------------------------------------------------------- The U.K. government's Office of Fair Trading authorized Corus Group Plc, Europe's second-largest steel maker, to proceed with a proposal to buy Brazil's Cia. Siderurgica Nacional, Bloomberg reports, citing a spokesman for the competition regulator. London-based Corus announced July 17 that it would buy CSN, Brazil's second-largest steelmaker, for US$4.2 billion of stock and assumed debt. The proposal still needs the approval of the European, Brazilian and U.S. regulatory authorities and shareholders in both companies. Corus said it plans to send a final proposal to its shareholders in the first quarter of next year. To see financial statements: http://bankrupt.com/misc/CSN.pdf CONTACT: Jose Marcos Treiger CSN - Investor Relations General Manager Tel. +55 21 2586 1442 Email: jmtreiger@csn.com.br URL: www.csn.com.br IMPSAT: To Offer Digital Certification Services In Brazil --------------------------------------------------------- Brazil's digital certification authority ICP Brasil gave the Brazilian division of Argentine broadband services provider Impsat Fiber Networks authority to offer digital certification services, reports Business News Americas, citing Brazilian tech news agency IT Web. Impsat, according to e-business data center senior VP Gabriel Del Campo, hasn't predicted the financial impact from the certification, but the Company is confident that it will generate substantial revenues based on the expanding e-commerce market in Brazil. Impsat, a provider of broadband Internet, data, and voice services in Latin America, filed for chapter 11 protection on June 11, 2002. Anthony D. Boccanfuso, Esq., and Michael J. Canning, Esq. at Arnold & Porter represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $667,189,368 in total assets and $1,334,732,793 in total debts. CONTACT: IMPSAT Fiber Networks, Inc. Home Page: http://www.impsat.com Hector Alonso Gonzalo Alende Serra Phone: 54.11.5170.3700 DEBTORS' COUNSEL: Anthony D. Boccanfuso, Esq. Michael J. Canning, Esq. Arnold & Porter 399 Park Avenue New York, New York 10022 (212) 715-1315 Fax : (212) 715-1399 KLABIN S.A.: S&P Lowers Local Currency Rating to 'B+' ----------------------------------------------------- Standard & Poor's Rating Services lowered its local currency global scale rating on Brazilian paper company Klabin S.A. to single-'B'-plus from double-'B'-minus. Standard & Poor's also placed both its local currency and single-'B'-plus foreign currency ratings on the company on CreditWatch with negative implications. The local currency downgrade reflects Standard & Poor's expectation that the volatility of the currency together with the restricted availability of short term funding options to Klabin will lead to weaker cash flow protection measures and capital structure during the next two to three quarters. Klabin had $980 million of total debt as of June 2002. "Cash generation in local currency is expected to improve as the company captures the positive effect of the devaluation over the portion of sales that is denominated in dollars, and of cost reductions brought about by the corporate reorganization. However, interest burden and the stock of bank debt will increase at a much faster pace since 70% of the total debt is pegged to the dollar, or 86% of the debt coming due until December 2002," Standard & Poor's credit analyst Milena Zaniboni said. Standard & Poor's also said that Klabin has made significant efforts to improve free cash flow and gradually reduce debt, but its financial strategy has been hurt by the extreme lack of liquidity for Brazilian companies. Even trade finance, a traditional source of funding for Klabin, has been scarce and is forcing the company to resort to shorter and more expensive loans, as well as to absorb the full impact of the devaluation as it repays maturing dollar loans with local funding. The CreditWatch listing reflects that the company has not yet solved the refinancing strategy for the eurobonds maturing in November and December of 2002 ($50 million and $60 million, respectively). The CreditWatch will be resolved if the company manages to refinance its upcoming maturities with long-term instruments at costs compatible with its current cost of funding. Analyst: Milena Zaniboni, Sao Paulo (55) 11-5501-8945 TELESP CELULAR: Portugal Telecom Sells Preferred Stake ------------------------------------------------------ Telesp Celular Participacoes S.A ("TCP"), (NYSE:TCP) (BOVESPA: TSPP3 (Common), TSPP4 (Preferred)), the Brazilian holding company that owns 100% of Telesp Celular S.A., the leading mobile operator in the state of Sao Paulo in Brazil, and an 83% indirect economic interest in Global Telecom S.A., a B-band mobile operator in the Brazilian states of Santa Catarina and Parana, announced Friday that its controlling shareholder Portugal Telecom, SGPS, S.A. ("PT"), by the terms of purchase and sale agreement entered on Oct. 17, 2002, with Telefonica Moviles S.A. ("TEM"), sold 172,016,089,469 preferred shares issued by the Company and owned by PT, representing 22.56% of the total preferred shares and 14.68% of the Company's total capital. The shares will be transferred by PT to TEM at a price of R$3.50 (three reais and fifty cents) per thousand shares, equivalent to the subscription price paid by PT at the recent capital increase of the Company, totaling 200,305,535.00 (two hundred million, three hundred and five thousand, five hundred and thirty five euros). The Company was also informed by PT that such purchase and sale transaction is being executed within the terms of the joint venture to be set up by Portugal Telecom and Telefonica Groups, as already publicly announced. The 172,016,089,469 preferred shares issued by the Company will be subsequently transferred by TEM to the holding company that will emerge from the joint venture, whose capital will be equally shared by PT and TEM. All direct and indirect shareholding positions owned by both PT and TEM in Brazilian mobile operators will eventually be transferred to the new holding company. CONTACT: TELESP CELULAR PARTICIPACOES S.A. Investor Relations Officer Maria Paula de Almeida Martins Canais Investor Relations: Edson Alves Menini, (55 11) 3059-7531 Email: emenini@telespcelular.com.br ========= C H I L E ========= DISPUTADA: Enami Resolves Conflict With Parent ---------------------------------------------- Chile's state-owned mining firm Enami has come to terms with Exxon Mobil Corp. regarding their conflict stemming from Exxon's plan to sell its copper asset for US$1.3 billion, Reuters indicates. In May, Exxon agreed to sell its Chilean unit, Disputada de las Condes, to South African miner Anglo-American PLC. But the sale was held up after Enami sued Exxon Mobil, saying that the company refused to recognize its option to buy 49% of Disputada. On Friday, however, Enami approved a draft agreement with Exxon that would clear the way for the latter to complete the Disputada sale. Chile's Mining Minister Alfonso Dulanto told reporters that Enami's board of directors unanimously approved a text prepared by lawyers of the companies that recognizes the option, "Enami has unanimously resolved ... to agree to future relations that imply the full acknowledgment of rights acquired by Enami in 1978 to purchase up to 49 percent of the shares or rights in Disputada," said Mr. Alfonso, without giving any details of the agreement. Anglo is expected to recognize the option, valid until 2028. Mr. Alfonso is also the chairman of Enami. Subsequently, Enami will withdraw its lawsuit against Exxon's subsidiaries and considers its negotiations with the company finished, the statement said. Exxon, Anglo and Enami now need to sign their respective contracts to complete the process. CONTACT: EXXONMOBIL (U.S.) Cynthia Langlands Phone: 972/444-1107 DISPUTADA (CHILE) Guillermo Garcia Phone: 562/230-6488 EDELNOR: Takeover Awaits US Justice Decision -------------------------------------------- Inversiones Mejillones, a subsidiary of Codelco, and Inversiones Tocopilla, an association of Codelco and Tractebel, are awaiting the US justice's decision to approve the takeover of power generator Empresa Electrica del Norte Grande SA (Edelnor) Edelnor filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court in Manhattan in September this year to complete a prearranged reorganization of unsecured loans in the U.S. In the filing, Edelnor, a unit of Spanish utility company Endesa S.A., revealed it has nearly US$612.9 million in total assets and about US$385.5 million in total liabilities. Court documents revealed that the filing would affect holders of US$340 million in unsecured loans from Bank of America N.A. and the New York branch of Switzerland's Union Bank. Union Bank of Switzerland is owed about US$260 million and Bank of America is owed more than US$92.4 million, according to the documents. Edelnor keeps principal executive offices in Santiago, Chile. For the past two years, the Company has maintained accounts in New York with minimum total balances of about US$1 million to US$3 million, according to a declaration by Chief Financial Officer Cristian Bernstein. With the exception of the New York accounts, all of Edelnor's assets are in Chile. CONTACT: EMPRESA ELECTRICA DEL NORTE GRANDE S.A. (EDELNOR) Avenida Apoqindo 3721, Oficina 81 Las Condes Santiago, Chile DEBTOR'S COUNSEL: Lindsee Paige Granfield, Esq. Thomas J. Moloney, Esq. CLEARY, GOTTLIEB, STEEN & HAMILTON One Liberty Plaza New York, NY 10006 (212) 225-2000 Fax : (212) 225-3499 GASATACAMA: Argentine Difficulties Delay Refinancing ---------------------------------------------------- The effects of the Argentine crisis could force Chilean gas transporter and power generator GasAtacama to put off until next year its plans to refinance US$200 million - US$300 million, according to GasAtacama CEO Rudolf Araneda. In May, GasAtacama was initiated its refinancing plans. The company expects to pay back its shareholders - US Energy company CMS and Chilean generator Endesa, by the confirmation of a power sales contract to Chile's Emel group of distributors. However, up to now, GasAtacama has still not able to define the exact amount to be refinanced because of the recession in Argentina. "We're studying how the impact of the negative perception of assets in Argentina can be reduced," Araneda said, adding, "What's most realistic is that we probably won't refinance until next year." Citigroup's Salomon Smith Barney, which has been contracted to advise on the process, will help GasAtacama decide on the best instrument for the refinancing, as well as the amount and the timing, Araneda said. CONTACT: Gasoducto Atacama Y Cia. Ltda. Isodora Goyenechea 3365 Piso 8 Santiago, Chile Phone: 3663800 Fax: 3663802 Contact: Rudolf Araneda, Chief Executive Officer =============== C O L O M B I A =============== * Colombia Gets $180M From World Bank ------------------------------------- Colombian Finance Minister Roberto Junguito said that Colombia will receive US$180 million from the World Bank on Friday. The funds are the second installment of a US$400 million loan approved last year, according to Dow Jones Newswires. Junguito disclosed that the loan's interest rate is Libor plus 55 basis points. The country has the option to change from a floating rate to a fixed one. The loan has a 14-year term and 9- year grace period. The World Bank has also promised to provide Colombia with up to US$3.0 billion in loans over the next three years. The signing will be in October. Colombia had felt the need for multilateral funding as the country's international bond sales gad been affected by the regions economic woes primarily caused by the crisis in Brazil and Argentina. ================================= T R I N I D A D & T O B A G O ================================= BWIA: Finally Gets Government Attention --------------------------------------- Prime Minister Patrick Manning admitted that BWIA had approached the government for help but was not given attention, as the country was having an election. A report by the Trinidad Guardian reveals that BWIA has lost US$2.5 million from the last two months, sustaining severe financial difficulties since the September 11 attacks. The airline has laid out its restructuring and reorganization plans aiming to rationalize its fleet and reduce operational profits. The company aims to save at least US$1 million monthly. The government owns 49 percent of the airline. Manning said that they will be addressing BWIA's problems but did not divulge when. He explained that the government is new and that they are still trying to settle in. *********** 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 * * *