/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/021218.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 Wednesday, December 18, 2002, Vol. 3, Issue 250 Headlines A N T I G U A & B A R B U D A LIAT: Exec Expects To See Recovery By March A R G E N T I N A BANCO RIO: S&P Rates Senior Notes 'D', New Notes 'CC' IMPSA: Ex-President's Testimony Delayed on Technicality REPSOL YPF: Still Awaiting Permit To Start Mendoza Project * Argentina Missed Payments to World Bank, IADB B E R M U D A ANNUITY AND LIFE: Wechsler Harwood Announces Class Action Suit GLOBAL CROSSING: October 2002 Operating Results Still On Track B R A Z I L BANESTES: Scandal Involving Top Execs Delays Privatization ELETROPAULO METROPOLITANA: Fitch Downgrades Ratings To `DDD' EMBRATEL: Lazard In Advance Acquisition Talks With Parent C H I L E COEUR D' ALENE: Reduces Long-Term Debt by $23M EMBONOR/BEPENSA: S&P Expects Contrasting Credit Trends C O L O M B I A SEVEN SEAS: Updates Default Status on Senior Notes E C U A D O R VINTAGE PETROLEUM: Sells Ecuadorian Interest; Reduces Debt J A M A I C A CABLE & WIRELESS: Exec Says Rival Overstated Market Share M E X I C O AHMSA: CEO Expects Liquid Steel Output Up By 10% Next Year MAXCOM TELECOMUNICACIONES: Investor Update November 2002 V E N E Z U E L A SIDOR: Ongoing National Strike Taking Its Toll - - - - - - - - - - ================================= A N T I G U A & B A R B U D A ================================= LIAT: Exec Expects To See Recovery By March ------------------------------------------- LIAT chief Gary Cullen is confident that the airline will be able to fly smoothly by the first quarter of next year, according to a report from the Antigua Sun in its Monday edition. The story quoted Cullen saying, "The successful conclusion of our restructuring program in the first quarter of 2003, will finally see an adequately financed and revitalized LIAT that will serve the people and continue to carry the torch and live the vision of its founder Sir Frank DeLisle had some 46 years ago." LIAT was not spared the airline industry-wide slump after the September 11 attacks in the United States. The allegedly predatory pricing done by LIAT competitor Caribbean Star would have driven LIAT out of business. Fares had gone down by 35 percent compared to prices two years ago. Caribbean governments have taken action against predatory pricing to ensure a level playing field for all airlines, according to the report. Shareholder governments promised to inject some US$11 million to address LIAT's capitalization needs. A range of public and private investments are also being considered for the airline. The report also revealed that a select committee of shareholder governments would meet in St. Vincent on Thursday a to study LIAT's three-year plan and come up with strategies for the airline. LIAT chairman Wilbur Harrigan said that the are going to make sure that LIAT would be fixed properly this time, adding that the airline is in the process of speaking to a "very serious" investor. "We are hoping that by March 2003 the predatory pricing, the capital injection, the regulation by the respective authorities in the Caribbean as well as the government for the first time will fully recognise what LIAT needs to go forward and what their contribution should be if LIAT is to be the true Caribbean airline," he said. CONTACT: LIAT Corporate Headquarters V.C. Bird International Airport, P.O. Box 819, St. John's, Antigua West Indies Tel. 1 (268) 480-5600/1/2/3/4/5/6 Fax: 1 (268) 480-5625 Homepage: http://www.liatairline.com/ Contacts: Garry Cullen, Chief Executive Officer David Stuart, Vice President of Marketing ================= A R G E N T I N A ================= BANCO RIO: S&P Rates Senior Notes 'D', New Notes 'CC' ----------------------------------------------------- Standard & Poor's Ratings Services said Monday that it lowered its ratings on Banco R¡o de la Plata S.A.'s ('SD'; Banco Rio) 8.75% senior notes maturing in December 2003 (referred to in the exchange as "existing notes"), which are subject to an exchange offer that is considered to materially affect the value of the bonds under their original terms and conditions, to 'D'. Given the difficulties for banks in Argentina (Republic of) after the devaluation of the peso, and system-wide pesification at the beginning of 2002, all banks have been under pressure to restructure their liabilities consistent with the lower value and cash flow-generating ability of their assets. Banco Rio was not able to escape the fate of the rest of the Argentine financial system, despite the fact that it is a wholly owned subsidiary of a strong foreign financial institution (Banco Santander Central Hispano S.A., rated A/Stable/A-1), and has a history of being more prudent than its peers. In this context, the bank started a debt restructuring process, of which this exchange offer is the most significant step. During the course of the year, the bank also refinanced its short-term debt in the U.S. CP market, but the transaction did not reduce the value to the bondholders. "The current exchange offer presents two alternatives to bondholders. Both alternatives represent worse terms and conditions than originally agreed upon with bearers of the existing notes, prompting the placement of the securities in 'D'," said credit analyst Gabriel Caracciolo. The new securities will be rated 'CC', because the difficulties that the bank will face in complying with the terms and conditions of their restructured liabilities could still lead to a future inability to pay. ANALYSTS: Gabriel Caracciolo, Buenos Aires (54) 114-891-2100 Carina Lopez, Buenos Aires (54) 11-4891-2118 IMPSA: Ex-President's Testimony Delayed on Technicality ------------------------------------------------------- The hearing of the testimony of former Philippine President Joseph Estrada concerning alleged irregularities in the government's contract with Argentine company Industrias Metalurgicas Pescarmona Sociedad Anonima (IMPSA) was postponed to January 14 next year, reports AFX-Asia. The report indicates that the Committee in Government Corporations and Public Enterprises of the Philippine Senate had reset the testimony after the police did not allow Estrada to testify, saying that there was no court order. Earlier, Manila police chief Reynaldo Velasco said that Estrada could not be moved from his detention at the Veteran's Memorial Medical Center in Quezon City without an order from the Sandiganbayan anti-graft court. Committee Chairman John Osme¤a said that the Senate is yet to receive formal notice of the Philippine National Police's decision, adding that the committee would subpoena PNP chief Hermogenes Ebdane to explain the PNP`s decision during the next hearing. Estrada, who faces plunder and corruption charges, had been asked by the Senate to testify any knowledge on the alleged pay-off attempts concerning IMPSA. An earlier report from local news firm ABS-CBN revealed that Estrada claimed that Manila Rep. Mark Jimenez had offered to pay him US$14 million to approve a contract with Impsa to rehabilitate the Caliraya-Botocan-Kalayaan hydroelectric complex in Laguna. Estrada said he had refused the offer. CONTACT: (Latin America) Hern n Gui¤az£ Carril Rodr¡guez Pe¤a 2451 (M5503AHY) Godoy Cruz, Mendoza, Argentina. Tel: (+54-261) 4131374 Fax.(+54-261) 4131429 - 4131423 Email: guinazu@impsa.com.ar (Asia and South East Asia) Juan Carlos Fern ndez 6-4 Level 6th Tower Block, Menara Milenium Jalan Damanlela, Pusat Bandar Damansara Damansara Heights 50490 Kuala Lumpur, Malaysia Tel: (+60-3) 252 3744 Fax: (+60-3) 252 3743 Email: fernandez@impsa-sea.com REPSOL YPF: Still Awaiting Permit To Start Mendoza Project ---------------------------------------------------------- Local reports suggesting that the Mendoza provincial government could issue an environmental permit as early as this week in order for Repsol YPF to start a project may be too optimistic, a spokesperson from the Spanish oil company indicated to Business News Americas. "We have waited two years already and the way things are in this country, you never know how long something like this will take," the spokesperson said. Repsol plans to drill eight wells in the Llancanelo lagoon in the Mendoza province but the project was blocked in 2000 due to environmental concerns about the impact of drilling on the lagoon's ecosystem. The Company can't see any reason why the government of Mendoza is delaying the issuance of the permit when it could stand to gain a lot from the project through royalties on crude produced from the field. Repsol YPF plans to spend ARS170 million (US$50 million) to develop the first stage of the project, including ARS66 million on drilling and ARS104 million on other development work in the lagoon. "The crude in Llancanelo lagoon is high density and difficult to extract and transport, so the level of investment is relatively high," the spokesperson added. Depending on the success of the project's exploration stage, Repsol could build a pipeline to transport the crude to a treatment plant at Malargue, the spokesperson said. Crude reserves in Llancanelo are estimated at 25 million barrels according to a study carried out by the previous concessionaire Alianza Petrolera Argentina. CONTACT: REPSOL YPF SA Head Office Paseo de la Castellana 278 28046 Madrid Spain Tel +34 91 348 81 00 Fax +34 91 348 28 21 Telex 48162 RESOLE Web http://www.repsol.com Contact: Alfonso Cortina de Alcocer, Chairman Jose Vilarasu Salat, Vice Chairman Antonio Hernandez, Vice Chairman * Argentina Missed Payments to World Bank, IADB -------------------------------------------------- Argentina failed to make a total of US$930 million in payments to the World Bank and the Inter-American Development Bank (IADB). President Eduardo Duhalde said, "We don't like to default. Defaulting is proof of a country's failure." However, he added that, at the moment, paying (the debts due) would put at risk the balance that is helping a recovery in production. The country did not pay the World Bank for a US$250 million bond guarantee and a US$680 million payment to the Inter- American Development Bank. The IADB is now considering raising fees on US$46 billion in lending to Latin American and Caribbean nations, while the World Bank would no longer guarantee the bonds maturing next year and the year after. According to the report, the IADB has extended 18 percent of its loans outstanding to Argentina. The US$680 million debt stems from a US$2.5 billion loan, the bank's biggest ever. Argentina this month also owes US$160 million on other IADB loans. Before this year, the bank imposed a 50 basis-point charge, a credit commission of 75 basis points on all outstanding loans to a borrower, and a 1 percent up-front fee. A basis point is one one-hundredth of a percentage point, said the report. Earlier, ratings agency Standard and Poor's downgraded the two US$250 million Argentine bonds next in the series of six bonds guaranteed by the World Bank. It was the first time S&P ever downgraded World Bank-backed bonds. Meanwhile, the fee increase the IADB would impose would hurt Latin American nations. According to the World Bank, private investment in Latin America had declined by 64 percent this year. The World Bank would also halt reimbursements ion a US$2 billion loan to the country after it failed to pay US$830.7 million last Sunday. Argentina would also be disqualified to receive several hundred million dollars in installments on existing loans intended to help the country combat hunger and emerge from recession. According to the report, about one-half of the country's population is living in poverty and almost 20 percent have no jobs. Last year, Argentina defaulted on a record US$95 billion in private debt, cutting its credit line to the International Monetary Fund. It had been negotiating for a new loan from the IMF for the greater part of this year, without success. The government said that it would be using the IMF loan to repay the World Bank and other government-backed creditors. According to Larry Hays, who follows Washington-based lenders for S&P, Argentina's failure to pay would not cause a credit rating cut for both the World Bank and the IADB. ============= B E R M U D A ============= ANNUITY AND LIFE: Wechsler Harwood Announces Class Action Suit -------------------------------------------------------------- Wechsler Harwood LLP announced Monday that a securities class action has been commenced on behalf of shareholders who purchased, converted, exchanged or otherwise acquired the common stock of Annuity and Life Re (Holdings), Ltd. (NYSE:ANR) between February 12, 2001 and November 19, 2002, inclusive (the "Class Period"). A copy of the complaint filed in this action is available from the Court, or can be viewed on Wechsler Harwood web site at: www.whesq.com The case is pending in the United States District Court for the District of Connecticut against defendant Annuity and Life Re (Holdings), Ltd. and against Frederick S. Hammer, Lawrence S. Doyle and John F. Burke. The complaint charges Annuity and Life Re (Holdings), Ltd. and certain of its officers and directors with issuing false and misleading statements concerning its business and financial condition.. Specifically, the complaint alleges that throughout the Class Period, as alleged in the complaint, defendants issued numerous statements and filed quarterly and annual reports with the SEC which described the Company's increasing revenues and financial performance. As alleged in the complaint, these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (i) that the Company had failed to properly account for embedded derivatives contained in certain of its annuity reinsurance contracts in 2001; (ii) that, since at least 2001, the Company had understated a portion of its liabilities and expenses; (iii) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (iv) that as a result, the values of the Company's balance sheet and financial results were materially overstated at all relevant times. On November 19, 2002, the last day of the Class Period, Annuity and Life announced that it would restate its financial results for years 2000, 2001 and the first and second quarters of 2002, the period ending June 30, 2002. As detailed in the announcement, the restatement was necessary because the Company had failed to properly account for embedded derivatives contained in certain of its annuity reinsurance contracts in 2001, and, that since at least 2001, the Company had understated a portion of its liabilities and expenses. Following this disclosure, shares of Annuity and Life fell as much as 44%, culminating a 91% decline in the price of the Company's common stock in the prior twelve months. If you purchased securities during the Class Period, you may, no later than February 3, 2002, move to be appointed as a lead plaintiff in this class action. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiff. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Wechsler Harwood, or other counsel of your choice, to serve as your counsel in this action. Wechsler Harwood has taken a leading role in many important actions on behalf of defrauded shareholders. The Wechsler Harwood website ( www.whesq.com) has more information about the firm and detailed information regarding this matter. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following: Wechsler Harwood LLP 488 Madison Avenue, 8th Floor New York, New York 10022 Toll Free Telephone: (877) 935-7400 Craig Lowther, Wechsler Harwood Shareholder Relations Department: clowther@whesq.com GLOBAL CROSSING: October 2002 Operating Results Still On Track -------------------------------------------------------------- Global Crossing announced Monday that it continued to meet key performance targets during October 2002. The performance targets were established for Global Crossing (excluding Asia Global Crossing) in the operating plan presented to its creditors in March 2002. The Operating Results that compare to that plan are described in the following section of this press release. Consolidated results for the month of October that include Asia Global Crossing and that are reported in the Monthly Operating Report (MOR) filed with the U.S. Bankruptcy Court in the Southern District of New York are summarized later in this press release. OPERATING RESULTS (excluding Asia Global Crossing) "Our entire organization is committed to meeting our performance objectives and restoring the financial health of Global Crossing," said John Legere, CEO of Global Crossing. "Our business continues to show signs of increasing stability, which will prove advantageous as we emerge from Chapter 11 in early 2003." For the past three months, Global Crossing's Service Revenue has shown month-over-month gains. In October 2002, Global Crossing reported Service Revenue of $242 million, $26 million above the Service Revenue target set forth in the operating plan. This compares to Service Revenue of $237 million in September and $236 million in August. In October, Service EBITDA was reported at a loss of $6 million, beating the operating plan by $1 million. "For the third month in a row, our Service Revenues have shown month-over-month gains, showing that customers are starting to expand their business with Global Crossing," said Dan Cohrs, Global Crossing's CFO. "We were able to achieve this growth while stabilizing our operating expenses and other costs throughout the organization." Total cash in bank accounts exceeded targets set forth in the operating plan, with $683 million as of October 31, 2002, compared to a plan of $583 million. Operating expenses were $64 million in October, $4 million higher than the target in the operating plan. However, third-party maintenance costs were reported at $9 million in October, lower than plan by $6 million. OPERATING RESULTS (excluding Asia Global Crossing) AUGUST THROUGH OCTOBER 2002 MONTH RECURRING OPERATING SERVICE CASH IN SERVICE REVENUE EXPENSES EBITDA BANK October 2002 $242 mln $64 mln $(6) mln $683 mln September 2002 $237 mln $64 mln $0 mln $724 mln August 2002 $236 mln $63 mln $(5) mln $744 mln Monlthly Operating Results For October 2002 Global Crossing filed Monday a Monthly Operating Report (MOR) for the month of October with the U.S. Bankruptcy Court for the Southern District of New York, as required by its Chapter 11 reorganization process. The consolidated results in the MOR include Asia Global Crossing and report revenue according to Generally Accepted Accounting Principles (GAAP). GAAP revenue includes revenue from sales of capacity in the form of indefeasible rights of use ("IRUs") that occurred in prior periods, recognized ratably over the lives of the relevant contracts. Beginning on October 1, 2002, Global Crossing no longer recognizes revenue from exchanges of leases of capacity. Results reported in the October MOR include the following: For continuing operations in October 2002, Global Crossing reported consolidated revenue of approximately $256 million. Consolidated operating expenses were $79 million, while access and maintenance costs were reported at $193 million in October 2002. In addition, Global Crossing reported a consolidated GAAP cash balance of approximately $895 million as of October 31, 2002, including $229 million of cash held by Asia Global Crossing. Global Crossing's $666 million GAAP cash balance (excluding Asia) is comprised of $272 million unrestricted cash, $332 million in restricted cash and $62 million of cash held by Global Marine. Global Crossing reported a consolidated net loss of $150 million for October 2002. Consolidated EBITDA was reported at a loss of $16 million. MOR RESULTS MONTHLY RESULTS AUGUST THROUGH OCTOBER 2002 MONTH CONSOLIDATED CONSOLIDATED CONSOLIDATED REVENUE OPERATING EBITDA NET LOSS EXPENSES October 2002 $256 mln $79 mln $(16) mln $150 mln September 2002 $254 mln $71 mln $(6) mln $157 mln August 2002 $255 mln $73 mln $(14) mln $138 mln Definitions and Notes "Service Revenue" refers to revenue less (i) any revenue recognized immediately for circuit activations that qualified as sales-type leases and (ii) revenue recognized due to the amortization of IRUs sold in prior periods and not recognized as sales-type leases. "Service EBITDA" refers to EBITDA (earnings before interest, taxes, depreciation, and amortization) but excludes the contribution of (i) any revenue recognized immediately for circuit activations that qualified as sales-type leases and (ii) revenue recognized due to the amortization of IRUs sold in prior periods and not recognized as sales-type leases. The results for Global Crossing (excluding Asia Global Crossing) discussed in the "Operating Results (excluding Asia Global Crossing)" section of this release have been prepared on a basis consistent with targets presented to the creditors of Global Crossing in March 2002. These operating results exclude Global Marine (which is a discontinued operation), exclude any revenue contribution of sales of capacity in the form of IRUs, and reflect certain eliminations and adjustments not detailed in the MORs. Cash balances reported in this section are bank balances, not reflecting the estimated impact of outstanding checks and other adjustments as required by GAAP. The information contained in this press release is qualified in its entirety by reference to the MORs for the months of February through October, including the footnotes to the financial statements contained therein, copies of which are available through the U.S. Bankruptcy Court for the Southern District of New York and on Global Crossing's Web site. The October MOR is available at http://www.globalcrossing.com/pdf/investors/inv-- mor--oct.pdf. These MORs have been prepared pursuant to the requirements of the Bankruptcy Code and the unaudited consolidated financial statements contained in these MORs do not include all footnotes and certain financial presentations normally required under GAAP. In addition, any revenues, expenses, realized gains and losses, and provisions resulting from the reorganization and restructuring of Global Crossing are reported separately as reorganization items in these MORs. As discussed more fully in the footnotes to the financial statements contained in the MORs, Global Crossing has not yet filed its Annual Report on Form 10-K for the year ended December 31, 2001. By order dated November 20, 2002, the Bankruptcy Court directed the appointment of an examiner. On November 25, 2002, the United States Trustee appointed Martin E. Cooperman, a partner of Grant Thornton LLP, as the Examiner. Mr. Cooperman and the Audit Committee of the Board of Directors of Global Crossing Ltd. are seeking to retain Grant Thornton LLP to assist the Examiner. In general, the Examiner's role will be limited to reviewing the financial statements of the Debtors for the fiscal years ended December 31, 2001 and December 31, 2002 and earlier periods if any restatement of those periods is necessary. As part of his role, the Examiner, with the assistance of Grant Thornton LLP, will audit any revised financial statements and issue a report as to such financial statements. Separately, the Audit Committee and the Board of Directors of the Company have authorized the appointment of Grant Thornton LLP as the independent public accountant of the Company, effective as of the date indicated in an engagement letter to be executed on behalf of the Audit Committee by its Chairman. In addition, certain matters relating to Global Crossing's accounting for, and disclosure of, concurrent transactions for the purchase and sale of telecommunications capacity between Global Crossing and its carrier customers are being investigated by the Securities and Exchange Commission (SEC), the U.S. Attorney's Office for the Central District of California, the House of Representatives Financial Services Committee and the House of Representatives Energy & Commerce Committee. Global Crossing is also cooperating with a similar inquiry being conducted by the Denver office of the SEC regarding Qwest Communications International, Inc., and has provided documents in response to subpoenas it received from the New York Attorney General's office relating to an investigation of Salomon Smith Barney. The U.S. Department of Labor is conducting an investigation into the administration of Global Crossing's benefit plans. All of these investigations are described more fully in footnote one to the financial statements contained in the October MOR. Any changes to the financial statements resulting from any of these investigations and the completion of the 2001 financial statement audit could materially affect the unaudited consolidated financial statements contained in the MORs and the information presented in this press release. On October 21, 2002, Global Crossing announced that it will restate certain financial statements contained filings previously made with the SEC. These restatements, which are more fully described in footnote one to the financial statements contained in the October MOR, will record exchanges between carriers of leases of telecommunications capacity at historical carryover basis, resulting in no recognition of revenue for such exchanges. Reflecting this accounting treatment, the October MOR excludes from revenue amounts previously recognized as revenue over the lives of the lease contracts governing these capacity exchanges. However, since the detailed application of this accounting treatment for exchanges of capacity and services is not complete, the October MOR does not reflect the reduction to depreciation expense that will result when such transactions are recorded at carrying value rather than fair value. As reflected in greater detail in the financial statements contained in the October MOR, Global Crossing estimates that the reduction in depreciation expense for the month of October would be approximately $2 million. The restatements have no impact on cash flow for the month of October. As previously announced, Global Crossing's net loss for the three months ended December 31, 2001, which has not yet been reported, pending the completion of the audit of financial statements for 2001, is expected to reflect the write-off of the remaining goodwill and other intangible assets, which total approximately $8 billion. Furthermore, as previously disclosed, Global Crossing has determined that it will write down its tangible assets by at least $10 billion in light of the terms contained in the previously announced agreement with Hutchison Telecommunications and Singapore Technologies Telemedia, the bankruptcy filings of Asia Global Crossing and its subsidiary, Pacific Crossing Ltd., and the reduction in the carrying value of assets acquired in exchange transactions by approximately $1.2 billion expected to result from the restatement referred to in the immediately preceding paragraph. The financial information included within this press release and the MORs reflects the write-off of all of the goodwill and other identifiable intangible assets of $8 billion, but does not reflect any write-down of tangible asset value. Global Crossing is currently in the process of evaluating its financial forecasts to determine the impairment of its long- lived assets. Accordingly, the net loss of $150 million for the month of October 2002 (reported above under MOR Results section) includes $111 million of depreciation and amortization expense recorded in October 2002. This October 2002 net loss would have been reduced substantially if the financial statements in the October MOR had reflected the tangible asset write down. The write-off of the intangible assets, and the write-downs of tangible assets are described more fully in the October MOR. ABOUT GLOBAL CROSSING Global Crossing provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. Global Crossing operates throughout the Americas and Europe, and provides services in Asia through its subsidiary, Asia Global Crossing. On January 28, 2002, Global Crossing Ltd. and certain of its subsidiaries (excluding Asia Global Crossing and its subsidiaries) commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court) and coordinated proceedings in the Supreme Court of Bermuda (Bermuda Court). On the same date, the Bermuda Court granted an order appointing joint provisional liquidators with the power to oversee the continuation and reorganization of the Bermuda-incorporated companies' businesses under the control of their boards of directors and under the supervision of the Bankruptcy Court and the Bermuda Court. Additional Global Crossing subsidiaries commenced Chapter 11 cases on April 23, August 4 and August 30, 2002, with the Bermuda incorporated subsidiaries filing coordinated insolvency proceedings in the Bermuda Court. The administration of all the cases filed subsequent to Global Crossing's initial filing on January 28, 2002 has been consolidated with that of the cases commenced on January 28, 2002. Global Crossing's Plan of Reorganization, which it filed with the Bankruptcy Court on September 16, 2002, does not include a capital structure in which existing common or preferred equity would retain any value. On November 18, 2002, Asia Global Crossing Ltd. and its subsidiary, Asia Global Crossing Development Co., commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda. Asia Global Crossing's bankruptcy proceedings are being administered separately from and are not being consolidated with Global Crossing's proceedings. Asia Global Crossing Ltd. is a majority-owned subsidiary of Global Crossing. However, Asia Global Crossing has announced that no recovery is expected for Asia Global Crossing's shareholders. As a result, Global Crossing is currently evaluating its ongoing requirement to consolidate the operating results and financial positions of AGC and its subsidiaries. CONTACT GLOBAL CROSSING: Press Contacts Tisha Kresler + 1 973-410-8666 Tisha.Kresler@globalcrossing.com Kevin Burgoyne Latin America + 1 305-808-5947 Kevin.Burgoyne@globalcrossing.com Mish Desmidt Europe + 44 (0) 7771-668438 Mish.Desmidt@globalcrossing.com Analysts/Investors Contact Ken Simril + 1 310-385-3838 investors@globalcrossing.com =========== B R A Z I L =========== BANESTES: Scandal Involving Top Execs Delays Privatization ---------------------------------------------------------- Brazil's Espiritu Santo state bank Banestes failed to carry out a privatization process scheduled for December 10. The trouble follows a corruption-related scandal involving the bank's president and three other executives, reports local financial paper Gazeta Mercantil. Earlier this month, a federal court threw out Banestes president Joao Luiz de Menezes Tovar and three other Banestes executives on charges of taking BRL80,000 (US$22,150) in bribes from the state's transport minister Jorge Helio Leal in exchange for their support of the privatization process. The court ordered the central bank to intervene Banestes, but a final date for the federal takeover has yet to be set. Banestes, which was supposed to be privatized at a minimum bid price of BRL348 million, posted losses of BRL2.1 million for the first half of this year and has debts of BRL576 million. The only remaining pre-qualified bidder for the bank is the country's largest private bank Bradesco. The scandal prompted rivals Itau and Banco Safra to withdraw from the process. ELETROPAULO METROPOLITANA: Fitch Downgrades Ratings To `DDD' ------------------------------------------------------------ Fitch Ratings lowered the local and foreign currency ratings and Brazilian national scale rating of Eletropaulo Metropolitana Eletricidade de Sao Paulo S.A.'s (Eletropaulo) to 'DDD' from 'C' following the company's default on US$100 million of Euro commercial paper due this week. The company had previously issued three options for an exchange offer to the holders of the commercial but has not received sufficient participation. Eletropaulo has extended the offers to December 18, 2002. Eletropaulo has received a waiver (until February 24, 2003) of the cross-default provision of the local debenture issue. Separately, Eletropaulo recently signed a definitive agreement with the JP Morgan bank syndicate under which the company repaid 15% of the US$225 million loan and agreed to amortize the balance over a 24 month period (with grace period of 11 months) at a higher interest rate; Eletropaulo has the waiver of the non- payment of the CP from JP Morgan as well. It is expected the company will negotiate similar terms with its other lenders. The company is currently in technical default (not payment default) on a number of its bank loans related to violation of financial covenants, although no loans have been accelerated. Fitch does not expect Eletropaulo to be able to meet its upcoming debt maturities absent a restructuring of its other bank loans under similar terms of the JP Morgan loan. The company has said its intention is to honor 100% of its obligations, but Eletropaulo's refinancing options are currently limited to rolling over existing local and international bank transactions and commercial paper given the company's strained cash position and AES management's intention to not invest additional funds into Brazil. Positively, AES has successfully restructured US$2.1 billion of bank and bond debt, which should ease some concerns of shareholder pressure on AES' Latin American subsidiaries, but AES' commitment to its Brazilian assets is unchanged. Should the company successfully restructure its debt as proposed, which should better match debt maturities to cash flow, Fitch may revise Eletropaulo's local currency rating upward to a level equal to or near to the current sovereign rating of Brazil of 'B'. From an operational standpoint, Fitch believes Eletropaulo, the operating company, to be a viable company with the ability to generate cash flow to service debt in excess of US$500 million in a stable environment. Significant short-term debt maturities during 2002 in a volatile Brazilian marketplace exacerbated the company's liquidity position, and devaluation of the real has stressed free cash flow due to the currency mismatch between revenues and debt service, ultimately leading to the current situation. Eletropaulo's revenues have benefited from an annual tariff increase of 14.2% in July 2002, which while positive, has been partially offset by slower than expected demand growth and overall demand lower than 2000 levels. Demand growth should continue over the medium term and tariffs are expected to continue to be adjusted by an inflation index. To preserve cash, Eletropaulo has postponed the payment of its dividend that was declared earlier this year. Future dividends will be limited due to the use of cash at the operating company level to repay debt. Beyond the operating company concerns, the company is facing refinancing risk at its holding companies, AES ELPA (voting) and TransGas (non-voting). AES is currently renegotiating terms on these loans with BNDES. AES has pledged the shares of Uruguaiana to BNDES in support of the US$521 million ELPA debt (principal and interest) and has committed to applying dividends from Eletropaulo to repay BNDES. TransGas has another US$336 million due January 2003 and US$299 million in January 2004 (principal and interest). Should the required payments not be made to BNDES, shares and control could revert back to BNDES, which may affect the rating depending on the stated intentions of the Brazilian development bank. Given dividend restrictions at the Eletropaulo level, it is uncertain from where the holding company will obtain sufficient funds to repay BNDES or what type of agreement will be reached. Eletropaulo is the largest electricity distributor in Latin America in terms of revenues, with a sales volume of 32,563 GWh in 2001. Since privatization on April 15, 1998, Eletropaulo has been owned by LightGas, now known as AES ELPA. AES ELPA is 88.21% owned and controlled by AES. AES ELPA owns 77.81% of Eletropaulo's voting shares and 30.97% of total capital. EMBRATEL: Lazard In Advance Acquisition Talks With Parent --------------------------------------------------------- Brazil's three fixed line incumbents - Telemar, Telesp and Brasil Telecom - are making progress in their efforts to take control of Embratel, the country's largest long distance operator. According to local daily O Globo, investment bank Lazard Frere, which is acting on behalf of the incumbents, is now in advanced talks with bankrupt US-based carrier WorldCom to acquire its ailing local unit. The paper suggests that the fixed line operators hired local consultant Roberto Mangabeira Unger and UK-based consultancy Spectrum four months ago to perfect the plan, which they must submit to Brazilian telecoms regulator Anatel for approval. Acquisition talks come amid contentions by Embratel that it is not for sale and that it would be illegal for the telcos to set up an offshore investment fund to buy Embratel. Also, Anatel chairman Luiz Guilherme Schymura has previously stated the acquisition of Embratel is not possible until July 2003, upon expiry of regulations that prevent a change of ownership. In the event the three fixed line operators receive authorization to carry out the takeover, they would split Embratel in two companies; one providing voice and data services; and another encompassing Embratel's satellite operations. According to Mangabeira Unger, Embratel is not a viable concern, implying that it needs new owners to become financially stable. Embratel is battling with debts totaling BRL5.2 billion (US$1.4bn), much of which is denominated in foreign currencies. CONTACT: EMBRATEL PARTICIPACOES S.A. Investor Relations Silvia Pereira Tel. (55 21) 2519-9662 Fax: (55 21) 2519-6388 Email: Silvia.Pereira@embratel.com.br invest@embratel.com.br or Press Relations: Helena Duncan/Mariana Palmeira Tel: (55 21) 2519-3653/3654 Fax: (55 21) 2519-8010 Email: hduncan@embratel.com.br mpalm@embratel.com.br ========= C H I L E ========= COEUR D' ALENE: Reduces Long-Term Debt by $23M ---------------------------------------------- Coeur d'Alene Mines Corporation (NYSE:CDE) announced Monday further significant reductions in its outstanding long-term convertible debt. Coeur's remaining convertible indebtedness now stands at $79.5 million, down from $145.5 million at the beginning of the year, which represents a 45% decline. Coeur ended the third quarter of 2002 with $102.7 million in convertible debt. Dennis E. Wheeler, Coeur's Chairman and Chief Executive Officer, remarked: "We have eliminated over $210 million of debt while cutting our annual cash interest expense by approximately $16 million since embarking on our debt-reduction program in 1998. These considerable interest savings, combined with significant reductions in our operating costs, represent major elements of our ongoing turnaround plan. We are pleased to now be in the position of generating positive operating cash flow for our shareholders." Coeur recently exchanged 7.9 million shares of common stock for $10.3 million principal amount of its 6.375% Convertible Debentures due January 2004, reducing the remaining balance to $55.1 million. In addition, the Company exchanged 2.1 million shares of common stock for $2.7 million principal amount of its 7.25% Convertible Debentures due October 2005, reducing the remaining balance to $11.7 million. Since September 30, 2002, holders of $10.1 million of Coeur's Series I and II 13.375% Convertible Notes due December 2003 have voluntarily converted into 8.8 million common shares. As a result, the Series II 13.375% Convertible Notes have been fully retired. After taking these exchanges and conversions into account, Coeur now has 118.0 million shares outstanding. Coeur d'Alene Mines Corporation is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. CONTACT: COEUR D'ALENE MINES CORPORATION Mitchell J. Krebs, 208/769-8155 EMBONOR/BEPENSA: S&P Expects Contrasting Credit Trends ------------------------------------------------------ Standard & Poor's Ratings Services said Monday that as a result of a Latin America bottling industry review, it put the 'BB' rating on Mexican Coke bottler Bepensa S.A. de C.V. (Bepensa) on CreditWatch with positive implications. Concurrently, the ratings agency it put the 'BBB' ratings on Chilean Coke bottler Coca-Cola Embonor S.A. (Embonor) on CreditWatch with negative implications. "The macroeconomic environment has been negative along 2002 in Latin America, but asymmetries between Mexico and the southern region have been enough to result in contrasting credit trends," commented Standard & Poor's credit analyst Silvina Aldeco Martinez. "In the case of Embonor, unfavorable macroeconomic conditions in some territories and heightened competitive threats in others are challenging the improvement of the already weak financial performance for the rating category," she added. "Yet, modest but sustainable growth in soft drinks consumption in Mexico have allowed Bepensa to gradually strengthen its financial profile in the last couple of years," Standard & Poor's credit analyst Federico Mora commented. In the case of Bepensa, the company ratings have been placed on CreditWatch positive because of the improvement in the company's financial profile over the last couple of years, resulting from a considerable debt reduction, along with consistent EBITDA growth. This financial strength is reflected in the company's last 12 months EBITDA interest coverage of 9.9x and a total debt to capital ratio of 29.7%, from year-end 1999 figures of 4.6x and 56.1%, respectively. The CreditWatch positive listing will be resolved as soon as Standard & Poor's evaluates Bepensa's 2002 full-year results along with the company's future expectations. Embonor's CreditWatch negative placement reflects the fact that in spite of the company's several cost cutting measures implemented along 2001 and 2002, and the relative recent re- franchising of the bottling licenses in the Peruvian market, financial performance did not reflect substantial improvements. In 2002, Embonor has increasingly suffered the heightened competition of lower priced brands in some of its franchised territories in Chile, as well as in Bolivia. Furthermore, the company's exposure to more volatile economies than its home country coupled with limited growth potential in its main operation in Chile, questioned the entity's ability to improve its cash generation in the short to medium term. =============== C O L O M B I A =============== SEVEN SEAS: Updates Default Status on Senior Notes -------------------------------------------------- Seven Seas Petroleum Inc. (Amex: SEV) announced that the Company is in default under its 12 1/2% $110 Million Senior Subordinated Notes ("Senior Notes") due to a failure to make the $6,875,000 semiannual interest payment on November 15, 2002. The full principal plus accrued and unpaid interest will be due and payable immediately upon notice by the Trustee or holders of 25% of the Senior Notes. As previously announced, the Company is currently in default under its 12% Senior Secured $45 Million Notes ("$45 Million Notes") as a result of cross-default provisions in the governing documents relating to the Company's failure to meet the obligations owed to the Senior Notes. On December 13, 2002, Chesapeake Energy accelerated all amounts owing to Chesapeake Energy, including principal, accrued interest, fees, costs, and expenses, and as a result, such amounts are immediately due and payable. Additionally, under the terms of the $22.5 million CHK Note (one-half of the $45 Million Notes) the rate of interest has been increased from 12% to a default rate of 13%. Chesapeake, as collateral agent for the $45 Million Notes, has exercised its rights to exclusive control over Seven Seas' bank accounts, pursuant to deposit control agreements related to the Note Purchase and Loan Agreement dated July 9, 2001. Seven Seas cannot access its US bank accounts without prior approval from the collateral agent. Most of Seven Seas' operating cash is held in these accounts. Seven Seas has been advised by the collateral agent that the collateral agent currently intends to approve disbursements by the Company and its subsidiaries from these accounts as necessary to prudently operate the Guaduas Oil Field in the ordinary course of business. 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 ============= E C U A D O R ============= VINTAGE PETROLEUM: Sells Ecuadorian Interest; Reduces Debt ---------------------------------------------------------- Vintage Petroleum, Inc. (NYSE: VPI) announced Monday that it has signed an agreement to sell its interests in Ecuador to a major independent oil and gas company for $US 141.7 million. In the agreement, Vintage commits to sell for cash all of the stock of its indirect wholly-owned subsidiary, Vintage Oil Ecuador, S.A. ("VOE"). The transaction is scheduled to close January 31, 2003, subject to normal conditions precedent to closing. VOE holds all of Vintage's properties in Ecuador and had working capital of approximately $25.7 million at June 30, 2002. At year-end 2001, Vintage disclosed estimated proved reserves in Ecuador of 50.4 million barrels of oil. Upon closing, the after-tax proceeds from the sale of its Ecuador interests, coupled with proceeds received from non-core property sales earlier in the year and the application of cash flow in excess of capital expenditures, should allow Vintage to achieve its previously announced goal to reduce debt by $200 million. At year-end 2001, Vintage had long-term debt of $1,011 million and estimates its year-end 2002 debt would be reduced to $811 million or less, proforma for the application of the proceeds from the Ecuador sale scheduled to be received in January 2003. "We are pleased to announce that the sale of our holdings in Ecuador should allow us to fulfill our 2002 commitment to reduce debt by $200 million," said S. Craig George, CEO. "Our exploration and exploitation success in Ecuador created significant production potential, and the sale provides a means for early harvest of the enhanced value. We will have taken an important step in repositioning for future growth upon concluding this transaction," added Mr. George. Vintage plans to continue to review its portfolio for potential disposition of additional non- strategic interests to aid in further lowering its leverage over time. Vintage Petroleum, Inc. is an independent energy company engaged in the acquisition, exploitation, exploration and development of oil and gas properties and the marketing of natural gas and crude oil. The company is headquartered in Tulsa, Oklahoma, and its common shares are traded on the New York Stock Exchange under the symbol VPI. For additional information, visit the company website at www.vintagepetroleum.com. CONTACT: VINTAGE PETROLEUM, INC. Robert E. Phaneuf, Vice President - Corporate Development +1-918-592-0101 URL: http://www.vintagepetroleum.com ============= J A M A I C A ============= CABLE & WIRELESS: Exec Says Rival Overstated Market Share --------------------------------------------------------- Telecom service provider Cable and Wireless Jamaica (C&WJ) said that rival operator Digicel had grossly overstated its share of the local cellular market, reported the Jamaica Observer. Business News Americas reported that last week, Digicel marketing manager Harry Smith told local press, "We have 65 percent of the market." Earlier, Digicel chairman Denis O'Brien said that his company had over 600,000 customers, and would reach 700,000 by the end of this year. But C&WJ mobile division manager Patrick King said, "Digicel has tried to mislead the public regarding its market share. If they say that they have in excess of 600,000 customers at 65%, then they are saying that the entire mobile market is a little more than 900,000." The Jamaican mobile market is in excess of 1.2 million, said King. He added that C&WJ have in excess of 550,000 active customers, so Digicel's 65 percent is a gross exagerration, he added. C&WJ, the former monopoly operator in the country, expects to win back the market share from Digicel. According to King, C&WJ would be attacking Digicel on all areas in which they have a comparative advantage. As of now, King said that the Company could accommodate a few hundred thousand more customers. CONTACT: Cable & Wireless PLC Head Office 124 Theobalds Road London England WC1X 8RX Tel +44 (0)20 7315 4000 Fax +44 (0)20 7315 5000 Web http://www.cw.com Contacts: Sir Ralph Robins, Non Executive Chairman Sir Winfried W. Bischoff, Non Executive Deputy Chairman Graham M. Wallace, Chief Executive Robert E. Lerwill, Executive Director Finance =========== M E X I C O =========== AHMSA: CEO Expects Liquid Steel Output Up By 10% Next Year ---------------------------------------------------------- Alonso Ancira, CEO of Mexican steelmaker AHMSA, is forecating a 10% increase in liquid steel output next year, reports Business News Americas. However, the trend is merely in response to expanding export demand, said Mr. Ancira. He noted that demand from Nafta countries - Mexico, United States and Canada - has picked up and that prices of some products such as wire rod and rebars have gone up. "Our technicians are working on igniting blast furnace number 3, and restarting the long products area where AHMSA had halted operations because of lower prices for rebars and wire rod, which are now higher," Ancira said. Originally, the Company had planned to restart the number 3 furnace in May next year, but now the aim is to have it working early 2003. The furnace can produce 1,600t/d of pig iron. AHMSA has four functioning blast furnaces, of which two, numbers 4 and 5, are used permanently while 2 and 3, with lower capacity, are used as back-ups during maintenance periods or to boost output. AHMSA, which stopped paying its US$1.85 billion debt more than three years ago, recently submitted a restructuring proposal offering banks a 40% stake in the Company to write off US$1.3 billion of the debt. The plan would reduce AHMSA's debt to US$500 million, as well as extend maturities to 15 years from 9 years. 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 MAXCOM TELECOMUNICACIONES: Investor Update November 2002 -------------------------------------------------------- Revenues of Maxcom Telecomunicaciones, S.A. de C.V. for the month of November 2002 increased 3% to Ps$55.6 million, from Ps$54.1 million during October 2002. Voice revenues represented 90% of total revenues, while data and wholesale revenues contributed to total revenues with 3% and 7%, respectively. EBITDA for the month of November 2002 was Ps$0.8 million, which compared favorably to Ps$0.1 million during October 2002. The number of lines in service at the end of November 2002 increased 4% to 123,677 lines, from 119,289 lines at the end of October 2002. Residential lines at the end of November 2002 were 96,921, while 21,826 lines were business and 4,930 lines, or 4.0%, were wholesale. Total customers grew 7% to 88,157 at the end of November 2002, from 82,192 at the end of October 2002. Additionally, as the economic outlook for 2003, both for emerging economies as well as the telecom industry, continues to be uncertain, Maxcom is pushing ahead with cost reduction measures planned for next year. During the month of December 2002, the Company will take a special charge of approximately Ps$22.0 million to reflect one-time restructuring costs. Maxcom Telecomunicaciones, S.A. de C.V., headquartered in Mexico City, Mexico, is a facilities-based telecommunications provider using a "smart- build" approach to deliver last-mile connectivity to micro, small and medium- sized businesses and residential customers in the Mexican territory. Maxcom launched commercial operations in May 1999 and is currently offering local, long distance and data services in greater metropolitan Mexico City, Puebla and Queretaro. CONTACT: MAXCOM TELECOMUNICACIONES, S.A. DE C.V. Jose-Antonio Solbes (Mexico) +011-5255-5147-1125 investor.relations@maxcom.com Citigate Financial Intelligence Lucia Domville +1-212-419-4166, or lucia.domville@citigatefi.com URL: http://www.maxcom.com ================ V E N E Z U E L A ================= SIDOR: Ongoing National Strike Taking Its Toll ---------------------------------------------- Venezuela's national strike, which is about to enter its third week, has begun to affect the operations at the country's largest integrated steelmaker Siderurgica del Orinoco, Business News Americas indicates. Sidor, Venezuela's biggest private sector exporter, had to curtail operations after gas supplies dropped to 3 million cubic feet a day, or 1.5% of the normal rate. According to the Company, Sidor is gradually shutting down the various plants at its steel making complex in the eastern city of Ciudad Guayana. "The problem arose yesterday [Sunday] when we were informed that gas supplies from state oil and gas giant PDVSA would be reduced to a trickle, making operations impossible," a company spokesperson said. PDVSA explained that the shortfall was due to "technical problems" in the area, and said supplies would be restored "later." Under normal conditions PDVSA supplies Sidor with some 200 million cubic feet of gas a day. But the spokesperson said that the Company's exports, shipped along the Orinoco river to the Atlantic Ocean, have not been significantly affected by the strike, although there have been delays in the arrival of some vessels. Sidor was privatized in 1990 when the Amazonia consortium - made up of Mexico's Hylsamex, Argentina's Techint group (including its Mexican unit Tamsa), Venezuela's Sivensa and Brazil's Usiminas - acquired 70% of the company. State heavy industry holding company CVG held on to 30% but its stake is due to rise to 42% under a refinancing package announced in August that involves capitalizing part of Sidor's debt. CONTACT: SIDERURGICA DEL ORINOCO, C.A. (SIDOR) Edificio General, Piso 9 Avda. La Estancia Chuao, Caracas 1060 Venezuela Tel: (582) 902 3800/3917/3955 Fax: (582) 993 2930 Home Page: www.sidor.com.ve/ *********** 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 * * *