/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/021216.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, December 16, 2002, Vol. 3, Issue 248 Headlines A R G E N T I N A AT&T LATIN AMERICA: Anatel Grants Additional License IMPSAT: US Court Approves Restructuring, Chapter 11 Exit Plan OCA: Files For Preventive Bankruptcy TGS: Scrambles To Renegotiate $100M Debt Expiring December 18 * Argentine Federal Administrative Court Blocks Rate Hike Decree * Argentina Will Miss $726M Payment To World Bank B E R M U D A TRENWICK GROUP: S&P Reviews Implications of Recent Agreements B R A Z I L ACESITA: Owners In Talks To Resolve Debt Woes AES CORP.: Extends Exchange Offer Expiration Date AT&T LATIN AMERICA: Brazilian Bank Sues Local Unit Over Debts CEMAR: Aneel Analyzing Bids for Takover Candidates GLOBO: Three Firms Compete For 15% SIC Stake VASP: Narrows Losses In Nine Months Ended September 02 Period * Brazilian Congress Satisfies IMF Conditions With Tax Rate Vote C H I L E ENERSIS/ENDESA CHILE: Parent To Continue With Investments C O L O M B I A SEVEN SEAS: Granted Additional Extension of Cure Period U R U G U A Y GALICIA URUGUAY: Parent Mulls Incorporation of Int'l. Partner V E N E Z U E L A IBH: Ongoing General Strike Disrupts Operations PDVSA: Fires Four Execs Leading Strike * Prolonged Oil Export Trouble Key Credit Concern For Fitch - - - - - - - - - - ================= A R G E N T I N A ================= AT&T LATIN AMERICA: Anatel Grants Additional License ---------------------------------------------------- AT&T Latin America Corp. (Nasdaq: ATTL), a facilities-based provider of integrated business communications services and solutions in five Latin American countries, announced Thursday that it has received approval from Brazil's regulatory agency Anatel (Agencia Nacional de Telecomunicacoes) to provide domestic and international long distance service throughout Brazil. With this license, AT&T Latin America will now be able to provide a complete portfolio of corporate solutions with the addition of local and long distance voice services to its existing array of Internet and data services. AT&T Latin America will be able to offer services to the entire region of Sao Paulo State (Region 3) and the largest business centers outside this region where the company already has a presence, including Rio de Janeiro, Brasilia, Belo Horizonte, Curitiba and Porto Alegre. Together, these centers represent 60 percent of the country's corporate long distance market. "With this license in hand, we can significantly enhance our services portfolio, dramatically improve our cost structure and expand our reach while increasing our revenue base through our existing customers," said Joao Elek, general manager for AT&T Latin America in Brazil. "We've had success in launching similar services in Argentina, Chile and Peru so we can count on our know-how in extending this new offer." In addition to enhancing its service portfolio, the license to operate in the national and international long distance market will enable AT&T Latin America to increase its revenue with its existing customer base and immediately reduce expenses, due to the expected cost reduction of interconnection fees with other operators. The decision to compete in Brazil's long distance market further reinforces AT&T Latin America's presence in the country. "We stand behind our commitment to Brazilian telecommunications and we are confident about the future of our business," said Arthur Ituassu, vice president of regulatory and government affairs for AT&T Latin America in Brazil. "This license will allow us to better serve our Brazilian customers as we move forward in our regional consolidation strategy." AT&T Latin America in Brazil uses broadband technology to provide voice, data, video and Internet services primarily to the corporate market. With operations in Sao Paulo, Rio de Janeiro, Belo Horizonte, Campinas, Curitiba, Brasilia and Porto Alegre, the company provides coverage through its 100%- digital, high- capacity, fiber optic network. Currently, AT&T Latin America in Brazil has more than 1,200 clients with dedicated access to Internet and data. With more than 68,400 kilometers of installed fiber in Brazil, the Company's high-speed, IP network is capable of transporting large volumes of voice, data for private networks (VPNs), Internet, videoconferencing and e-commerce. About AT&T Latin America Corp. AT&T Latin America (Nasdaq: ATTL), based in Washington, is an autonomous facilities-based provider of integrated business communications services and solutions with operations in Argentina, Brazil, Chile, Colombia and Peru. As of September 30, 2002 the company's high-speed fiber network reached more than 7,950 total route kilometers or approximately 237,650 fiber kilometers, covering 17 major metropolitan areas. The company offers broadband communications services including data, Internet, voice, video-conferencing and electronic commerce services. For more information, visit AT&T Latin America's website at http://www.attla.com. CONTACT: AT&T Latin America Media: Jim McGann +1-202-689-6337 Investors: Catherine Castro +1-202-689-6336 URL: http://www.attla.com IMPSAT: US Court Approves Restructuring, Chapter 11 Exit Plan ------------------------------------------------------------- Impsat Fiber Networks, Inc. ("Impsat" or the "Company") (OTC:IMPT), a leading provider of integrated telecommunications services in Latin America, announced Thursday that the US Bankruptcy Court for the Southern District of New York approved the Company's Plan of Reorganization yesterday. The Plan was approved by creditors holding 83% of the indebtedness subject to ballot. The confirmation of the Plan took place exactly six months after Impsat filed for Chapter 11. The Plan enables Impsat to emerge from Chapter 11 as a financially stronger company, reducing the Company's principal and accrued interest by more than over $700 million. As a result, total consolidated indebtedness will be approximately $ 270 million. According to the terms of the new securities, no cash payments on principal or interest will be required for the first two years. As of November 30, 2002, Impsat had cash and cash equivalents on hand of approximately $57 million. Impsat expects to complete the administrative details to make its Plan effective before year-end. The Company's subsidiaries have continued to operate normally throughout the year. As part of the approved Plan, a new seven-member Board of Directors will be formed, including Mr. Ricardo Verdaguer, Impsat's chief executive officer, together with Joseph Thornton, William Connors, Thomas Doster IV, Raul Ramirez, Ignacio Troncoso, Elias Makris. The Management team will remain unchanged. Commenting on today's [Thursday] action by the court, Mr. Verdaguer stated: "The confirmation of our Plan gives us the financial structure we need to maintain our competitive position in the region. Completing the reorganization before year-end has been result of continued support from our creditors, clients and employees. Their vital support has allowed us to sustain and enhance our key commercial relationships, control our cash flow, and even improve our operating margins in difficult times. After sorting the financial challenges we faced, we are in an unmatched position to seize new opportunities in the region." The terms of the Plan approved are the same the Company previously announced. Impsat Fiber Networks, Inc. is a leading provider of fully integrated broadband data, Internet and voice telecommunications services in Latin America. Impsat has recently launched an extensive pan-Latin American high capacity broadband network in Brazil, Argentina, Chile and Colombia using advanced technologies, including IP/ATM switching, DWDM, and non-zero dispersion fiber optics. The Company has also deployed fourteen facilities to provide hosting services. Impsat currently provides services to 3,000 national and multinational companies, government entities and wholesale services to carriers, ISPs and other service providers throughout the region. The Company has local operations in Argentina, Colombia, Venezuela, Ecuador, Mexico, Brazil, the United States, Chile and Peru. Visit us at www.impsat.com. Statements regarding the restructuring or about future results made in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform act of 1995. These statements are based on current expectations and the current economic environment. The Company cautions that these statements are not guarantees of future performance. They involve a number of risks and uncertainties that are difficult to predict. Actual results could differ materially from those expressed or implied in the forward-looking statements. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the Company's Annual Report on Form 10-K and quarterly reports on Form 10-Q on file with the Securities and Exchange Commission. CONTACT: IMPSAT Fiber Networks, Inc. Hector Alonso or Gonzalo Alende Serra 54.11.5170.3700 www.impsat.com HOULIHAN LOKEY HOWARD & ZUKIN CAPITAL John McKenna or Lily Chu 212/497-4100 CITIGATE DEWE ROGERSON INC. John McInerney or Robin Weinberg 212/688-6840 OCA: Files For Preventive Bankruptcy ------------------------------------ OCA, Argentina's largest courier, applied for preventive bankruptcy status after failing to make good on US$205 million in debt, local daily Clarin reports. OCA, which generates a monthly income of ARS17 million, preceived the bankruptcy measure as the only way to avoid being taken over by creditors since they had OCA's shares as guarantee. Apart from the US$205-million debt, OCA owes ARS35 million with domestic suppliers and the tax collection system. OCA stopped quarterly payments of US$13 million for capital & interests in mid 2001, and in September 2001, missed the payment of US$7 million. Since then, no payment has been made. OCA was acquired by The Exxel Group OCA from Yabran group in 1997 in a US$430-million operation. According to Clarin, Exxel took out loans with foreign banks in order to fund the acquisition. URL: http://www.oca.com.ar/internacional.asp TGS: Scrambles To Renegotiate $100M Debt Expiring December 18 ------------------------------------------------------------- Argentine gas transport company Transportadora de Gas del Sur (TGS) is in talks with creditors to restructure terms on a US$100-million debt that matures December 18, Business News Americas reports, citing a company statement to the Buenos Aires stock market. TGS originally took out the loan in 1997 from BankBoston and Dresdner Bank. "With the situation in Argentina still as bad as it was six months ago, we simply can't afford to pay capital on this loan," a TGS source said, adding that TGS will however pay US$1.4 million in interest corresponding to the period June-December. With regards to the recent rates hike suspension, "we must work around it to get an increase," the source said, adding that other variables include the evolution of the dollar exchange rate and collection on overdue bills. "In Argentina at the moment it is difficult to focus on the long term, so we will wait and see how it goes next year," the source said. TGS, which carries a debt load of US$1 billion, has ruled out bond issuance because there is no market for them. The Company is owned by Companhia de Inversiones de Energia SA, or Ciesa, which is in turn co-owned by Perez Companc SA and bankrupt Enron Corp. CONTACTS: IN BUENOS AIRES Investor Relations: Eduardo Pawluszek, Finance & Investor Relations Manager Gonzalo Castro Olivera, Investor Relations (gonzalo_olivera@tgs.com.ar) Mara Victoria Quade, Investor Relations (victoria_quade@tgs.com.ar) Tel: (54-11) 4865-9077 Media Relations: Rafael Rodriguez Roda Tel: (54-11) 4865-9050 ext. 1238 * Argentine Federal Administrative Court Blocks Rate Hike Decree ---------------------------------------------------------------- Argentine Federal Administrative Judge Susana Cordoba issued a ruling blocking the decree allowing an increase in utility rates all across the country, reports Dow Jones newswires. The ruling follows an earlier ruling by a judge in Buenos Aires, declaring the decree to be unconstitutional. National Ombudsman Eduardo Mondino requested the federal administrative court on Wednesday to extend the Buenos Aires ruling throughout the whole of Argentina, citing the situation is "discriminatory", as some consumers were penalized based on where they lived The government confirmed on Thursday that it would be appealing the original decision, but the report did not indicate when, or whether the government would also appeal Cordoba's decision. However, the government would have to file their appeals early as the courts are scheduled to have a month-long summer recess starting by the end of this month. Argentine Cabinet Chief Atanasof said, "We are going to appeal the ruling. If a tariff rise and investment plan are not discussed today, the system can collapse." The government had issued the decree to increase utility rates, after the courts banned public hearings on such subjects. The International Monetary Fund had asked the government to increase utility rates, while utility companies were clamoring for an increase in order to maintain service quality. Argentine utility companies, especially those with dollar- denominated debts faced significant losses as the country's economy slowed down, and the local currency lost more than 70 percent of its value against the dollar. * Argentina Will Miss $726M Payment To World Bank ------------------------------------------------- Argentina will not be make a payment of US$726 million to the World Bank, because the country had been unable to obtain a new loan agreement from the International Monetary Fund, according to a report from the Associated Press, citing Argentine Economy Ministry Spokesman Armando Torres. The nonpayment is the second time the country would fail to meet its financial obligations to the World Bank, and may lose its only remaining source of foreign financing. Last month, Argentina failed to make a payment of US$805 million to the World Bank. The report indicated that the country's move had raside tension between Buenos Aires and multilateral lenders in Washington. Before Torres' announcement, Argentine officials had appealed to the IMF to speed up negotiations, saying that an agreement from the lender would help the country avert a debt default. Cabinet Chief Alfredo Atanasof said, "If the IMF would facilitate an accord, Argentina could move more quickly to cancel its debts with multinational credit organizations, otherwise, the talks are going to get more complicated." The report also indicated that the country faces debt payments due within the next 14 months totaling more than US$16 million. Though the country's leaders are pressured to use its reserves to make the payments, the reserves only stand at US$10 billion. Officials from the IMF and the World Bank have urged Argentine officials to meet its financial obligations to keep its sole financial lifeline open. ============= B E R M U D A ============= TRENWICK GROUP: S&P Reviews Implications of Recent Agreements ------------------------------------------------------------- Standard & Poor's Ratings Services commented Thursday on Trenwick Group Ltd. and its subsidiaries. The ratings on these companies, including the 'CCC+' counterparty credit rating on Trenwick Group Ltd., remain on CreditWatch with negative implications, where they were placed on Oct. 21, 2002. On December 8, 2002, Trenwick announced that it reached an agreement with its letter-of-credit providers to extend the letters of credit issued and outstanding to support underwriting at Lloyd's Syndicate 839, thereby allowing the syndicate to trade for the 2003 year of account. Standard & Poor's believes this development is favorable for the company and will provide additional time to negotiate the refinancing of its $75 million of senior notes, which are due in April 2003, as well as its several outstanding preferred stock obligations. The letter of credit is reduced to $182.5 million from $230 million and is extended from December 31, 2005, to December 31, 2006. Trenwick will further satisfy its Lloyd's solvency deficit of about $100 million with payments from LaSalle Re Ltd. and the proceeds from the Cat E Put settlement with Swiss Reinsurance Co. The creditors will also allow Trenwick to make a cash payment of about $14.4 million to support capital requirements for year-of- account 2003. Consideration to the banks includes the payment of a 5% cash fee, warrants equal to 10% of Trenwick's equity capital, and the right to receive 15% of the profits earned by Trenwick at Lloyd's for the 2002 and 2003 years of account. At the closing, which is expected by Dec. 31, 2002, Trenwick has undertaken to satisfy several new affirmative covenants covering the management of obligations at its runoff companies, including specific financial tests and a commitment to refinance the $75 million senior notes by March 2003 and collateralize the letter-of-credit banks by December 31, 2003. Negative covenants include a prohibition on the type of business that can be undertaken and limitations on the assumption of financial and other obligations. The termination of the Chubb or Berkshire agreements also constitutes a default. The banks might also review and opine on operational matters to include compensation, runoff costs, and (both intercompany and third-party) expenditures. Standard & Poor's expects to meet with management over the next few weeks to fully review the implications of the agreement and status of the senior debt negotiation. The CreditWatch status of these ratings is expected to be resolved when the negotiations on the April 2003 debt maturities are concluded. CONTACT: Standard & Poor's, New York Karole Dill Barkley, 212/438-7167 Jason A. Jones, 212/438-7174 =========== B R A Z I L =========== ACESITA: Owners In Talks To Resolve Debt Woes --------------------------------------------- Partners in Acesita - the Luxembourg-based steel group Arcelor and Brazilian pension fund Previ - are discussing different possibilities in resolving the Brazilian stainless steel company's BRL2.99-billion net debt, as reported by the end of this year's third quarter. The solution will be announced soon. "Smaller stocks and less investments is the recipe to allow the company to be more solid during a storm," Arcelor chairman Guy Dolle said. Acesita is one of the most highly leveraged companies trading on Brazil's Bovespa bourse, with several obligations maturing in the short term. The Company plans to issue BRL800 million (currently US$214mn) in non-convertible debentures this month to roll over short-term obligations. Steel analysts have recommended that Acesita sell its stake in Espirito Santo-based flat steelmaker CST in order to resolve its debt problems. The stake, valued at BRL388 million, is outside its core business and could be picked up by Arcelor. Acesita owns 44% of CST's common shares and 33% of its preferred stock for a total stake of 37%. With an annual production capacity of 850,000 tons of liquid steel, Acesita is Latin America's sole integrated producer of flat-rolled stainless and silicon steels. Depending on market demand, Acesita has the flexibility to use its plant's entire capacity for stainless steel production. With 800,000 tons of stainless steel capacity, Acesita would rank among the top 10 flat stainless steel producers, representing approximately 4.7% of world flat stainless steel production. Arcelor's total stainless steel production capacity of about 2.6 million tons represents approximately 15% of world stainless steel production. In 2001, Acesita sold 704,000 tons of steel, of which 17% was exported, primarily to Asia, Europe, and the Americas. CONTACT: Acesita SA Registered Office Av Joao Pinheiro, 580 Centro 30130-180 Belo Horizonte - MG Brazil Tel +55 31 3235-4211 Fax +55 31 3235-4300 Web http://www.acesita.com.br Contacts: Valmir Marques Camilo, Chairman Bruno Le Forestier, Vice Chairman AES CORP.: Extends Exchange Offer Expiration Date ------------------------------------------------- The AES Corporation (NYSE: AES) announced Thursday that it had extended the expiration date of the exchange offer relating to its outstanding $300,000,000 8.75% Senior Notes due 2002 ("2002 Notes") and $200,000,000 7.375% Remarketable or Redeemable Securities due 2013, which are puttable in 2003 ("ROARs"), from 5:00p.m., New York City time, on December 11, 2002 to 12:00p.m., New York City time, on December 12, 2002. The AES Corporation has been informed by the exchange agent that, as of 5:00 p.m., New York City time, on December 11, 2002, approximately $240,013,000 in aggregate principal amount of its 2002 Notes and $173,889,000 in aggregate principal amount of its ROARs had been tendered in the exchange offer. These amounts represent in excess of 80% and approximately 87% of the outstanding 2002 Notes and ROARs, respectively. Although the minimum condition has been satisfied, consummation of the exchange offer remains subject to a number of significant conditions, which have not yet been satisfied, including AES' concurrent entry into new senior secured credit facilities to refinance its existing credit facilities. The offering of the new senior secured notes in the exchange offer is being made only to "qualified institutional buyers" and "persons other than a U.S. person" located outside the United States, as such terms are defined in accordance with Rule 144A and Regulation S of the Securities Act of 1933, as amended, and two individuals affiliated with AES who are accredited investors. The new senior secured notes will not be registered under the Securities Act of 1933, or any state securities laws. Therefore, the new senior secured notes may not be offered or sold in the United States absent an exemption from the registration requirements of the Securities Act of 1933 and any applicable state securities laws. This announcement is neither an offer to sell nor a solicitation of an offer to buy the new notes. CONTACT: AES Corporation Kenneth R. Woodcock, 703/522-1315 AT&T LATIN AMERICA: Brazilian Bank Sues Local Unit Over Debts ------------------------------------------------------------- The Brazilian operations of regional communications services provider AT&T Latin America is now facing a lawsuit lodged against it by Banco Itau, the country's second largest bank in terms of assets. Citing local news agency, Business News Americas reports the lawsuit pertains to an unpaid debt installment of US$818,000. The defendant refuses to issue comments pending a decision on the case. ATTL Brasil took out a US$12.3-million loan from Itau in 2000, and paid back the first US$1.71 million on October 10, but missed the second payment due November 4. The operator explained to the court that it could not make the payment due to a "grave recession in the Brazilian economy" coupled with "violent appreciation of the [US] dollar." As of September this year, ATTL Brazil had 1,300 corporate clients, served by a fiber optic network present in 1,000 buildings, which contain 14,000 companies. The concession licenses are applicable to the country's seven largest metro areas. CEMAR: Aneel Analyzing Bids for Takover Candidates -------------------------------------------------- The period for bidders to present the best proposal to take control of Maranhao state distributor Cemar ended Wednesday, reports Business News Americas. Aneel, which intervened in Cemar after the company filed for protection from creditors in August, didn't reveal the exact number of bids it received. Officials of the Brazilian power regulator are currently working through the bids, and according to the timetable, will announce a winner in December 17. Three groups qualified for the sale: SVM Participacoes e Empreendimentos, part of the GP Capital group of GP Investimentos; Docas Investimentos of Brazilian businessman Nelson Tanure; and Canada's Brascan Participacoes Financeiras. Rather than offering cash for the shares, the bidders were asked to provide the best proposals for restructuring Cemar's debt to main creditor Eletrobras, Brazil's federal power sector holding. Cemar owes Eletrobras BRL334 million (US$88mn) for power purchases made since 2000, while other individual creditors are owed a total of BRL210 million for a variety of services. US-based PPL Global, which owns 84% of Cemar, has written off its investment in the unit, as well as a US$24-million loan. Aneel is also seeking to sell PPL's stake and PPL is reportedly prepared to sell the stake for US$1 to a buyer who takes on Cemar's debts. 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 GLOBO: Three Firms Compete For 15% SIC Stake -------------------------------------------- Brazil's Globo media group now has three buyers competing for its 15% stake in Portugal's SIC TV. The buyers, as revealed by Reuters in a report, are French broadcaster TF1, Portugal Telecom (PT) and a private equity investor. According to an industry source, the three have already met with SIC executives to discuss the network. TF1, PT and the unnamed private equity group "can be considered potential candidates to buy Globo's interest in SIC, although this is not decided," the source said. Originally, there were seven potential buyers of the Globo stake but only PT, TF1 and the equity group had advanced to the second round of the sale process, the source said. Diario Economico newspaper reported in October that Globo wanted to sell the stake to reduce its debt. SIC has been valued at EUR341 million euros by Morgan Stanley, it said. Impresa, which is controlled by former prime minister Francisco Pinto Balsemao, also owns 51% of SIC. An Impresa spokesman declined to comment on the sale, saying it was up to Globo to make a statement. VASP: Narrows Losses In Nine Months Ended September 02 Period ------------------------------------------------------------- Brazilian airline company Vasp decreased its losses in the first nine months of this year. During the period, the airline posted a net loss of BRL234.2 million, 35.3% less compared to the same period last year, reports Gazeta Mercantil. Operating losses for this year fell 30.3%, to BRL268.7 million compared to that of last year. Vasp also saw its net income decrease by 27.8%, to BRL700.9 million. The airline lost market shares during the Jan-Sep 2002 period from 14.5% to 12.9%. However, gross margin boosted from 30.1% to 44.1% and net financial expenses jumped to BRL171.1 million against the BRL115.7 million registered in the Jan-Sep 2001. Vasp also posted a 25.2% drop in the number of passengers. The airline continues to struggle under a heavy debt load of BRL1.9 billion. CONTACTS: VASP (For Investors) Cesis Canhedo, Chief Financial Officer PraOa Comandante Lineugomes, s/n 04626-910 Sao Paulo, Brazil Phone: +55-11-532-3000 Fax: +55-11-533-0444 * Brazilian Congress Satisfies IMF Conditions With Tax Rate Vote ---------------------------------------------------------------- The lower house of the Brazilian Congress voted to keep next year's income tax rate at 27.5 percent, satisfying revenue requirements for a loan from the International Monetary Fund. The house also voted to extend a tax on gross corporate revenue at 9 percent, but decided to replace a 0.65 percent tax on each stage to production with a 1.65 percent value-added tax on manufacturers. The decisions were reached by a vote of 264 to 131. Credit Suisse First Boston Economist Rodrigo Azevedo said, "This could be the first step toward a real tax reform." He also added that the move is also an important qualitative target in the IMF agreement. The decision would also help the country address a tax shortfall due to the expiration in November of the authority to renegotiate back taxes, which would cost the country some US$17 billion next year. Economists say that keeping the income tax rate to top-wage earners may lessen the new administration's need to boost taxes when it takes office on January. The report said that the income tax rate would have fallen 25 percent without the vote. Tax revenue in Brazil had risen to record levels for the past three years enabling the country to service its debts despite a slowing economy. ========= C H I L E ========= ENERSIS/ENDESA CHILE: Parent To Continue With Investments --------------------------------------------------------- Spain's largest utility Endesa on Thursday vowed to proceed with its investments in Latin America despite the recent cut by Standard & Poor's on the ratings of its two units sited in the region, reports Reuters. Late on Wednesday, S&P lowered Enersis and Endesa Chile to BBB from BBB+, lowering them to its second lowest investment grade with a negative outlook, meaning a further possible downgrade. S&P also placed Endesa on negative watch. However, the Spanish utility said it was satisfied with the units' credit ratings. "It's a downgrade, that's clear. But it's a rating comparable to those of European companies that don't raise any doubts about their solvency like (Spanish oil major) Repsol REP.MC or France Telecom FTE.PA," Endesa's Chief Financial Officer, Jose Luis Palomo, said. "This is not a company that is in liquidation. We continue investing in the region," Palomo said, citing a 500-megawatt dam under construction in Ralco, Chile. "Considering the situation in Argentina and Brazil right now, a BBB rating in Latin America is plenty good," he said. However, investors are getting a bit apprehensive. If S&P cuts the debt on the two units to junk status, Enersis and Endesa Chile could be forced to pay off US$2.4 billion in bank loans right away. In Argentina, S&P credit analyst Marta Castelli said the rating agency "is not thinking of lowering Endesa below BBB- in the short term." However, S&P cited "liquidity challenges" faced by Enersis and Endesa Chile because of some US$3.8 billion in debt maturities due in 2003 and 2004. "These maturities present a relatively high refinancing risk, exacerbated by the difficult economic environment in Latin America, mainly in Argentina and Brazil," S&P said. "In Standard & Poor's view, a significant reduction in the companies' refinancing risk, as well as the strengthening in financial ratios, is necessary for rating stability." To see financial statements: http://bankrupt.com/misc/Enersis.pdf CONTACT: ENERSIS Investor Relations: Ricardo Alvial Chief Investments & Risks Officer of Enersis Email: ram@e.enersis.cl Phone: (562) 353-4682 Contacts: Susana Rey, srm@e.enersis.cl Ximena Rivas, mxra@e.enersis.cl Pablo Lanyi-Grunfeldt, pll@e.enersis.cl =============== C O L O M B I A =============== SEVEN SEAS: Granted Additional Extension of Cure Period ------------------------------------------------------- Seven Seas Petroleum Inc. (Amex: SEV) announced Thursday that in connection with its continuing efforts to sell its producing properties in Colombia, the Company has obtained an additional extension of time to cure a potential default under its Note Purchase and Loan Agreement with Chesapeake Energy Corporation until the close of business on December 13, 2002. This extension applies to the Company's previously announced failure to make the $6,875,000 semiannual interest payment on its 12.5% $110 Million Senior Subordinated Notes due November 15, 2002. Seven Seas Petroleum Inc. is an independent oil and gas exploration and production company operating in Colombia, South America. CONTACT: SEVEN SEAS PETROLEUM INC. Daniel Drum, Investor Relations +1-713-622-8218 ============= U R U G U A Y ============= GALICIA URUGUAY: Parent Mulls Incorporation of Int'l. Partner ------------------------------------------------------------- Argentine financial group Grupo Financiero Galicia plans to reopen its Uruguayan banking unit, Galicia Uruguay, but only after a Uruguayan judge approves a plan to gradually return deposits. According to GF Galicia, the plan already has the approval of clients who hold 80% of the bank's deposits. The parent may bring in an international partner for Galicia Uruguay when it reopens the local unit, as it sees the move as a good option because it would bring prestige and capital to the battered bank. The option is still being analyzed, a GF Galicia spokesperson said, without confirming or denying whether the group is actually in talks with a potential candidate. A source at Uruguay's central bank recently said that GF Galicia would have to inject fresh capital and submit a new business plan to reopen Galicia Uruguay. Citing these remarks, the GF Galicia spokesperson said the Argentine group is ready to comply with all the local authorities' demands. Galicia Uruguay was the country's second-largest private financial institution in terms of deposits before it was intervened and suspended by the central bank in mid-February after losing US$500 million in deposits between December last year and January 2002. Today, it has some 11,000 clients, 99% of which are Argentines. CONTACT: GRUPO FINANCIERO GALICIA S.A. Teniente General Juan D. Peron 456, Piso 3 1038 Buenos Aires, Argentina Phone: (54 11) 4343 7528 / 9475 Home Page: http://www.gfgsa.com Contacts: Eduardo J. Escasany, Chairman and CEO Sergio Grinenco, CFO, Banco de Galicia y Buenos Aires BANCO GALICIA URUGUAY S.A. World Trade Center Luis A. Herrera 1248 Piso 22 Montevideo Uruguay Tel.:(+598-2) 628-1230 www.bancogalicia.com.uy ================= V E N E Z U E L A ================= IBH: Ongoing General Strike Disrupts Operations ----------------------------------------------- Venezuela's general strike has disrupted activities at the International Briquettes Holding (IBH), a subsidiary of steelmaker Sivensa. Citing an IBH statement, Business News Americas reports that the Company has closed down its Orinoco Iron plant, invoking force majeure to avoid operational risk on account of the scarcity of gas brought about by the impact of the strike. Fuel is necessary in the direct reduction process and currently, there is shortage of the product due to the strike running since December 2 on the oil and gas industry. On December11, IBH had announced maintenance conditions, after suspending operations at its Venprecar plant and an Orinoco Iron production train. CONTACT: INTERNATIONAL BRIQUETTES HOLDING Henrique Machado Zuloaga, Chairman Oscar Augusto Machado, CEO Gustavo Machado, CFO Contacts: Av. Venezuela, Edificio Torre America, Piso 11., Urbanizacion Bello Monte. Caracas, Venezuela Phone: +58-(0)2-707-6145 Fax: +58-(0)2-707-6335 Iron and steel of Turbio, S.A.. - Sidetur Home Page: www.sidetur.com.ve Contacts: Mr. Left Nicholas, General Manager Phone: (58212) 407,03,00 and 51 E-mail: nicolas.izquierdo@sidetur.com.ve Mr. Carlos Fonseca , Finance & Administration Manager Phone:(58212) 407,04,11 and 12 E-mail: carlos.e.fonseca@sidetur.com.ve SIDERURGICA VENEZOLANA "SIVENSA", SA Torre America, Piso 12 Av. Venezuela Bello Monte Caracas, Venezuela Phone: (0212) 707.6200 /6145 Fax. (0212) 762.9938 - 707.6335 Home Page: www.sivensa.com.ve Contacts: Armando Rondon, Corporate Planning Manager Phone: (58) (212) 707.62.80 / 707.61.27 E-mail: armando.rondon@sivensa.com Fax: (58) (212) 707.63.52 Peggy Medina Transfer Agent. Planivensa Phone: (58) (212) 707.64.66 / 707.64.68 E-mail: peggy.medina@sivensa.com Fax: (58) (212) 707.64.56 Investor Relations. Nueva York Geoffrey Bell and Co. 780 Third Avenue, New York, N.Y. Phone: (212) 888.37.00 E-mail: d.vandecker@worldnet.att.net Fax: (212) 888.37.07 PDVSA: Fires Four Execs Leading Strike -------------------------------------- Venezuela's state oil monopoly Petroleos de Venezuela SA (PDVSA) Ali Rodriguez fired four executives for leading a strike that had paralyzed the country's oil industry, reports Dow Jones Newswires, adding that the disruption had rattled international markets, as Venezuela is the world's fifth-largest exporter of oil. Rodriguez said, "We don't have a balance yet of the losses, but by blocking exports obviously...there is a terrible damage to the country, and those that convoked the strike are responsible." The report named the fired executives as Juan Fernandez, Anibal Quijano, Horacio Medina and Edgar Paredes. The four were allegedly leaders in the strike against the administration of president Hugo Chavez. The government and the opposition had started talks on a constitutional amendment that would allow an early vote on Chavez' rule on Wednesday, but key mediator Cesar Gaviria, secretary general of the Organization of American States said that an understanding is yet to be reached. Talks are set to resume the following day. Gaviria said that the government wants to new electoral authorities to be appointed and push through with a constitutional amendment to allow the early election, but the opposition wants to set a date for the vote first, before working out the details. Chavez contends that the government is making progress in breaking the strike but strikers disagree. Fernandez, one of the executives fired said, "There is no (oil) production. The refineries are paralyzed." Rodriguez also said that the government has "enough gasoline to supply the country for a long time", adding that it would import if worse comes to worst. CONTACT: Petroleos de Venezuela SA Head Office Apdo 169 Avenida Libertador La Campina Caracas Venezuela 1010-A Tel +58 212 708 4111 Fax +58 212 708 4661 Web http://www.pdvsa.com Contact: Ali Rodriguez Araque, Chairman Jorge Kamkoff, Joint Vice Chairman Jose Rafael Paz, Joint Vice Chairman * Prolonged Oil Export Trouble Key Credit Concern For Fitch ----------------------------------------------------------- A general strike in Venezuela, begun on December 2nd, which has disrupted the country's oil exports, could lead to a downgrade of Venezuela's sovereign ratings if prolonged. Venezuela's long-term foreign currency rating is 'B' and its long-term local currency rating is 'B-', both of which have a Negative Rating Outlook. Likewise, should the severe political pressures between the Chavez government and the opposition or an acceleration of bank deposit flight begin to impact sovereign debt service willingness, then sovereign creditworthiness would clearly suffer. In spite of macroeconomic imbalances and uncertainty over the viability of the Chavez government, Fitch believes that the Venezuelan sovereign's capacity to meet its foreign currency debt service compares favorably to similarly rated sovereigns. At 189% (including assets in the macroeconomic stabilization fund, the FIEM), Venezuela's external liquidity ratio far exceeds the 114% median of 'B' rated countries. Venezuela's expected current account surplus position in 2003 could cover up to 82% of its external amortizations and stock of short-term external debt next year, which Fitch estimates could total US$6.6 billion. Nevertheless, the government's willingness to service its debt could come under increasing pressure if the strike were to continue to disrupt oil exports for an extended period of time. Fitch estimates that at today's prices and export levels, the government could potentially lose over US$20 million per day in revenue if exports were to come to a complete halt. Although the government's domestic bond swap (DPNs) last month, which was not deemed a 'distressed debt exchange' by Fitch, has relieved some of the short-term refinancing pressures Venezuela faces, Fitch believes that the government's near-term financing outlook remains challenging, not least because a resolution of the current political conflict appears remote. The bond exchange last month yielded amortization relief through 2004. The central government's domestic amortizations have been reduced by approximately 26% and 19% in 2003 and 2004, respectively. While this transaction has alleviated some of the government's cash constraints, the current circumstances could easily complicate cash flow management. Fitch estimates that the government still has a financing gap of close to 9% of GDP in 2003. Higher than expected oil prices and major exchange rate depreciation have allowed the authorities to avoid any significant fiscal adjustment this year and provided the central bank with sufficient resources to stabilize the exchange rate. If oil production and exports remain at a standstill, then budgeted 2003 revenues could come under significant pressure and result in continued financing difficulties next year. Fitch maintains Venezuela's foreign currency rating above its local currency rating as the country's external liquidity position remains strong relative to similarly rated sovereigns. In addition, the government has in the past demonstrated a greater willingness to continue servicing international obligations while domestic obligations were in default (e.g. the DPN payment suspension in 1995). However, given the government's dwindling sources of extraordinary revenues and lack of access to financial markets, aggravated by the domestic political climate, it could prove difficult for the Venezuelan government to selectively default on specific obligations. CONTACT: FITCH RATINGS Theresa Paiz Fredel, 212/908-0534 Roger M. Scher, 212/908-0240 James Jockle, 212/908-0547 (Media Relations) *********** 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 Oona G. Oyangoren, 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 * * *