/raid1/www/Hosts/bankrupt/TCRLA_Public/030320.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Thursday, March 20, 2003, Vol. 4, Issue 56
Headlines
A N T I G U A & B A R B U D A
LIAT: BWIA Exec Criticizes LIAT/BWIA Merger
A R G E N T I N A
DIRECTV LATIN AMERICA: Files Chapter 11 Reorganization in U.S.
DIRECTV LATIN AMERICA: Announces Management Shakeup
EDERSA: Parent Pays Off Debt Owed To Banco Santander-Chile
MUSIMUNDO: Seeks To Restructure 40% of Debt
PECOM ENERGIA: Issues $33M Worth of Dollar, Peso Bonds
B E R M U D A
CAPITAL INSURANCE: Files Winding Up Notice to Creditors
GLOBAL CROSSING: Motion To Approve Pegasus Settlement Agreement
GLOBAL CROSSING: Moves To Settle With Service Providers
GLOBAL CROSSING: Motion To Approve Techtel Settlement Agreement
TYCO INTERNATIONAL: Two Executives Face Arrest in Mexico
TYCO INTERNATIONAL: ADT Division Under Increasing Scrutiny
VOYAGER SECURITIES: Notice to Creditors of First Meetings
B R A Z I L
CESP: To Hold General Assembly April 7
MRS LOGISTICA: Announces Improved 4Q02 Results
C H I L E
ALUSA: Cuts Losses In 2002
COEUR D'ALENE: Reports Record 4Q02, FY `02 Silver Production
GRUPO CB: SVS Approves Mutual Fund Freeze
C O L O M B I A
* World Bank Approves $300M Loan To Support Reform In Colombia
D O M I N I C A N R E P U B L I C
UNION FENOSA: Aims To Re-capitalize Ailing Local Unit
M E X I C O
EMPRESAS ICA: Retains German Bank To Raise $750M Project Funding
MAXCOM TELECOMUNICACIONES: Names Rene Sagastuy CEO
PEMEX: Debt Refinancing Includes $500M Dollar Bonds Issue
T R I N I D A D & T O B A G O
CARONI LTD.: PM Manning Sees Economic Boom After Restructuring
CARONI LTD.: Workers Halts Work To Clarify VSEP
U R U G U A Y
* IMF Extends, Modifies Uruguay's Stand-By Credit Arrangement
- - - - - - - - - -
=================================
A N T I G U A & B A R B U D A
=================================
LIAT: BWIA Exec Criticizes LIAT/BWIA Merger
-------------------------------------------
BWIA Corporate Communications Manager Clint Williams said that a
merger between BWIA and Antigua-based carrier LIAT would not be a
sound decision. In a telephone interview, Mr. Williams said,
"Anyone with good financial experience would tell you, you don't
merge two companies with heavy debt and expect to create one
viable carrier."
"We believe there are more creative ways of bringing the two
organizations closer under one corporate structure that will
benefit both (airlines), but that is something we have to leave
to BWIA' s steering committee headed by Mr. Ken Gordon," he
added, as quoted by the Trinidad Guardian.
Mr. Williams also said that BWIA is not opposed to anyone
offering help to LIAT. BWIA is LIAT's single largest shareholder,
owning 29 percent of LIAT's shares.
On Sunday, Trinidad and Tobago Prime Minister Patrick Manning,
and St. Vincent and the Grenadines Prime Minister Dr. Ralph
Gonsalvez, met to discuss a solution for LIAT's financial woes.
The report added that the leaders also discussed an integration
framework for the Caricom.
CONTACT: LIAT Corporate Headquarters
V.C. Bird International Airport,
P.O. Box 819,
St. John's, Antigua West Indies
Phone: 1 (268) 480-5600/1/2/3/4/5/6
Fax: 1 (268) 480-5625
Home Page: http://www.liatairline.com/
Contacts:
Garry Cullen, Chief Executive Officer
David Stuart, Vice President of Marketing
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)
=================
A R G E N T I N A
=================
DIRECTV LATIN AMERICA: Files Chapter 11 Reorganization in U.S.
--------------------------------------------------------------
DIRECTV Latin America, LLC announced Tuesday that in order to
aggressively address the Company's financial and operational
challenges, it has filed a voluntary petition for reorganization
under Chapter 11 of the U.S. Bankruptcy Code. The filing applies
only to DIRECTV Latin America, LLC, a U.S. company, and does not
include any of its operating companies in Latin America and the
Caribbean, which will continue regular operations.
DIRECTV(TM) is the leading pay television service in Latin
America and the Caribbean with approximately 1.6 million
subscribers in 28 countries. DIRECTV Latin America, LLC intends
to continue providing its DIRECTV service as normal without
interruption across Latin America and the Caribbean.
"The commitment by DIRECTV Latin America, LLC to provide its
customers with the best service and widest array of entertainment
options has not changed," said Michael A. Feder, chief
restructuring officer, DIRECTV Latin America, LLC. "The action
we have taken today [Tuesday] in the U.S. is intended to
strengthen DIRECTV Latin America and allow us to continue to
selectively add new subscribers on a profitable basis and further
enhance our product offerings for the benefit of our customers."
DIRECTV Latin America, LLC is a Delaware limited liability
company owned by DIRECTV Latin America Holdings, a subsidiary of
Hughes Electronics Corporation (HUGHES); Darlene Investments LLC,
an affiliate of the Cisneros Group of Companies; and Grupo
Clarin. Today's [Tuesday's] filing was made in the U.S.
Bankruptcy Court in Wilmington, Delaware.
HUGHES has agreed to provide DIRECTV Latin America with a $300
million senior secured debtor-in-possession financing facility
(subject to Bankruptcy Court approval) to supplement its existing
cash flow and help ensure that vendors, programmers and other
business associates receive payment for services incurred after
the bankruptcy filing was made.
In early January 2003, DIRECTV Latin America, LLC announced it
had initiated negotiations with certain programmers, suppliers
and business associates in an effort to resolve issues that have
affected the financial performance of the Company in recent
years, including excessive fixed costs and a substantial debt
burden during a time of economic deterioration throughout Latin
America. The Company's decision to voluntarily file for Chapter
11 followed its determination that these negotiations would not
achieve a satisfactory long-term outcome for DIRECTV Latin
America, LLC.
Feder said, "We appreciate the efforts by all involved in the
discussions regarding a potential out-of-court restructuring.
However, we have concluded that a Chapter 11 filing is a
necessary and appropriate means of addressing the Company's
current financial and operating challenges. We expect this
process will enable us to significantly reduce our fixed costs by
restructuring or rejecting contracts that are not in line with
the current economic realities of the marketplace or that do not
provide for programmers and suppliers to appropriately share the
risks of exchange rate fluctuation and currency devaluation. The
process should also allow us to simplify certain contractual
issues and significantly reduce our long-term debt."
Feder continued, "Because we have already identified the issues
that need to be addressed, we are prepared to move forward
quickly and complete the restructuring process as soon as we are
able."
Concurrent with today's [Tuesday's] announcement, it was
announced that Kevin N. McGrath has retired as chairman of
DIRECTV Latin America, LLC, and Larry N. Chapman has been named
president and chief operating officer of the Company, effective
immediately.
DIRECTV Latin America, LLC previously retained AP Services, LLC,
an affiliate of AlixPartners, LLC as restructuring advisors and
appointed Feder, a principal of the firm, as chief restructuring
officer. Feder will continue to oversee the restructuring
efforts during the bankruptcy process, reporting to Chapman.
In conjunction with today's [Tuesday's] Chapter 11 filing,
DIRECTV Latin America, LLC has filed "First Day Motions" in the
court in Wilmington to support its employees and vendors. These
filings include requests to continue employee payroll and
benefits as usual; to obtain interim approval of the DIP
financing from HUGHES and maintain existing cash management
programs; and to retain legal and financial professionals to
assist with the Company's restructuring. In addition, the Company
intends to file motions today [Tuesday] seeking to reject certain
executory agreements that it has determined to be uneconomic and
not in its best long-term interest. These include contracts
pertaining to Disney Channel Latin America, MUSIC CHOICE and
certain exclusive rights to broadcast the 2006 FIFA World Cup(TM)
soccer tournament.
DIRECTV Latin America, LLC will continue normal business
operations in its markets across Latin America and the Caribbean.
"We will continue to pursue opportunities to add new programming
and services that further enhance the DIRECTV experience for our
customers," Feder said.
About DIRECTV Latin America
DIRECTV is the leading direct-to-home satellite television
service in Latin America and the Caribbean. Currently, the
service reaches approximately 1.6 million customers in the
region, in a total of 28 markets. DIRECTV is currently available
in: Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, El
Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Puerto
Rico, Trinidad & Tobago, Uruguay, Venezuela and several Caribbean
island nations.
DIRECTV Latin America, LLC is a multinational company owned by
DIRECTV Latin America Holdings, a subsidiary of Hughes
Electronics Corporation; Darlene Investments, LLC, an affiliate
of the Cisneros Group of Companies, and Grupo Clarin. DIRECTV
Latin America has offices in Buenos Aires, Argentina; Sao Paulo,
Brazil; Cali, Colombia; Mexico City, Mexico; Carolina, Puerto
Rico; Fort Lauderdale, USA; and Caracas, Venezuela. For more
information on DIRECTV Latin America please visit
www.directvla.com .
Hughes Electronics Corporation, a unit of General Motors
Corporation, is a world-leading provider of digital television
entertainment, broadband satellite networks and services, and
global video and data broadcasting. The earnings of HUGHES are
used to calculate the earnings attributable to the General Motors
Class H common stock (NYSE: GMH).
DIRECTV LATIN AMERICA: Announces Management Shakeup
---------------------------------------------------
DIRECTV Latin America, LLC announced on Tuesday that Kevin N.
McGrath will retire as chairman, effective immediately.
Larry N. Chapman has been named president and chief operating
officer of DIRECTV Latin America, LLC, effective immediately.
Chapman, who has been with Hughes Electronics Corporation since
1980, will report to Eddy W. Hartenstein, chairman of DIRECTV
Latin America, LLC and corporate senior executive vice president
of HUGHES.
HUGHES, through its DIRECTV Latin America Holdings subsidiary,
owns 75 percent of DIRECTV Latin America, LLC.
"I have spent almost 26 years working for General Motors and
related subsidiaries. For the better part of the past decade I
have worked with an extremely talented and dedicated group of
people to launch and build DIRECTVT into the leading pay
television service in Latin America and the Caribbean," said
McGrath. "We were the first all-digital pay television service in
Latin America, bringing the highest quality programming to
households throughout the region. While I am extremely proud of
all that the DIRECTV Latin America team has accomplished and I am
confident that the Company will successfully emerge from its
restructuring, I feel it is now time for me to move on.
Therefore, I have elected to retire and spend more time with my
family and pursue other goals."
"Kevin deserves much credit for bringing hundreds of channels of
digital television programming via satellite to TV viewers in
countries throughout Latin America and the Caribbean," said
Hartenstein. "Providing such a sophisticated service to consumers
in 28 different countries with different cultures and in three
languages, was a daunting challenge. We appreciate his enormous
contributions and wish him well in his future endeavors."
Hartenstein continued, "Both Larry Chapman and I are committed to
the successful future of DIRECTV Latin America. Larry is a
seasoned veteran of HUGHES and DIRECTV in the U.S. and his
breadth of experience and superb knowledge of the satellite
television business make him the ideal choice to oversee DIRECTV
Latin America during this critical period."
DIRECTV Latin America, LLC announced earlier today that in order
to aggressively address the Company's financial and operational
challenges, it has filed a voluntary petition for reorganization
under Chapter 11 of the U.S. Bankruptcy Code. The filing applies
only to DIRECTV Latin America, LLC, a U.S. company, and does not
include any of its operating companies in Latin America and the
Caribbean, which will continue regular operations.
"Kevin has established a strong leadership team and talented
employee base at DIRECTV Latin America and I look forward to
working together with Eddy and all DIRECTV Latin America
employees as we position the Company for future profitable
growth," said Chapman. "While we have a formidable challenge
ahead, I'm confident that we will emerge as a stronger and more
efficient organization."
DIRECTV is the leading pay television service in Latin America
and the Caribbean with approximately 1.6 million subscribers in
28 countries.
DIRECTV Latin America, LLC is owned by DIRECTV Latin America
Holdings, a subsidiary of Hughes Electronics Corporation
(HUGHES); Darlene Investments LLC, an affiliate of the Cisneros
Group of Companies; and Grupo Clarin.
In December 2002, Chapman was named corporate senior vice
president of HUGHES to work with Hartenstein and the DIRECTV
Latin America management team applying his exceptional expertise
and experience to assist in evaluating and managing the DIRECTV
Latin America business consistent with the overall objectives of
enhanced competitiveness and profitability.
A member of the original DIRECTV launch team in the U.S., Chapman
was executive vice president in charge of DIRECTV's Product
Development, Marketing and Advertising organizations. In his
Product Development role, Chapman was responsible for DIRECTV's
receiver development strategy as well as the development and
deployment of advanced services such as digital video recording
and interactive television. Marketing responsibilities included
development and execution of customer offers and promotions,
customer upgrade efforts, and customer loyalty programs.
Advertising responsibilities included oversight of DIRECTV's
advertising agency, advertising strategy, brand management and
media planning.
From March 2000 through August 2001, Chapman was president of
DIRECTV Global Digital Media Inc., a business unit of HUGHES.
Before his assignments with DIRECTV, Chapman served in various
business development roles at Hughes Communications, Inc., a
former satellite services subsidiary of Hughes Electronics
Corporation. Chapman holds MS and BS degrees in electrical
engineering from the University of Florida.
McGrath, who joined HUGHES in 1987, was named chairman of DIRECTV
Latin America, LLC and appointed vice president of HUGHES in
1996. Previously, McGrath was president of DIRECTV International.
Prior to his position with DIRECTV International, McGrath was
named president of Hughes Communications, Inc. in November 1993.
Prior to joining HUGHES, McGrath spent a decade in increasingly
responsible positions at various units of General Motors
Corporation. He joined GM in 1977.
EDERSA: Parent Pays Off Debt Owed To Banco Santander-Chile
----------------------------------------------------------
Cayman Islands-based Saesa Overseas is now a direct subsidiary of
Chilean distributor Saesa after it sold 99.9% of its shares to
the latter, Business News Americas indicates. Saesa Overseas sold
the shares in order to pay off a US$35.5 million loan held by its
50% owned Argentine distributor Edersa to Banco Santander-Chile.
Edersa, which serves 140,000 clients in Rio Negro province, owed
Santander US$35 million for the loan and US$553,770 in
accumulated interest, all of which has now been cleared. The loan
was due at the end of this month, and Saesa had previously sought
to extend the due date.
Argentina's Camuzzi group owns the other 50% of Edersa.
MUSIMUNDO: Seeks To Restructure 40% of Debt
-------------------------------------------
Argentine music-store chain Musimundo, currently controlled by
Citibank and Banco Galicia, seeks to restructure 40% of its
US$48-million debt, reports EFE, citing a La Nacion article.
EFE recalls that Musimundo defaulted on its debt back in August
2001 when it was still under the control of U.S.-based Exxel
Group. The bulk of the retailer's debt is owed to banks, record
companies and Japanese conglomerate Sony.
Musimundo has suffered in recent years due to the country's
protracted economic depression, the report revealed. Musimundo
claims a 60% share in the market, with 58 outlets and 758
workers.
PECOM ENERGIA: Issues $33M Worth of Dollar, Peso Bonds
---------------------------------------------------------
Argentine energy company Pecom Energia sold one-year debentures
denominated in US dollars and Argentine pesos totaling US$33
million, reports Business News Americas. The Company issued the
bonds in two traunches: the US$29.2 million dollar-denominated
series O pays 7.5% annual interest, while the US$3.6 million peso
or dollar denominated series P pays 8.5% annual interest. Dutch
bank ABN Amro managed the offering.
The issue was less than Pecom's original plan, which was to place
up to US$34 million in debentures. Nevertheless, the Company is
satisfied with the result. The offer is significant because it is
the first time since the devaluation of the peso in early 2002
that the Company has offered bonds on the local market.
Furthermore, it is Pecom's first bond issue since its parent
company Perez Companc was bought out by Brazil's state owned oil
company Petrobras in October 2002.
According to a source from Pecom, proceeds of the offer will be
used as a refinancing instrument to pay part of a US$35-million
bond payment due on March 21.
CONTACT: PECOM ENERGIA S.A. DE PEREZ COMPANC S.A.
Maipo 1 - Piso 22 - C1084ABA
Buenos Aires, Argentina
Phone: (54-11) 4344-6000
Fax: (54-11) 4344-6315
URL: http://www.pecom.com.ar/
Contacts:
Jorge Gregorio C. Perez Companc, Chairman
Oscar Anibal Vicente, Vice Chairman
=============
B E R M U D A
=============
CAPITAL INSURANCE: Files Winding Up Notice to Creditors
-------------------------------------------------------
In the Supreme Court of Bermuda
Companies (Winding-Up)
In the Matter of the Companies Act 1981
Take Notice that a hearing will take place before Her Majesty's
Judges sitting in Chambers at the Sessions House, Parliament
Street in the City of Hamilton on Friday, the 23rd day of May at
9:30 o'clock in the forenoon or so soon thereafter as counsel for
the Official Receiver and Liquidator of the Company (hereinafter
referred to as "the Liquidator") may be heard upon the hearing of
an application by the Liquidator for an Order that this
Honourable Court sanction the Stipulation and Agreement of
Settlement and the Deed of Release and Covenant not to Sue
exhibited to the affidavit of the Liquidator seeks to release all
persons against whom the Liquidator and/or the Company could
assert claims arising under or related to a Reinsurance Cover
Note between the Company and Sphere Drake Insurance Limited and
Sphere Drake Underwriting Management (Bermuda) Limited.
Creditors may obtain a copy of the affidavit of the Liquidator
from the offices of Cox Hallet Wilkinson at its office.
Dated the 16th day of February 2003.
CONTACT: COX HALLET WILKINSON
Attorneys for the Liquidator
Milner House
18 Parliament Street,
Hamilton HM 11, Bermuda
GLOBAL CROSSING: Motion To Approve Pegasus Settlement Agreement
---------------------------------------------------------------
In September 2001, certain of Global Crossing Ltd. Debtors
entered into two separate Commitment Purchase Agreements with
Pegasus Telecom S.A. By entering into the CPAs, the GX Debtors
sought to:
-- reduce the need to build out planned local and domestic
networks by outsourcing Brazilian connectivity requirements
to Pegasus;
-- minimize the cost of access by securing a discount to
market rates for all future purchases from Pegasus; and
-- establish a long-term relationship with Pegasus, a company
that at the time was controlled by the same parties that
control Telemar, one of the largest fixed-line operators in
Latin America.
Michael F. Walsh, Esq., at Weil Gotshal & Manges LLP, in New
York, explains that the provision of capacity and services under
the CPAs is subject to the terms and conditions of the Master
Services Agreements dated as of October 28, 2002 between Pegasus
and SAC Brasil Ltda. and Pegasus and South America Crossing and
Global Crossing Bandwidth Inc.
Pursuant to the CPA dated as of September 3, 2001 between Pegasus
and SAC, Mr. Walsh explains that SAC agreed to purchase and
Pegasus agreed to supply managed bandwidth capacity on Pegasus'
fiber network in Brazil. The purchase price of the capacity and
services was equivalent to $26,000,000. SAC prepaid the non-
refundable purchase price on September 28, 2001, and credits for
capacity and services actually rendered are periodically taken
against this amount. As of December 31, 2002, SAC has drawn down
$750,000 of its original purchase commitment.
Pursuant to the CPA dated as of September 3, 2001 between Pegasus
and GX Bandwidth, Mr. Walsh informs the Court that Pegasus agreed
to purchase and GX Bandwidth agreed to supply managed bandwidth
capacity on GX Bandwidth's international fiber network. The
purchase price of the capacity and services was $23,400,000 for
rights in capacity and services from GX Bandwidth and $2,600,000
for rights in capacity and services from SAC. Pegasus prepaid
the non-refundable purchase price on September 28, 2001, and
credits for capacity and services actually rendered are
periodically taken against this amount. To date, Pegasus has
drawn down $2,400,000 of its original purchase commitment. In
addition, based on current commitments and outstanding orders,
Pegasus will consume an additional $2,600,000 in products and
services by December 31, 2003.
Due to the downturn in the economy, particularly in the
telecommunications sector, Mr. Walsh states that each of the
parties has reconsidered its own requirements for capacity and
services to be purchased from the other party. On July 29, 2002,
after extensive arm's-length negotiations, the Debtors and
Pegasus agreed to a settlement to amend the CPAs and the MSAs,
and executed a Memorandum of Understanding. Pursuant to the
Settlement, the parties agreed to modify the amount of credit
available to GC and Pegasus against the original prepaid purchase
price under the CPAs from $26,000,000 to $5,000,000, to extend
the duration of the agreements, and to include a cross default
provision.
After arm's-length negotiations, on October 28, 2002, Mr. Walsh
relates that the parties executed the First Amendment to the
Commitment Purchase Agreement and Other Covenants, which
terminated the MOU and substantially incorporated its terms into
the CPAs. In connection with the Amendment, on October 28, 2002
the parties executed a letter agreement. The Letter Agreement
provides that, after Bankruptcy Court approval, the CPAs and MSAs
will be deemed obligations of the Debtors' bankruptcy estate so
that breach by the Debtors will give rise to an administrative
expense claim by Pegasus.
Pursuant to this motion, the Debtors ask the Court to approve the
Settlement Agreement.
The salient terms of the Amendment are:
A. Purchase Price: The prepaid purchase price of the capacity
and services purchased under the CPAs and available as
credits to both parties for capacity and services will be
reduced from $26,000,000 to $5,000,000. As a result of
this modification and the capacity already taken down by
each party, the Debtors will have $4,400,000 of capacity
and services available to be drawn down, and Pegasus will
have $2,600,000 of capacity and services available to be
drawn down. Based on current commitments and outstanding
orders aggregating $2,600,000, Pegasus will have consumed
its full $5,000,000 credit commitment by December 31, 2003.
B. Term: The term for consumption of credits of capacity and
services is revised from September 1, 2006 to December 31,
2006.
C. Representations and Warranties: GX acknowledges that
Pegasus is entitled to reimbursement for certain taxes
incurred for the period from September 3, 2001 until
July 31, 2002 amounting to $238,057, which will be paid in
three equal installments of $79,352.33 payable on the 15th
of August, September and October 2002.
D. Cross Default Provisions: The CPAs are amended so that
defaults by a party under one CPA entitle the other party,
subject to certain conditions, to suspend the provision of
capacity and services under the other CPA for the duration
of the disruption.
Mr. Walsh contends that the Amendment is fair and equitable and
falls well within the range of reasonableness as it enables the
parties to avoid unnecessary contract costs that would be
incurred if the parties were required to continue under the
initial terms and conditions of the CPAs. Renegotiating the
original agreement to a more manageable level will allow the
Debtors to reduce the amount of capacity and services required to
be provided to Pegasus, thereby avoiding the necessity of
investing in the additional infrastructure that would be required
to comply with the terms of the CPA. Additionally, the Amendment
enables the Debtors to maintain a good working relationship with
Pegasus.
Mr. Walsh believes that the continued operation of the Debtors
under the existing terms of the CPAs would result in the wasting
of both the Debtors' and Pegasus' resources. In determining to
enter into the Settlement, the Debtors have reviewed and
considered all of the factors pertinent to the approval of a
compromise and settlement. The decline in the telecommunications
industry due to the overall economic downturn has resulted in a
reduction in the level of capacity and services required by all
parties from that which was originally contemplated under the
CPAs. Absent authorization to enter into the Amendment, the
Debtors and Pegasus would be forced to expend and consume
unnecessary resources to maintain their operations, a cost both
parties seek to avoid through the implementation of the
Amendment.
Furthermore, the Debtors believe that they should continue its
business relationship with Pegasus. Currently, Mr. Walsh reports
that the Debtors and Pegasus are involved in numerous contractual
agreements. The inability to implement the terms of the
Amendment would cause a serious deterioration in the Debtors'
business relationship with Pegasus. The Amendment will help the
Debtors foster a harmonious relationship with Pegasus, which
inures to the benefit of their estates.
By assuming the CPAs and MSAs in the context of the Settlement,
the Debtors:
-- obtain the benefit of additional future services tailored
to the current needs of the Debtors business by way of
contract amendments contained in the Amendment;
-- reduce the amount of capacity that they are required to
provide Pegasus under the terms of CPA; and
-- maintain a positive and beneficial relationship with
Pegasus on a going forward basis. (Global Crossing
Bankruptcy News, Issue No. 36, Bankruptcy Creditors'
Service, Inc., 609/392-0900)
GLOBAL CROSSING: Moves To Settle With Service Providers
-------------------------------------------------------
Michael F. Walsh, Esq., at Weil Gotshal & Manges LLP, in New
York, informs the Court that the GX Debtors have constructed the
world's largest privately owned telecommunications network, which
connects customers in nearly every country in the world.
Nevertheless, the Network is not all reaching. The GX Debtors
rely on over 1,100 other telecommunications companies for "last
mile" telecommunications services in areas where they cannot
connect directly to their customers. The services provided by
the Access Providers include the hardware that physically
connects the GX Debtors' network to the networks of the Access
Providers, as well as the ability to send traffic over the Access
Providers' lines. Other than the GX Debtors' banks and
bondholders, the Access Providers are their largest creditor
constituency.
The Access Providers provide services to the GX Debtors, in most
instances, under either interconnection agreements or tariffs
that are filed by the Access Providers with the Federal
Communications Commission. The Access Providers asserted claims
against the GX Debtors totaling $375,000,000 for amounts
outstanding under both interconnection agreements and tariffs.
Mr. Walsh admits that the relationship with the Access Providers
posed a serious challenge to the GX Debtors. On the one hand,
the GX Debtors believed that most of the claims of the Access
Providers did not need to be cured under Section 365 of the
Bankruptcy Code to continue to receive services from the Access
Providers. On the other hand, the GX Debtors wanted to receive
services from these Access Providers long-term. Finally, the GX
Debtors' efforts were constrained by the fear of disruption of
service that would result if even one of the Access Providers
shut off service to them. Significantly, the shut down of the GX
Debtors' Network during the course of the bankruptcy cases would
have negative effects on their relationship with their own
customers and thwart their efforts to attract new customers.
The Debtors negotiated with the Access Providers in an effort to
obviate the need to litigate disputes as part of confirmation of
the Plan. The Debtors' objective in their negotiations with the
Access Providers was to enter into settlement agreements with
each of the Access Providers that would:
-- be global in scope, settling all disputes and all claims
between each Access Provider and its affiliates and the
Debtors arising from the agreements between the parties;
-- establish a cure amount and provide terms for the payment
of the cure amount;
-- modify, restate, assume under a plan of reorganization that
preserves or transfers substantially all of the core
network on a going concern basis, including for the
avoidance of doubt, the Plan, and affirm certain of the
agreements and terminate others, where appropriate, without
incurring additional claims against the estates; and
-- ensure the continued performance of work and the provision
of services or equipment by the Access Providers.
Ultimately, the Debtors were able to reach settlements with
nearly all of their Access Providers.
By this motion, the Debtors ask the Court to approve these
settlements. The Debtors also seek Court approval for certain
payment terms for the cure amounts listed on their Schedules with
respect to those Access Providers that did not settle with them.
Finally, the Debtors seek the Court's authority to assume all
agreements with those Access Providers listed on the Schedules
under a plan of reorganization.
Given the large number of Access Providers with whom the Debtors
do business, Mr. Walsh believes that negotiating a separate
settlement agreement with each Access Provider is not feasible.
Moreover, based on the small dollar amounts involved with respect
to many of the regional Access Providers, expending large amounts
of resources and time in contacting and negotiating individual
settlement agreements would not have been in the best interests
of the Debtors or their estates. Accordingly, the Debtors'
settlement efforts with the Access Providers were divided into
three distinct categories, namely:
-- the Debtors sent settlement letters to all of their Access
Providers except the Regional Bell Operating Companies;
-- the Debtors negotiated with each of the RBOCs and a small
number of other providers, which negotiations culminated in
executed settlement agreements; and
-- the Debtors entered into a settlement agreement with the
National Exchange Carriers Association which governs the
relationship between the Debtors and 900 of their Access
Providers who are also NECA members.
Mr. Walsh insists that the Settlement Agreements are fair and
equitable and fall well within the range of reasonableness as
they avoid potential litigation between the Debtors and their
Access Providers concerning the cure amount required under
Section 365 of the Bankruptcy Code prior to the Debtors'
assumption of access agreements. The litigation would be
extremely complex and involve a determination of what constitutes
a contract in the telecommunications world, whether
telecommunications agreements, to the extent there are any, may
be severed, and the effect of numerous rulings by the Federal
Communications Commission and state regulatory agencies. Given
the stakes for all parties, this litigation could drag on for an
indefinite period of time. Moreover, the law on whether a tariff
is an executory contract is unsettled and litigation stemming
from this issue would require extensive discovery, including
document production and numerous depositions. These undertakings
would be a drain on the Debtors' monetary resources and could
jeopardize the closing of the Purchase Agreement.
Mr. Walsh believes that the Settlement Agreements greatly benefit
the Debtors' estates because they avoid any disruption of service
for the Debtors by ensuring the continued provision of services
by the Access Providers. In addition, the Debtors are able to
sever and reject agreements, which are no longer needed by the
Debtors' estates without incurring any additional liabilities.
Finally, the Settlement Agreements fix cure costs for access
services in amounts significantly less than those asserted by the
Access Providers. Notably, the savings achieved by the Debtors
in potential cure payments alone exceed $150,000,000.
Finally, under the Settlement Agreements, the Debtors and the
Access Providers agree to release any and all claims against each
other arising prior to the Petition Date. This release dispels
the threat of potential litigation and allows the parties to
resume a normal business relationship.
Mr. Walsh notes that the Settlement Agreements provide that all
access agreements, including tariffs, considered executory
contracts for settlement purposes, will be assumed after the
effective date of the Plan.
Mr. Walsh asserts that the services provided by the Access
Providers are critical to the operation of the Debtors' network.
The Debtors must utilize the services of the Access Providers to
reach customers throughout the world. Moreover, in most areas,
no alternatives exist to the Access Providers. Accordingly,
assumption of the agreements with the Access Providers represents
a sound exercise of the Debtors' business judgment.
The Settlement Letters
Under the terms of the Settlement Letters with 1,066 access
providers, the GX Debtors offered each Access Provider:
-- a cure amount of about 30% of the aggregate prepetition
amount outstanding to each provider as full satisfaction
for all prepetition amounts owed by the Debtors;
-- payment of the cure amount in equal monthly installments
over 12, 18 or 24 months, beginning the first full month
after the effective date of a plan of reorganization; and
-- the continued provision of all services provided to the
Debtors prepetition for so long as the Debtors continue to
comply with all applicable tariff terms and conditions.
For each Access Provider that executed a Settlement Letter, the
Schedules fixed the cure amount at the amount agreed to in the
Letter. Nevertheless, according to the order confirming the
Plan, the payment terms for the cure amounts were to be approved
by separate order.
The GX Debtors seek Court approval to pay each Access Provider
who executed a Settlement Letter, the cure amount listed on the
Schedules in equal monthly installments during the term agreed to
by the parties after the effective date of a plan of
reorganization.
However, a small number of Access Providers listed on the
Schedules did not execute Settlement Letters, but also did not
object to their cure amount or treatment under the Plan.
Accordingly, the cure amount for these Access Providers was fixed
as the amount listed in the Schedules. As with the majority of
Access Providers, the Debtors propose to pay each Access
Providers the cure amount approved by the Court in equal monthly
installments over a 24-month period commencing the first full
month following the effective date of a plan of reorganization.
The Debtors estimate that the aggregate cure amount for all
Access Providers who did not execute a Settlement Letter will not
exceed $111,000. Given the Debtors' cash position, the
relatively small amount involved, and the Debtors' postpetition
history of timely payments, the Debtors propose that these
payment terms constitutes "prompt" cure as the term is used in
Section 365(b)(1)(A) of the Bankruptcy Code.
The Negotiated Agreements
According to Mr. Walsh, the Regional Bell Operating Companies
asserted claims against the GX Debtors aggregating $120,000,000.
The GX Debtors resolved the RBOCs' claims at an aggregate cost of
$75,063,144. Although the GX Debtors executed a separate
settlement agreement with each RBOC, the Negotiated Agreements
with the RBOCs had at least three things in common:
-- a fixed cure amount of 75% of the total undisputed
prepetition amounts outstanding to the RBOC;
-- payment of the agreed cure amount in equal monthly
installments over a 12-month period commencing 30 days
after the effective date of a plan of reorganization; and
-- mutual releases of all claims between the parties.
Moreover, all of the Negotiated Agreements provided that, solely
for settlement purposes, all agreements and tariffs by which the
RBOCs provide services to the GX Debtors would be considered
executory contracts which would be assumed by the Debtors,
subject to certain modifications where appropriate, after the
effective date of a plan of reorganization that preserves or
transfers substantially all of the core network on a going
concern basis, including for the avoidance of doubt, the Plan.
The material individual terms for each of the Negotiated
Agreements are:
A. Qwest Corporation
-- Date of Agreement: January 14, 2003
-- Prepetition Claim: $6,600,000
-- Cure Amount: $4,963,144.05
-- Releases: As of the later of the effective date of the
Settlement Agreement and the effective date of the Plan,
Qwest and the Debtors, on behalf of themselves, their
officers, directors, agents, employees, successors and
assigns fully and finally release, acquit and forever
discharge the other, and their officers, employees,
shareholders, agents, representatives, attorneys,
successors and assigns, from any and all Claims,
demands, obligations, actions, causes of action, rights
or damages under any legal theory, including under
contract, tort, or otherwise, which they now have, may
claim to have or ever had, whether these Claims are
currently known, unknown, foreseen or unforeseen, which
either of the parties may now have or have ever had,
from the beginning of time through and including the
date of this Settlement Agreement relating to the
Agreements including for all products, facilities, and
services provided pursuant to the Agreements, like non-
usage sensitive telecommunications services and "minutes
of use"; provided, however, that the release will not
affect:
a. obligations contained in the Settlement Agreement,
including any claims for payment of administrative
expense obligations of any of the Debtors under the
Agreements, or
b. rejection damage claims, if any, based on the
rejection by the Debtors of any Agreements with Qwest
prior to the effective date of the Plan.
B. Southwestern Bell Telephone Company and its Affiliates
-- Date of Agreement: February 20, 2003
-- Prepetition Claim: $43,660,125
-- Cure Amount: $24,000,000
-- Rejection of Certain Agreements: On the date of the
Settlement Agreement, certain agreements are deemed
terminated and the Debtors will have no further
obligation or liability with respect to these
agreements. SBC forever waives any and all defaults and
claims, including claims based on the termination of
these agreements, existing prior to the date of the
Settlement Agreement with respect to the terminated
agreements.
-- 14-Day Payment Terms: For a period of 12 months after
the effective date of the Plan, the Debtors will pay SBC
within 14 days of receipt of invoice.
-- Switched Access PIU and Cellular Roaming Issues: The
Debtors and SBC resolved all outstanding disputes
regarding PIU and Cellular Roaming issues.
-- Use of SBC Access Services: The Debtors agree to
consider SBC as their vendor of choice for access
services and will allow SBC to actively compete for the
provision of any services to the Debtors in SBC
territories.
-- Releases: As of the effective date of the Settlement
Agreement, SBC and the Debtors, on behalf of themselves,
their officers, directors, agents, employees, successors
and assigns fully and finally release, acquit and
forever discharge the other, and their officers,
employees, shareholders, agents, representatives,
attorneys, successors and assigns, from any and all
Claims, demands, obligations, actions, causes of action,
rights or damages under any legal theory, including
under contract, tort, or otherwise, which they now have,
may claim to have or ever had, whether these Claims are
currently known, unknown, foreseen or unforeseen, which
either of the parties may now have or have ever had,
from the beginning of time through and including the
date of this Settlement Agreement; provided, however,
that the release will not affect obligations contained
in the Settlement Agreement or that survive the
Settlement Agreement.
C. Verizon Communications, Inc.
-- Prepetition Claim: $46,000,000
-- Cure Amount: $33,084,320
-- 14-Day Payment Terms: For a period of 12 months after
the effective date of the Plan, the Debtors will pay
Verizon within 14 days of receipt of invoice.
-- Consolidation of Billing: Verizon agrees to work
cooperatively with the relevant Debtor entity to effect
a reasonable consolidation of its billings to the
Debtors, including consolidating BANs and the number of
invoices sent to the Debtors on a monthly basis.
-- Notice of Default: If any cure payment is not timely
made, Verizon thereafter will be entitled to deliver a
notice of nonpayment to the Debtors, and if the full
amount of the payment then due and owing is not paid to
Verizon within 5 business days of delivery of this
notice of non-payment, then the full unpaid balance of
the cure amount will immediately become due and payable
in full, without further notice or the requirement of
any further action by Verizon, and, in addition to any
of its other rights and remedies under the agreements,
Verizon will be entitled as against the Debtors to
pursue termination of the delivery of services under the
Agreements in accordance with the terms of these
Agreements.
-- No Credit Support to Others/Other Terms: Each of the
Debtors represents to Verizon that it has not provided
any form of credit support to any other
telecommunications provider in connection with or
arising from the assumption of their agreements pursuant
to Section 365 of the Bankruptcy Code. Each of the
Debtors further represents to Verizon that no
telecommunication provider has been or will be offered
payment of a larger percentage of its agreed cure claim
than is to be paid to Verizon in this Settlement
Agreement. Each of the Debtors acknowledges that
Verizon is specifically relying on these representations
in making its decision to enter into the Settlement
Agreement, and that, but for these representations,
Verizon would not have entered into the Settlement
Agreement.
-- Releases: As of the effective date of the Settlement
Agreement, Verizon and the Debtors, on behalf of
themselves, their officers, directors, agents,
employees, successors and assigns fully and finally
release, acquit and forever discharge the other, and
their officers, employees, shareholders, agents,
representatives, attorneys, successors and assigns, from
any and all Claims, demands, obligations, actions,
causes of action, rights or damages under any legal
theory, including under contract, tort, or otherwise,
which they now have, may claim to have or ever had,
whether these Claims are currently known, unknown,
foreseen or unforeseen, which either of the parties may
now have or have ever had, from the beginning of time
through and including the date of the Settlement
Agreement, provided, however, that the release will not
affect obligations contained in the Settlement
Agreement.
D. BellSouth Telecommunications, Inc., BellSouth Long
Distance, Inc. and all of their subsidiaries and affiliates
-- Date of Agreement: December 3, 2002
-- Prepetition Claim: $33,261,930.93
-- Cure Amount: $13,000,000
-- 14-Day Payment Terms: For a period of 24 months after
the effective date of the Plan, the Debtors will pay
BellSouth within 14 days of receipt of invoice.
-- Releases: As of confirmation of the Plan, BellSouth and
the Debtors, on behalf of themselves, their officers,
directors, agents, employees, successors and assigns
fully and finally release, acquit and forever discharge
the other, and their officers, employees, shareholders,
agents, representatives, attorneys, successors and
assigns, from any and all Claims, Avoidance Claims,
demands, obligations, actions, causes of action, rights
or damages under any legal theory, including under
contract, tort, or otherwise, which they now have, may
claim to have or ever had, whether these Claims or
Avoidance Claims are currently known, unknown, foreseen
or unforeseen, which either of the parties may now have
or have ever had, from the beginning of time through and
including the Petition Dates, other than Claims arising
under, or related to, any warranties contained in the
Agreements; provided, however, that the release will not
affect obligations contained in the Settlement Agreement
or that survive the Settlement Agreement. In addition,
the parties will dismiss with prejudice, all litigation
pending against the other without further delay.
Mr. Walsh informs the Court that the Debtors also entered into
individual Negotiated Agreements with five other significant
Access Providers who are not RBOCs, but represented $30,000,000
of access claims pending against the Debtors. With respect to
these five providers, Sprint, Interstate FiberNet, Inc. and
ITC^DELTACOM Communications, Inc., Metromedia Fiber Network, Inc.
and Time Warner, the Debtors settled on similar terms contained
in the agreements with the RBOCs, except that the percentage
recovery for each provider was 30% of all undisputed prepetition
amounts outstanding.
Material individual terms for each of the Agreements include:
A. Sprint Communications Company L.P., Sprint Spectrum L.P.
and the Sprint Local Telephone Companies
-- Date of Agreement: December 20, 2002
-- Prepetition Claim: $25,328,843.96
-- Cure Amount: $6,945,000, payable in 18 equal monthly
installments beginning 30 days after the effective date
of the Plan.
-- Releases: Sprint and the Debtors, on behalf of
themselves, their officers, directors, agents,
employees, successors and assigns fully and finally
release, acquit and forever discharge the other, and
their officers, employees, shareholders, agents,
representatives, attorneys, successors and assigns, from
any and all Claims, demands, obligations, actions,
causes of action, rights or damages under any legal
theory, including under contract, tort, or otherwise,
which they now have, may claim to have or ever had,
whether these Claims are currently known, unknown,
foreseen or unforeseen, which either of the parties may
now have or have ever had, from the beginning of time
through and including the date of the Settlement
Agreement; provided, however, that the release will not
affect obligations contained in the Settlement Agreement
or that survive the Settlement Agreement.
B. Interstate FiberNet, Inc. and ITC^DELTACOM Communications
Inc.
-- Date of Agreement: December 20, 2002
-- Prepetition Joint Claims: $1,024,510.67
-- Cure Amount: 286,097.57 for IFN and $21,953.43 for ITC,
payable in 12 equal monthly installments with the
balance payable in one lump sum on March 31, 2004, if
not otherwise paid.
-- Agreement to Provide Identified Services: As part of the
consideration for the Settlement Agreement, Global
Crossing Telecommunications, Inc. and IFN entered into
an agreement whereby GX Telecommunications agreed to
provide data/IP capacity services and wholesale
conferencing services to IFN under preferential pricing
terms.
-- Releases: IFN, ITC and the Debtors, on behalf of
themselves, their officers, directors, agents,
employees, successors and assigns fully and finally
release, acquit and forever discharge the other, and
their officers, employees, shareholders, agents,
representatives, attorneys, successors and assigns, from
any and all Claims, demands, obligations, actions,
causes of action, rights or damages under any legal
theory, including under contract, tort, or otherwise,
which they now have, may claim to have or ever had,
whether these Claims are currently known, unknown,
foreseen or unforeseen, which either of the parties may
now have or have ever had, from the beginning of time
through and including the Petition Date, other than
claims arising under any warranties contained in the
Agreements or applicable law; provided, however, that
the release will not affect obligations contained in the
Settlement Agreement or that survive the Settlement
Agreement.
C. Metromedia Fiber Network, Inc.
-- Date of Agreement: January 14, 2003
-- Prepetition Claims: $1,672,046.54
-- Cure Amount: 123,400 payable in one lump sum on the 30th
day after the effective date of the Plan.
-- Rejection of Certain Agreements: As of January 14, 2003,
certain agreements are deemed terminated and the Debtors
will have no further obligation or liability with
respect to these agreements. MFN forever waives any and
all defaults and claims, including claims based on the
termination of these agreements, existing prior to
January 14, 2003 with respect to the terminated
agreements.
-- Postpetition Settlement: The Debtors will pay $293,000
to MFN without further delay, which would constitute
full satisfaction of all postpetition claims between the
parties through February 28, 2003.
-- PAIX.net, Inc. Settlement: The Debtors will pay $14,900
to MFN in 24 equal monthly installments beginning 30
days after the effective date of the Plan, in full
satisfaction of all postpetition claims through
February 28, 2003.
-- Modified Pricing: As of December 1, 2002, pricing under
all assumed agreements between the parties will be
reduced by 25%.
-- Releases: MFN and the Debtors, on behalf of themselves,
their officers, directors, agents, employees, successors
and assigns fully and finally release, acquit and
forever discharge the other, and their officers,
employees, shareholders, agents, representatives,
attorneys, successors and assigns, from any and all
Claims, demands, obligations, actions, causes of action,
rights or damages under any legal theory, including
under contract, tort, or otherwise, which they now have,
may claim to have or ever had, whether these Claims are
currently known, unknown, foreseen or unforeseen, which
either of the parties may now have or have ever had,
from the beginning of time through and including the
date of the Settlement Agreement, other than claims
arising against the non-debtor subsidiaries of either
party; provided, however, that the release will not
affect obligations contained in the Settlement Agreement
or that survive the Settlement Agreement.
D. Time Warner Telecom Holdings, Inc.
-- Date of Agreement: February 5, 2003
-- Prepetition Claims: $1,756,630.53
-- Cure Amount: $526,989.16
-- Postpetition Administrative Claim for Global
Center/Exodus Circuits: Time Warner will have an allowed
administrative expense claim amounting to $431,000 which
will be paid by the Debtors by allowing Time Warner to
draw from the Debtors' $250,000 deposit for services
provided by Time Warner. The $181,000 remaining balance
will be paid over a 12-month period in monthly
installments of $15,083.33 commencing 30 days after the
effective date of the Plan. For so long as the Debtors
continue to pay all undisputed postpetition amounts
within 14 days of receipt of invoice until the effective
date of the Plan, the Debtors will not be required to
replenish the deposit. After the Plan of
Reorganization, Time Warner will be paid in accordance
with the Master Services Agreement, which the parties
will attempt to renew under terms mutually agreeable to
both parties.
-- Prepetition Claims: In the event the Debtors do not
assume the Agreements, Time Warner will have an allowed
general unsecured claim amounting to $1,756,630.53 in
the Debtors' Chapter 11 cases.
-- Releases: Time Warner and the Debtors, on behalf of
themselves, their officers, directors, agents,
employees, successors and assigns fully and finally
release, acquit and forever discharge the other, and
their officers, employees, shareholders, agents,
representatives, attorneys, successors and assigns, from
any and all Claims, demands, obligations, actions,
causes of action, rights or damages under any legal
theory, including under contract, tort, or otherwise,
which they now have, may claim to have or ever had,
whether these Claims are currently known, unknown,
foreseen or unforeseen, which either of the parties may
now have or have ever had, from the beginning of time
through and including the Petition Dates, other than
claims arising under any warranties contained in the
Agreements or applicable law; provided, however, that
the release will not affect obligations contained in the
Settlement Agreement or that survive the Settlement
Agreement.
NECA Settlement
Mr. Walsh reports that 972 of the GX Debtors' Access Providers
are members of National Exchange Carriers' Association. In the
aggregate, these entities asserted claims against the GX Debtors
totaling $42,840,453. The GX Debtors negotiated a settlement
agreement with NECA, on behalf of its member entities, whereby
NECA would serve as a clearinghouse for receiving and making
payments on behalf of its member entities. To that end, NECA
obtained consent forms from each of the NECA Entities to enter
into the Settlement Agreement with the GX Debtors.
The salient terms of the NECA Agreement are:
A. Continuation and Payment for Services Provided by the NECA
Entities: The NECA Entities agree to continue to provide
all telecommunication services currently being provided to
the Debtors, subject to the Debtors' continued payment on a
timely basis in accordance with the terms of the
agreements. Any future products or services provided by
the NECA Entities pursuant to the agreements will be paid
for by the applicable Debtor in the ordinary course of
business and in accordance with the agreement price in the
applicable agreement and subject to any change in the
applicable tariff.
B. Pricing of Services Offered by the Debtors: The Debtors
agree to provide the NECA Entities with preferred pricing
for Data/IP Capacity and Wholesale Conferencing Services
until the cure payment is paid in full.
C. Assumption of the Agreements: The Debtors agree to assume
all agreements with the NECA Entities after the effective
date of the plan. After assumption, the Debtors will be
authorized to pay a $12,180,197.97 cure payment, provided
that NECA provides the Debtors with a copy of an
Authorization Form for each NECA Entity. Notwithstanding
anything to the contrary contained in the Settlement
Agreement, the Debtors will be entitled to reduce the cure
payment by the amount of the cure payment attributable to
each NECA Entity for which NECA has not procured or
provided an Authorization Form to the Debtors on or before
the effective date of the plan until NECA provides
Authorization Form. The cure amount will be paid to NECA,
on the NECA Entities' behalf, in 24 equal and consecutive
months with the first payment due 30 days after the
effective date of the plan and each subsequent installment
payment due 30 days thereafter. If any monthly payment is
not timely made, NECA will be entitled to deliver a notice
of nonpayment to the Debtors, and if the full amount of the
remaining unpaid balance of the cure payment then due and
owing is not paid to NECA within 5 business days of
delivery of this notice of non-payment, the NECA Entities
will be entitled to exercise any rights and remedies
available to them under their agreements and under
applicable law. Except for the cure payment, no payments
will be required in connection with or arising from the
assumption of the agreements pursuant to Section 365 of the
Bankruptcy Code or otherwise, and the Parties forever waive
any and all defaults existing prior to the effective date
under the agreements.
D. Payments by NECA to the NECA Entities: It will be NECA's
sole and absolute responsibility to disburse the monthly
cure payments to the NECA Entities as it deems appropriate.
After receipt by NECA of each monthly cure payment, the
Debtors will have no further obligations or liabilities,
under the Settlement Agreement or otherwise, with respect
to these payment, including in the event of delay or
nonpayment of the amounts by NECA to the NECA Entities.
E. Indemnification: NECA agrees to indemnify, hold harmless,
and reimburse the Debtors and their officers, employees,
shareholders, agents, representatives, attorneys,
successors and assigns, for any and all current or future
liabilities and payments of money arising out of or in
connection with:
-- any assertion by any NECA Entity that NECA was not
authorized to execute the Settlement Agreement on the
Entity's behalf or that the execution of the Settlement
Agreement on the Entity's behalf exceeds NECA's
authority as agent for the Entity; or
-- an assertion by an Entity that despite payment of a
monthly cure payment by the Debtors to NECA, the Entity
has not received from NECA that portion of the monthly
cure payment to which it is entitled.
NECA further agrees to reimburse the Debtors promptly after
request for all reasonable expenses after presentation of
an invoice by the Debtors in connection with the
investigation of, preparation for, defense of, or providing
evidence in, any commenced or threatened action, claim,
proceeding or investigation or any collection efforts
undertaken by the Debtors against NECA or a NECA Entity;
provided, however, that prior to incurring any expense
reimbursable, the Debtors will:
-- notify NECA in writing of any assertion;
-- provide NECA with a copy of any written communication by
a Member to the Debtors which the Debtors claim gives
rise to indemnification; and
-- provide NECA with five Business Days in which to resolve
the Entity's assertion to the Debtors' satisfaction.
F. Releases: As of the effective date of the Settlement
Agreement, the NECA Entities and the Debtors, on behalf of
themselves, their officers, directors, agents, employees,
successors and assigns fully and finally release, acquit
and forever discharge the other, and their officers,
employees, shareholders, agents, representatives,
attorneys, successors and assigns, from any and all Claims,
demands, obligations, actions, causes of action, rights or
damages under any legal theory, including under contract,
tort, or otherwise, which they now have, may claim to have
or ever had, whether these Claims are currently known,
unknown, foreseen or unforeseen, which either of the
parties may now have or have ever had, from the beginning
of time through and including the Petition Date; provided,
however, that the release will not affect obligations
contained in the Settlement Agreement.
G. Side Letter: On January 10, 2002, the Debtors executed a
side letter with NECA which provided that NECA would
receive an up-front payment, on the effective date of the
Plan, of 1% of the aggregate cure payment under the
Settlement Agreement in return for its services with
respect to the Settlement Agreement. (Global Crossing
Bankruptcy News, Issue No. 37, Bankruptcy Creditors'
Service, Inc., 609/392-0900)
GLOBAL CROSSING: Motion To Approve Techtel Settlement Agreement
---------------------------------------------------------------
Paul M. Basta, Esq., at Weil Gotshal & Manges LLP, in New York,
recounts that in September 2001, certain of GX Debtors entered
into two separate deposit agreements with Techtel LMDS
Comunicaciones Interactivas S.A. By entering into the Deposit
Agreements, the Debtors sought to:
-- reduce the need to build out planned local and domestic
networks by outsourcing to Techtel connectivity
requirements in Argentina via Techtel's network; and
-- minimize the cost of access by securing discounts to market
rates for all purchases of products and services from
Techtel.
Pursuant to the Deposit Agreement dated as of September 28, 2001
by and between Techtel and GX SAC Argentina S.R.L., Mr. Basta
relates that GX Argentina agreed to pay a $2,500,000 non-
refundable deposit plus 21% VAT, totaling $3,025,000 towards the
purchase price of various services to be provided by Techtel.
Pursuant to the terms of the Deposit Agreement, the GX Deposit
may be used by Global Crossing or its affiliates toward the
purchase price of any Services in the city of Buenos Aires,
Argentina, during the period commencing on September 28, 2001 and
ending on September 28, 2004. GX Argentina has consumed
$608,165.37 in Services, including those provided on the Techtel
Network, and $2,416,834.63 remains available for drawdown prior
to the GX Deadline.
Pursuant to the Deposit Agreement, dated as of September 28,
2001, by and between Techtel and Global Crossing Europe Limited,
Mr. Basta explains that Techtel agreed to pay a $2,100,000 non-
refundable deposit towards the purchase price of rights with
respect to capacity and services on the Debtors' Network and off-
net capacity. The Techtel Deposit was to be used by Techtel or
its affiliates toward the purchase price of capacity purchased
and activated by Techtel during the period commencing on
September 28, 2001 and ending on September 28, 2002, in
accordance with the terms and conditions set forth in the
Capacity Purchase Agreement entered into subsequent to the date
of the Techtel Deposit Agreement. Techtel has consumed
$845,259.39 -- excluding taxes -- of capacity, and $1,254,740.61
was not used by Techtel prior to the Techtel Deadline.
Due to the downturn in the economy, particularly in the
telecommunications sector, Mr. Basta states that the Debtors have
reconsidered their requirements for capacity and services. After
extensive arm's-length negotiations, the GX Parties and Techtel
entered into a Settlement Agreement, dated as of November 11,
2002 to resolve all issues related to the Deposit Agreements.
Pursuant to the Settlement Agreement, the parties agreed to
modify the amount of credit available to GX Argentina against the
original prepaid purchase price under the Techtel Deposit
Agreement and to extend the time within which GX Argentina may
consume those remaining credits. In addition, Techtel agreed to
release GX Europe from any claims in connection the Techtel
Deposit Agreement, including claims with respect to Techtel's
unused commitment credits.
Pursuant to this motion, the Debtors ask the Court to approve the
Settlement Agreement.
The salient terms of the Settlement Agreement are:
A. Global Crossing Parties: Global Crossing Europe Limited and
GC SAC Argentina S.R.L.
B. Techtel Parties: Techtel LMDS Comunicaciones Interactivas
S.A.
C. Modification of Credits: The parties agree that as of
November 11, 2002, GX Argentina has a credit to be used in
connection with services over the Techtel Network of
$1,162,094.02, including taxes.
D. Term: The GX Deposit may be used by Global Crossing or its
affiliates towards the purchase price of services from
Techtel and will not expire until fully used by Global
Crossing.
E. Release: Techtel and all of its subsidiaries and affiliates
releases and forever discharges GX Europe and its
shareholders, affiliates, subsidiaries, employees,
officers, directors, successors and assigns, from all
claims, damages, costs, expenses and liabilities, including
releasing GX Europe from a claim in connection with the
Techtel Deposit Agreement, including any claim with respect
to Techtel's unused commitment credits.
Mr. Basta points out that the decline in the telecommunications
industry due to the overall economic downturn has resulted in a
reduction in the level of capacity and services required by the
Debtors from that was originally contemplated under the Deposit
Agreement. The Settlement Agreement enables the Debtors to
extend the period indefinitely within which the GX Deposit may be
used towards the purchase of the Services from Techtel. In
addition, the Settlement Agreement provides for the release by
Techtel of GX Europe of any claims in connection with the Techtel
Deposit Agreement and any unused commitment credits associated
therewith.
Although pursuant to the terms of the Settlement Agreement, the
Debtors' remaining credit will be reduced from $2,416,834 to
$1,162,094, the Debtors do not require sufficient services from
Techtel by the GX Deadline to utilize the existing credit.
Absent the Settlement Agreement, Mr. Basta is concerned that a
significant portion of the GX Deposit will expire unused.
By assuming the obligations under the GX Argentina Deposit
Agreement in the context of the Settlement Agreement, the
Debtors:
-- obtain the benefit of applying the GX Deposit as payment
for future services; and
-- maintain a positive and beneficial relationship with
Techtel on a going-forward basis.
Considering the benefit to the estates accruing from the
assumption, the Debtors determined, in their business judgment,
to assume the GX Argentina Deposit Agreement, as amended. (Global
Crossing Bankruptcy News, Issue No. 36, Bankruptcy Creditors'
Service, Inc., 609/392-0900)
TYCO INTERNATIONAL: Two Executives Face Arrest in Mexico
--------------------------------------------------------
Two executives of Tyco International, Ltd. are facing fraud
charges in Mexico, for their handling of the Company's ADT
security-alarm operations in the country. In fact, according to a
report by the Associated Press, warrants have been issued for
Phillip McVey, president of Tyco Fire & Security Latin America,
and Patricio Gonzalez, head of ADT's Mexican operations on March
6.
"Under our contracts with (security alarm) dealers, there is an
arbitration clause that calls for an arbitrated resolution to
this, and we're prepared to do that," said Tyco spokesman Gary
Holmes. "But these dealers have abused the Mexican justice system
to leverage it into a criminal case."
"We have confidence this dispute will be resolved in favor of our
employees. Meantime, we're doing everything we can to protect our
employees and resolve this matter," he added.
Miami lawyer David Hart said that part of the action is to get
the Company's attention, but they were legitimate criminal
claims, nevertheless.
"There are plenty of examples of people who may have civil
litigation, and discover there is some criminal element to a case
and bring it to authorities who have the responsibilities to act
upon it," he said. He added that the contracts that all for
arbitration are void because of actions taken by the company.
Atty. Hart, who represents four of the largest dealers in Latin
America, said that his clients claim losses of more than US$0
million.
CONTACT: Gary Holmes
Phone: 212-424-1314
TYCO INTERNATIONAL: ADT Division Under Increasing Scrutiny
----------------------------------------------------------
The pressure Tyco International Ltd.'s ADT security alarms
business is building as news of its accounting problems and
contract disputes pose a threat on Tyco's efforts to regain
investor confidence.
Last week, company executives said that ADT's decentralized
operations pose a signi.ficant threat to Tyco because they
escaped close scrutiny under former senior management
Adding to the pressure on ADT is the number of court claims it
faces in Mexico and Australia. Fox News reported that the
Australian lawsuit accused ADT of changing contracts without
approval and removing funds earmarked for marketing and
development.
According to the report, Tyco has made a number of changes to a
program that pays independent security companies to land
customers and install alarm equipment for ADT. These actions have
rankled current and former ADT independent dealers throughout the
world.
Furthermore, Tyco acknowledged that ADT, whichc was expected to
generate about US$11 billion in revenue this year, have booked
revenue prematurely, failed to write off equipment on
disconnected accounts and signed up customers with low credit
scores.
About US$3.7 billion has been spent on the expansion of ADT's
independent dealer program, including US$750 million this year.
Tyco spokesman Gary Holmes was quoted by Fox News saying ADT's
trouble in Mexico have nothing to do with the unit's European
operations.
An earlier report from the Troubled Company Reporter-Latin
America indicated that Tyco will launch an investigation on the
books of its smaller units. Almost all of these units were beyond
the scope of the auditing of Tyco's outside auditor
Pricewaterhouse Coopers, and the company's internal auditors.
VOYAGER SECURITIES: Notice to Creditors of First Meetings
---------------------------------------------------------
In the Supreme Court of Bermuda
Companies (Winding-Up)
No. 320, 321, 322,and 323 of 2003
In the Matter of the Companies Act of 1981
And in the Matter of Voyager Securities Ltd. (in Liquidation),
Voyager Management (Bermuda) Ltd. (in Liquidation),
Voyager Financial Services Ltd. (in Liquidation),
Voyager International Venture Alliance Ltd. (in Liquidation)
(Under the order for Winding-Up the above-named Companies dated
the 27th of September 2002.)
Notice is hereby given that the First Meetings of Creditors in
the above matters will be held at the offices of:
PricewaterhouseCoopers
Dorchester House,
7 Church Street,
Hamilton, Bermuda
on the 26th day of March 2003 at 10:30 a.m., 11:30 a.m., 12:30
p.m. and 2:30 p.m. respectively.
Forms of the Proof of Debt and General and Special Proxies are
available from the Official Receiver and Provisional Liquidator.
To entitle you to vote thereat your Proof of Debt and proxy must
be lodged with the Official Receiver and Provisional Liquidator
at the offices of
PricewaterhouseCoopers
Dorchester House,
7 Church Street,
P.O. Box HM1171
Hamilton, Bermuda
marked for the attention of Ian Ridge not later than 5:00 o'clock
in the afternoon of 25th day of March 2003. Those documents sent
by fax (441-295-1242) before the allotted time will be accepted
by the Official Receiver and Provisional Liquidator.
Dated this 14th day of March 2003.
===========
B R A Z I L
===========
CESP: To Hold General Assembly April 7
--------------------------------------
Brazilian power company Companhia Energetica de Sao Paulo (Cesp)
will hold a general shareholders' assembly on April 7 to decide
if holders of the US$150 million in notes will accept a proposal
to change the terms and conditions of the commercial papers
maturing in 2005.
Dow Jones recalls that the Company is seeking to repay US$30
million, or 20% of the total amount, on May 9, and leave the rest
to be paid on May 9, 2005. However, investors would be able to
get the remaining US$120 million on Jan. 30, 2004, if Cesp fails
to refinance at least 80% of two other issuances by Nov. 28,
2003. These are: US$300 million with an early repayment deadline
on March 4, 2004, and EUR200 million coming due on Feb. 27, 2004.
Cesp wants to extend the deadline of both issuances to "at least
2006," the Company said in the statement. JP Morgan Chase has
been hired to help Cesp restructure its debt burden.
The cash-strapped company must repay around BRL2.6 billion of
debt this year.
Last year, Cesp's losses quadrupled as the cost of financing its
foreign currency bonds soared.
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
MRS LOGISTICA: Announces Improved 4Q02 Results
----------------------------------------------
MRS LogĦstica S.A., one of the largest railroad concessionaires
in Brazil, announces its results for the fourth quarter of 2002.
MRS transported 20.2 million tons in 4Q 2002, same volume
achieved in 3Q 2002 and 16.1% higher when compared with the same
period of 2001. After achieving successive transportation records
during 3Q 2002, the Company surpassed the 7 million tons/month
mark in October. Total volume transported in 2002 reached 74.4
million tons, an 8.2% increase over the 2001 figure.
The effort in reaching new markets and the implementation of new
transportation flows were responsible for an impressive growth in
the general cargo segment, which attained 19.7 million tons in
2002, against 17.8 million tons in 2001 (11% increase).
Total production reached 29.4 billion net ton kilometers (net
Tkm), 7.3% greater than the 27.4 billion net Tkm produced in
2001.
Gross revenue in 4Q 2002 reached R$444.9 million, including
R$184.4 million in additional revenues resulting from an
agreement among MRS and its captive clients, which reimbursed the
Company for foreign exchange losses occurred in 1999 and 2001.
Total revenue for the year reached R$ 1.07 billion, an increase
of 63.5% when compared to 2001. The Company was also reimbursed
by its captive clients for non-budgeted cash disbursements
resulting from increases in foreign exchange and fuel prices
throughout the year. This generated additional revenues of R$16
million in December, totaling R$26 million throughout the year,
reaffirming the consistency of MRS' tariff policy. Average tariff
throughout 2002, reached R$11.96/ton, representing a 25% in
relation to 2001. General materials costs in 2002 showed a 54.3%
increase with regards to 2001, as a consequence of the rise in
the acquisition costs of rails and imported parts for
locomotives, due to the devaluation of the Real along the year.
Fuel and lubricant costs in 4Q 2002 were increased by 19.4% with
regards to the previous quarter as a result of the increase in
fuel's unitary price of 30.4% in the period.
With regards to 2001, fuel costs increased by 30%, despite the
continuing efforts towards fuel consumption reduction.
EBITDA in 2002 amounted to R$ 434.8 million, 165% higher than the
R$ 163.9 million figure reported in 2001. EBITDA margin
(EBITDA/Net Revenue) increased from 27.2% to 44.4% from 2001 to
2002, as a consequence, not only from the additional revenue in 4
Q 2002, but also from Management's effort in order to maximize
the Company's financial resources, through cost reductions and
productivity gains.
Operating profit in 2002, before financial effects, reached
R$379.9 million, 222% higher than in 2001. Despite the
significant improvement in commercial and operational aspects,
the Company showed a net loss of R$166.8 million in 2002. This
negative result was caused, basically, by the effects of the net
foreign exchange and monetary variations throughout the year,
responsible for a R$323.7 million net loss. In addition, the
result was also negatively affected by the amortization of R$
76.8 million from the deferment of the currency devaluations
occurred in 1999 and 2001.
With the objective of reducing the effects of foreign exchange
fluctuations in its Income Statement, the Company contracted
hedge operations in December, protecting 50% of the its long term
Dollar denominated liabilities.
Among operational aspects, the return of 9 GE C-36 locomotives
that were rented to Ferronorte should be emphasized. This
expanded the average number of available locomotives to 260 in
the quarter. Among commercial aspects, it should be highlighted:
- MRS and Cosipa signed a 5-year contract to transport iron ore
from the Quadril tero Ferrifero (MG) to Mogi das Cruzes -
Terminal Terminal (SP), with annual volumes of 2.2 million tons,
in addition to the 4.5 million tons of iron ore expected to be
shipped to Cosipa through its Cubatao Terminal (SP).
- Development of the Companhia Sider£rgica de Tubarao - CST
Logistic Project to transport steel products from the CST mill in
Vit˘ria (ES) to the Sao Paulo market (100 thousand tons/year) and
to the CSN mill in Volta Redonda (RJ) (200 thousand tons/year).
CONTACT: MRS LOGISTICA S.A.
Praia de Botafogo, 228/1201-E
22250-906 - Rio de Janeiro - RJ
Brasil
Contacts: Eduardo Cassinelli - Treasurer Marco Andre
Guimaraes - Financial Manager
Maria Lucia Silveira - Financial Analyst
Tel.: 55-21-2559-4600
Fax: 55-21-2552-2635
E-mail: daf@mrs.com.br
Home-Page: www.mrs.com.br
=========
C H I L E
=========
ALUSA: Cuts Losses In 2002
--------------------------
Chile's Alusa, a producer of PVC and aluminum foil packaging,
narrowed its loss to CLP1.61 billion in 2002 from a loss of
CLP4.40 billion in the previous year, reports Business News
Americas. However, sales last year dropped to CLP40.8 billion
from CLP43.9 billion in 2001.
Alusa is a subsidiary of Madeco, which is undergoing a financial
restructuring. At one point, Madeco, which is controlled by
Chile's Luksic group, was thought to have included the offloading
of Alusa as part of the restructuring process.
Alusa also has operations in Argentina and Peru.
COEUR D'ALENE: Reports Record 4Q02, FY `02 Silver Production
-------------------------------------------------------------
Coeur d'Alene Mines Corporation (NYSE:CDE):
-- New South American operations driving improved performance
-- Majority of remaining indebtedness restructured
Highlights
-- Record silver production of 4.9 million ounces during the
fourth quarter, up 53 percent from a year ago at an average cash
cost per ounce of $2.06.
-- Full year silver production a new record of 14.8 million
ounces, up 36 percent over the previous year at an average cash
cost per ounce of $2.89.
-- Fourth quarter gold production of 43,674 ounces, up 118
percent from last year's period.
-- Full year gold production of 117,114 ounces, up 22 percent
from previous year.
-- Silver cash costs down 22 percent for the year.
-- Cerro Bayo/Martha mines in South America commenced production
and produced nearly two million ounces of silver in fourth
quarter at cash cost of $0.05 per ounce, net of gold sold as a
cash by-product.
-- Discovery of 13.9 million additional high-grade silver
equivalent ounces of reserves and 8.3 million ounces of resources
at Cerro Bayo and Martha, with average discovery cost of $0.07
per ounce.
-- Debt reduced 42 percent from previous year. Additional capital
raised in February will further restructure outstanding
indebtedness.
"We are extremely pleased with Coeur's achievements in 2002,
culminating in the fourth quarter, when our new generation of
mines -- Cerro Bayo and Martha -- more than doubled their silver
production from the third quarter. These mines are very low cost,
high grade operations that will generate strong operating cash
flow," said Dennis E. Wheeler, Chairman and Chief Executive
Officer. "We expect to build on our very successful exploration
results in South America and continue adding more high-grade
silver and gold ounces at low cost. At the same time, we have now
neared completion of our debt restructuring efforts, and Coeur's
much stronger balance sheet now positions us to actively pursue
new growth opportunities."
Financial Summary
Coeur d'Alene Mines Corporation (NYSE:CDE) reported Tuesday
fourth quarter 2002 revenue of $28.8 million, an increase of 71
percent over reported revenue of $16.8 million in the fourth
quarter of 2001. The improvements were due primarily to the
contributions from the Company's new low-cost Cerro Bayo and
Martha mines in South America, which began production in the
second quarter of 2002. For the full year 2002, the Company
reported revenue of $94.5 million, up 31 percent from the $71.9
million in revenue the previous year.
During the fourth quarter 2002 the Company reported a net loss of
$46.1 million, or $0.44 per share, due primarily to a previously
reported $19.0 million write-down in the carrying value of Coeur
Silver Valley's Galena Mine, and $16.1 million related to the
early retirement of 6 3/8% and 7 1/4% debentures in the fourth
quarter. Excluding these items, Coeur's fourth quarter net loss
was $11.0 million, or $0.10 per share. In the year earlier fourth
quarter, the Company had a net loss of $18.3 million, or $0.41
per share.
For the full year 2002, the Company reported a net loss of $81.2
million, or $1.04 per share, which included the write down of
mining properties of $19.0 million and a loss on the early
retirement of debt of $19.1 million. In the previous year, Coeur
reported a net loss of $3.1 million, or $0.07 per share, which
included a gain of $48.2 million due to the early retirement of
debt.
Coeur's mines continued to operate more efficiently during the
fourth quarter and for the entire year, a trend that is expected
to continue into 2003 as production increases from the Cerro Bayo
and Martha mines. Cash used in operating activities was $789,000
during the fourth quarter, which represents a significant
improvement from the $4.1 million of cash used in operating
activities during last year's fourth quarter. During 2002, $8.5
million was used in operating activities compared to $29.9
million during 2001.
The Company's balance sheet continues to strengthen considerably.
Year-end total debt was $84.5 million, down from $145.5 million
at the end of 2001. On January 28, 2003, Coeur reported a further
$36.4 million reduction in its outstanding indebtedness. On
February 21, 2003, Coeur announced the private placement of $37.2
million of 9% Senior Convertible Notes due February 2007. The
proceeds from this financing of $33.8 million will be used to
further redeem $22.4 million of the Company's 6 3/8% Subordinated
Convertible Debentures due in January 2004. The balance will be
available for general corporate purposes. At December 31, 2002,
shareholder's equity stood at $47.3 million at the end of the
quarter, up from $26.8 million at December 31, 2001, primarily as
a result of the conversions of debt to equity.
For the fourth quarter, Coeur realized an average silver price of
$4.53 per ounce compared to an average realized price during last
year's fourth quarter of $4.34 per ounce. For its gold
production, Coeur realized an average price of $324 per ounce
during the fourth quarter compared to an average gold price of
$275 per ounce during the same period last year.
Overview of Operations
South America
Cerro Bayo (Chile)
-- 2.0 million ounces of silver and 24,209 ounces of gold
produced during the fourth quarter, up 124 percent and 61
percent, respectively, from the third quarter.
-- Extremely low cash costs of $0.05 per ounce of silver during
fourth quarter, net of gold sold as a cash by-product.
-- Additional high-grade vein structures intersected during
recent drilling program.
-- In approximately nine months of operation in 2002, production
of 3.1 million ounces of silver and 45,209 ounces of gold at cash
cost of $0.38 per ounce of silver, net of gold sold as a cash by-
product.
-- Exploration added 16.9 million silver equivalent ounces of
reserves and resources at an average discovery cost of $0.08 per
ounce.
During its second full quarter of operations, Cerro Bayo more
than doubled its silver production and increased gold production
61 percent compared to the third quarter. Cash costs during the
fourth quarter were $0.05 per ounce of silver, net of gold sold
as a cash by-product, 95% lower than the third quarter.
During the second half of 2002, the Company's aggressive
exploration drilling added a total of 16.9 million silver
equivalent ounces of reserves and resources at an average
discovery cost of $0.08 per silver equivalent ounce. The
exploration included 87,250 feet of core drilling in five new
veins north and south of the Cerro Bayo mine. The most
significant of the new discoveries involved the Javiera vein,
which has a new portal scheduled for construction in the first
quarter of 2003 with mining to commence by the fourth quarter.
At the end of 2002, Coeur also discovered the Wendy vein, 50 feet
west of the Javiera vein. Visible from the surface for over 2,600
feet, the Wendy is similar in size to the Javiera vein. The
initial drill hole at Wendy intersected 7.5 feet of 67.5 silver
equivalent ounces per ton. The Company plans an active drill
program in this area during 2003.
Because of the exploration success in 2002, the Company increased
its holding of prospective ground by 10 percent to 103 square
miles around Cerro Bayo. The excellent exploration potential
there has justified increasing the exploration budget for 2003
nearly 30% to $1.8 million, which would include over 100,000 feet
of drilling over 300 core holes.
Martha (Argentina)
-- Hauled approximately 9,000 tons of ore to Cerro Bayo averaging
126 ounces per ton silver during the fourth quarter
-- New reserves discovered totaled approximately 5.1 million
silver equivalent ounces at an average grade of 150 silver
equivalent ounces per ton
-- Average discovery cost of $0.03 per silver equivalent ounce
During the fourth quarter, the amount of high-grade ore hauled
from Martha to Cerro Bayo for processing tripled from the amount
hauled during the previous quarter. Already the highest-grade
silver mine in the world, Martha added additional reserves
through aggressive drilling during the fourth quarter.
Exploration success was outstanding during the second half of
2002, focusing primarily on the Martha vein located within the
100 acre Martha Mine property. The Martha vein, which is exposed
for over one mile, is one of six presently known veins with very
limited exploration prior to Coeur's ownership. Currently,
reserves discovered along the R 4 Zone of the Martha vein total
27,928 tons averaging 0.12 ounces per ton gold and 143 ounces per
ton silver for a total of 4.2 million silver equivalent ounces.
A select drill intercept in the R 4 Zone has a true thickness of
44 feet of 0.42 ounces per ton gold and 666 ounces per ton of
silver, which equates to a silver equivalent grade of 694 ounces
per ton. An ongoing drill program during 2003 is expected to
expand the high-grade reserve in the R 4 Zone to the southeast.
New reserves discovered on the Martha Mine property during the
second half of 2002 totaled approximately 4,824,187 ounces of
silver and 4,325 ounces of gold averaging 150 ounces of silver
equivalent per ton. They were discovered at a cost of $0.03 per
silver equivalent ounce.
Ground reconnaissance has also commenced on Coeur's large land
package in Santa Cruz Province surrounding the Martha Mine, as
well as 90 miles to the north surrounding its Lejano property,
which contains a significant silver resource. Based on the
Company's initial review of its landholdings -- which were
increased in the fourth quarter nearly 50 percent to 334 square
miles -- Coeur believes there is potential to discover over fifty
million silver equivalent ounces on prospects located on this
land package outside the Martha property. With its exploration
success, the Company has increased its 2003 exploration budget
for Argentina five-fold to $0.8 million.
North America
Rochester Mine (Nevada)
-- 1.6 million ounces of silver and 19,465 ounces of gold
produced during the fourth quarter
-- 6.4 million ounces of silver and 71,905 ounces of gold
produced during 2002
-- Cash costs of $2.65 per ounce of silver during the fourth
quarter
-- Full year average cash costs of $2.99 per ounce of silver,
$0.10 per ounce lower than a year ago
Through the course of the 2002, Rochester reduced cash costs
three percent from the previous year, through a variety of
employee-driven process enhancements. The 6.4 million ounces of
silver produced at Rochester was an increase of 69,500 ounces
over 2001. Gold production was 71,905 ounces compared to 78,201
the previous year. Preparations to commence production at the
adjacent Nevada Packard deposit took place in the fourth quarter,
and mining of Nevada Packard has begun in 2003.
During 2003, the Company expects to relocate its existing crusher
facilities to access additional ore reserves. Combined with
mining from Nevada Packard, Coeur now expects mining at Rochester
to continue into 2007, at which time residual leaching is
expected to commence.
During the fourth quarter, the Nevada Mine Association awarded
Rochester 1st place for the safest medium sized mine in the
state.
Coeur Silver Valley - Galena Mine (Idaho)
-- Fourth quarter silver production of 1.3 million ounces
-- Record annual silver production of 5.3 million ounces in 2002,
18 percent higher than last year
-- Full year average cash costs of $4.25, down 37 cents per
ounce, or 8 percent, from the previous year due to mining
improvements
Production continued to increase and costs declined during 2002
at Coeur Silver Valley, due mostly to the introduction of
mechanized mining in select areas of the mine. Silver production
for the year was a record 5.3 million ounces, up 18 percent from
the previous year's 4.5 million ounces. Meanwhile, cash costs
declined from $4.62 per ounce in 2001 to $4.25 per ounce in 2002.
Since acquiring operating control of CSV in 1999, cash costs have
declined nearly 17 percent while production has increased 55
percent.
Changes to the mine plan at Coeur Silver Valley's Galena Mine and
a decline in our expectation for long-term silver prices resulted
in an impairment of $19.0 million during the fourth quarter.
However, we also completed development work in the "upper
country" of the mine to allow the Company to introduce lower cost
long-hole bulk mining in select areas of the mine next year,
which should positively impact cash costs. Coeur is also
conducting an exploration and development program in 2003 to
increase the mine's reserves and resources.
Commodity Hedging
Coeur does not currently have any of its silver production
hedged. At December 31, 2002, the Company had 58,000 ounces of
gold sold forward over the next 15 months at an average price of
$333 per ounce.
Coeur d'Alene Mines Corporation is the country's largest silver
producer, as well as a significant, low-cost producer of gold.
The Company has mining interests in Nevada, Idaho, Alaska,
Argentina, Chile and Bolivia.
To see financial statements: http://bankrupt.com/misc/Coeur.htm
GRUPO CB: SVS Approves Mutual Fund Freeze
-----------------------------------------
Due to a breakdown in the chain of payments, Chilean financial
group Grupo CB asked the country's securities regulator, the SVS,
to freeze the group's mutual funds CB Equilibrio, CBEmpresarial
and CB Dinamico, reports Business News Americas. The SVS,
according to Business News Americas, has already accepted the
formal request.
In a statement sent to SVS chairman Alvaro Clarke, the group said
that the breakdown in the chain of payments is caused by "recent
public events that have gravely affected the financial system."
The group was referring to the scandal involving the theft of
CLP70 billion (US$95mn) in CDs from the vault of industry
development agency CORFO. The fraud was orchestrated by the
chairman of intervened financial services group Inverlink, and
involved the participation of CORFO money desk manager Javier
Moya.
According to the group's executives, the fact that CB traded
secondary time deposits belonging to Inverlink's mutual fund
subsidiary Qualitas resulted in "the market turning its back" on
CB.
Mr. Clarke also added that an official audit will take place to
determine any relationship between CB's brokerage activities and
the stolen financial instruments. CB denies any business links
with the development agency.
===============
C O L O M B I A
===============
* World Bank Approves $300M Loan To Support Reform In Colombia
--------------------------------------------------------------
The World Bank approved Tuesday a $300 million loan to support
economic adjustments and macroeconomic stability in Colombia.
This is the first of four programmatic loans designed to give the
Government of Colombia the flexibility to make key changes in
budgetary management, the tax system and in public
administration.
"The Government of Colombia is undertaking an ambitious program
of economic and budgetary reforms, said Isabel Guerrero, Director
of the World Bank's program in Colombia and Mexico. "This
operation is part of a contribution by the World Bank to address
structural barriers and short-term financing needs and thus put
the Colombian economy on a sound footing for the long term."
The Programmatic Fiscal and Institutional Structural Adjustment
Loan provides support to the Government of Colombia at a critical
juncture, as it seeks to resolve the long-standing internal armed
conflict while also addressing the need to create jobs, and
expand education and social services.
Meeting these needs requires a stable tax base, appropriate
budgetary mechanisms and an efficient public administration. This
loan program will enable the Government to overcome short and
medium-term budgetary deficits and tax shortfalls, while also
supporting its efforts to deal with moderate external economic
shocks during a period of fiscal, budgetary and administrative
reform. In turn, economic adjustment will support the goals of
the country's National Development Plan for 2002-2006: security
for all Colombians, sustainable development and employment,
social equity, and modernization of the state.
"Macroeconomic stability, efficient administration, and high-
quality public services-these are the goals Colombia seeks to
achieve, and which the Bank seeks to support with this loan,"
said Fernando Rojas, World Bank Task Manager the Programmatic
Fiscal and Institutional Adjustment Loan.
This variable-rate loan will be disbursed this month and is
repayable over five years starting in May, 2010. Depending on the
progress of planned reforms, a total amount of up to $900 million
in World Bank loans is planned for disbursement in four tranches
by 2006.
The Programmatic Fiscal and Institutional Structural Adjustment
Loan is being pursued under the umbrella of the World Bank
Group's current Country Assistance Strategy (CAS) for Colombia.
That strategy, approved in January 2003, aims to help achieve
rapid and sustainable growth and to give all Colombians a share
in that growth and to build efficient and transparent governance.
The CAS involves project and investment loans of up to US$3.3
billion through June 2006.
===================================
D O M I N I C A N R E P U B L I C
===================================
UNION FENOSA: Aims To Re-capitalize Ailing Local Unit
-----------------------------------------------------
Dominican Republic's Finance Minister Jose Lois Malkum announced
that Union Fenosa has submitted a new proposal to re-capitalize
its ailing local electricity subsidiary Edenorte. According to a
DR1 Daily News report, Union Fenosa seeks to capitalize US$60 -
80 million and is asking the government to inject at least US$30
million.
Based in Spain, Union Fenosa currently controls two-thirds of
power distributors in the Dominican Republic. In December, the
Company sought the government for US$200 million in financial
assistance to help pay the debts of its local unit. The Spanish
firm claimed the subsidiary has piled up RD$14 billion of debts.
===========
M E X I C O
===========
EMPRESAS ICA: Retains German Bank To Raise $750M Project Funding
----------------------------------------------------------------
Mexican construction company ICA authorized German bank West LB
to secure funding of up to US$750 million for the construction of
the 750MW El Cajon hydroelectric project in Nayarit state,
reports Business News Americas. Meanwhile, ICA also has recourse
to US$70 million in funding offered by state-owned Mexican bank
Bancomext.
Mexico's Federal Electricity Commission (CFE) recently awarded
the El Cajon construction contract to Constructora Internacional
de Infraestructura, S.A. de C.V. - a consortium made up of two
ICA subsidiaries (Promotora e Inversora Adisa, S.A de C.V. and
Ingenieros Civiles Asociados), Energomachexport Power Machines
and Peninsular Compania de Constructora, S.A. de C.V.
The bid presented by the consortium was for approximately US$750
million, with a term of completion of 1,620 days.
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
MAXCOM TELECOMUNICACIONES: Names Rene Sagastuy CEO
--------------------------------------------------
Maxcom Telecomunicaciones S.A. de C.V. announced Tuesday that its
Board of Directors has elected Rene S. Sagastuy to the position
of Chief Executive Officer. Mr. Sagastuy who was the Vice
President of Operations of Maxcom for the past two years,
replaces Ing. Fulvio Del Valle who has presented his resignation
at Maxcom effective Tuesday.
Rene joined Maxcom in May of 2001 from Johnson Controls where he
served as Operations Director with responsibilities over 19
manufacturing sites in Mexico. Mr. Sagastuy has also served as
operations, strategic planning, manufacturing and projects
manager and director for diverse companies in Mexico, including
Avex Electronics, AMP Inc. and the Jefferson Smurfit Group
Mexico.
"Rene has been very instrumental in helping Maxcom grow 400% over
the last two years while achieving the highest standard of
excellence in the quality of its service through his leadership
of the operating, engineering, sales and customer care groups.
His appointment as CEO is well earned and is a natural step in
our internal management succession, placing under his leadership
the balance of the company's day-to-day operations," said Adrian
Aguirre, Chairman of the Board of Maxcom.
"I am very excited about this new challenge. I look forward to
working with the entire Maxcom family including employees,
customers, suppliers and shareholders to continue growing and
deploying our business model", said Mr. Sagastuy.
Mr. Sagastuy holds a Bachelor degree in Civil Engineering from
the Universidad Iberoamericana in Mexico City, and a Master
degree in Business Administration from the Instituto Tecnologico
Autonomo de Mexico.
"I also want to express my gratitude to Fulvio. Under his
leadership, Maxcom was able to achieve a number of milestones
which included a rapid increase in the number of lines and the
achievement of a sustainable level of profitability, while at the
same time building a solid management team that allowed the
company to effect this seamless succession plan" added Mr.
Aguirre.
"Maxcom's management team has done a terrific job proving out the
success of the company's business model. Together with the
company's other partners, we look forward to working with Rene
and to give him our full support" said Jacques Gliksberg, a board
member representing Banc of America Equity Partners, Maxcom's
largest shareholder.
"I enjoyed very much this challenging task for the past two
years. From the outset, I set a goal of working and enhancing
this position for a limited period of time. I believe my
objectives were achieved and I appreciate the relationship
developed with the shareholders", said Ing. Fulvio Del Valle.
Maxcom Telecomunicaciones, S.A. de C.V., headquartered in Mexico
City, Mexico, is a facilities-based telecommunications provider
using a "smart- build" approach to deliver last-mile connectivity
to micro, small and medium- sized businesses and residential
customers in the Mexican territory. Maxcom launched commercial
operations in May 1999 and is currently offering local, long
distance and data services in greater metropolitan Mexico City,
Puebla and Queretaro.
PEMEX: Debt Refinancing Includes $500M Dollar Bonds Issue
---------------------------------------------------------
Market sources revealed Tuesday that Pemex Master Trust, a unit
of Mexican state oil monopoly Petroleos Mexicanos, added US$500
million to its existing 8.625% global medium-term notes, which
are due February 2022, in the 144a private placement market,
reports Reuters. The total amount of notes now outstanding is
US$1 billion.
Pemex plans to issue as much as US$3 billion in local and foreign
bonds this year to refinance existing debt and increase spending
on infrastructure in order to boost production. Pemex plans to
sell as much as US$1 billion of foreign currency bonds and US$2
billion of peso-denominated bonds this year, Chief Financial
Officer Juan Jose Suarez said in January.
Morgan Stanley and Goldman Sachs Group Inc. managed the sale.
=================================
T R I N I D A D & T O B A G O
=================================
CARONI LTD.: PM Manning Sees Economic Boom After Restructuring
-----------------------------------------------------------------
Trinidad and Tobago Prime Minister Patrick Manning predicts that
the reorganization of state sugar company Caroni (1975) Ltd. will
bring an "explosion" of new types of economic activity in the
region. The Trinidad Guardian reports that the government
official is also expecting a "major expansion" for Central
Trinidad, which surrounds Point Lisas, an emerging North-South
corridor.
Mr. Manning said that the restructuring would result in "freeing
up of some of the lowest paid workers in the country to get into
far more productive endeavours some on own-account farms,
servicing growing markets for various produce; others in
industries emerging on the periphery of the cane-growing areas."
Mr. Manning explained that the Company will have to be
restructured as the government cannot continue protecting it. He
indicated that buyers may opt to buy sugar from Guyana or
Guatemala, at lower prices.
"This is the case with our state enterprises, Caroni (1975) Ltd,
incidentally one of the highest cost sugar producers in the
world," he said.
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
CARONI LTD.: Workers Halts Work To Clarify VSEP
-----------------------------------------------
Workers of Trinidad and Tobago's state sugar enterprise Caroni
(1975) Ltd. effectively shut down operations at the Ste Madeleine
refinery on Monday as they put down their tools, seeking
clarification of the Voluntary Separation of Employment Plan
(VSEP) the government is offering them.
A report BY the Trinidad Express said that almost 100 daily-paid
workers decided to forego a day's pay in order to discuss working
under contract if they accept the VSEP.
Among the things the workers want to be made clear are
consequences for those who might decide to reject the VSEP offer,
and the basis by which the government would determine the
distribution to land to them. They are also asking for a
guarantee that they will be re-contracted after the VSEP
However, the workers remained waiting until late afternoon, said
the report. In the meantime, cane farmers complained that the
shutdown had caused them millions in losses as tons of unsold
cane are lining up at the scales.
Seukeran Tambie, general secretary of the Cane Producers
Association of Trinidad and Tobago (CPATT), said that cane
formers also lost millions of dollars in cane to unplanned fires.
In related news, Ashton Ramsundar, a member of the workers'
Action Committee, said they Have collected about 2500 signatures
out of the 5000 they need so that their legal adviser Ramesh
Lawrence Maharaj could take court action on their behalf.
=============
U R U G U A Y
=============
* IMF Extends, Modifies Uruguay's Stand-By Credit Arrangement
-------------------------------------------------------------
The Executive Board of the International Monetary Fund (IMF) has
completed the second review under the Stand-By Arrangement with
Uruguay, approved a one-year extension through end-March 2005,
and re-phased projected disbursements over the extension period.
Upon completion of the review, a disbursement of SDR 218.5
million (about US$303 million) became immediately available. The
Executive Board also approved the authorities' request to shift
repayments expectations under the Supplemental Reserve Facility
arising in 2003 to an obligations basis, which shifts SDR 128.7
million (about US$178 million) in payments to 2004.
The current Stand-By Arrangement was initially approved on March
25, 2002 in an amount of SDR 594.1 million (about US$823 million)
for a 24-month period. The arrangement was augmented by SDR 1.16
billion (about US$1.6 billion) on June 25, 2002, and by SDR 376
million (about US$521 million) on August 8, 2002.
In commenting on the Executive Board decision on March 17, 2003,
Eduardo Aninat, Deputy Managing Director and Acting Chairman,
stated:
"Since Uruguay was hit by financial crisis and a deep recession
last year, the authorities have implemented a series of measures
designed to stabilize the economy and create the conditions for
sustained recovery. In particular, fiscal and monetary policy
have been adjusted and important steps have been taken to
restructure the banking system. Although the economy remains in
recession, there are signs that it will bottom out this year, and
financial indicators have stabilized after the severe strains of
last year.
"Nevertheless, the economic and financial situation is still
challenging, reflecting, in particular, the high level of public
debt, the remaining fragilities in depositor confidence, and the
uncertain external environment. To address these vulnerabilities,
the government has reinforced its economic program, with focus on
the critical areas of fiscal policy, banking reforms, and
financing and debt management.
"The fiscal program for 2003 aims at raising the primary surplus
to 3.2 percent of GDP, a strong signal of the authorities'
commitment to prudent macroeconomic policies. Achieving this
target will require strict control over public sector wages and
pensions, while essential social outlays are appropriately being
protected. The authorities are committed to raising the primary
surplus further to around 4 percent of GDP over the medium term
in order to ensure sustainable debt dynamics. Structural fiscal
reforms will be critical to this goal, including comprehensive
tax reform which is part of the agenda for this year.
"Restoring a viable banking system is key to Uruguay's growth
prospects. The resolution of the four banks suspended in mid-2002
is moving into a decisive phase, and the authorities will make
sure that any new or reopened bank is viable and complies with
all prudential requirements. The authorities are proceeding with
the reform of the mortgage bank (BHU), and steps have been taken
to strengthen the regulatory powers of the central bank.
"The authorities are preparing a comprehensive and voluntary
government debt exchange designed to eliminate residual financing
needs during 2003-05 and to achieve a sustainable debt and debt
service profile over the medium term. This proposal is welcomed
as an appropriate step to address Uruguay's financing needs and
debt sustainability in a cooperative approach with creditors. To
meet its objectives and assure the financing of the program, the
debt exchange will need to be completed on a timely basis and
with sufficiently high participation of bondholders.
"The authorities' strengthened program for 2003 represents a
strong and balanced effort to create the conditions for the
resumption of economic growth that merits the support of the
international community," Mr. Aninat said.
***********
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.
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