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/raid1/www/Hosts/bankrupt/TCRLA_Public/030211.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 Tuesday, February 11, 2003, Vol. 4, Issue 29 Headlines A R G E N T I N A ARGENTINE UTILITIES: Government Moves To Help Recoup Losses AUTOPISTAS DEL SOL: $210 Million Of Bonds Rated `D' by Moody's TRANSENER: Local Fitch Rates $450M Bonds `D(arg)' TYCO INTERNATIONAL: Trial Date For Former Executives Set TYCO INTERNATIONAL: District Attorney Says PwC Knew Of Bad Loans B O L I V I A ENTEL: Court Freezes Assets On Non-Payment Of Debt SEMAPA: To Launch Waterworks Consulting Tender End-Feb B R A Z I L CEA: Amapa Government Steps In to Resolve $31M Debt ELETROPAULO METROPOLITANA: Unpaid Debts May Cede State Control EMBRATEL: Restructures Sales, Client Services Operations TELEMAR: Regulator Unlikely To Grant Request TELESP CELULAR: Announces Additional Global Telecom Purchase J A M A I C A AIR JAMAICA: AAC Threatens Action Over Looming Debt In Arrears M E X I C O ALESTRA/AVANTEL: Reach Deal On Interconnection Fees With Telmex ALFA: Downplays Impact of Sidor's Troubles ATSI: Files For Chapter 11 Bankruptcy Protection ATSI COMMUNICATIONS: Managements Announce GlobalCom Merger AVANTEL: Banamex Completes First Step To Resolve Ownership Issue GRUPO MEXICO: Asarco Misses Payment; Fitch Drops Notes To `DDD' TV AZTECA: Sets Cashflow, Equity Distribution Guidelines T R I N I D A D & T O B A G O BWIA: Retrenched Workers Rally Outside Whitehall BWIA: Government Silent On BWIA-Union Conflict V E N E Z U E L A CITGO: Fitch Ratings Cuts Senior Unsecured Debt To B+ CITGO: PDVSA Oil Supplies Back To Normal PDVSA: To Reopen El Palito This Week To Alleviate Gas Shortages - - - - - - - - - - ================= A R G E N T I N A ================= ARGENTINE UTILITIES: Government Moves To Help Recoup Losses ----------------------------------------------------------- Argentine Economy Minister Roberto Lavagna suggested that the government needs to raise electric utility rates twice more this year to help foreign investors recover their losses, relates Bloomberg. "We must progressively address the situation," Mr. Lavagna said. Last month, President Eduardo Duhalde allowed a 9% and 7.2% increase in electricity and gas rates respectively. The rate hikes comply with conditions set by the International Monetary Fund (IMF) for the approval of a loan package for Argentina. The IMF, which subsequently signed an accord to defer payment of $6.8 billion in Argentine debt, has pushed for a rate increase of as much as 50% in order to restore the financial health of foreign investors, Mr. Lavagna said. "That, of course, would be unbearable for the people," he said. Meanwhile, Foreign banks and utility companies complain that the government has made them scapegoats for the financial collapse in the country. "Utilities have been singled out and used politically to help the government," said Joseph Brandt, the head of AES Corp.'s operations in Argentina, in a recent interview. AES has invested more than US$1 billion in Argentina. In order to address these complaints, Mr. Lavagna said that the government may also extend the length of utility contracts in order to compensate investors for their losses. AUTOPISTAS DEL SOL: $210 Million Of Bonds Rated `D' by Moody's -------------------------------------------------------------- Moody's Latin America Calificadora de Riesgo, S.A. issued a rating of `D' to corporate bonds of Autopistas del Sol. The National Securities Commission of Argentina described the bonds as "Obligacion Negociable - Serie B." The bonds, worth US$210 million dollars, come due on August 1, 2009. These are classified under "simple issue." The rating, issued on Jan 31, is based upon the Company's financial health as of the end of September 2002. No reasons for the issue of the junk ratings were given in the NSC web site. ELECTRICIDAD ARGENTINA: Fitch Rates Corporate Bonds `D(arg)' ------------------------------------------------------------ Electricidad Argentina S.A.'s corporate bonds were given a rating of `D(arg)' by Fitch Argentina Calificadora de Riesgo S.A. last Monday, said the National Securities Commission of Argentina. The rating indicates the Company defaulted on the US$200 million worth of bonds. The Commission described the bonds as "obligaciones negociables", and classified under `simple issue'. The CUSIP was not indicated. SIDECO AMERICANA: Corporate Bonds Rated `D(arg)' by Local Fitch --------------------------------------------------------------- Corporate bonds of Sideco Americana S.A. were rated `D(arg)' by the local arm of Fitch ratings agency, Fitch Argentina Calificadora de Riesgo S.A., said the National Securities Commission in its web site. The rating affects US$200 million worth of bonds called "Obligaciones negociables", which matured on June 30, 2000. The rating means that the Company has defaulted on the financial obligation. Given on Monday last week, the rating is based on the Company's performance as of the end of September 2002. TRANSENER: Local Fitch Rates $450M Bonds `D(arg)' ------------------------------------------------- Fitch Argentina Calificadora de Riesgo, S.A. assigned a rating of `D(arg)' to US$450 million of corporate bonds of Argentine transmission company, Transener S.A., according to the country's National Securities Commission. The rating, assigned last Monday, is given to entities or financial commitments that are currently in default, according to Fitch in its Web site. The ratings apply to the bonds described as "Programa Global de Obligaciones Negociables simples no convertibles en acciones", based on the Company's financial status as of September 30, 2002. The bonds come due on March 1 this year. Two months ago, a report by Business News Americas indicated that the Company may face a fine of up to US$100 million if electricity regulator, Enre, finds proof that the Company intentionally cut power in protest of the government's slow progress on utility rates increases. Transener denied the allegations, saying that the massive power outage, which left more than a third of Argentina without electricity for three hours last year, was due to the breakdown of one of its main transformers and not an intentional move to lobby for an increase in frozen utility rates. There has been no report on the results of the investigation since. Transener, which is owned by Pecom Energia and the UK's National Grid, owns the concession to operate the extra high voltage electricity transmission network in the Argentine Republic. Since its creation in 1993, the Company has remained a leader in the field. CONTACT: COMPANIA DE TRANSPORTE DE ENERGIA ELECTRICA EN ALTA TENSION (Transener S.A.) Av. Paseo Colon 728, 6"Piso - (1063) Buenos Aires, Argentina Tel. (5411) 4342-6925 Business Development: Carlos A. Jeifetz (jeifecar@transx.com.ar) Gerardo Baseotto (baseoger@transx.com.ar) Tel.: (54-11) 4334-0182 / 4342-6925 Fax: (54-11) 4342-4861 MORGAN STANLEY, DEAN WITTER & COMPANY 1585 Broadway New York, New York 10036 United States Phone: +1 212 761-4000 Home Page http://www.msdw.com TYCO INTERNATIONAL: Trial Date For Former Executives Set -------------------------------------------------------- State Supreme Court Justice Michael Obus set the date to start jury selection for the trial of former executives of Tyco International. Ltd. on September 29, reports the Associated Press. For the prosecution, Assistant District Attorney John Moscow seeks the trial to start on May 27, by eliminating months of pre- trial depositions of accountants, but the defense is asking for a January 2004 trial date. According to the defendants' lawyers, they have about 700 boxes of documents and 3.5 million e-mails to sift through before the trial. Tyco's former chief executive Dennis Kozlowski, and ex-finance chief Mark Swartz, were charged of grand larceny and enterprise corruption in a Manhattan court, for allegedly stealing more than US$600 million from the company's coffers. The Company's former chief lawyer, Mark Belnick was also charged of larceny. He was first accused of improperly obtaining US$14 million in loans from Tyco. In a superseding indictment last week, prosecutors alleged that he received a US$12 million "special bonus" for blocking a federal probe, the report reveals. The judge also scheduled Mr. Kozlowski and Mr. Swartz to appear in court on March 14, while Mr. Belnick is ordered to make a court appearance on May 16. All three defendants entered pleas of not guilty, and are currently out on bail. Bail for Mr. Kozlowski was set at US$100 million, while the amount was US$50 million for Mr. Swartz. Mr. Belnick was released under the conditions of a US$1 million bail. CONTACT: Walter Montgomery (Media) Tel: 212-424-1314 Kathy Manning (Investors) Tel: 603-778-9700 TYCO INTERNATIONAL: District Attorney Says PwC Knew Of Bad Loans ---------------------------------------------------------------- Assistant District Attorney John Moscow announced that he would stipulate that PricewaterhouseCoopers LLC (PwC), the auditor of Tyco International Ltd. was aware of the many transactions leading to the indictments of the Company's former top executives. However, said Mr. Moscow, he is not conceding that PwC knew about all of the questionable transactions, or knew that certain transactions were in fact illegal. The Associated Press reports that the attorney did not say if PwC, or any of its staff might be criminally liable. Outside court, Mr. Moscow said that the auditors were told that the transactions in question were approved by Tyco's board of directors, when in fact, they were not. Steven Silber, spokesman for PwC was not surprised by Mr. Moscow's comments. "It doesn't appear that anything said in court is new or is anything that hasn't been previously reported," he said. Nor did he deny the attorney's words. "We do not disagree with ADA Moscow's assertion that PWC was aware of some of the loans, but we had no knowledge that any of the loans or bonuses at issue were unauthorized or unknown to the Company and its board of directors," said Mr. Silber. He added that, "PricewaterhouseCoopers has been and continues to cooperate with the Manhattan district attorney's Tyco investigation." Meanwhile, lawyers for the indicted executives said that they could not understand how their clients could have committed fraud when the auditors "knew" about it. "Isn't it extraordinary that we're told today that the watchkeepers of the organization had full knowledge (of the things the former Tyco CEO is charged with)? " asked Stephen Kaufman, legal counsel for Tyco's former chief executive Dennis Kozlowski's attorney. Charles Stillman, lawyer for the Company's former finance chief Mark Swartz, said, "It is very startling that the district attorney is acknowledging that PriceWaterhouse knew of actions for which the DA wants to send my client to prison." Attorney Moscow also rebuffed Attorney Stillman's referring to the money as "loans", saying, "Those were thefts." ============= B O L I V I A ============= ENTEL: Court Freezes Assets On Non-Payment Of Debt -------------------------------------------------- Bolivian full service provider Entel had its assets frozen by a civil court after failing to pay a US$5.5-million interconnection debt for the termination of long distance traffic on the network of mobile operator Telecel, reports Business News Americas. Entel, however, recognizes only about US$2.4 million of the debt as legitimately owed. The company claims that Telecel owes it US$10 million. Entel is now analyzing plans to solicit an embargo on Telecel's assets and accounts. According to Telecel marketing manager Juan Carlos Acosta, Entel's debt with Telecel has accumulated since early 2000. Telecel has already filed lawsuits against Entel but the latter has refused to acquiesce to the lawsuits. SEMAPA: To Launch Waterworks Consulting Tender End-Feb ------------------------------------------------------ Bolivia's Cochabamba water utility Semapa recently cleared its way toward an US$18.5-million loan from the Inter-American Development Bank (IDB) for the improvement of drinking water systems and treatment plants. As a part of the project, Semapa will initiate by the end of February a US$1.8-million waterworks consulting tender. According to a Semapa official, the Company will publish bidding rules Feb. 28 and sell those bidding rules March 7. Interested firms will have until April 21 to submit their offers. The contract involves five responsibilities for the winning firm: establish a plan to reduce utility losses; study alternate ways to treat wastewater; develop a business management design; oversee construction projects; and supervise water meter management and installation. The project is expected to run from December 2003 to September 2004. =========== B R A Z I L =========== CEA: Amapa Government Steps In to Resolve $31M Debt --------------------------------------------------- Brazil's Amapa state government revealed that state power company CEA and federal power company Eletronorte have set up a working group to discuss CEA's BRL112-million debt (US$31 million), relates Business News Americas. Negotiation process began on Wednesday, Feb. 5, with a meeting between CEA president Jose Adauto Bittencourt and Eletronorte representatives. A representative from power regulator Aneel will mediate the working group, which has 60 days to present a solution to CEA's debts. The state government is determined to resolve CEA's problems, but needs to find an alternative for paying back the debts, Mr. Adauto said. The state government does not plan to privatize the Company or transfer it to federal control. But if the debts cannot be resolved, the federal government will probably have to intervene in the Company, he warned. CONTACT: CENTRAIS ELETRICAS DO NORTH DO BRAZIL - ELETRONORTE Av. Presidente Vargas, 489 -13 andar. 20071-003- Rio do Janeiro RJ Phone: + (55+61) 429 5139 Fax: +(55+61) 328 1373 E-mail: elnweb@eln.gov.br Home Page: http://www.eln.gov.br/ Contact: Mr. Arlindo Soares Castanheira, Investor Relations Phone: 55 21 2514.6331 55 21 2514.6333 Fax: 55 21 2242.2694 E-mail: arlindo@eletrobras.gov.br ELETROPAULO METROPOLITANA: Unpaid Debts May Cede State Control -------------------------------------------------------------- Brazilian Mines and Energy Minister Dilma Rousseff warned that the government may take control of Eletropaulo Metropolitana SA, Latin America's biggest energy distributor, from AES Corp. if the U.S. utility doesn't pay debt owed to Brazil, Bloomberg says, citing Valor Online news agency. "There is the possibility of the government wanting to resolve the debt issue," the news agency quoted Rousseff as saying. "The guarantees on the debt will be involved." AES missed a January 31, 2003 payment of approximately US$85 million due to the Brazil National Bank for Economic and Social Development (BNDES) under a financing agreement for the acquisition by AES ELPA of common shares of Eletropaulo Metropolitana. The approximately US$542 million of outstanding debt under this financing agreement is secured by the common shares of Eletropaulo owned by the subsidiary and by certain other AES businesses in Brazil. Under this financing agreement, BNDES has the right to call due such outstanding debt as a result of the failure to pay the amount due. CONTACT: ELETROPAULO METROPOLITANA Avenida Alfredo Egidio de Souza Aranha 100-B, 13 andar 04726-270 San Paulo Brazil Phone: +55-11-548-9461, +55 11 5696 3595 Fax: +55-11-546-1933 URL: http://www.eletropaulo.com.br Contacts: Luiz D. Travesso, Chairman and President Orestes Gonzalves Jr., VP Finance/Investor Relations EMBRATEL: Restructures Sales, Client Services Operations -------------------------------------------------------- Brazil's largest long distance operator Embratel is executing a plan to revamp its business, according to a company statement carried in Business News Americas. On March 1, the Company will implement a new structure that would see the creation of a separate unit for corporate sales in a bid to boost its corporate client base and offer more products to existing corporate clients. "Embratel's customer service philosophy will change. From now on, the company will consider the client's potential, and not just specific services," the company said in the statement. Moreover, the Company will expand its northeast sales team to cover Bahia and Sergipe states. Meanwhile, its sales force in the central-west region will take care of the northern region, and its Rio de Janeiro-based team will take on Espirito Santo and Minas Gerais states. In addition to its traditional long distance portfolio, Embratel has begun offering local services to the corporate market. The operator expects to complete its 29-city local service launch by February 15. Embratel aims to serve 35% of the country's 10,000 largest corporations in five years, Embratel regulatory affairs manager Purificacion Carpinteyro said at a press conference on January 30. Embratel recently reported a full year 2002 net loss of BRL626 million (US$174 million), a 13% increase from that of 2001. The full year loss came despite a fourth-quarter 2002 profit of BRL112 million. The Company attributed last year's poor results mainly to the effect of the 52.3% decline of the real against the US dollar. The total depreciation amount exceeded the hedged portion of the Company's foreign currency debt. To see Income Statement: http://bankrupt.com/misc/Income_Statement.htm To see Balance Sheet: http://bankrupt.com/misc/Balance_Sheet.htm CONTACT: Embratel Participacoes S.A. Silvia Pereira, Investor Relations Manager Tel: 55 21 2121-6474/9662 (messages) Email: Silvia.Pereira@embratel.com.br invest@embratel.com.br TELEMAR: Regulator Unlikely To Grant Request -------------------------------------------- Rio de Janeiro-based fixed line incumbent Telemar may not be successful in its appeal to lessen infrastructure build-out requirements. Citing Brazilian telecoms news agency, World Telecom, Business News Americas reports that Telemar requested communications minister Miro Teixeira and regulator chairman Luiz Guilherme Schymura reduce the burden of the previously defined requirements. The Company argued on Thursday that its build-out requirements should reflect the fact that its concession area covers regions of vastly differing per-capita income. However, Schymura only repeated the official line that operator profitability as well as the penetration of basic telephony services are important to the regulator, and that its regulations are designed to attempt a balance between the two. TELESP CELULAR: Announces Additional Global Telecom Purchase ------------------------------------------------------------ Telesp Celular Participacoes S.A. ("TCP"), (NYSE:TCP); (BOVESPA:TSPP3) (Common), (BOVESPA:TSPP4) (Preferred), the largest cellular operator in Brazil, announced a Relevant Notice: On December 27, 2002, Telesp Celular Participacoes S.A. ("TCP") acquired the remaining 17% of the capital stock of the holding companies that control Global Telecom ("GT"), and became the indirect owner of 100% of the capital stock of GT, the B Band cellular operator in the states of Santa Catarina and Parana, according to the Relevant Notice published in the D.O.E.S.P. on December 28, 2002, and in Gazeta Mercantil on December 30, 2002. According to Instruction CVM 247 of March 23, 1996, and due to the acquisition of the remaining 17% of the capital stock of the holdings that control GT, the Company decided to hire an independent appraisal of Global Telecom to evaluate the need to constitute an investment loss provision. Once the appraisal is completed, if this provision is constituted, the result will be recorded as an extraordinary item of the income statement, with a negative impact on the net result of this accounting period. CONTACT: Telesp Celular Participacoes S.A. Edson Alves Menini, 5511/3059-7531 Web site: www.telespcelular.com.br ============= J A M A I C A ============= AIR JAMAICA: AAC Threatens Action Over Looming Debt In Arrears -------------------------------------------------------------- The Airports Authority of Jamaica (AAJ) may take "strong action" against Air Jamaica Express, according to local news source, RJR News. Apparently, Air Jamaica Express failed to honor a promise to reduce its debt, which stands at $40.6 million at the end of last year. The article indicated that Air Jamaica Express promised last December to pay $250,000 weekly on an interim basis in order to reduce the debt. Air Jamaica President and Chief Executive Officer Timothy Coon, confirmed that the Company has indeed failed to honor its debt, citing losses due to the September 11 attacks. In the meantime, AAJ is demanding that Air Jamaica Express submit a proposal for the payment of the arrears on landing fees and renting facilities. Mr. Coon said that the airline has submitted a proposal, and is waiting for a response from the AAJ. He added that efforts would be made to meet with representatives of AAJ next week. In related news, Air Jamaica, the parent company of Air Jamaica Express said it lost millions of dollars due to the visa restrictions the British government imposed on Jamaicans last month. Air Jamaica's Deputy Chairman Chris Zacca said that although passenger loads have declined by as much as 10 percent, he is confident that the airline's situation will eventually improve. 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 =========== M E X I C O =========== ALESTRA/AVANTEL: Reach Deal On Interconnection Fees With Telmex --------------------------------------------------------------- Mexican long distance operators Alestra and Avantel struck an agreement with the country's telephone giant Telmex over 2003 interconnection fees. Under the terms, Alestra and Avantel, which earlier asked to reduce the fee to US$0.5-0.7/min, agreed to leave the interconnection fee at $0.0975/min through the end of 2003. In return, Telmex, which controls more than 95% of Mexico's local lines, agreed to renegotiate debts the operators have run up over previous years, provide discounts on peripheral services and accept payment in pesos for some services that were previously payable only in dollars. According to sources, the debt to be renegotiated is on the order of US$100 million, but is a minor issue compared to payment in pesos of costs that can be affected by exchange rate fluctuation. The agreement, which follows six months of negotiation, caught market observers by surprise, since the companies wrote to the regulator Cofetel last month, asking it to set the interconnection rate independently. Alestra is looking to restructure US$570 million in debt in order to obtain an US$80-million capital injection from its shareholders -- AT&T Corp., Mexican industrial conglomerate Alfa SA and financial group BBVA-Bancomer SA. Avantel, on the other hand, is Mexico's second largest fixed line communications company, with about 850,000 lines in service. The Company's customer base has seen a slump in recent months due to the uncertainty surrounding its ownership structure and the bankruptcy of its U.S. parent, WorldCom. CONTACT: ALESTRA S.A. DE R.L. DE C.V Av. Paseo de las Palmas No. 405 Col. Lomas de Chapultepec 11000 Mexico, D.F. Phone: 5201-5020 5201-5019 Fax: 5201-5031 5201-5027 Web site: http://www.alestra.com.mx/cgi- Executives: Rolando Zubiran, Chief Executive Officer Eduardo Lazos, V.P. Engineering & Ops Investor Relations: Alberto Guajardo Phone: (52-818) 625-2219 E-mail: aguajard@alestra.com.mx ALESTRA'S FINANCIAL ADVISOR: MORGAN STANLEY Worldwide Headquarters 1585 Broadway New York, NY 10036 Phone: (212) 761-4000 Fax: (212) 761-0086 Home Page: http://www.morganstanley.com/ Contact: Investor Relations Phone: (212) 762-8131 ALFA: Downplays Impact of Sidor's Troubles ------------------------------------------ Mexican industrial group Alfa remains unshaken even with the production shortfalls at its subsidiary Venezuelan steelmaker Sidor, according to a company official in a Business News Americas report. "As far as we're concerned the Sidor factor doesn't affect us. It's true that the Venezuelan company has had problems with its natural gas supplies and has cut production, but we have our operations in Mexico," the Alfa official said. Alfa, via its Hylsamex unit, holds an interest in Sidor, whose operations have been hurt by a shortage of natural gas due to the two-month-old general strike in Venezuela. Hylsamex is part of the Amazonia consortium that owns 70% of Sidor. Other members of the consortium are Venezuela's Sivensa, Siderar of Argentina, Tamsa, also from Mexico, Usiminas of Brazil and Argentina's Techint Engineering. Venezuelan state heavy industry holding CVG owns the remaining 30%. Indirectly though, the situation in Venezuela has impacted the group as Sidor is a non-consolidated subsidiary, the Alfa spokesperson admitted. "But apart from that it doesn't affect us," he said. CONTACT: ALFA, S.A. de C.V. Ave. Gomez Morin 1111 Sur, Col. Carrizalejo Garza Garcia, N. L. Mexico C.P. 66254 Tel: 52 8748-1111 Fax: 52 8748-2552 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/ ATSI: Files For Chapter 11 Bankruptcy Protection ------------------------------------------------ Struggling telecommunications firm ATSI Communications Inc., which provides phone and Internet service between the United States and Latin America, filed Chapter 11 bankruptcy protection last Tuesday, reports Knight Ridder Business News. According to documents filed with the U.S. Bankruptcy Court for the Western District of Texas, the Company listed estimated debts between US$1 million and US$10 million. It's estimated assets are between US$10 million and US$50 million. The largest of the 134 creditors listed in ATSI's filing is IBM Corp., which it owes US$3 million for equipment it used to build its network in Mexico. In its most recent financial documents, for the fiscal year ended July 31, the Company listed assets of US$10.5 million and current and long-term liabilities of US$15.4 million. ATSI's shares last traded on January 14, closing at 8 cents per share. CONTACT: The Eversull Group for ATSI Communications, Inc. Jack Eversull, 972/991-1672 jack@theeversullgroup.com URL: www.atsi.net ATSI COMMUNICATIONS: Managements Announce GlobalCom Merger ---------------------------------------------------------- ATSI Communications, Inc. (AMEX:AI) announced Friday that its Board of Directors has approved a strategic merger with CCC GlobalCom of Houston, TX (OTCBB:CCGC). John R. Fleming, ATSI's Interim Chairman of the Board remarked, "A combination with CCC GlobalCom provides significant synergy for the merged entity. Both companies focus on the Hispanic market. CCC GlobalCom, through its wholly owned subsidiary, Ciera Network Systems, has a strong customer Latino base of individuals and small businesses in the United States. It's a perfect fit for ATSI's infrastructure and operations in Mexico. The merger will create an international telecommunications company with a leadership position in serving the paired-market between the U.S. and Mexico at a time when Mexico has surpassed Canada and become the most frequently dialed country in the world by Americans." Under the terms of the preliminary Letter of Intent, CCC GlobalCom and ATSI would sign a Joint Management Services Agreement to operate ATSI's wholesale network. As part of its commitment, CCGC would provide interim financing while the merger is in process and provide letters of credit for ATSI to restart its recently idled wholesale customer network. ATSI's network will provide a lower cost of long distance transport for Ciera's existing customer base. The combined entity will be listed as ATSI Communications, Inc. and expects to continue to be traded on the American Stock Exchange under the symbol of AI. The merger would likely result in a change of control thereby triggering an additional listing standard under Section 341 and subjecting the combined entity to American Stock Exchange's original listing standards. The transaction is subject to shareholder approval. In addition, ATSI announced Friday, Stephen M. Wagner, President, Chief Executive Officer and Director had resigned to pursue other business opportunities. John R. Fleming, Interim Chairman of the Board stated, "Steve has done a great job working on this merger and other strategic moves for ATSI. We wish him well." In addition, Darrel Kirkland and Carlos Kauachi have resigned from ATSI's Board of Directors. The Board of Directors has appointed Raymond G. Romero to serve as Interim Chief Executive Officer effective immediately. CCC GlobalCom Corporation is an Integrated Communications Provider (ICP) headquartered in Houston, TX. The Company offers a full range of communications services to commercial and residential customers while providing a single point of contact through bundled billing services. CCC GlobalCom Corporation provides local, long distance, high-speed data, Internet, paging and other enhanced communications services in the United States. In addition, CCC GlobalCom Corporation has franchise operations in Colombia, South America. CCC GlobalCom Corporation actively seeks opportunities to acquire existing telecommunication service providers, customer bases and major telecommunication switching equipment to be deployed in its target markets. AVANTEL: Banamex Completes First Step To Resolve Ownership Issue ---------------------------------------------------------------- Mexico's biggest bank Banamex, a subsidiary of Citigroup, finalized the first phase of its plan to put Mexican phone company Avantel's ownership in line with the federal laws that limit foreign ownership of certain types of telecoms companies. The first of the plan - approved by the government earlier in January - included giving employees majority control of Avantel. Avantel is currently 55%-owned by Banamex and 45%-owned by WorldCom Inc., which filed the world's largest bankruptcy in last July. The acquisition of Banamex by U.S. financial giant Citigroup in 2001 effectively put Avantel entirely in foreign hands, in violation of Mexican foreign investment laws requiring majority Mexican ownership. Banamex said it had assigned a group of Mexican Banamex employees a majority shareholding in a controlling company that owns the majority of ordinary Avantel shares. Banamex is set to complete the second phase of the plan in the next few weeks. The phase includes offering Banamex's more than 31,000 Mexican employees the chance to take part in the program. GRUPO MEXICO: Asarco Misses Payment; Fitch Drops Notes To `DDD' --------------------------------------------------------------- Fitch Ratings has downgraded the ratings of Asarco Inc.'s (Asarco) notes due in 2003 to 'DDD' from 'C'. This rating action is a result of the company's failure to make a $100 million principal payment due on February 3, 2003 for the 2003 notes. Asarco has recently reached an agreement with the United States Justice Department that eliminates litigation between the two parties over the proposed sale of Asarco's stake in Southern Peru Copper Corporation (SPCC) to Americas Mining Corporation. Once the sale of SPCC is completed, Fitch expects the holders of Asarco's 2003 notes to be paid in full. CONTACT: Joe Bormann CFA Tel: 1-312-368-3349 Anita Saha CFA Tel: 1-312-368-3179 TV AZTECA: Sets Cashflow, Equity Distribution Guidelines -------------------------------------------------------- TV Azteca Board Approves Guidelines for Uses of Free Cash Flow - Strategy for Debt Reduction and Distributions to Shareholders - TV Azteca, S.A. de C.V. (NYSE: TZA; BMV: TVAZTCA), one of the two largest producers of Spanish language television programming in the world, announced on Friday that the Company's board approved a comprehensive course of action to use cash generated at TV Azteca in the years to come. TV Azteca expects to create annual free cash flow in excess of US$125 million going forward, consistent with cash generation trends over the past several years. The Company does not foresee major investment needs in its core business in the near future, and does not expect that its Azteca America Network or its investment in Unefon will require additional capital funding. Accordingly, TV Azteca anticipates it will allocate a substantial portion of its free cash generation to reduce debt and make distributions to shareholders on an ongoing basis. The Company's board approved a six-year plan for uses of free cash, which management presented after incorporating the views of investors, analysts and rating agencies, in order to address the interests of both its noteholders and its shareholders. The Company expects to use approximately US$250 million of its free cash flow within the six-year span to gradually reduce TV Azteca's US$647 million outstanding debt, following a payment schedule fitting its maturities. The Company's major debt obligations that expire within the next five years are US$125 million of notes due in 2004, and an additional US$300 million of notes maturing in 2007. TV Azteca will refinance the portion of these notes that is not amortized. The board also authorized an aggregate amount above US$500 million to make distributions to shareholders within the next six years. "We are convinced that the best use for TV Azteca's free cash generation is to further strengthen our capital structure, and to distribute the benefits of our consistent profitability through a steady dividend policy," said Pedro Padilla, Chief Executive Officer of TV Azteca. "With negligible opportunity cost in terms of core investments, we are in an unparalleled position to add further value to our stakeholders by reducing our overall risk profile." Company Profile TV Azteca is one of the two largest producers of Spanish language television programming in the world, operating two national television networks in Mexico, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. TV Azteca affiliates include Azteca America Network, a new broadcast television network focused on the rapidly growing US Hispanic market; Unefon, a Mexican mobile telephony operator focused on the mass market; and Todito.com, an Internet portal for North American Spanish speakers. Except for historical information, the matters discussed in this press release are forward-looking statements and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Risks that may affect TV Azteca are identified in its Form 20-F and other filings with the US Securities and Exchange Commission. CONTACT: Bruno Rangel (Investors) Tel: +5255-3099-9167 Email: jrangelk@tvazteca.com.mx or Rolando Villarreal Tel: +5255-3099-0041 Email: rvillarreal@tvazteca.com.mx Tristan Canales (Media) Tel: +5255-3099-5786 Email: tcanales@tvazteca.com.mx Web site: http://www.tvazteca.com.mx ================================= T R I N I D A D & T O B A G O ================================= BWIA: Retrenched Workers Rally Outside Whitehall ------------------------------------------------ Retrenched workers from troubled airline, BWIA, held a demonstration in front of Whitehall on Thursday, reports the Trinidad Guardian. Union leaders tried to present a petition to Trinidad and Tobago Prime Minister Patrick Manning. Aviation Communication and Allied Workers Trade Union (ACAWU) president Christopher Abraham said that unions representing BWIA workers are seeking an audience with Mr. Manning to discuss the retrenchment. "We have a vision for BWIA that rather than see massive job loss and the contracting of the airline we see potential for growth and the airline being able to sustain itself," said Abraham. He added that unions have been asking for a promise to have no retrenchments at BWIA from the Minister of Finance, since September last year. Some unions, such as the National Alliance for Reconstruction (NAR) blame the government for the retrenchments at BWIA. Earlier, Mr. Manning said that BWIA, as a private entity, is free to make decisions, though he admitted that the retrenchments did worry him. BWIA sent home 617 workers in the last week of January after failing to obtain concessions from unions in order to meet its target savings. The airline has to save at least US$1.4 million in operation expenses monthly to keep it alive. 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) BWIA: Government Silent On BWIA-Union Conflict ---------------------------------------------- Trinidad and Tobago Prime Minister Patrick Manning said that the government, as a minority holder in the national airline, BWIA, would not intervene in the dispute between the airline's management and the unions representing its workers. The state owns 33.5 percent of the airline. The Trinidad Express reported that Mr. Manning would not allow the retrenchment of 617 BWIA workers to become a political issue. At a post-cabinet meeting press conference in Whitehall, the prime minister said, "There are majority shareholders in that company who would be even more involved in the determination of the direction of the company." He added, "What is not acceptable is an attempt made to move away from normal industrial practice in the country and to make it a political issue, whereby the Government finds itself negotiating with the workers of the company. The Government is determined to resist that." On the same day, workers from BWIA and Caroni Ltd. marched outside Whitehall to present a petition to Mr. Manning. Communications and Transport Trade Union president Jagdeo Jagroop said that they hope to convince Mr. Manning to form a Technical Committee comprised of the Government and the unions to formulate an alternative plan to BWIA's "new business model", which received the government's support earlier. The unions are seeking an alternative plan that does not require massive job cuts, unlike BWIA's current plan. CARONI LTD.: Total Shutdown As Workers Protest At Whitehall ----------------------------------------------------------- Rudy Indarsingh, leader of All Trinidad Sugar and General Workers' Trade Union, declared a total shutdown of Caroni on Thursday as its workers marched outside Whitehall, Port of Spain, said the Trinidad Express. The workers, donning red shirts and waving cane stalks, sought to present a petition to Prime Minister Patrick Manning. President general of the Sugar Industry Staff Association, Jai Ramkissoon told the Express, "If you look at the rest of the country, VSEP is the last option. With Caroni, it's the first option. We were given a letter on Monday indicating that there's going to be surplus labour at Caroni, and it's a clear indication that they're going to retrench people. We are saying there must be dialogue with the government. They must come clean. We are not opposed to restructuring Caroni, but it cannot be done in an inhumane manner." Mr. Indarsingh and Mr. Ramkisoon entered Stollmeyer's Castle to hand over the petition to Mr. Manning, about one hour after the protest was in full momentum. Cane Producers Association Sookeram Tambie said that the march shows that Caroni has a greater role in the society. It has supported more than 15, 000 workers and their families, he said, adding that the displacement of Caroni will cause "serious economic and social fall-out." CONTACT: Caroni Limited Old Southern Main Road, Caroni, Trinidad & Tobago Phone: (868) 663-1781 or 662-0879 Fax: (868) 663-1404 All Trinidad Sugar and General Workers' Trade Union Rienzi Complex Exchange Village Southern Main Road, Couva. President: Mr. Boysie Moore-Jones General Secretary: Mr. Rudranath Indarsingh Tel. 868-636-2354 Fax. 868-636-3372 E-mail: atsgwtu@opus.co.tt ================= V E N E Z U E L A ================= CITGO: Fitch Ratings Cuts Senior Unsecured Debt To B+ ----------------------------------------------------- Fitch Ratings-Chicago-February 7, 2003: Fitch Ratings has lowered the senior unsecured debt rating of CITGO Petroleum Corporation (CITGO) to 'B+' from 'BB-'. Fitch Ratings has also assigned the senior unsecured debt rating of 'B+' to the proposed $550 million bond offering by CITGO. Fitch rates the senior notes of PDV America, Inc. 'B-'. CITGO is owned by PDV America, an indirect, wholly owned subsidiary of Petroleos de Venezuela S.A. (PDVSA), the state-owned oil company of Venezuela. The debt of CITGO and PDV America remains on Rating Watch Negative. The downgrade reflects Fitch's concerns with the potential use of proceeds from the proposed bond offering to help pay the maturity of PDV America's $500 million of senior notes in August 2003. The rating action also reflects the continued tight liquidity position of CITGO and potential for further dividend payments to PDV America and ultimately PDVSA. Under the proposed bond offering, CITGO can upstream dividends to PDV America towards the August maturity subject to a post- dividend liquidity of $350 million. The indentures of the proposed offering will include a limit on future dividend payments of 50% of the Consolidated Net Income accrued during the period (treated as one accounting period) beginning Jan. 1, 2003. The financial flexibility of both CITGO and PDV America has been weakened by the oil sector strike in Venezuela, which has severely disrupted the country's hydrocarbon exports. As a result of the labor action, CITGO has been forced to find alternate sources for some of the crude supplied by PDVSA. CITGO typically purchases approximately 50% of its crude needs from PDVSA under long-term contracts. CITGO has been successful acquiring alternate crudes and other feedstocks to maintain refinery operations. Although crude supply from Venezuela has improved (CITGO received 86% of contractual volumes in January), spot market terms have increased working capital requirements. Given the lowered credit ratings of CITGO related entities, additional working capital requirements are possible. The proposed offering will significantly improve near term liquidity for CITGO. The company is also in the process of replacing its accounts receivable program with a new $200 million facility as well as negotiating the sale of its pipeline fill inventory in the Colonial Pipeline for an estimated $100 million. CITGO is also considering a $200 million secured loan for its interest in the Colonial Pipeline. In mid-December, CITGO entered into a new $520 million credit facility, split into a $260 million three year facility and a $260 million 364-day revolver. The CITGO and PDV America ratings are also based on the deteriorating creditworthiness of PDVSA and Venezuela. The $500 million of senior notes mature in August 2003 and are supported by Mirror Notes issued by PDVSA and held by PDV America. The senior notes and Mirror Notes have identical terms and conditions such that the interest income PDV America receives from PDVSA on the mirror notes pays the interest on the senior notes. In an absence of a return to normal oil operations, Fitch has significant concerns with the ultimate parent's ability and willingness to pay the maturity of the notes. The situation in Venezuela remains highly volatile. Although Fitch expects CITGO to maintain operations, further deterioration in CITGO's financial position or the ultimate shareholders credit quality could result in additional downgrades. CITGO is one of the largest independent crude oil refiners in the United States with three modern, highly complex crude oil refineries and two asphalt refineries with a combined capacity of 756,000 barrels per day. The company also owns approximately 41% interest in LYONDELL-CITGO Refining L.P. (LCR), a limited liability company that owns and operates a 265,000-barrel per day (BPD) crude oil refinery in Houston, Texas. CITGO: PDVSA Oil Supplies Back To Normal ---------------------------------------- Citgo Petroleum Corp., a U.S. refiner owned by Venezuela's state oil company, will no longer have to pay higher prices when purchasing crude oil in order to maintain normal operations at its refineries. According to a report by Platts on its website, Citgo is now receiving the same amount of crude oil from PDVSA as it did before the strike broke out. PDVSA supplied about 50% of the Citgo's crude through term contracts before the strike. Citgo purchased an additional 10% of its needs from PDVSA, Platts said. When the strike broke out, Citgo was forced to pay higher prices for alternative sources of crude oil to maintain normal operations at its refineries. Suppliers shortened Citgo's payment terms, in some cases requiring payment before delivery, which hurt liquidity. PDVSA: To Reopen El Palito This Week To Alleviate Gas Shortages --------------------------------------------------------------- Production of gasoline in Venezuela is expected to see some improvements this week should the country's state oil company achieve its goal of restarting the El Palito refinery. The refinery was shut down due to a nationwide strike against President Hugo Chavez that began Dec. 2. PDVSA has twice attempted to restart the refinery but to no avail. El Palito, which is located in the central industrial state of Carabobo, has production capacity of 130,000 barrels a day. But refinery chief Roberto Capriles didn't say if El Palito would be able to produce at its capacity on its initial reopening. PDVSA is counting on El Palito to help produce gasoline that has been in short supply, leading to long lines outside service stations, since crude output was curtailed by the nationwide strike. *********** 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 * * *