/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/021028.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Monday, October 28, 2002, Vol. 3, Issue 213 Headlines A R G E N T I N A BANCO HIPOTECARIO: Tardy 1Q02 Results Impacted by Devaluation EDENOR: To Default On $3.4M Interest Payment Due Oct. 25 IMPSAT FIBER: Court Approves Reorg Plan Disclosure Statement IRSA/CRESUD: Placing $150M In 5-Yr. Bonds METROGAS: Default on US$100 Million Loan Imminent METRORED: Auction Expected Soon B E R M U D A TYCO INTERNATIONAL: Restructuring, Impairments Hamper 4Q02 B R A Z I L ACESITA: Debenture Issue Gets Shareholder Nod AES CORP.: 3Q02 Earnings Lower as Restructuring Continues AES SUL: S&P Cuts National Scale Rating BCP: Injunction Versus TIM Rejected LIGHT: S&P Downgrades Local, Foreign Currency Ratings * Lula Win May Not Overcome Factors Leading Up To Default C H I L E MADECO: Bondholders To Meet Monday To Consider Waiver E C U A D O R EMELEC: Debt Swells to US$248 Million M E X I C O AHMSA: Losses Down by 70% GRUPO IUSACELL: 3Q02 Results Modestly Better GRUPO IUSACELL: Announces Favorable Ruling in Injunctive Action GRUPO TMM: Provides Additional Info About Ruling On TFM VAT Suit SANLUIS CORPORACION: 3Q02 Sales Higher, Results Improve VITRO: Shares Gain After Posting 3Q02 Profit VITRO: Seeks $200M In Bank Loan To Pay Debt - - - - - - - - - - ================= A R G E N T I N A ================= BANCO HIPOTECARIO: Tardy 1Q02 Results Impacted by Devaluation ------------------------------------------------------------- Banco Hipotecario SA, Argentina's largest mortgage bank, belatedly reported its first-quarter results ended March 31 last week. According to Dow Jones Newswires, the bank posted a net loss of ARS790.5 million ($1=ARS3.61) during the quarter. "This loss primarily reflects the adverse effects of inflation, the devaluation of the Argentine peso and the `pesification' of the Bank's foreign currency-denominated assets and liabilities during the first quarter," the bank said in a press release. At the end of March, the bank's loan portfolio stood at ARS3.48 billion, down from ARS5.26 billion a year earlier. International credit ratings agency Standard & Poor's slashed Hipotecario's credit rating to `D' earlier this year, after the bank halted payments on all its bond and loan obligations. In a recent interview with Dow Jones Newswires, Miguel Kiguel, Hipotecario's chairman said that the bank hasn't made any progress in restructuring its US$1.1 billion in outstanding bonds and loans, although it continues to explore options. The bank hired ABN Amro NV and Salomon Smith Barney, a unit of Citigroup Inc., to restructure the debt. Hipotecario is owned by Argentina's IRSA Inversiones y Representaciones SA and the government. CONTACT: BANCO HIPOTECARIO SA Reconquista 101 (1005) - Capital Federal Buenos Aires Argentina Phone: 0800-999-4476 Fax: (54-11) 4347-5278 E-mail: ri@hipotecario.com.ar Home Page: http://www.e-potecario.com.ar Contact: Miguel A. Kiguel, Chairman RESTRUCTURING ADVISORS: 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 ABN AMRO HOLDING N.V Foppingadreef 22 1102 BS Amsterdam, The Netherlands Phone: +31-20-628-9393 Fax: +31-20-629-9111 Home Page: http://www.abnamro.com Contact: Investor Relations(HQ1191) Gustav Mahlerlaan 10 PO Box 283 1000 EA Amsterdam The Netherlands Phone: +31 (0) 20 628 78 35 +31 (0) 20 628 78 37 E-mail: investorrelations@nl.abnamro.com EDENOR: To Default On $3.4M Interest Payment Due Oct. 25 -------------------------------------------------------- Argentine electric distributor Empresa Distribuidora y Comercializadora Norte's (Edenor), informed the Buenos Aires bourse that it would miss a US$3.4 million interest payment on US$82 million in class 3 debentures maturing October 25. According to Business News Americas, the utility has been suffering from low energy rates, which have been frozen at their January 2002 levels, despite the significant devaluation of the Argentine real against the US dollar. Its French parent, EDF, recently announced it would take a charge of US$490 million for Edenor, which erased some US$854 million from EDF's books last fiscal year due to the devaluation of the Argentine peso. "The problem is that most of our debts are US-dollar denominated so the devaluation of the peso has been a disaster for us," EDF Argentina country manager Yves Desrousseaux said. CONTACT: EDENOR S.A. Azopardo Building Azopardo 1025 (1107) Capital Federal Phone: (54-11) 4346-5000 Fax: (54-11) 4346-5300 E-mai: to ofitel@edenor.com.ar Home Page: http://www.edenor.com.ar IMPSAT FIBER: Court Approves Reorg Plan Disclosure Statement ------------------------------------------------------------ Impsat Fiber Networks Inc.'s (IMPT) Chapter 11 reorganization plan has received approval for disclosure from a U.S. bankruptcy court Wednesday. U.S. Bankruptcy Judge Robert E. Gerber signed the authorization order on the adequacy of the disclosure statement as well as the form of ballots for eligible voting classes, according to a report from Dow Jones Newswires. A hearing to consider confirmation of the plan is slated for Dec. 11 before the U.S. Bankruptcy Court in Manhattan. The deadline for submission of ballots for classes of creditors voting on the plan was set on December 3, while objections are due November 26. Under the plan, existing noteholders could receive up to 98 percent of the Company's new common stock. The plan provides for the cancellation of the Company's 12.125 percent senior guaranteed notes due 2003, worth US$125 million. Interest on the notes worth about US$14 million will also be canceled. Holders of those notes would get prorated portions of new Series A guaranteed senior notes with a total face amount of $67,531,000. Impsat Fiber will issue 10 million shares of new common stock, with a total value of US$100 million, as well as US$118,034,000 in principal o new guaranteed notes under the plan. Noteholders of the Company's US$300 million 13.75 percent senior notes due 2005 and US$225 million of 12.375 percent senior notes due 2008 will receive varying treatments depending on the entire voting classes vote on the plan. If all voting classes vote in favor of the plan, the noteholders will receive new common shares with a total worth of US$98 million. Otherwise, they would be getting about US$73 million. The disclosure statement also says that creditors holding contingent guaranteed claims would be receiving shares of new Series B guaranteed senior notes. Impsat Fiber, some of its noteholders and some holders of contingent guarantee claims signed lock-up agreements earlier this year. The agreements require them to support a plan that incorporated provisions of a term sheet. The Company filed for Chapter 11 bankruptcy protection on June 11 this year, declaring assets of US$337.1 million and liabilities f US$1.33 billion as of the end of May. The Company has revealed that some of its liabilities were nondebtor company obligations, which Impsat had guaranteed. The Company's principal activities are to provide telecommunication network and Internet services to financial institutions, governmental agencies and other customers in Latin America, providing services through networks, which consists of owned fiber optic and wireless links, teleports, earth stations and leased fiber optic and satellite links. Impsat Fiber Network offers integrated telecommunications solutions with an emphasis on end-to-end broadband data transmission. Data and value added accounted for 73% of 2001 revenues; Internet, 14%; Carriers services, 6%; Equipment sales, 5% and Broadband network, 2%. CONTACT: Impsat Fiber Networks Inc. Head Office Alferez Pareja 256 (1107) Buenos Aires Argentina 1107 Tel +54 11 5170-0000 Fax +54 11 4307-1525 Web http://www.impsat.com Contact: Enrique M. Pescarmona, Chairman Ricardo A. Verdaguer, President and CEO IRSA/CRESUD: Placing $150M In 5-Yr. Bonds ----------------------------------------- Two firms owned by IFISA holding company were due to issue beginning Friday US$150 million in five-year securities as part of their efforts to pay down debt and raise money to support new investments. According to a report by Business News Americas, real estate firm IRSA- -Inversiones y Representaciones S.A. will issue US$100 million of the bonds and Argentine agricultural company Cresud would offer US$50 million. The securities - which are bonds convertible into shares - will carry annual yields of 8%, with payments coming twice yearly. The sale will end Nov. 13. IFISA has a 50% stake in Cresud, which in turn has a 20% interest in IRSA. The holding company intends to maintain at least that stake in IRSA and Cresud and increase them if possible, IRSA officials said. IRSA is one of Argentina's most important property development firms with major holdings in downtown Buenos Aires and elsewhere, including four five-star hotels with 750 rooms. The company also owns over 7 million square meters of unused property in prime spots, which the firm said it plans to develop with some of the cash raised by the bond sale. Cresud is one of Argentina's lead farming companies, owning 19 farming units, which mainly produce grain and are used for grazing lands for the 80,000 cattle heads they own. The company represents 51% of Argentina's agricultural exports, according to figures the company provided. To see latest financial statements: http://bankrupt.com/misc/Irsa.pdf CONTACT: Irsa Inversiones y Representaciones SA Head Office Piso1 Bolivar 108 Buenos Aires Argentina C1066AAD Tel +54 11 4323 7555 Fax +54 11 4323 7597 Web http://www.irsa.com.ar/ Contacts: Eduardo Sergio Elsztain, Executive Chairman M. Marcelo Mindlin, Executive Vice Chairman Atty Saul Zang, Vice Chairman METROGAS: Default on US$100 Million Loan Imminent ------------------------------------------------- An anonymous source from Metrogas reveals that the Company could default on a US$100 million loan if the government fails to increase energy rates by the end of this year. Business News Americas reports that the loans would be due in May 2003. However, the Company is confident that rates will be increased despite the postponement of the public hearing on gas rates. The hearing will be held on November 18. Metrogas defaulted on a loan worth EU110 million due Sept 27 this year. However, unlike most other Argentine companies, the Company had been able to make interest payments after the currency devaluation last January. In fact, Metrogas will be paying US$10 million in interest on three series of debentures on the first of November. According to the source, the Company has cut costs and investments and carefully managed its cashflow to enable it to afford this payment. The Business News Americas report detailed the interest charges as follows: US$4.14mn on series A (US$100mn, 9.875%, expiry 2003), 3.27mn euros on series B (110mn euros, 7.375%, expiry 2002), and US$2.62mn on series C (US$130mn, floating interest rate, expiry 2004). Restructuring the loans will be delayed until utility rates are finalized. Metrogas, owned by the Gas Argentino consortium of UK's BG and Spain's Repsol-YPF, has about 1.9 million customers in Buenos Aires and southern and eastern greater metropolitan areas. CONTACT: METROGAS Alberto Alfredo Alvarez, President William Harvey Adamson, First VP Gen. Director Enrique Barruti, HR Director Fernando Aceiro New Bus. Director Luis Domenech Admin. and Fin. Director Their Address: G. Araoz de Lamadrid 1360 1267 Buenos Aires, Argentina Phone: (800) 422-2066 Fax: (201) 262-2541 Email: info@metrogas.com.ar URL: http://www.metrogas.com.ar METRORED: Auction Expected Soon ------------------------------- The auction for Argentine corporate communications provider MetroRed Argentina will be launched within the next few weeks, reports Business News Americas. The minimum bid price was set at US$8 million, according to Francisco Lofuedo, one of MetroRed's court-appointed managers. The overseer will then select in December the highest bidder for the Company's assets. Companies expected to have an interest in MetroRed are Argentine corporate communications providers Datco, Iplan and Techtel as well as local ISP Netizen - a subsidiary of US-based holding SkyOnline - and Argentina's Dolphin investment fund. Although previous offers for MetroRed were all under US$2 million, the auction is expected to fetch a higher price since the creditors have agreed to swallow the Company's liabilities. Metrored's two largest creditors Boston financial institutions BankBoston and Fidelity currently hold US$100 million and US$47 million of the Company's liabilities, respectively. MetroRed's going price should also be helped by its strong operational performance. For the month of September, the Company reported revenues of ARS2.8 million (US$770,000) and net profits of ARS450,000. However, even with a better-than-expected auction, their chances of seriously cutting their losses are "very improbable," Lofuedo and court appointed CEO Julio Bello said. MetroRed Argentina is the bankrupt Argentine unit of regional corporate communications provider MetroRed Telecom. The unit 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 its largest creditors to take control of the struggling company. 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 ============= B E R M U D A ============= TYCO INTERNATIONAL: Restructuring, Impairments Hamper 4Q02 ---------------------------------------------------------- Tyco International Ltd. reported Thursday that revenues from continuing operations for the fourth quarter ended September 30, 2002 were $9.36 billion, an increase of 9.9% as compared to $8.52 billion for the quarter ended September 30, 2001, and an increase of 3.0% as compared to the $9.09 billion for the Company's fiscal third quarter. Revenues from continuing operations for 2002 increased by 4.8% to $35.67 billion from $34.04 billion last year. Including impairment, restructuring and other unusual charges from continuing operations of $1.15 per share, which are discussed below, the loss for the fourth quarter from continuing operations was 85 cents per share, as compared to earnings of 61 cents for the same quarter last year. The loss per share from continuing operations for 2002 after all charges was $1.40 per share, compared to income from continuing operations of $2.40 a year ago. Diluted pro forma earnings from continuing operations for the fourth quarter were 30 cents per share as compared to 82 cents per share for the fourth quarter of fiscal 2001. Pro forma results from continuing operations for the fourth quarter of fiscal 2002 are presented excluding the discontinued operations of CIT, are before impairment, restructuring and other unusual charges, which are discussed below, and reflect a tax rate of 35.9%. Assuming a 22.0% tax rate, which is the effective rate on pro forma earnings from continuing operations for the full fiscal year, fourth quarter 2002 pro forma earnings were 36 cents per share. Pro forma earnings per share for 2002 were $1.79 compared to $2.88 for fiscal 2001. "Tyco's operations generated strong cash flow and revenues that exceeded the expectations we outlined in our September 25th conference call. Considering the difficult economic environment and the issues facing the Company, this performance reflects our leading market positions, the strength of the products and services we offer, and the dedication and hard work of our employees. We will continue to build these businesses and leverage their strengths over time," said Ed Breen, Tyco's Chairman and Chief Executive Officer. CASH AND LIQUIDITY Free cash flow was approximately $1.3 billion in the quarter. The primary drivers behind the strong quarterly cash flow were strong collections of accounts receivable and reduced inventory levels. Tyco refers to the net amount of cash generated from operating activities, less capital expenditures, spending on the Tyco Global Network (TGN), changes due to the Company's accounts receivable securitization program, and dividends, as "free cash flow." Free cash flow is not a substitute for cash flow from operating activities as determined in accordance with GAAP. Included as a reduction of operating cash flows in the fourth quarter of fiscal 2002 is $191 million related to cash spending on restructuring and other unusual items, compared with $102 million in the fourth quarter last year. Cash flow from operating activities was approximately $1.8 billion in the quarter. The Company paid $431 million in cash for acquisitions in the quarter, including $326 million for the acquisition of dealer accounts, $93 million relating to purchase accounting liabilities and $10 million related to contingent deferred purchase price on prior acquisitions. Free cash flow is calculated before these expenditures. Tyco's debt-to-capitalization ratio was 49.4% at September 30, 2002 compared to 49.0% at June 30, 2002. The net debt-to- capitalization ratios were 36.2% and 43.8%, respectively, for the same periods. IMPAIRMENT, RESTRUCTURING AND OTHER UNUSUAL CHARGES The Company recorded impairment, restructuring and other unusual charges from continuing operations of $2.8 billion pre-tax, or $1.15 per share after- tax (EPS), of which approximately $2.2 billion is non-cash and $600 million is cash. The charges are as follows: Tyco Telecommunications (formerly TyCom) related: Total charges associated with TyCom were approximately $2.2 billion pre-tax, or 88 cents EPS, of which approximately $1.72 billion is non-cash and approximately $460 million is cash. The non-cash portion relates primarily to the impairment of goodwill and intangibles ($663 million), impairment of TGN and other fixed assets ($592 million) and the write-down of certain investments, accounts receivable and inventory. The cash portion is primarily related to severance, facility consolidations and the termination of certain lease commitments. All Other Charges: The Company took additional charges of approximately $600 million pre-tax, or 27 cents EPS, of which approximately $470 million is non-cash and approximately $130 million is cash. The non-cash charge is comprised primarily of $109 million related to the impairment of goodwill in the Engineered Products and Services segment; $111 million related to the impairment of intangible assets associated with the Security business outside of the United States; and $224 million related to inventory and long- lived assets at Electronics. The cash portion relates primarily to severance and facility consolidations. PRO FORMA QUARTERLY RESULTS FROM CONTINUING OPERATIONS Pro forma quarterly segment profits and margins for the Company's Electronics, Healthcare and Specialty Products, Fire and Security Services, and Engineered Products and Services segments that are presented in the discussions below are operating profits before impairment, restructuring and other unusual charges and credits. The Engineered Products and Services group, formerly Tyco Flow Control, has been presented as a separate segment for all periods presented to conform with current internal reporting structures. In fiscal 2001, its results were included in the Electronics and Fire and Security Services segments. Additionally, pro forma results presented below for the third quarter reflect changes in each segment as a result of certain accounting adjustments and reclassifications. See the accompanying table to this press release for adjusted pro forma segment results by quarter for fiscal 2002. Results before impairment, restructuring and other unusual charges are commonly used as a basis for operating performance, but should not be considered an alternative to operating income determined in accordance with GAAP. For GAAP results by segment, see the accompanying table to this press release. All dollar amounts are stated in millions. Electronics September 30, June 30 September 30 2002 2002 2001 Segment revenues $2,564.2 $2,650.7 $2,785.1 Segment profit $234.4 $339.8 $797.1 Segment margins 9.1% 12.8% 28.6% For the quarter ended September 30, 2002, revenues for Tyco's electronics businesses, excluding Tyco Telecommunications which is discussed below, decreased approximately 3% from the same period a year ago to $2.52 billion. Pro forma profit at Tyco's electronics businesses, excluding Tyco Telecommunications, was $306.5 million, or 12.1% margin, for the quarter ended September 30, 2002, compared to $703.1 million, or 26.9% margin for the quarter ended September 30, 2001. On a sequential quarterly basis, revenues were flat and pro forma profit declined 16%. The Electronics business continued to be negatively impacted by further softening of demand in the telecommunications end markets the company serves. These decreases were partially offset by revenue growth in automotive products and revenues from companies acquired in fiscal 2002. Pro forma margins were impacted primarily as a result of continuing pricing pressure, operating inefficiencies and the impact of reduced volume on a fixed cost base. Revenues at Tyco Telecommunications decreased year over year 76%, and sequentially 71%, to $40.7 million, as the Company is winding down the construction of undersea systems for third parties. Tyco Telecommunications had a pro forma loss of $72.1 million for the fourth quarter compared to pro forma profit of $94.0 million in the fourth quarter a year ago and a pro forma loss of $23.2 million in the third quarter of fiscal 2002. The Company expects that this business will generate operating losses of approximately $200 million in fiscal 2003 as it does not anticipate any new construction contracts or sale of capacity on its systems. Restructuring actions commenced during the fourth quarter are anticipated to reduce those losses to a run rate of $125 million to $150 million by the end of 2003. Healthcare and Specialty Products September 30 June 30 September 30 2002 2002 2001 Segment revenues $2,59 $2,526.0 $2,335 Segment profit $512.2 $528.1 $606.8 Segment margins 19.7% 20.9% 26.0% The Healthcare and Specialty Products segment revenues for the fourth quarter of fiscal 2002 increased 11% over the same period a year ago, and 3% from the previous sequential quarter. Changes related to the components within the segment are detailed below. Tyco Healthcare revenues increased year over year 14% to $2.12 billion, and 4% from the previous sequential quarter. Pro forma profit was $498.6 million for the fourth quarter of fiscal 2002, or down 1% compared with the prior year and up 10% sequentially. Within Tyco Healthcare, the revenue increase was driven primarily by the acquisition of Paragon Trade Brands in January 2002. International growth continued to be strong, and in the United States, growth at Kendall, Mallinckrodt and U.S. Surgical was partially offset by the divestiture of SDI in the fourth quarter. Pro forma margins decreased as compared to the same period last year in the healthcare business primarily due to the acquisition of Paragon, which has margins lower than the segment average, product mix and higher selling costs associated with the introduction of new products. Sequentially, improvement came from Paragon, the divestiture of SDI and product mix. Tyco Plastics' revenues were down slightly from the both the previous year and previous sequential quarter, to $476.9 million. The impact of acquisitions offset an organic decline in this business. The decline is a result of decreased volumes in the hanger business and unfavorable pricing in the adhesives business. Pro forma margins were down year over year in the group as a result of volume shortfalls and pricing issues, as well as expenses associated with inventory management and accounts receivable. Fire and Security Services September 30 June 30 September 30 2002 2002 2001 Segment revenues $2,887.2 $2,711.3 $2,271.1 Segment profit $322.6 $316.8 $468.5 Segment margins 11.2% 11.7% 20.6% Tyco Fire and Security revenue increased 27% year over year and 6% from the previous sequential quarter. The increase is primarily the result of acquisitions, such as Sensormatic, Security Link, Edison and the ADT Authorized Dealer sales programs, slightly offset by a decline in the North American Fire Protection business. The Company expects revenue growth in Security to slow as it scales back its dealer sales program, and Fire Protection revenue to moderate as well. The Company's fire businesses performed well in 2002 due to strong backlog, but weakness in industrial construction markets are expected to negatively impact the segment in 2003. Pro forma margins in the segment have declined from the prior year primarily as a result of the acquisition of Sensormatic, as well as pricing and competitive pressures in the contracting businesses worldwide. Engineered Products and Services September 30 June 30 September 30 2002 2002 2001 Segment revenues $ 1,311.1 $1,197.9 $ 1,125.3 Segment profit $197.2 $193.1 $222.6 Segment margins 15.0% 16.1% 19.8% At Tyco Engineered Products and Services (formerly Tyco Flow Control), revenues increased 17% over the prior year and 9% from the previous sequential quarter. At Tyco Flow Control (formerly Valves & Controls), revenues increased due to several large turn key heat tracing projects and acquisitions, partially offset by pricing pressure and market conditions. Within Tyco Electrical and Metal Products, revenues increased primarily as a result of increased selling prices as steel prices rose significantly during the quarter, a trend that is expected to continue in the first quarter of fiscal 2003. Tyco Infrastructure revenues increased slightly, as a result of acquisitions, and Tyco Fire and Building Products revenues were flat. Pro forma profit was down from last year due to reduced royalty payments from divested businesses as well as market and competitive pressures on selling prices within the Flow Control and Fire and Building Products divisions. Sequentially, these pressures were partially offset by the impact of cost savings programs and favorable pricing at Electrical and Metal Products. FISCAL 2003 GUIDANCE Earnings per share from continuing operations are expected to be in a range of 30 cents to 33 cents for the first quarter of fiscal 2003, and $1.50 to $1.75 for the full fiscal year. Free cash flow is expected to approximate $0 to $300 million in the first quarter of fiscal 2003 and $2.5 billion to $3.0 billion for the full fiscal year. ABOUT TYCO INTERNATIONAL Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2002 revenues from continuing operations of approximately $36 billion. To see financial statements: http://bankrupt.com/misc/Tyco_International.htm 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 =========== ACESITA: Debenture Issue Gets Shareholder Nod --------------------------------------------- The proposed BRL900 million (US$210 million) non-convertible debenture issue of Brazilian stainless steel maker Acesita has received approval from the company's shareholders. "The debentures slated for sale in November will be for four years and will be renegotiated after two years offering holders the option to sell the debt," said Acesita spokesman Jose Antonio Bicalho, as quoted by Business News Americas The new issue, which expires in 360 days, is designed to roll over some BRL300 million debentures, maturing in December. The market will determine the yield on the date of issue. Acesita is currently under a debt restructuring process, facing a total debt of BRL2.4 billion. Part of the company's debt comes from the company's stake in other steel mills. "Out of all of its subsidiaries, CST's debt weighs the most on Acesita's results. CST is a significant asset but also has large debts," Bicalho said. However, Bicalho said that the debenture issue is not part of Acesita's restructuring, adding that CST is not part of Acesita's core business. CONTACT: ACESITA Avenida Joao Pinheiro, 580 30130-180 Belo Horizonte, Minas Gerais, Brazil Phone: +55-31-3235-4200 Fax: +55-31-3235-4294 URL: http://www.acesita.com.br Contacts: Luiz A. de Lima Fernandes, President Bernardo C. Marie Del Litto, Industrial Director Guilherme Amado, Financial Superintendent AES CORP.: 3Q02 Earnings Lower as Restructuring Continues --------------------------------------------------------- The AES Corporation (NYSE: AES) reported Thursday earnings from recurring operations of $92 million, or 17 cents per share, for the third quarter ended September 30, 2002, down 39% from $151 million, or 28 cents per share, in the year earlier quarter. Earnings from recurring operations for the nine months ended September 30, 2002, were $410 million, or 76 cents per share, down 26% from $557 million, or $1.03 per share, for the nine months ended September 30, 2001. Revenues for the third quarter were $2.1 billion, up 16% percent from a year earlier. After adjusting for non-cash charges and discontinued business operations, AES reported a GAAP loss for the third quarter of $(314) million, or (58) cents per share. For the nine months ended September 30, 2002, the GAAP loss was $(743) million, or $(1.38) per share. The GAAP loss for the third quarter of 2002 includes $(215) million, or (40) cents per share, from discontinued operations. Parent operating cash flow was $1.24 billion for the twelve months ended September 30, 2002 and $252 million for the third quarter of 2002. Parent company liquidity at September 30, 2002, stood at $395 million. SUMMARY OF KEY FINANCIAL RESULTS 3Q 3Q Change YTD YTD Change 2002 2001 2002 2001 Pro Forma Net Income Millions ($) 92 151 (59) 410 557 (147) $/share 0.17 0.28 (0.11) 0.76 1.03 (0.27) GAAP Income (Loss) from Continuing Operations Millions ($) (99) 6 (105) (24) 267 (291) $/share (0.18) 0.01 (0.19) (0.04) 0.50 (0.54) Parent Operating Cash Flow Millions ($) 252 335 (83) 846 782 64 "This has been a challenging time for AES and others in our industry. We are intensely focused on managing cash flow and liquidity as we work on solutions to near term challenges. At the same time, we remain committed to strengthening AES for the longer term through various initiatives to improve business performance," said President and Chief Executive Officer, Paul Hanrahan. "As a result of these efforts, we have begun to see improvements in the operating margins in many of our businesses, especially in the contract generation business line." Mr. Hanrahan continued, "We have also made good progress on asset sales. In September we completed the sale of AES NewEnergy ahead of schedule for approximately $260 million, and we expect to close the sale of Cilcorp by the end of the first quarter of 2003 and to realize approximately $500 million in cash." Barry Sharp, Chief Financial Officer, added, "This quarter we have also launched an exchange offer for our 2002 and 2003 notes as well as a new multi-tranche $1.6 billion senior secured credit facility. This is an extremely important transaction for AES as it will help address our near term liquidity issues, permitting the company to establish a more manageable debt maturity schedule over the next several years, as well as providing the flexibility to deliver and strengthen the balance sheet." AES is a leading global power company comprised of contract generation, competitive supply, large utilities and growth distribution businesses. The company's generating assets include interests in 176 facilities totaling over 60 gigawatts of capacity, in 33 countries. AES's electricity distribution network sells over 108,000 gigawatt hours per year to over 16 million end-use customers. For further info: http://bankrupt.com/misc/AES_Corp.htm CONTACT: AES CORP Investor Relations Kenneth R. Woodcock, 703/522-1315 www.investing@aes.com AES SUL: S&P Cuts National Scale Rating --------------------------------------- Standard & Poor's lowered the national scale rating of AES Sul Distribuidora Ga�cha de Energia S.A. (AES Sul) to brCCC/Negative from brBB/Negative. According to S&P, AES Sul is expected to face difficulties to amortize a syndicated loan payment due in January 2003 unless a broader agreement to restructure debt is reached with its creditors. AES Sul is facing about US$115 million (syndicated loan and debentures) of debt coming due in the next 12 months, which has to be partially rolled over as expected cash generation will be around US$68 million in this timeframe. The outlook on the AES Sul is negative due to the uncertainties on how ANEEL (Brazilian regulatory agency for energy sector) and the new administration will deal with complex developments in the regulatory framework, and continuing credit crunch at least for the first six months of 2003. S&P ANALYSTS: Marcelo Costa, Sao Paulo (55) 11-5501-8955; Juliana Gallo, Sao Paulo (55) 11-5501-8948; Milena Zaniboni, Sao Paulo (55) 11-5501-8945 BCP: Injunction Versus TIM Rejected ----------------------------------- An injunction aiming to block PCS operator TIM's service launch filed by Band-B cellular operator BCP was denied by a Sao Paulo federal court, reports Business News Americas. Earlier, a similar injunction filed by Band-A operator Telesp Celular was also rejected by Judge Aroldo Jose Washington. It also lost its appeal at a higher court. Lawyers for BCP argued that changes in the controlling shareholder before July 2003 was prohibited by local legislation. However, Judge Washington said that it is unreasonable to deactivate a company by reason of a law that expires within nine months. TIM's parent company had reduced its stake in Brazil Telecom holding company Solpart Participacoes from 37.3% to 19% to enable TIM to offer PCS services. CONTACT: Banco Comercial Portugues SA BCP Rua Augusta n 62/96, 2 piso Lisboa, Portugal 1149-023 Tel +351 213 211 000 Fax +351 213 211 739 Web http://www.bcp.pt/ Contacts: Jorge M. Jardim Goncalves, Chairman Felipe de Jesus Pinhal, Deputy Chairman Christopher de Beck, Deputy Chairman LIGHT: S&P Downgrades Local, Foreign Currency Ratings ----------------------------------------------------- Standard & Poor's downgraded Light Servicos de Eletricidade S.A.'s local currency rating to B/Watch Negative from BB/Negative. The ratings agency also downgraded Light's foreign currency rating to B/Watch Negative from B+/Negative. Even though LIGHT received a substantial capitalization -almost US$1 billion, out of which US$400 million were new contributions- from the parent company Electricite de France - EDF (AA/Negative/A-1+) in 2002, S&P believes that significant maturities in 2003, including a $150 million medium-term note coming due in February, impose significant refinancing risks. The ratings of LIGHT are on CreditWatch negative until a clear refinancing strategy is presented. S&P ANALYSTS: Marcelo Costa, Sao Paulo (55) 11-5501-8955; Juliana Gallo, Sao Paulo (55) 11-5501-8948; Milena Zaniboni, Sao Paulo (55) 11-5501-8945 CONTACT: LIGHT SERVICOS DE ELETRICIDADE S.A. Avenida Marechal Floriano, 168 20080-002 Rio de Janeiro, Brazil Phone: +55-21-2211-2794 Fax: +55-21-2211-2993 Home Page: http://www.lightrio.com.br Contact: Bo Gosta Kallstrand, Chairman Michel Gaillard, President and CEO Joel Nicolas, Executive Director, Operation Paulo Roberto Ribeiro Pinto, Executive Director, Investor Relations and CFO * Lula Win May Not Overcome Factors Leading Up To Default --------------------------------------------------------- Brazil's economy will be in the hands of the new president determined by this weekend's elections. Workers Party candidate Luiz Inacio Lula da Silva is favored by popularity surveys as a likely winner. Economists say that there are external factors that may force Brazil to default on its despite Lula's ingenuity, according to a report from the Wall Street Journal. The report enumerates the following factors that will eventually force Brazil to default, despite whatever measures Lula take: Emerging-Market Credit Crunch: After Brazil's last financial crisis, in 1999, investors returned quickly. These days, with war in Iraq on the horizon, the global economy unsteady and the U.S. stock market gyrating, investors are shying away from risk everywhere. As a result, Brazil may find its borrowing costs don't fall anytime soon. Investors who still want to put their money into emerging markets may seek safer shores -- China, South Korea, Mexico or Chile, for instance. Global Economic Woes: Brazil's economy is relatively insular, with exports constituting just 11% of gross domestic product. The country nonetheless feels the effects of slow economic growth elsewhere. It limits Brazil's exports, reduces the amount of foreign capital seeking an investment home and increases risk aversion among investors. Oil Shock: Brazil now produces 85% of its oil needs, so the direct impact of higher oil prices isn't so severe. Every $1 increase in the price of a barrel adds $200 million to Brazil's oil-import bill, estimates Rodrigo Azevedo, Brazil economist at Credit Suisse First Boston. But the indirect costs could be far greater. "An oil shock may force an increase in domestic fuel prices, pushing up inflation and forcing the government to keep interest rates high," Mr. Azevedo says. Higher rates, in turn, would raise Brazil's domestic debt burden. Austerity-Induced Recession: Should Mr. da Silva impress investors by cutting government spending, he may accidentally provoke an economic slowdown. A sluggish economy means lower tax revenues and greater government borrowing needs, and could make it even harder for Brazil to pay its debts. There is, however, the possibility that a radical move to increase the primary budget surplus -- which excludes debt payments -- would create so much goodwill in the markets that interest rates would drop sharply. "What happens in Brazil at the end of the day will hinge not only on what Lula does, but on what the world economy does," says Barry Eichengreen, an economist at the University of California at Berkeley. If the country defaults, it would have more difficulties to borrow funds to nurture economic growth, and the effects could be felt in neighboring impoverished country. Brazil is hoping to raise fresh money to finance its US$259 billion in net public debt. The country is expecting to raise US$4 billion in foreign bonds next year. However, international markets sees the country as risky, that the bonds have to pay interest 18 percentage points above comparable U.S. Treasurys in order to attract investors. ========= C H I L E ========= MADECO: Bondholders To Meet Monday To Consider Waiver ----------------------------------------------------- Chilean copper and aluminum manufacturer Madeco's bondholders, including several pension fund managers that also own 11.5% of Madeco, are due to meet Monday (Oct.28). Citing local newspapers, Business News Americas reports that the meeting will see a decision by these bondholders whether to waive their rights to be paid back because Madeco has not complied with the terms of the bond issue. However, the debt holders are likely to wait until an extraordinary shareholders' meeting is called to discuss a US$137-million equity issue. The board is expected to call the meeting in the next few days. Reports suggest that if the equity issue goes ahead, the bondholders are expected to receive US$24 million of the total. The bondholders could agree to have the debt converted into shares. Madeco has debts totaling US$325 million, of which about US$120 million is in short-term bank loans, US$100 million in long-term bonds and US$100 million related to its subsidiaries. The Company's operations in Chile, Peru, Argentina and Brazil have been hard hit by economic problems in the region, particularly in the latter two countries. In crisis-struck Argentina, Madeco has closed its plants. 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 ============= E C U A D O R ============= EMELEC: Debt Swells to US$248 Million ------------------------------------- Figures released by the Ecuadorian national power system operator Corporacion Cenace disclosed that distribution company Emelec has a total debt of US$248 million in the wholesale energy market According to Business News Americas, the debt is equivalent to 60% of the total debts of all the distribution companies in Ecuador. The figures are based on data available until September 26 of this year. The government has saved the country's distribution companies on two occasions before this, as debts spiral upward due to low power tariffs. A local paper has revealed that the government is in the process of bailing them out again. CONTACT: Electrica del Ecuador (EMELEC) Tel,fonos: (593-4) 248000 - 248003 Fax: (593-4) 248051 E-mail: asalcedo@teconet.net =========== M E X I C O =========== AHMSA: Losses Down by 70% ------------------------- Ahmsa, an iron and steel company based in Mexico, reported losses of MXP277 million for this year's third quarter. The reported loss is some 70 percent less than that of last year's MXP926 million loss for the same quarter. According to Business News Americas, the Company's operating losses totalled 795mn pesos (US$80.1mn) between July and September of this year, 5.8% more than 752mn in 3Q01. Sales in 3Q02 reached 8.01bn pesos (US$807mn), 1.7% less than the 8.15bn in same-period last year. For the first time since it filed for bankruptcy protection, the Company has called for a shareholder's meeting on November 7. Creditor banks are expected to ask for a change in the Company's management. Ahmsa owes about US$1.85 billion to creditor banks. The banks accused the Company's board of unwillingness to resolve the debt issue, breaking off negotiations with directors earlier. Ahmsa is the largest steel producer in Mexico with two plants in Monclova, Coahuila state. CONTACT: AHMSA Prolongacion B. Juarez s/n, Monclova , Coahuila 25770 Mexico http://www.ahmsa.com Phone: +52 86 33 81 72 Fax: +52 86 33 65 66 Contacts: Alonso Ancira Elizondo, CEO, Vice Chairman, Pres./CEO Jorge Ancira Elizondo, Chief Financial Officer Manuel Ancira Elizondo, Chief Operating Officer GRUPO IUSACELL: 3Q02 Results Modestly Better -------------------------------------------- Grupo Iusacell, S.A. de C.V. (NYSE: CEL) (BMV: CEL) (Iusacell or the Company) announced results for the third quarter ended September 30, 2002. (1) Highlights -- Revenues stabilized sequentially over the second quarter at $1,308 million -- Postpaid ARPUs increased to $682 from $676 in the second quarter -- Adjusted EBITDA margin (2) improved over second quarter from 23% to 26% -- Benefits of Company restructuring and facilities rationalization taking hold with ongoing savings of over $200 million annually "Iusacell's renewed focus on quality subscribers and streamlined operations has resulted in an improved postpaid Average Revenue per User (ARPU), a more profitable customer base, and a tighter cost structure. When the economic outlook improves, Iusacell stands to benefit from the operational and strategic changes we have implemented," said Carlos Espinal G., Iusacell's Chief Executive Officer. Quarterly Results Iusacell achieved 268,978 gross cellular additions during the third quarter 2002, 31% lower than the previous quarter, and 1% lower than the third quarter 2001. The decrease in gross additions during the quarter reflects the Company's renewed focus on high-value customers, and related changes in the commission structure designed to incent sales of higher traffic-generating product offerings. Consequently, the number of gross and net additions in low and ultra-low prepaid segments declined. Iusacell's total subscriber base increased 28% on a year over year basis, with net additions of 23,499 in the quarter, however, after an adjustment of approximately 47,000 customers in the previously reported subscriber base, the Company registered negative net additions of 23,913 in the quarter. As of September 30, 2002, subscribers totaled 2,176,478. The postpaid customer base declined over the quarter to approximately 371,000 due to fewer hybrid package gross additions and increased disconnections of lower ARPU generating customers. As part of the operational streamlining, the Company conducted a review of its subscriber base. This review identified approximately 47,000 existing prepaid customers who have not utilized Iusacell's network services since the start of the year. These inactive accounts were turned over on an extraordinary basis and are not included in the blended churn rate. Prepaid customers increased 41% year over year, totaling approximately 1,805,000 as of September 30, 2002. While blended churn improved from the 4.4% registered in the third quarter of 2001, turnover among low usage prepaid subscribers, combined with lower gross additions in both segments, increased the third quarter 2002 blended churn rate to 3.7% from the 3.0% reported in the second quarter of this year. Iusacell is focusing on its postpaid retention and renewal programs in an effort to further reduce churn in this high value market segment. The Company anticipates the blended churn rate will remain relatively high while the turnover of low usage prepaid subscribers continues. To improve high-value sales and emphasize the customer-care orientation of the Company, Iusacell is currently evaluating its Company-owned stores' performance. Selected stores will be relocated and new stores will be opened to optimize coverage in Mexico's key plazas. As of September 30, 2002, the total number of Company-owned stores was 155, compared to 111 one year ago. In the third quarter of 2002, Iusacell entered into direct distribution contracts with a number of national retail chains for more than 1,300 points of sale that had previously been serviced through third party distributors. The Company will continue to implement a more direct sales model in order to strengthen distribution relationships and improve cost structure. As of September 30, 2002 there were approximately 54,000 points of sale compared to approximately 43,000 one year ago. Third quarter 2002 revenues of $1,308 million held constant as compared to the second quarter of this year, after three consecutive quarters of decline. Compared to the previous year, third quarter revenues decreased 25% from the $1,747 million registered in the third quarter of 2001. Third quarter 2001 revenues included a $149 million from the sale of fiber optic and did not include revenues from Region 8, which was acquired in the fourth quarter of 2001. After four consecutive quarters of deterioration, postpaid ARPUs increased in the third quarter of 2002 to $682, from the $676 earned in the second quarter, as a greater number of new subscribers entered into higher revenue generating contracts. Compared to the third quarter of 2001, however, postpaid ARPUs decreased 16%. Among prepaid subscribers, ARPU increased 4% compared to the previous quarter, again due to higher turnover among low-end prepaid subscribers. Compared to the same period in 2001, however, prepaid ARPUs decreased 23%. In the third quarter of 2002, cost of sales decreased 5% from the second quarter of this year to $442 million. The reduction in costs was driven by lower acquisition cost associated with the decline in prepaid gross additions. On a year over year basis, cost of sales in the third quarter of 2002 decreased 11% compared to the same period in 2001, driven by the Company's cost- reduction efforts and the decline in sales. As a percentage of total revenues, cost of sales decreased from 36% in the second quarter, to 34% in the third quarter 2002. Third quarter 2002 sales and advertising expenses declined 3% compared to the second quarter of this year and 11% compared to the third quarter of 2001 due to expense reduction efforts. General and administrative expenses rose 8% compared to the previous quarter as a result of severance charges incurred during the quarter. In spite of these non-recurring charges, general and administrative expenses decreased 9% compared to the third quarter of 2001. EBITDA increased 13% in the third quarter compared to the second quarter of 2002, to $477 million. Compared to third quarter of 2001, EBITDA decreased 40%. Both 2002 and 2001's third quarter EBITDA results benefited from gains related to sales of non- strategic cellular towers of $65 million and $59 million, respectively (see "Tower Sales"). Restructuring-related severance costs totaled approximately $31 million in the third quarter of 2002. Adjusted EBITDA margin, which excludes tower gains and severance costs, was 26% in the third quarter, as compared to the 23% margin in the second quarter of 2002 and the 30% margin registered in the third quarter of last year. Depreciation and amortization expenses of $572 million declined 15% from the third quarter of 2001, driven by lower handset amortization expenses resulting from more cost-effective handset purchases and a market-driven handset mix weighted toward lower- cost handsets. Direct cash acquisition costs per postpaid subscriber improved from US$289 in the third quarter of 2001 to US$198 in the most recent quarter, due to restructured commission plans and lower handset costs derived from more efficient purchases and handset mix. Third quarter operating loss totaled $95 million compared to an operating gain of $127 million in the same period of 2001. Excluding 2002 severance charges as well as tower-related gains and the fiber optic sales in both years' quarters, Iusacell would have reported operating losses of $129 million and $76 million during the third quarter of 2002 and 2001, respectively. The Company reported an integral financing cost of $425 million in the third quarter of 2002, compared to $522 million in the same quarter of last year. The reduction in the integral financing cost was mainly driven by a lower foreign exchange loss in the third quarter of 2002 derived from the 3.7% peso depreciation against the U.S. Dollar in the period, compared to the 4.7% peso depreciation in the third quarter of 2001, as well as a higher monetary correction gains and foreign exchange hedging benefits. The higher operating loss in the third quarter of 2002 resulted in a net loss of $501 million, compared to a net loss of $412 million in the third quarter of 2001. Excluding the severance charges, tower related gains, and fiber-optic sales, Iusacell would have reported a $587 million loss in the third quarter of 2002 and a $615 million loss in the third quarter of 2001. Financial Condition Liquidity: During the third quarter of 2002, the Company funded its operations, capital expenditures, handset purchases, principal and interest payments mainly with internally generated cash flow and resources from the sale of certain non-strategic cellular towers. On September 30, 2002, the Company's operating cash balance was US$8 million. Iusacell also has US$25 million in escrow to cover interest payments through December 2002 on its 14.25% US$350 million Senior Notes due in 2006. The Company has no major principal payments due in the 2002 and 2003 time frame. Capital expenditures: Iusacell invested US$14 million in its cellular and PCS regions during the third quarter of 2002, primarily to expand coverage. As of September 30, the Company has invested US$59 million year to date (see Other Developments - PCS). The Company does not expect that 2002 capital expenditures will exceed the previously cited guidance of US$130 million. Debt: As of September 30, 2002, debt, including trade notes payable and notes payable to related parties, totaled US$840 million. All of the Company's debt is U.S. dollar-denominated, with an average maturity of 3.1 years. As of quarter-end, Iusacell's debt-to-capitalization ratio was 59.2%, versus 55.6% on September 30, 2001. Hedging: The Company ended the third quarter of 2002 with approximately US$182 million in foreign exchange hedge coverage, for the principal and interest payments related to the Company's 10% US$150 million Senior Notes due 2004 and short-term interest payments. In order to improve liquidity by eliminating the collateral account requirements of the hedge and to take advantage of a temporary weakness in the Mexican peso, the Company opted to unwind the full foreign exchange hedge contracted for in August and October 2001. This action was completed on October 9, 2002 at an aggregate cost of US$1.7 million. The Company will continue to look for opportunities to enter into cost efficient, foreign exchange hedging positions when appropriate. Other Developments Cost control initiatives: As disclosed in the second quarter 2002 earnings release, the Company will continue to adapt its operations to the current environment by taking significant steps towards reducing costs. As part of these initiatives, Iusacell reduced its total labor force by 842 permanent and outsourced positions, ending the third quarter of 2002 with 1,871 total employees. The re-sizing of the Company generated a $31 million severance cost in the quarter. The Company expects approximately $50 million in net cost reduction savings by year-end 2002 and annual savings of approximately $200 million in 2003. PCS: The Phase II PCS build-out, including the addition of network coverage to approximately 9 second-tier cities in Regions 1 and 4, was substantially completed in the third quarter. Once Phase II is fully placed in commercial service, Iusacell's footprint will cover approximately 65% of these two regions' population. Phase II has been financed by a portion of the funds raised in the 2001 rights offering and internally generated cash. Tower sales: During the third quarter of 2002, the Company sold and leased back 51 additional non-strategic towers to the Mexican subsidiary of American Tower Corporation (MATC) for approximately $65 million in net gains. Through 2001 and the first nine months of 2002, the Company had sold and leased back a total of 320 non- strategic cellular towers to MATC. Fiber optic inventory sales: In July 2002, the Company consummated a 1998 agreement with Marca-Tel, S.A. de C.V. to sell Iusacell dark fiber optic cable to Marca-Tel and purchase dark fiber optic cable from Marca-Tel through a series of fiber swaps. This transaction served to expand Iusacell's long distance network. The transaction generated an extraordinary gain of approximately $52 million in the third quarter of 2002 in accordance with Generally Accepted Accounting Principals (GAAP) in Mexico. For U.S. GAAP purposes, this transaction represents no registered gain. Corporate governance: Iusacell has taken the necessary actions to fully comply with Mexico's Securities Law. Specifically, the Company has: -- Ensured that independent Directors comprise at least 25% of the entire Board; -- Established a separate Audit Committee, removing the audit responsibilities from the former Finance and Audit Committee; -- Empowered the Audit Committee with the newly mandated functions; -- Appointed independent directors to a majority of the Audit Committee seats as well as the Committee's Chair; -- Modified its corporate bylaws to incorporate required changes with respect to the non-delegable duties of Board members, statutory auditors, stock repurchases and Board and Shareholder meeting notifications. Listing standards on the NYSE: In September 2002, the Company received notice from the New York Stock Exchange (NYSE) that it's not meeting one of the NYSE's continued listing standards because Iusacell's ADRs 30 average trading day price is below US$1.00. The Company has notified the NYSE of its intention to cure the deficiency within the required six-month period and is currently evaluating appropriate alternatives. Grupo Iusacell, S.A. de C.V. (Iusacell) (NYSE: CEL) (BMV: CEL) is a wireless cellular and PCS service provider in seven of Mexico's nine regions, including Mexico City, Guadalajara, Monterrey, Tijuana, Acapulco, Puebla, Leon and Merida. The Company's service regions encompass a total of approximately 91 million POPs, representing approximately 90% of the country's total population. Iusacell is under the management and operating control of subsidiaries of Verizon Communications Inc. (NYSE: VZ). To see financial statements: http://bankrupt.com/misc/Grupo_Iusacell.htm Investor Contacts: Russell A. Olson Chief Financial Officer 011-5255-5109-5751 russell.olson@iusacell.com.mx Carlos J. Moctezuma Manager, Investor Relations 011-5255-5109-5780 carlos.moctezuma@iusacell.com.mx GRUPO IUSACELL: Announces Favorable Ruling in Injunctive Action --------------------------------------------------------------- Grupo Iusacell, S.A. de C.V. (NYSE: CEL) (BMV: CEL) announced that on October 21, 2002, the Company was officially notified that the federal district court of Mexico City ruled in favor of Iusacell's cellular service concessionaires in their injunction ("amparo") filed against the special telecommunications tax enacted by the Mexican Congress on January 1, 2002. This ruling is subject to appeal by the Mexican government. Iusacell has no knowledge as to whether or not the Mexican government intends to file such an appeal. In March 2002, the Company filed several injunctive actions challenging the Mexican government's implementation of an additional 10% excise tax approved by the Mexican Congress on certain telecommunications services. The Company decided to pass the full impact of this new tax to its postpaid customers, although monthly service packages were modified to increase airtime minutes in an effort to compensate these high value customers for that impact. The excise tax has also been applied to prepaid cards with a face value equal to or in excess of Ps.$200. Even though the case is still subject to appeal, the Company believes that the district court decision is an important step towards obtaining a favorable final ruling. Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE: CEL; BMV: CEL) is a wireless cellular and PCS service provider in seven of Mexico's nine regions, including Mexico City, Guadalajara, Monterrey, Tijuana, Acapulco, Puebla, Leon and Merida. The Company's service regions encompass a total of approximately 91 million POPs, representing approximately 90% of the country's total population. Iusacell is under the management and operating control of subsidiaries of Verizon Communications Inc. (NYSE: VZ). Investor Contacts: Russell A. Olson Chief Financial Officer 011-5255-5109-5751 russell.olson@iusacell.com.mx or Carlos J. Moctezuma Manager, Investor Relations 011-5255-5109-5780 carlos.moctezuma@iusacell.com.mx GRUPO TMM: Provides Additional Info About Ruling On TFM VAT Suit ---------------------------------------------------------------- On October 11, 2002, GRUPO TMM, S.A., ("TMM") (NYSE: TMM) and Kansas City Southern ("KCS") (NYSE: KSU) owners through Grupo Transportaci�n Ferroviaria Mexicana, S.A. de C.V. of the controlling interest in TFM, S.A. de C.V. ("TFM") announced a favorable ruling on a value added tax claim, which has been pending in the Mexican courts since 1997. The claim arose out of the failure of the Mexican Treasury's delivery of a VAT credit certificate to a Mexican governmental agency rather than to TFM. Since that announcement, TMM and KCS have received numerous questions regarding the amount and timing of the expected recovery on that claim. By a unanimous decision, a three-judge panel of the Court of the First Circuit ("Federal Court") found that the Fiscal Court's ruling had violated TFM's constitutional rights. The Federal Court has remanded the case to the Fiscal court with specific instructions to vacate its prior decision and enter a new decision consistent with the guidance provided by the Federal Court's ruling. The Federal Court ruling requires the fiscal authorities to issue the VAT credit certificate only in the name of the interested party and not in the name of any third party, to issue the VAT credit certificate only in strict accordance with the terms of the fiscal code, and to deliver the VAT credit certificate only to the beneficiary and not to any third party. The new decision of the Fiscal Court must be issued in accordance with the guidelines of the Federal Court. TMM and KCS have been advised that the Federal Court's order is not subject to appeal by the Mexican government. However, the Fiscal Court's new decision may be challenged by either of the parties if such party believes that the new ruling does not comply with the order of the Federal Court. In addition a third party who can establish that its rights have been adversely and improperly affected by the new ruling may seek to bring a claim against TFM, but TFM believes that it would prevail against such actions. The face value of the VAT certificate at issue is approximately $206 million, and the amount of any recovery will reflect that principal amount adjusted for inflation and interest accruals from 1997. Based upon the language of the Federal Court's order and the advice of legal counsel, TMM and KCS remain optimistic about the ultimate outcome of this matter; however, the recovery, including the timing and final amount thereof, must await the conclusion of the legal process. 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 Transportaci�n 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 SANLUIS CORPORACION: 3Q02 Sales Higher, Results Improve ------------------------------------------------------- SANLUIS Corporacion, S.A. de C.V. (BMV: SANLUIS), a Mexican industrial group that manufactures auto parts, reported Thursday results for the three months ended September 30, 2002. Operational Results Sales and EBITDA of SANLUIS in the third quarter were US $105.7 million and US $16.4 million, respectively. Compared with the same period last year, this is 13.7% and 156.3% higher, respectively. The third quarter of last year was one of the most difficult periods in recent history with the troubles that the economy and the automotive industry in the US faced, which severely depressed the results in that period. During the first nine months of 2002, respective sales and EBITDA figures were US $324.6 million and US $50.1 million, or a 9.6% and 27.2% improvement over the same period in 2001, respectively. The increased return is the result of higher sales volumes, increased productivity and a better control of costs and expenses. The suspension business recorded sales during the third quarter of US $76.4 million, which places it 6% higher than the same sales level of the third quarter of last year. As for the first nine months of the year, sales were US $244.0 million, a 4.5% improvement over the same period in 2001. The Brake business during the third quarter recorded sales of US $29.3 million, an increase of 39.5% over the same period in 2001. On a nine-month accumulated basis, sales in the brake business were US $80.6 million, up 28.5% compared to the same period in 2001. The Brazilian leaf spring business sold US $8.9 million in the third quarter, while for the first nine months of the year the figure was US $30.3 million. For the same periods in 2001, the corresponding numbers were US $9.6 million and US $ 30.9 million, respectively. (The Brazilian results are negatively affected when the local currency sales are translated into U.S. dollars due to the 44.3% devaluation that the Real suffered during the 12 month period up to the September closing.) Consolidated Results for the Third Quarter 2002 (US $ Millions) (excluding Hendrickson Rassini and Luisminin all periods) 2001 2002 Q3 Q4 Q1 Q2 Q3 Last 12 Months Sales: Suspensions 72.0 77.6 78.2 89.4 76.4 321.6 Brakes 21.0 22.8 23.1 28.2 29.3 103.4 Consolidated 93.0 100.4 101.3 117.6 105.7 425.0 EBITDA: 6.4 5.4 13.7 20.0 16.4 55.5 % EBITDA 6.9 5.4 13.5 17.0 15.5 13.1 margin The main factors driving the improvement in results in the third quarter 2002 are: * Higher auto parts sales as production by our main customers increased in the U.S. market once the high inventory levels of last year were normalized. * Higher utilization levels at the plants; * Reduced fixed costs thanks to strict cost controls; * Favorable exchange rate trends. Restructuring On October 1, the international tender offer to restructure SANLUIS Corporacion S.A. de C.V.'s debt was officially launched, and investors will have the option of their preference. The choices offered are (i) debt for cash exchange and (ii) debt for debt exchange. The terms and conditions of both options were already publicly announced and are mentioned once more in the last part of this document. Deadline for the selection of either offer is November 8, 2002. Capital Expenditures Capital expenditures in the third quarter were US $6.6 million, and in the first nine months US $13.7 million. The largest investments were made in the Brakes business in order to increase machining capacity to meet additional demand from our customers. The corresponding figures for the previous year were US $8.1 million and US $30.5 million, respectively. Hendrickson Rassini During the quarter, the sale of SANLUIS' share in the "Hendrickson Rassini" joint venture (which focused on the production of suspensions for heavy trucks) was made official, in the view that it was not considered part of the company's strategy. During 2001, the sales level of this business was US $38.7 million. In order to facilitate the comparisons with the previous periods, all references in the historic numbers throughout this document are presented, excluding Hendrickson Rassini. About SANLUIS SANLUIS produces suspensions and brake components for the global automotive industry, with a principal focus on original equipment manufacturers (OEMs). Suspension products include leaf springs (parabolic and multi- leaf), coil springs, torsion bars, bushings, and stabilizer bars. The Brake Division produces drums and rotors. SANLUIS Rassini holds a 90% stake in the Mexican market for light truck suspensions and a 62% stake in the U.S. and Canadian markets. The division's solid and diversified client base includes General Motors, Ford, DaimlerChrysler, Nissan, Nummi, Volkswagen, and Toyota. In the Brake business, SANLUIS Rassini holds an 11% market share in the U.S. and Canada in the disc and drum segment of light vehicles. CONTACT: SANLUIS Corporacion, S.A. de C.V. Hector Amador In Mexico: Tel: 011-5255-5229-58-38 Fax: 011-5255-5202-66-04 E-mail: hamador@sanluiscorp.com.mx Web site: http://www.sanluiscorp.com VITRO: Shares Gain After Posting 3Q02 Profit -------------------------------------------- Vitro SA, Mexico's biggest glassmaker, saw its shares gain 1.3% to MXN8 after the market close at 3 p.m. Wednesday in Mexico City, reports Bloomberg. The stock rose after Vitro posted a profit of US$38 million in the third quarter of this year, reversing a US$59-million loss in the same quarter of last year. Job cuts and debt reduction also helped raise the value of the stock. Vitro reduced debt by US$165 million during the quarter to US$1.37 billion, using some proceeds from the sale of its Acros Whirlpool unit to Whirlpool Corp. for US$320 million in cash and assumed debt. Vitro is trying to cut costs and reduce debt to offset slowing sales and bolster earnings amid sluggish economies in Mexico and the U.S. The Company, which fired 1,120 workers last year, dismissed another 110 administrative workers during the quarter, it said. "They are very exposed to the U.S. construction industry and non- residential construction is in a recession," said Bond Snodgrass, an analyst with UBS Warburg LLC. CONTACT: VITRO, S.A. DE C.V. Investor Relations - Beatriz Martinez +52-81-8863-1258, bemartinez@vitro.com Media Relations - Albert Chico +52-81-8863-1335, achico@vitro.com Media - Eduardo Cruz +52-55-5089-6904, ecruz@vitro.com Web site: http://www.vitro.com VITRO: Seeks $200M In Bank Loan To Pay Debt ------------------------------------------- Vitro plans to obtain a US$200-million bank loan by November or December at its flat-glass division, said Juan Orozco, vice president of strategy and corporate finance, during the Company's third-quarter conference call. The loan will be in two tranches. It will be open for banks to participate in five to 10 days and will have a maturity of between three and five years. Vitro will use most of the proceeds to pay long-term debt maturing next year, and depending on the success of the issue, some additional short-term debt, Orozco said. *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter Latin American is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. John D. Resnick, Edem Psamathe P. Alfeche and Ma. Cristina Canson, Editors. Copyright 2002. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. 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