/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030312.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Wednesday, March 12, 2003, Vol. 4, Issue 50 Headlines A R G E N T I N A ARGENTINE BANKS: Allowed to Up Foreign Currency Holdings CENTRAL COSTANERA: Signs Deal To Refinance Part of $192M Debt TELECOM ARGENTINA: Reports $1.38B Loss For 2002 * Argentine Finance Minister Confident in Debt Talks' Success B O L I V I A DBLA: To Close Peruvian & Bolivian Offices This Month B R A Z I L BCP: Telecom Italia Denies Rumors About Possible Bid CESP: Hires J.P. Morgan To Help Restore Financial Health VARIG: Bovespa Suspends Shares On Violation of Exchange Rules * Brazil's Sovereign Credit Outlook Revised To Stable C H I L E ENERSIS: PLC Project Hits Snags MADECO: Feller Rate Places Bonds On "Credit Watch" TELEFONICA CTC: Plans Negotiations With Creditors of $150M Loan C O L O M B I A TELECOM: Launches Early Retirement Plan To Guarantee Survival E C U A D O R FILANBANCO: Three Firms To Recover Bad Loans M E X I C O CFE: Postpones Mexicali II Bid Deadline CFE: El Cajon Bidders Narrowed Down To Two EMPRESAS ICA: Debt Reduction Efforts Yield Positive Results GRUPO BITAL: Fitch Places Ratings On "Positive Observation" INSILCO HOLDING: Receives Approval of Asset Sales PEMEX: Invites Bids For Marine Division Drilling PEMEX: US Ex-Im Bank Approves $400M Long-Term Guarantees PEMEX: Opposition Proposes 10% Stake Sell-Off PEMEX: Announces Record Daily Output SATMEX: Likely To Get Congressional Approval on Ex-Im Loan P A N A M A * S&P Revises Panama's Sovereign Credit Ratings Outlook P E R U PAN AMERICAN: Reports Year-End And Fourth Quarter Results T R I N I D A D & T O B A G O CARONI LTD.: Minister Criticizes Substantial Losses V E N E Z U E L A PDVSA: Retention of Force Majeure Highlights Difficulties - - - - - - - - ================= A R G E N T I N A ================= ARGENTINE BANKS: Allowed to Up Foreign Currency Holdings -------------------------------------------------------- Banks in Argentina are now allowed to hold net foreign currency up to 30 percent of their total net assets, from the previous allowance of only up to 10 percent. The country's central banks gave permission Friday, loosening currency controls further. Dow Jones reports that the new measure will take effect on May 1. This would allow banks to be prepared for possible orders to re- convert "pesified" deposits into dollars, and return them to clients. The central bank's announcement came a couple of days after the Supreme Court of Argentina ruled that the decree requiring the conversion of dollar deposits into the local currency was unconstitutional. Local commentators said that the government may issue dollar- denominated bonds to help banks pay for the effects of the Supreme Court's ruling. Argentina's central bank is gradually easing the currency controls, which took effect last year. CENTRAL COSTANERA: Signs Deal To Refinance Part of $192M Debt ------------------------------------------------------------- Argentine thermo generator Central Costanera told the Buenos Aires stock market that it has reached a preliminary agreement with Mitsubishi to restructure US$18.9 million of its US$192.5 million debt with the Japanese company, relates Business News Americas. Under the agreement, Costanera will pay US$2.4 million in December 2003, US$2.4 million in March 2005, US$3.8 million in June 2005, US$3.8 million in December 2005, US$5.6 million in June 2006 and US$0.9 million in December 2006. The Mitsubishi credit was signed in November 1996 and is related to Mitsubishi's turnkey contract to supply a 851MW combined cycle unit to Costanera. The credit was initially for 12 years and carried an annual average interest rate of 7.42%. However, Costanera did not meet payments scheduled for 2002 owing to the difficulties caused by the devaluation of the peso and the pesofication of rates. TELECOM ARGENTINA: Reports $1.38B Loss For 2002 ----------------------------------------------- Telecom Argentina, the country's No. 1 telephone company, reported a ARS4.35-billion loss ($1.38 billion) for 2002 against a profit of ARS99 million in 2001. Telecom attributed this loss to two things: First, the deep currency devaluation. Argentina's peso has slumped 70% against the dollar since the devaluation in January 2002. Second, after converting utility rates from dollars into devalued pesos, the government hasn't allowed utility companies to raise their prices for the last year despite a general inflation rate of 41% last year. Telecom defaulted on its debt last year in the wake of Argentina's disastrous currency devaluation. It revealed last month that some of its creditors had reacted coldly to the Company's proposal to buy back a portion of its defaulted debt, saying talks had been "difficult." The buyback offer covers only a portion of Telecom's US$3.2 billion total debt, but industry analysts say that if successful it could guarantee that Telecom survives its debt restructuring without being disassembled by its creditors. Telecom is controlled by a holding company held in equal parts by France Telecom and Telecom Italia. CONTACT: Telecom Argentina Stet France Telecom SA Head Office 10th Floor Alicia Moreau de Justo 50 Buenos Aires Argentina 1107 Phone: +54 11 4968 4000 Fax: +54 11 4313 5842 Home Page; http://www.telecom.com.ar Contacts: Juan Carlos Masjoan, Chairman Christian Chauvin, Vice Chairman Franco Bertone, Vice Chairman Susana Malcorra, Chief Executive * Argentine Finance Minister Confident in Debt Talks' Success ------------------------------------------------------------- Argentine Finance Minister Guillermo Nielsen is confident that the negotiations with holders of the country's defaulted debt will succeed. According to a Financial Times report, Mr. Nielsen said that representatives of bondholders have agreed, during their first meeting in New York, to set up working groups of various classes of holders, to serve as basis for future negotiations. However, the Supreme Court ruled that the decree requiring the conversion of dollar deposits into the local currency was unconstitutional. The ruling raises speculations that the state may have to reimburse depositors in dollars. This might result in the reduction of the available funds to pay the holders of the defaulted debt. Mr. Nielsen would not comment on the impact of the court's decision. But he added that the country has the support of the International Monetary Fund in the talks. He admitted that the last week's negotiations were spent mostly on identifying who the bondholders were, and the type of debt they held. The country's advisers, Lazard Freres and the law firm Cleary Gottlieb Steen & Hamilton were present. Mr. Nielsen also emphasized the importance of completing the database of concerned investors after the elections, in order to have the "best possible transition" to a new government. Meanwhile, holders of about US$65 billion of Argentine bonds denominated in a range of currencies are scheduled to meet officials over the next few weeks. ============= B O L I V I A ============= DBLA: To Close Peruvian & Bolivian Offices This Month ----------------------------------------------------- Beginning March 17, Dresdner Bank Lateinamerika (DBLA), the investment bank unit of German bank Dresdner, will serve its Peruvian and Bolivian corporate clients from Chile, says Business News Americas. This follows DBLA's decision to close its representation offices in Peru and Bolivia this month, owing to Latin America's difficult economic environment and the weakness of the region's capital markets. The closures are part of DBLA's ambitious restructuring plan announced in December 2002. The plan is expected to result to a loss of 450 jobs and the split up of the Company into two divisions: Corporate & Correspondent Banking (CCB) and Private Banking International (PBI). Relationship management services for corporate customers and banks will eventually be run from Mexico, Guatemala, Colombia, Brazil, Chile and Argentina. Dresdner has also closed its financial advisory and M&A office in Rio as part of the restructuring process. These services will be offered to Brazilian clients through Dresdner's London or New York offices. CONTACTS: Joint Representative Office Dresdner Bank Lateinamerika AG and Dresdner Bank AG Calle Rosendo Guti‚rrez Nų 136 esq. Av. Arce Edificio Multicentro, Torre B, 8ų piso La Paz, Bolivia Mailing address: Casilla 1077 La Paz, Bolivia Contacts: Catrin Pietsch, Country Manager and Rep. Tel.: (+591 2) 244 32 14 Fax: (+591 2) 244 32 15 E-Mail: La-Paz@dbla.com Joint Representative Office Dresdner Bank Lateinamerika AG and Dresdner Bank AG Av. Rivera Navarette 620, piso 9 San Isidro Lima 27, Peru Contacts: Catrin Pietsch, Country Manager and Rep Volker Werner, Country Manager Tel.: (+51 1) 212 5060 Fax: (+51 1) 212 5165 E-Mail: Lima@dbla.com =========== B R A Z I L =========== BCP: Telecom Italia Denies Rumors About Possible Bid ---------------------------------------------------- Telecom Italia Mobile SpA, Italy's largest wireless-telephone company, countered speculation that it is planning to bid for BellSouth Corp.'s Brazilian unit, BCP SA, reports Bloomberg. Speculation about the bid came to light when the Rome-based company, the second-biggest wireless provider in Brazil, announced plans to expand in the country, said Roger Oey, a telecommunications analyst at BBV Securities in Sao Paulo. But according to Telecom Italia Chief Executive Officer Marco de Benedetti, his company doesn't have any plans to bid for BCP. "We are following BCP and the developments but we have no interest in that company," de Benedetti said on a conference call with analysts. Meanwhile, Oey links Telecom Italia's lack of interest to the regulatory problems it may have to face in case it bids for BCP. Telecom may have to face regulatory problems in a bid because it already operates in Sao Paulo, Oey said. "Legally an acquisition of BCP by Telecom Italia Mobile would face problems because they would have to justify to antitrust regulators about the decrease in competition" because the Italian company already operates in Sao Paulo, Oey said. BellSouth, the third-largest U.S. local telephone company, is selling its assets in Brazil as part of its pull out of the South American nation as financing costs and competition increase. Last week, it agreed to sell another unit in Brazil, BSE SA, to Mexico's America Movil SA. And now, it is putting BCP on the block with America Movil and Tele Norte Leste Participacoes SA, the country's largest company known as Telemar, seen as the most likely buyers. CONTACT: BCP S.A. Rua Florida, 1970 4o andar Sao Paulo - SP Tel: 55 11 5509-6428 Fax: 55 11 5509-6257 Home Page: http://www.bcp.com.br BELLSOUTH CORPORATION 1155 Peachtree St. NE Atlanta, GA 30309-3610 Phone: 404-249-2000 Fax: 404-249-5599 Home Page: http://www.bellsouth.com/ Contacts: Investor Relations Phone (US): 800.241.3419 Fax: 404.249.2060 E-mail: investor@bellsouth.com CESP: Hires J.P. Morgan To Help Restore Financial Health -------------------------------------------------------- Brazilian power generator Cia. Energetica de Sao Paulo (Cesp) informed the Sao Paulo stock exchange that it has hired J.P. Morgan Chase & Co. to help it reduce losses and manage debts, relates Bloomberg. The utility, Brazil's third-largest power generator, is about to buckle under a debt load of BRL12.5 billion. It has posted losses in eight of the last 10 quarters, as financing costs on its in debt soared. "The company is insolvent right now," said F. Rowe Michels, a utilities analyst with Bear, Stearns & Co. in New York. "They can't service their debt at the current exchange rate. Cesp is in the worst shape of all utilities in Brazil right now." CONTACT: Companhia Energetica De Sao Paulo (CESP) Rua da ConsolaO o, 1.875 CEP 01301 -100 S o Paulo, Brazil Phone: +55-11-234-6322 Fax: +55-11-287-0871 Home Page: http://www.cesp.com.br/ Contact: Mauro G. Jardim Arce, Chairman Ruy M. Altenfelder Silva, Vice Chairman Vicente Kazuhiro Okazaki, Finance Director VARIG: Bovespa Suspends Shares On Violation of Exchange Rules ------------------------------------------------------------- Brazil's Sao Paulo Stock Exchange, Bovespa, suspended Monday the trading of shares of Viacao Aerea Rio-Grandense SA (Varig) after Latin America's biggest airline failed to release third-quarter results, reports Bloomberg. Varig also committed another violation of exchange rules when it failed to hold an annual meeting with analysts and investors to discuss 2002 results. "We've been talking a lot about this with Varig, but we have to follow the rules and we have to impose sanctions if they don't follow the rules," said Maria Helena Santana, head of Bovespa's relations with companies department. Varig's press department said the Company is already preparing a statement to send to the exchange explaining why it didn't meet the requirements. Varig is registered with the exchange among companies that have agreed to follow stricter rules for disclosing information to investors and corporate governance. The Company may be removed from the group if it fails to comply by Friday, Santana said. Varig should have released third-quarter results by Nov. 14. Since then, the Bovespa has been levying a daily fine, Santana said. She wouldn't say how much the fine is. Trading of Varig shares was due to resume Tuesday. Varig is merging operations with TAM Linhas Aereas SA, Brazil's second-largest carrier, to avoid bankruptcy after failing to get government aid. 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 TAM Daniel Mandelli Martin, President Buenos Aires Tel. (54) (11) 4816-0001 URL: www.tam.com.br * Brazil's Sovereign Credit Outlook Revised To Stable ----------------------------------------------------- Fitch Ratings revised Monday the Outlook on Brazil's sovereign ratings to Stable from Negative, reflecting a marked turnaround in international trade performance and signs the new government is committed to economic policies that could place Brazil's public and external finances on a sustainable path. The ratings, both foreign and local currency (Brazilian Real), remain at 'B'. Brazil's current account deficit has narrowed sharply, in part as a result of the 35% nominal depreciation of the Real against the US dollar since the end of 2001. The current account deficit is expected to be around US$5 billion this year compared to US$7.8 billion last year and US$23.2 billion in 2001, reducing Brazil's international financing needs and vulnerability to external shocks, including a possible war in the Gulf. Gross external financing needs this year (excl. short-term debt), are estimated to be around US$33 billion compared to US$38 billion last year and US$58 billion in 2001. Nonetheless, Brazil is still adjusting to the sharp curtailment of capital inflows in recent years, only partly relieved by the US$30 billion IMF program agreed in August 2002. Net capital inflows, excluding IMF lending, turned negative in July 2002, reaching an outflow of nearly US$3 billion per month in September and October, before turning slightly positive (US$557 million) in January 2003. Nevertheless, rollover rates on external trade lines, loans and bonds have not yet returned to normal levels. Sizable public external debt repayments fall due in the coming years (US$14.1 billion and US$10.7 billion in 2004 and 2005 respectively), though these figures could be somewhat lower due to the government's debt buyback policy. Continued IMF and other multilateral financial support is therefore vital to ease pressure on the exchange rate and reliance on international capital markets. Higher domestic debt rollover rates and greater exchange rate stability since the October 2002 national elections have been driven by greater market confidence in President Lula's administration and commitment to sound economic policies. Rollover rates on the government's heavy domestic debt, which had fallen to an average of 63% from mid-year 2002 through the election in October, have recovered markedly since November to 91% on average and over 100% since the beginning of 2003. But the government's domestic debt profile remains unfavorable and continues to render it vulnerable to adverse shocks. The average maturity of domestic debt is 32.4 months with 43% of domestic securities (equivalent to 19% of 2002 GDP) due within twelve months at January 2003, while 36% of domestic debt is linked to the US dollar and almost half is floating rate. The historic political transition from a center-right government to Brazil's first leftist government since the end of military rule has gone more smoothly than expected. President Lula and his administration have moved quickly to raise the primary surplus target to 4.25% of GDP from 3.75%.In the face of accelerating inflation and rising inflation expectations, the incoming team at the central bank have raised interest rates by 150 bps and affirmed their commitment to tackling inflation. Restoring credibility to the inflation targeting regime is crucial if the exchange rate is to be stabilized and the public debt profile improved. In addition, President Lula has committed his administration to reforming Brazil's onerous social security system, passing central bank autonomy legislation, and offering tax reform legislation. In the coming months, Fitch will monitor President Lula's success at building a workable reform coalition in Congress, where he and the parties affiliated with him lack a majority. In addition, the agency will monitor the course of reform legislation and implementation of the primary surplus target, as well as the commitment to continue with this target in future years. The ability of the central bank to establish its credibility will also be key. Finally, although recent exchange rate strengthening (to a range of 3.2-3.7 Reais per U.S. dollar this year from lows near 3.95 last fall) has improved debt dynamics prospects, Fitch believes that maintenance of sizable primary surpluses, a trend toward declining real interest rates, and critically, a resumption of reasonable economic growth rates will be critical to further improvements in Brazil's international credit standing. CONTACT: Roger M. Scher 1-212-908-0240, New York Morgan C. Harting 1-212-908-0820, New York David Riley +44 (0)20 7417 6338, London Media Relations: James Jockle 1-212-908-0547, New York ========= C H I L E ========= ENERSIS: PLC Project Hits Snags ------------------------------- Chilean power sector holding Enersis expects the development of a commercial model for power line communication (PLC) technology to be suspended for years, an Enersis source told Business News Americas. The project has been held up because the government's fair trade regulator FNE and antimonopoly commission CRA has not yet publish commercial guidelines for the service, the source said. Enersis has already accepted the FNE's recommendations that it should create a new subsidiary to operate the technology and that the subsidiary should only operate under a carrier of carriers business model. But the CRA's typically delayed responsiveness has contributed to the lack of expectation for a quick resolution. 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 MADECO: Feller Rate Places Bonds On "Credit Watch" -------------------------------------------------- Chilean copper and aluminum products manufacturer Madeco had its credit ratings placed on "credit watch" with positive outlook by local credit rating agency Feller Rate, reports Business News Americas. The move came after Madeco repaid 30% of the US$120 million in debt that it is renegotiating with creditors and obtained a seven-year extension for the repayment of the remaining US$84- million debt balance, and subject to a three-year grace period. The successful restructuring was made possible after controlling shareholders, the Luksic group's Quinenco holding company, signed up to its US$70-million portion of a roughly US$130-million capital increase. Of the amount, US$36 million was used to pay the banks. The bank debt restructuring was agreed in December last year but depended on the success of the equity issue. Feller said, "the rating assigned to the company could be improved," once the current capital increase, due to close April 3, and financial restructuring process is complete. An affiliate of Standard and Poor, Feller currently rates Madeco's solvency and bonds "BB" and its shares "second class". The Company, which was hit hard by the Argentine and Brazilian currency devaluations and the economic crises in the two countries, cut losses in 2002 by 29.1% to US$55.9 million compared to US$78.8 million the previous year. Madeco currently operates in Chile and Brazil, after temporarily halting its operations in Argentina in December 2001. CONTACT: MADECO Ureta Cox, 930 San Miguel, Santiago, Chile Phone: 56-2 5201461 Fax: 56-2 5516413 E-mail: mfl@madeco.cl Home Page: http://www.madeco.cl Contacts: Oscar Ruiz-Tagle Humeres, Chairman Albert Cussen Mackenna, Chief Executive Officer Investor Relations Phone: 56-2 5201380 Fax: 56-2 5201545 E-mail: ir@madeco.cl TELEFONICA CTC: Plans Negotiations With Creditors of $150M Loan --------------------------------------------------------------- Telefonica CTC Chile is slated to negotiate with creditors this month to ask for an extension on the maturity date of a US$150 million loan due this year. CTC Finance Chief Julio Cabarrubias said the Company may ask for a four-year extension. Mr. Cabarrubias added that CTC plans to issue papers worth about CLP35 billion (US$46 million). Business News Americas said that the issue is aimed at reducing the strain on the company's short- term loans with banks. CTC has been trying to reduce debt after a rates decree in 1999 caused the company to lose a number of potential revenues. Apparently, the company has some success with this, as it has reduced its debt by roughly 50 percent to US$1.55 billion. Mr. Cabarrubias also said that the company intends to further reduce its debt to just about US$1 billion. CTC has reduced investments after the 1999 rate decree. The report said that the company invested only US$204 million in 2002 from a yearly average of US$250 million. For this year, the company may spend less that US$230, said the report. CONTACT: TELEFONICA CTC Avenida Providencia 111, Piso 2 Santiago, Chile Phone: +56-2-691-2020 Fax: +56-2-691-2392 Home Page: http://www.ctc.cl Contacts: Mr. Bruno Philippi, President Mr. Jacinto Daz, Vice President Gisela Escobar, Head of Investor Relations =============== C O L O M B I A =============== TELECOM: Launches Early Retirement Plan To Guarantee Survival ------------------------------------------------------------- Ailing Colombian state-run fixed line operator Telecom launched an early retirement plan as part of an effort to ensure the Company's survival, Business News Americas reports, citing Telecom chairman Alfonso Gomez. About 1,557 of the Company's 6,300 employees qualify for the plan. Telecom expects annual savings of COP40 billion if all eligible employees accept the plan. Employees eligible for early retirement are on average aged 49 and have been working for 21 years with the Company; most are administrative staff and operators. Telecom already has a pension liability of some US$1.8 billion, exacerbated by a US$1.56-billion debt with technology suppliers that have begun filing lawsuits to force payment. The Colombian government has already ruled out a bailout of the Company. But Gomez vowed earlier: "Whatever the final solution, Telecom's work in Colombia must continue. There is no other option." Telecom controls 40% of the fixed telephone lines in Colombia in 1,200 cities and towns, many of which have no other provider. CONTACT: EMPRESA NACIONAL DE TELECOMUNICACIONES (TELECOM) Calle 23 No 13-49, Bogot Colombia Phone: 286-0077 282-8280 Home Page: http://www.telecom.com.co/ ============= E C U A D O R ============= FILANBANCO: Three Firms To Recover Bad Loans -------------------------------------------- Three companies won contracts to recover defunct Ecuadorian bank Filanbanco's bad loans amounting to US$392 million, reports Business News Americas. The companies are Thesis Antares, Gomez Giraldo y Asociados, and Hunton & William American Services. Filanbanco, which was intervened by authorities during the 1998- 1999 financial crisis, had outstanding loans of US$925 million last year, which was significantly reduced in the bank's last restructuring process. The awarding of the loan collection contract has been held up for weeks on accusations of irregularities and problems with the documentation submitted by bidders. The US embassy reportedly expressed its concern to local authorities over the transparency of the process. 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 =========== M E X I C O =========== CFE: Postpones Mexicali II Bid Deadline --------------------------------------- Commission Federal de Electricidad, Mexico's state power company extended the deadline for bids on the Mexicali II thermo/solar project. The new deadline is May 20, after the original March 7 deadline was not fulfilled. In a report, Business News Americas indicated that CFE is still in talks with the World Bank on the project's financing. The World Bank has agreed to make US$50 million available to the contractor, but mechanism of the financing is yet to be agreed on. The project, excluding the solar unit, is estimated to cost a total of US$150 million. The World Bank's Global Environmental Facility (GEF) reportedly agreed to provide another US$50 million to the winning bidder through a trust fund. Bidding rules are available until May 14, and the CFE will open economic bids on June 18. A winner will be declared by July 4, said the report. The project, which expected to begin commercial operations on March 2006, is to generate 198-242MW combined cycle power, plus a 25MW solar unit. Under the terms of a 25-year contract, the CFE will buy Mexicali's output. CONTACT: COMISION FEDERAL DE ELECTRICIDAD Rio Rodano 14, Col. Cuauhtemoc 06598 Mexico, D.F., Mexico Phone: +52-55-5229-4400 Fax: +52-55-5310-4614 Home Page: http://www.cfe.gob.mx Contacts: Alfredo Elias Ayub, General Director Arturo Hernandez Alvarez, Director of Operations Francisco J. Santoyo Vargas, Director of Finance CFE: El Cajon Bidders Narrowed Down To Two ------------------------------------------ Mexican state power company CFE is only considering two of the three bids submitted for the construction of the 750MW El Cajon hydro project, Business News Americas reports, citing a company statement. The consortium of Constructora Cota, Tradeco Infraestructura, Compania Contratista Nacional and Consorcio Aristos has fallen out of the list of qualifiers, but the CFE did indicate its reasons for this consortium's disqualification. The two other consortia are Brazil's Andrade Gutierrez, the Construcoes e Comercio Camargo Correa subsidiary of Brazil's Camargo Correa and the Mexican unit of the US' General Electric; and Mexico's Ingenieros Civiles Asociados (ICA) togther with Constructora Internacional de Infraestructura, Promotora Inversora Visa, La Peninsular Compania Constructora, and Russia's Energomachexport Power Machines. The CFE is expected to announce bid winners on Friday. Local paper La Reforma quoted CFE financed projects director Eugenio Laris saying that access to funding could be a drawback for a bidder. The CFE opened economics bids last Friday, said Reforma. El Cajon, estimated to generate an average of 1,228 gigawatts- hour per year, will be constructed on the Santiago River in the state of Nayarit. Operations at the first unit is scheduled to start in February 2007, the second a month after that, and the third (and last) in August that year. EMPRESAS ICA: Debt Reduction Efforts Yield Positive Results ----------------------------------------------------------- Mexico's engineering and construction firm ICA reduced its risk of negative credit for March after embarking on measures to reduce its debt, La Reforma revealed in a report. "Considering that only US$98 million worth of ICA convertible bonds remain in the market, we believe the company has reduced its risk of negative credit for March," the paper quoted an ICA executive as saying. ICA's debt last year reached a total of US$480 million, but the Company reduced it by 15% after selling some US$149 million worth of assets. In December, ICA used a US$116-million loan from Inbursa to repurchase US$70.6 million worth of convertible bonds due March 2004. The remainder was used to refinance short-term debt and finance company interests. The Company aims to sell off a further US$250 million in assets by end-2004. In addition, ICA also downsized its labor force over the last few months of last year to slash costs. The Company expects to save MXN121 million (US$10.9mn) this year from that decision. To see financial statements: http://bankrupt.com/misc/ICA.pdf CONTACT: Dr. Jos, Luis Guerrero (5255) 5272-9991 x2060 jose.guerrero@ica.com.mx Lic. Paloma Grediaga (5255) 5272-9991 x3470 paloma.grediaga@ica.com.mx In the United States: Zemi Communications Daniel Wilson (212) 689-9560 d.b.m.wilson@zemi.com GRUPO BITAL: Fitch Places Ratings On "Positive Observation" ----------------------------------------------------------- Fitch Ratings Mexico put the domestic ratings of Grupo Financiero Bital on "positive observation," according to an article released by Internet Securities. The move came after HSBC injected some US$800 million into Bital as part of the reorganization of the financial structure and the strengthening of the capital base. The rating agency said the change "implies" a high probability that the ratings will be improved in the months to come." At the same time, Fitch also announced that in recent days it upgraded its individual and support ratings for Bital on the international scale, putting them at "D" and "3," respectively. INSILCO HOLDING: Receives Approval of Asset Sales ------------------------------------------------- Insilco Holding Co. announced Monday that following a hearing held March 7, 2003 before the U.S. Bankruptcy Court for the District of Delaware, Bankruptcy Judge Kevin J. Carey signed orders approving the going concern sales of substantially all of the assets of the Company's three business segments. The Bankruptcy Court is expected to enter the orders on the official docket on March 10, 2003. "We are extremely pleased with the progress being made relative to the sale of the company's assets," said David A. Kauer, President and Chief Executive Officer. "We can now focus on the orderly transition of substantially all of the assets of our three business segments to their new owners." The Bankruptcy Court approved the sale of the Company's going concern assets pursuant to previously announced contracts. Specifically, Amphenol Corporation emerged as the successful bidder in a competitive auction for the majority of Insilco Technologies, Inc.'s custom assembly business assets for approximately $14 million, subject to closing adjustments. Bel Fuse Ltd. will purchase the passive components business for approximately $35 million; SRDF Acquisition Company LLC, a private investor group, will purchase the stamping assets for approximately $13 million; and LL&R Partnership, a private investor group, will purchase the North Myrtle Beach custom assembly business for approximately $1.7 million. Insilco Technologies, Inc. has also agreed to sell the Ireland-based custom assembly business to that facility's general manager, Mr. Stephen Bullock, under terms that return approximately $850,000 to the Insilco entities. The closing of the transactions remain subject to, among other things, customary closing conditions. Insilco Holding Co., and certain of its domestic subsidiaries, filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code on December 16, 2002, with the stated intention to facilitate the planned sales of the going concern assets of the Company. At the March 7, 2003 hearing, counsel to the Insilco Debtors, counsel to the agent for the Debtors' senior secured lender group, and counsel to the official committee of unsecured creditors informed the Bankruptcy Court that a tentative agreement had been reached to settle the creditors' committee's motion for appointment of an operating trustee or an examiner; if that settlement is consummated, the creditors' committee will withdraw its motion, with prejudice. The creditors' committee also informed the Court at the hearing that it was withdrawing its objections to the proposed sales. The proposed settlement among the Company, the Debtors' senior secured lender group and the creditors' committee also sets forth the general terms for an anticipated Chapter 11 plan of liquidation that would seek to distribute remaining assets to unsecured creditors. About Insilco Holding Co. Insilco Holding Co., through its wholly-owned subsidiary Insilco Technologies, Inc., is a leading global manufacturer and developer of a broad range of magnetic interface products, cable assemblies, wire harnesses, high-speed data transmission connectors, power transformers and planar magnetic products, and highly engineered, precision stamped metal components. Insilco maintains more than 1.5 million square feet of manufacturing space and has 21 locations throughout the United States, Canada, Mexico, China, Ireland and the Dominican Republic serving the telecommunications, networking, computer, electronics, automotive and medical markets. For more information visit our sites at http://www.insilco.comor http://www.insilcotechnologies.com. Investors: Michael R. Elia Sr. Vice President & CFO (614) 791-3117 Media: Kimberly Kriger/Adam Weiner Kekst and Company (212) 521-4800 PEMEX: Invites Bids For Marine Division Drilling ------------------------------------------------ Petroleos Mexicanos, Mexico's state oil company is inviting bids for the top drive drilling of a number of wells for its marine division. Business News Americas reveals that the Company has scheduled a site visit on March 14. An explanatory meeting would be held on March 17. Bidding rules are available until April 9. Bids should be submitted by April 15, when the Company opens technical bids. Economic bids will be opened on April 21. In related news, bids for another contract for the drilling, termination and repair of a number of offshore wells will e accepted until April 1. Economic bids on this project will be opened on April 8. CONTACT: PETROLEOS MEXICANOS Marina Nacional 329, Colonia Huasteca 11311 M,xico, D.F., Mexico Phone: +52-55-5531-6061 Fax: +52-55-5531-6321 Home Page: http://www.pemex.com Contacts: Raul Munoz Leos, General Director Jose A. Ceballos Soberanis, Director Corporate Operations Jose Juan Suarez Coppel, Director Corporate Finance PEMEX: US Ex-Im Bank Approves $400M Long-Term Guarantees -------------------------------------------------------- The Export-Import Bank of the United States (Ex-Im Bank) approved a $400 million long-term loan guarantee enabling 95 U.S. exporters and suppliers to sell up to $447 million of oil and gas field equipment and services to Petroleos Mexicanos (PEMEX) in Mexico. Schlumberger Technology Corp., Sugar Land, Texas, and the following Texas and Louisiana companies are major exporters and suppliers on the transaction: Houston: Halliburton Energy Services, M-I LLC, Weatherford USA Inc, Universal Compression Holdings, Protechnics International, BJ Services Co., Baker Hughes Allied Ops; Sugar Land: Dowell Product Center. New Orleans: Petrotech EPC Co. also is a major supplier on the contract. "We are delighted to support an export sale that benefits so many U.S. companies and sustains U.S. jobs," said Ex-Im Bank Chairman Philip Merrill. "Mexico is an important market for U.S. exporters and a long-time customer of Ex-Im Bank, and Texas is one of the top exporting states in this country." The transaction is the fourth and final conversion of a $1.1 billion preliminary commitment authorized by Ex-Im Bank in September 2002 to support U.S. exports for PEMEX projects. PEMEX will use the equipment and services financed under this latest loan guarantee for its New Pidiregas Projects (NPP) to enhance production at 23 existing natural gas and crude oil exploration sites on and off-shore near the Bay of Campeche. The guaranteed lender on the transaction is BNP-Paribas, New York, NY. The primary source of repayment is PEMEX. In Texas in fiscal year 2002, Ex-Im Bank supported $1.56 billion in exports of equipment and services by Texas companies. Over the past five years, Ex-Im Bank helped 847 Texas companies in 135 communities export $7.3 billion, sustaining thousands of U.S. jobs. Ex-Im Bank is an independent federal government agency that helps finance the sale of U.S. exports, primarily to emerging markets, by providing loans, guarantees, and export credit insurance. In fiscal year 2002, Ex-Im Bank authorized $1.56 billion in financing to support U.S. exports to Mexico. Overall in fiscal year 2002, Ex-Im Bank authorized financing to support approximately $13 billion in U.S. exports worldwide. CONTACTS: Marianna Ohe (202) 565-3200 PEMEX: Opposition Proposes 10% Stake Sell-Off --------------------------------------------- Mexican congressmen from the opposition party proposed the floating of 10 percent of Pemex' shares in the local stock market. Local paper Mileno quoted Guillermo Hopkins and Omara Fayad saying that the finance and public credit commission is studying the issue. The two congressmen, from the Institutional Revolutionary Party (PRI), said that the move is a way of obtaining much-needed financing for the Company. The PRI asserts that Pemex would need US$30 billion in investments over the next 10 years. However, according to a Business News Americas report, any move of increasing private sector participation in the country's energy sector, is highly controversial. The two congressmen argued that the sell-off would not become a constitutional issue; rather, it would only need some alterations in the Company's organic law and the federal public administration organic law. The PRI also said that the sell-off would force the Company to become more transparent. The party further proposed that eligible shareholders should be limited to Mexican nationals and retirement funds. The overall maximum individual holding should be limited to 0.5 percent, said the party. Through being traded on the bourse, Pemex would be forced to become more transparent, the PRI continued. PEMEX: Announces Record Daily Output ------------------------------------ Pemex announced a record output of 3.42 million barrels of crude oil on Sunday, the highest single day production figure in its company. The company's Cantarell fields contributed 2.12 million barrels to the figure, Business News Americas reports, citing a company statement. Aside from the Cantarell fields in Campeche Bay, improved yields in the northeast marine region also contributed to the achievement. The recorded output means that Pemex subsidiary Pemex Exploracion y Produccion (PEP) is right track towards reaching the 4 million barrel production mark by 2006. In January, Pemex produced an average of 3.3 million barrels of crude, which is 2.4 percent greater than the January 2002 production. SATMEX: Likely To Get Congressional Approval on Ex-Im Loan ---------------------------------------------------------- Mexican satellite operator Satmex exuded confidence that it will be granted final approval on a loan it applied to the US Export- Import Bank, suggests Business News Americas. Satmex is seeking final approval of a loan that will be used to cover the debt incurred by the construction of its Satmex 6 satellite. The Company said it applied to the Ex-Im Bank because Loral Space & Communications constructed the satellite. Loral is a US-based firm and also a Satmex shareholder. The Ex-Im Bank has asked the US congress to make a definitive decision on the financing request. The move, according to a Satmex source, implied that the bank had in principal approved the loan itself. Otherwise, it would not have sent the request to congress. Also, local press revealed that the congress has never rejected a loan in cases where the bank has already approved one. The size and terms of the loan won't be disclosed pending final congressional approval. Congress has 35 days to decide on the loan. According to Satmex finance VP Cynthia Pelini, it is easier for Satmex to take out the loan now that Ex-Im Bank has submitted the loan for congressional approval. Satmex is struggling with debts totaling US$525 million, all of which matures in the second half of 2004. With such an untenable burden looming on the horizon, the Company is seeking some US$300 million from various sources, in addition to the Ex-Im Bank. Satmex has also gone to the French government's export financing arm Coface, which may also provide financial aid. Satmex plans to launch Satmex 6 via French satellite launcher Ariane in French Guiana in the third quarter of this year. =========== P A N A M A =========== * S&P Revises Panama's Sovereign Credit Ratings Outlook ------------------------------------------------------- Standard & Poor's Ratings Services said Monday that it revised its outlook on its long-term sovereign credit ratings on the Republic of Panama to negative from stable. At the same time, Standard & Poor's affirmed its 'BB' long-term sovereign credit rating and its 'B' short-term foreign currency sovereign credit rating on the republic. The negative outlook reflects the possibility of a downgrade if the government fails to turn around the high general government deficit that is incompatible with the framework of Panama's dollarized economy. In 2002, the first-time inclusion of the Panama Canal Authority's undistributed profits in the nonfinancial public sector balances allowed the government to comply with the 2% of GDP ceiling required by the recently enacted fiscal responsibility law. While Standard & Poor's views this change as appropriate from an accounting perspective, this does not mitigate the government's borrowing requirements and their impact on interest rates. The ratings on the Republic of Panama are constrained by: -- Subdued growth prospects, absent a shift in reform momentum that boosts productivity and/or stronger global growth that contributes to the canal and transshipping businesses. -- Rigidities in the general government's fiscal accounts, which limits Panama's room to maneuver. General government deficits are projected to be around 3.50%-3.75% of GDP in 2003- 2004. -- A dual economic structure, which contributes to income inequalities, relatively high unemployment and poverty, and low domestic demand. The ratings are supported by: -- A stable democracy since General Manuel Noriega's dictatorship (1985-1989) ended. -- Long-standing monetary stability, which stems from use of the U.S. dollar. The ratings could come under downward pressure if the general government deficit worsens ahead of the May 2004 presidential and legislative elections. However, the ratings could stabilize if development of the former Canal Zone boosts productivity and growth or if pension reform or additional fiscal measures ease fiscal pressures. ANALYSTS: Lisa M Schineller, New York (1) 212-438-7352 Jane Eddy, New York (1) 212-438-7996 ======= P E R U ======= PAN AMERICAN: Reports Year-End And Fourth Quarter Results --------------------------------------------------------- Pan American Silver Corp. (NASDAQ: PAAS; TSX: PAA) reported Monday its financial results for the fourth quarter and the year 2002. All amounts are expressed in U.S. dollars. Revenue for the fourth quarter was $12.1 million, an 11 percent increase over that of 2001. Revenue for the year was $45.1 million, 21 per cent greater than for 2001 due to a full year's operations from the company's Huaron mine in Peru. Full-year silver production was 7.8 million ounces, 12 percent higher than in 2001. During the fourth quarter, Pan American recorded an unusual charge of $12.1 million against the operations of the Quiruvilca mine, resulting in a net loss for the quarter of $13.7 million or $0.32 per share. The unusual charge follows the company's $15.1 million write-down in the third quarter of the Quiruvilca mine's carrying value and an assessment of the long-term mine reclamation cost. The net loss for the year was $33.7 million ($0.80 per share) including the total $27.2 million Quiruvilca mine write-down and reclamation charge. The fourth quarter charge consisted of a $10 million non- cash provision for future reclamation costs, a $1.8 million non-cash provision against the carrying value of the mine's supplies inventory and $0.29 million of mine development costs incurred in the fourth quarter. All future expenditures at Quiruvilca will be expensed as incurred. Operations at Quiruvilca have been severely affected by record low metal prices since late 2000, particularly zinc. The mine continues to operate, and in fact has operated better than expected to date in 2003. Excluding the unusual charge, the net loss for the fourth quarter was $1.6 million or $0.04 per share (2001 - net loss of $4.4 million or $0.12 per share). The improvement stems mainly from good results at the Huaron mine, where metal production was higher and costs lower than in the fourth quarter of 2001. Consolidated production for the quarter was 2.0 million ounces of silver, 9,555 tonnes of zinc, 5,214 tonnes of lead and 742 tonnes of copper. Mining operations contributed $1.9 million during the year, a $5.2 million improvement from 2001 when mining operations lost $3.3 million. The mining contribution in the fourth quarter was $0.4 million (2001 - lost $1.2 million). Capital spending totaled $10.9 million, primarily on the La Colorada mine expansion. Financing activities, net of $3.3 million in debt repayments during the year, generated $18.5 million. Cash at year-end was $10.2 million. At December 31, the company had spent and committed $10.1 million of the $20 million La Colorada capital budget and the balance of the expansion costs will be funded from a $10 million loan from the IFC, a member of the World Bank group, the first tranche of which was drawn down on March 7, 2003. This project is proceeding on schedule and within budget and should be completed by July. At year-end, long-term debt was $3.9 million (2001 - $5 million). Pan American's CEO Ross Beaty, said, "Pan American had another tough financial year in 2002 due to continued very low metal prices, but I am optimistic that we will have much better results in 2003 as we grow into a larger and stronger company. We have taken the difficult decision to reflect in our 2002 results our worst-case financial exposure regarding the Quiruvilca mine even though we expect metal prices and therefore Quiruvilca's results to improve in the future. We began construction of La Colorada and this should be our most profitable mine when it opens to full-scale production in July. Huaron had an excellent performance in 2002 and we added a new source of cash flow from the Peru silver stockpiles operation late in the year. We added major growth projects at Manantial Espejo in Argentina, and early in 2003, at Alamo Dorado in Mexico following our acquisition of Corner Bay Silver. So I am very excited about our growth ahead, and with it our ability to improve our financial results this year." In Peru, the company increased its silver operations to three, with the November addition of a small but very profitable silver stockpile operation that is expected to produce about 0.5 million ounces annually at a cash cost of less than $2 per ounce for the next ten years. At the Huaron mine, silver production increased to 4.5 million ounces in 2002 from 2.9 million ounces in 2001. In December a 10 percent mine expansion began at Huaron due to excellent exploration results in the year, and planned production in 2003 is 4.9 million ounces of silver. At the Quiruvilca mine, production in 2003 is planned at 2.7 million ounces of silver. Half of Quiruvilca's planned zinc production for 2003 has been hedged at higher-than-current prices and operations so far this year are much improved from the previous quarter. In Mexico, Pan American began construction in July of the $20 million project that will expand production at the La Colorada mine to 3.8 million ounces annually by mid-2003. Silver production for 2002 was 0.6 million ounces and planned production for 2003 is 2.3 million ounces. In June, the company agreed to acquire Corner Bay Silver in a merger that closed on February 20, 2003. Corner Bay's main asset was the 77 million ounce Alamo Dorado silver project and Pan American plans to complete a revised feasibility study on the deposit by mid-2003, and then proceed with production financing and construction as soon as possible on this promising project. Elsewhere, Pan American has interests in four other growth projects that were all advanced during 2002. In Bolivia, the San Vicente mine produced 1.1 million ounces of silver under a toll- milling agreement with a Bolivian company, and Pan American anticipates advancing the property in 2003 towards a feasibility study. In Argentina, the 50 percent owned Manantial Espejo property generated very good exploration drilling results during the year, and plans for 2003 are to undertake an underground tunneling and drilling program on the property leading to a feasibility study in 2004. In Peru, the Tres Cruces gold project near Quiruvilca was reactivated during the year as a result of the large nearby Alto Chicama gold discovery by Barrick Gold, and higher gold prices. In 2003, Barrick will be exploring Tres Cruces and the company's Los Angeles gold property, also adjacent to Quiruvilca. Finally, in Russia, the 20 percent owned Dukat mine was reported to have opened in December, though no silver sales were made and it is uncertain as to when they will commence. Mr. Beaty concluded, "Pan American now has four silver operations and several outstanding growth projects. In 2003 the company's silver production is expected to grow to 10.3 million ounces. While the silver price only rose modestly in 2002 relative to gold, it outperformed most base metal prices - an affirmation of silver's dual role as a precious and industrial metal. The outlook is good for higher metal prices in 2003 and, with our rising production base, this will immediately translate to improved financial results for our shareholders. We are solidly on track to become the world's purest large silver producer in the near future and the pre-eminent silver mining investment equity." To see financial statements: http://bankrupt.com/misc/PAN_AMERICAN.htm CONTACT: Ross J. Beaty, Chairman Rosie Moore, VP Corporate Relations 604-684-1175 ================================= T R I N I D A D & T O B A G O ================================= CARONI LTD.: Minister Criticizes Substantial Losses --------------------------------------------------- Trinidad and Tobago Planning and Development Minister Keith Rowley said the taxpayers can no longer afford to shoulder state sugar company Caroni (1975) Ltd.'s debt burden, the Trinidad Guardian relates. "Ladies and gentlemen, boys and girls, babies in arms, unborn babies: Caroni owes, as of now, $2.2 billion," Mr. Rowley stressed. The Company accumulated the debt in ten years, after the government wrote off a $34 billion debt in 1992. Caroni, in its 27-year lifetime, has lost about $5.5 billion, which is more than what the state spends on important national initiatives. According to Mr. Rowley, in that 10-year period (1992-2002), the total amount spent for the development program for health, for education, for public order and safety, for the development program for roads and bridges was $4.83 billion. He contends that the Company was well into its way to recovery, until the UNC administration took over in 1995. "Between 1995 and 2001, under Basdeo Panday - that `great sugar champion' - the Company found itself in a worse position," commented the official. According to him, the government's plan to have the Company produce 70,000 tons of sugar instead of the usual 100,000 in a year, is the only way to save the Company. 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: Retention of Force Majeure Highlights Difficulties --------------------------------------------------------- Venezuela's state oil company PDVSA is having a hard time bringing downstream refining operations back to pre-strike levels of performance than it is in restarting upstream production activities, according to press speculation. Difficulty became evident when the Company decided to retain force majeure on unleaded gasolines, lube oils and asphalts, even though President Hugo Chavez has said last week that force majeure had been totally lifted. Force majeure had been in force since December 5 last year, three days after the country's national strike began. *********** 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. 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