/raid1/www/Hosts/bankrupt/TCRLA_Public/030416.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 16, 2003, Vol. 4, Issue 75
Headlines
A N T I G U A & B A R B U D A
LIAT: Financial Rescue Prevails; BWIA Merger Likely In June
A R G E N T I N A
AT&T LATIN AMERICA: Involuntary Chapter 11 Process Commenced
AT&T LATIN AMERICA: Updates $750,000 Letter of Intent
DIRECTV LA: Judge Denies Motion To Transfer Case To Florida
DIRECTV LA: Hughes 1Q03 Results Buoy Company Results
PECOM ENERGIA: Petrobras Concerned Elections May Hold Back Sale
REPSOL YPF: Superior Justice Court Scraps Lower Court's Ruling
TELECOM ARGENTINA: Initiates Debt Buyback Offer
TGS: Capital, Interest Payments Due Tuesday Expected to Default
YPF: Dividend Payment Leaves Credit Quality Intact
* Argentina Gets Authority To Buy Dollars To Stop Peso Strength
* IMF Wants To Take Part In Argentine Debt Negotiations
TYCO INTERNATIONAL: Unfair Contract Termination Prompts Suit
B O L I V I A
MILLICOM INTERNATIONAL: Amends Terms Of Exchange Offer
B R A Z I L
BCP: Controllers Relinquish Stake To Restructure Debt
CEMIG: Announces General Shareholders' Meeting
ELETRONET: Postpones Shareholders Meeting To April 24
TUPY: Issues Notes To Refinance Maturing Debt
C H I L E
GUACOLDA: $150M Notes Rated 'BBB-'; On CreditWatch Negative
C O L O M B I A
* S&P Affirms Colombia's Sovereign Credit Ratings
M E X I C O
CFE: Electrica de Medellin Wins US$33M Trans Line Contract
DESC: Fitch Cuts Ratings From `BB+' To `BB'
GRUPO TFM: Seeks To Amend Credit, Term Loan Agreements
GRUPO TMM: Sells Interest In Ports, Terminals Division
HAYES LEMMERZ: Seeks Exclusivity Period Preservation
T R I N I D A D & T O B A G O
BWIA: Branson Sees Hazy Outlook, Urges Government Intervention
BWIA: Additional Stake Set As Condition for Bailout
BWIA: T&T Government Calls on Minority Shareholders To Aid BWIA
BWIA: Unions Take BWIA To Court
V E N E Z U E L A
PDVSA: Meeting 100% of Foreign Sales Commitments
- - - - - - - - - -
=================================
A N T I G U A & B A R B U D A
=================================
LIAT: Financial Rescue Prevails; BWIA Merger Likely In June
-----------------------------------------------------------
A merger between troubled regional carriers BWIA and LIAT is
expected to take place by the end of June. Citing St. Vincent and
the Grenadines Prime Minister Ralph Gonsalvez, the Trinidad
Express reports that a decision has been reached in principle to
transform BWIA and LIAT into one carrier to serve the region.
Indication of the two becoming a single carrier-a development,
long mooted by some regional governments and airline officials-
came at the conclusion of two separate meetings in Barbados over
the weekend, the report says.
Aside from Mr. Gonzalvez, Prime Minister Patrick Manning of
Trinidad and Tobago, Prime Minister Owen Arthur of Barbados, and
the Prime Ministers of Antigua and Barbuda attended the meeting.
Mr. Gonsalvez added that the leaders have reached an agreement to
provide interim financial assistance to LIAT to keep it afloat
until the proposed merger plans take effect.
The report adds that the government of Trinidad and Tobago will
make ESS12.5 million available for LIAT, adding that aid may also
include ESS4.8 million to be provided by Antigua and Barbuda;
ESS3 million by Barbados; ESS2.5 million from St Vincent and the
Grenadines and ESS300,000 by Grenada.
However, the report indicates that no official statement
concerning the planned merger has been released.
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
=================
AT&T LATIN AMERICA: Involuntary Chapter 11 Process Commenced
------------------------------------------------------------
AT&T Latin America Corp. (OTC Bulletin Board: ATTL.OB) announced
Monday that Matlin Patterson, one of the company's secured
creditors, filed a petition to reorganize ATTL under Chapter 11
in the Southern District of Florida, Miami Division. This
petition applies to AT&T Latin America Corp., as well as its
Argentine subsidiary.
The company will continue to meet customer commitments and
provide the high-quality service the company's customers have
come to expect. Additionally, the company will continue working
with lenders, creditors and other third parties to enhance the
company's capital structure, improve liquidity and explore
potential investor opportunities. In addition to the other
parties of interest, ATTL continues to work directly with its
largest shareholder and creditor, AT&T Corp., as the company's
restructuring efforts progress. It is expected that AT&T Latin
America will finance its reorganization through existing cash and
liquidity generated from operations. AT&T Latin America and its
subsidiaries in Argentina, Brazil, Chile, Colombia, and Peru will
continue to operate on a normal basis, providing high-quality
communication services to more than 140,000 total customers,
including 5,400 data/Internet business customers and 800
multinational corporations throughout Latin America.
The stated purpose of Matlin's filing was to counter possible
adverse action by an unsecured creditor. For these same reasons,
the company was itself preparing a voluntary petition for Chapter
11, and this action merely accelerates the process. The company
expects to convert the existing process into a voluntary
reorganization in the near future.
Earlier this year, ATTL announced that it might use a Chapter 11
filing as a mechanism to restructure its debt or to protect its
assets and business if creditors initiated actions against the
company or its subsidiaries. The initiation of the Chapter 11
process is in keeping with this strategy. Simultaneously, the
sale process is progressing on schedule, and the company has
provided guidelines to potential investors regarding the delivery
of initial indications of interest. A Chapter 11 filing will
provide an efficient mechanism for the implementation of a more
attractive capital structure and help speed the ultimate sale
transaction.
"This is not an unexpected development in the process of
restructuring the company and seeking a new investor," said
Patricio Northland, CEO, President and Chairman of the Board of
ATTL. "Since we began our restructuring process late last year,
we have always contemplated the possibility of a Chapter 11
filing as a mechanism to restructure our debt. We are on track
with all elements of our restructuring plan. We have achieved
significant cost reductions in all areas of our business and we
have reduced our use of cash and dramatically improved our cash
outlook." Additionally, Mr. Northland indicated that ATTL's
business remains strong. "Our financial and operating results for
the first two months of the year beat our budget projections,
and, once we close our books, we expect a positive result in
March as well. I am pleased with the progress we have made in
positioning ourselves to increase our profitability and prudently
manage our cash. When we release our first quarter results, I
believe it will be self-evident that ATTL's operating and
financial performance is on a strong upward trajectory." Mr.
Northland concluded by saying, "Our focus remains on maximizing
our advanced network and regional presence to deliver our high-
quality services to each of our customers, building upon our
reputation as the top quality service provider in Latin America.
This is our commitment."
"Great strides have been made toward our goal to reach an
operational cash-flow positive position," said Lawrence E. Young,
Executive Vice President and Chief Financial Officer of AT&T
Latin America. Furthermore, Young added "Chapter 11 gives us the
opportunity to reorganize the company's capital structure and
operations in an efficient and organized manner, and will allow
us to maintain our financial stability as we reduce our debt
burden."
ATTL continues to seek a strategic or financial investor to
purchase or recapitalize the company. In February, ATTL hired
Greenhill & Co. to manage the sales process. To-date, the company
has received qualified inquiries from numerous entities, both
strategic and financial, that are interested in purchasing all or
parts of the company. Said Mr. Northland, "We are confident that
AT&T Latin America is an attractive asset for any company that
desires to operate and grow their telecom business in the Latin
American market. This confidence is supported by the level of
interest we have generated from many quality investors and
operators. Our desire is to move quickly, but prudently, to
secure an investor for the company while addressing responsibly
the interests of our constituents."
About AT&T Latin America
AT&T Latin America Corp., headquartered in Washington, D.C., is a
facilities-based provider of integrated business communications
services in five countries: Argentina, Brazil, Chile, Colombia
and Peru. The company offers data, Internet, voice, video-
conferencing and e-business services.
CONTACT: AT&T Latin America
Marcelo Esquivel
Phone: 011-562-241-4706
Email: marcelo.esquivel@attla.com
or
Catherine Castro
Phone: +1-202-689-6336
Email: catherine.castro@attla.com
AT&T LATIN AMERICA: Updates $750,000 Letter of Intent
-----------------------------------------------------
An AT&T source admitted that the US-based company is unlikely to
reach a definitive agreement by April 15 to sell its 67% stake in
AT&T Latin America to the investment group Southern Cross,
Business News Americas relates.
"The FCC would still need to approve [such a sale before we could
announce it], which would take some time, so I don't think we'll
have anything to announce tomorrow [April 15]," the source said.
As a result, AT&T is likely to accept an obligation to pay
Southern Cross US$750,000.
In early January, AT&T announced that Southern Cross had signed a
letter of intent to acquire the ATTL stake for US$1,000, while
assuming only US$440 million of AT&T Latin America's US$1.1
billion debt. The two companies set April 15 as the deadline for
AT&T to pay Southern Cross US$750,000 if no agreement had been
reached.
The source said the letter of intent remains valid and a sale to
Southern Cross is still a possibility.
AT&T is ATTL's largest creditor, accounting for US$604 million of
the Latin American unit's US$850 million debt.
DIRECTV LA: Judge Denies Motion To Transfer Case To Florida
-----------------------------------------------------------
A creditor's motion to transfer the Chapter 11 bankruptcy case of
DirecTV Latin America LLC to a Florida court was scrapped Monday
by a bankruptcy judge handling the case, reports Dow Jones.
"I give significant deference to the committee with all five
members opposed to the motion, including one from Florida," Chief
Judge Peter J. Walsh of the U.S. Bankruptcy Court in Wilmington
said. "From a personal perspective, I would like to transfer this
case but I really don't think the movant has made a persuasive
case."
In his decision, Judge Walsh took into consideration Hughes
Electronics Corp.'s role as a "major player in the case." DirecTV
Latin America's owes Hughes Electronics roughly US$1.345 billion
in debt under a prepetition agreement.
DIRECTV LA: Hughes 1Q03 Results Buoy Company Results
----------------------------------------------------
- DIRECTV U.S. Revenues Increase over 16% to $1.71 Billion;
- DIRECTV U.S. EBITDA More than Doubles to Record $230 Million
and Operating Profit Increases to $106 Million;
- DIRECTV U.S. Attains Higher than Expected Net New Owned and
Operated Subscriber Additions of 275,000; Increases Full Year
Guidance
Hughes Electronics Corporation ("HUGHES"), a world-leading
provider of digital television entertainment, broadband satellite
networks and services, and global video and data broadcasting,
reported Monday that first quarter 2003 revenues increased 10.0%
to $2,227.3 million, compared with $2,024.8 million in the first
quarter of 2002. EBITDA1 for the quarter was $305.0 million and
EBITDA margin1 was 13.7%, compared with the first quarter of 2002
EBITDA of $164.5 million and EBITDA margin of 8.1%. Operating
profit for the first quarter of 2003 was $41.9 million compared
with an operating loss of $87.7 million in the first quarter of
2002.
"An outstanding first quarter performance by DIRECTV U.S. drove
HUGHES' strong first quarter revenue and EBITDA growth," said
Jack A. Shaw, HUGHES' president and chief executive officer. "The
DIRECTV U.S. performance is a direct result of our profitable
growth strategy that focuses on attracting long-term, high
quality subscribers who provide us with exceptional financial
returns."
Shaw added, "DIRECTV U.S.' better-than-expected quarterly
performance for both subscribers and average monthly revenue per
subscriber drove revenues up by over 16% to more than $1.7
billion. In addition, DIRECTV U.S.' EBITDA more than doubled in
the quarter to $230 million - an all-time record - as a result of
the strong revenue growth along with a sharp increase in
operating margins due in part to our ongoing efforts to improve
our cost structure." Shaw continued, "Also contributing to
DIRECTV U.S.' strong financial performance was a monthly customer
churn rate of only 1.5% during the quarter, representing the
lowest level attained in a first quarter in four years."
Shaw finished, "The first quarter was very significant for HUGHES
in many ways. First, due to strong operating results across the
company, HUGHES reached an important milestone in the first
quarter: operating profit of nearly $42 million - the first time
we have generated operating profit in a quarter in over four
years. Next, because of DIRECTV U.S.' strong performance in the
first quarter, we are increasing HUGHES' and DIRECTV U.S.' full
year 2003 guidance for both revenue and EBITDA, and we are also
raising our DIRECTV U.S. full year subscriber guidance. In
addition, last week, GM and HUGHES announced their intentions to
split-off HUGHES into an asset-based security that will be 34%
owned by News Corp. The combination of HUGHES' improving outlook
along with the planned News Corp. transaction will provide GMH
shareholders with considerable potential for value creation."
Also impacting the EBITDA comparison were several one-time items
in the first quarter of 2002. HUGHES recorded a $95 million one-
time gain in last year's first quarter based on the favorable
resolution of a lawsuit filed against the U.S. government on
March 22, 1991. The lawsuit was based upon the National
Aeronautics and Space Administration's ("NASA") breach of
contract to launch ten satellites on the Space Shuttle. Also
impacting the 2002 first quarter was a charge of $83 million to
provide for losses associated with a contractual dispute with
General Electric Capital Corporation ("GECC"). Of this amount,
$56 million was recorded as a charge to "Selling, general and
administrative expenses," and the remaining $27 million was
recorded as "Interest Expense" (see the Direct-To-Home Broadcast
segment for more details). In addition, DIRECTV Latin America
("DLA") recognized an EBITDA loss of approximately $32 million in
the first quarter of 2002 due to the devaluation of the
Argentinean peso.
***HUGHES believes EBITDA is a measure of performance used by
some investors, equity analysts and others to make informed
investment decisions. HUGHES management uses EBITDA to evaluate
the operating performance of HUGHES and its business segments, as
a measure of performance for incentive compensation purposes, and
for other purposes discussed in footnote 1, below. HUGHES
reconciles this non-GAAP measure to operating profit in the
schedule below titled Non-GAAP Financial Reconciliation
Schedule.***
Operating profit for the first quarter of 2003 improved to $41.9
million compared with an operating loss of $87.7 million in the
first quarter of 2002 primarily due to the DIRECTV U.S.
operational improvements and the first quarter 2002 items that
impacted EBITDA discussed above.
HUGHES had a first quarter 2003 net loss of $50.9 million
compared to a net loss of $837.7 million in the same period of
2002. The improvement was primarily due to a first quarter 2002
charge associated with HUGHES' adoption of Statement of Financial
Accounting Standards ("SFAS") No. 142, "Goodwill and Other
Intangible Assets." As a result of the completion of the required
transitional impairment tests, HUGHES wrote-down $557 million of
goodwill related to DIRECTV Latin America, $108 million of
goodwill related to DIRECTV Broadband, Inc ("DIRECTV Broadband")
and $16 million of goodwill associated with a Hughes Network
Systems ("HNS") equity investment in the first quarter of 2002.
In accordance with SFAS No. 142, these charges were recorded as
"Cumulative effect of accounting change, net of taxes." Also
impacting the quarter was the improved operating profit, a lower
income tax benefit in the first quarter of 2003 due primarily to
the lower pre-tax loss, and a $29 million charge in the first
quarter of 2002 related to a loan guarantee for an HNS affiliate
in India. In addition, DIRECTV Broadband, now accounted for as a
discontinued operation, had lower net losses in the first quarter
of 2003 due to its shutdown on February 28, 2003.
SEGMENT FINANCIAL REVIEW: FIRST QUARTER 2003
Direct-To-Home Broadcast
First quarter 2003 revenues for the segment increased 13.3% to
$1,847.9 million from $1,630.4 million in the first quarter of
2002. The segment had EBITDA of $211.3 million compared with
negative EBITDA of $20.9 million in the first quarter of 2002.
Operating profit for the segment was $38.3 million in the first
quarter of 2003 compared to an operating loss of $164.0 million
in the same period of 2002. Included in the segment's 2002 EBITDA
and operating loss is a charge of $56 million to provide for
losses related to a contractual dispute with GECC associated with
an agreement consummated in July 1995 whereby GECC agreed to
establish and manage a credit program for consumers who purchased
DIRECTV programming and related hardware.
Also, on February 28, 2003, HUGHES completed the shutdown of the
DIRECTV DSLTM service. DIRECTV Broadband is now accounted for as
a discontinued operation in the consolidated financial statements
and its revenues, operating costs and expenses, and non-operating
results are no longer included in the Direct-To-Home Broadcast
segment for the periods presented.
United States: Excluding subscribers in the National Rural
Telecommunications Cooperative ("NRTC") territories, DIRECTV
added 701,000 gross subscribers and, after accounting for churn,
275,000 net subscribers in the quarter. DIRECTV owned and
operated subscribers totaled 9.77 million as of March 31, 2003,
11% more than the 8.79 million cumulative subscribers as of March
31, 2002. For the first quarter of 2003, the total number of
subscribers in NRTC territories fell by 30,000, reducing the
total number of NRTC subscribers as of March 31, 2003, to 1.65
million. As a result, the DIRECTV platform ended the quarter with
11.42 million total subscribers.
DIRECTV reported quarterly revenues of $1,708.1 million, an
increase of over 16% from last year's first quarter revenues of
$1,465.8 million. The increase was primarily due to continued
strong subscriber growth as well as increased average monthly
revenue per subscriber ("ARPU"). ARPU increased $2.40 to $59.10
in the quarter primarily due to increased customer purchases of
local channel and premium programming packages, as well as
additional fees from the increased number of customers that have
multiple set-top receivers.
EBITDA for the first quarter of 2003 more than doubled to a
record $230.4 million compared to EBITDA of $93.7 million in last
year's first quarter. This increase was due to the additional
gross profit gained from DIRECTV's increased revenue, an improved
mix of higher-margin revenues primarily related to increased
sales of local channel packages and fees from customers that have
multiple set-top receivers, and the favorable impact resulting
from continued cost reductions.
Operating profit in the quarter increased to $106.0 million
compared to an operating profit of $8.6 million in the first
quarter of 2002. The improved operating profit was primarily due
to the reasons discussed above for the change in EBITDA partially
offset by increased depreciation and amortization related to the
launch of DIRECTV 5 in May of 2002, and additional infrastructure
expenditures made during the last year.
Latin America: On March 18, 2003 DIRECTV Latin America, LLC
announced that in order to aggressively address the company's
financial and operational challenges, it had filed a voluntary
petition for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. The filing applies only to DIRECTV Latin
America, LLC, a U.S. company, and does not include any of its
operating companies in Latin America and the Caribbean. DIRECTV
Latin America, LLC and its operating companies are continuing
regular operations.
The DIRECTV service in Latin America lost 54,000 net subscribers
in the first quarter of 2003 primarily due to the economic
turmoil following the general strike in Venezuela. The total
number of DIRECTV subscribers in Latin America as of March 31,
2003, was approximately 1,528,000 compared to about 1,642,000 as
of March 31, 2002, representing a decline of approximately 7%.
Revenues for DIRECTV Latin America declined to $140 million in
the quarter from $165 million in the first quarter of 2002 mostly
due to the devaluation of the Venezuelan and Brazilian currencies
over the last year, as well as the lower average number of
subscribers.
DIRECTV Latin America recorded negative EBITDA of $22 million in
the quarter compared to negative EBITDA of $61 million in the
same period of 2002. The lower EBITDA loss was primarily due to
the $32 million loss related to the devaluation of the
Argentinean peso in 2002 and aggressive cost cutting over the
past year, partially offset by the lower gross profit related to
the lower revenues.
Operating loss in the quarter was $71 million compared to
operating loss of $119 million in the first quarter of 2002. The
lower operating loss was due to the reasons discussed above for
the change in EBITDA and decreased depreciation expense.
Satellite Services
PanAmSat Corporation ("PanAmSat"), which is approximately 81%-
owned by HUGHES, generated first quarter 2003 revenues of $199.8
million compared with $207.1 million in the same period of the
prior year. The decrease was primarily due to a termination fee
received in 2002 associated with one of the company's video
customers and lower occasional-use revenues during the first
quarter of 2003. These declines were partially offset by
increased network services revenue and PanAmSat's new G2
Satellite Solutions division, which was formed after the
acquisition of Hughes Global Services on March 7, 2003.
EBITDA for the quarter was $148.6 million and EBITDA margin was
74.4%, compared with first quarter 2002 EBITDA of $151.1 million
and EBITDA margin of 73.0%. The EBITDA margin improvement was
principally due to the company's continued focus on operational
efficiencies and lower bad debt expense partially offset by the
termination fee received in 2002. The decrease in EBITDA was
primarily due to the termination fee received in 2002. Also
impacting the change in EBITDA and EBITDA margin were several
significant items recorded in the first quarter of 2002 including
a $40 million gain in relation to the settlement of the PAS-7
insurance claim, net facilities restructuring and severance
charges of $13 million, and a $19 million loss on the conversion
of sales-type leases to operating leases.
PanAmSat generated operating profit of $76.3 million in the first
quarter of 2003 compared with operating profit of $57.1 million
in the same period of 2002. The improved operating profit was due
to reduced satellite depreciation expense which was partially
offset by the EBITDA changes discussed above.
As of March 31, 2003, PanAmSat had contracts for satellite
services representing future payments (backlog) of approximately
$5.46 billion compared to approximately $5.55 billion at the end
of the fourth quarter of 2002.
Network Systems
HNS generated first quarter 2003 revenues of $247.4 million
compared with $242.8 million in the first quarter of 2002. The
increase was principally due to higher sales of DIRECTVr receiver
systems and revenues from the larger DIRECWAY residential and
small office/home office ("SOHO") subscriber base, partially
offset by lower sales in the carrier segment due to the
substantial completion of the Thuraya Satellite
Telecommunications Company and Inmarsat Ltd. contracts. HNS
shipped 629,000 DIRECTV receiver systems in the first quarter of
2003 compared to 430,000 units in the same period last year.
Additionally, as of March 31, 2003, DIRECWAY had approximately
152,000 subscribers in North America compared to 111,000 one year
ago, an increase of approximately 37%.
HNS reported negative EBITDA of $22.2 million compared to
negative EBITDA of $30.5 million in the first quarter of 2002.
Operating loss in the quarter was $39.8 million compared to an
operating loss of $48.5 million in the first quarter of 2002. The
improvement in EBITDA and operating loss was primarily
attributable to a lower loss in the Consumer DIRECWAY business
due to improved efficiencies associated with the larger
subscriber base and a $6 million charge related to headcount
reductions recorded in 2002.
BALANCE SHEET
From December 31, 2002 to March 31, 2003, the company's
consolidated cash balance increased $1,833.6 million to $2,962.2
million and total debt increased $1,897.0 million to $5,014.8
million. These changes resulted in an increase in net debt of
$63.4 million to $2,052.6 million. Net debt is defined as the
difference between the consolidated cash balance and the
consolidated debt balance of HUGHES.
In the first quarter of 2003, DIRECTV U.S. completed several
financing transactions. On February 28, DIRECTV U.S. closed a
$1.4 billion senior notes offering. The $1.4 billion senior notes
were offered in a Rule 144A / Regulation S private placement and
bear interest at an 8.375 percent annual rate, payable semi-
annually. The notes will mature on March 15, 2013 and are
callable on or after March 15, 2008. The notes are guaranteed by
all of DIRECTV U.S.' domestic subsidiaries. On March 6, DIRECTV
U.S. closed senior secured credit facilities totaling $1.675
billion. The facilities consist of a $250 million five-year
revolving credit facility, a $375 million five-year Term A loan
and a $1.05 billion seven-year Term B loan. The Term A loan
includes a $200 million delayed draw component. The facilities
are secured by substantially all of DIRECTV U.S.' assets and are
guaranteed by all of DIRECTV U.S.' domestic subsidiaries.
Approximately $2.56 billion of the proceeds from the financing,
after transaction fees, were paid to HUGHES in a distribution
that was used to repay $506 million of outstanding short-term
debt, and is expected to fund HUGHES' business plan through
projected cash flow breakeven and for HUGHES' other corporate
purposes.
Hughes Electronics Corporation is a unit of General Motors
Corporation. The earnings of HUGHES are used to calculate the
earnings attributable to the General Motors Class H common stock
(NYSE:GMH).
CONTACT: Hughes Electronics Corporation
P.O. Box 956
El Segundo, CA 90245-0956
Media Contact: Bob Marsocci (310) 662-9986
Investor Relations: (310) 662-9688
PECOM ENERGIA: Petrobras Concerned Elections May Hold Back Sale
---------------------------------------------------------------
Brazil's federal energy company, Petrobras, seeks to complete the
purchase of a controlling share in Argentina's Perez Companc
before the Argentine elections take place. Petrobras is
apprehensive that the elections, scheduled to take place at the
end of this month, will hamper the transaction.
Already, Argentina's current president, Eduardo Duhalde, has
expressed opposition to the sale of shares in Argentine
transmission company Transener, despite approval of the entire
package by Argentina's antitrust authority. The President is
against the sale of Transener given the strategic importance of
transmission lines for the economic development of the country.
Transener controls 90% of transmission assets in Argentina and
Duhalde said the utility must not be taken over by foreigners for
strategic reasons.
Duhalde's choice for president, Nestor Kirchner, is one of the
frontrunners in polls ahead of the first round vote on April 27,
and is reported to be more nationalist and protectionist than his
mentor.
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
COMPANIA DE TRANSPORTE DE ENERGIA ELECTRICA EN ALTA
TENSION (Transener S.A.)
Av. Paseo Colon 728, 6"Piso - (1063)
Buenos Aires, Argentina
Tel. (5411) 4342-6925
Business Development:
Carlos A. Jeifetz (jeifecar@transx.com.ar)
Gerardo Baseotto (baseoger@transx.com.ar)
Tel.: (54-11) 4334-0182 / 4342-6925
Fax: (54-11) 4342-4861
REPSOL YPF: Superior Justice Court Scraps Lower Court's Ruling
--------------------------------------------------------------
The president of Brazil's superior justice court (STJ) ditched a
decision by a lower court regarding the legitimacy of the US$2-
billion asset swap carried out between Brazil's federal energy
company Petrobras and Spain's Repsol-YPF in December 2001,
reports Business News Americas.
Following an appeal by five former Petrobras employees led by
Cesar Ant“nio Przygodzinski, a lower court ruled that the
Brazilian company's assets were undervalued as a result of the
devaluation of the Argentine peso. At the time the contract was
closed, Petrobras said any compensation due as a result of
devaluation of the Argentine peso was included in the original
contract.
However, STJ president Nilson Naves rejected the lower court's
ruling, saying the decision prevented the transaction from being
completed and had caused financial losses to the public coffers.
The court cited the fact that Brazil's antitrust authority Cade,
oil regulator ANP and the federal accounts court TCU have already
approved the deal.
The assets have already been exchanged. However, the deal is yet
to be formally and finally completed pending resolution of the
case.
Meanwhile, an STJ spokesperson said that the petitioners,
Przygodzinski and his colleagues, could still appeal to the STJ's
special court because the decision was taken solely by the
president of the court.
TELECOM ARGENTINA: Initiates Debt Buyback Offer
-----------------------------------------------
Telecom Argentina and its mobile subsidiary Telecom Personal will
start a US$305-million debt buyback program via cash tender
offers, reports Business News Americas. Telecom Argentina will
offer up to US$260 million while Telecom Personal will offer
US$45 million.
The program will be open to the holders of the notes and credit
facility debt of Telecom Argentina and the credit facility debt
of Telecom Personal. Morgan Stanley and Argentine investment bank
MBA Banco de Inversiones are co-managers for the tender offers,
which will commence on April 16 and expire May 16.
Telecom will conduct the tender in the form of a reverse Dutch
auction, where the lowest bidder sets the value of the
transaction. Telecom has set a price range of 43.5-50% of the
outstanding principal amount of its debt.
A successful offer would see the Company reduce its debt by more
than twice the US$305 million it has set aside for the buyback,
given that it will be paying slightly less than half of the
debt's face value.
If oversubscribed, the Company will pro-rate tenders among the
participating creditors. The tenders will be paid in the
respective currency of the debt instruments.
Telecom will also make partial payments on the interest the
companies defaulted on in 2002. Interest will be paid back
equivalent to 30% of the contractual rates, and it will ignore
penalties associated to last year's default.
CONTACT: TELECOM ARGENTINA STET - FRANCE TELECOM SA(TELECOM)
Alicia Moreau de Justo 50, 10th Floor
Capital Federal (1107) Repoblica Argentina
Phone: +54 11 4968 4000
Home Page: http://www.telecom.com.ar
Contacts:
Alberto J. Ricciardi, Chief Financial Officer
Elvira Lazzati, Finance Director
Pedro Insussarry, Investor Relations Manager
Phone: (5411) 4968-3626/3627
Fax: (5411) 4313-5842/3109
Email: inversores@intersrv.telecom.com.ar
TGS: Capital, Interest Payments Due Tuesday Expected to Default
---------------------------------------------------------------
TGS spokesperson Maria Victoria Quade said that the Argentine gas
transport company is likely to miss Tuesday capital and interest
payments on a US$150-million debt after failing to obtain the
necessary 66.6% approval from bondholders to renegotiate US$1
billion in total debt, relates Business News Americas.
TGS already obtained green light from bondholders of up to US$400
million to renegotiate US$219 million in debt. The number
represents only about 33% of the amount required to proceed with
the restructuring of total debts. Foreign bondholders of a
US$200-million series were not present in sufficient numbers to
reach quorum at a meeting.
TGS is working with these bondholders and other creditors in
order to obtain the required percentage to approve the
renegotiation, but Quade said it was too late for TGS to obtain
the approval by Tuesday.
With Tuesday's default on US$150 million debt, TGS will have
defaulted on US$450 million debt to date in 2003.
CONTACTS: IN BUENOS AIRES
Investor Relations:
Eduardo Pawluszek, Finance & Investor Relations Manager
Gonzalo Castro Olivera, Investor Relations
Email: gonzalo_olivera@tgs.com.ar
Mara Victoria Quade, Investor Relations
Phone: (54-11) 4865-9077
Email: victoria_quade@tgs.com.ar
Media Relations:
Rafael Rodriguez Roda
Phone: (54-11) 4865-9050 ext. 1238
YPF: Dividend Payment Leaves Credit Quality Intact
--------------------------------------------------
Standard & Poor's Ratings Services said that YPF Sociedad
An˘nima's (YPF, local currency: BB+/Developing/--; foreign
currency: B+/Developing/--) dividend announcement will not affect
the credit quality of the company given its sound financial
profile and a strong cash flow generation since the second
quarter of 2002 due to unusually high crude oil prices. YPF
announced dividends of Argentine peso (ArP) 5 per share that
would total approximately ArP2 billion (approximately $682
million). In addition, after having paid the outstanding portion
of the US$350 million 7.25% notes due March 17, 2003, the company
has no significant maturities until 2004 and therefore
refinancing risk does not represent a major concern. In the
current Argentine scenario and despite the healthy credit quality
of the company, the ratings are driven by potential sovereign
intervention risk, particularly considering the upcoming
presidential election, that could hurt YPF's operations and
ability to service its debt, and the potential incentives that
Repsol-YPF S.A. may have to financially support its Argentine
operation in such a case.
ANALYST: Pablo Lutereau, Buenos Aires (54) 114-891-2125
Emmanuel Dubois-Pelerin, Paris (33) 1-4420-6673
* Argentina Gets Authority To Buy Dollars To Stop Peso Strength
---------------------------------------------------------------
Argentine Economy Minister Roberto Lavagna said that the country
has received permission from the International Monetary Fund
(IMF) to buy U.S. dollars, local paper Clarin relates.
The dollar purchase would be used to prevent the local currency
from getting stronger. Bloomberg indicates that the country needs
a weak peso to make its exports competitive, boost dollar revenue
from export taxes in order to pull itself of the economic slump.
Bloomberg adds that the peso, which declined by more than 70
percent last year, is currently the best performing currency
among the 59 currencies it is tracking.
Mr. Lavagna asked the IMF to allow the country buy dollars after
the local currency broke the US$1 = ARS3 mark, which would crimp
economic recovery.
Under an agreement with the IMF, the country promised to limit
the amount of pesos in circulation. The IMF agreed to let the
country defer payment on its US$6.8 billion in debt last January.
* IMF Wants To Take Part In Argentine Debt Negotiations
-------------------------------------------------------
The International Monetary Fund (IMF) reportedly wants to have a
"voice and vote" in Argentina's negotiations with the holders of
the US$95 billion of defaulted debt, local daily Clarin reports,
citing IMF Western Hemisphere department head Anoop Singh.
Argentina is meeting the bondholders to decide on the payment
terms of the defaulted debt. The country's default in December
2001, resulted in the country losing its credit lines to all
multilateral lenders except for the IMF. However, an agreement
with the IMF did not come until about a year of negotiations.
Bloomberg relates that the Argentine government is trying to come
up with new terms with creditors mostly fro the U.S., Europe and
Japan, who hold about 100 different bonds denominated in eight
currencies.
Analysts say that creditors may have to wait for at least another
year to receive as little as 20 cents on the dollar.
TYCO INTERNATIONAL: Unfair Contract Termination Prompts Suit
------------------------------------------------------------
ADT Security Services Inc., a unit of the Fire & Security
Services unit of Tyco International Ltd., is facing a lawsuit
from five Wisconsin security alarm dealers, reports Milwaukee
Business Journal.
In a suit filed Monday in the Milwaukee County Circuit Court, the
dealers, which were formerly affiliated with ADT, claimed that
their dealership contracts were improperly terminated in
violation of state law. Plaintiffs' attorney Paul Jacquart
alleged that ADT did not give the dealers a 90-day notice of
termination of the dealership contracts as required by
Wisconsin's Fair Dealership Law.
Mr. Jacquart, an attorney with the Milwaukee law firm of Jacquart
& Lowe S.C., said that last August, letters went out to ADT
dealers nationwide limiting the number of accounts ADT would
acquire from the dealers. At the same time, ADT terminated a
number of dealers, citing insufficient sales volumes and higher
rates of customer cancellations. Some of the dealers remained in
business and affiliated with other brands, while others were
forced out of business altogether.
Plaintiffs in the suit are Home Security Services Inc.,
Milwaukee; A-1 Security of S.E. Wisconsin L.L.C., Racine; Howard
Reddan of Verona; David Hinks of Kenosha; and Vicetec Security
Group Inc., Milwaukee. Milwaukee County Circuit Judge Clare
Fiorenza is handling the lawsuit, which is seeking compensatory
damages and attorneys' fees.
=============
B O L I V I A
=============
MILLICOM INTERNATIONAL: Amends Terms Of Exchange Offer
------------------------------------------------------
Millicom International Cellular S.A. ("Millicom") (Nasdaq: MICC),
the global telecommunications investor, announced that it is
extending the private exchange offer and consent solicitation to
holders of 13-1/2% Senior Subordinated Discount Notes due 2006,
or the "Old Notes", who are not U.S. persons, or who are U.S.
persons that are either "qualified institutional buyers" or
institutional "accredited investors" (as each of those terms are
defined under the Securities Act of 1933, as amended) and who can
make the representations to exchange, upon the terms and subject
to the conditions set forth in the private offering documents,
until 5:00 p.m. New York City time on April 16, 2003, unless
further extended by Millicom.
The rights of withdrawal for those bondholders who have already
tendered their acceptance to the exchange offer and consent
solicitation shall continue until the new expiration date in
accordance with the terms of the private offering documents.
Millicom also announced that the commitments it has received from
approximately 50% of the holders of the Old Notes to exchange
their Old Notes for new securities in the ongoing private
exchange offer under certain revised terms have become binding on
such holders and are no longer subject to the satisfactory
completion of a due diligence review. Subject to the remaining
members of the ad hoc committee of holders of Old Notes
(representing an additional 18% of the holders of the Old Notes)
entering into similar binding commitments (no later than April
16, 2003) to tender their Old Notes, Millicom has agreed to amend
the terms of the ongoing private exchange offer and circulate the
related private offering documents under the proposed revised
terms described below. Millicom can make the exchange offer on
these or any other amended terms at any time.
If the ongoing private exchange offer is amended and subject to
the satisfaction of applicable conditions precedent, Holders of
the Old Notes who tender their Old Notes would receive for each
$1,000 of Old Notes validly tendered $720 of Millicom's newly
issued 11% Senior Notes due 2006, or the "11% Notes", and $81.7
of Millicom's newly issued 2% Senior Convertible PIK (payment in
kind) Notes due 2006, or the "2% Notes," both maturing June 1,
2006 (which, when issued, could result in a maximum dilution to
existing Millicom stockholders of approximately 30%, assuming no
issuance of PIK notes in lieu of cash interest). The 11% Notes
would have the right to receive semi-annual amortization payments
due June 1, 2004, December 1, 2004, June 1, 2005 and December 1,
2005. The 2% Notes would be convertible into Millicom's common
stock at a conversion price of $10.75 per share (taking into
consideration Millicom's recent reverse stock split). At maturity
or upon redemption, Millicom would have the right to, at its
option, in whole or in part, pay the then outstanding principal
amount of the 2% Notes, plus accrued and unpaid interest thereon,
in cash or in shares of its common stock. Millicom International
Operations B.V., a wholly owned subsidiary of Millicom, would
irrevocably and unconditionally guarantee the 11% Notes and 2%
Notes. Millicom would continue to solicit consents to certain
amendments to the indenture under which the Old Notes were
issued. For each $1,000 of Old Notes who validly deliver a
consent and are entitled to vote, Millicom would pay a cash fee
of $50, provided that at least a majority of the holders of Old
Notes so consent.
This press release is neither an offer to purchase nor a
solicitation of an offer to sell Millicom's securities and is not
being made to, nor will tenders be accepted from, or on behalf
of, holders of Old Notes in any jurisdiction in which the making
of the exchange offers and consent solicitations or the
acceptance thereof would not be in compliance with the laws of
such jurisdiction.
Millicom's securities referred to herein, if and when offered,
will not have been registered under the Securities Act of 1933,
as amended, and such securities may not be offered or sold in the
United States absent registration or an applicable exemption from
registration requirements.
Millicom International Cellular S.A. is a global
telecommunications investor with cellular operations in Asia,
Latin America and Africa. It currently has a total of 16 cellular
operations and licenses in 15 countries. Millicom's cellular
operations have a combined population under license (excluding
Tele2) of approximately 382 million people. In addition, Millicom
provides high-speed wireless data services in six countries.
Millicom also has a 6.8% interest in Tele2 AB, the leading
alternative pan-European telecommunications company offering
fixed and mobile telephony, data network and Internet services to
over 16.8 million customers in 22 countries. Millicom's shares
are traded on the Nasdaq Stock Market under the symbol MICC.
CONTACTS: Marc Beuls
Telephone: +352 27 759 101
President and Chief Executive Officer
Millicom International Cellular S.A., Luxembourg
Andrew Best
Telephone: +44 (0) 20 7321 5022
Shared Value Ltd, London
Homepage at http://www.millicom.com
===========
B R A Z I L
===========
BCP: Controllers Relinquish Stake To Restructure Debt
-----------------------------------------------------
Atlanta-based BellSouth Corp. and Verbier are passing control of
BCP SA to its 34 bank creditors as part of a US$1.5-billion
restructuring of the bankrupt Brazilian wireless carrier's debt.
Citing a so-called note purchase agreement, Dow Jones reports
that BellSouth is giving up its 45.4% stake, while its Brazilian
partner Verbier, which is owned by banking brothers Moise and
Joseph Safra, is expected to continue to be a shareholder in BCP
but with a smaller and as yet unknown stake.
The agreement would see between 30% and 50% of BCP's debt with
the creditors transformed into equity.
Carolina Gava, a local analyst of BES Securities, told Business
News Americas that at least 42% of BCP's total debt must be
converted to shares in order for BCP to be attractive for
acquisition. This equates to a debt reduction to US$800 million,
she said, adding that a 50% reduction in debt would "definitely"
turn BCP into an acquisition target.
The creditors are expected to eventually sell BCP to Tele Norte
Leste mobile unit Oi, Telecom Italia Mobile or Telecom Americas -
controlled by Mexico's America Movil.
Gava said she favors Telecom Americas as buyer because the group
appears to have the "largest appetite" for mobile expansion.
Telecom Americas is also the only major player whose shareholders
are only focused on the mobile segment in Brazil, she added.
BCP has 1.7 million subscribers in greater Sao Paulo.
CONTACT: BCP S.A.
Rua Fl>rida, 1970 4o andar
Sao Paulo - SP
Tel: 55 11 5509-6428
Fax: 55 11 5509-6257
Home Page: http://www.bcp.com.br
BELLSOUTH CORPORATION
1155 Peachtree St. NE
Atlanta, GA 30309-3610
Phone: 404-249-2000
Fax: 404-249-5599
Home Page: http://www.bellsouth.com/
Contacts:
Investor Relations
Phone (US): 800.241.3419
Fax: 404.249.2060
E-mail: investor@bellsouth.com
CEMIG: Announces General Shareholders' Meeting
----------------------------------------------
Companhia Energ‚tica de Minas Gerais - CEMIG - (NYSE: CIG; BOV:
CMIG4, CMIG3 and LATIBEX: XCMIG), one of Brazil's largest energy
companies, announced Tuesday that its shareholders are hereby
summoned to the Annual General Shareholders' Meeting to be held
on April 30, 2003 at 10:00 a.m. (Belo Horizonte, Brazil time) at
CEMIG's headquarters, located at Avenida Barbacena, 1200 - 18th
floor, in the city of Belo Horizonte, State of Minas Gerais,
Brazil, to deliberate on the following matters:
1. Examination, discussion and voting on the Management Report
and the
Financial Statements regarding the year ended December 31, 2002,
as well as certain related documents;
2. Distribution of Interest on Capital in the amount of R$220
million as previously approved by the Board of Directors. This
distribution will be paid in lieu of the annual dividend;
3. Determination of the manner and date of payment of Interest on
Capital referred to in item 2;
4. Election of the members of the Board of Directors and their
alternate members;
5. Election of Fiscal Council members and their alternates, and
establishment of their remuneration; and.
6. Establishment of the remuneration of CEMIG's management.
As set forth in CVM Article 3 of Instruction No. 165, dated
December 11, 1991, the minimum percentage required for adoption
of a cumulative vote for election of the members of the Company's
Board of Directors is 5% (five per cent) of the voting capital.
Contacts: Luiz Fernando Rolla
Investor Relations Officer, CEMIG
Tel: +55-31-3299-3930
Fax: +55-31-3299-3933
Email: lrolla@cemig.com.br
Vicky Osorio
THE ANNE MCBRIDE COMPANY
Tel: 212-983-1702
Fax: 212-983-1736
Email: vicky@annemcbride.com
ELETRONET: Postpones Shareholders Meeting To April 24
-----------------------------------------------------
An extraordinary shareholders meeting to discuss the future of
the embattled Brazilian carrier of carriers Eletronet has been
postponed from April 14 to April 24, reports Business News
Americas. The reason for the postponement was not disclosed.
At the meeting, shareholders will decide whether Eletronet, a
telecommunications venture between AES Corp. and Brazil's federal
electricity holding company Centrais Eletricas Brasileiras
(Eletrobras), will file for bankruptcy. The board of the venture
has recommended filing for bankruptcy protection because
Eletronet is losing BRL4.1 million (US$1.2 million) a month and
can't find a buyer for the Company, said Eletrobras President
Luiz Pinguelli.
Eletrobras is blaming AES for Eletronet's financial difficulties.
Eletronet owes suppliers BRL550 million, and AES, which controls
the Company, is responsible for paying.
Eletronet was created in 1999 by LightPar, a unit of Eletrobras.
Eletrobras, via LightPar, took a 49% stake in Eletronet and
auctioned off the majority interest to sole bidder AES in August
of that year. AES offered the US$155 million minimum price for
its stake and committed to make its purchase payment in several
installments over four years, with the funds treated as paid-in
capital to Eletronet to help fund construction of the network.
AES failed to make a required payment of US$3 million to boost
Eletronet's capital in August, leading it to give up day-to-day
management of the company, Pinguelli said. Even so, AES is still
responsible for the debt, he said.
Eletronet operates a 16,000km nationwide broadband
telecommunications network over Brazil's electrical transmission
grid.
TUPY: Issues Notes To Refinance Maturing Debt
---------------------------------------------
As part of an effort to roll over debt coming due this month,
Brazilian foundry Tupy begun to issue BRL150 million (currently
US$46.9mn) in promissory notes on the local market, AE-Setorial
news service reveals.
A total of 150 notes each totaling BRL1 million are being
distributed. The paper, to mature in six months, will yield 118%
on the CDI interbank lending rate.
The Company didn't offer any guarantees, but AE-Setorial says
that shareholders could cash the titles in with the Company after
60 days from date of emission. The operation was coordinated by
Brazilian bank Unibanco.
Tupy, South America's largest foundry, has net debt of some
BRL700 million.
CONTACT: Tupy SA
Head Office
Rua Albano Schmidt 3,400
Boa Vista
89206-900 Joinville - SC
Brazil
Tel +55 47 441-8514
Fax +55 47 441-8321
Web http://www.tupy.com.br
Contacts:
Mario Fernando Engelke, Chairman
Francisco Parra Valderrama, BOD Member
Norberto J Hoffmann, BOD Member
=========
C H I L E
=========
GUACOLDA: $150M Notes Rated 'BBB-'; On CreditWatch Negative
-----------------------------------------------------------
Standard & Poor's Ratings Services said Monday it assigned its
'BBB-' rating to Chilean power generator Empresa El‚ctrica
Guacolda S.A.'s (Guacolda) upcoming $150 million senior secured
loan participation certificates due 2013. The local and foreign
currency corporate credit ratings are rated 'BBB-' and will
remain on CreditWatch with negative implications due to the
refinancing risk of US$87 million debt maturities (net from
repurchased debt) that are due on April 29 and 30, 2003.
Standard & Poor's expected Guacolda to close a refinancing
package well in advance of the maturities that are due by the end
of April. However, market conditions have delayed the completion
of this process, substantially increasing refinancing risk. The
placement of the $150 million senior secured loan participation
certificates due 2013 should allow Guacolda to refinance the
abovementioned US$87 million debt maturities and to prepay its
US$48.8 million outstanding debt with Mitsubishi Corp., thus
eliminating short-term refinancing risk.
"While the outlook will return to stable if the company's debt
maturities are successfully refinanced, if the US$150 million
bond is not placed or other funding sources are not closed in the
next few days, the ratings will be lowered," said credit analyst
Sergio Fuentes.
Guacolda is a 304MW coal-fired power generator located in the
northern region of Chile's SIC. The company has been applying
excess cash flows to debt reduction during the last years as
evidenced by the fact that total financial debt has decreased to
US$192 million as of December 2002 from US$215 million as of
December 2001. However, Guacolda's leverage remains at high
levels (62.9% as of December 2002), mainly as a result of the
continuing devaluation of the Chilean peso.
ANALYST: Sergio Fuentes, Buenos Aires (54) 114-891-2131
Marta Castelli, Buenos Aires (54) 114-891-2128
===============
C O L O M B I A
===============
* S&P Affirms Colombia's Sovereign Credit Ratings
-------------------------------------------------
Standard & Poor's Ratings Services said Tuesday that it assigned
its 'BB' senior unsecured debt rating to the Republic of
Colombia's reopened 10.75% bond due 2013. The US$250 million
offered last week, together with the US$500 million offered in
January 2003, brings the total amount outstanding to US$750
million. At the same time, Standard & Poor's affirmed its 'BBB/A-
3' local and 'BB/B' foreign currency sovereign credit ratings on
the republic. The outlook on the long-term ratings remains
negative. "The continued negative outlook reflects the
uncertainty for July 2003 passage of the national referendum,
which, among other things, contains fiscal measures that are
critical to achieving a public sector primary surplus of close to
3% of GDP" said sovereign analyst Richard Francis. "Standard &
Poor's estimates that a primary surplus of this magnitude is
needed to stabilize to government's adverse debt dynamics at
nearly 50% of GDP," he said.
According to Mr. Francis, despite the negative outlook there has
been a marked boost in domestic confidence due to the
strengthening of the military and the passage of important tax
and pension reform in late December 2002. "This should narrow the
government's overall deficit by nearly 1% of GDP in 2003," noted
Mr. Francis. "The rise in confidence should stimulate private
sector demand, leading to higher economic growth," he added. Mr.
Francis said that the referendum remains important because the
freeze in public spending envisioned in the law is needed to
stabilize the government's debt dynamics. "If the economic
measures in the referendum fail, the government's debt will
continue to rise unless alternatives, such as new taxes, are
adopted in their place," he said. "Furthermore, the country's
governability could be weakened if the referendum is not passed
due to the fact that it will also gauge the popular backing of
the administration of President Alvaro Uribe," he concluded.
According to the government, the proceeds of the transaction will
be used to finance liability management operations: US$157.4
million (US$153.3 million plus US$4.1 million in accrued
interest) will be allocated to the calling of the QAN bond, and
the remainder will be retained as liquidity to fund future
liability management transactions, with the primary objective of
smoothing the peaks in amortizations in 2005 and 2008.
===========
M E X I C O
===========
CFE: Electrica de Medellin Wins US$33M Trans Line Contract
----------------------------------------------------------
Mexico's state power company CFE awarded a US$33-million contract
to build a 400kV transmission line to Colombian engineering
company Electrica de Medellin. Business News Americas relates
that the contract also involves the construction of three
substations.
The 444km long transmission line will link the northern and
southern parts of Mexico's grid. It will pass through the states
Aguascalientes, Coahuila, San Luis Potosˇ and Zacatecas.
The line is split into two stretches: 223.3km between Saltillo
and 1 de Mayo, and 220.5km between 1 de Mayo and Ca¤ada.
Operations are planned for May 2004, said Business News Americas.
Electrica de Medellin CEO Gonzalo Henao told Business News
Americas that work will begin after December 1, when Argentina's
Techint is scheduled to complete the first phase of the project.
Electrica de Medellin specializing the building transmission
lines, and also serves Panama, Peru and Ecuador.
CONTACT: COMISION FEDERAL DE ELECTRICIDAD
Rio Rodano 14, Col. Cuauhtemoc
06598 Mexico, D.F., Mexico
Phone: +52-55-5229-4400
Fax: +52-55-5310-4614
Home Page: http://www.cfe.gob.mx
Contacts:
Alfredo Elias Ayub, General Director
Arturo Hernandez Alvarez, Director of Operations
Francisco J. Santoyo Vargas, Director of Finance
DESC: Fitch Cuts Ratings From `BB+' To `BB'
-------------------------------------------
Fitch Ratings has downgraded its senior unsecured foreign and
local currency ratings of Desc, S.A. de C.V. (DES) to 'BB' from
'BB+'. Fitch has also downgraded to 'BB' from 'BB+' the rating on
the US$60 million International Finance Corporation (IFC) 'B'
loan participation receipts due 2009 formerly issued by Girsa
S.A. de C.V. and as of Dec. 14, 2001 assumed by Desc. Fitch has
also downgraded Desc's national scale ratings to 'A'(mex) from
'AA-'(mex). The ratings remain on Negative Rating Outlook.
The rating actions reflect the ongoing challenges faced by Desc's
automotive parts and chemical operations, which together
accounted for 78% of total revenues and 86% of EBITDA in 2002.
These challenges have hampered Desc's progress on debt reduction
and the improvement of credit protection measures.
In 2002, Desc's consolidated sales declined by 10% and EBITDA
declined by 26% as intractable weakness in the U.S. and Mexican
economies continued to pressure revenues and cash flows.
Profitability has also been affected by lower fixed-cost
absorbtion as capacity utilization remains low. Total Debt to
EBITDA deteriorated to 5.3x in 2002 from 3.4x in 2001. The ratio
of EBITDA to Interest Expense declined to 2.7x in 2002 from 3.0x
in 2001. Desc's refinancing efforts during the year helped to
moderate interest costs and limited the deterioration of interest
coverage. Preliminary results for the first quarter of 2003 show
continuing weak sales, though Desc reversed the operating loss
suffered in the fourth quarter of 2002.
The outlook for the autoparts business - which manufactures
manual transmissions and other autoparts for export to original
equipment manufacturers (OEMs) and for resale in the after market
- is dim. Economic uncertainty and high levels of North American
automobile inventory are expected to continue to pressure volumes
during 2003. Fitch Ratings estimates that sales volume of light
vehicles in North America will decline by 4%-7% in 2003. Pricing
pressures from OEMs are expected to intensify due to cost-
reduction targets. In particular, Ford Motor Co., which accounts
for approximately a third of Desc's autoparts revenues, has set a
15% cost-reduction target over the next two years from its supply
base as part of its revitalization program.
The chemical businesses remain under pressure from weak global
demand, lower average prices and volatile fuel prices.
Profitability has been hurt by the impossibility to translate
higher raw material costs to sale prices, given low worldwide
capacity utilization rates.
Desc's liquidity and financial flexibility remains adequate. At
Dec. 31, 2002 Desc had US$232 million in cash and marketable
securities but during the first quarter of 2003, the refinancing
of approximately US$50 million of current maturities of long-term
debt and other cash charges reduced the balance to approximately
US$80 million. The company does not have any major bullet
maturity due in 2003 and 72% of the debt is in the long-term. The
ratings are supported by Desc's diversified revenue stream,
strong business position in the autoparts and chemical sectors,
joint ventures and strategic alliances with international
industry leaders and the generation of a majority of revenues in
U.S. dollars or U.S. dollar-indexed terms.
Desc is a diversified holding company and one of Mexico's largest
industrial conglomerates, with operations in the automotive
parts, chemical, food and real state businesses.
GRUPO TFM: Seeks To Amend Credit, Term Loan Agreements
------------------------------------------------------
Grupo Transportacion Ferroviaria Mexicana, SA. de C.V. announced
Monday that, based on a review of its financial projections for
2003, including its anticipated results for the first quarter of
2003, several factors, primarily the devaluation of the Mexican
peso and current macroeconomic and geopolitical events, are
expected to adversely effect the company's anticipated financial
results. In light of these developments, the company is seeking
amendments from the banks party to its Commercial Paper Program
Credit Agreement and Term Loan Agreement that will defer
scheduled "stair step" increases in the interest coverage and
leverage coverage maintenance ratios under the agreements. The
ratios are scheduled to increase in the first and third quarters
of 2003.
Although TFM can not assure that it will obtain such amendments,
the company expects the participating financial institutions to
agree to the requested amendments during April 2003. If the
amendments are not obtained, TFM would likely fail to meet the
increased ratios for 2003, including those scheduled for the
first quarter of 2003.
GRUPO TMM: Sells Interest In Ports, Terminals Division
------------------------------------------------------
Proceeds To Repurchase Receivables Under Securitization Program
And Reduce Outstanding Indebtedness
Grupo TMM, S.A. (NYSE: TMM), the largest Latin American multi-
modal transportation and logistics company, announced Monday the
sale of its 51 percent interest in TMM Ports and Terminals to an
affiliate of its current partner in the division, SSA M‚xico.
Included in this transaction are the operations currently
performed by the division at the ports of Manzanillo, Cozumel,
Veracruz and Progreso. Grupo TMM will retain its interest in the
ports of Acapulco and Tuxpan. The transaction, expected to close
in early May, is subject to SSA receiving sufficient financing
and other customary closing conditions.
Net proceeds from the transaction will be approximately $120
million and will be used to repurchase certificates sold to a
trust under the company's existing Receivables Securitization
Program and to reduce indebtedness. At December 31, 2002, the
trust had $86.7 million outstanding certificates. The April 15,
2003, maturity under the Receivables Securitization Program has
been extended to May 6, 2003. No certificates will remain
outstanding after the repurchase.
Javier Segovia, president of Grupo TMM said, "The sale of
Manzanillo, Cozumel, Veracruz and Progreso improves our ability
to meet our financial obligations, while maintaining our long-
lasting relationship with SSA M‚xico. These assets are typically
strong revenue and margin performers, which enabled us to obtain
a very attractive price for them.
"It was important to signal to our investors how serious we are
about reducing the company's financial obligations," Segovia
continued. "Our most urgent priority is to reduce our leverage
and extend the maturity of our outstanding debt. We believe these
actions will, in the long-term, enhance value for our
shareholders by improving our balance sheet and return to
shareholders."
Proceeds from the sale remaining after the repurchase of
certificates under the company's Receivables Securitization
Program will not be sufficient to repay the company's 9 « percent
Notes due May 15, 2003. Grupo TMM is continuing discussions
regarding other potential asset sales or investments in the
company to provide additional liquidity. There can be no
assurance that the company will be able to complete any such
asset sales or obtain any additional investments, that the
proceeds from any asset sales or investments will be sufficient
to permit the company to meet its obligations or that any such
additional asset sales or investments will be completed within a
particular time frame. Grupo TMM expects that it will amend the
terms of its outstanding exchange offers in light of the sale of
the company's interest in the ports and terminals division.
Headquartered in Mexico City, Grupo TMM is Latin America's
largest multimodal transportation company. Through its branch
offices and network of subsidiary companies, Grupo TMM provides a
dynamic combination of ocean and land transportation services.
Grupo TMM also has a significant interest in Transportaci˘n
Ferroviaria Mexicana (TFM), which operates Mexico's Northeast
railway and carries over 40 percent of the country's rail cargo.
Visit Grupo TMM's web site at www.grupotmm.com and TFM's web site
at www.tfm.com.mx. Both sites offer Spanish/English language
options.
CONTACT: Grupo TMM Company
Jacinto Marina
Phone: 011-525-55-629-8790
E-mail: jacinto.marina@tmm.com.mx
Brad Skinner
Phone: 011-525-55-629-8725
E-mail: brad.skinner@tmm.com.mx
Luis Calvillo
Phone: 011-525-55-629-8758
E-mail: luis.calvillo@tmm.com.mx
or
Dresner Corporate Services
(general investors, analysts and media)
Kristine Walczak
Phone: 312/726-3600
E-mail: kwalczak@dresnerco.com
HAYES LEMMERZ: Seeks Exclusivity Period Preservation
----------------------------------------------------
Hayes Lemmerz International, Inc. (OTC: HLMMQ) announced Monday
that it has filed a motion with the United States Bankruptcy
Court for the District of Delaware to extend the period during
which the Company has the exclusive right to file a Plan of
Reorganization in its Chapter 11 cases. The motion seeks to
preserve the Company's exclusive right to sponsor a Plan of
Reorganization to June 16, 2003, and to preserve the Company's
exclusive right to solicit acceptances of a Plan of
Reorganization until August 15, 2003. These periods had been
scheduled to expire on April 15, 2003 and June 16, 2003,
respectively.
Kenneth Hiltz, the Company's Chief Restructuring Officer and
Principal of AlixPartners, LLC said that, "Requesting an
extension of the exclusivity period is routine during Chapter 11
cases." The extension is in the best interests of the Company,
its creditors and other parties in interest.
On April 9, 2003, the Company filed a modified Plan of
Reorganization with the Court and announced that its key
creditors had reached agreement on the modified Plan. The
Confirmation Hearing is scheduled for May 7, 2003, at 10:30 a.m.,
EDT.
Hayes Lemmerz has secured commitments for its Exit Financing and
is poised to emerge from Chapter 11 shortly after the May 7, 2003
Confirmation Hearing.
Hayes Lemmerz, its U.S. subsidiaries and one subsidiary organized
in Mexico filed voluntary petitions for reorganization under
Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court
for the District of Delaware on December 5, 2001.
Hayes Lemmerz International, Inc. is one of the world's leading
global suppliers of automotive and commercial highway wheels,
brakes, powertrain, suspension, structural and other lightweight
components. The Company has 44 plants, 3 joint venture facilities
and 11,100 employees worldwide.
=================================
T R I N I D A D & T O B A G O
=================================
BWIA: Branson Sees Hazy Outlook, Urges Government Intervention
--------------------------------------------------------------
British billionaire Sir Richard Branson who chairs Virgin
Atlantic Airways Ltd. has this advice for the government: Start
afresh with BWIA. Sir Richard was in Antigua over the weekend
when journalist Julian Rogers chanced upon him.
"If the Trinidadian government approached me, I would recommend
that they approach (the BWIA problem) and start afresh and try to
get the staff back at BWIA again," Sir Richard told Mr. Rogers.
The British businessman also said the government should replace
"fuel guzzling" aircraft and approach the carrier as a new
airline. He noted, though, that it is "not easy to run an
airline in a place like the Caribbean where there is not a lot of
business travel, although there is business travel in Barbados."
BWIA: Additional Stake Set As Condition for Bailout
---------------------------------------------------
The government of Prime Minister Patrick Manning wants to have a
controlling stake in the carrier if the government were to
provide a bailout plan that is worth more than its shareholding,
says The Trinidad Express.
Trade and Industry Minister Ken Valley says Mr. Manning is
willing to fund up to 49% of BWIA's cash requirements, equivalent
to the government's stake in the carrier. If the bailout goes
beyond this, the government will demand a change in the current
equity structure and the combination of the board of directors.
The government used to own the carrier, but decided to partially
privatized the company in the mid-1990s. Mr. Manning had earlier
said that should government be forced to take up additional
equity in the airline, it will not be a permanent situation.
Mr. Valley called on BWIA shareholders and citizens to support
the national airline, and hinted that this course of action,
along with the carrier's complete disclosure of its financial
responsibilities to creditors, may convince government to bail
out the airline once more.
"If the Chamber of Commerce and ordinary citizens think that BWIA
is strategically important, then there's a case to be made for
getting involved and taking equity in the airline," Mr. Valley
said at the weekly post-Cabinet news conference at Whitehall,
Port of Spain.
He insisted that BWIA's top management must disclose everything
and help the government understand the airline's current
financial situation, if it wants the bailout to materialize.
BWIA: T&T Government Calls on Minority Shareholders To Aid BWIA
---------------------------------------------------------------
The Government of Trinidad and Tobago calls on BWIA's minority
shareholders to help save the ailing carrier. The Trinidad
Guardian relates that government asked the shareholders to "chip
in" if they want to save the airline.
At a post Cabinet briefing, Minister of Trade, Ken Valley said he
finds it strange that private shareholders are not trying to save
the company.
The airline has submitted its second restructuring plan after the
first one failed. The government is currently reviewing the plan,
although it has said categorically that it will let the airline
go under.
Recent reports indicated that BWIA might have omitted certain
data in the plan it presented to the government.
The airline has been hard hit by the effects of the war in the
Middle East, and is having difficulties with paying the $53
million in severance pay it owes to the 617 workers dismissed in
January.
The Airport Authority also complained that the airline has not
been paying its dues to them.
BWIA: Unions Take BWIA To Court
-------------------------------
Three unions representing BWIA workers will file legal action
against the airline today, in hope of recovering the workers'
severance pay, reports the Trinidad Guardian. The airline failed
to disburse the severance payments to the 617 workers it sent
home in January. The payment totals $53 million.
Instead, the airline offered to pay two weeks' worth of pay in
the meantime, as the airline is having cashflow problems.
However, the offer was turned down by the angry workers, who are
demanding the full amount due to them.
The report adds that the unions are not expecting the airline to
pay the full $53 million by Monday.
The Aviation, Communication and Allied Workers' Union,
Communication, Transport and General Workers' Trade Union and the
Airline Superintendents' Association will be filing the action on
behalf of their retrenched members in the Industrial Court, said
the report.
BWIA's management will be charged of an industrial relations
offence under the Industrial Relations Act for a breach of the
Retrenchment and Severance Benefits Act, Section 22 (1).
CATTU president Jagdeo Jagroop said that the airline had 30 days
from the date of severance notice to pay out full severance
benefits, under the Retrenchment and Severance Benefits Act.
Meanwhile, Trinidad and Tobago Airline Pilots' Association
president Rory Lewis said his union has no immediate plans to
file any such action against BWIA, said the paper.
=================
V E N E Z U E L A
=================
PDVSA: Meeting 100% of Foreign Sales Commitments
------------------------------------------------
With production at 3.2 million barrels a day, Venezuela's state
oil company PDVSA is meeting 100% of its foreign sales
commitments, Business News Americas reports, citing company
director and president of workers' union Fedepetrol Rafael
Rosales.
PDVSA has restarted operations of the DA-2 atmospheric
distillation unit at its Puerto la Cruz refinery, allowing for
exports of Sweet Mery crude to the US' ConocoPhillips to resume,
PDVSA announced. According to PDVSA's deputy refining manager
Alejandro Granado, the oil company has commitments to send a
total of 1.05mb to ConocoPhillips over the short term, and will
restart dispatches later this month.
The refinery is currently producing 170,000b/d, Granado
continued, adding that it is operating at 100% of its fuel
production capacity.
"We have excellent gasoline inventories, and if today we had to
stop production for one reason or another, we would have
inventories for 24 days," he said.
***********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter Latin American is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ,
and Beard Group, Inc., Washington, DC. John D. Resnick, Edem
Psamathe P. Alfeche and Oona G. Oyangoren, Editors.
Copyright 2003. All rights reserved. ISSN 1529-2746.
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
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Information contained herein is obtained from sources believed to
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contact Christopher Beard at 240/629-3300.
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