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T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Monday, May 5, 2003, Vol. 4, Issue 87
Headlines
A R G E N T I N A
* Argentine Central Bank Says IMF Is More Flexible In Talks
B E R M U D A
GLOBAL CROSSING: Committee's 2nd Report On Olofson Allegations
GLOBAL CROSSING: Seeks Approval to Work Up Exit Financing Deal
GLOBAL CROSSING: Seeks To Assume, Assign Shareholder Agreement
GLOBAL CROSSING: Seeks To Reject Velocita Telecom Agreement
GLOBAL CROSSING: Moves for Bitro Settlement Court Approve
GLOBAL CROSSING: Files Omnibus Objection on Duplicate Claims
GLOBAL CROSSING: Objects To Amended, Superceded Claims
MUTUAL RISK: Creditors OK Restructuring Scheme of Arrangement
TYCO INTERNATIONAL: Taking $1B In New Accounting Charges
TYCO INTERNATIONAL: Latin American Dealers Accuse ADT Of Fraud
B R A Z I L
AES CORP.: Posts 1Q03 Financial Results
AES CORP.: Richard Darman Elected Chairman Of Board
AES CORP.: Prices $1.8B Debt Private Placement
BCI: Announces 1Q03 Results After AMX Deal Finalized
MRS LOGISTICA: S&P Changes Outlook To Stable
SABESP: Currency Improves, S&P Changes Outlook To Stable
VARIG/TAM: FRB-Par Approves Merger Model
C H I L E
ENDESA CHILE: Pehuenche Land Swap Negotiations Still Unresolved
GUACOLDA: Refinances Debt Following Successful Bond Issuance
MANQUEHUE NET: Fitch Withdraws Ratings Following Restructuring
M E X I C O
GRUPO TFM: S&P Rates Kansas City's Preferred Offering as `B'
* Government Calls Mexican Bonds Due 2019 at Par
P E R U
MINERA VOLCAN: Net Income Shrinks In The First Quarter 2003
T R I N I D A D & T O B A G O
BWIA: Unions Intend To Take Back Equipment, Start Own Company
BWIA: Unions Advise Employees Against Accepting Salary Cuts
V E N E Z U E L A
FERTINITRO FINANCE: Liquidity Improves, Fitch Issues Comments
FERTINITRO FINANCE: Moody's Improves Outlook On $250M Bonds
* Issues Interest Notification to Holders of Gov't 2020 Bonds
- - - - - - - - - -
=================
A R G E N T I N A
=================
* Argentine Central Bank Says IMF Is More Flexible In Talks
-----------------------------------------------------------
Argentine Central Bank President Alfonso Prat-Gay said
preliminary talks on a new loan program with the International
Monetary Fund are going better than expected. According to a Dow
Jones report, the IMF may extend the May 15 deadline for setting
new capital adequacy ratios for the local banking system. Mr.
Prat-Gay explained that authorities are still trying to collect
more data before settling on a number.
The IMF has recently shown signs that it is willing to loosen
monetary targets, said the official. Argentina's central bank has
been expanding the monetary base more quickly than outlined under
the current IMF program as the local economy shows clear signs of
emerging from a harsh four-year recession and the local currency
rebounds from last year's steep devaluation, said the report.
Recently, the central bank predicted that the country's monetary
base, adjusted for inflation and economic growth, will grow more
than ARS42 billion by the end of this year.
Mr. Prat-Gay explained, "If there's an excess in the market, it's
an excess in demand, not an excess in supply."
Argentina obtained a temporary accord with the IMF in January.
The agreement allows that country to roll over US$6.8 billion in
payments to the Fund through August, as it tries to recover from
a deep economic recession.
=============
B E R M U D A
=============
GLOBAL CROSSING: Committee's 2nd Report On Olofson Allegations
--------------------------------------------------------------
As it proceeded with its review, the Special Committee was
particularly mindful of and took into account the matters raised
in 0lofson's August 6, 2001 letter and his subsequent complaint,
certain internal e-mails and other documents, some of which have
been publicly released by congressional staff and others. These
materials raise, on their face, questions regarding the
transactions under review, including whether the GX Debtors
purchased assets from counter-parties solely for the purpose of
meeting securities market expectations as to their pro forma
earnings. The Special Committee regarded these documents as a
starting point for its review and directed its professional
advisors to probe more deeply into the business reasons
supporting each transaction. Accordingly, the conclusions of
this Report take into account a broader and more comprehensive
review of the concurrent transactions than would have been
possible based on the previously published documents alone.
The Special Committee recognized that, during the period in
question, Asia Global Crossing was a separate corporate entity in
which the GX Debtors owned a majority interest. However, in
those instances where AGX and GX jointly participated in either
the buy- or sell-side of a concurrent transaction, the Special
Committee disregarded the inter-corporate accounting
reconciliation between the two entities and focused on the
substance of the transaction and its effect on GX, on a
consolidated basis.
In addition to the views of Coudert and Brattle, the Special
Committee has become aware of other relevant facts and
circumstances in connection with its members' service as
directors of GX since April 2002. After consultation with its
own professional advisors, officials of GX and its professional
advisors, and SEC staff, and in the exercise of its business
judgment, the Special Committee has reached certain conclusions
regarding the concurrent transactions.
Principal among those conclusions are:
A. None of the concurrent transactions reviewed was a "sham."
B. Each had a legitimate business purpose that management
expected would confer a benefit on Global Crossing and
generally satisfies one or more of these objectives:
1) extending GX's geographic reach;
2) deepening its service presence; and
3) enhancing its service or product platforms.
C. Global Crossing's demand projections were, during 2000 and
through the first two quarters of 2001, reasonable based on
information available at the time and, combined with its
assessment of risks and opportunity costs, were the
predicate for its acquisition of capacity and services in
key geographic markets.
D. While there were numerous reports and industry forecasts
during the period in question, some form of which indicated
considerable demand growth across geographic markets, there
was no "consensus" industry or expert view against which
Global Crossing's own demand/supply forecasts could be
benchmarked.
E. Global Crossing's business case analyses generally
reflected positive net present values for the transactions
reviewed.
F. In determining whether to enter into certain concurrent
transactions, Global Crossing sought to acquire strategic
and anchor customers on its network.
G. In principle, the business purposes underlying the buy-
sides of Global Crossing's concurrent transactions were
consistent with its strategy to migrate its business from
exclusive reliance on revenues derived from the sale of
wholesale capacity to include the provision of services,
and appeared to be congruent, based on information
available at the time, with its expected revenue
opportunities and the market segments it believed offered
the greatest growth.
H. In retrospect, from late summer 2001, precipitous market
decline in the telecommunications industry and its own
financial distress prevented Global Crossing from realizing
the strategic objectives that it initially contemplated
would support its acquisition of buy side assets in most of
the concurrent transactions reviewed.
I. Global Crossing's buy-side acquisitions during 2001 Q1 and
Q2 were based on its knowledge of market conditions as they
were evolving and its preexisting business objectives,
neither of which anticipated the collective impact of the
market decline and Global Crossing's own deteriorating
financial condition.
J. At the end of 2001, virtually all of the assets Global
Crossing had acquired on the buy-side of the concurrent
transactions were impaired and subject to disposition.
K. Global Crossing relied in good faith on the advice of its
independent accountants, Arthur Andersen, including experts
from Arthur Andersen's National Office, in accounting for
the assets both acquired and sold in approved concurrent
transactions.
L. Global Crossing's decided on its own to make public
disclosure of concurrent transactions commencing in 2001 Q1
and cleared the adequacy and timing of such disclosure with
its professional advisors.
In reaching these conclusions, the Special Committee has
considered the allegations of misconduct and special
circumstances and has determined, based on its review, that they
do not, taken individually or collectively, require the Special
Committee to alter the conclusions. (Global Crossing Bankruptcy
News, Issue No. 38, Bankruptcy Creditors' Service, Inc., 609-392-
0900)
GLOBAL CROSSING: Seeks Approval to Work Up Exit Financing Deal
--------------------------------------------------------------
Bermuda-based Global Crossing has determined to arrange a credit
facility for working capital and other general corporate purposes
for New Global Crossing on and after the Effective Date. Although
the existence of this facility is not a condition to the
occurrence of the effective date of the Plan, Global Crossing has
determined that it would be beneficial to their overall
restructuring efforts and could save significant costs to enter
into the Working Capital Facility when the Plan becomes
effective. The Purchase Agreement and the New Senior Secured
Notes to be issued under the Plan permit New Global Crossing to
enter into this facility on a senior secured basis.
Michael F. Walsh, Esq., at Weil Gotshal & Manges LLP, in New
York, informs the Court that General Electric Capital Corporation
and Merrill Lynch Capital, a division of Merrill Lynch Business
Financial Services Inc. have expressed an interest in making a
proposal for the Working Capital Facility on terms that Global
Crossing believe would be acceptable to them. Any proposal,
however, would be subject to the completion of certain diligence
by the Prospective Lenders. The Prospective Lenders are willing
to perform the diligence on the terms of the work fee letter,
dated March 19, 2003, under which Global Crossing would be
responsible, inter alia, for paying the out-of-pocket expenses of
the Prospective Lenders as an administrative expense of Global
Crossing's estates.
Accordingly, Global Crossing sought and obtained an order
authorizing them to execute and perform under the terms of the
Work Fee Letter.
The Work Fee Letter provides for:
(i) the reimbursement of the reasonable out-of-pocket costs
and expenses of the Prospective Lenders;
(ii) the delivery to GE Capital of $500,000 as a deposit
against these expenses; and
(iii) the indemnification of the Prospective Lenders in
connection with the proposed Working Capital Facility.
Subject to certain restrictions, Global Crossing may terminate
the Work Fee Letter at any time.
According to Mr. Walsh, the fees and expenses covered by the Work
Fee Letter include all out-of-pocket fees and expenses, including
the reasonable fees and expenses of legal, business,
environmental, and other consultants, incurred in connection with
the Work Fee Letter, the Working Capital Facility, the diligence
for this facility, and the preparation of proposal or commitment
letters, whether or not the Working Capital Facility is approved,
committed, or consummated. The reimbursable expenses will also
include a per diem charge of $750 per person for personnel
conducting a field audit in connection with the due diligence.
Finally, up to $35,000 of underwriting expenses for Merrill Lynch
are also covered.
Mr. Walsh relates that Global Crossing will deliver the Work Fee
to GE Capital. Thereafter, GE Capital will charge the Work Fee
as these expenses are incurred. If at any time less than $50,000
remains of the Work Fee, Global Crossing will have the obligation
to deliver an additional $50,000 to GE Capital to be included in
the Work Fee.
Any balance in the Work Fee will be treated as:
-- In the event the Working Capital Facility is consummated,
any unused portion of the Work Fee will be applied to other
fees and expenses related to the facility.
-- In the event the Prospective Lenders do not commit to
provide the Working Capital Facility by April 30, 2003, and
Global Crossing terminate their obligations under the Work
Fee Letter, the Prospective Lenders will return the unused
balance of the Work Fee to Global Crossing.
-- In the event Global Crossing terminate the Work Fee Letter
under any other circumstances, the Prospective Lenders may
retain any remaining portion of the Work Fee.
The Work Fee Letter also provides for a standard indemnification
of the Prospective Lenders by Global Crossing. Other than with
respect to the indemnification and the payment of all accrued
expenses of the Prospective Lenders, Global Crossing may
terminate their obligations under the Work Fee Letter at any
time.
Section 363(b)(1) of the Bankruptcy Code provides, in relevant
part, that a debtor in possession, "after notice and a hearing,
may use, sell or lease, other than in the ordinary course of
business, property of the estate." In order for a court to
approve a request for the use of property of the estate outside
the ordinary course of business, the court must find that the
proposed course of action is supported by sound business reasons.
Committee of Equity Security Holders v. Lionel Corp. (In re
Lionel Corp.), 722 F.2d 1063, 1071 (2d Cir. 1983); Bartel v. Bar
Harbor Airways, Inc., 196 B.R. 268, 272 (S.D.N.Y. 1996); In re
Caldor, Inc.-NY, 193 B.R. 182, 187 (S.D.N.Y. 1996). Section
503(b)(1) of the Bankruptcy Code provides, in relevant part, that
"after notice and a hearing, there shall be allowed
administrative expenses ... including, the actual, necessary
costs and expenses of preserving the estate ..."
Mr. Walsh points out that Global Crossing is in the final stages
of their respective Chapter 11 cases and hope to emerge shortly.
They have determined that arranging the Working Capital Facility
at this time will facilitate the mechanics of obtaining this
facility and will enhance the future business prospects of New
Global Crossing. Most importantly, Global Crossing estimates
that they can save millions of dollars in expenses in connection
with the perfection of security interests for the Working Capital
Facility and the New Senior Secured Notes if they enter into the
Working Capital Facility after the effective date of the Plan.
Mr. Walsh reminds the Court that the Plan requires that the New
Senior Secured Notes be secured by substantially all the assets
of New Global Crossing and its subsidiaries. These notes permit
the Working Capital Facility to be secured by liens that are
senior to these notes. As Global Crossing is preparing for the
Effective Date, they have determined that the perfection of the
security interests throughout the world is both time-consuming
and expensive. Global Crossing can achieve significant
economies, however, by perfecting liens for the Working Capital
Facility at the same time they perfect liens for the New Senior
Secured Notes.
Mr. Walsh believes that the existence of the Working Capital
Facility on the effective date of the Plan should enhance the
ability of New Global Crossing to obtain beneficial economic
terms from suppliers and vendors. Finally, the Working Capital
Facility includes a letter of credit sub-facility. The ability
to arrange for the issuance of letters of credit will assist New
Global Crossing in bidding for large contracts.
In the exercise of their sound business judgment, Global Crossing
has determined that the Work Fee Letter is a necessary first step
in obtaining the Working Capital Facility. Global Crossing
believes that it is customary to provide for the reimbursement of
the out-of-pocket expenses of Prospective Lenders and
indemnification. Moreover, a deposit of funds toward the
reimbursement appears to be reasonable under the circumstances.
(Global Crossing Bankruptcy News, Issue No. 38, Bankruptcy
Creditors' Service, Inc., 609-392-0900)
GLOBAL CROSSING: Seeks To Assume, Assign Shareholder Agreement
--------------------------------------------------------------
Asia Global Crossing asks that the Court enter an order:
(i) authorizing it to assume a certain Shareholders Agreement
dated April 1, 2002 among AGX, Internet Research
Institute, Inc. and Softbank BB Corp., formerly known as
Softbank Networks, Inc. pursuant to Section 365(a) of the
Bankruptcy Code; and
(ii) assign the Shareholders Agreement to Asia Netcom
Corporation Limited pursuant to Section 365(f) of the
Bankruptcy Code.
Richard F. Casher, Esq., at Kasowitz Benson Torres & Friedman, in
New York, reminds the Court that as part of the Asia Netcom
Transaction, in connection with the Sale of the Acquired Assets,
the AGX Debtors assigned to Asia Netcom certain executory
contracts and unexpired leases identified in Schedule 1.01(a) to
the Sale Agreement. It recently came to the attention of the
parties that the AGX Debtors are parties to an executory contract
that is not designated as an Assigned Contract in the Sale
Agreement. Specifically, while the Assigned Contracts included a
certain Amended and Restated Shareholders Agreement dated
December 20, 2000 among the AGX Debtors, Internet Research
Institute, Inc. and Softbank Networks, Inc. relating to shares in
BroadBand Tower, Inc., this agreement has been superceded by a
certain Shareholders Agreement dated April 1, 2002 among the AGX
Debtors, Internet Research and Softbank.
The Sale Agreement provides that:
"[i]f the Purchaser determines at any time that the Seller is a
party to any contracts, agreements, leases, licenses,
commitments, sales or purchase orders or other instruments
primarily related to the Business that have not been
previously designated to be Assigned AGX Contracts, the
Purchaser will have the right in its discretion to demand, by
written notice delivered to the Seller not less than 30 days
prior to the Confirmation Date, that any contracts,
agreements, leases, licenses, commitments, sales or purchase
orders or other instruments be assumed by the Seller and
assigned to the Purchaser and transferred to the Purchaser or
its designee effective upon the Closing as an Acquired Asset
without any additional consideration ... After receipt of any
notice, the Seller will promptly file with the U.S. Bankruptcy
Court a motion for an order authorizing the assumption and
assignment to the Purchaser pursuant to Section 365 of the
Bankruptcy Code."
Mr. Casher relates that Asia Netcom has notified Global Crossing
that the Shareholders Agreement is primarily related to the
Business and that Asia Netcom will exercise its right to demand
that Global Crossing file this Motion seeking a "Section 365
Order" with respect to the Shareholders Agreement. Therefore,
because this Motion expressly is contemplated by the Sale
Agreement, which has been approved by this Court, the assumption
of the Shareholder Agreement and the assignment of the
Shareholder Agreement to Asia Netcom should be authorized.
In connection with the closing of the Asia Netcom Transaction,
Internet Research executed a memorandum of understanding on March
7, 2003 among Internet Research, Asia Netcom and Global Crossing
pursuant to which Internet Research has consented to the
assumption by Global Crossing, and the assignment to Asia Netcom,
of the Shareholders Agreement. Therefore, the issue of "adequate
assurance of future performance" is not implicated with respect
to Internet Research.
With respect to the Softbank, Mr. Casher insists that the
assumption and assignment to Asia Netcom of the Shareholders
Agreement, in and of itself, will provide Softbank with adequate
assurance of the future performance. To the best of their
knowledge, Global Crossing is not in default under the
Shareholders Agreement. In respect of Asia Netcom's financial
credibility and its ability to perform in the future, Asia
Netcom's ultimate corporate parent, China Netcom Corporation
(Hong Kong) Limited, has capitalized Asia Netcom with
$120,000,000 of equity capital and has arranged for bank debt
financing amounting to $150,000,000 to be available to Asia
Netcom.
At the hearing on this Motion, Global Crossing will file evidence
of Asia Netcom's financial credibility, experience, and ability
to perform under the Shareholders Agreement. The hearing on this
Motion, therefore, will provide the Court and other interested
parties the opportunity to evaluate and, if necessary, challenge
the ability of Asia Netcom to provide adequate assurance of
future performance under the Shareholders Agreement, as required
under Sections 365(b)(1)(C) and 365(f)(2)(B) of the Bankruptcy
Code.
Mr. Casher tells the Court that the assumption of the
Shareholders Agreement and the assignment thereof to Asia Netcom
is a component of the Asia Netcom Transaction and, as a result,
is extremely beneficial to Global Crossing's estate.
Accordingly, Global Crossing has determined that the assumption
and assignment of the Shareholders Agreement represents a valid
exercise of its business judgment and is in the best interest of
Global Crossing, its creditors and all parties-in-interest.
(Global Crossing Bankruptcy News, Issue No. 38, Bankruptcy
Creditors' Service, Inc., 609-392-0900)
GLOBAL CROSSING: Seeks To Reject Velocita Telecom Agreement
-----------------------------------------------------------
Global Crossing seeks approval of the rejection of an executory
Telecommunications Services Agreement between Debtor Global
Crossing Bandwith, Inc. and PF.Net Network Services Corp., a
subsidiary or affiliate of Velocita Corp., dated June 29, 2001.
The Contract relates to IRU dedicated circuit capacity/optical
wavelength services between designated city pairs provided by the
Debtors to PF.Net for a term of 20 years.
The standard applied to determine whether the rejection of an
executory contract should be authorized is the "business
judgment" standard. See In re Orion Pictures Corp., 4 F.3d 1095,
1098-99 (2d Cir. 1993); see also NLRB v. Bildisco & Bildisco, 465
U.S. 513, 520 (1984); In re Roman Crest Fruit, Inc., 35 B.R. 939,
949 (S.D.N.Y. 1983).
According to Robert N.H. Christmas, Esq., at Nixon Peabody LLP,
in New York, the Debtors' obligations under the Contract are more
burdensome to the estates than beneficial. Velocita has drawn
down only minimal capacity provided for under the Contract. In
addition, given Velocita's financial condition and the current
status of its bankruptcy proceedings, Debtors perceive that
Velocita will be unable to do so in the foreseeable future.
Accordingly, the obligations that remain to be performed by
Debtors under the Contract are potentially substantial and would
constitute a drain on the Debtors' estates with no corresponding
incremental value. The Debtors believe that it would be more
beneficial to the estates to free this capacity for resale to
other potential customers. (Global Crossing Bankruptcy News,
Issue No. 38, Bankruptcy Creditors' Service, Inc., 609-392-0900)
GLOBAL CROSSING: Moves for Bitro Settlement Court Approve
---------------------------------------------------------
According to Paul M. Basta, Esq., at Weil Gotshal & Manges LLP,
in New York, prior to the Petition Date, Bitro Telecommunications
Incorporated agreed to purchase network transport and other
telecommunication services from Global Crossing Bandwidth, Inc.
formerly known as Frontier Communications of the West, Inc.,
pursuant to a certain Carrier Services Agreement, by and among
Bitro and GX Bandwidth, dated as of August 25, 1999.
On April 30, 2001, Mr. Basta recounts that GX Bandwidth filed a
complaint in the Superior Court of the State of California for
the County of Santa Barbara against Bitro for breach of the
Carrier Services Agreement. GX Bandwith asserted $1,790,747.08 in
damages on account of Bitro's payment defaults under the Carrier
Services Agreement. On September 4, 2001, Bitro filed a cross-
complaint in the California Superior Court against GX Bandwidth
for breach of contract, fraud, negligent misrepresentation,
interference with economic advantage, and unfair competition.
To avoid the costs and uncertainty of litigation, Global Crossing
entered into settlement discussions with Bitro to resolve the
litigation. After arms-length negotiations, GX Bandwidth and
Bitro agreed to the terms of a settlement dated as of June 13,
2002. The Stipulation provides for:
(i) certain payments by Bitro to Global Crossing;
(ii) the dismissal of the First Amended Cross-Complaint after
the Court's approval of the Stipulation;
(iii) the dismissal of the Complaint once all amounts pursuant
to the Stipulation have been paid by Bitro to the
Debtors; and
(iv) mutual releases.
By this Motion, Global Crossing seeks approval of the
Stipulation.
The salient terms of the Stipulation are:
A. The parties agree that Judgment will be entered against
Bitro amounting to $1,000,000 unless Bitro makes certain
payments pursuant to the terms of the Stipulation.
B. Bitro will pay Global Crossing $100,000 within 10 days of
the
Court's approval of the Stipulation and $400,000 no later
than three months after the First Payment.
C. Bitro may elect to make the Second Payment over time under
a payment plan. Pursuant to the Payment Plan, Bitro will
pay Global Crossing:
(i) $15,000 per month for the first 12 months following
approval of the Stipulation;
(ii) $26,000 per month for the next 17 months; and
(iii) $28,000 for the last month.
Under the Payment Plan, Bitro would make payments totaling
$750,000, whereas Bitro would make payments totaling
$500,000 if it elects to make the Second Payment as a
lump-sum.
D. Bitro may prepay amounts owed under the Payment Plan by
making a lump-sum payment and will receive a credit for the
lump-sum payment in accordance with a formula set forth in
the Stipulation.
E. The parties agree that the First Amended Cross-Complaint
will be dismissed, with prejudice, after the Court's
approval of the Stipulation.
F. The parties agree that the Complaint will be dismissed,
with prejudice, once all amounts due pursuant to the
Stipulation have been paid to Global Crossing.
G. The parties agree to release, discharge and acquit each
other from all claims and causes of action asserted in the
Complaint, the First Amended Cross-Complaint, and all
claims arising out of the subject matters contained in the
lawsuit.
Mr. Basta insists that the Stipulation is a fair resolution of
the disputes between the parties and in the best interests of
Global Crossing's estates. The Stipulation resolves the pending
litigation between Global Crossing and Bitro with respect to the
Complaint and First Amended Cross-Complaint. The First Amended
Cross-Complaint will be dismissed after approval by the Court of
the Stipulation and the Complaint will be dismissed once all
amounts due pursuant to the Stipulation have been paid by Bitro
to Global Crossing.
By entering into the Stipulation, Mr. Basta points out that
Global Crossing will receive payments from Bitro aggregating
between $500,000 and $750,000. The Stipulation also enables the
parties to avoid a potentially long, costly and uncertain
litigation. Under the Stipulation, Bitro and Global Crossing
agree to release any and all claims against each other for
actions relating to the subject matter contained in the Complaint
and the First Amended Cross-Complaint. (Global Crossing
Bankruptcy News, Issue No. 38, Bankruptcy Creditors' Service,
Inc., 609-392-0900)
GLOBAL CROSSING: Files Omnibus Objection on Duplicate Claims
------------------------------------------------------------
Global Crossing asks the Court to expunge and disallow 205
duplicate claims to avoid double recovery by the claimants.
Some of these claims include:
Claim No. Surviving
Claimant Expunged Claim No. Amount
-------------------- -------- --------- -----------
Dennis Banks 859 973 $279,334
Robert Barrett 1413 1417 634,495
Paula Besset 8533 8534 348,372
Bestel USA Inc. 531 559 290,838
California Coastal 6413 8190 2,945,000
Commission 7586
7831
Citicorp Vendor Finance 39 41 256,396
40
EOP Metro Plaza LLC 3505 8343 400,059
8229
Euromart New York 8163 8162 10,000,000
Foxfire Consulting LLC 626 669 367,127
Gov't. of Virgin Islands 923 1974 7,147,140
IHS Help Desk 8483 8595 376,069
KDDI America 5474 5475 1,042,253
James Martin 724 829 515,935
National Office Partners 331 358 316,736
Barbara Pannell 2968 2970 500,000
2969
Donald Poulter 908 941 425,829
Pride Electric Co. 5799 8238 337,140
Donna Reeves-Collins 8659 5879 352,852
Ronald Katz Licensing 4849 5968 6,380,475
Shipley Logan Comms. 5555 5942 910,913
Teleservices Inc. 952 988 1,865,708
Webex Inc. 4398 4400 343,818
Williams Communications 5641 5645 716,542
These claims were filed against the same debtors for the same
dollar amount and in respect of the same obligation. As a
result, each of the duplicate claims represents only one
obligation of Global Crossing and the claimants that filed the
duplicate claims are entitled to only one distribution. (Global
Crossing Bankruptcy News, Issue No. 38, Bankruptcy Creditors'
Service, Inc., 609-392-0900)
GLOBAL CROSSING: Objects To Amended, Superceded Claims
------------------------------------------------------
Global Crossing asks the Court to disallow 27 claims totaling
over US$65 million as these were amended and superceded by later
filed claims. As a result, the original claims no longer
represent valid claims against the Company.
Some of these claims include:
Claim No. Surviving
Claimant Expunged Claim No. Amount
-------------------- -------- --------- -----------
Alameda Main LLC 105 349 $4,046,555
Citizens Communications 4274 9628 58,534,556
4276
Computer Associates 2312 10042 258,939
8537
Ross Ackard Acquisition 108 348 2,671,078
SAP America Inc. 50 5791 1,086,610
(Global Crossing Bankruptcy News, Issue No. 38, Bankruptcy
Creditors' Service, Inc., 609-392-0900)
MUTUAL RISK: Creditors OK Restructuring Scheme of Arrangement
-------------------------------------------------------------
At the Scheme Meetings held on April 10, 2003, the Scheme of
Arrangement between Mutual Risk Management Ltd. ("the Company")
was approved by the requisite majorities of each class of Scheme
Creditors.
A petition for sanction of the Scheme has now been filed with the
Supreme Court of Bermuda and was heard on April 25, 2003. Copies
of the Petition and evidence filed in support can be obtained
from the offices of Conyers Dill & Pearman, Clarendon House, in
Church Street, Hamilton, Bermuda. Interested parties may call
Robin Mayor at Phone No. (441) 294-1422, or Fax No. (441) 295-
6972.
CONTACT: Mutual Risk Management, Ltd.
44 Church Street,
Hamilton Bermuda
TYCO INTERNATIONAL: Taking $1B In New Accounting Charges
--------------------------------------------------------
Tyco International, Ltd. said that it will take new charges for
more that US$1 billion in accounting inaccuracies, Reuters
reports, adding that about 60 percent of these inaccuracies are
caused by Tyco's Fire & Security division.
Chief Executive Edward Breen said, "Tyco finally has identified
all or nearly all of the remaining legacy issues. We're committed
to changing the culture to more conservative. Where we cannot
change the culture, we will change the people."
Mr. Breen is on record as having said that "heads will roll" if
the Company proves to have more accounting problems.
In the meantime, the accounting charges would contribute to a
loss of US$467.9 million, or 23 cents a share for Tyco's second
quarter ended March 31, compared to a loss of US$6.38 billion, or
US$1.03 a share, for the same period last year. The results
included 55 cents a share in after-tax charges related to
adjustments resulting from Tyco's internal audits, said the
report.
Because of the controversy, the Company decided that it would
change the accounting method for its ADT outside dealers to make
its faster for the Company to write off the ADT accounts. This
would be the fourth accounting adjustment in the Company since
October.
According to the report, Tyco's Fire and Security Services unit,
of which ADT is a major part, posted a loss of US$702.6 million
for the quarter, compared with a profit of US$337.6 million in
the same period last year. The 2003 quarterly loss includes
US$936.8 million in charges, with US$364.5 million reflecting
accounting changes at ADT. Tyco's second-quarter revenues were
US$9 billion, up 4 percent from US$8.6 billion in the second
quarter of last year.
Rik Fennema, a credit analyst at Dresdner Kleinwort Wasserstein,
relates that the new accounting issues "put a big question mark
generally above reported figures."
Tyco's shares fell early Wednesday, but closed up 23 cents at
US$15.60.
TYCO INTERNATIONAL: Latin American Dealers Accuse ADT Of Fraud
--------------------------------------------------------------
Tyco International Ltd. subsidiary, ADT, is facing multiple
charges of fraud in Latin America, according to the Knight Ridder
Business News. A group of ADT alarm dealers filed separate
criminal charges against ADT in Mexico, Chile and Argentina.
Court documents indicate that the charges were brought in
Argentina on December 19, in Chile on September 18 and in Mexico
on March 6. The lawsuits name ADT and Tyco officials as
defendants, particularly ADT Mexico President Patricio Gonzalez
and the company's former Latin America dealer network chief,
Jorge Hernandez. Tyco Fire & Security Division's Latin America
chief Phillip McVey was also named in two of he lawsuits, the
report adds.
"Taken together, these charges point to a pattern of unethical
and possibly criminal behavior on the part of ADT throughout
Latin America," said David Hart, a Miami-based attorney
representing four former Mexican dealers.
ADT is accused of various criminal actions. In Mexico,
allegations include that it fraudulently attempted to gain
control of a dealer of alarm equipment. In the other countries
mentioned, ADT faces estafa charges.
Tyco denies any criminal violation in Mexico, the report says.
The Company insists that its dealer problems should be resolved
through arbitration proceedings, and not in a criminal court.
Tyco Spokesman Gary Holmes relates that the Company is aware of
come civil suits in Chile, but downplayed it by saying the
complaints "have not been accepted yet."
However, Reginaldo Callejas, owner of the Santiago-based alarm
company named CallCom, contends that Mr. McVey was made aware of
the charges in Chile.
===========
B R A Z I L
===========
AES CORP.: Posts 1Q03 Financial Results
---------------------------------------
The AES Corporation (NYSE: AES):The AES Corporation (NYSE: AES)
announced Thursday that income from continuing operations for the
quarter ended March 31, 2003 was $73 million, or $0.13 per
diluted share.
Net income for the quarter was $93 million, or $0.17 per diluted
share. Net income includes $0.04 per diluted share from
discontinued operations.
Revenues for the first quarter were $2.2 billion. AES also
announced that consolidated net cash provided by operating
activities for the first quarter of 2003 was $446 million.
Additionally, as previously announced, its subsidiary
distributions to parent and qualified holding companies for the
quarter totaled $180 million.
For the quarter ended March 31, 2002, income from continuing
operations was $118 million, or $0.22 per diluted share, and net
loss for the same period was $(313) million, or $(0.58) per
diluted share. The net loss for the first quarter of 2002
included a charge for the cumulative effect of an accounting
change.
Paul Hanrahan, President and Chief Executive Officer, commented,
"The operating cash flow and earnings results for the first
quarter are in line with expectations from our turnaround plan.
This is a solid start to 2003 as we work to restore equity value
and to position AES for long-term growth."
Barry Sharp, Chief Financial Officer, stated, "We have made
significant progress in strengthening our balance sheet and
reducing debt at the parent level with over $600 million of
additional proceeds from asset sales during the first quarter.
For the full year of 2003 we continue to expect diluted earnings
per share from continuing operations of $0.50 per share and
consolidated net cash provided by operating activities of
approximately $1.5 billion."
AES is a leading global power company comprised of contract
generation, competitive supply, large utilities and growth
distribution businesses.
The company's generating assets include interests in 160
facilities totaling over 55 gigawatts of capacity, in 30
countries. AES's electricity distribution network sells 108,000
gigawatt hours per year to over 16 million end-use customers.
For more general information visit our web site at www.aes.com or
contact investor relations at investing@aes.com.
To see financial statements:
http://bankrupt.com/misc/AES_CORP.htm
CONTACT: AES Corporation
Kenneth R. Woodcock, 703/522-1315
AES CORP.: Richard Darman Elected Chairman Of Board
---------------------------------------------------
The AES Corporation (NYSE:AES) announced Thursday that Richard
Darman has been elected Chairman of the AES Board of Directors.
Roger Sant, co-founder of the Company, assumed the new title of
Chairman Emeritus, and will remain a member of the Board.
Mr. Darman was elected to the Board in June 2002. In December
2002, he assumed the responsibilities of Vice Chairman and Lead
Independent Director. He also serves as Chairman of the Board's
Special Committee and as a member of the Financial Audit
Committee.
"We are indeed fortunate to have a person of Dick Darman's
caliber step into the new role of non-executive Chairman," said
Roger Sant, outgoing Chairman of the Board of AES. "His
exceptional breadth of experience and talent will serve as an
invaluable asset to Paul Hanrahan as he continues to lead our
Company at this critical time of our recovery. I leave the
Chairmanship confident that Paul, Dick, and our entire leadership
team have the resources necessary to take us where we want to be:
the best global power company."
Mr. Darman commented, "In the past year, I have had a chance to
observe Roger's extraordinary leadership directly. The times for
AES, the energy sector, and much of American business have
required significant change. Throughout, Roger has been
indefatigable in helping a committed AES team, led by Paul
Hanrahan, do very much more than simply cope with temporary
adversity. He has helped transform AES into a company that can
again look confidently forward with a renewed sense of promise. I
am, of course, delighted that Roger has agreed to remain an
active member of the AES board."
Mr. Darman, 59, is a Partner and Managing Director of The Carlyle
Group, one of the world's largest private equity firms. He joined
Carlyle in February 1993, after serving in the first Bush
administration as Director of the U.S. Office of Management and
Budget (from 1989 to 1993). Prior to joining the Bush cabinet, he
was a Managing Director of Shearson Lehman Brothers, Deputy
Secretary of the U.S. Treasury, and Assistant to the President of
the United States. He graduated with honors from Harvard College
in 1964 and from the Harvard Graduate School of Business
Administration in 1967. He has served on the boards of several
Carlyle portfolio companies, is a Trustee of the publicly traded
CDC Nvest Funds and the AEW Real Estate Income Fund, and is Vice
Chairman of the Board of the Smithsonian National Museum of
American History.
AES also announced that Philip A. Odeen was newly elected by the
shareholders to the Board of Directors as an independent member,
bringing the total number of Directors to 10, of which 8 are
independent. Mr. Odeen was nominated in March 2003, after
retiring as Chairman of TRW Inc.
AES CORP.: Prices $1.8B Debt Private Placement
----------------------------------------------
The AES Corporation (NYSE:AES) announced Thursday that it had
priced an offering of $1.8 billion of second priority senior
secured notes. The notes will be issued in two tranches: $1.2
billion of 8.75% Second Priority Senior Secured Notes due 2013
and $600 million of 9.00% Second Priority Senior Secured Notes
due 2015. AES intends to use approximately $1.075 billion of the
net proceeds of the offering to fund the pending tender offer for
its outstanding senior and senior subordinated notes (based on
the notes tendered as of 5:00 p.m. New York City time on
Thursday, May 1, 2003), approximately $475 million to repay a
portion of the amounts outstanding under its senior secured
credit facilities and the balance for general corporate purposes.
The $1.8 billion offering of second priority senior secured notes
is scheduled to close on Thursday, May 8, 2003 and is subject to
customary closing conditions.
AES also announced that it had increased the aggregate principal
amount of each series of senior notes that it was seeking to
purchase in its pending tender offer. The following table shows
the principal amount of each series of notes that AES is seeking
to purchase and the amount of notes tendered as of 5:00 p.m. New
York City time on Thursday, May 1, 2003.
Principal Principal
Amount Purchase Amount
The Notes Outstanding Amount Tendered
-----------------------------------------------------------------
8.00% Senior Notes,
Series A, Due 2008 $199,022,000 $43,797,000 $53,982,000
8.75% Senior Notes,
Series G, Due 2008 $400,000,000 $161,398,000 $198,931,000
9.50% Senior Notes,
Series B, Due 2009 $750,000,000 $252,951,000 $311,774,000
9.375% Senior Notes,
Series C, Due 2010 $850,000,000 $414,345,000 $510,699,000
8.875% Senior Notes,
Series E, Due 2011 $536,690,000 $223,504,000 $275,479,000
10.25% Senior Subordinated
Notes Due 2006 $217,050,000 $55,000,000 $18,915,000
8.375% Senior Subordinated
Notes Due 2007 $303,290,000 $77,000,000 $40,116,000
8.50% Senior Subordinated
Notes Due 2007 $338,250,000 $86,000,000 $27,138,000
8.875% Senior Subordinated
Notes Due 2027 $125,000,000 $32,000,000 $4,952,000
In addition, AES announced that it had extended the expiration
time of the tender offer for its senior notes to 8:00 a.m. New
York City time on Thursday, May 15, 2003, and the expiration time
of the tender offer for its senior subordinated notes to 5:00
p.m. New York City time on Wednesday, May 7, 2003, in each case,
unless extended or earlier terminated. The other terms of AES's
pending tender offer remain unchanged.
AES's obligation to accept notes tendered and pay the tender
offer consideration and any early tender premium is subject to a
number of conditions which are set forth in the Offer to Purchase
and Letter of Transmittal for the tender offer. The conditions
include (1) the completion of the proposed private placement and
(2) the effectiveness of the amendment to AES's senior credit
facility.
The second priority senior secured notes will not be registered
under the Securities Act of 1933, or any state securities laws.
Therefore, the second priority senior secured notes may not be
offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of the
Securities Act of 1933 and any applicable state securities laws.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy the second priority senior secured notes.
BCI: Announces 1Q03 Results After AMX Deal Finalized
----------------------------------------------------
As a result of the adoption on July 17, 2002 of the Plan of
Arrangement, and the completion of the sale of Bell Canada
International Inc.'s ("BCI") (NASDAQ:BCICF)(TSX:BI) interest in
Telecom Americas Ltd. ("Telecom Americas") on July 24, 2002,
BCI's consolidated statements of earnings and cash flows for the
first quarter of 2003 reflect only the activities of BCI as a
holding company. Axtel S.A de C.V. ("Axtel") and Canbras
Communications Corp. ("Canbras") are recorded under Investments
on the balance sheet at the lower of carrying value and estimated
net realizable value and their operating results are not
reflected on BCI's consolidated statements of earnings.
First Quarter Results
As at March 31, 2003, BCI's shareholders' equity was $248.6
million, down by $15.4 million from the fourth quarter of 2002.
This decrease was as a result of foreign exchange losses on the
America Movil S.A. de C.V. note (the "AMX Note") and on cash and
temporary investments held in US dollars due to a decline in the
US dollar exchange rate since the fourth quarter of 2002,
interest expense on the BCI's 11% senior unsecured notes and
administrative expenses, partially offset by gains on the foreign
exchange currency option purchased to hedge the AMX Note and
interest income.
On March 3, 2003, BCI received payment of the remaining balance
of US$ 170 million due under the AMX Note. These proceeds
represent the final payment on the sale of BCI's interest in
Telecom Americas Ltd on July 24, 2002. Upon the exercise of the
foreign currency option on March 4, 2003, BCI received net
proceeds of approximately $264 million. As a result, BCI's cash
and temporary investments reached $399 million at the end of the
first quarter of 2003.
BCI's interests in Axtel and Canbras are recorded on the balance
sheet at their aggregate net realizable value of $25 million.
Total liabilities include BCI's 11% senior unsecured notes due
September 2004 in the amount of $160 million. Accrued liabilities
were $17.6 million at the end of the first quarter of 2003, down
$5.7 million from the fourth quarter of 2002 mainly as a result
of the payment of interest on the BCI's 11% senior unsecured
notes and other administrative expenses.
Net costs from April 1, 2003 to December 31, 2004 are estimated
at approximately $27.1 million, including interest expenses on
the 11% senior unsecured notes of approximately $27.6 million,
interest income of approximately $17.7 million and operating
costs of approximately $17.2 million. These future net costs
exclude any amounts that may be required to settle contingent
liabilities such as law suits, the Vesper guarantees and the
Comcel voice over IP claim.
The net loss for the first quarter was $15.4 million, or $0.38
per share.
Update on Assets Held for Disposition
-- On March 27, 2003, BCI announced that Axtel was proceeding
with a series of transactions pursuant to which Axtel's debt
would be reduced by US$ 400 million. These restructuring
transactions include a capital call on shareholders in which BCI
is not participating. In connection with the restructuring, which
also includes a settlement of all obligations under a BCI service
agreement with Axtel, BCI will receive at closing:
-- Approximately US$ 2.7 million in cash
-- Two non-interest bearing notes, one in the amount of
approximately US$ 3.5 million payable in instalments on June 30,
September 30 and December 31, 2003, and the other in the amount
of approximately US$ 9.4 million payable in the second quarter of
2006
-- A reduction in its equity ownership in Axtel to 1.5% on a
fully diluted basis
These transactions are expected to be completed in the second
quarter of this year.
-- BCI is still actively seeking to dispose of its interest in
Canbras. The following is a summary of the first quarter
financial and operational results of Canbras, as well as an
update on the company's liquidity situation:
Revenues were $13.5 million in the quarter, down $3.7 million or
21.5% compared to the first quarter of 2002. This decrease is
mainly as result of a 54% devaluation of the average translation
rate of the Brazilian real compared to the Canadian dollar
relative to the first quarter of 2002, partially offset by cable
and internet access subscriber growth and price increases. EBITDA
was unchanged at $3 million, from the first quarter of 2002. The
decrease in revenues was offset by a decrease in the cost of
service and in operating expenses both resulting principally from
the devaluation of the average translation rate of the Brazilian
real.
Canbras' sale process may be negatively affected by the company's
severe liquidity challenges in 2003 and 2004. Currently, the most
pressing is the inability of Canbras' primary subsidiary, Canbras
TVA, to repay a US$9.25 million obligation under its credit
facility due in mid May of this year which would result in an
acceleration of the entire amount (US$18.5 million) of the
indebtedness under the facility.
Canbras is currently engaged in discussions with its bank lenders
and the partner in Canbras TVA, and progress has been made with
regard to a potential restructuring of the debt that could avoid
a payment default by Canbras TVA this May and which would be
based on a business plan that could enable Canbras to continue in
operation for 2003 and beyond. Canbras is cautiously optimistic
that all parties will reach an acceptable agreement with its bank
lenders with the intention of addressing the various liquidity
challenges facing the company.
BCI is operating under a court supervised Plan of Arrangement,
pursuant to which BCI intends to monetize its assets in an
orderly fashion and resolve outstanding claims against it in an
expeditious manner with the ultimate objective of distributing
the net proceeds to its shareholders and dissolving the company.
BCI is listed on the Toronto Stock Exchange under the symbol BI
and on the NASDAQ National Market under the symbol BCICF. Visit
our Web site at www.bci.ca.
To see financial statements: http://bankrupt.com/misc/BCI.htm
CONTACT: Bell Canada International Inc.
Howard N. Hendrick, 514/392-2260
howard.hendrick@bci.ca
MRS LOGISTICA: S&P Changes Outlook To Stable
--------------------------------------------
Credit rating agency Standard & Poor's revised the outlook on
Brazilian railroad concessionaire MRS Logistica to stable from
negative, reports Business News Americas.
The action reflects the revision of the outlooks on Brazil's B+/B
foreign currency and BB/B local currency credit ratings to stable
from negative, which in turn reflects recent progress and
prospects for a further strengthening of Brazil's fiscal
position, and President Luiz Inacio Lula da Silva and his
administration's demonstrated commitment to stabilize the stock
of government debt, S&P explained.
MRS Logistica operates the 1,700km southeast rail network (Malha
Sudeste) that spans the states of Minas Gerais, Rio de Janeiro
and Sao Paulo.
CONTACT: MRS LOGISTICA S.A.
Praia de Botafogo, 228/1201-E
22250-906 - Rio de Janeiro - RJ
Brasil
Contacts: Eduardo Cassinelli - Treasurer Marco Andre
Guimaraes - Financial Manager
Maria Lucia Silveira - Financial Analyst
Tel.: 55-21-2559-4600
Fax: 55-21-2552-2635
E-mail: daf@mrs.com.br
Home-Page: www.mrs.com.br
SABESP: Currency Improves, S&P Changes Outlook To Stable
--------------------------------------------------------
Credit rating agency Standard & Poor's (S&P) revised the outlook
on Brazilian state Sao Paulo's water utility Sabesp to stable
from negative, reports Business News Americas.
In its reports, S&P explained that the action reflects the
revision of the outlooks on Brazil's B+/B foreign currency and
BB/B local currency credit ratings to stable from negative, which
in turn reflects recent progress and prospects for a further
strengthening of Brazil's fiscal position, and President Luiz
Inacio Lula da Silva and his administration's demonstrated
commitment to stabilize government debt.
Sabesp is Brazil's largest water utility in terms of users,
serving 366 of Sao Paulo state's 645 municipalities, providing
water to 25 million residents.
CONTACT: Helmut Bossert
(5511) 3388-8664
hbossert@sabesp.com.br
Marisa Guimaraes
(5511) 3388-9135
marisag@sabesp.com.br
www.sabesp.com.br
VARIG/TAM: FRB-Par Approves Merger Model
----------------------------------------
A model for the merger of Brazil's flagship airline Viacao Aerea
Riograndense (Varig) and No. 2 airline TAM gained approval from
Fundacao Ruben Berta (FRB-Par), the holding company that controls
Varig, reports Reuters.
The approval by the FRB-Par, which is made up of roughly 216
employees, propels the merger ahead after it nearly stalled due
to FRB-Par's opposition in recent weeks. FRB-Par's opposition,
which was due to concerns over its share of the new company,
prompted the resignation of Manuel Guedes as Varig's President.
According to Reuters, about 96% of FRB-Par's assembly agreed
Wednesday to the general outline of a plan presented by the bank
administering the merger, Banco Fator, after FRB-Par was
guaranteed control of at least 5% of the new airline. The
government would hold the biggest share of the new airline, Banco
Fator's Luciano Coutinho said.
According to the proposal, Brazil's BNDES development bank --
which has been involved in the merger talks, state-owned Banco do
Brasil, fuel supplier BR Distribuidora and Brazil's Infraero air
traffic control company would combined hold 40% of the new
company's capital.
"The idea is that the BNDES intermediate at this moment to
provide some maneuverability in the cash flow so we can pull off
this merger," FRB-Par's board president, Yutaka Imagawa, said.
TAM would hold 35%, followed by international creditors -- most
of which are Varig's -- with 20%, and FRB-Par the remaining 5%.
CONTACT: VARIG (Viacao Aerea Rio-Grandense, S.A.)
Rua 18 de Novembro No. 800, Sao Joao
90240-040 Porto Alegre,
Rio Grande do Sul, Brazil
Phone: (51) 358-7039/7040
(51) 358-7010/7042
Fax: +55-51-358-7001
Home Page: www.varig.com.br/english/
Contacts:
Dorival Ramos Schultz, EVP Finance and CFO
E-mail: dorival.schultz@varig.com.br
Investor Relations:
Av. Almirante Silvio de Noronha,
n 365-Bloco "B" - s/458 / Centro
Rio de Janeiro, Brazil
TAM
Daniel Mandelli Martin, President
Buenos Aires
Tel. (54) (11) 4816-0001
URL: www.tam.com.br
=========
C H I L E
=========
ENDESA CHILE: Pehuenche Land Swap Negotiations Still Unresolved
---------------------------------------------------------------
Endesa Chile continues to be in conflict with indigenous groups
who refuse to abandon their lands in the upper Bio Bio basin in
Region VIII allowing Endesa to fill the reservoir at its 570MW
Ralco hydro project, Business News Americas indicates.
The two sides were brought together by the government's planning
undersecretary Jaime Andrade to negotiate and were given until
April 26 to resolve the conflict. However, the deadline passed
without an agreement.
As a result, another deadline was set for May 12. If the two
sides still won't reach an agreement by the new deadline, a
national court will be called to rule on the dispute.
Citing a company source, Business News Americas reports that
Endesa is offering CLP200 million and 77 hectares of land to each
of the four Pehuenche families involved in the dispute, but is
not willing to pay more.
Ralco has been dogged by the fact that the power sector law
protecting Endesa clashes with the indigenous law protecting the
Pehuenches. Most Pehuenches have accepted to sell or trade their
lands with Endesa, but a group of four families refuses to do so,
and in December 2002 it presented a case against the Chilean
State to the Inter-American Commission of Human Rights.
Based on a recommendation from the commission, the government put
a temporary injunction on the Ralco project, effectively freezing
it.
GUACOLDA: Refinances Debt Following Successful Bond Issuance
------------------------------------------------------------
Chilean electricity company Guacolda successfully placed US$150
million in senior amortizing secured loan participation
certificates with final maturity in 2013. Proceeds were mainly
applied to refinance its US$87 million net debt maturities on
April 30, 2003 and to prepay its US$48.8 outstanding debt with
Mitsubishi Corp. Guacolda is a 304 MW coal-fired power generator
located in the northern region of Chile's Central Interconnected
System.
MANQUEHUE NET: Fitch Withdraws Ratings Following Restructuring
--------------------------------------------------------------
Fitch Ratings has affirmed Manquehue Net S.A.'s ratings of
'CCC+', revised the Rating Outlook to Stable from Negative and
has simultaneously withdrawn the 'CCC+' foreign currency and the
international scale local currency ratings. Fitch has withdrawn
the ratings following the successful debt restructuring and the
absence of any outstanding international debt securities. Fitch
will no longer provide international analytical service or
coverage of this issuer but will continue to follow the company
on the national scale.
CONTACT: Randy Alvarado +1-312-368-3117, Chicago
Ivonne Ibanez +562-206-7171 x36, Santiago
MEDIA RELATIONS: James Jockle +1-212-908-0547, New York
===========
M E X I C O
===========
GRUPO TFM: S&P Rates Kansas City's Preferred Offering as `B'
------------------------------------------------------------
Standard & Poor's Ratings Services said Thursday it assigned its
'B' rating to Kansas City Southern's proposed $175 million
redeemable cumulative convertible perpetual preferred stock
(liquidation preference $500 per share) being offered under Rule
144A. The stock is redeemable, subject to certain conditions, on
or after May 20, 2008. At the same time, the rating was placed on
CreditWatch with negative implications. Existing ratings on
Kansas City Southern and unit Kansas City Southern Railway Co.,
including the 'BB' corporate credit rating, remain on CreditWatch
with negative implications, where they were placed on April 1,
2003. The original CreditWatch placement reflected Standard &
Poor's concerns that continuing economic weakness and potential
funding requirements related to the company's investment in TFM
S.A. de C.V. (TFM) could cause deterioration in its financial
profile. The Kansas City, Mo.-based Class 1 railroad currently
has about $860 million of debt (adjusted for operating leases).
Kansas City Southern announced last month a series of agreements
with Grupo TMM S.A. in which Kansas City Southern will gain
control of TFM (the main privatized Mexican railroad) and the
Texas Mexican Railway Co. (Tex-Mex; a short-line railroad
currently owned by TFM that links the TFM system with Kansas City
Southern trackage and the broader U.S. railroad system). Kansas
City Southern will combine the TFM and Tex-Mex operations with
those of its subsidiary, The Kansas City Southern Railway Co., to
form one single transportation company and will change its name
to NAFTA Rail. The deal, which has been approved by the board of
directors at both Kansas City Southern and TMM, has received bank
group consent but remains subject to shareholder and regulatory
approval. Based on 2002 results, the combined entity would
generate about $1.3 billion in revenues and $368 million in
EBITDA.
Under the proposed deal, TMM Multimodal (a subsidiary of TMM)
will receive 18 million shares of NAFTA Rail (representing
approximately 22% of the company); $200 million in cash; and a
potential incentive payment of between $100 million and $180
million, based on the resolution of certain future contingencies,
including TFM's long-running value-added-tax (VAT) dispute with
the Mexican government. The VAT dispute, which dates back to the
privatization of TFM in 1997, could result in a significant
payment to TFM. The matter is still being debated in the courts,
and the timing of a resolution of this matter is uncertain.
Proceeds from the preferred stock issuance will be used to fund
the cash portion of the TFM deal. Kansas City Southern will also
use cash on hand to acquire 51% of Tex-Mex from TFM for $32.7
million.
Ratings remain on CreditWatch pending a review of the financial
impact of the proposed transaction as well as a review of the
company's future funding requirements and near-to-intermediate
term operating outlook. "While the proposed deal should enhance
the company's business profile, increased financial risk
following the completion of the transaction will make the company
more vulnerable to cyclical pressures," said Standard & Poor's
credit analyst Lisa Jenkins. As of Dec. 31, 2002, the combined
companies had about $1.6 billion in total balance sheet debt.
Adding to financial risk and uncertainty in the near-to-
intermediate term is the Mexican government's right to put its
ownership in TFM in the fall of 2003. Measured as of Dec. 31,
2002, the total purchase price of the government's stake was
about $485 million.
ANALYST: Lisa Jenkins, New York (1) 212-438-7697
* Government Calls Mexican Bonds Due 2019 at Par
------------------------------------------------
The United Mexican States (Mexico) issued a notice of redemption
to holders of its Collateralized Fixed Rate Bonds Due 2019, USD
Par Series A, and to holders of its Collateralized Fixed Rate
Bonds Due 2019, USD Par Series B. Pursuant to the terms and
conditions of the said Bonds, Mexico has elected to redeem the
entire outstanding principal amount of the Bonds on May 15, 2003
(the "Redemption Date") at a price equal to 100 percent of their
principal amount, plus accrued interest to the Redemption Date.
Payment of the Bonds will be made on the Redemption Date by
credit to the account of Citibank, N.A., as common depositary for
Euroclear and Clearstream, Luxembourg, for the account of their
respective participants.
On and after the Redemption Date, interest will cease to accrue
on the Bonds and the Bonds will cease to be listed on the
Luxembourg Stock Exchange. Upon redemption, the Bonds will be
cancelled.
=======
P E R U
=======
MINERA VOLCAN: Net Income Shrinks In The First Quarter 2003
-----------------------------------------------------------
Peruvian zinc miner Volcan Compania Minera SAA posted first-
quarter 2003 net income of PEN432,000 ($1=PEN3.4624) compared
with net income of PEN2.75 million in the same quarter a year
earlier, the Company said. The announcement came by way of an
official filing with the country's Peruvian securities regulatory
agency, Conasev. Total revenues were PEN133.70 million in the
first quarter, compared with PEN132.63 million in the same
quarter of 2002.
CONTACT: COMPANIA MINERA VOLCAN
Av Gregorio Escobedo
710 Jesus Mara
Lima, Peru
Tel: +51 1 219-4000
Fax: +51 1 261-9716
Contact:
Mr. FMG Sayan (Francisco), Chairperson
=================================
T R I N I D A D & T O B A G O
=================================
BWIA: Unions Intend To Take Back Equipment, Start Own Company
-------------------------------------------------------------
Unions representing BWIA workers are reportedly forming a company
to be contracted for some of the airline's outsourced services.
At a joint membership meeting of ASA, Aviation Communication and
Allied Workers Union and the Communication, Transport and General
Workers Trade Union, Mr. Oliver pointed out that the equipment
for the ramp and line operations at the airline belong to the
employees.
"We are trying to put a working paper together for a company to
handle ramp and line. The (airline's) chairman said he would push
it through the board and we will be able to get a ramp and line
service at BWIA," Theo Oliver, president of the Airline
Superintendents Association, was quoted by the Trinidad Guardian
as saying.
The existing equipment is slated to be used for their Company,
indicated Mr. Oliver. "We want back our equipment," he said. "We
didn't sign anything to lend it out or lease it away."
BWIA's ramp operations were outsourced as part of its 2003 New
Business Model launched in January. The airline's management said
the move was intended to produce "annual net savings of third
party costs of US $575,760", the Trinidad Guardian reported.
BWIA: Unions Advise Employees Against Accepting Salary Cuts
-----------------------------------------------------------
BWIA employees of troubled carrier, BWIA, were advised not to
accept the airline's proposal of a 5-15 percent pay cut, the
Trinidad Guardian relates. CATTU general secretary Raymond Small
warned employees that if they accept the salary cuts, BWIA's
retrenched workers will get their severance payments at a reduced
pay rate.
The leaders of Aviation Communication and Allied Workers Union
(ACAWU), Airline Superintendents Association and the
Communication Transport and General Workers' Trade Union told the
workers that it would take years for them to convince the
management to reinstate their original salaries.
The Leaders also pointed out that if the employees take the pay
cuts, they would be receiving their 1998 salaries, which may not
be sufficient to sustain them in a 2003 economy.
BWIA's management proposed that the pay cuts take effect on May
1.
=================
V E N E Z U E L A
=================
FERTINITRO FINANCE: Liquidity Improves, Fitch Issues Comments
-------------------------------------------------------------
FertiNitro Finance Inc. (FertiNitro) was successful in formally
executing a financing plan last month that relieved its liquidity
shortfall by securing additional financial support from the
sponsors and negotiating a revised payment plan with the bank
lenders. As a result, the project was able to make its amended
April 2003 debt service payment, thus avoiding a prospective
payment default. Fitch rates FertiNitro's US$250 million 8.29%
secured bonds due 2020 at 'CC' on Rating Watch Negative.
Over the past months, FertiNitro negotiated with its sponsors and
lenders on a financing plan that provides the project with the
required financial resources to make certain critical repairs
while also likely avoiding a debt payment default this year. Key
provisions of the executed financing plan include the sponsors
providing an aggregate of US$32 million of additional capital to
fund FertiNitro's bond and bank interest payments as well as to
pay transaction fees and costs associated with the Amendment, to
pay for critical near-term repairs, and the bank lenders agreeing
to defer 2003 principal debt service payments until April 2004.
Due to Venezuelan strike-related interruptions, FertiNitro was
shutdown for a two-month period, from mid-December 2002 to mid-
February 2003. The project took advantage of the extended
shutdown and restricted gas deliveries to commence critical
repairs on its waste heat boilers in late-February. As of late-
April, FertiNitro completed the critical repairs on one ammonia
train and began repairs on the other train.
Since PDVSA resumed limited gas supply in mid-February 2003,
FertiNitro has been operating at approximately 50% of its
expected capacity for both its ammonia and urea output.
Currently, PDVSA is still delivering restricted gas supply at
approximately 50% of contractual levels, which FertiNitro expects
will gradually increase over the coming weeks to reach about 90%
levels by mid-year. Despite reduced production levels, the
project is generating nominal positive operating cash flow due to
the current favorable fertilizer price environment. FertiNitro
has sold its ammonia and urea production at average prices of
roughly $167 per metric ton (mt) and $143/ mt, respectively,
compared to 2002 when prices for each product averaged less than
$100/ mt.
The Rating Watch Negative continues to reflect the project's
inconsistent operating performance to-date, PDVSA's restricted
gas supply deliveries to FertiNitro, and commodity prices of
ammonia and urea that have softened over recent weeks. All of
these factors impact FertiNitro's ability to generate operating
cash flow needed to strengthen its liquidity base.
FertiNitro is owned 35% by a Koch Industries, Inc. subsidiary,
35% by Petroquimica de Venezuela, S.A. (Pequiven), a wholly owned
subsidiary of Petroleos de Venezuela S.A. (PDVSA), 20% by a
Snamprogetti S.p.A. subsidiary, and 10% by a Cerveceria Polar,
C.A. (Polar) subsidiary.
CONTACT: Caren Y. Chang +1-312-368-3151
John W. Kunkle, CFA +1-312-606-2329
Joy Guttschow +1-312-368-3140, Chicago
Alejandro Bertuol +1-212-908-0393, New York
MEDIA RELATIONS: Matt Burkhard +1-212-908-0540, New York
FERTINITRO FINANCE: Moody's Improves Outlook On $250M Bonds
-----------------------------------------------------------
Moody's Investors Service revised the outlook on the Caa2 rating
for the US$250 million secured bonds of FertiNitro Finance Inc.
to developing from negative. FertiNitro Finance Inc. is a
financing vehicle whose debt is guaranteed by Fertilizantes
Nitrogenados de Venezuela, Fertinitro, C.E.C ("FertiNitro").
The outlook revision reflects amendments to Fertinitro's bank
debt agreements that will give the project more flexibility after
being weakened by numerous difficulties with the start-up and
operation of the facilities, and by the national strike in
Venezuela.
Moreover, it reflects signs of improvement in the operations of
the plant as those difficulties are addressed.
Under the amendments, 2003 principal repayment obligations have
been deferred until 2004-2007, US$10 million of sponsor equity
has been contributed for capital expenditures, the Second
Reliability Test deadline has been extended until at least
November 30, 2005, US$50 million of additional sponsor equity has
been committed for the payment of debt service, and restricted
payments are not allowed until parameters surrounding the new
Second Reliability Test date are met.
FertiNitro is 35%-owned indirectly by Koch Jose Cayman Limited,
ultimately majority-owned by Koch Industries Inc. through other
Koch subsidiaries ("Koch"), 35%-owned by Petroquimica de
Venezuela, S.A. ("Pequiven"), a wholly-owned subsidiary of PDVSA,
20%-owned by Snamprogetti, a wholly-owned subsidiary of
Snamprogetti S.p.A., and 10%-owned by Polar Jose Investments,
Limited ("Polar"), ultimately owned directly and indirectly by
the Polar Group.
* Issues Interest Notification to Holders of Gov't 2020 Bonds
-------------------------------------------------------------
In accordance with the provisions of the US$968,562,000
Collateralized Floating Rate Bonds due 2020, (USD Discount Series
A), notice is hereby given that for the Interest Period from
April 25, 2003 to October 27, 2003 the Bonds will carry an
Interest Rate of 2.1875 percent per annum.
The Interest payable on the relevant interest payment date,
October 27, 2003 will be US$11.24 per US$1000 principal amount.
This Notice is issued by the Bonds' Agent Bank, JPMorgan Chase
Bank, on April 25, 2003.
***********
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
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