/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030324.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 Monday, March 24, 2003, Vol. 4, Issue 58 Headlines A N T I G U A & B A R B U D A LIAT: Four CariCom Governments Express Monetary Support A R G E N T I N A COMPANIA MEGA: S&P Assigns $700M Worth of Bonds `raCCC' EDENOR: Majority Controller Sues Former Spanish Owners IMPORTADORA Y EXP.: Fitch Rates Bonds `raD' METROGAS: Argentine Standard & Poor's Rates Bonds `raD' PECOM ENERGIA: Expects Block X Drilling by Mid-April RAGHSA: S&P Argentina Rates $33M of Corporate Bonds as `raB' B E R M U D A TYCO INTERNATIONAL: Aggressive Accounting Results in Cash Charge B R A Z I L CESP: S&P Lowers Ratings to 'CC'; Still on Watch CHAPECO ALIMENTOS: BNDES Refuses To Come To Its Aid ORGANIZACOES GLOBO: Appoints New Director For New Division SABESP: Posts YE2002 Results; Devaluation Eclipses Higher Fees C H I L E GASTACAMA: Negotiates Restructuring With Shareholders INVERLINK: SVS In Hot Water C O L O M B I A AVIANCA: Files for Chapter 11 Protection in S.D.N.Y. E C U A D O R FILANBANCO: To Finalize Plan To Recover $70M of Bad Loans J A M A I C A AIR JAMAICA: FA's Agree To 3% Salary Cut M E X I C O DIRECTV LA: Bankruptcy Filing Leaves Mexican Ops Unchanged PEMEX: Increases Average Daily Production Goal to 3.43 mb/d P U E R T O R I C O CENTENNIAL COMMUNICATIONS: Records Non-Cash Charge Of $189.5M T R I N I D A D & T O B A G O CARONI LTD.: Workers' Union Takes Legal Action Against VSEP U R U G U A Y ANCAP: Seeks To Remain In Market Amid Tough Times BANCO COMERCIAL: Bank Buys Brazilian Credit Cards V E N E Z U E L A PDVSA: El Palito Refinery Resumes Normal Operations - - - - - - - - - - ================================= A N T I G U A & B A R B U D A ================================= LIAT: Four CariCom Governments Express Monetary Support ------------------------------------------------------- At least four members of the Caribbean Community reportedly promised to provide emergency aid to bail out cash-strapped Antiguan airline LIAT, said the Trinidad Express on Thursday. LIAT needs approximately EC$2.7 million (US$1= EC$2.70) to avoid repossession of half its fleet. The airline also needs some EC$25 million to carry out its overall restructuring plan. St Vincent and the Grenadines; and Trinidad and Tobago have discussed options for saving the airline. The report said that the latter government has decided to help LIAT, and other airlines in the region. On Tuesday, T&T decided to issue a letter of comfort to the region's airlines and giving them access to about EC$12.5 million (about TT$29 million) in financing, through the Caribbean Development Bank. Trinidad and Tobago is also under pressure to help its own troubled flag carrier BWIA. The CariCom member governments include Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname and Trinidad and Tobago. 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 ================= A R G E N T I N A ================= COMPANIA MEGA: S&P Assigns $700M Worth of Bonds `raCCC' ------------------------------------------------------- Corporate Bonds of Compania Mega, S.A. were rated `raCCC' by the Argentine arm of Standard & Poor's International Ratings, Ltd. on Thursday, according to an announcement in the official web site of the country's National Securities Commission. Some US$700 million of bonds due on June 3, 2004 were affected by the ratings. The bonds were described as "Programa de ONs autorizado por AGOyE de fecha 15.12.97", and is classified under "Program." According to ratings definitions, given by S&P, an obligor rated 'raCCC' is CURRENTLY VULNERABLE, and is dependent upon favorable business and financial conditions to meet its financial commitments. The junk rating was based on the Company's financial health as of the end of December 2002. EDENOR: Majority Controller Sues Former Spanish Owners ------------------------------------------------------ France's state power company EDF has turned to the Paris-based International Chamber of Commerce in order to resolve its conflict with Spanish power company Endesa and Spanish oil company Repsol-YPF. EDF's case dates back to its 2001 purchase of 58% of Buenos Aires distributor Edenor from the two Spanish companies. EDF paid US$780 million for the 49% of Edenor from Endesa and 9% from Repsol-YPF subsidiary Astra. The sale contract included a clause that said the price would be reduced if the peso devalued before the end of 2001. EDF now argues that although the devaluation was officially announced on January 11, 2002, the suspension of banking and currency exchange activities on December 27, 2001 made it impossible to have a reference exchange rate at the end of the year. The Company paid US$780 million and is seeking EUR66 million (US$70mn). Through direct and indirect holdings, EDF owns 90% of Edenor, which serves 2.3 million clients in the northern part of Buenos Aires. CONTACT: EDENOR S.A. Azopardo Building Azopardo 1025 (1107) Capital Federal Phone: (54-11) 4346-5000 Fax: (54-11) 4346-5300 E-mai: to ofitel@edenor.com.ar Home Page: http://www.edenor.com.ar IMPORTADORA Y EXP.: Fitch Rates Bonds `raD' ------------------------------------------- Some US$100 million of corporate bonds issued by S.A. Importadora y Exp. de La Patagonia were rated `D(arg)' by Fitch Argentina Calificadora de Riesgo S.A., said the National Securities Commission if Argentina. The rating, issued on Wednesday last week, affects bonds described as "obligacioned negociables", and classified under "program." According to the rating agency, the rating is issued to financial obligations currently in default. In a related news, the Company's stocks were rated `4' by the same ratings agency. The ratings were based on the Company's financial health as of the end of December 2002. METROGAS: Argentine Standard & Poor's Rates Bonds `raD' ------------------------------------------------------- Corporate Bond issued by Metrogas S.A. were rated `raD' by the local arm of Standard & Poor's International Ratings, Ltd., said the National Securities Commission of Argentina. The rating, which was issued to bonds when they are in payment default, affects US$600 million of bonds described as "Obligaciones Negociables Simples," whose final maturity date was not indicated in the announcement. The said bonds were classified under "Program." The ratings agency said that the 'raD' rating is used when interest or principal payments are not made on the date due, even if the applicable grace period has not expired, unless Standard & Poor's believes that such payments will be made during such grace period. The rating was issued on Monday, and was based on the Company's financial health as of the end of last year. At the same time, the Company's stocks were rated `4.' The Company's principal activities are the production, distribution and storage of natural gas and processed natural gas for the electric power, industry and domestic sectors. Sale of natural gas accounted for 89% of 2001 revenues; transportation and distribution services, 9% and sale of processed natural gas, 2%. CONTACT: Metrogas S.A. Gregorio Araoz de Lamadrid 1360 Buenos Aires Argentina CPA C 1267 Phone: +54 11 4309 1010 Fax: +54 11 4309 1025 Home Page: http://www.metrogas.com.ar Contacts: William Harvey Alvarez, President Luiz Carlos Costamilan, Director Angus Charles De Symons Mc Callum, Director PECOM ENERGIA: Expects Block X Drilling by Mid-April ---------------------------------------------------- Argentine energy company Pecom Energia will start drilling the first of ten development wells in Peru' block X on April 15, said Eliseo Salcedo, the Company's Peru exploration manager. Business News Americas reported that an estimated 500 barrels per day may be obtained from the wells, adding that this is a high level as most of the Company's 40 wells average between 3-10 barrels per day. In the meantime, the Company's first exploration well on block XVI in north-west Peru gave negative results. Mr. Salcedo said that the Company may decide on the operations soon, adding the Company is under contract with Petroperu to drill a total of five exploration wells on the block. Earlier this week, the Company 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 sUS$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. 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, said the Company. 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 RAGHSA: S&P Argentina Rates $33M of Corporate Bonds as `raB' ----------------------------------------------------------- The Argentine arm of rating agency Standard & Poor's International Ratings issued an `raB' rating to US$33 million of corporate bonds issued by Raghsa S.A. on Thursday. According to the National Securities Commission of Argentina, the affected bonds, described as "obligaciones negociables", would come due on Feb 28, 2012. The bonds were classified under "program", but the CUSIP was not indicated. The rating, based on the Company's financial position as of November 30, 2002, means that the obligor's capacity to meet financial commitments on short-term obligations, relative to that of other Argentine obligors is WEAK, and vulnerable to adverse business, financial, or economic conditions, according to definitions given by S&P. ============= B E R M U D A ============= TYCO INTERNATIONAL: Aggressive Accounting Results in Cash Charge ---------------------------------------------------------------- An investigation on the books of Tyco International, Ltd. done by external lawyer David Boies said that the aggressive accounting initiated by Tyco's former chief executive Denniz Kozlowski were not material to the Company's overall profits. However, a report by NewsEdge indicated that the discovery of such accounting problems is resulting to a cash charge of between US$265 million and US$325 million in Tyco's books for the current quarter. The accounting problems dates back between two and six years, said the report. Mr. Kozlowski's successor, Edward Breen promised he would purge wrongdoers from the group after more accounting problems from Tyco's fire and security units in Asia and Europe. Mr. Breen dismissed the head of Tyco's fire and security unit. The Company is also initiating a move to investigate all of the Conglomerate's units, no matter how small. Earlier this week, reports say the move could prove to be a daunting task, but the company seems to determined to push it through. Mr. Kozlowski, along with Tyco's former finance chief Edward Breen were charged of grand larceny and enterprise corruption, among a number of other charges. Both men entered pleas of not guilty, and are out on bail. CONTACT: Gary Holmes (Media) Phone: 212-424-1314 Kathy Manning (Investors) Phone: 603-334-3900 =========== B R A Z I L =========== CESP: S&P Lowers Ratings to 'CC'; Still on Watch ------------------------------------------------ Standard & Poor's Ratings Services lowered Thursday its global scale local currency and foreign currency corporate credit and senior debt ratings on Brazilian utility Companhia Energ�tica de Sao Paulo (CESP) to 'CC' from 'CCC'. The ratings remain on CreditWatch with negative implications, where they were placed on Jan. 31, 2003. "The downgrade follows the announcement made by the government of the state of Sao Paulo that it does not intend to provide support to CESP for the company to meet, in particular, a put option on a US$150 million medium-term note due on May 9, 2003," said credit analyst Juliana Gallo. "CESP's management confirmed that it does not expect to receive any support from either the state or the federal government for this financial obligation." These announcements break the initial expectations that CESP could still receive some support given its importance in the national electric generation industry, and in fact leave the company in a situation in which a default on the notes, under Standard & Poor's criteria, is imminent. On March 14, CESP formalized a solicitation to amend the terms of the medium-term note indenture in which the company proposed, among other alterations: (i) to cancel the May 9, 2003, put option; (ii) to add a put option on Jan. 30, 2004, that could be exercised if the company has not refinanced its debts by Nov. 28, 2003; and (iii) to provide a partial payment of US$200 per US$1,000 of nominal amount of the notes on May 9, 2003. The solicitation will expire on April 4, 2003, and its successful conclusion will be viewed by Standard & Poor's as equivalent to a default. Therefore, a default on the notes is considered to be imminent, either because the new terms will be accepted by investors on April 4, or because the company will not be able to meet the put on May 9 if the solicitation is not completed. Therefore, the CreditWatch negative is expected to be resolved by May 9, when CESP's corporate credit rating will be lowered to 'SD' (selective default), while the rating on the MTNs will be lowered to 'D'. Analysts: Juliana Gallo, Sao Paulo (55) 11-5501-8948 Milena Zaniboni, Sao Paulo (55) 11-5501-8945 CHAPECO ALIMENTOS: BNDES Refuses To Come To Its Aid --------------------------------------------------- The Santa Catarina-based public and private agribusiness companies are seeking answers as to why the BNDES refuses to help Chapeco Alimentos when the development bank is a majority shareholder of the ailing meat processing company, reports NewsEdge. Chapeco is one of the five largest slaughterhouses in Brazil. Its principal activity is the production, slaughter, commercialization, import and export of hogs, poultry, animal feeds and other related activities. Main brands are "Chapeco" and "Regencia". Slaughter of hogs accounted for 51% of 2001 revenues, poultry, 48% and other 1%. Chapeco has been facing financial difficulties since last year. In Sep., it gave vacation to the workers of its hogs slaughterhouse, based in Santa Rosa (Rio Grande do Sul state). According to NewsEdge, the Company has a total debt of US$180 million. BNDES, which owns 29.65% shares in the Company, is also the largest creditor, says the report. In early December 2002, TCR-LA reported that BNDES outlined a plan to capitalize the embattled slaughterhouse. The plan, aimed to prepare Chapeco for a future sale, reportedly comprised of the conversion of long-term debts into equity. The Company's long- term liabilities would be converted into shares and 15 creditors will become its shareholders. The proposal also called for the exit of the Argentinean group Macri, which owns 65% of the Company's shares. ORGANIZACOES GLOBO: Appoints New Director For New Division ---------------------------------------------------------- Media giant Organizacoes Globo named Juarez Queiroz as director of the new Cross Media and Multiplatform division, as part of the Company's restructuring. Prior to his appointment, Queiroz was president of Globo.com. It is not clear how the restructuring will affect portal and theme parks Globo Filmes, which belong to the Cross Media and Multiplatform division. The report says Globo Filmes' manager, Carlos Eduardo Rodrigues, will maintain his position and continue reporting to Queiroz. SABESP: Posts YE2002 Results; Devaluation Eclipses Higher Fees -------------------------------------------------------------- Sabesp - Cia. de Saneamento Basico do Estado de Sao Paulo (NYSE: SBS; Bovespa: SBSP3), the largest water and sewage utility company in the Americas and the third largest in the world (in number of customers), announced Thursday its financial results for the year 2002. The following financial and operating information, unless otherwise indicated, is presented in nominal Reais pursuant to Brazilian Corporate Law. Comparisons, unless otherwise stated, refer to the year 2001. Highlights -- Net revenue reached R$ 3,767 million, a 9.7% growth influenced by the 8.22% fee readjustment implemented in August 2002; -- Retail billed volume grew 4.4%, due to the end of the energy rationing implemented in mid-2001; -- EBITDA grew 4.2% to R$ 1,860 million; -- Net loss amounted to R$ 651 million, as a consequence of the devaluation of the Brazilian Real. CONTACT: Marisa Guimaraes Tel: +5511-3388-9135 marisag@sabesp.com.br Helmut Bossert Tel: +5511-3388-8664 hbossert@sabesp.com.br Web site: http://www.sabesp.com.br ========= C H I L E ========= GASTACAMA: Negotiates Restructuring With Shareholders ----------------------------------------------------- GasAtacama, the second-largest power supplier in Northern Chile, is now in talks with shareholders to restructure its US$250- million debt, reports NewsEdge. The Company, which is controlled by Endesa Chile (50%) and US power company CMS Energy (50%), hopes to reach an agreement and obtain a US$250-million syndicate loan by the end of the third-quarter of this year. Rudolf Arenda, GasAtacama's general director, indicated that the Company might sell bonds to raise necessary funds. The operation, however, hinges on the political and economical developments in Argentina. GasAtacama is trying to sell its transmission assets in the northern grid (SING). Among the potential buyers are groups such as Canada's Hydro Quebec. INVERLINK: SVS In Hot Water --------------------------- Chilean financial industry executives are now questioning the efficiency of the SVS as a securities and insurance regulator. The concerns come after failing to take immediate steps to resolve the scandal involving financial services group Inverlink. Business News Americas recalls that on March 7, the SVS intervened Inverlink after its executives were found to have spied on the central bank and orchestrated the theft of US$95 million in CDs from the vaults of state development agency Corfo. Industry sources said the SVS should have immediately informed the financial community who would be held liable for honoring the Corfo CDs that were traded on the market. Worse still, the government's initial response was to refuse payment of the CDs, which wound up in the hands of mutual and pension funds. The courts will have the final say whether the government or the financial system eats the loss. "For the good of the market it is necessary for someone to assume responsibility because uncertainty will continue ruling the market," one source said. According to the executives it was common knowledge that the earnings of Inverlink's brokerage unit were difficult to obtain through "normal" business practices, but the SVS took no steps to investigate the company. =============== C O L O M B I A =============== AVIANCA: Files for Chapter 11 Protection in S.D.N.Y. ---------------------------------------------------- Aerovias Nationales de Colombia SA and Avianca Inc., voluntarily filed for Chapter 11 protection in the United States Bankruptcy Court for the Southern District of New York. Since the end of 2002, unforeseen market and economic conditions, added to the lingering challenges post-September 11, have had a devastating impact on the aviation industry as a whole, the Company says. Sharp increases in fuel prices, a slow U.S. economy, and continued contraction in travel have forced airlines worldwide to dramatically cut costs. Avianca's situation is further complicated by the drastic devaluation of the Colombian Peso, weak economies in key countries such as Venezuela and Argentina and further reduction in travel due to risks associated with flying to Colombia and restrictions on visas for Colombians. In 2002, the negative impact of the devaluation alone was approximately $27 million. Avianca currently employs approximately 4,153 employees in Colombia, 28 in the United States, and 148 outside of Colombia and the United States. Avianca also contracts with third party providers for the services of approximately 900 individuals. As of March, 2003, Avianca's operating fleet consisted of 31 aircraft, including 13 MD-83, 6 Fokker-50, 6 Boeing 767 and 6 Boeing 757 aircraft. Avianca leases all 31 aircraft. Bankruptcy is Step One The chapter 11 filings, the Company explains, are the first step to improving operations. Avianca explains that it faces unique U.S. issues that can only be addressed under U.S. law. Chapter 11 is a first key step within the framework of making the carrier competitive while at the same time finding ways to reduce its operating costs. Avianca's management team wants to aggressively address the challenges the carrier faces. They are working to restructure their operations to eliminate inefficiencies and increase cash flow. "We recognize that we have a lot of work ahead of us if we are to continue to remain an industry leader. This ongoing restructuring process requires focus, dedication and effort, but we firmly believe that we will be on track to achieve solid results," the Company said in a letter to its vendors. Corporate Structure Aerovias Nationales de Colombia SA -- the oldest airline in the Western Hemisphere and sometimes referred to as the "Airline of Colombia" and the "First Airline in America" -- is a corporation organized under the laws of the Republic of Colombia as a sociedad anomina, with its administrative offices located at Centro Administrativo, Avenida Eldorado No. 92-30, Bogota, Colombia, and its principal place of business in the United States located at 720 5th Avenue, 5th Floor, New York, New York 10019-4107. The company operates a domestic (Colombia) and international airline passenger business, but it also carries mail and freight cargo on its domestic and international routes. Avianca, Inc. is a corporation organized under the laws of the State of New York, with its principal place of business located at 8125 Northeast 53rd Street, Suite 1111, Miami, Florida 33166. Avianca, Inc. acts as Avianca S.A.'s general agent in connection with its activities in the United States pursuant to a general agency agreement which provides for Avianca, Inc., in its capacity as general agent for Avianca S.A., to market and sell tickets for air travel, to lease facilities for its operations in the United States, to procure supplies, to collect accounts, to purchase parts, and to provide other services in connection with the business of operating an international commercial airline in the United States. Passenger & Cargo Routes Avianca has destinations in 14 cities in Colombia, two cities in the United States, and 12 cities in other countries, for a total of 28 destinations. Approximately 24.1% of Avianca's international air service is between Colombia and the United States. Avianca's principal routes between Colombia and the United States include service between Bogota and Miami and between Bogota and New York City. Avianca's operations have a hub-and-spoke structure, with domestic and international hubs at Bogota, designed to allow Avianca to maximize Bogot 's strategic geographical position in providing domestic and international connections. Avianca is the predominant carrier at Bogota, having approximately 81 scheduled daily departures, including 63 domestic and 18 international departures. Avianca uses two passenger terminals in Bogota, one at Eldorado International Airport and one at Terminal Puerto Aereo. Avianca's international operations consist of both nonstop and through service between Bogota, Medellin and Cali in Colombia and destinations in Europe, South America, Central America and the Caribbean, including Madrid, Aruba, Curacao, Mexico City, Guayaquil, Quito, Buenos Aires, Santiago (Chile), Sao Paolo, and Rio de Janeiro. Avianca's principal routes to destinations outside the United States include service between Bogota and Caracas, Madrid and Buenos Aires. The Road to Chapter 11 By December 1999, Avianca, as well as virtually all other domestic and international commercial airlines, was confronting serious financial and operational difficulties. Essentially, Avianca found that its revenues were not sufficient to support its cost structure and that it needed to restructure its outstanding financial obligations and to address various operational issues in order to continue operations. As a result, Avianca initiated a number of measures designed to cut costs and to enhance revenues. In the fall of 2000, Avianca remained in need of further financial restructuring. In or about September 2000, Avianca, with the assistance of its legal and financial advisors, reached interim accommodation agreements with its principal aircraft lessors and lenders. In the first part of 2001, Avianca entered into formal restructurings of its relationships with its principal lessors and lenders, with the important exception of the holders of notes issued by The Bank of New York, as trustee, under a Master Trust Agreement, dated December 23, 1997, between BONY and Avianca, which are secured by all of Avianca's U.S. receivables arising out of payments made in U.S. dollars on credit cards and through a clearinghouse (Airlines Reporting Corporation) on account of tickets for travel to and from the United States, which are paid directly to BONY under the terms of the Master Trust Agreement. On December 19, 2001, in an effort to address its operational difficulties, shareholders of Avianca entered into an "integration" with shareholders of Aerolineas Centrales de Colombia, SA. (known as Aces), another Colombian commercial airline. The Integration was effected in part by the transfer of approximately 98% of the outstanding shares of capital stock of Avianca and an equal percentage of the outstanding shares of capital stock of Aces to two business trusts, in exchange for interests in the trusts, and in part by a series of operational agreements, such as a code share agreement and a wet lease agreement by and among Aces, Avianca and Sociedad Aeronautica de Medellin Consolidada S.A., a Colombian domestic airline and a subsidiary of Avianca. As a result of the alliance among Avianca, SAM and Aces, known as "Alianza Summa," the three airlines have integrated various administrative and management functions for the purpose of achieving synergies and reductions in costs to Avianca, SAM and Aces. Over the period from 2000 to 2002, Avianca's majority shareholder, Valores Bavaria S.A., made additional capital contributions and other equity investments in Avianca aggregating over $259,268,000, of which approximately $140,000,000 was used by Avianca to make a loan to Valores Bavaria S.A. in exchange for an instrument which has been placed in trust for the satisfaction of Avianca's and SAM's pension obligations to their respective non-flight crew employees and former employees. The terrorist attacks on the United States, which took place on September 11, 2001, devastated the airline industry, and Avianca was no exception. Avianca's revenues have suffered since that day, and it has found itself unable to meet its financial obligations, even as restructured over the past several years. This situation has been aggravated by the Venezuelan instability, exchange controls imposed by the Venezuelan Government, increase in jet fuel prices due to the war with Iraq, and deeper market reductions in first quarter 2003 as a consequence of the war fears among other factors. With respect to Avianca's obligations to the Noteholders pursuant to the Master Trust Agreement, under which Avianca was, in the fall of 2000, in default by reason of the violation of a financial covenant, Avianca was able to obtain only intermittent temporary waivers of the default. The Noteholders have from time to time exercised their right, on account of the default that has existed since 2000, to direct BONY to withhold from Avianca all payments made on Avianca's U.S. Receivables paid or to be paid, notwithstanding the fact that Avianca has never missed a payment on the Notes, the payment on the Notes scheduled for March 21, 2003, has been prepaid, Avianca has overall prepaid the Notes by approximately $17,000,000 (leaving a balance remaining of approximately $20,500,000 out of an original principal amount of $75,000,000), and Avianca's U.S. Receivables are projected to remain, for each quarter through the maturity of the Notes, at a level at least three times the amount of the quarterly payment that next comes due on the Notes. Avianca has now determined that it is in its and its creditors' best interests to undertake a reorganization under the provisions of chapter 11 of the Bankruptcy Code. Why Not Reorganize in Colombia? Avianca has assets located in the United States and has an office on Fifth Avenue in New York City. The Noteholders, BONY and Avianca's principal lessors are located in, or are subject to the jurisdiction of, the United States. Most of Avianca's lease agreements and the Master Trust Agreement and the other documents related thereto are governed by the laws of the State of New York (except that the nature and extent of Avianca's and BONY's interest in the U.S. Receivables are governed by the laws of the Republic of Colombia) and were negotiated and are in many cases performed in the United States. The provisions of several of Avianca's leases and contracts, including the Master Trust Agreement, require that Avianca submit to the jurisdiction of the state and federal courts located in New York. While Avianca is likewise eligible to be a debtor under Colombian Law 550 (a law in many ways similar to chapter 11 of the Bankruptcy Code), it is not certain, Chief Financial Officer Gerardo Grajales explains, whether a filing under that law would adequately protect Avianca from legal action in the United States against it by its U.S. lessors and creditors. It is likewise not certain whether an ancillary proceeding under the Bankruptcy Code, in conjunction with a proceeding under Law 550, would necessarily provide the protection of chapter 11 which is needed for Avianca to have a reasonable likelihood of achieving an effective reorganization, owing to procedural and substantive differences between chapter 11 and Law 550. Avianca believes that it is able to manage its Colombian creditors (i.e., creditors who may not be subject to the jurisdiction of a U.S. bankruptcy court) in a manner consistent with its obligations under the Bankruptcy Code. If Avianca should at a later date require protection from its Colombian creditors, Law 550 will remain available to Avianca. CONTACT: AVIANCA P.O. Box 151310 Av. el Dorado no. 93-30 Bogota, Colombia Phone: (1) 413 9511 (1) 295 8977 ============= E C U A D O R ============= FILANBANCO: To Finalize Plan To Recover $70M of Bad Loans --------------------------------------------------------- The debt collection committee representing creditors of defunct Ecuadorian bank Filanbanco was expected to approve on Friday a plan to recover bad loans worth US$70 million, reports Business News Americas. The committee recently awarded three companies to recover Filanbanco's bad loans amounting to US$392 million. The companies are Thesis Antares, Gomez Giraldo y Asociados, and Hunton & William American Services. Filanbanco, which was intervened by authorities during the 1998- 1999 financial crisis, had outstanding loans of US$925 million last year, which was significantly reduced in the bank's last restructuring process. CONTACT: FILANBANCO Av. 9 of 203 October and Pichincha Guayaquil, Ecuador Phone: 322780 ext. 2885 Fax: 329451 E-mail: mailto:administrador@filanbanco.com Home Page: http://www.filanbanco.com/ Contacts: International Business Division Germania Narv ez Brandon E-mail: mailto:mgnarvaez@filanbanco.com Legal Divison (Guayaquil) Marks Arteaga Valenzuela, Departmental Manager E-mail: mailto:mmarteaga@filanbanco.com ============= J A M A I C A ============= AIR JAMAICA: FA's Agree To 3% Salary Cut ---------------------------------------- Embattled carrier Air Jamaica continues to implement measures in order to reduce costs as it struggles to stay afloat amid a tough financial environment. After it laid off 29 mostly high-level employees, negotiated new aircraft leases and shifted flight schedules in efforts to save about JMD1.4 billion ($1=JMD53.58) yearly, Air Jamaica asked flight attendants to agree to a 3% salary cut, the AP reports. According to Kavan Gayle of the Bustamante Industrial Trade Union, representatives of the 400 flight attendants voted Wednesday to accept the pay cut, which begins April. Air Jamaica, which is the Caribbean's largest regionally based carrier, offering more than 360 weekly flights to several U.S. and British destinations, including New York, Boston, Chicago and London, reported losses of JMD3.7 billion last year. CONTACT: Air Jamaica 4 St. Lucia Avenue Kingston 5, Jamaica Phone: 876/922-3460 Fax: 929-5643 E-mail: webinfo@airjamaica.com Contact: Gordon Stewart, Chairman Allen Chastanet, Vice President for Marketing and Sales =========== M E X I C O =========== DIRECTV LA: Bankruptcy Filing Leaves Mexican Ops Unchanged ----------------------------------------------------------- DirecTV Latin America LLC's bankruptcy filing in the US does not affect the operations of DirecTV Mexico, NewsEdge reports, citing an executive from the Mexican company. DirecTV Latin America does not have any direct share participation in the Mexican company, according to Robert Sierra, director of the Grupo Galaxy Mexicana, which owns DirecTV Mexicana. He pointed out that the relation of DirecTV Mexicana with the US company is only in the area of programming and other services, which will continue, with the exception that the Disney Latin America and Music Choice channels will be removed. Besides, DirecTV Mexicana is financially sound, Mr. Sierra emphasized. Grupo Galaxy Mexicana is owned by Grupo MVS and is affiliated with the Hughes Electronic Corp. PEMEX: Increases Average Daily Production Goal to 3.43 mb/d ----------------------------------------------------------- Mexican state oil monopoly Petroleos Mexicanos (Pemex) increased its output production goal for this year by 30,000 barrels a day, reports Business News Americas. The Company's new goal target is 3.43 million barrels per day. The Company also plans to process 1.4 million barrels a day from 155,000 barrels a day last year, and expects to increase natural gas output by 2 percent to 4.51 billion cubic feet per day this year. Aside from increasing petroleum products and petrochemicals, company also sees sales this year rising to MXP526 billion from MXP495 billion last year. Dow Jones reports that Aside from its six refineries in Mexico, Pemex has a refining joint-venture with Royal Dutch/Shell (RD) in Deer Park, Texas, and also has contracts under which it sends crude for processing abroad and then reimports the refined products. Pemex produced a record 3.2 million b/d of crude oil in 2002, of which it exported 1.69 million b/d on average. Exports have risen this year to 1.79 million b/d in January and 1.88 million b/d in February, said the report. ===================== P U E R T O R I C O ===================== CENTENNIAL COMMUNICATIONS: Records Non-Cash Charge Of $189.5M ------------------------------------------------------------- Centennial Communications Corp. (NASDAQ:CYCL), a leading regional telecommunications service provider, announced Thursday results for the quarter ended February 28, 2003. Consolidated revenues grew 3% from the same quarter last year to $182.0 million. "Adjusted EBITDA" increased 21% from the same quarter last year to $68.1 million. Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, loss (gain) on disposition of assets, minority interest in loss of subsidiaries, income from equity investments and non-cash charges. Operating loss was $156.8 million for the quarter, a decrease of $170.5 million versus the same quarter last year, primarily due to a $189.5 million non-cash write down of certain assets. During the quarter ended February 28, 2003: -- In conjunction with its new roaming agreement with AT&T Wireless, the Company obtained a $20 million option to purchase from AT&T Wireless, 10MHz of spectrum covering approximately 4.2 million POPs in Michigan and Indiana. -- The Company recorded a non-cash charge of $189.5 million to write-down the intangible assets associated with its Puerto Rico Cable Television business which has been experiencing subscriber losses, and to reduce the carrying value of certain of its undersea cable assets. -- The Company closed on the sale of 64 U.S. Wireless towers, bringing the total closed during fiscal year 2003 to 105 towers. -- The Company announced the award of a $34.4 million contract from the Puerto Rico Department of Education to provide telecommunications and Internet Services to schools in Puerto Rico. The contract is subject to funding from the Federal Communications Commission, which has not yet been obtained. The Company's wireless subscribers at February 28, 2003 were 929,700, compared to 882,600 on the same date last year, an increase of 5%. Caribbean Wireless subscribers increased 24,100 during the quarter. U.S. Wireless subscribers increased by 8,800 during the quarter. Caribbean Broadband switched access lines reached 39,800 and dedicated access line equivalents were 177,900 at quarter end, up 31% and 20%, respectively from the same quarter last year. "We are very pleased with the greater than 20% year-over-year improvement in Adjusted EBITDA and the reduction in net debt that has occurred in each of the last four quarters," said Michael J. Small, chief executive officer. "Our Caribbean operations performed very well this quarter and the option for more contiguous spectrum in the Midwest improves visibility to long- term profitable growth in the US Wireless operations." For the quarter, total Caribbean revenues were $97.3 million and Adjusted EBITDA was $33.7 million. Adjusted EBITDA was up 45% from the same quarter last year. Caribbean Wireless revenues for the quarter reached $65.1 million, an increase of 7% from the same quarter last year. Caribbean Wireless Adjusted EBITDA for the quarter was $24.1 million, an increase of 34% from the same quarter last year. Caribbean Broadband revenues for the quarter were $34.8 million and Adjusted EBITDA reached $9.7 million, up 79% from the same quarter last year. Also for the quarter, U.S. Wireless revenues were $84.7 million and Adjusted EBITDA was $34.3 million. Adjusted EBITDA increased by 4% from the prior year due to improved margins on retail revenue offset in part by a 15% reduction in roaming revenue. U.S. Wireless Adjusted EBITDA margin was 41%, an increase of 81 basis points from the same quarter last year. Consolidated capital expenditures for the quarter were $25.1 million or 14% of revenue. Net debt at February 28, 2003 was $1,699.7 million. The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142 effective June 1, 2002. As a result, previously recorded goodwill and other intangible assets with indefinite lives will no longer be amortized but will be subject to impairment tests. Depreciation and amortization expense for the nine months ended February 28, 2003 would have been $18.3 million higher in the absence of SFAS No. 142. The aggregate effect of ceasing amortization decreased net loss and loss per basic and diluted share by $13.4 million and $0.14, respectively. Centennial is one of the largest independent wireless telecommunications service providers in the United States and the Caribbean with approximately 17.1 million Net Pops and approximately 929,700 wireless subscribers. Centennial's U.S. operations have approximately 6.0 million Net Pops in small cities and rural areas. Centennial's Caribbean integrated communications operation owns and operates wireless licenses for approximately 11.1 million Net Pops in Puerto Rico, the Dominican Republic and the U.S. Virgin Islands, and provides voice, data, video and Internet services on broadband networks in the region. Welsh, Carson Anderson & Stowe and an affiliate of the Blackstone Group are controlling shareholders of Centennial. For more information regarding Centennial, please visit our websites at www.centennialcom.com and www.centennialpr.com. To see financial statements: http://bankrupt.com/misc/CENTENNIAL_COMMUNICATIONS.htm ================================= T R I N I D A D & T O B A G O ================================= CARONI LTD.: Workers' Union Takes Legal Action Against VSEP ----------------------------------------------------------- The All Trinidad Sugar and General Workers Trade Union (ATSGWU) has taken legal action to prevent the implementation of the Trinidad and Tobago government's offer of the Voluntary Separation Of Employment Plan (VESP) to workers of state sugar enterprise Caroni (1975) Ltd. A report by the Trinidad Express indicated that action was taken pursuant to the Industrial Relations Act. Attorneys-at-law Douglas Mendes, Dave Cowie and Ashvani Mahabir are representing the union. The matter is to be discussed on Thursday morning. The union's Secretary General said that the legal action is in respect with Caroni's failure to recognize the union as the majority union of the daily paid workers and to negotiate in good faith with the union. According to the union, Caroni "has developed and implemented a VSEP without obtaining the agreement of the union and despite the union's express disapproval." The union added that the Company refused the union's request for details on the VSEP. 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 ============= U R U G U A Y ============= ANCAP: Seeks To Remain In Market Amid Tough Times ------------------------------------------------- An Ancap executive indicated that the Uruguayan state-owned oil, fuels and cement company wants to continue its commercial presence in the market and wait for better times to come, relates Business News Americas. According to Ancap director Pablo Abdala, the Company could reactivate its Minas and Nuevo Paysandu cement plants if the market recovers. However, Ancap's determination to remain in the market faces tough challenges as the country is still struggling to emerge from a deep recession. Ancap's cement division registered a US$6-million deficit last year due to high production costs and a drop in demand, Abdala revealed. CONTACT: Administracion Nacional de Combustibles, Alcohol y Portland (ANCAP) Central Administration Paysando s/n esq. Avenida del Libertador Montevideo, 11100 Uruguay P.O. Box 1090 Phones: +598(2) 902 0608 902 3892 902 4192 Fax +598(2) 902 1136 902 1642 Telex ANCAP UY 23168 E-mail: info@ancap.com.uy Home Page: www.ancap.com.uy Contact: Benito E. Pi eiro, Chief Executive Officer Phone +598(2) 900 2945 +598(2) 902 0608 Ext. 2253 Fax +598(2) 908 9188 BANCO COMERCIAL: Bank Buys Brazilian Credit Cards ------------------------------------------------- Brazil's Banco Rural agreed to buy Uruguayan bank Banco Comercial's Brazilian credit card portfolio of 200,000 cards in a US$100-million transaction expected to close in a few days, reports Business News Americas. The report comes ahead of the reopening of Banco Comercial's doors on Monday under a new name brand El Nuevo Banco Comercial following approval by the local banking regulator. Banco Comercial was intervened and suspended with a host of other local banks last year due to Uruguay's economic and financial crisis. The authorities finally decided to merge the best assets of suspended banks Commercial, Montevideo and Caja Obrera to create El Nuevo Banco Comercial. El Nuevo will start operating with 46 branches and expects to open new branches in the future. ================= V E N E Z U E L A ================= PDVSA: El Palito Refinery Resumes Normal Operations --------------------------------------------------- Petroleos de Venezuela S.A.'s (PdVSA) El Palito refinery finally resumed normal operations after problems with it s catalytic cracker forced the Company to halt the refinery's operations last week. A spokesman from Venezuela's state oil company told Bloomberg that the refinery was restarted on Wednesday night. The cracker produces about 60,000 barrels of gasoline a day, or about one third of the country's daily consumption of 200,000 barrels, said the report. Previously, local news indicated that the refinery's restart may be delayed because of a shortage of manpower and skills. At least 15, 000 PdVSA workers were dismissed in the course of the two- month long strike staged by workers in the country. The strike was aimed at deposing president Hugo Chavez or force him to call for early elections. Presently, Mr. Chavez is still in his post, but the strike almost disabled the country's oil industry. *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter Latin American is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. John D. Resnick, Edem Psamathe P. Alfeche and Oona G. Oyangoren, Editors. Copyright 2003. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *