/raid1/www/Hosts/bankrupt/TCRLA_Public/030116.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
Thursday, January 16, 2003, Vol. 4, Issue 11
Headlines
A R G E N T I N A
* Argentina Pays IADB $845M As Loan Payment Comes Due
B E R M U D A
TYCO INTERNATIONAL: May Face 2021 Debenture Repurchase
B R A Z I L
CEMIG: Split-up Will Only Involve Accounts, Not Assets
SAESA: Issuing $138M Bonds To Pay Debt
TELESP CELULAR: Promissory Notes' Issuance Planned
VARIG: TAM Merger Viewed As Financial Woes' Solution
C H I L E
AES GENER: Fitch Downgrades Ratings To 'BB-'; Rating Watch Neg.
C O L O M B I A
SEVEN SEAS: Files for Chapter 11 Protection
D O M I N I C A N R E P U B L I C
UNION FENOSA: Massive Debts Spur Speculations
E C U A D O R
FILANBANCO: Creditors Delay Awarding Collection Contract
J A M A I C A
AIR JAMAICA: Seeks Government Aid To Overcome Immediate Woes
JUTC: Consultants Recommend 90% Price Hike
KAISER ALUMINUM: Additional Subsidiaries File for Chapter 11
M E X I C O
SATMEX: S&P Maintains "CCC+" Rating
P A R A G U A Y
ANDE: Struggles To Meet $26M In Payments Due In February
T R I N I D A D & T O B A G O
CARONI LTD: Workers Seem To Accept Restructuring
CARONI LTD: TIFCA To Ask For Cane Price Hike
PATT: Dealing With $2.7B In Debt With The State
V E N E Z U E L A
HOVENSA: Moody's Puts Ratings Under Review For Possible Downgrade
PDV AMERICA: Ratings Downgraded; Remain on CreditWatch Negative
PDVSA: Moody's Lowers Citgo's Ratings To Below Investment Grade
CERRO NEGRO: Political Turmoil Drives Moody's To Cut Bond Rating
HAMACA: Moody's Downgrades $600M of Senior Secured Loans
PETROZUATA FINANCE: Moody's Cuts Bond Rating On Continued Strike
SINCOR: Moody's Lowers Rating After Downgrading PDVSA's ratings
- - - - - - - -
=================
A R G E N T I N A
=================
* Argentina Pays IADB $845M As Loan Payment Comes Due
-----------------------------------------------------
The Inter-American Development Bank received a US$845 million
payment from the government of Argentina, reports local news
source Cronica TV. Central bank reserves were used to make the
payment.
The payment was originally due last month, but an automatic 30-
day rollover period allowed the country to hold off on payment
until today.
The payment may help the country earn its first loan from the
International Monetary Fund since it defaulted on a record US$95
billion worth of debt in December 2001. The default severed the
country's credit lines, except for the IMF. Last year, the
country had been unsuccessful in its negotiations for a new aid
package from the IMF.
However, on Monday, Bloomberg News reported that the two parties
had signed a draft letter of intent, and that the IMF negotiating
team may stay in the country until Thursday this week, in case
the LoI needa modification.
The IMF loan is intended to help the country roll over about US$7
billion of debt payments coming due on or before June. Another
US$980 million payment to the IMF comes due on Friday.
=============
B E R M U D A
=============
TYCO INTERNATIONAL: May Face 2021 Debenture Repurchase
------------------------------------------------------
Tyco International Ltd. (NYSE - TYC, BSX - TYC, LSE - TYI)
announced Tuesday that holders of Zero Coupon Convertible
Debentures due February 12, 2021 issued by its wholly-owned
subsidiary, Tyco International Group S.A., have the right to
surrender their debentures for repurchase as of Tuesday.
Each holder of the debentures has the right to require Tyco to
repurchase on February 12, 2003 all or any part of such holder's
debentures at a price equal to the issue price plus the accreted
original issue discount. Under the terms of the debentures, Tyco
had the option to pay for the debentures with cash, Tyco common
shares, or a combination of cash and shares, and has elected to
pay for the debentures solely with cash. If all outstanding
debentures are surrendered for purchase, the aggregate cash
purchase price will be approximately $1,850,809,508.
In order to surrender debentures for repurchase, a purchase
notice must be delivered to U.S. Bank, N.A., the trustee for the
debentures, on or before 5:00 p.m. eastern standard time, on
February 12, 2003. Holders of debentures complying with the
transmittal procedures of the Depository Trust Company need not
submit a physical purchase notice to U.S. Bank. Holders may
withdraw any debentures previously surrendered for purchase at
any time prior to 5:00 p.m., New York City time, on February 12,
2003.
Tyco will file a Tender Offer Statement on Schedule TO with the
Securities and Exchange Commission later Tuesday. Tyco will make
available to debenture holders, through the Depository Trust
Company, documents specifying the terms, conditions and
procedures for surrendering and withdrawing debentures for
purchase. Debenture holders are encouraged to read these
documents carefully before making any decision with respect to
the surrender of debentures, because these documents contain
important information regarding the details of Tyco's obligation
to purchase the debentures.
The debentures are convertible under certain circumstances into
8.6916 Tyco common shares per $1,000 principal amount at maturity
of debentures, subject to adjustment under certain circumstances.
The debentures are not currently convertible.
About Tyco International Ltd.
Tyco International Ltd. is a diversified manufacturing and
service company. Tyco operates in more than 100 countries and had
fiscal 2002 revenues from continuing operations of approximately
$36 billion.
CONTACT: Gary Holmes (Media)
212-424-1314
Kathy Manning (Investors)
603-778-9700
===========
B R A Z I L
===========
CEMIG: Split-up Will Only Involve Accounts, Not Assets
------------------------------------------------------
Brazil's Minas Gerais state integrated power company Cemig's
decision to delay spinning off its generation, transmission and
distribution assets into separate companies, yielded good results
as hoped.
Power regulator Aneel said it was enforcing terms set in
concession contracts and in a law passed in 1998 that obliges the
power companies to split up.
Aneel set a deadline for the spin offs to be completed by 2002.
Cemig procrastinated in anticipation that a Workers Party (PT)
government would stop Aneel from enforcing the measure. Just
recently, mines and energy minister Dilma Rousseff revealed that
Cemig is no longer obliged to split up.
"We have already informed Aneel that the question of
deverticalization is not foreseen in any legal document,"
Rousseff said. "The only instance of deverticalization is in the
Cemig concession contract and, if [the company wants to change
the concession], it is possible, because the other party is the
federal government."
The companies will be required to provide separate accounts for
each one of the business lines, in order to allow proper
supervision, the minister said.
CONTACT: Cia Energetica de Minas Gerais (Cemig)
Registered Office
Edificio Julio Soares
Avenida Barbacena, 1200
Sto Agostinho
30123-970 Belo Horizonte - MG
Brazil
Tel +55 31 3349-2111
Fax +55 31 3299-4691
URL: http://www.cemig.com.br
Contact:
Djalma Bastos de Morais, Chairman
SAESA: Issuing $138M Bonds To Pay Debt
---------------------------------------
Saesa, a Chilean distributor, received approval from the
country's securities exchange commission (SVS) to issue series-D
bonds.
It is hoped the issue will help the Company pay US$150 million in
debt coming due this April 4. The loan was originally due on
October 18, but the deadline was extended to November 8, only to
be extended again after Saesa Group ditched a US$175-million bond
issue due to investor uncertainty.
The Company has a total debt of US$115 million, owed to banks,
and another US$35 million due to its sister distributor, Frontel.
Business News Americas reports the Company may issue up to 5.9
million UF (Chile's index-linked financial unit), currently equal
to US$138 million of such bonds by April 4.
The 21-year bonds, priced at 10,000UF each, bear annual interest
of 5.25%. Salomon Smith Barney will place the bonds, while Banco
de Chile will represent the bondholders.
The Company earlier modified a bond issue contract with Banco de
Chile to make sure the value of C-bonds in circulation, together
with the D-bonds would not exceed 5.9 million UF.
CONTACT: SAESA
Gerencia y Administracion Zonal de Osorno
Bulnes 441, Osorno
Telefono: (64) 206400
Fax: (64) 206209 - Casilla: 21 -0
TELESP CELULAR: Promissory Notes' Issuance Planned
--------------------------------------------------
Telesp Celular Participacoes S.A ("TCP"), (NYSE: TCP; BOVESPA:
TSPP3 (Common), TSPP4 (Preferred)), the Brazilian holding company
that owns 100% of Telesp Celular S.A., the leading mobile
operator in the state of Sao Paulo in Brazil, and Global Telecom
S.A., a B-band mobile operator in the Brazilian states of Santa
Catarina and Parana, announced today the beginning of procedures
to offer promissory notes in the Brazilian market, with the
following features:
Issuer: Telesp Celular Participacoes S.A.
Securities Offered: Up to R$ 700,000,000.00 (seven hundred
million Reais) on the issue/subscription date. The public offer
of promissory notes is subject to a minimum placement of R$
500,000,000.00 (five hundred million Reais).
Face value: R$ 1,000,000.00 (one million Reais) on the
issue/subscription date.
Number of Notes: Up to 700 (seven hundred) promissory notes
Issue Date: To be defined by the Issuer along with the
Underwriters as soon as the respective registration is obtained
with CVM.
Maturity: 180 days after the issue date.
Interest Rate: It will be determined in the bookbuilding process,
as a percentage of the CDI (Brazilian Interbank Deposit Rate)
that better reflects the current market situation at the
placement date.
Trading Market: NOTA/CETIP System
Guarantee: Telesp Celular S.A.
Use of Proceeds: The proceeds will be used to cancel short term
debt due to recent acquisition of Global Telecom's remaining
shares and the restructuring of existing liabilities, due to
investments incurred.
Bookbuilding scheduled date: 01/29/2003
Settlement Date: Scheduled for 02/04/2003
The underwriters are Esp¡rito Santo Investment, BBV, Santander,
Bradesco and Unibanco.
We clarify that the issue of the referred promissory notes is
subject to the approval of CVM - Comissao de Valores Mobili rios.
CONTACTS: Maria Paula Canais - Investor Relations Officer
pacanais@telespcelular.com.br
(55 11) 3059-7081
Edson Alves Menini - Investor Relations Adviser
emenini@telespcelular.com.br
(55 11) 3059-7531
Fabiola Michalski
fmichalski@telespcelular.com.br
(55 11) 3059-7975
Claudio Wenzel Lagos
Clagos@telespcelular.com.br
(55 11) 3059-7480
VARIG: TAM Merger Viewed As Financial Woes' Solution
----------------------------------------------------
The Brazilian government proposed that ailing flagship airline
Varig merge with its rival TAM to resolve its financial woes
without getting support from the Brazilian development bank BNDES
(Banco Nacional de Desenvolvimento Economico e Social).
Varig is now studying the proposal, which would create a major
merger operation in the Brazilian sector, since jointly, the
companies control almost 80% of the domestic market.
Varig, which hasn't made a profit since 1997, has been reducing
its fleet and negotiating with creditors to postpone debt
payments to avert bankruptcy. The Company, which is struggling
with debts totaling US$764 million and a negative net equity of
US$450 million, has also asked the government for a capital
injection of as much as US$400 million.
TAM also stands to benefit from the proposal because the airline
itself is also trying to deal with huge losses. For the Jan-Sep
2002 period, it posted a loss of BRL619 million and has already
requested financing from BNDES.
CONTACT: VARIG (Viacao Aerea Rio-Grandense, S.A.)
Rua 18 de Novembro No. 800, Sao Joao
90240-040 Porto Alegre,
Rio Grande do Sul, Brazil
Phone: (51) 358-7039/7040
(51) 358-7010/7042
Fax: +55-51-358-7001
Home Page: www.varig.com.br/english/
Contacts:
Dorival Ramos Schultz, EVP Finance and CFO
E-mail: dorival.schultz@varig.com.br
Investor Relations:
Av. Almirante Silvio de Noronha,
n 365-Bloco "B" - s/458 / Centro
Rio de Janeiro, Brazil
KPMG Brazil
Belo Horizonte
Rua Paraba, 1122
13th Floor
30130-918 Belo Horizonte MG
Telephone 55 (31) 3261 5444
Telefax 55 (31) 3261 5151
or
Brasilia
SBS Quadra 2 BL A N 1
Edificio Casa de Sao Paulo SL 502
70078-900 Braslia - DF
Telephone 55 (61) 223 2024
Telefax 55 (61) 224 0473
BAIN & CO
Primary Contact: Wendy Miller
Two Copley Place, Boston, MA 02116
USA
Phone: +1-617-572-2000
Fax: +1-617-572-2461
Email: miles.cook@bain.com
URL: http://www.bain.com
=========
C H I L E
=========
AES GENER: Fitch Downgrades Ratings To 'BB-'; Rating Watch Neg.
---------------------------------------------------------------
Fitch Ratings has downgraded the senior unsecured local and
foreign currency ratings of AES Gener S.A. (Gener) to 'BB-' from
'BBB-' and the Chilean national scale rating to 'Chl BBB-' from
'Chl A-'. The ratings have also been placed on Rating Watch
Negative. The downgrade and Rating Watch primarily reflect near
term liquidity constraints and longer-term refinancing concerns.
Gener continues to work through its liquidity issues. The company
successfully refinanced two bank loans in the third quarter of
2002, which resulted in an amortization schedule that tracks
closely to projected free cash flow available for debt service
and limits financial flexibility. The recent refinancings plus
semiannual interest payments on the US$503 million convertible
bond and US$200 million Yankee bond have resulted in total
required debt service payments in 2003 of approximately US$159
million, assuming the near-term sale of certain assets and
application of a portion of those proceeds.
The sale of that investment should improve liquidity and provide
additional financial alternatives. Given ongoing negotiations and
continued interest by both parties, Fitch believes that an
agreement to sell such asset is likely in the near term and
should provide sufficient liquidity to stabilize the credit while
it focuses on its longer-term refinancing efforts. However, the
Rating Watch status will remain until the transaction is closed.
Gener continues to reduce debt, paying approximately US$127
million in both scheduled and unscheduled amortization during
2002, although debt levels remain high. The company anticipates
further reducing debt by US$96 million (not including Chivor)
during 2003 and will complete the repayment of its restructured
bank debt by the end of 2004, essentially leaving the convertible
and Yankee bonds to be refinanced. Gener has bullet maturities of
approximately US$503 million of convertible bonds due March 2005
and US$200 million of Yankee bonds due January 2006. The company
is currently pursuing alternatives to address this debt.
The company ended 2002 with a cash balance of approximately US$14
million. Sources of near-term cash include operating cash flow as
well as dividends from its Chilean subsidiaries based on 2002
results. To further improve liquidity and ease the restructuring
efforts, the company has also begun discussions with interested
parties to sell some additional smaller investments, although
proceeds from these sales are not expected before the second half
of the year.
The fundamentals of Gener reflect the company's strong position
as the largest thermal generator in the Chilean electricity
market, its diverse portfolio of generating plants, its strategy
of focusing on core electricity generation in Chile, a soundly
administered regulatory system, an economically strong and
growing service area, and experienced management. Gener further
benefits from its project-like structural characteristics,
including long-dated power purchase agreements (PPAs) with
financially strong customers and fuel supply contracts that
reduce business risk.
For September 2002, Gener had a leveraged consolidated balance
sheet with total debt-to-EBITDA of 6.1 times (x) down from 7.5x
at December 2001, reflecting increased operating income. Leverage
should decline as the company amortizes its recently renegotiated
bank loans over the next couple of years with free cash flow and
proceeds from the sale of assets. To conserve cash, Gener has
reduced its capital-expenditure program. Additionally, the
company did not pay any dividends during 2002, and dividends in
2003 will be limited to the legal minimum required by Chilean law
based on documentation of the renegotiated bank loans.
CONTACT: Fitch Ratings
Jason T. Todd 1-312-368-3217, Chicago
Alejandro Bertuol, 1-212-908-0393, New York
Carlos Diez +011-562-206-7171, Santiago
James Jockle 1-212-908-0547, New York, (Media
Relations)
===============
C O L O M B I A
===============
SEVEN SEAS: Files for Chapter 11 Protection
-------------------------------------------
Seven Seas Petroleum Inc. (OTC Pink Sheets: SVSSF) announced the
Company has filed for protection under Chapter 11 of the United
States Bankruptcy Code with the United States Bankruptcy Court,
Southern District of Texas, Houston Division. The Company has
consented to the appointment of a court-appointed trustee.
The filing pertains only to Seven Seas Petroleum, Inc., the
Cayman-based corporate parent. The Company's subsidiaries are
separate legal entities and intend to continue operations in the
ordinary course and proceed with the closing of the previously
announced sale of their 57.7% participating interest in the
shallow Guaduas Oil Field and related assets.
Seven Seas Petroleum Inc. is an independent oil and gas
exploration and production company operating in Colombia, South
America.
CONTACT: Daniel Drum, Investor Relations
+1-713-622-8218
===================================
D O M I N I C A N R E P U B L I C
===================================
UNION FENOSA: Massive Debts Spur Speculations
---------------------------------------------
Speculations abound that Union Fenosa power distributors may have
a hidden agenda when it accumulated debts with the power
generation companies, says DR1 Daily News.
In a letter addressed to President Mejia dated 19 December and
published in El Caribe newspaper, the companies say they have
amassed debts of RD$14.2 billion, half of which is owed to Union
Fenosa affiliates or home office.
El Caribe newspaper speculates that the power distributors could
be accumulating these debts with the power generation companies
to gain a better position in their negotiations to abandon its
Dominican affiliates by declaring bankruptcy.
Economist Alfonso Abreu Collado has indicated that it is only a
matter of time before the companies become insolvent. The report
says that although the companies invested US$200 million
(approximately RD$4.2 billion) to buy 50% ownership of the power
distribution companies, they would be willing to sell this back
and in so doing leave the government with a massive debt of RD$10
billion.
=============
E C U A D O R
=============
FILANBANCO: Creditors Delay Awarding Collection Contract
--------------------------------------------------------
The four companies, which are competing for a contract to recover
defunct Ecuadorian bank Filanbanco's bad loans, have already
submitted to the banking regulator the merits of their proposals.
However, Filanbanco's creditors association will not announce the
name of the winning firm until after president elect Lucio
Gutierrez takes office on January 15.
The creditors hope the funds recovered by the winning company
will be able to pay the US$350 million owed to them by
Filanbanco.
The four competing companies are Prowill, Mexico's Thesis, Hunton
& Williams and Gomez Giraldo & Asociados.
The selection process has taken so long due to legal problems and
requests for more information by interested companies.
Formerly the largest bank in the system, Filanbanco was
intervened in the 1998-1999 crisis and remained open until July
2001 under the administration of the deposit guarantee agency
(AGD). Upon resolution of a dispute with depositors, the Central
Bank ordered the bank to be liquidated on July 31, 2002.
CONTACT: FILANBANCO
Av. 9 of 203 October and Pichincha
Guayaquil, Ecuador
Phone: 322780 ext. 2885
Fax: 329451
E-mail: mailto:administrador@filanbanco.com
Home Page: http://www.filanbanco.com/
Contacts:
International Business Division
Germania Narv ez Brandon
E-mail: mailto:mgnarvaez@filanbanco.com
Legal Divison (Guayaquil)
Marks Arteaga Valenzuela, Departmental Manager
E-mail: mailto:mmarteaga@filanbanco.com
=============
J A M A I C A
=============
AIR JAMAICA: Seeks Government Aid To Overcome Immediate Woes
------------------------------------------------------------
Jamaica's troubled flag carrier is asking for government
assistance to survive its current problems. A report by The
Caribbean Investor indicates the specific nature of the aid has
not been worked out yet.
Air Jamaica Chief Executive Officer Christopher Zacca said, "We
think we have a safe future. But we are going to need help for a
few years. We have to look for help of some sort."
He added. "The Government is trying to work with us." The report
indicated that the nature government assistance may be known
after the board committee and the management finalizes the
budget.
The airline's chairman Gordon Stewart estimates that the country
may lose about US$1 billion without Air Jamaica. According to the
figures presented in the report, Air Jamaica flies over half of
all passengers to Jamaica and almost 60 per cent of all tourists.
Stewart rejects the idea that other airlines will come to take
over if Air Jamaica stops operations, "Then the question is why
have they not gone to the Eastern Caribbean? Instead, flights
have been cut and airlift is a problem."
Aggressive cost-cutting measures had helped Air Jamaica improve
its performance in the past year. The airline had posted losses
at US$80 million loss, significantly less than the expected
US$140 million loss. This year, the airline expects a loss of
US$35 million while still implementing the same cost-cutting
measures.
Meanwhile, the airline might have to face more losses due to the
imposition of visa requirement for Jamaicans traveling to
Britain. Unofficially, the loss might be up to US$5 million,
according to the report.
The increase in fuel prices resulting from a possible war between
the United States and Iraq may also hurt the airline.
Although Air Jamaica had reported an increased passenger load,
the yields are still low due to the discounted fares. The report
indicated these profits may not cover costs.
CONTACT: AIR JAMAICA
4 St. Lucia Avenue
Kingston 5,
Jamaica
Tel No. 876/922-3460
Fax /929-5643
Email: webinfo@airjamaica.com
Contact:
Gordon Stewart, Chairman
Allen Chastanet, Vice President for Marketing and Sales
JUTC: Consultants Recommend 90% Price Hike
------------------------------------------
A 90% increase in fares was recommended by a group of Swedish
consultants to struggling Jamaica Urban Transit Company (JUTC). A
report by The Jamaica Gleaner shows that this recommendation may
push fares to nearly US$40 per stage from the current US$20, if
accepted.
The four consultants also urged the Company to give priority to
the newly introduced cashless fare collection system. According
to them, this would encourage frequent travelers while reducing
leakages.
The four consultants were hired to advise the Company, which had
been losing US$3.6 million daily. JUTC currently faces an
accumulated deficit of US$2.63 billion. The consultants presented
a raft of cost-cutting measures, aimed at saving the Company
about US$700 over the next 15 months.
The measures recommended include the freezing of new employment
and the reduction of the number of drivers and conductors, depot
attendants and dispatchers. Aside from that, the consultants
suggested cutting security costs and increasing the number of
part-time drivers and conductors.
According to the report, an estimated US$250 million reduction in
costs by the end of March was proposed, according to the Gleaner,
citing the consultants' proposals. From April until the end of
the next financial year, the plan recommends saving US$450
million from costs.
KAISER ALUMINUM: Additional Subsidiaries File for Chapter 11
------------------------------------------------------------
In a move that is expected to have no impact on day-to-day
operations, nine additional wholly owned subsidiaries of Kaiser
Aluminum & Chemical Corporation filed Tuesday voluntary petitions
with the U.S. Bankruptcy Court for the District of Delaware under
Chapter 11 of the Federal Bankruptcy Code.
"From an operating perspective, the filings are a non-event,"
said Jack A. Hockema, president and chief executive officer of
Kaiser Aluminum. "Financial liquidity remains strong and is
further protected by the actions taken today [Tuesday]."
The voluntary filings were initiated to, among other things,
protect the assets held by these subsidiaries against possible
statutory liens that may arise from the Pension Benefit Guaranty
Corporation (PBGC) if Kaiser does not make a $15 million
contribution to its salaried pension plan by January 15. (The
company previously disclosed that it did not intend to seek
Bankruptcy Court approval to make that payment.) Such possible
statutory liens would, among other things, violate the provisions
of Kaiser's Debtor-in-Possession (DIP) credit agreement.
The filings include the U.S. legal entities through which Kaiser
owns interests in its Jamaican operations; however, the legal
entities that own the operating facilities themselves -- the
Alpart alumina refinery and the KJBC bauxite mining operation in
Jamaica -- are not included in the filings and thus are not
subject to any bankruptcy-related impacts. The filings also
include the legal entities through which Kaiser owns its interest
in an aluminum extrusion plant in London, Ontario, but Kaiser
expects court approvals (through the U.S. Court and through an
ancillary application to the Ontario Superior Court of Justice in
Toronto, Canada of measures that will eliminate any impact on
operations at that facility.
Hockema said, "We want to be absolutely certain that customers,
employees, and suppliers understand that these filings will have
no impact on the day-to-day operations of Alpart, KJBC, and
London. In particular, the filings were not prompted by cash flow
concerns, business conditions, or balance sheet issues at any of
the affected subsidiaries. We expect the Bankruptcy Court to
approve our request to permit the filed entities to continue to
make payments in the normal course of business (including
payments of pre-petition amounts) to creditors and others for
items such as materials and supplies, freight, taxes and, of
course, salaries, wages, and benefits for employees."
Kaiser expects approval of such payments primarily because the
amounts are not material and are essential to ongoing operations.
The company also expects approval of a continuation of routine
intercompany transactions involving, for example, the transfer of
materials and supplies among affiliates.
"In short, the filings simply represent yet another step on the
path toward the company's restructuring and eventual emergence
from Chapter 11," said Hockema.
The company also has received a waiver from the DIP lenders to
assure that the availability under the DIP credit agreement will
not be affected by the failure to make the pension payment, the
additional Chapter 11 filings, or the imposition of any statutory
PBGC liens. In addition, the company and its DIP lenders expect
to seek approval of a further amendment to the DIP credit
agreement to formally incorporate the waiver provisions.
The filings include the following subsidiaries, all of which are
U.S. entities, except where noted. Several of the subsidiaries
are special-purpose or dormant entities.
Alpart Jamaica Inc. (not the Alpart alumina refinery)
KAE Trading, Inc.
Kaiser Aluminum & Chemical Canada Investment Limited (Canada)
Kaiser Aluminum & Chemical of Canada Limited (Canada) Kaiser
Bauxite Company (not the KJBC bauxite mining operation)
Kaiser Center Properties
Kaiser Export Company
Kaiser Jamaica Corporation
Texada Mines Ltd. (Canada)
At the time of its original Chapter 11 filings in 2002, it did
not appear to be necessary to include these nine subsidiaries in
the bankruptcy proceedings. However, in light of the accelerated
funding requirement for the salaried retirement plan -- and in
light of the steps taken to ensure that the filings have no
impact on operations -- it was determined that today's [Tuesday]
filings constituted an appropriate and prudent protective
measure.
Certain other majority-owned subsidiaries, such as the legal
entity that owns the Valco aluminum smelter, have not been
included in the filings to date for a variety of legal,
technical, or jurisdictional reasons. Instead, and where
pertinent, measures intended to provide similar protection are
being pursued.
Kaiser and 16 of its subsidiaries originally filed Chapter 11
petitions in February and March of 2002. In connection with those
cases, Kaiser had previously obtained U.S. Bankruptcy Court
approval to set January 31, 2003 as a general claims bar date. In
respect of the subsidiaries included in today's [Tuesday] Chapter
11 filings, the company anticipates that the debtors will ask the
Court to set a separate (and later) claims bar date.
Kaiser Aluminum & Chemical Corporation, the operating subsidiary
of Kaiser Aluminum Corporation (OTCBB:KLUCQ), is a leading
producer of alumina, primary aluminum and fabricated aluminum
products.
CONTACT: Kaiser Aluminum Corporation, Houston
Scott Lamb, 713/332-4751
===========
M E X I C O
===========
SATMEX: S&P Maintains "CCC+" Rating
-----------------------------------
Standard and Poor's is maintaining its rating on Mexican
satellite company Satelites Mexicanos pending the launching of
the Satmex 6 satelite, according to a report released by Notimex.
S&P has placed the "CCC+" rating of Satmex on its review list of
special revisions with a negative outlook since Nov. 8, 2002. The
rating was attributed to Satmex's US$530-million debt, low income
and low liquidity.
Satmex's income dropped 36% year-on-year in the first nine months
of 2002 and its coverage of interest payments with Ebitda
declined to a factor of 1.2, due to a drop in use of production
capacity after the loss of its client Innova.
However, with the expected launching of the Satmex 6 satellite in
the second quarter of this year, S&P believes that the Company
will subsequently improve its potential to increase income.
S&P also said that Satmex's fixed satellite services would also
benefit from transmission of signals related to Internet.
At present, Satmex is focused on the video market and corporate
networks and its area of coverage includes the United States,
Latin America and the Caribbean.
Satmex is 75% owned by Mexican consortium Principia, the
remaining 25% is controlled by the government.
CONTACT: SATELITES MEXICANOS, S.A. DE C.V.
Kristi King Etchberger
Tel. 011-52-55-5201-0804
Web site: http://www.satmex.com
===============
P A R A G U A Y
===============
ANDE: Struggles To Meet $26M In Payments Due In February
--------------------------------------------------------
Paraguay's state power company Ande's is pursuing other
alternatives of raising money to cover a total of US$26 million
in debt payments coming due in February because until now, local
banks have not expressed much interest.
This February, Ande has to pay US$17 million to Itaipu hydro
plant, US$6 million with the Inter-American Development Bank
(IDB), and US$3 million with the Japan Bank for International
Cooperation (JBIC).
Citing Ande finance director Pedro Ferreira, Business News
Americas reports that the Company recently launched five
different products that would anticipate payment from its
customers for 2H03 electric power purchases. Ande hopes to raise
some US$5 million from the said approach.
Another approach is to offer discounts on bills paid in advance,
or pay interest equivalent to about 2.5% a month for payment
deposits in Paraguayan guaranis and 6.5% a year for deposits in
US dollars, Ferreira explained.
Ande has also reinforced its campaign to recover debts from
public and private sector customers, which proved successful in
December and January, Ande chief of staff Victor Romero said.
Ande has also used a number of debts with public bodies to settle
debts with the finance ministry, he said, adding that although
this did not add to Ande's cash flow it did cut its debts with
the government.
Finally, the Company is stepping up its campaign to reduce power
losses, in particular losses to illegal connections, Romero said.
=================================
T R I N I D A D & T O B A G O
=================================
CARONI LTD: Workers Seem To Accept Restructuring
------------------------------------------------
Caroni Ltd.'s workers and cane farmers appear to accept the
Company's restructuring phase, The Trinidad Guardian reports,
citing Trinidad Islandwide Cane Farmers' Association (TICFA)
spokesperson Lallan Rajaram.
The sugar worker's mood seemed to be one of acceptance after
Agriculture Minister John Rahael explained the need for
restructuring the Company.
Meanwhile, the harvest of this year's crop did not start out
well. Mechanical problems at Caroni's Usine Ste Madeliene factory
had delayed the first step of operations.
The Guardian cited a company source saying Caroni's acting chief
executive William Washington was in the field all day, trying to
address complaints of mechanical failure.
In South, farmers only brought in about 60 tonnes of sugarcane by
midday, while the factory needs between 2,000 to 3,000 tonnes to
start operations.
By that evening, the factory only produced 150 tonnes out of its
6,000-tonne capacity.
CONTACT: Caroni Limited
Old Southern Main Road, Caroni,
Trinidad & Tobago
Phone: (868) 663-1781 or 662-0879
Fax: (868) 663-1404
CARONI LTD: TIFCA To Ask For Cane Price Hike
--------------------------------------------
The Trinidad Islandwide Cane Farmers' Association (TICFA) will
lobby for an increase in the price of sugar cane, according to
group spokesman Lallan Rajaram.
A report by Trinidad Guardian relates that TICFA met with a
special ministerial team to discuss the restructuring plan of
troubled company Caroni Ltd.
The team, composed of Planning Minister Dr Lenny Saith, Minister
of Agriculture John Rahael, Health Minister Colm Imbert, Works
Minister Franklyn Khan, Minister of Trade and Enterprise Ken
Valley and Housing Minister Martin Joseph, was set up by Prime
Minister Patrick Manning. The union was pleased with the response
of the ministerial team, said Rajaram.
According to him, TICFA has proposed a base figure of US$170 per
tonne of average-quality cane, when Caroni implements its new
pricing system based on quality next year. For cane of higher
quality, a higher price will be expected.
Meanwhile, employees and farmers, who reported to the Usine
factory compound for the start of the 2003 harvest, was greeted
by a new signboard, which reads, "If you can't suck it, don't
bring it." The report indicates that the signboard pertains to
the Company's new pricing policy based on quality.
PATT: Dealing With $2.7B In Debt With The State
-----------------------------------------------
The Port Authority of Trinidad and Tobago (PATT) has offered the
State shares in the proposed successor holding company for the
Port's operations as part of an effort to address its US$2.7-
billion debt with the State, reports The Trinidad Guardian.
Tackling the debt issue is critical for the Port in its bid to
attract a business partner.
PATT general manager, Colin Lucas, said the Port's present
restructuring and upgrading exercise will include the refinancing
of that multi-billion dollar debt.
"One of the tenets of the transformation and restructuring
initiative that is going on now is a restructuring of those loans
into equity for the Government in the successor holding company,"
Lucas said.
The Port made an annual operational profit last year of more than
US$80 million.
=================
V E N E Z U E L A
=================
HOVENSA: Moody's Puts Ratings Under Review For Possible Downgrade
-----------------------------------------------------------------
The ongoing national strike in Venezuela prompted Moody's
Investors Service to place Hovensa L.L.C.'s Baa3 rating under
review for possible downgrade.
The rating change affects US$600 million of senior bank loan
facilities to Hovensa, consisting of a US$396 million term loan
facility and a US$150 million revolving working capital facility,
and US$127 million of senior secured tax-exempt revenue bonds.
All the debt ranks "pari passu."
PDVSA has in place long term contracts to supply both 115, 000
bpd of Merey heavy crude oil and 155,000 bpd of Mesa medium
weight crude, Moody's revealed. The lower cost Merey was intended
to supply the new 58,000 barrels per day (bpd) delayed coking
unit, thereby bringing down the average feedstock cost. The
strike, which led to a cessation of nearly all PDVSA operations,
forced a declaration of force majeure under the crude contracts.
While Hovensa can purchase alternative feedstocks, this is less
economically optimal and would result in lower margins than
processing supplies under the PDVSA contracts. Moody's sees
possible serious financial stresses in the event of a prolonged
disruption. Even after the supply situation improves, there may
be potential longer-term impacts on the operations, financial
capacity, and autonomy of PDVSA.
Moody's is also concerned over the ability of PDVSA, as a sponsor
and guarantor of Hovensa debt until the coker has reached final
completion, to pay its share should cash flow prove insufficient.
Moody's review will also consider the impact of capital spending
related to low sulf and other environmental regulations on
Hovensa's financial flexibility and liquidity. A fully funded
debt service reserve account is currently in place.
PDV AMERICA: Ratings Downgraded; Remain on CreditWatch Negative
---------------------------------------------------------------
Standard & Poor's Ratings Services further downgraded Tuesday its
ratings on U.S. refining and marketing company PDV America Inc.
and its indirect, wholly-owned subsidiary CITGO Petroleum Corp.
The ratings remain on CreditWatch with negative implications
where they were placed on Dec. 10, 2002.
Tulsa, Oklahoma-based PDV America has approximately $2 billion in
debt and capital lease obligations outstanding.
"The ratings downgrade reflects the deterioration in PDV
America's credit quality as a result of the crippling of the oil
export capacity of its ultimate parent, Petroleos de Venezuela
S.A. (PDVSA), the national oil company of Venezuela," said
Standard & Poor's credit analyst Bruce Schwartz.
As its crude oil production has fallen from about 2.8 million
barrels per day to less than 500,000 barrels per day, PDVSA has
declared force majeure on crude supply arrangements with CITGO
that contain margin stabilization provisions that fortify CITGO's
credit quality. (CITGO purchased about half of its crude oil
under these arrangements.)
The reduced volume of crude supplied under these contracts is
diminishing the profitability and cash flow generation of CITGO's
refineries by forcing it to refine alternate crude oils that have
less attractive margins. Crude runs, to date, have not been
affected at CITGO Lake Charles and Corpus Christ refineries,
although runs at its Lyondell-CITGO joint venture have been cut.
In addition, the purchasing of alternate supplies is increasing
working capital requirements at CITGO because the trade credit
terms on open market purchases are worse than those on purchases
under its crude supply agreements with PDVSA. Given the nature of
the political conflict within Venezuela and the capital and lead
times required for PDVSA to restore PDVSA's crude oil production,
Standard & Poor's believes that crude shipments may not normalize
for some time.
Furthermore, CITGO's working capital requirements could increase
in the interim if oil prices were to rise due to events
surrounding a likely war with Iraq.
ANALYST: Bruce Schwartz, CFA, New York (1) 212-438-7809
PDVSA: Moody's Lowers Citgo's Ratings To Below Investment Grade
---------------------------------------------------------------
Moody's Investors Service downgraded the debt ratings of Citgo
Petroleum Corp., a U.S refiner owned by Venezuela's state oil
company, to below investment grade due to the ongoing strike that
has seen a reduction of oil shipments from its parent.
In a statement, Moody's said it downgraded the rating on US$700
million of Citgo senior unsecured debt to Ba2 from Baa2 and
warned it may further cut the rating. The cut means Citgo may
have to rely on lines of credit to finance its operations, the
statement said.
The action also mirrors concern that Petroleos de Venezuela SA
(PDVSA) may have to rely on the refiner to pay off US$500 million
of debt due in August, Moody's said.
CERRO NEGRO: Political Turmoil Drives Moody's To Cut Bond Rating
----------------------------------------------------------------
Moody's Investors Service lowered the US$600 million senior
secured bonds of Venezuelan heavy oil project Cerro Negro
Finance, Ltd. to B1 from Ba2. The outlook for the rating is
negative.
Moody's attributed the downgrade to the continued strikes and
political upheaval in the country, the ongoing shutdown of the
project, and the downgrade of the national oil company, Petroleos
de Venezuela ("PDVSA"), to B3 on both a local and foreign
currency basis.
The project is complete and is supported by funded debt service
reserve accounts sufficient to pay the next debt service payment.
Moody's is maintaining a negative rating outlook on the project's
rating. Critical near term rating factors include the duration of
the current production disruption, the project's cash position
and cash burn rate, debt service reserve accounts, and other
liquidity sources.
Beyond the near term, the ultimate impact on the disruption upon
the independence, operating capacity, and financial condition of
PDVSA will be an important consideration.
HAMACA: Moody's Downgrades $600M of Senior Secured Loans
--------------------------------------------------------
Venezuela heavy oil project Hamaca Holding LLC had the ratings on
its US$600 million senior secured loans downgraded to B2 from Ba2
by Moody's Investors Service. The outlook for the rating is
negative.
The cut reflects the continued strikes and political upheaval in
the country, the ongoing shutdown of the project, and the
downgrade of the national oil company, Petroleos de Venezuela
("PDVSA"), to B3 on both a local and foreign currency basis.
The project was 83% complete as of November 30, 2002. PDVSA is
responsible for significant equity contributions toward the
completion of the project, as well as for repayment of debt for
non-completion.
Moody's said the lower rating of the Hamaca project, in
comparison to that of the other 3 heavy oil projects, reflects
its greater degree of reliance upon PDVSA and the absence of any
funding of the debt service reserve account.
Moody's is maintaining a negative rating outlook on the rating of
the project. Critical near term rating factors include the
duration of the current production disruption, the project's cash
position and cash burn rate, debt service reserve accounts, and
other liquidity sources.
Beyond the near term, the ultimate impact on the disruption upon
the independence, operating capacity, and financial condition of
PDVSA will be an important consideration.
PETROZUATA FINANCE: Moody's Cuts Bond Rating On Continued Strike
----------------------------------------------------------------
Moody's Investors Service downgraded the US$1 billion senior
secured bonds of Venezuelan heavy oil project Petrozuata Finance
Inc. to B1 from Ba2. The outlook for the rating is negative.
The cut on the rating reflects the continued strikes and
political upheaval in the country, the ongoing shutdown of the
project, and the downgrade of the national oil company, Petroleos
de Venezuela ("PDVSA"), to B3 on both a local and foreign
currency basis.
The Petrozuata project is complete and is supported by funded
debt service reserve accounts sufficient to pay the next debt
service payment.
Moody's is maintaining a negative rating outlook on the project's
rating. Critical near term rating factors include the duration of
the current production disruption, the project's cash position
and cash burn rate, debt service reserve accounts, and other
liquidity sources.
Beyond the near term, the ultimate impact on the disruption upon
the independence, operating capacity, and financial condition of
PDVSA will be an important consideration.
SINCOR: Moody's Lowers Rating After Downgrading PDVSA's ratings
---------------------------------------------------------------
The US$1.2 billion of senior secured loans of Venezuelan heavy
oil project Sincor Finance Inc. has been downgraded to B1 from
Ba2 by Moody's Investors Service. The outlook for the rating is
negative.
Moody's action reflects the continued strikes and political
upheaval in the country, the ongoing shutdown of the project, and
the downgrade of the national oil company, Petroleos de Venezuela
("PDVSA"), to B3 on both a local and foreign currency basis.
The project, while physically complete, is still supported by
sponsor guarantees of debt repayment for "non-completion" as
defined under the financing documents and is also supported by
funded debt service reserve accounts sufficient to pay the next
debt service payment.
PDVSA is responsible for its share of the sponsor guarantees for
Sincor.
Moody's is maintaining a negative rating outlook on the rating of
the project. Critical near term rating factors include the
duration of the current production disruption, the project's cash
position and cash burn rate, debt service reserve accounts, and
other liquidity sources.
Beyond the near term, the ultimate impact on the disruption upon
the independence, operating capacity, and financial condition of
PDVSA will be an important consideration.
***********
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 America 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 2003. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed to
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