/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030130.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 30, 2003, Vol. 4, Issue 21 Headlines A R G E N T I N A ARGENTINE BANKS: Deposit Freeze May Be Totally Lifted By May CLISA: Launches Bond Swap to Restructure Debts COMPANIA DE ALIMENTOS: Fitch Assigns `D(arg)' To $120M In Bonds EDENOR: Fitch Rates $600M Corporate Bonds `D(arg)' GAS ARGENTINO: Corporate Bonds Rated `D(arg)' by Fitch Argentina INTERANDES: Fitch Rates $50M Corporate Bonds `BBB(arg)' IRSA: Corporate Bonds Assigned `B(arg)' Rating by Fitch METROGAS: Fitch Rates `D(arg)' on $600M Of Corporate Bonds TELECOM ARGENTINA: Corporate Bonds Rated `D(arg)' by Fitch TERMOANDES: $250M of Bonds Rated `BBB(arg)-' by Fitch TGN: S&P Cuts CRIBs Financial Trust I Risk-Insured Bonds Rating * World Bank Approves $600M Loan for Lower Income Families B E R M U D A TYCO INTERNATIONAL: Dow Corning To Acquire Electronics Division B R A Z I L AES CORP.: Fitch Rates Secured Debt 'BB'; Affirms Ratings ELETROPAULO METROPOLITANA: AES Transgas Defers Equity Payment LIGHT: Ratings Lowered to'CCC+'; Off Watch LIGHT: Outlines New Three-Year Crisis Plan C H I L E COEUR D'ALENE: Reports Additional $25M Reduction in Debt ENERSIS: Rio Maipo Sale To Generate $300M M E X I C O GMM: To Complete Debt Restructuring By March 2003 T R I N I D A D & T O B A G O BWIA: Cost Cutting Effort Leads to 600 LayOffs CARONI LTD.: Restarts Usine Grinding Operations V E N E Z U E L A DVSA: To Slash Costs By 51% To Compensate For Losses - - - - - - - - - - ================= A R G E N T I N A ================= ARGENTINE BANKS: Deposit Freeze May Be Totally Lifted By May ------------------------------------------------------------ The halt on transfers of time deposits in Argentina is likely to be completely lifted by May, before the President Eduardo Duhalde leaves office. The country's economy minister Roberto Lavagna announced the forecast in an interview with a local radio on Saturday. Business News Americas recalls that the government of former President Fernando de la Rua froze all deposits in December 2001 to halt a massive run on banks. Subsequent governments have gradually loosened the freeze on demand deposits, but there are still ARS14 bilion (US$4.3bn) worth of time deposits trapped in banks. Analysts and bankers in Buenos Aires deem Lavagna's declaration as political. On the other hand, they also believe it is feasible considering that the liquidity situation of the country's banks has improved in the last 12 months. Duhalde and Lavagna are very concerned about "leaving a legacy" of ending the highly unpopular deposit freeze and saving the economy, an executive from one of Argentina's largest banks said. Presidential elections are expected in April and Duhalde will not run for a second term. CLISA: Launches Bond Swap to Restructure Debts ---------------------------------------------- Argentine construction and transportation company Compania Latinoamericana de Infraestructura & Servicios SA offered to exchange new bonds for those it defaulted on last month, reports Bloomberg. In a statement to the Buenos Aires bourse, CLISA SA, as the Company is known, offered to exchange US$100 million of 11 5/8% bonds that mature in 2004 for new 6% bonds that mature in 2012. The exchange offer is open until Feb. 25. "A high percentage of investors will accept the new bonds, but there is significant loss in value," said Marta Castelli, an analyst at Standard & Poor's in Buenos Aires. The privately held company, which is majority-owned by Argentine holding company Benito Roggio, is one of few issuers seeking to resume payments in the wake of the country's US$95-billion debt default and a devaluation that caused the economy to contract about 12% last year, its largest drop in a century. As of September 2002, the Company's total debt was US$147 million, including the US$100 million notes. About 18% of total debt matures before September 2003. CONTACT: CLISA Adalberto Campana +1-54-11-4959-6857 FINANCIAAL ADVISOR: BANC OF AMERICA SECURITIES LLC Jonah Hirsch +1-888-292-0070 or, +1-704-388-4807 from outside the US COMPANIA DE ALIMENTOS: Fitch Assigns `D(arg)' To $120M In Bonds --------------------------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. assigned last Thursday a `D(arg)' on Compania de Alimentos Fargo S.A.'s corporate bonds worth US$120 million, according to a posting on Argentina's National Securities Commission. Based on the definitions given in Fitch's web site, a rating of `D(arg)', is given to financial obligations currently in default. The rating reflects the Company's position as of the end of September last year. The bonds, due in July 2008, are classified under `Simple Issue', and described in the posting as "Obligaciones negociables Simples." The reasons for the rating were not indicated in the posting. EDENOR: Fitch Rates $600M Corporate Bonds `D(arg)' -------------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. assigned a `D(arg)' rating to US$600 million worth of corporate bonds issued by Argentine electric distributor, Edenor S.A., last Thursday. According to the official website of the National Securities Commission of Argentina, the bonds were called "obligaciones negociables." The rating was based on the Company's financial status as of September 30, 2002. The rating "D(arg)' is given to financial commitments that are in default. Edenor has been suffering from low energy rates, which have been frozen at their January 2002 levels, despite the significant devaluation of the Argentine real against the US dollar. Edenor is an electricity distribution company serving the northwestern half of the greater Buenos Aires area and the northern portion of the Federal Capital -- within the city of Buenos Aires -- under the exclusive 95-year concession granted by the Argentine government. EASA, Edenor's controlling shareholder (51%), is a holding company controlled by EDF International (100%). CONTACT: EDENOR S.A. Azopardo Building Azopardo 1025 (1107) Capital Federal Phone: (54-11) 4346-5000 Fax: (54-11) 4346-5300 E-mai: to ofitel@edenor.com.ar Home Page: http://www.edenor.com.ar GAS ARGENTINO: Corporate Bonds Rated `D(arg)' by Fitch Argentina ---------------------------------------------------------------- A posting in the official web site of the National Securities Commission of Argentina indicated that Fitch Argentina Calificadora de Riesgo S.A. rated Gas Argentina's corporate bonds `D(arg)' last Thursday. The bonds were worth US$130 million and described as "Obligaciones negociables simples por U$S 130.000.000." The said bonds were classified under `simple issue' and were due on June 7, 2000. The rating of `D(arg)' reflects that the Company defaulted on the obligation. The rating agency issued the rating based on the Company's performance as of September 30, 2002. INTERANDES: Fitch Rates $50M Corporate Bonds `BBB(arg)' ------------------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A., the Argentine division of Fitch, Inc., issued a `BBB(arg)-' to US$50 million worth of corporate bonds of Interandes S.A., said the National Securities Commission of Argentina. The rating reflects the Company's financial position as of September 30, 2002. The commission described the bonds as "obligaciones negociables", but did not indicate the maturity date. The `BBB(arg)-' rating denotes an adequate credit risk relative to other issuers or issues in Argentina. But changes in circumstances or economic conditions are more likely to affect the capacity for timely repayment of these financial commitments than for financial commitments denoted by a higher rated category, said Fitch. The `-' sign denotes a negative implication. IRSA: Corporate Bonds Assigned `B(arg)' Rating by Fitch ------------------------------------------------------- Corporate bonds of Argentine real estate company IRSA Inversiones y Representaciones S.A. were rated `B(arg)-' by the local affiliate of Fitch Ratings agency, Fitch Argentina Calificadora de Riesgo S.A. last Thursday. A posting on the web site of the National Securities Commission of Argentina showed that the bonds were worth US$250 million, and described as "Programa Global de Obligaciones Negociables." The rating was based on the Company's financial position as of September 30, 2002. According to definitions given by Fitch, the rating denotes a significantly weak credit risk relative to other issuers or issues in Argentina Financial commitments are currently being met but a limited margin of safety remains and capacity for continued timely payments is contingent upon a sustained, favorable business and economic environment, said Fitch. Meanwhile, the rating agency gave a rating of `2' to the Company's stocks. IRSA is Argentina's leading property development firm with major holdings in downtown Buenos Aires and a controlling interest in leading shopping center developer Alto Palermo S.A. CONTACT: Irsa Inversiones y Representaciones SA Head Office Piso1 Bolivar 108 Buenos Aires Argentina C1066AAD Tel +54 11 4323 7555 Fax +54 11 4323 7597 Web http://www.irsa.com.ar/ Contacts: Eduardo Sergio Elsztain, Executive Chairman M. Marcelo Mindlin, Executive Vice Chairman Atty Saul Zang, Vice Chairman METROGAS: Fitch Rates `D(arg)' on $600M Of Corporate Bonds ---------------------------------------------------------- Corporate bonds of Argentine natural gas distribution company received a rating of `D(arg)' from Fitch Argentina Calificadora de Riesgo S.A. last week, according to Argentina's National Securities Commission. The bonds, worth US$600 million, were described as "obligaciones negociables simples" by the commission. The maturity date was not disclosed. The given rating means that the Company has defaulted on the financial obligation and reflects the Company's position as of September 30, 2002. In related news, the Company's stocks were given a rating of `3' by Fitch. For the first three quarters of 2002, the Company posted a net loss of ARS543.7 million (US$152.7 million). The Company defaulted on a loan worth EUR110 million due Sept 27 last year, although it was able to make interest payments after the currency devaluation. CONTACT: METROGAS Alberto Alfredo Alvarez, President William Harvey Adamson, First VP Gen. Director Enrique Barruti, HR Director Fernando Aceiro New Bus. Director Luis Domenech Admin. and Fin. Director Their Address: G. Araoz de Lamadrid 1360 1267 Buenos Aires, Argentina Phone: (800) 422-2066 Fax: (201) 262-2541 Email: info@metrogas.com.ar URL: http://www.metrogas.com.ar TELECOM ARGENTINA: Corporate Bonds Rated `D(arg)' by Fitch ---------------------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. rated four different corporate bonds of Telecom Argentina Stet-France Telecom S.A. `D(arg)' last week. The rating denotes that the Company is defaulting on the financial obligation, based on the definition given by Fitch. According to the National Securities Commission of Argentina, different series of the bonds described as "emitada bajo el Programa Global de Obligaciones Negocibles vencido en agoto de 1999" received the junk rating. The said bonds are the following: -- Series C, worth US$126 million due on November 1, 2002 -- Series E, worth US$100 million, coming due in May 2005 -- Series H, worth ITL40 billion, due on March 3, 2008 -- Series K, worth EU2.5 billion, due on July 1, 2002 The ratings reflect the Company's financial position as of the end of September 2002. However, the reasons behind the ratings were not revealed in the posting. The Company's main activities involve the provision of telecommunication and related services such as infrastructure, consultancy and security services; Internet access; and marketing of equipment, according to the Financial Times. CONTACT: Telecom Argentina Stet France Telecom SA Head Office 10th Floor Alicia Moreau de Justo 50 Buenos Aires Argentina 1107 Tel +54 11 4968 4000 Fax +54 11 4313 5842 Web Site http://www.telecom.com.ar Contacts: Juan Carlos Masjoan, Chairman Christian Chauvin, Vice Chairman Franco Bertone, Vice Chairman Susana Malcorra, Chief Executive TERMOANDES: $250M of Bonds Rated `BBB(arg)-' by Fitch ----------------------------------------------------- Corporate bonds worth US$250 million issued by Salta generator Termoandes S.A. were rated `BBB(arg)-' by Fitch Argentina Calificadora de Riesgo S.A. according to the National Securities Commission of Argentina. The rating denotes an adequate credit risk relative to other issuers or issues in the country. It was based on the Company's financial position as of September 30, 2002. The bonds, described as "obligaciones negociables", come due in January 2009. Termoandes is owned by Chilean generator AES Gener, which is the second largest electricity generation group in Chile in terms of operating revenue and generating capacity with an installed capacity of 1,757 MW composed of 1,512 MW of thermal and 245 MW of hydro generating capacity. The Company operates most of the thermal electric power plants in the country. AES Gener serves both the Central Interconnection System (SIC) and Northern Interconnection System (SING) through various subsidiaries and related companies. CONTACT: TERMOANDES S.A. Av. Libertador 602 Piso 13 (C1001ABT), Buenos Aires. Tel.: 4816-1502 Fax: 4816-6605 E-mail: infoandes@aesc.com TGN: S&P Cuts CRIBs Financial Trust I Risk-Insured Bonds Rating --------------------------------------------------------------- Standard & Poor's Ratings Services lowered Tuesday its rating on TGN CRIBs Financial Trust I's (TGN CRIBs) convertibility risk- insured bonds to 'D' from 'CC' after the underlying obligor, Transportadora de Gas del Norte (TGN), did not fully comply with the semiannual US$9.5 million interest payment that was due Jan. 25, 2003. TGN made only a partial interest payment of US$1.9 million, which is the interest accrued from the last interest payment date until Oct. 31, 2002, with an interim cap on the interest rate of 3.5%. The underlying corporate credit ratings on TGN were lowered to 'D' on Feb. 25, 2002, following missed payments on the TGN IFC Trust I and TGN IFC Trust II transactions. The company has since suspended principal payments and made partial interest payments on all of its outstanding debt due to the negative effect that the pesification of tariffs, the unsettling peso devaluation, and the government measures have had on the company's cash flow and ability to transfer funds abroad. The TGN CRIBs transaction has a transferability and convertibility insurance policy issued by Overseas Private Investment Corp. The TGN CRIBs bonds were issued on July 26, 2000, for US$175 million. The outstanding amount of the bonds is US$175 million. These bonds are due to mature in July 2012. The transaction's liquidity reserve was depleted on July 25, 2002. ANALYSTS: Juan Pablo De Mollein, Buenos Aires (54) 114-891-2113 Felicitas Del Cioppo, Buenos Aires (54) 114-891-2120 Marta Castelli, Buenos Aires (54) 114-891-2128 Diane Audino, New York (1) 212-438-2388 * World Bank Approves $600M Loan for Lower Income Families ---------------------------------------------------------- The World Bank approved Tuesday a US$600 million loan to finance the "Heads of Household" program in Argentina in order to support the establishment of a social protection network for poor households. The "Heads of Household" program (Plan Jefes de Hogar) gives financial assistance to poor unemployed workers, providing $150 Argentine pesos (about US$45) per month for the head of a household with children under the age of 18 or with disabled persons of any age. In exchange, beneficiaries must engage in a work or training activity. The number of beneficiaries is estimated to be about 1.85 million people, a figure that will decline over the two-year duration of the project. "Since the beginning of the crisis, we have been deeply concerned about the impact on the poorest sector of society of the dramatic increases in poverty and unemployment which have taken place in Argentina. This loan, which provides immediate support to poor households, provides much needed short term assistance while Argentina presses forward with other longer term challenges." said Axel van Trotsenburg, World Bank Director for Argentina, Chile, Paraguay and Uruguay. "Throughout 2002 we have reallocated significant resources to relieve the social emergency, including to health, education and feeding programs for children. Today we continue these efforts to limit the impact of the crisis among the most vulnerable sectors." The kinds of work activities eligible under the Program include small infrastructure and community services projects designed to improve the basic social and economic conditions of the poor neighborhoods where they are implemented. In this context, US$100 million under the loan will be directed to small municipalities, particularly those with large numbers of very poor, to help cover the costs of the needed materials and other inputs necessary for these projects. "We expect to have the support of the various parties involved to ensure full execution of the budget in 2003, which will be critical to maximizing the Program's impact. In addition, we are introducing a new tool called the Social Monitor [1] that provides for the participation of civil society organizations in the monitoring of the program, thus ensuring additional independent sources of evaluation of program implementation, creating greater incentives for transparency and efficiency in the execution of this program -to ensure that the help gets to those who need it most," added van Trotsenburg. After four years of recession in Argentina, unemployment reached 21.5 percent in May 2002, a percentage that is nearly twice as high in the case of poor households. In this context, the "Heads of Households" program is an important tool with immediate effects, but does not replace medium- and long-term efforts that will stimulate the creation of new jobs. The US$600 million loan from the International Bank of Reconstruction and Development is a LIBOR-based, fixed-spread loan, repayable in 15 years, and has a five-year grace period. World Bank Support for the Social Emergency Program Up to this point, the World Bank has provided support for the Social Emergency Program in two phases. During the first phase, in March 2002, it reallocated US$100 million to the areas of health, education and community kitchens. The second phase, in October 2002, included the reallocation of US$140 million in funds for health and education. Today, a US$600 million loan for a social protection program is being announced, and assistance would continue to be provided for social protection and economic reform in Argentina. [1] Social Monitor - The principal objective of the Social Monitor is to create capabilities within civil society to monitor the use of public resources in the social emergency programs financed by the World Bank, the IDB and the Government of Argentina. The Social Monitor seeks to improve transparency and efficiency in the management of assistance programs and to increase the quality of those programs. ============= B E R M U D A ============= TYCO INTERNATIONAL: Dow Corning To Acquire Electronics Division --------------------------------------------------------------- Dow Corning Corp., which is looking to expand its share of the fabricated thermal interface materials market, signed a definitive agreement to acquire the Raychem Power Materials Business Unit of Tyco Electronics. The value of the deal was not disclosed. Under the terms of the agreement, Dow Corning will obtain the Power Materials Business Unit's fabricated thermal interface materials (TIMs), electromagnetic-interference (EMI) and radio- frequency-interference (RFI) shielding products, as well as certain connector sealing products that have been sold under the trademarks GELTEK, HEATPATH and DBSEAL. Sales of these products in 2002 totaled approximately $9 million. Along with the Tyco Electronics Power Materials Unit's three product lines, Dow Corning will acquire its intellectual property rights, including patents associated with the product lines. The products will continue to be manufactured at the facility currently used for production in Menlo Park, Calif. All of the Tyco Electronics Power Materials Unit employees will become employees of Dow Corning Corporation. The acquisition is expected to be completed by the end of the first quarter of 2003, said Dow Corning, the Midland-based maker of silicone products. Tyco Electronics is part of troubled manufacturing conglomerate Tyco International Ltd. CONTACT: TYCO INTERNATIONAL LTD. Corporate Office The Zurich Centre, Second Floor 90 Pitts Bay Road Pembroke HM 08, Bermuda Phone: 441-292-8674 Home Page: http://www.tyco.com Contacts: Gary Holmes (Media) Tel +1-212-424-1314 or Kathy Manning (Investors) Tel +1-603-778-9700 =========== B R A Z I L =========== AES CORP.: Fitch Rates Secured Debt 'BB'; Affirms Ratings --------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to The AES Corp's (AES) recently completed secured debt refinancing (secured debt) comprised of a multi-tranche $1.62 billion senior secured credit facility and $258 million of secured notes. Fitch has also affirmed the existing ratings of AES and those of its subsidiaries, IPALCO Enterprises (IPALCO) and Indianapolis Power and Light (IP&L). AES, IPALCO, and IP&L's ratings are removed from Rating Watch Negative. The Rating Outlook is Negative. CILCORP and Central Illinois Light Company's (CILCO) ratings remain on Rating Watch Evolving pending completion of their committed sale to Ameren Corporation. The CILCORP sale is now awaiting final SEC approval. The newly assigned rating of AES's secured debt reflects the strong asset coverage, net of AES subsidiaries' individual debts, afforded by the security package and the stringent terms and conditions that govern the bank credit agreement and secured notes indenture. The ratings of the various secured debt instruments do not differentiate among the various tranches that enjoy varying baskets of collateral since in Fitch's view all have reasonably strong recovery prospects. All secured debtholders benefit from a fixed amortization schedule that requires AES to pay down 50% of the secured credit facility and 40% of the secured notes by November 2004. They are also advantaged by a cash sweep mechanism that requires AES to use a significant portion of proceeds from asset sales to pay down the secured debt. Fitch projects a breakeven liquidity scenario in which AES meets the fixed amortization schedule with proceeds from the CILCORP sale, a slightly reduced forecast of parent operating cash flow (POCF) relative to that of 2002, and a much reduced capital investment schedule. Any additional funding, either via asset sales or access to capital markets, would improve AES's liquidity position and allow the company to pay down debt and strengthen its balance sheet. AES' affirmed ratings already reflect the effective subordination of AES' senior unsecured debt and the explicit subordination of more junior debt and preferred classes as a result of the creation of a secured debt category. The ratings also consider the relatively thin residual asset coverage, afforded to the existing unsecured and subordinate debt classes after the expected repayment of the senior secured debt. The ratings are also influenced by the current high degree of debt leverage, as indicated by the ratio of Parent Debt to POCF ratio expected to be in the 7.5-8.0 times (x) range and POCF to Parent-Interest ratio around 1.5x. The Negative Outlook takes into consideration the continuing uncertainties AES faces. The company still encounters a difficult business environment in its key geographic regions such as the US, UK and Latin America. Fitch's current forecasts do not anticipate that AES will receive much of any contribution of POCF in the next two years from Brazil, Venezuela, and the UK. AES must manage it's portfolio of businesses in these as well as other regions for optimal operations as well as to ensure its compliance with its corporate debt covenants. Furthermore, AES' ability to pay down debt beyond the required debt maturities and improve its credit metrics will depend on the timing and execution of its asset sale program. In addition, if AES is able to issue equity or equity-related instruments, it will be relieved from the pressure to sell assets and preserve future cash flow foregone from asset sales. Barring any further unforeseen deterioration in AES businesses worldwide, the company's credit metrics could stabilize and see potential for slight improvement in late 2003 or early 2004. The following ratings are affirmed and removed from Rating Watch Negative: AES --Senior secured credit facility 'BB'; --Senior secured notes 'BB'; --Senior unsecured debt 'B'; --Senior and junior subordinated debt 'B-'; --Trust preferred convertibles (AES Trust III and AES Trust VII) 'CCC+'; --Senior unsecured bank facility withdrawn; --Rating Outlook Negative. IPALCO --Senior unsecured debt 'BB'; --Rating Outlook Negative. IP&L --First mortgage bonds and secured pollution control revenue bonds 'BBB-'; --Senior unsecured debt 'BB+'; --Preferred stock 'BB+'; --Rating Outlook Negative. The following ratings remain on Rating Watch Evolving: CILCORP --Senior unsecured debt 'BBB-'; --Rating Watch Evolving pending consummation of sale of CILCORP to Ameren. CILCO --First mortgage bonds and secured pollution control revenue bonds 'BBB'; --Senior unsecured debt 'BBB-'; --Preferred stock 'BBB-'; --Commercial paper 'F2'; --Rating Watch Evolving. The AES Corp., founded in 1981, is among the world's largest power developers. It generates and distributes electricity and is also a retail marketer of heat and electricity. AES owns or has an interest in 182 plants, with more than 63,000 megawatts, in 31 countries and also distributes electricity in 11 countries through 21 distribution companies. CONTACT: Mona Yee, CFA 1-212-908-0557, New York Ellen Lapson, CFA 1-212-908-0504, New York Media Relations: James Jockle 1-212-908-0547, New York ELETROPAULO METROPOLITANA: AES Transgas Defers Equity Payment ------------------------------------------------------------- The AES Corporation (NYSE:AES) announced Tuesday that the Brazil National Bank for Economic and Social Development (BNDES) and other former holders of preferred shares of Eletropaulo Metropolitana Eletricidade de Sao Paulo S.A., the electric distribution company for Sao Paulo, Brazil (Eletropaulo) accepted from its subsidiary AES Transgas Empreendimentos Ltda. (Transgas) an offer to defer until February 28, 2003, approximately $336 million due by Transgas in connection with the purchase of such shares. AES also stated that another AES subsidiary, AES ELPA S.A., had previously deferred until January 30, 2003 approximately $85 million due to BNDES related to its acquisition of common shares of Eletropaulo. AES stated that there can be no assurance that an agreement with BNDES will be reached relating to this payment or that this debt will be rescheduled. AES is a leading global power company comprised of contract generation, competitive supply, large utilities and growth distribution businesses. The company's generating assets include interests in 176 facilities totaling over 60 gigawatts of capacity, in 33 countries. AES's electricity distribution network sells 108,000 gigawatt hours per year to over 16 million end-use customers. CONTACT: AES Corporation Kenneth R. Woodcock, 703/522-1315 URL: www.aes.com Email: investing@aes.com LIGHT: Ratings Lowered to'CCC+'; Off Watch ------------------------------------------ Standard & Poor's Ratings Services lowered Tuesday its global scale ratings on Brazil-based electric utility Light Servi�os de Eletricidade S.A. (Light) to 'CCC+' from 'B', in both local and foreign currencies. The rating on US$150 million senior unsecured medium-term notes issued by the affiliate LIR Energy Ltd. was also lowered to 'CCC+' from 'B'. The ratings have been removed from CreditWatch where they were placed on Oct. 23, 2002. The outlook on the ratings is negative. The rating action reflects both the continuous uncertainty about Light's strategy to refinance significant maturities in the short run and the ongoing deterioration of Light's financial performance. In 2003 and 2004, Light will face BrR1 billion (about US$288 million) of debt maturities in each year, and the company's main source of liquidity comes from its parent company, France-based electric utility Eletricit, de France (EDF; AA/Negative/A-1+). EDF made significant capital contributions to Light during 2002, but Standard & Poor's understands that the parent company's willingness to provide additional support has reduced and is mainly dependant on Light's capacity to improve efficiency and on the result of the tariff revision during 2003. During 2002, EDF contributed approximately US$1.2 billion to Light, of which US$1.0 billion was infused as capital (US$600 million converting existing intercompany loans and US$400 million of new money) and US$200 million as intercompany loans. However, the entire electric sector in Brazil has been suffering due to an incomplete regulatory framework, problems with the wholesale market (MAE), and cost increases. Thus, despite the contributions made last year, Standard & Poor's believes that additional funds from EDF now are limited due to the many troubles afflicting Brazil's electric utility sector and Light's inability to improve its operating efficiency. EDF has recently made significant changes to Light's organizational structure in order to reduce costs and tackle the subsidiary's operating inefficiencies, such as high energy losses. However, the success of this undertaking is uncertain and doubts remain if Brazil or Light is still a strategic investment for EDF. As parent support is Light's main source of liquidity, Standard & Poor's has growing concerns about Light's ability to find a timely solution to refinance debt. The company has been negatively affected by the high level of energy losses, coupled with the increase in the dollar- denominated cost of energy from Itaip�, resulting in reduced cash generation. Under this perspective, it is expected that Light's cash generation in 2003 will be insufficient to cover debt service, presenting EBITDA/interest coverage ratio of about 0.75x. The uncertainties in the electric sector model, together with this weakened financial position, and a BrR3.8 billion debt burden, net of positive results from hedging transactions, have hurt Light's access to the credit market. Moreover, general credit availability has not been restored yet since the credit crunch experienced in Brazil during the second semester of 2002, which imposes extra difficulties on Light to refinance debt. The negative outlook highlights the company's lack of strategy regarding its maturity amortization schedule for 2003 and the uncertainties about the sector regulatory environment and its potential negative effect on the company's level of cash generation. The ratings will be lowered further if it becomes clear that EDF is not supporting Light. In addition, if important issues, such as the tariff revision rules and procedures and the commercialization environment, are not properly regulated and put into place to improve the electric energy sector's performance, the financial performance of Light could deteriorate further, thus affecting ratings. ANALYST: Marcelo Costa, Sao Paulo (55) 11-5501-8955; Milena Zaniboni, Sao Paulo (55) 11-5501-8945 LIGHT: Outlines New Three-Year Crisis Plan ------------------------------------------ Brazil's Rio de Janeiro distributor Light will cut costs by BRL100 million (US$27mn) a year up to 2005, lay off staff and sell the corporate headquarters in Flamengo, in the southern zone of Rio de Janeiro, reports Business News Americas. The measures are all part of a three-year Crisis Plan launched by the Company in December in order to see a profit or at least balance the books, by 2005. Under the plan, Light will also reduce power losses to 15% from 21.6% and reduce the level of non-payment from 45.8% of total billing to 2.5%, both by 2005. Light has been battling with successive losses since 1999. In the first nine months of 2002, the Company lost BRL407 million. Adding more to its woes is its conflict with employees, who oppose plans for significant layoffs. The Company is now reported to be examining ways to reduce benefits to its employees instead. Francois Roussely, the chief executive of Electricite de France, earlier said that the French parent would send an official to Brazil in mid-February to discuss with the Brazilian government solutions for the troubles of its local unit in the country. CONTACT: LIGHT SERVICOS DE ELETRICIDADE S.A. Avenida Marechal Floriano, 168 20080-002 Rio de Janeiro, Brazil Phone: +55-21-2211-2794 Fax: +55-21-2211-2993 Home Page: http://www.lightrio.com.br Contact: Bo Gosta Kallstrand, Chairman Michel Gaillard, President and CEO Joel Nicolas, Executive Director, Operation Paulo Roberto Ribeiro Pinto, Executive Director, Investor Relations and CFO ========= C H I L E ========= COEUR D'ALENE: Reports Additional $25M Reduction in Debt -------------------------------------------------------- Coeur d'Alene Mines Corporation (NYSE:CDE) announced Tuesday continued significant reductions in its outstanding long-term convertible debt. Coeur's remaining convertible indebtedness now stands at $54.5 million, consisting of $10.6 million of 13.375% Senior Convertible Notes due December 2003, $32.3 million of 6.375% Convertible Debentures due January 2004, and $11.7 million of 7.25% Convertible Debentures due October 2005. This remaining indebtedness represents nearly a 50% reduction since the end of the third quarter 2002. Coeur began 2002 with $145.5 million of indebtedness. This remaining balance represents approximately 20% of Coeur's current total market capitalization. Dennis E. Wheeler, Coeur's Chairman and Chief Executive Officer, remarked, "Coeur is now nearing completion of its debt reduction program. Our strengthened balance sheet is now providing us with the flexibility to aggressively pursue internal and external growth opportunities to create further value for shareholders. Combined with higher metal prices, continued success at our new low-cost South American operations, and a growing cash balance, we believe that Coeur is poised for an excellent 2003." Over the past six weeks, Coeur exchanged 13.8 million shares of common stock for $22.9 million principal amount of its 6.375% Convertible Debentures due January 2004 in several privately negotiated transactions. This decline represents a 51% decrease from the $65.5 million of outstanding 6.375% Convertible Debentures at the end of the third quarter of 2002. In addition, the Company has seen $2.1 million of its 13.375% Senior Convertible Notes voluntarily convert into common equity in 2003 based on the security's existing terms. Because these Convertible Notes have a conversion price of $1.35 per share, representing a 27% discount to Coeur's current share price, the Company believes that holders of the remaining balance of $10.6 million will likely voluntarily convert into common stock by the end of the year. After taking these exchanges and conversions into account, Coeur now has approximately 134 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 ENERSIS: Rio Maipo Sale To Generate $300M ----------------------------------------- The sale of Chilean electric power distribution subsidiary Rio Maipo is expected to bring in approximately US$300 million to its parent company, Enersis, says the Santiago Times. Enersis, the primary Latin American subsidiary of the Spanish giant Endesa Spain, is selling the asset as part of a restructuring plan. The company intends to reduce the holding's debt by US$2.6 billion. Enersis' debt until the second half of 2002 totaled US$9.2 billion. The restructuring plan also includes recovering US$500 million in loans to its subsidiaries, a capital increase of US$1.5 billion, and the sale of assets totaling between US$900 million and US$1 billion. Assets for sale include the Manso de Velasco real estate company, the Infraestructura 2000 highways operator, the Canutillar hydroelectric power generator and some electric transmission lines. The sale of Rio Maipo is now in the advanced stages, as Enersis' board of directors is expected to evaluate the offers for the asset at the end of this week. Groups which have expressed interest in buying Rio Maipo are the General Electric Company, Emel electric power distributor, the Chilquinta electric company and some investment funds. Rio Maipo is the fourth largest electric power distributor in the country, having 293,000 clients and representing 5.2 percent of the total consumption at the Central Interconnected System power grid (SIC). CONTACT: ENERSIS Investor Relations: Ricardo Alvial Chief Investments & Risks Officer of Enersis Email: ram@e.enersis.cl Phone: (562) 353-4682 Contacts: Susana Rey, srm@e.enersis.cl Ximena Rivas, mxra@e.enersis.cl Pablo Lanyi-Grunfeldt, pll@e.enersis.cl =========== M E X I C O =========== GMM: To Complete Debt Restructuring By March 2003 ------------------------------------------------- Analysts from financial services group ING expects Grupo Minero Mexico (GMM), the mining wing of Grupo Mexico, to complete a debt restructuring by the end of February, reports Business News Americas. The restructuring, which covers a bond issue, includes a capital injection of US$110 million backed by an affiliated railroad borrowing, ING said in a report. It will involve a two- year grace period, the report added. Once secure, ING said it expects to upgrade GMM's credit rating, which currently stands at Ca/CC. The Company's financial risks will then be relatively low until 2007, when US$586 million of bonds and bank debts mature, it added. The report also said that the expected recovery in the global economy this year and in 2004 will boost the prices of copper, leading to "drastic improvements" in GMM's credit ratios. CONTACT: GRUPO MEXICO S.A. DE C.V. Avenida Baja California 200, Colonia Roma Sur 06760 M,xico, D.F., Mexico Phone: +52-55-5264-7775 Fax: +52-55-5264-7769 Home Page: http://www.gmexico.com Contacts: Germ n Larrea Mota-Velasco, Chairman and CEO Xavier Garca de Quevedo Topete, President and COO Alfredo Casar P,rez, COO, Ferrocarril Mexicano Daniel Ch vez Carre n, COO, Industrial Minera M,xico Daniel Tellechea Salido, VP and Administration and Finance President ================================= T R I N I D A D & T O B A G O ================================= BWIA: Cost Cutting Effort Leads to 600 LayOffs ---------------------------------------------- About 617 workers of BWIA West Indies Airways Ltd. were sent home Tuesday as part of the ailing carrier's plan to cut costs as it seeks to obtain a $13-million loan package from the Trinidad government. The government, which owns a one-third stake in BWIA, agreed in November to lend the Company $13 million to help it restructure. To get the federal loan, the Company must adopt a plan by Saturday to achieve monthly cost savings of $1.4 million. According to Aviation and Communications Allied Workers Union president general Christopher Abraham, the layoffs are effective immediately, but the Company will pay the workers for another 45 days. The airline is also working to reduce its fleet as part of its cost-saving efforts. It has also laid off about 40 pilots because of the changes and will contract out maintenance work to save money, BWIA said. BWIA has blamed the Company's losses on the worldwide economic slowdown and the drop in air passengers following the Sep. 11, 2001 terror attacks on the United States. CONTACT: BRITISH WEST INDIES AIRWAYS Phone: + 868 627 2942 E-mail: mailto:mail@bwee.com Home Page: http://www.bwee.com/ Contacts: Conrad Aleong, President and CEO (Trinidad) Beatrix Carrington, VP Marketing and Sales (Barbados) Paul Schutz, CFO (Trinidad) CARONI LTD.: Restarts Usine Grinding Operations ----------------------------------------------- Grinding operations at Caroni (1975) Limited's Usine Ste Madeleine factory started once again on Tuesday, a couple of weeks after the official start of the 2003 sugar cane harvest, reports the Trinidad Express. Along with the resumption of the factory's operations was the reassignment of former manager Ayoub Ali, who replaced Raphael O'Neal under the terms agreed upon in a memorandum of understanding signed between staff unions and management last week. The signed agreement brought an end to industrial action taken by staff workers. The action had brought operations at the factory to come to a virtual standstill. Lallan Rajaram, public relations officer of the Trinidad Islandwide Cane Farmers Association (TICFA), said although grinding operations had begun, the union had advised farmers not to burn large amounts of cane. "We are advising farmers that, until everything returns to normal, they should exercise caution about the amount of cane they burn and cut. They should allow the company to salvage canes that are already on the ground," he said. Rajaram said once operations run smoothly, things should return to normal by weekend. CONTACT: Caroni Limited Old Southern Main Road, Caroni, Trinidad & Tobago Phone: (868) 663-1781 or 662-0879 Fax: (868) 663-1404 ================= V E N E Z U E L A ================= PDVSA: To Slash Costs By 51% To Compensate For Losses ----------------------------------------------------- Venezuela's government will lower by 51% the operating costs at state oil company PDVSA to VEB3.7 trillion (US$1.92bn) from VEB7.5 billion in an effort to offset the Company's losses. PDVSA is suffering from diminished sales as a result of the ongoing general strike. According to the government's estimates, PDVSA is losing US$520 million a month due to lower revenues. PDVSA chairman Ali Rodriguez told government news agency Venpres this week that 5,111 company employees have been fired since a nationwide oil strike that crippled the country began eight weeks ago. As for the Company's western division, 1,300 workers have already been dismissed, division manager Felix Rodriguez said, adding that 1,000 more are expected to get sacked this week. An additional 593 layoffs have also been reported at the Carabobo and Lara state units of PDVSA, according to press reports quoting the temporary head of the El Palito refinery, Roberto Capriles. Before the strike, PDVSA planned to put US$16.5 billion of its own resources to the 2002-2007 exploration and production business plan, with private capital providing a further US$8.8 billion. Now, it will almost certainly rely even more on private sector partners to help finance projects: two of these are already under way (Deltana Platform and Mariscal Sucre natural gas projects) and one is under evaluation (Tomoporo oil discovery, estimated to hold 2 billion barrels of light crude in the Lake Maracaibo area), and San Tome. *********** 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 2003. 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 * * *