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/raid1/www/Hosts/bankrupt/TCRLA_Public/030409.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Wednesday, April 9, 2003, Vol. 4, Issue 70 Headlines A R G E N T I N A AGUAS ARGENTINAS: Suez May Seek ICSID Help on Rates Hike Issue PECOM ENERGIA: S&P Comments on Pecom-Petrobras Transaction * US$500 Million World Bank Disbursement Delayed B E R M U D A FOSTER WHEELER: Appoints New CFO to Help Reduce Debt B R A Z I L ACESITA: `Low Risk' Reputation Yields Cheap Insurance Premiums BRASIL TELECOM: Court Grants Motion to Enjoin Regulator's Order CESP: First Attempt Fails at Majority, New Debt Plan Expected CSN: Opening Bidding Process For Capacity Expansion Contracts EMBRATEL: Reaches Deal With Creditor Banks Over US$861 Mln Debt C H I L E ENDESA: Strikes Another Deal Involving Transmission Lines ENERSIS: To Use New Electronic System for 2003 Procurements GUACOLDA: AES Rejects Capital Hike, Favors Debt Refinancing MADECO: Rejects Sale of Packaging Unit to Complete Restructuring SANTA ISABEL: Dutch Parent Willing to Lower Sale Price E C U A D O R * IMF Concludes 2003 Article IV Consultation with Ecuador J A M A I C A JUTC: Union Threatens Industrial Action M E X I C O AVANTEL: Executive Denies Debt Restructuring, Sale Rumors AZTECA HOLDINGS: Extends Bond Exchange Offer Anew EMPRESAS ICA: Termoelectrica de Mexicali Project Right On Track PEMEX: Investing in Two Cryogenics Plants, Cuts Down LPG Imports PEMEX: Places EUR750 Million for Pidiregas Financing SATMEX: To Launch New Satellite in August T R I N I D A D & T O B A G O BWIA: Caribbean Star Owner Not Interested in BWIA Purchase BWIA: Aid Withholds Aid Pending Turnaround Plan First PETROTRIN: S&P Affirms 'BBB-' Rating After Sovereign Upgrade - - - - - - - - - - ================= A R G E N T I N A ================= AGUAS ARGENTINAS: Suez May Seek ICSID Help on Rates Hike Issue -------------------------------------------------------------- Suez, which controls Argentine waterworks concessionaire, Aguas Argentinas, has threatened to turn to the International Center for Settlement of Disputes (ICSID) if the government refuses to approve a proposed rates hike. According to local daily La Nacion, Aguas Argentinas recently received a counter-proposal from the Economy Ministry's rates renegotiating commission. The counter-proposal comes after the Company requested permission for a 15 percent rates hike to finance its 2003 improvement and expansion plan. The government proposal, however, only allows a total increase of 10 percent this year. Furthermore, proceeds are to be deposited and administered in a trust fund to help finance the expansion plan. Aguas Argentinas, which provides drinking water to 7.6 million residents and sewerage services to 5.7 million people in the greater Buenos Aires area, reported an ARS886 million (US$239 million) loss during the first half of 2002 after the Argentine peso declined abruptly. Aside from Aguas Argentinas, Suez also controls Aguas de Santa Fe and Aguas Cordobesas in Argentina. CONTACT: SUEZ Media: Antoine Lenoir Phone: +331-4006-6715 or Investors: Arnaud Erbin Phone: +331-4006-6489 or Belgium Guy Dellicour Phone: +322-507-02-77 PECOM ENERGIA: S&P Comments on Pecom-Petrobras Transaction ---------------------------------------------------------- As reported by the press, Argentine President Eduardo Duhalde and the Minister of Production, Anibal Fernandez, are against the transfer of certain assets which now belong to Pecom Energia S.A. (Pecom, CCC/Negative/--) to the sphere of Petroleo Brasileiro S.A. (Petrobras, not rated) after the Brazilian company takes effective control of Pecom. Particularly, the government seems concerned about the transfer of power transmission company Compania de Transporte de Energia Electrica en Alta Tension TRANSENER S.A. (Transener, D/--/--), which is 27.625% indirectly owned by Pecom through its subsidiary Citelec S.A., whose main shareholders are Pecom with a 42.5% stake and National Grid Co. PLC (National Grid, A/Stable/A-1) with 42.5%. Given the strategic importance of transmission lines for the economic development of the country, the Argentine government is demanding that Transener be left outside the change of control transaction. Although at this point, Petrobras has not made any public comment, Standard & Poor's Ratings Services considers that an agreement between the Argentine and the Brazilian government will be reached in order to complete the transaction. Nevertheless, Petrobras' final purchase agreement for the controlling stake owned by the Perez Companc family and Foundation Perez Companc included an option to reverse the deal depending on the decision of the antitrust authorities in Argentina. Even in that event, which Standard & Poor's considers unlikely, these developments have no impact on the rating or outlook of Pecom because no parent support is incorporated in the ratings, and Pecom's ability to meet its obligations is evaluated on a stand-alone basis considering the capital expenditures required for growth and the company's debt burden. In addition, Standard & Poor's does not consider Transener to be a key driver of Pecom's profitability because of the impact of pesification over all regulated utilities in Argentina. However, should the transaction be reversed, Standard & Poor's considers that Pecom's financial flexibility could be somewhat narrowed, forcing the company to adjust its growth strategy and increasing refinancing risks. The current rating category also incorporates the many challenges Pecom will have to face in the medium- to long-term to develop its crude oil base. Analyst: Pablo Lutereau Buenos Aires Phone: (54) 114-891-2125 Marta Castelli Buenos Aires Phone: (54) 114-891-2128 Reginaldo Takara Sao Paulo Phone: (55) 11-5501-8932 * US$500 Million World Bank Disbursement Delayed ------------------------------------------------ World Bank President James Wolfensohn said that the multilateral lender will not release a delayed US$500 million loan to Argentina, unless the country makes several economic steps. In an interview with Reuters News, Mr. Wolfensohn said, "There is a $500 million loan. It is being held up, but not by us. I believe there are minimum steps that the Argentines need to make." In the meantime, Argentina's government officials complained on the loan's delay. Mr. Worlfensohn defended the bank's position, saying it is not an attempt to reduce its exposure to Argentina after the country defaulted on a record US$95 billion of debt in December 2001. In fact, he said, "I'm extremely anxious to increase exposure," promising that "there is more to come," if the country makes the right moves. In related news, Mr. Wolfensohn refuted claims made by presidential candidate Carlos Menem that he has been promised US$15 billion to US$20 billion by multilateral lenders, including the World Bank, should he win the April 27 election. The World Bank executive, said, "If that has been said, it has not been said by anyone in a position to say it in the World Bank." ============= B E R M U D A ============= FOSTER WHEELER: Appoints New CFO to Help Reduce Debt ---------------------------------------------------- Foster Wheeler Ltd. (NYSE:FWC) announced on Monday the appointment of Kenneth A. Hiltz as chief financial officer. Mr. Hiltz, 50, a principal with AlixPartners, LLC, has an extensive background in balance-sheet restructurings and corporate financial leadership. He replaces Joseph T. Doyle, who has left the company. Mr. Hiltz will work closely with Ryan J. Esko, also with AlixPartners, who will continue as treasurer. Mr. Esko was appointed treasurer in November 2002, and has been working with Foster Wheeler on worldwide cash management since March 2002. "Over the past year, Foster Wheeler made significant improvement to the company's operations, which enabled us to end 2002 with our strongest cash position in 15 years," said Raymond J. Milchovich, chairman, president and chief executive officer. "As a result, we expect to generate EBITDA from operations in 2003 that would be approximately 30 percent higher than we have achieved over the last three years. "In addition to this operational improvement, we must also reduce debt and improve our balance sheet. Ken has a proven track record and brings an unparalleled depth of experience and financial skills in these critical areas. He will work with Mike Rosenthal, our chief restructuring officer, and our outside advisors to lead the company through this process," Mr. Milchovich said. Prior to joining Foster Wheeler, Mr. Hiltz served as chief restructuring officer for Hayes Lemmerz International, Inc., one of the world's leading global suppliers of automotive and commercial highway components. Previously, he was senior vice president and chief financial officer for Harnischfeger Industries, now known as Joy Global, Inc., a global manufacturer of mining equipment and pulp/paper-making machinery. Mr. Hiltz has designed and implemented turnaround programs, and helped restructure debt for numerous manufacturing, retail and industrial companies. "By strengthening Foster Wheeler's senior leadership team and strategically aligning with firms like AlixPartners in 2002, we were able to vastly improve our cash management, increase the rigor of our financial and project controls, and implement vastly improved contracting standards," added Mr. Milchovich. "With Ken to assist in the next phase of Foster Wheeler's restructuring, we are ensuring that we have the people to execute our plan and build a better and stronger company." Mr. Hiltz holds a bachelor of business administration degree from Xavier University and an MBA from the University of Detroit. He has also attended the executive education program at Harvard Business School. Mr. Hiltz is a Certified Management Accountant and CPA. About Foster Wheeler Foster Wheeler Ltd. is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research and plant operation services. The corporation is domiciled in Bermuda, and its operational headquarters are in Clinton, N.J. For more information about Foster Wheeler, visit its Web site at http://www.fwc.com. =========== B R A Z I L =========== ACESITA: `Low Risk' Reputation Yields Cheap Insurance Premiums -------------------------------------------------------------- Stainless steel-maker, Acesita, disclosed last week that it has renewed its "all risk" insurance, paying only a measly sum of US$3.1 million despite the rising cost of insurance policies worldwide. According to the company, the risk value of the contract was kept at US$1.9 billion, as was the deductible of US$1 million for protection against fire lighting and accidents, among others. Maximum compensation is limited to US$350 million. "It was an important achievement to keep the deductible at US$1 million, especially since it is a company in the steel sector," Guilherme Amado told Gazeta Mercantil recently. He also credited the company's efforts in risk management: "Since 2000, we have not had to use our insurance." The steel-maker's insurance premiums, according to Business News Americas, depend on the international market, which covers 70% of the policy via federally owned reinsurance company IRB Brasil Re. The remaining coverage on the domestic market is divided between Itau Seguros and Bradesco Seguros on a 60:40 basis respectively. The paper says the company invests BRL15 million (US$4.55 million) annually in insurance with "all risks" being the most expensive. CONTACT: Acesita SA Registered Office Av Joao Pinheiro, 580 Centro 30130-180 Belo Horizonte - MG Brazil Tel +55 31 3235-4211 Fax +55 31 3235-4300 Web http://www.acesita.com.br Contacts: Valmir Marques Camilo, Chairman Bruno Le Forestier, Vice Chairman BRASIL TELECOM: Court Grants Motion to Enjoin Regulator's Order --------------------------------------------------------------- Barely a week after telephone regulator, Anatel, ordered Brasil Telecom to justify its discount rates for favored data communications clients, a federal court has enjoined that order and restored the status quo. Business News Americas did not cite specific details, but it identified Brasil Telecom as the entity that filed the request for injunction. According to a previous story by Troubled Company Reporter-Latin America, Brasil Telecom did not participate in the proceeding before Anatel, although it was the subject of the legal spat. Anatel eventually ruled in favor of long-distance incumbent, Embratel, and ordered Brasil Telecom to justify giving discounts to governmental clients for using its data communications network, if it wished to continue granting the discounts. If the discounts are to continue, Brasil Telecom will have to pay BRL106,000 (US$31,000) daily; otherwise, it will have to charge standard rates to clients, TCR-LA said. Embratel had earlier argued that allowing Brasil Telecom to continue this practice would bring "irreparable damage to competition in the data communication services market." Business News Americas did not say what led the federal court to grant the injunction nor did it specify what would lead the court to lift the order. CONTACT: Investor Relations (55 61) 415-1140 ri@brasiltelecom.com.br Renata Fontes (55 61) 415-1256 renatafontes@brasiltelecom.com.br Shay Chor (55 61) 415-1291 shay@brasiltelecom.com.br Flavia de Oliveira (55 61) 415-1411 flaviam@brasiltelecom.com.br Media Relations (outside Brazil) (1 212) 983-1702 ivette.almeida@annemcbride.com CESP: First Attempt Fails at Majority, New Debt Plan Expected ------------------------------------------------------------- Brazil's Sao Paulo state-based power company Companhia Energetica De Sao Paulo (CESP) will present its debt-restructuring program at its shareholders meeting on April 23, after it failed to secure creditor support the first time the program was presented. At a Monday meeting in London, the Company failed to get a quorum of investors holding at least 75 percent of the value of US$150 million commercial papers due on May 9, reports Business News Americas. Sao Paulo state energy minister Mauro Arce says the Company has only BRL80 million in cash left. At the April 23 meeting, CESP will only need to present to investors representing 25 percent of the total value to establish a quorum. Then the debt-restructuring proposal would need the nod of 75 percent of those present to get approved. According to the report, CESP, advised by US investment bank JP Morgan, has proposed paying 20 percent of the principal on May 9 and upping the interest payment from 9 percent a year to 11.5 percent on the remaining debt. CESP has included a clause in the proposal stating that if the company fails to renegotiate about US$500 million of debts due February and March 2004, then it will introduce a put option on January 30, 2004 for these commercial papers, a company spokesperson said. This clause is designed to ensure that all investors are treated equally and to maintain a chronological timetable for payments, the report said. CESP would be obliged to pay back 80 percent of the commercial aprpers on January 30 if the renegotiations of the two commercial paper issues due in 2004 are not successful (EUR200 million in February and US$300 million in March). Standard & Poor's lowered the Company's ratings to CC last week, while the Sao Paulo state government denied having plans of bailing out CESP if the creditors do not approve the restructuring plan. 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 CSN: Opening Bidding Process For Capacity Expansion Contracts ------------------------------------------------------------- Brazilian business daily Gazeta Mercantil reported that local flat steel-maker CSN will open a bidding process to expand its capacity, adding that the Company may sign contracts with suppliers by the end of the year. Among the suppliers rumored to have been contacted by the Company are: Voest Alpine, Nippon Steel and SMS-Demag. A check by Business News Americas with the company, however, did not yield confirmation of the plan. "For some time now, we have said that CSN needs to expand, but everything is being carefully studied. We still don't know what the next steps will be," CSN spokesman Gustavo Lima Ferreira told Business News Americas. The Company reportedly wants to increase total capacity to almost 7.5 million tons per year. The amount involved has not been determined yet, but CSN has informally presented the project to federal development bank BNDES. In 2001, CSN sent invitations to potential equipment suppliers, but the expansion project was put on hold during protracted merger talks with Anglo-Dutch steel group Corus (later abandoned) and during the economic turbulence associated with the country's presidential elections last year, said the report. CONTACT: CIA SIDERURGICA NACIONAL (CSN) Rua Lauro Muller 116-36 Andar, PO Box 2736 Rio De Janeiro, Brazil, 22299-900 Phone: 55 21 5451707 Fax: 5521 5451529 Home Page: http://www.csn.com.br/english/index.htm Contact: Benjamin Steinbruch, Chief Executive Officer Antonio Mary Ulrich, Executive Officer - Investors Relations EMBRATEL: Reaches Deal With Creditor Banks Over US$861 Mln Debt --------------------------------------------------------------- Local long-distance operator, Embratel, has reportedly reached an agreement with principal creditors that eliminates the risks of having to restructure again, Business News Americas says, citing tech news agency, IT Web. The report says the deal with creditors, made up of 25 banks from Brazil, Japan, Europe and the United States, restructured US$861 million of Embratel's debts and is set to gradually reduce the need for further restructuring as maturity nears. Under the deal, Business News Americas says Embratel will pay 20% in the original 2003-2004 due dates, 30% in the subsequent seven quarters, and the remaining 50% amortized two years after the original expiration dates. In addition, the deal also does not bar the company from investing in service and infrastructure quality. IT Web says the deal was reached March 17. CONTACT: Embratel Participacoes S.A. Silvia Pereira, Investor Relations Manager Tel: 55 21 2121-6474/9662 (messages) Email: Silvia.Pereira@embratel.com.br invest@embratel.com.br ========= C H I L E ========= ENDESA: Strikes Another Deal Involving Transmission Lines --------------------------------------------------------- After selling last month two assets worth US$377 million, Spain's biggest power company, Endesa SA, has entered into another deal involving the sale of transmission lines in Chile. Local generating unit, Empresa Nacional de Electricidad SA, owns these transmission lines, according to Bloomberg. HQI Transelec Chile SA, a division of Canada's Hydro-Quebec, will takeover the asset for US$110 million. Endesa says the sale is part of a strategy to reduce debt at Latin American units after a slump in currencies in Brazil and Argentina and weaker energy demand led to a drop in revenue from the region last year. Last month, the Spanish power firm received US$203 million for a distribution company in Chile and another US$174 million for a Chilean generator. Bloomberg did not identify the two companies. CONTACT: Jacinto Pariente North America Investor Relations Office Telephone no. 212/750-7200 URL: http://www.endesa.es ENERSIS: To Use New Electronic System for 2003 Procurements ----------------------------------------------------------- Chilean power firm, Enersis, announced recently that it will adopt an online procurement system beginning fiscal year 2003 to cut cost and shorten the processing of tenders. According to local daily El Diario, this will not be the first time that the company will use the electronic procurement system. Enersis Procurement Manager Eduardo Lopez says the company actually processed at least 65 contracts worth US$440 million in 2000-01 using this system. Compared to the traditional tender process, says Mr. Lopez, the electronic process only takes two to three days what took the former system two to three weeks to finalize a contract. In addition, the e-procurement system has also brought transparency to the purchase process and allowed the company to save around 15% of processing cost. The company, the paper says, will use the procurement platform of Opciona (http://opciona.com). This platform is owned by Endesa (63%), Enersis (15%), PwC Consulting (12%) and Commerce One (10%). The platform also offers e-sourcing, outsourcing, consulting services and other value-added services. CONTACT: ENERSIS Investor Relations: Ricardo Alvial Chief Investments & Risks Officer of Enersis Email: ram@e.enersis.cl Phone: (562) 353-4682 Contacts: Susana Rey, srm@e.enersis.cl Ximena Rivas, mxra@e.enersis.cl Pablo Lanyi-Grunfeldt, pll@e.enersis.cl GUACOLDA: AES Rejects Capital Hike, Favors Debt Refinancing ----------------------------------------------------------- Power generator, Guacolda, will now have to renegotiate debts with creditors after majority shareholder AES Gener blocked a capital hike initiative that would have raised US$60 million. According to Business News Americas, AES vetoed the proposal for fear that its 50% stake in the company will be diluted by local conglomerate Copec and the Von Appen group in the event of non- subscription. The two each hold 25% of Guacolda. The company, whose 'BBB-' corporate credit ratings was put on CreditWatch with negative implications by S&P last week, needs to repay about US$87 million of debts on April 29 and 30. According to some accounts, Guacolda Chairman Jose Florencio Guzman has already started negotiations with two groups of creditor banks -- one led by Citibank and Chile's BancoEstado and another led by Credit Suisse, which is offering a possible placement in foreign markets. Guacolda has a 304MW thermoelectric plant near the northern limit of Chile's central grid, Business News Americas says. MADECO: Rejects Sale of Packaging Unit to Complete Restructuring ---------------------------------------------------------------- Aluminum and copper products manufacturer, Madeco, denies it is selling Alusa, its flexible packaging unit, as part of an ongoing restructuring. CEO Tiberio Dall'Olio told Business News Americas recently that although the company posted a net loss of CLP1.61 billion last year, it is definitely not for sale. The subsidiary produces PVC and aluminum foil packaging and has operations in Chile, Argentina and Peru, the paper says. Rumors had previously abounded that the company was among those up for sale to complete Madeco's restructuring. CONTACT: MADECO Ureta Cox, 930 San Miguel, Santiago, Chile Phone: 56-2 5201461 Fax: 56-2 5516413 E-mail: mfl@madeco.cl Home Page: http://www.madeco.cl Contacts: Oscar Ruiz-Tagle Humeres, Chairman Albert Cussen Mackenna, Chief Executive Officer Investor Relations Phone: 56-2 5201380 Fax: 56-2 5201545 E-mail: ir@madeco.cl SANTA ISABEL: Dutch Parent Willing to Lower Sale Price ------------------------------------------------------ An unidentified Royal Ahold spokeswoman admitted Monday that the firm could sell its local chain of retail stores for less than US$150 million, amid rumors that a possible buyer is reconsidering its options. The official told Dow Jones Newswires that the actual price could "turn out lower or higher," adding that the previously announced sale price was merely "indicative." Local retailer Cencosud, which had previously showed interest in Santa Isabel, is reportedly balking at the price on concerns that it may have to assume unknown liabilities. Regulators had recently discovered accounting irregularities in the retail chain. Struggling with EUR12 billion plus of debts and an accounting scandal that has eroded investors' confidence in the company, the Dutch retailing giant needs to sell non-core and under-performing operations to stay afloat, Dow Jones says. Barely two weeks ago, Ahold said it would sell all of its Latin American operations. CONTACT: Royal Ahold Investor Relations: Huibert Wurfbain, 011-31-75-659-5813 or Media Relations: Annemiek Louwers, 011-31-75-659-5720 or Taylor Rafferty New York Media Relations: Ethan Sack, 212/889-4350 or Taylor Rafferty London Media Relations: Matthew Nardella, + 44 20 7936 0400 ============= E C U A D O R ============= * IMF Concludes 2003 Article IV Consultation with Ecuador --------------------------------------------------------- Public Information Notice (PIN) No. 03/47 April 7, 2003 International Monetary Fund 700 19th Street, NW Washington, D.C. 20431 USA On March 21, 2003, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Ecuador. Background Ecuador experienced severe economic stress in 1999, involving accelerating inflation, public debt default, and a currency and banking crisis. Following the adoption of the U.S. dollar as legal tender in January 2000, expectations stabilized, confidence returned to the banking system, and economic activity began to turn around. Demand was given further impetus by the start of the construction of a new oil pipeline, and escalating public sector spending. However, economic growth slowed again in 2002 due to policy slippages and faltering confidence. Fiscal discipline weakened with large increases in the public wage bill, new revenue earmarking, and discretionary tax cuts. Moreover, oil output dropped because of inefficiencies in PetroEcuador; the structural reform agenda was suspended; and there was a high level corruption scandal in June. By the end of the year, the treasury was very short of cash and facing payment arrears. Nevertheless, in September, the Ecuadorian congress approved the Fiscal Responsibility and Transparency Law, which sets medium-term fiscal rules. This law could substantially lower the public debt and the country risk spreads, thereby crowding in investment and employment in the non-oil economy. The government that took office on January 15, 2003 has taken bold measures aimed at strengthening the fiscal balance and helping to eliminate arrears. The new government's program also includes ambitious structural reforms to reduce rigidities in fiscal policy, resolve remaining problems with closed banks, and modernize the state enterprises. Completion of the oil pipeline will boost output growth over the medium term, and provide revenues that should provide the basis for a rapid reduction in public sector debt under the terms of the Fiscal Responsibility Law. Executive Board Assessment The Executive Directors commended the new government's quick and comprehensive actions to strengthen policies and address the challenges imposed by dollarization, while emphasizing the need for sustained implementation of the program. While the economy had begun to recover following dollarization, Directors expressed concern that performance had not been sustained in 2002. Rapid public sector wage increases had undermined the fiscal position and contributed to excessive inflation for a dollarized economy, and to a further appreciation of the real effective exchange rate. Moreover, structural reforms had been suspended in key sectors, further jeopardizing competitiveness. Directors regretted the build up of large payments arrears to domestic and external creditors. Directors also expressed concern about institutional weaknesses that give rise to poor governance and corruption. Under these circumstances, Directors considered that Ecuador faces major economic challenges. They, therefore, welcomed the bold measures taken swiftly by the new government after taking office on January 15. They commended the comprehensive nature of the authorities' program, which contains four main building blocks: immediate fiscal measures to boost revenues and control expenditures; fiscal structural reforms; liquidation of closed banks and other steps to resolve outstanding issues from the banking crisis; and reforms in the state enterprises. Directors also appreciated the authorities' efforts to build a social and political consensus for the program, and underscored that timely congressional approval of the reform laws is crucial. While recognizing that the program is ambitious, Directors called for its rigorous and timely implementation. Directors agreed that the upfront fiscal measures are necessary in view of the immediate liquidity needs, and because expenditure growth needs to be brought back in line with the demands of dollarization. Given the substantial increases in the wage bill in recent years, Directors agreed that a wage freeze is essential for 2003. At the same time, Directors fully supported the authorities' steps to strengthen the social safety net to compensate the poor for the effects of some of the revenue measures. Directors encouraged the authorities to improve targeting ahead of the planned elimination of the cooking gas subsidy at mid-year. Directors welcomed the plans to enhance the flexibility of fiscal policy by reforms in customs, civil service, and tax policy. These reforms are an integral part of the effort to limit the growth in public sector spending, maintain revenue buoyancy, and reduce revenue earmarking. Directors saw these reforms as necessary to establish a sustainable fiscal position over the medium term. Directors also strongly endorsed the authorities' efforts in setting up institutional and legal procedures to strengthen the foundation of fiscal policy. In particular, they welcomed the passage of the Fiscal Responsibility and Transparency Law, which creates a stabilization fund that provides a medium-term framework to substantially reduce Ecuador's debt and to protect the economy from external shocks. Many Directors expressed concern about the rapid growth in social security spending and urged the authorities to take precautionary steps to preserve the long-term solvency of the system. Directors expressed concern about the pace at which outstanding issues left from the 1999 banking crisis were being resolved. In particular, the Deposit Guarantee Agency (AGD) has yet to collect on most of the loans held by the bankrupt banks, risking severe asset erosion, and Directors strongly supported the authorities' recent efforts to audit these banks and liquidate them. Directors also noted the poor functioning of the public sector development banks and urged their early and comprehensive reform. Directors looked forward to the results of the planned Financial Sector Assessment Program exercise. Directors cautioned that, while Ecuador's medium-term growth potential is high, it can only be realized by sustained program implementation and strengthening competitiveness of the non-oil economy. The coming on stream of the new oil pipeline by end-2003 could alleviate pressures on the external current account, but it would be important to avoid crowding out the non-oil economy, and to cut debt levels rapidly. Therefore, Directors urged the authorities to adhere strictly to their fiscal reform and consolidation plan, and to press ahead with productivity- enhancing structural reforms, especially in the state enterprises. Such reforms would help strengthen competitiveness, and were seen as particularly crucial given the likely effects of real exchange rate appreciation and Dutch disease on the non-oil economy. Directors noted that, by strengthening savings and lowering the debt, Ecuador could reduce its risk profile and, thus, boost investment and employment in the non-oil economy. Directors also called for steps to improve governance, including reform of the politicized judicial system and strengthening of the rule of law, which would help improve the climate for domestic and foreign investment. Directors considered that statistical information provided to the Fund is generally adequate, but urged the authorities to improve the timeliness of fiscal data and the accuracy of revenue and expenditure data to enhance the monitoring of economic developments. Ecuador: Selected Economic and Financial Indicators Prel. Proj. 1999 2000 2001 2002 2003 (Annual percentage changes; unless otherwise indicated) National income and prices Real GDP -6.3 2.8 5.1 3.0 3.5 Real GDP per Capita -8.2 0.9 3.2 1.1 1.6 Consumer price index, End-of-period -25.2 -10.1 22.4 9.4 6.5 Real effective exchange rate (depreciation - ) -30.8 -6.6 39.4 10.1 --- Banking system Liabilities to the private sector 19.2 8.5 24.2 18.0 11.2 Credit to the private sector --- -5.1 16.9 13.8 10.8 EMBI Ecuador (percentage points spread) 2,650 2,866 1,233 1,801 --- (In percent of GDP) Public Finances Revenue 22.5 27.6 24.7 36.1 27.0 Noninterest expenditure 1/ 19.1 19.9 20.4 21.7 21.9 Primary balance (deficit - ) 3.4 7.7 4.3 4.5 5.2 Overall balance (deficit - ) -4.6 1.0 -0.5 1.0 1.9 Total Public Debt 101.6 91.4 70.2 59.6 51.9 Domestic 18.7 19.4 15.7 12.8 9.5 External 82.8 72.0 54.5 46.9 42.2 Saving, Investment, and External Balance National saving 20.5 26.4 23.2 20.7 20.2 Gross Investment 14.7 20.1 25.7 25.7 25.5 Foreign saving= external current account deficit (+) -5.7 -6.3 2.4 5.0 5.3 To view Ecuador's supplementary letter of intent: http://bankrupt.com/misc/Ecuador_LOI.htm CONTACT: IMF EXTERNAL RELATIONS DEPARTMENT Public Affairs: Phone: 202-623-7300 Fax: 202-623-6278 Media Relations: Phone: 202-623-7100 Fax: 202-623-6772 ============= J A M A I C A ============= JUTC: Union Threatens Industrial Action --------------------------------------- Cash-strapped Jamaica Urban Transit Company (JUTC) received an ultimatum from The Union of Clerical, Administrative and Supervisory Employees (UCASE), which represents its workers. According to a report from RJRNews.Com, the union gave the Company until 5:00 p.m. Monday to call a meeting; otherwise, it would have to face industrial actions by workers. UCASE Vice President Danny Roberts said the union is no longer willing to wait for management to call a meeting. The state-run bus Company had reportedly refused to discuss the ongoing redundancies with the union. Mr. Roberts also said that the Company has advertised 29 new posts although it has denied that a redundancy exercise is taking place. UCASE said it will instruct workers to go on strike as early as Tuesday, if the Company fails to comply their requests. The union has charged the company of violating sections of the Labour Relations Code in relation to the restructuring/redundancy exercise. =========== M E X I C O =========== AVANTEL: Executive Denies Debt Restructuring, Sale Rumors --------------------------------------------------------- Oscar Rodriguez, general director of telecommunications company, Avantel, denies rumors that the Company is undergoing debt restructuring. A report from NewsEdge quoted the executive as saying, "We do not have an excess of money, but we are quite able to make [the payments] ourselves. We will complete the debt repayment in six or seven years." Mr. Rodriguez also downplayed the Company's liabilities, saying they are "much less than is believed and we have been covering them with the cashflow that we are able to generate." He denied rumors that the Company is up for sale. In fact, he said its workers are eligible to participate in the "Mexicanization" process Citigroup is carrying out. He added that the process should be complete by the end of May or early June. Presently, said the report, some 22,000 Avantel employees have taken advantage of the one-time stock offer. Citigroup owns 55 percent of Avantel. CONTACT: Citigroup Inc 9 Park Ave. New York United States 10043 Phone: +1 212 559-1000 Home Page: http://www.citigroup.com Contact: Sanford I. Weill, Chairman & Chief Executive AZTECA HOLDINGS: Extends Bond Exchange Offer Anew ------------------------------------------------- TV Azteca's parent company, Azteca Holdings, said on Monday that it has once again extended the deadline for its offer to exchange existing 10.5 percent 2003 senior secured notes for new 10.75 percent senior secured amortizing notes due 2008. Azteca Holdings extended the deadline to April 14, reports Reuters News, adding that this is the second time the Company has extended the said deadline. The original deadline was set at March 31, but was moved to April 7. As of March 31, US$41.993 million in principal of the original amount of the 10.5 percent notes had been tendered for exchange, said the report. Azteca holdings controls 55.5 percent of TV Azteca in Mexico. It is one of the two largest producers of Spanish language television programming in the world, operating two national television networks in Mexico, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. TV Azteca's affiliates include Azteca America Network, a broadcast television network focused on the rapidly growing United States Hispanic market; Unefon, a Mexican mobile telephony operator focused on the mass market; and Todito.com, an Internet portal for North American Spanish speakers. CONTACT: Azteca Holdings, S.A. de C.V. Bruno Rangel Phone: +5255-30-99-9167/ Home Page: http://www.tvazteca.com.mx EMPRESAS ICA: Termoelectrica de Mexicali Project Right On Track --------------------------------------------------------------- Empresas ICA's consortium working on the US$350 million, 600MW thermoelectric project called Termoelectrica de Mexicali near Mexicali is right on track with the project, whose construction was started in September 2001. Tom Murnane, a spokesperson for Sempra Energy Resources, one of ICA's partners told Business News Americas, "We are more than 95% complete and it is moving ahead according to schedule." The plant is being built through an EPC turnkey, said the report. ICA and Sempra are working with US engineering-construction firm Fluor Daniel (NYSE: FLR). Natural gas from the US$230 million, 215-mile North Baja pipeline will supply the project from the Arizona border. Sempra Energy International, PG&E Corporation's National Energy Group and Mexico's Proxima Gas own the pipeline, which was completed in September 2002, said BNAmricas. Initially, the plant is designed to serve California, Arizona and Nevada. But Mr. Murnane added that power could be delivered to Mexico as well, if deals could be reached. 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 PEMEX: Investing in Two Cryogenics Plants, Cuts Down LPG Imports ---------------------------------------------------------------- Mexico's state oil company, Pemex, will invest in two cryogenics plants at Reynoso, reports Business News Americas, citing Pemex Gas y Petroquimica Basica deputy director Salvador Garcia-Luna. The Company has earmarked US$130 million for the projects this year. The new plants will allow the Company to cut down on liquefied petroleum gas (LPG) imports. Presently, Pemex only produces 205,000 barrels of the country's daily LPG demand of 335,000 barrels. Pemex imports LPG to fill in the gap. Mr. Garcia-Luna said Mexican-US engineering and construction joint venture ICA-Fluor Daniel and German engineering firm Linde Process Plants have begun working on the plants. Based on the working schedules, the first cryogenic plant should be operational by December 2003 and the second by February 2004. PEMEX: Places EUR750 Million for Pidiregas Financing ---------------------------------------------------- Pemex has placed EUR750 million (US$797 milion) in seven-year bonds to finance its Pidiregas long-term productive infrastructure projects, reports Business News Americas, citing a statement from Pemex. Investment banks BNP Paribas and JP Morgan reportedly handled the issue, which was channeled through the Pemex Master Trust financing vehicle. The bonds pay 6.625 percent interest per semester and will yield 6.87 percent, 305 basis points above the German Treasury bond benchmark, said the report. Demand on the bonds, which expire April 4, 2010, exceeded EUR1.7 billion from over 200 investors, said the Company. SATMEX: To Launch New Satellite in August ----------------------------------------- Satelites Mexicanos (Satmex) plans to launch its Satmex 6 satellite in August, NewsEdge says. The satellite will have 24 channels in the Ku band. The US$600 million satellite will put Mexico in the frontline of satellite infrastructure, and make it the only Latin American country to have satellites capable of regional service, said the report. The satellite will cover the area between the north of the United States to the southern tip of South America. Meanwhile, the satellite launch is good news for the Company, which had to slash 21 percent of its work force and reduced costs by millions of dollars in order to meet its financial obligations. Presently, Satmex is seeking final approval of a loan that would be used to cover the debt incurred in the construction of Satmex 6. An earlier report from the Troubled Company Reporter-Latin America said that the Company is confident that the loan will be approved. ================================= T R I N I D A D & T O B A G O ================================= BWIA: Caribbean Star Owner Not Interested in BWIA Purchase ---------------------------------------------------------- The owner of regional airline, Caribbean Star, is not interested in buying out or into BWIA, said Caribbean Star's director of scheduling, government affairs and network operations Edward Gilkes. "Let me make one categorical statement - no," said Mr. Gilkes, when asked whether Texas billionaire Allen Stanford is interested in buying BWIA. Mr. Gilkes clarified that the meeting between Mr. Stanford and Trinidad and Tobago Prime Minister Patrick Manning discussed government support for the Stanford Caribbean Development Fund, and nothing else. However, said Mr. Gilkes, the Caribbean Star is not opposed to inter-line agreements, such as code sharing with either BWIA or LIAT, but received no response from the two airlines. Aside from the Caribbean Star, which competes with those two airlines on the Tobago airbridge, Mr. Stanford also owns the Caribbean Sun Airlines. The report did not indicate any comments from BWIA officials. The airline is currently under pressure from creditors and dismissed employees, after it failed to meet financial obligations to them. CONTACT: British West Indies Airways Phone: + 868 627 2942 E-mail: mailto:mail@bwee.com Home Page: http://www.bwee.com/ Contacts: Conrad Aleong, President and CEO (Trinidad) Beatrix Carrington, VP Marketing and Sales (Barbados) Paul Schutz, CFO (Trinidad) Caribbean Star Airlines Coolidge Industrial Estate P.O. Box 1628W, Airport Road, St. John's, Antigua West Indies Phone: 1 (268) 480-2500 Home Page: http://www.flycaribbeanstar.com/ Contacts: Paul Moreira, Chief Executive Officer Sandra Scotland, Director of Marketing BWIA: Aid Withholds Aid Pending Turnaround Plan First ----------------------------------------------------- If BWIA, the national flag carrier, goes under today, it will only have itself to blame, says Prime Minister Patrick Manning, who said he had given the carrier enough time to avoid this outcome. In an interview with Trinidad Express, Mr. Manning said the government's position was clear right from the start: BWIA must present a viable plan before the government will inject any cash into it. Up until Monday night, says Mr. Manning, the government had yet to see any plan from the carrier. Today is the deadline for the company to pay more than US$18 million to its major aircraft lessor, International Lease Finance Corporation, says the paper. Failure to pay could result in seizure of BWIA aircraft. According to Junior Finance Minister Ken Valley, the government is willing to pay up to 49% of the airline's debt. He, however, echoed the prime minister's position that a viable plan must be presented first before the government releases any cash. But BWIA CEO Conrad Aleong insists the Government has "to give the money." He said if the government fails to bail out the airline, "chances are we go down." Mr. Manning, however, is standing firm on his position: "[T]hey must present a (viable) plan before that. If they don't do that, they (will) go through." PETROTRIN: S&P Affirms 'BBB-' Rating After Sovereign Upgrade ------------------------------------------------------------ Standard & Poor's Ratings Services said on Monday that it affirmed its local and foreign currency 'BBB-' corporate credit rating on Trinidad-based Petroleum Co. of Trinidad & Tobago Ltd. (Petrotrin). The rating affirmation follows the upgrade of the Republic of Trinidad & Tobago. The outlook on the rating of Petrotrin is stable. Long-term debt maturities total about US$50 million yearly between 2002 and 2006 and the company has approximately US$200 million in short-term debt. "Although the ratings on Petrotrin and the Republic are not equalized, the rating assigned to Petrotrin is supported by Trinidad & Tobago's 100% ownership of Petrotrin, and the government's continued support for Petrotrin's financial strength," states Standard & Poor's credit analyst Jose Coballasi. Petrotrin operates on- and offshore the Caribbean nation of Trinidad & Tobago. Initiatives implemented throughout the company since 1997 (E&P) and 1990 (refining) have enabled Petrotrin to partly remedy below-average past operating and financial performance. Still, the company faces the twin challenges of reversing E&P production declines and economically growing its reserve base, and strengthening refining performance in an environment of increasing competition. To this end, Petrotrin has invested in new proprietary reserve positions and plans to explore and develop higher risk/return prospects as a minority partner with major international oil companies. Results could materially augment and diversify (on a geographic and a commodity basis) reserves and lower unit operating and finding costs. At the same time, Petrotrin is reviewing several "Phase 2" projects that could further raise refining operating efficiency and throughput. While premium prices and transportation advantages enhance gross margins, capital projects underway by larger regional competitors could jeopardize Petrotrin's competitiveness in existing and prospective markets. The stable outlook reflects Standard & Poor's expectation that the government of Trinidad & Tobago will pursue policies and actions that support and strengthen Petrotrin's financial health and encourage prudent growth. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions. Analyst: Jose Coballasi Mexico City Phone: (52) 55-5279-2014 *********** 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 * * *