/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030612.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Thursday, June 12, 2003, Vol. 4, Issue 115 Headlines A R G E N T I N A AEROPUERTOS ARGENTINA: Government Voids Renegotiated Contract DE PAOLA HERMANOS: Files for "Concurso Preventivo" EDEERSA: Entre Rios Government Likely To Assume Debt EDENOR: S&P Confirms `D' Rating Assigned to $600M Debentures EUROMAYOR: $10M in Bonds Get Default Ratings From Fitch EUROMAYOR: Various Bonds Rated `CCC(arg)' by Fitch Argentina GAS ARGENTINO: Fitch Rates $130M of Bonds `D(arg)' GF GALICIA: Expresses Optimism Profits Will Return This Quarter HIDROELCTRICA PIEDRA: Fitch Rates Trusts `D(arg)' HIDROELCTRICA PIEDRA: Gets `D(arg)' Ratings From Fitch HIDROELECTRICA PIEDRA: Gets Default Ratings From Fitch MADET: Seeks "Concurso Preventivo" METROGAS: Argentine Fitch Issues Ratings to Bonds, Stocks MULTICANAL: Must Conclude Debt Restructuring Efforts By Friday TELECOM ARGENTINA: $3.4B Of Bonds Get `D(arg)' from Fitch TELEFONICA HOLDING: Fitch Rates Bonds `CCC(arg)'; Stocks, `3' TOWER RECORDS: Has New Owner * World Bank Latin America Chief Optimistic On Argentine Recovery B E R M U D A GLOBAL CROSSING: Court Gives Clearance to Bitro Settlement Pact B R A Z I L CEMIG: Mirant Retains Control Despite Stake Sale CEMIG: May Sell Off Infovias Stake CORSAN: Moody's Places Ratings On Review For Possible Downgrade EMBRATEL: Legal Director Makes Exit GERDAU: S&P Assigns `BB' to $350M Bank Facility TUPY: Invested $25M For Improvements At Maua Plant VARIG: Employees Oppose Merger With TAM C H I L E COEUR D'ALENE: Expands Exploration Results in South America C O L O M B I A SERVIMAG: Water Utility Makes Rescue Offer D O M I N I C A N R E P U B L I C INTERCONTINENTAL DE SEGUROS: Regulator Confirms Intervention E C U A D O R PETROECUADOR: Strike Reduces Crude Transport M E X I C O CFE: Gives Investors More Time To Submit Bids For Yucatan Project GRUPO ELEKTRA: Deutsche Bank Recommends "Buy" TV AZTECA: Announces Intention to Sell Content To Channel 10 T R I N I D A D & T O B A G O BWIA: Government Delivers Ultimatum BWIA: Zwaig Consultants Studying Troubled Airline V E N E Z U E L A PDVSA: Court Won't Reinstate Warrants For Strike Leaders - - - - - - - - ================= A R G E N T I N A ================= AEROPUERTOS ARGENTINA: Government Voids Renegotiated Contract ------------------------------------------------------------- The Argentine government has decided to annul the decree that established the renegotiation of the airport's concession contract. Furthermore, from now on, if Aeropuertos Argentina 2000 (AA2000) -concessionaire of the country's 33 air stations - breaches the previous contract, its concession agreement may be canceled. In this case, Argentine President Nestor Kirchner is determined to call for a new tender process in order to award the concession for the administration and operation of the airports currently managed by AA2000. The decision regarding the contract renegotiation is based on an investigation carried out by Judge Alfredo Bustos, who ruled the suspension of the renegotiated contract a week ago. The new contract approved by former president, Eduardo Duhalde, on May 22 contemplated a significant reduction of the annual AA2000 Treasury payment. AA2000 owes the government some ARS358 million (US$126 million), debt that is under legal dispute. DE PAOLA HERMANOS: Files for "Concurso Preventivo" -------------------------------------------------- De Paola Hermanos S.A. has applied for "concurso preventivo" at Lomas de Zamora Court NO. 14, under case number 30520273413. The Company, which is involved in the production of milk and milk-related products, is seeking permission to reorganize itself. The Court assigned Mr. Carlos A. Ceccarelli as receiver for the proceedings. Mr. Ceccarelli is instructed to present the individual report on August 12, 2003, while the general report is due on September 22, 2003. The deadline for verification of claims is June 26, 2003. EDEERSA: Entre Rios Government Likely To Assume Debt ---------------------------------------------------- The transfer of shares owned by U.S. energy company Public Service Enterprise Group Inc. (PSEG) in an Argentine electricity generator in the eastern province of Entre Rios to a local trust fund may create a problem for the Entre Rios government, Clarin suggests. PSEG transferred its shares in Edeersa to an Argentine trust fund benefiting current Edeersa employees, including existing shareholders, following a decision to abandon the country due to increasing losses caused by rising debt costs and frozen electricity rates. The shares will remain in the trust fund for five years, after which they will be distributed amongst Edeersa's 352 employees and board members according to a pre-determined formula. The sticking point is that Edeersa has an US$80-million debt with international banks, which it defaulted on during the beginning of 2002. If a court denies the transfer of Edeersa to the new owners, the province will have to take on 51% of the shares of the distributor. As a result, the Entre Rios Government will again become the new owner of Edeersa. As such, the government will have to be responsible as well, 51% of the unpaid obligations that PSEG has left. EDENOR: S&P Confirms `D' Rating Assigned to $600M Debentures ------------------------------------------------------------ The Argentine arm of credit ratings agency Fitch Ratings confirmed the D local-scale rating assigned to US$600 million debentures issued by distributor Edenor, Business News Americas reports, citing a Fitch statement. Edenor defaulted on its debts in September last year following the government's rate freeze and pesofication of contracts, and the peso's 70% devaluation. Edenor now has a stable cash flow. Despite that, Fitch believes that the Company remains at the mercy of inflation, peso devaluation, energy demand and unrecoverable debt. At the end of March this year, Edenor's financial debt totaled US$125mn, of which two debenture series make up 60%. The Company is currently negotiating with its creditors to restructure its debt. Edenor, which is 51%-owned by holding company Easa, has over 2.2 million clients in the northern part of capital city Buenos Aires. CONTACT: EDENOR S.A. Azopardo Building Azopardo 1025 (1107) Capital Federal Phone: (54-11) 4346-5000 Fax: (54-11) 4346-5300 E-mai: to ofitel@edenor.com.ar Home Page: http://www.edenor.com.ar EUROMAYOR: $10M in Bonds Get Default Ratings From Fitch ------------------------------------------------------- Corporate bonds issued by Euromayor S.A. de Inversiones received default ratings from Fitch Argentina Calificadora de Riesgo S.A. last Wednesday. Classified under "series and/or class", US$10 million worth of the company's bonds were rated `D(arg)'. Fitch said that the rating is given to financial commitments that are currently in default. The ratings were issued with consideration to the state of the Company's finances as of the end of January 2003. The National Securities Commission of Argentina described the concerned bonds as "primera serie por 10 millones de US$ dentro de un Programa Global." The bonds matured in April 2003. EUROMAYOR: Various Bonds Rated `CCC(arg)' by Fitch Argentina ------------------------------------------------------------ Fitch Argentina Calificadora de Riesgo S.A. assigned junk ratings to various bonds issued by Euromayor S.A. de Inversiones, relates the National Securities Commission of Argentina. The bonds were assigned a `CCC(arg)' rating which denote that the obligations have extremely weak credit risk relative to other issues in Argentina. Fitch said that the Company's capacity to meet its financial obligations ion this debt is solely reliant on favorable business and economic conditions. The concerned bonds include ARS4.4 million of bonds called "Serie II Clase pesos" and US$3 million of "Serie II Clase dolares", both sets that matured on Tuesday. The rating also applies to US$3 million of "Serie I Clase dolares" and ARS6.8 million of "Serie I Clase pesos", both of undisclosed maturity date. The ratings were issued last Wednesday, and were based on the Company's finances as of January 31, 2003. GAS ARGENTINO: Fitch Rates $130M of Bonds `D(arg)' -------------------------------------------------- Gas Argentino S.A.'s corporate bonds were rated `D(arg)' by Fitch Argentina Calificadora d Riesgo last Wednesday. According to the National Securities Commission of Argentina, US$130 million worth of bonds called "Obligaciones negociables simples por U$S 130.000.000" received the junk rating. The said bonds, classified under "Simple Issue", matured on June 7, 2000. Fitch said that the rating, based on the Company's finances as of the end of March 2003, is given to financial obligations that are currently in payment default. GF GALICIA: Expresses Optimism Profits Will Return This Quarter --------------------------------------------------------------- Argentine financial group Grupo Financiero Galicia, which was hardly hit by the Argentine crisis that erupted in late 2001, expects to return to profits as early as this quarter, says Business News Americas. The group, due to its aggressive cost cutting this year and last, and a proactive approach to capturing new deposits, managed to narrow losses to ARS58.6 million in the first quarter of this year from a whopping ARS2 billion in the comparable period of last year. Galicia is also making progress in its debt-negotiations with some 200 international creditors, which it owes US$1.1 billion. A spokesperson said that talks are going "very well" but would not provide any details on when a final agreement could be signed. GF Galicia is mainly seeking to convince its creditors to extend the terms of the debt-maturities, the spokesperson revealed. CONTACT: GRUPO FINANCIERO GALICIA Teniente General Juan D. Peron 456, Piso 3 1038 Buenos Aires, Argentina Phone: (54 11) 4343 7528 / 9475 Web site: http://www.gfgsa.com Contacts: Eduardo J. Escasany, Chairman and CEO Sergio Grinenco, CFO, Banco de Galicia y Buenos Aires HIDROELCTRICA PIEDRA: Fitch Rates Trusts `D(arg)' -------------------------------------------------- Hidroel‚ctrica Piedra del Aguila Financial Trust Serie I y II was rated `D(arg)' by the Argentine arm of Fitch Ratings Agency. The National Securities Commission of Argentina relates that the debt security, series no. 1 and 2 received the ratings. These securities, worth a total of US$94.37 million, mature on December 31, 2009. Fitch says that `D(arg)' ratings are issued to financial obligations that are currently in payment default. HIDROELCTRICA PIEDRA: Gets `D(arg)' Ratings From Fitch ------------------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. assigns default ratings to US$62.5 million worth of Hidroel‚ctrica Piedra del Aguila's debt security, relates the National Securities Commission of Argentina. The security, described as "Series 3 & 4" mature on June 30, 2009. According to the ratings agency, the `D(arg)' rating is given to financial commitments that are currently in default. HIDROELECTRICA PIEDRA: Gets Default Ratings From Fitch ------------------------------------------------------ A total of US$35 million of Hidroelectrica Piedra del Aguila's debt security were rated `D(arg)' by Fitch Argentina Calificadora de Riesgo SA. The rating means that the Company is not meeting its financial obligations on these debt securities. The country's National Securities Commission relates that the Series 5 bonds mature on December 29, 2023. MADET: Seeks "Concurso Preventivo" ---------------------------------- Madet S.A. presented a petition for "concurso preventivo" at a Buenos Aires Court, relates local paper La Nacion. If the petition is approved, the Company may start reorganization proceedings. Buenos Aires Court No. 6, under Dr. Ferrario and Secretary No. 12, under Dr. Mendez Sarmiento are handling the case. The Company ceased paying its debts in March 2001. CONTACT: MADET S.A. 1381 Marcelo Torcuato de Alvear Piso 10 Buenos Aires METROGAS: Argentine Fitch Issues Ratings to Bonds, Stocks --------------------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. assigned `D(arg)' ratings to corporate bonds issued by Metrogas S.A., relates the National Securities Commission of Argentina. Bonds, which the NSC described as "obligaciones negociables simples" worth a total of US$600 million, received the ratings. The rating was based on the Company's financial situation as of March 31, 2003. At the same time, Fitch also rated the Company's stock, described as "Acciones Ordinarias Clase "B"" , `3', meaning it has average quality. CONTACT: METROGAS, S.A. Gregorio Araoz de Lamadrid 1360 Buenos Aires Argentina CPA C 1267 Phone: +54 11 4309 1010 Fax: +54 11 4309 1025 Home Page; http://www.metrogas.com.ar Contact: William Harvey Alvarez, President MULTICANAL: Must Conclude Debt Restructuring Efforts By Friday -------------------------------------------------------------- Argentine cable-television company Multicanal SA has until Friday to conclude debt-restructuring efforts following a series of extensions in recent months. Dow Jones recalls that Multicanal, which defaulted in early 2002 on its US$524.8 million in total debt held by institutional, bank and retail investors, initiated its debt restructuring efforts in late January this year. At that time, Multicanal offered to buy back its debts from bond and bank creditors at 30% of the US$100 million the debts had been originally worth. Soon afterward, Multicanal also said it would swap existing bonds for new ones coming due in later years. Holders could receive a combination of equity plus new seven-year 7% or floating-rate notes at 31.5% the value of their original bonds, or else new ten-year notes that would pay increasingly higher rates capped at 4%. So far, Multicanal's creditors have been shaking their heads at the deal that would more than halve the amount the Company collectively owes them. Multicanal needs agreement from two-thirds of the investors involved in order for its debt restructuring to get approval from the court system. By May 29, the Company had investors representing around US$109.6 million of bonds participating in its debt buyback of up to US$100 million, but only US$141.9 million in the swap component of the deal that needs around US$300 million to succeed. This comes even after Multicanal amended its original offer on Mar. 27, when it reduced the required participation in the swap to around 70% from an original 89% of creditors. Among other things, Multicanal also upped the amount of equity it was offering bondholders to 36% of the Company's fully diluted equity from an original 34%. Creditors have been doing more than refusing to participate in Multicanal's offer as it currently stands. According to the Company's Securities and Exchange Commission filing in late May, around 31 investors petitioned local courts for its bankruptcy. Multicanal has to put cash into an escrow fund to cover for possible expenses that could arise from each lawsuit it faces. The more suits pile up, the more cash the Company can't use right now, says Dow Jones. A source close to Multicanal and a source close to its creditors confirmed that many of the suits filed against Multicanal involve amounts less than US$1 million each. Nonetheless, Multicanal only had around US$30 million of cash on hand in late March. If all goes as the Company hopes, Multicanal will eventually convince enough creditors to change the agreements on its debts, making the lawsuits against it moot. However, if Multicanal can't manage a successful debt restructuring, it'll have to file for `concurso preventivo,' the Argentine equivalent of Chapter 11. Then those creditors' lawsuits will continue to play a role in the way the company repays them. "If the restructuring process undertaken by the Company is unsuccessful it will likely have to file voluntary insolvency proceedings," Multicanal said in an SEC filing in late May. CONTACT: MULTICANAL S.A. Avalos 2057 C1431DPM Buenos Aires, Argentina Tel: 54 11 4524-4700 Fax: 54 11 4370-5162 Contact: Fabian Melnitzky E-mail: fmelnitz@redarg.com.ar TELECOM ARGENTINA: $3.4B Of Bonds Get `D(arg)' from Fitch --------------------------------------------------------- A total of US$3.4 billion of corporate bonds issued by Telecom Argentina Stet-France Telecom S.A. were rated `D(arg)' by Fitch Argentina Calificadora de Riesgo S.A. last Wednesday. The ratings agency said that the `D(arg)' rating is given to financial commitments that are currently in payment default. The National Securities Commission of Argentina relates that the following bonds received the ratings: -- US$1.5 billion of "Programa Global de ONs autorizado por Asamblea de fecha 16.3.99", die on August 2, 2004. -- US$1.5 billion of "Programa de obligaciones negociables", with undisclosed maturity date. -- US$200 million of "Programa de Eurodocumentos Comerciales autorizado por Asamblea de fecha 18.12.97.", which matured on February 3, 2003. -- US$200 million of "Programa de ON simples", whose maturity date was not indicated. All the above bonds were classified under "Program." Meawhile, the Company's stocks, described as "Acciones Ordinarias en Circulaci¢n Clase A, B y C de 1 voto c/u, V/N $ 1" were given a rating of `3', which means that it is of average quality. The ratings were given based on the Company's finances as of MARch 31, 2003. 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 TELEFONICA HOLDING: Fitch Rates Bonds `CCC(arg)'; Stocks, `3' ------------------------------------------------------------- Fitch Argentina Calificadora de Riesgo assigned a `CCC(arg)' rating to corporate bonds issued by Telefonica Holding Argentina SA(Ex.Cei Citicorp SA). The rating means that the financial obligation has an extremely weak credit risk relative to other issues in Argentina. Fitch added that the Company's capacity to pay its obligations on the debt is solely reliant on favorable business and economic conditions. The rating applies to US$500 million owrth of bonds, which the National Securities Commission of Argentina describes as "Programa de Obligaciones Negociables por U$S 500 MM reducido a un monto maximo de U$S 34.8 MM". The bond is classified under "program". The rating agency also assigned a `3' rating to the Company's stocks called "Acciones ordinarias en circulaci¢n Clase B de 1 voto c/u, V/N $1". This means that the stock is of average quality, said Fitch. The ratings were issued last Wednesday, and were based on the Company's financial state as of the end of March 2003. TOWER RECORDS: Has New Owner ---------------------------- Tower Records Argentina, which entered into `Concurso Preventivo' in April 2002 listing debts of almost US$5 million, has a new owner. According to a report released by Mercado Magazine, the ownership of the major music sales company has been transferred to Mr. Marcelo F¡goli, the owner of the show producer Fenix Entertainment, from the investment fund Condor Ventures. The value of the transaction was not disclosed. * World Bank Latin America Chief Optimistic On Argentine Recovery ----------------------------------------------------------------- World Bank vice president for Latin America David de Ferranti said he is "optimistic about the possibilities for Argentina to reduce poverty and establish a path of sustainable growth that will permit the recuperation of the economy." Mr. De Ferranti met with Argentine president Nestro Kirchner and members of his economic team in Buenos Aires last week. According to him, the bank and the government have reached an auspicious phase of dialogue that will allow them to define the terms of the bank's assistance to the country and the priorities to work on. "In the Bank we share the positive expectations of the majority of Argentine people over the opportunity that the country has to retake the path of sustainable economic growth with equity and well being under the leadership of President Kirchner," said Mr. De Ferranti. The bank official, however did not comment on the country's request to hasten the disbursement of about US$1.7 billion of approved but undelivered loans. ============= B E R M U D A ============= GLOBAL CROSSING: Court Gives Clearance to Bitro Settlement Pact --------------------------------------------------------------- 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, 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, the Debtors entered into settlement discussions with Bitro to resolve the litigation. After arm's-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 the Debtors; (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. The Court approved 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 the Debtors $100,000 without further delay 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 the Debtors: (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 the Debtors; and 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. (Global Crossing Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 609/392-0900) =========== B R A Z I L =========== CEMIG: Mirant Retains Control Despite Stake Sale ------------------------------------------------ Despite the sale of its 3.6% economic interest in Brazil's Minas Gerais state power company Cemig, US-based Mirant retains management control of some companies, including some voting rights related to Cemig, consistent with the agreement with (national development bank) BNDES and the Minas Gerais state government. According to daily newspaper Valor Economico, Mirant has to retain the voting rights despite selling the economic interest until a dispute with the state government is resolved. Mirant joined with AES and Opportunity to acquire 33% of voting shares (14% of total capital) in Cemig in 1997 through the Southern Electric Brazil (SEB) holding company. At the time, a shareholders' agreement with the Minas state government gave the three partners operational control of the company, but subsequent Minas state governor Itamar Franco tore up the agreement and the case is still struggling through Brazilian courts. In the fourth quarter of 2002, Mirant sold the Cemig stake for a "nominal amount" and wrote off US$84 million related to the investment. Reports have it that US-based power investment company Franklin Park Energy was the buyer of the stake. Mirant spokesperson James Peters refuses to confirm the report due to confidentiality agreement. The new Minas Gerais state government, which took office in January, has stated that it wants to mend fences with foreign investors and try to improve the Company's credibility with the capital markets, but says it must wait for the courts to decide on the dispute with SEB. CONTACT: CEMIG Luiz Fernando Rolla, Investor Relations Phone: +55-31-3299-3930 Fax: +55-31-3299-3933 Email: lrolla@cemig.com.br or Eliza Gibbons The Anne McBride Company Phone: +1-303-477-1350 Fax: +1-212-983-1736 Email: eliza@annemcbride.com CEMIG: May Sell Off Infovias Stake ---------------------------------- Cemig is considering the sale of its 49% stake in the telecommunications company Infovias, which it acquired from AES Corp. last year for US$32 million, suggests South American Business Information. Infovias, which was created in 1998 through a partnership between Cemig and AES, reported a loss of BRL4 million in 2002. Cemig has already invested BRL300 million in Infovias since 1998. CORSAN: Moody's Places Ratings On Review For Possible Downgrade --------------------------------------------------------------- Moody's Investors Service placed Companhia Riograndense de Saneamento's (CORSAN) Brazil National Scale Rating of Baa1.br, and its issuer and senior unsecured ratings of B1 (Global Local Currency Scale) on review for possible downgrade. The action, which affects approximately BRL100 million in debt securities, reflects concerns over CORSAN's leverage and liquidity profile, in addition to incorporating regulatory uncertainties related to recent tariff policy and the allowed return on assets, says Moody's. CORSAN provides water and wastewater services to a population of over 6.5 million residing in the State of Rio Grande do Sul. The Company serves 69% of the municipalities in Rio Grande do Sul under long-term concession agreements. The Company's voting shares are 100% held by the State of Rio Grande do Sul. EMBRATEL: Legal Director Makes Exit ----------------------------------- Long-distance phone operator Embratel, a unit of scandal-ridden US operator WorldCom Inc., is about to see its legal director go. Citing a report by local financial news agency Valor Online, Business News Americas reports that Pedro Batista Martins is leaving his post as legal director. He will be the third Embratel executive to leave the Company in recent months. Business News Americas recalls that in May, corporate unit director Eduardo Levy and residential services division director Jose Maria Zubiria also left Embratel. Just after the pair's announcements, Embratel issued a statement saying it is restructuring its management "in order to adjust to new market demands." To see financial statements: http://bankrupt.com/misc/Embratel_Participacoes.htm CONTACT: Embratel Participacoes Silvia M.R. Pereira, (55 21) 2121-9662 fax: (55 21) 2121-6388 silvia.pereira@embratel.com.br invest@embratel.com.br GERDAU: S&P Assigns `BB' to $350M Bank Facility ----------------------------------------------- Standard & Poor's Ratings Services said Tuesday that it has assigned its 'BB' bank loan rating to Gerdau Ameristeel Corp.'s proposed $350 million senior secured revolving bank credit facility due 2008. Standard & Poor's also assigned its 'B+' rating to the company's proposed $400 million senior unsecured notes due 2011. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on the company. The outlook remains stable. "The credit facility is rated one notch above the corporate credit rating reflecting Standard & Poor's assessment of the strong prospect for full recovery in a default or bankruptcy scenario," said Standard & Poor's credit analyst Dominick D'Ascoli. Standard & Poor's said that the rating on the bank loan is based on preliminary terms and conditions and is subject to review once full documentation is received. Standard & Poor's said that its ratings on Tampa, Fla.-based Gerdau Ameristeel reflect the company's fair business position as a producer of rebar; structural shapes; and merchant bar, rod, flat-rolled, and fabricated steel. Analyst: Dominick D'Ascoli New York Phone: (1) 212-438-5024 TUPY: Invested $25M For Improvements At Maua Plant -------------------------------------------------- Brazilian foundry Tupy invested US$25 million in its Maua plant over the last two years, reports Business News Americas, citing a company spokesman. The investments were aimed at increasing the plant's capacity and adjust product lines. According to the source, "Of current production, of less than 30,000t/y, the plant will jump to 60,000t/y, having future conditions to reach 100,000t/y. For this, however, new investments will be needed," The move towards modernization is to prepare the plant for the production of cylinder blocks and heads for motors of heavy and extra-heavy duty trucks for clients like DaimlerChrysler, Cummins and Mack Trucks, said the source, adding that the plant will continue making similar products for smaller vehicles. Tupy, South America's largest foundry, acquired the Maua plant in 1998. Its main plant is in Joinville, Santa Catarina. VARIG: Employees Oppose Merger With TAM --------------------------------------- The ongoing process to merge Varig and TAM encountered heavy protests from the employees of Varig, Latin America's largest airline, which is undergoing a serious financial crisis. EFE reports that Varig workers held demonstrations at the Sao Paulo and Rio de Janeiro airports to show protest to Varig's proposed merger with TAM. They contended that the merger with TAM, which is being promoted by the Brazilian government, would lead to the loss of numerous jobs. The protesters also delivered a letter to Varig's chief, Roberto Macedo, criticizing what they called TAM's "takeover" of the company. Varig employs approximately 18,000 people, while TAM has a workforce of some 7,000. Macedo said last month that the Company would have to lay off some employees to adjust to the shrinking market, but he emphasized that the job cuts would not affect just Varig. The merger process, which started in February, is due to be completed in September, when a new airline will be launched. 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 ========= COEUR D'ALENE: Expands Exploration Results in South America ----------------------------------------------------------- Coeur d'Alene Mines Corporation (NYSE: CDE), the world's largest primary silver producer, announced Tuesday that the Company expects to increase the total resources at it's Cerro Bayo gold/silver mine in southern Chile this year by 267,000 gold equivalent ounces, or 18.7 million silver equivalent ounces, with up to half that amount converted to reserves by year-end. In the first three months of 2003 at Cerro Bayo an additional 50,000 gold equivalent ounces of measured and indicated resources were added. The Company expects to increase its measured and indicated resources at Cerro Bayo during 2003 by 138,000 gold equivalent ounces or 9.7 million silver equivalent ounces. The conversion to reserves of a majority of these measured and indicated resources are expected by year-end 2003. Coeur also anticipates the discovery of an additional 129,000 gold equivalent ounces, or 9.0 million silver equivalent ounces, of inferred resources at Cerro Bayo in 2003. Drilling this year at Cerro Bayo has focused on delineating new resources primarily within the Javiera and Wendy vein systems, which were first discovered during the fourth quarter of 2002. These two major veins cross over and strike parallel to each other for at least 4,000 feet in the central Cerro Bayo area. Ore grade mineralization in the Javiera vein has so far been delineated over 2,600 feet in strike length and vertically over 525 feet. The Wendy vein is currently known to contain mineralization over 650 feet in strike length and vertically over 400 feet. Drilling is continuing on the two veins, both of which remain open in both directions along strike. Additional high- grade reserves and resources discoveries are foreseen during 2003 within these and other numerous veins that total over 8 miles in strike length in the central Cerro Bayo area. Underground access to the Javiera and Wendy veins is now provided by two ramps, where development work has encountered excellent grades and thicknesses. On the Javiera vein, initial underground development along a strike length of 770 feet averaged 0.40 gold equivalent ounces per ton over a thickness of 4.8 feet. New veins discovered this year include the Daniella vein, identified 100 feet west of the Javiera and the Guanaco 2 Sur vein, located two miles west of the Cerro Bayo mine. An initial drill hole into the Daniella discovered a 7-foot wide vein assaying 1.08 gold equivalent ounces per ton. Also, the Guanaco 2 Sur vein was discovered with an initial drill hole containing 8 feet of 0.34 gold equivalent ounces per ton. "Exploration results at the Cerro Bayo mine continue to be outstanding," said Dennis E. Wheeler, Chairman and Chief Executive Officer. "These new gold and silver ounces are high- grade and are being discovered at a very low cost of under $0.10 per silver equivalent ounce. Our expectations are that the Cerro Bayo property will ultimately contain up to three million gold equivalent ounces, which translates to over 210 million ounces on a silver equivalent basis." Exploration is also continuing on Coeur's 465-square mile land package in the Santa Cruz province of Argentina, which includes Coeur's high-grade Martha silver mine. Numerous low sulfide epithermal veins with high-grade mineralization and extensive strike length have been discovered during reconnaissance exploration. The Company estimates the prospects on all of its properties in Santa Cruz province have the geologic potential to contain over 75 million silver equivalent ounces. At the Tesoro prospect, located 6 miles north of the Martha mine, drilling encountered 37 feet of massive sulfide bearing veins and stockworks containing .04 ounce per ton gold, 14.2 ounces per ton silver, 2.8 percent copper, 9.2 percent lead and 19 percent zinc at 25 feet below the surface. Recent drilling has encountered the down dip extension of the massive sulfide mineralization at 125 feet below the surface containing 11 feet of .01 ounce per ton gold, 3 ounces per ton silver, 0.2 percent copper, 3.99 percent lead and 5.08 percent zinc. "This is the first time this kind of massive sulfide mineralization has been encountered in the Santa Cruz province. The Tesoro prospect represents a different geologic environment from the low sulfide epithermal veins found throughout Santa Cruz province and may be geologically similar to other high-grade precious and base metal deposits currently being mined in other parts of the world," Dieter Krewedl, Senior Vice President of Exploration said. "We are currently doing detailed soil geochemistry and ground geophysics over an approximately one square mile area surrounding the Tesoro prospect to find extensions of the massive sulfide mineralization under post- mineral cover." Underground development work is also commencing on the high-grade R4 Zone located less than 600 feet east of the Martha mine. Coeur expects ore shipment from the R4 Zone to the Cerro Bayo mill to begin in the next two to three months. Average grade from the R4 Zone is in excess of 100 silver equivalent ounces per ton. Coeur d'Alene Mines Corporation is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. CONTACT: Coeur d'Alene Mines Corporation Tony Ebersole, Investor Relations Tel: +1-208-665-0335 =============== C O L O M B I A =============== SERVIMAG: Water Utility Makes Rescue Offer ------------------------------------------ Servimag, the public utility serving northern Colombia's Magangue municipality, could find its rescuer in a Bogota water utility as it struggles to remain afloat amid financial troubles. Citing newspaper El Universal, Business News Americas reports that EAAB, Bogota's water utility, has expressed interest in investing COP32 billion (US$11.4mn) in Servimag. The proposal, if accepted, would make EAAB the utility's operational manager for 20 years. During those 20 years, EAAB would need to provide 24-hour services throughout the city and pay Servimag's overdue bills, El Universal said. Meanwhile, Servimag is also scheduled to meet with the national government to discuss a possible bailout. =================================== D O M I N I C A N R E P U B L I C =================================== INTERCONTINENTAL DE SEGUROS: Regulator Confirms Intervention ------------------------------------------------------------ The Dominican Republic's insurance regulator passed a resolution confirming that it has intervened the local insurance unit Intercontinental de Seguros, owned by media magnate Ramon Baez Figueroa, who stands accused of multi-million-dollar fraud at the Banco Intercontinental (Baninter). The regulator said that it had decided to "intervene as liquidator of the referenced company with all legal consequences, to protect individual life insurance reserves and the payments of claimants." According to Business News Americas, the resolution forbids Intercontinental de Seguros from carrying out any sale transaction, signing new insurance contracts or making any payments without authorization. According to chief regulator Rafael Santos, a technical commission will be set up to determine the insurer's future operations based on an evaluation of the Company's assets and liabilities. ============= E C U A D O R ============= PETROECUADOR: Strike Reduces Crude Transport -------------------------------------------- Crude transport through Ecuador's sole crude oil pipeline has been reduced due to a strike staged by the workers of Petroecuador, the country's state oil company, according to Reuters. The degree of the reduction is not clear, however. According to Petroecuador president Pedro Espin, transport is slashed by 30 to 40 percent, but union leader John Plaza says that there is only 50 percent transport as they have cut off three units. However, crude transport remained at normal levels on Tuesday, said Mr. Espin. Another union leader said that it is only a matter of time before transport at the Transecuadorean pipeline, which is known as the SOTE, would be cut off by half. Petroecuador workers are staging the strike in protest of the government's proposal to award association contracts to private investors. They are demanding the resignation of Energy Minister Carlos Arboleda. Some 4,000 workers did not show up for work on Monday, says Reuters. In the meantime, the Company assures its customers that it has enough fuel despite the work slowdown. =========== M E X I C O =========== CFE: Gives Investors More Time To Submit Bids For Yucatan Project ----------------------------------------------------------------- Investors who are interested in Mexico's state power company CFE's 508MW Valladolid III combined-cycle thermoelectric project in Yucatan state now have ample time submit their bids. According to Business News Americas, CFE extended the deadline for the submission of bids from June 9 to July 12. Bidding rules are now available through July 15, technical bids will be opened July 21 and economic bids August 22. Work on the project, which will require investments of between US$320 million - US$340 million, is scheduled to start in March 2004, and be completed by April 2006. The CFE will buy power from the plant under a 25-year power purchase agreement (PPA), and generation from the plant will guarantee power supplies on the Yucatan peninsula through 2011. 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 GRUPO ELEKTRA: Deutsche Bank Recommends "Buy" --------------------------------------------- Deutsche Bank reinitiated coverage of Mexican retailer Grupo Elektra SA with a "Buy" recommendation, reports Dow Jones. In a research note, analyst Joaquin Lopez Doriga suggested that despite "conservative operational assumptions for the Company's banking and retail businesses," Elektra's shares "offer significant value." Deutsche Bank has established a 12-month target price of US$15 per American Depositary Receipt, above Friday's closing price of US$11.06 per ADR. TV AZTECA: Announces Intention to Sell Content To Channel 10 ------------------------------------------------------------ TV Azteca, S.A. de C.V. (NYSE: TZA)(BMV: TVAZTCA), one of the two largest producers of Spanish- language television programming in the world, announced Tuesday that, as part of its ongoing efforts to expand its programming sales abroad, is negotiating to sell content to channel 10 in Israel. The company also announced plans to sell broadcasting technology support to the channel. TV Azteca intends to sell some of its most successful international programming, which includes novelas and entertainment shows. The company noted it does not intend to purchase any equity interest in the Israeli Network. TV Azteca currently distributes its programming to more than 90 countries. International programming exports accounted for US$12 million in revenues during 2002. Company Profile TV Azteca is one of the two largest producers of Spanish-language television programming in the world, operating two national television networks in Mexico, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. TV Azteca affiliates include Azteca America Network, a new broadcast television network focused on the rapidly growing US Hispanic market; Unefon, a Mexican mobile telephony operator focused on the mass market; and Todito.com, an Internet portal for North American Spanish speakers. CONTACT: TV AZTECA, S.A. DE C.V. Investor Relations: Bruno Rangel Phone: +011-5255-3099-9167 Email: jrangelk@tvazteca.com.mx or Omar Avila Phone: +011-5255-3099-0041 Email: oavila@tvazteca.com.mx or Media Relations: Tristan Canales Phone: +1-5255-3099-5786 Email: tcanales@tvazteca.com.mx Home Page: http://www.tvazteca.com.mx ================================= T R I N I D A D & T O B A G O ================================= BWIA: Government Delivers Ultimatum ----------------------------------- Trinidad and Tobago Trade Minister Kenneth Valley delivered the government's ultimatum to its flag carrier, BWIA: reduce its labor costs or face liquidation. Mr. Valley met with the airline's management team last Thursday. The government gave BWIA one week to present its plan to reduce its plan to reduce costs. Unless the plan is presented, there would be no more funding from the state, according to the Trinidad Guardian. "In law, if BWIA does not get wage concessions and the Government withdraws funding, the directors would be forced to call a meeting of the creditors, who can pass a resolution putting BWIA into a creditors' liquidation," said a senior attorney, as quoted by the report. Recently, BWIA faced real danger of closing down after creditors started moving in on the airline. The government succeeded in saving the airline by negotiating with the ILFC, the leasor of BWIA's planes. CONTACT: BRITISH WEST INDIES AIRWAYS Phone: + 868 627 2942 E-mail: mailto:mail@bwee.com Home Page: http://www.bwee.com/ Contacts: Conrad Aleong, President and CEO (Trinidad) Beatrix Carrington, VP Marketing and Sales (Barbados) Paul Schutz, CFO (Trinidad) BWIA: Zwaig Consultants Studying Troubled Airline ------------------------------------------------- Executives from consulting firm Zwaig visited the offices of Trinidad and Tobago airline BWIA, reports the Trinidad Guardian. Zwaig president and chief executive Melville Zwaig himself was reportedly among those who visited. According to the report, the consultants met with BWIA executives. BWIA's corporate communications manager Clint Williams said, "BWIA has been supplying whatever information they (Zwaig) have requested. BWIA would have gone to its creditors if the government had not intervened in its behalf recently. Two of the airline's planes were seized by the leasing company as the airline failed to pay its dues on the deadline given. After negotiating with the government, the leasing company agreed to return the planes. In turn, the government demanded changes at the airline's management. BWIA CEO Conrad Aleong stepped down shortly after the negotiations. ================= V E N E Z U E L A ================= PDVSA: Court Won't Reinstate Warrants For Strike Leaders -------------------------------------------------------- The Supreme Court of Venezuela ruled that the arrest warrants for seven former executives of the country's state oil company, Petroleos de Venezuela S.A. (PdVSA), would not be reinstated, relates the Associated Press. The seven men reportedly led PdVSA workers in the national strike aimed at deposing president Hugo Chavez. According to the Court, prosecutors violated the defendants' rights by denying them legal representation when they were arrested. In the meantime, the Court told the prosecutors to reinitiate the process. The Associated Press points out that strike participants have avoided punishment, so far. The strike, which ended in February, closed with Mr. Hugo still president and at least 18,000 PdVSA workers dismissed. The strike also contributed to a 29 percent economic contraction for this year's first quarter. During the course of the strike, the Company's output was reduced by as much as 90 percent. *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter Latin American is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. John D. Resnick, Edem Psamathe P. Alfeche and Oona G. Oyangoren, Editors. Copyright 2003. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. 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