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/raid1/www/Hosts/bankrupt/TCRLA_Public/030703.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, July 3, 2003, Vol. 4, Issue 130 Headlines A R G E N T I N A ACINDAR: BMP To Assume Brazilian Parent's Stake AHOLD: Internal Forensic Investigations Reveal Irregularities DIRECTV LA: Hearing Set for Raven Media's Trustee Motion DIRECTV LA: Seeks to Extend Exclusive Period for Filing Plan IEBA: Board Gets Shareholders OK To Extend Bankruptcy Process PETROBRAS ENERGIA: Debenture Interest Payments Slated for July 7 TGS: Fitch Downgrades IDB A/B Loan Participation to 'DD' TRANSENER: Must Pay or Appeal $593,000 Fine B E R M U D A CRP: SCOR's Exclusive Purchase Rights Extended Through July GLOBAL CROSSING: Singaporean Bidder Granted More Time for Bid GLOBAL CROSSING: XO Communications Comments On Court's Ruling GLOBAL CROSSING: XO Presents Yet Another Unsolicited Offer B R A Z I L ENRON: South America LLC's Case Summary, 16 Unsecured Creditors LIGHT SERVICOS: Misses $150M Debt Payment Tuesday TELEMAR: Rate Hike Prompts UBS Equity Upgrade VARIG-TAM: Merger Agreement May Come This Week C H I L E ENERSIS: Concludes $2B Capital Increase TELEFONICA CTC: Regulator Snubs Chilesat's Request D O M I N I C A N R E P U B L I C BANCO POPULAR: Moody's Puts D+ BFSR On Review For Downgrade * Moody's Assigns Negative Outlook To DR's Credit Ratings E C U A D O R PACIFICTEL: Andinatel Receives Three Offers For Telecsa M E X I C O AZTECA HOLDINGS: Crucial Bond Swap Garners Enough Subsribers GRUPO IUSACELL: Defaults On $25M Interest Payment GRUPO IUSACELL: Verizon Announces Effect of Stake Sale TV AZTECA: Azteca America Network Adds Two Affiliates in Arizona T R I N I D A D & T O B A G O BWIA: Government Minister Announces First Aid Traunch Available U R U G U A Y BANCO SURINVEST: Moody's Confirms LTFC, STFC Ratings BNL URUGUAY: Moody's Confirms Foreign Currency Deposit Ratings V E N E Z U E L A REPSOL YPF: Raises Venezuelan Oil Reserves by 8.2M Barrels - - - - - - - - - - ================= A R G E N T I N A ================= ACINDAR: BMP To Assume Brazilian Parent's Stake ----------------------------------------------- Brazil's BMP Siderurgica will take control of parent Belgo- Mineira's stake in Argentine steelmaker Acindar. The process, according to Business News Americas, is part of the parent's move to increase its equity stake in BMP. Belgo-Mineira told the Sao Paulo stock market, Bovespa, that it has increased its capital in BMP Siderurgica. "The capital [in BMP] will be increased by 1.1bn reais [currently US$386mn], that is, it will go to more than 1.5bn reais [in total]," said a Belgo spokesperson. In turn, BMP will assume control of some of Belgo's mills, including Acindar. Furthermore, the subsidiary will take over Belgo's mill in Juiz de Fora, a new welded mesh and truss girder factory in Sao Paulo, distribution centers, and mini mills Piracicaba and Vitoria. CONTACT: ACINDAR INDUSTRIA ARGENTINA DE ACEROS SA 1609 Boulogne, San Isidro E. Zeballos Esq. Uruguay Buenos Aires, Argentina Phone: +54 11 47198500 Fax: +54 11 47198501 Home Page: http://www.acindar.com.ar/ir/eng/default.htm Contacts: Lic. Jose I. Giraudo, Investor Relations Manager Phone: (54-11) 4 719-8674 Fax: (54-11) 4 719-8501 Int. 8674 Lic. Andrea Dala, Investor Relations Officer Phone: (54-11) 4 719-8672 Fax: (54-11) 4 719-8501 Int. 8672 AHOLD: Internal Forensic Investigations Reveal Irregularities -------------------------------------------------------------- Ahold announced Tuesday that all internal forensic accounting investigations at Ahold, its subsidiaries and its joint ventures have been completed. The forensic accountants have identified, for review by Ahold management and the Audit Committee of the Supervisory Board, an approximately additional Euro 73 million of intentional accounting irregularities related to improper purchase accounting. Ahold may be required to reduce pre-tax earnings by this additional amount. The Euro 73 million excludes the pre-tax earnings reductions of an expected USD 856 million (compared to approximately USD 880 million previously announced) related to U.S. Foodservice and approximately USD 29 million principally related to Tops Markets in the U.S., also previously announced. This amount also excludes a reduction of pre-tax earnings of approximately Euro 8 million related to Disco S.A. The investigation at Disco has identified questionable transactions, including inaccurate documentation, and control weaknesses. The investigations confirmed or identified for management review various other accounting issues and internal control weaknesses. Ahold management and the Audit Committee are studying the findings to assess whether additional adjustments may be required to correct any accounting errors, and to identify needed improvements in controls and procedures at relevant companies. In total, all of the forensic accounting investigations found approximately Euro 970 million of accounting irregularities that may require adjustments in the year 2002 and restatements in one or more prior years. A task force reporting to the Audit Committee has been created consisting of members of Ahold management and outside advisors. Ahold's Internal Audit function, reporting directly to the CEO as well as to the Audit Committee, will play a central role in this task force. The task force will address the various accounting practices and internal control weaknesses raised, or confirmed, as a result of the investigations, and will oversee implementation of required changes. It is expected that these required changes will be implemented by the end of 2003. In addition, Ahold has made, or is in the process of making, personnel changes involving U.S. Foodservice, Disco, Tops and the Ahold parent company. As previously announced, although the forensic accounting work at U.S. Foodservice has been completed, the internal legal investigation at U.S. Foodservice is continuing. With respect to the status of the Ahold 2002 audit, Ahold announced that its auditors at all of the company's operations have resumed audit work. Management is working closely with its auditors to expedite completion of the audit of Ahold's 2002 consolidated financial statements. Under its Euro 2.65 billion credit facility, Ahold is required to deliver its audited consolidated 2002 financial statements by August 15, 2003 to the syndicate of the banks involved. Ahold is filing a Notification of Late Filing with the U.S. Securities and Exchange Commission relating to its Form 20-F for the fiscal year ended December 29, 2002. Ahold's Form 20-F would otherwise have been due on June 30, 2003. Ahold currently expects to file its Annual Report on Form 20-F for fiscal year 2002 as soon as possible after completion of the audit of its fiscal year 2002 consolidated financial statements. CONTACT: Ahold NV, Koninklijke 3050 Albert Heijnweg1 1507 EH Zaandam Netherlands Phone: +31 75 6599111 Fax: +31 75 6598350 Telex: 1 9010 Home Page: http://www.ahold.com Contact: Norbert L.J. Berger, Secretary DIRECTV LA: Hearing Set for Raven Media's Trustee Motion -------------------------------------------------------- The U.S. Bankruptcy Court in Wilmington, Del. will hear July 15 a motion filed by Raven Media Investments LLC to appoint a trustee to run DirecTV Latin America LLC while it is in Chapter 11 bankruptcy. Objections, according to Dow Jones, were due Monday. Raven Media, a unit of Argentina's Grupo Clarin SA, is in a dispute with DirecTV Latin America over a US$189 million claim it made against the Company's bankruptcy estate and has also sought to have the case transferred to a Florida court. Now, Raven Media is suggesting that a Chapter 11 trustee should be appointed for DirecTV Latin America, because the Company is too closely intertwined with its majority owner and largest creditor Hughes Electronics Corp. to restructure successfully. Hughes owns 75% of DirecTV Latin America's equity and is providing US$300 million of debtor-in-possession financing, while six of DirecTV Latin America's top seven officers are Hughes employees, Raven Media said. Due to those and other conflicts of interest, DirecTV Latin America can't be objective in restructuring agreements, such as those where it purchases satellite programming from Hughes or its units, Raven Media said. DIRECTV LA: Seeks to Extend Exclusive Period for Filing Plan ------------------------------------------------------------- DirecTV Latin America is asking the court to grant it more time to file a reorganization plan and solicit creditor votes for the plan. The U.S. Bankruptcy Court in Wilmington, Del. will hear the exclusivity extension request July 15, says Dow Jones, adding that objections are due July 8. The Company wants its exclusive period to file a reorganization plan, which is set to expire July 16, to be extended until Nov. 17 and its deadline to solicit votes, set to expire Sept. 12, extended until Jan. 16, 2004. DirecTV Latin America said it should receive the extension because it is working diligently to restructure programming and other contracts to cut costs, in addition to having to fight off the venue transfer motion from Raven Media and an effort by the former KirchMedia GmbH to sue the company. IEBA: Board Gets Shareholders OK To Extend Bankruptcy Process ------------------------------------------------------------- Argentine power holding company Inversora Electrica de Buenos Aires (IEBA) informed the Buenos Aires stock market that its shareholders have unanimously voted to allow the Company's board to continue with its bankruptcy protection process, reports Business News Americas. IEBA last month filed for "Concurso Preventivo de Acreedores," the local equivalent of Chapter 11 bankruptcy in the US, and recently obtained the court's approval for the request. According to the terms, a local judge will take control of IEBA's remaining US$162-million debt, and meet with creditors to renegotiate the payments. IEBA defaulted on US$230 million of bonds in September 2001 following the conversion of rates from US dollars into Argentine pesos. Luxemburg-based Camuzzi International, which controls 55% of IEBA through Buenos Aires Energy Company, in April offered to buy back the defaulted bonds. However, just 30% of creditors accepted the terms, and the Company cannot pay the remaining debts. United Utilities, which owns the remaining 45% of IEBA, has said it will not put any additional equity into the holding. PETROBRAS ENERGIA: Debenture Interest Payments Slated for July 7 ---------------------------------------------------------------- Argentine energy company Petrobras Argentina will make an US$8.6- million interest payment on four series of debentures totaling US$599.4 million on July 7, Business News Americas reports, citing a company statement to the Buenos Aires stock market. The interest payment includes: -US$991,578 on US$75.7 million on J class series (one year, Libor plus 3.75%); - US$3.95 million on US$286 million K class series (five years, Libor plus 4.00%); - US$767,735 on US$55.6 million L class series (one year, Libor plus 4.00%); and - US$2.85 million on US$182 million M class series (five years, Libor plus 4.75%). Petrobras Energia issued the four series in October 2002, when it was known as Pecom Energia, as part of the US$848.6-million refinancing to extend debt due in the short term by a final term of up to five years. TGS: Fitch Downgrades IDB A/B Loan Participation to 'DD' -------------------------------------------------------- Fitch Ratings downgraded the senior unsecured foreign currency rating of Transportadora de Gas del Sur (TGS) to 'DD' from 'C'. The rating action follows the announcement that TGS is postponing its payments of interests and principal on all of its financial obligations, including those due under the A and B loans granted by the Inter-American Development Bank (IDB). TGS is seeking to restructure the majority of its obligations in an effort to extend maturities and adjust payment terms to reflect the company's limited financial flexibility. TGS' credit profile has been adversely affected by the various emergency measures implemented by the government following the sovereign's default, including devaluation, 'pesofication' of tariffs and elimination of price and/or tariff adjustments based on foreign currency indexation. Fitch believes that parties involved in TGS' restructuring efforts remain far apart, precluding a rapid conclusion to the negotiations. In the interim, management is focused on protecting the company's operational integrity. TGS is the operator of the largest pipeline transmission system in Argentina, delivering an estimated 60% of the country's total natural gas consumption. The company is owned (55.3%) and operated by Compania de Inversiones de Energia (CIESA). CIESA is 50%-owned by Enron Argentina and Perez Companc. Both Enron and Perez Companc also hold a direct 7.35% interest in TGS. The remaining 30% is publicly traded on the NYSE and BCBA. CONTACT: Fitch Ratings Alejandro Bertuol, +1-212-908-0393, New York Jason Todd, +1-312-368-3217, Chicago Matt Burkhard, +1-212-908-0540, New York, Media Relations TRANSENER: Must Pay or Appeal $593,000 Fine ------------------------------------------- Argentine transmission company Transener is to pay a fine of ARS1.67 million (today US$593,000) for power cuts in November, electricity regulator Enre said in a statement. The fine was imposed after a study, commissioned by Enre and carried out by the University de la Plata, indicated that the collapse of a high-tension transmission line and a transformer in the Comahue substation, which cut power in and around capital city Buenos Aires for several hours on November 24, was due to Transener's poor maintenance. According to a source, Transener must pay the fine within 30 days of being informed of the decision or appeal the fine to the energy secretary. ============= B E R M U D A ============= CRP: SCOR's Exclusive Purchase Rights Extended Through July ----------------------------------------------------------- SCOR Group signed a letter of intent concerning the sale of Commercial Risks Partners (CRP) on March 28, 2003. Bermuda based, CRP was underwriting alternative risk transfer reinsurance. The letter of intent granted to the potential buyer an exclusive right of preemption until June 30, 2003. By common agreement, the deadline has been extended until July 31, 2003. Certain statements contained in this document may constitute forward-looking statements, and factors of risk and uncertainties may cause actual events and financial results to vary significantly from the information supplied herein. Details of these risk factors are described in the company's annual report. GLOBAL CROSSING: Singaporean Bidder Granted More Time for Bid ------------------------------------------------------------- The court handling Global Crossing's bankruptcy procedure has extended the exclusive takeover rights of Singapore Technologies Telemedia, giving the foreign bidder enough time to secure regulatory approval for its bid, Reuters said Tuesday. A witness had earlier told Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York that the regulatory review process would take another one to three months to conclude. In granting the request to preserve the exclusive rights, Judge Gerber noted that "[Global Crossing] ha[s] shown the requisite good cause for an exclusivity extension... They've given me no reason to believe that they are abusing their exclusivity rights." According to Reuters, several groups had objected to the request, including XO Communications Inc., which has a standing unsolicited takeover offer for the company. Both the creditor banks of Global Crossing and XO believe the deal faces uncertain approval due to potential concerns about foreign ownership of a strategic telecommunications assets. Singapore Technologies is a unit of Temasek Holdings, the investment arm of the Singapore government. But Judge Gerber said the bankruptcy court had "neither the role nor the expertise" to predict the outcome of the regulatory process and had no role in determining whether Global Crossing's assets should be sold to other bidders or under what terms. Last Monday, Global Crossing said it had US$537 million in cash as of May 31, including US$202 million in unrestricted cash and US$335 million in restricted cash. XO believes the company faces a cash crunch and therefore doesn't have the luxury of waiting to see if the Singapore Technologies pact got approved. The extension lasts until October, says Reuters. GLOBAL CROSSING: XO Communications Comments On Court's Ruling ------------------------------------------------------------- XO Communications, Inc. announced that it is disappointed by the U.S. Bankruptcy Court's ruling Tuesday regarding the decision to approve Amendment #2 to the Purchase Agreement and to extend the exclusivity period in the Global Crossing Chapter 11 case. XO remains highly skeptical that Singapore Technologies Telemedia PTE will be able to obtain the needed regulatory approvals to consummate this transaction. Furthermore, XO agrees with the many critics of this transaction that a Company of this magnitude and importance should not be owned and controlled by an entity owned by a foreign government. "As we stated earlier, we believe that Global Crossing's prolonged bankruptcy and dwindling cash reserves are expected to result in continued erosion of its customer base unless an alternative offer is put in place," said Brian Oliver, EVP Strategy and Corporate Development at XO. "XO has been through the bankruptcy process and understands the necessity of having a plan for emergence that provides customers, vendors and employees with certainty." According to Global Crossing's May Monthly Operating Report filed with the Bankruptcy Court, the company's cash burn totaled $48 million in May 2003. Indeed, in the opinion issued by the Bankruptcy Court Tuesday, the Court acknowledged that "(b)ased on present cash flow projections, that (running out of (unrestricted) cash) would be likely to happen sometime in October." Given Global Crossings liquidity position, the payment of $50 million in bonuses to management and certain employees is now subject to fair debate. XO will continue to actively monitor both the bankruptcy and regulatory proceedings. About XO Communications XO Communications is a leading broadband communications service provider offering a complete set of communications services, including: local and long distance voice, Internet access, Virtual Private Networking (VPN), Ethernet, Wavelength, Web Hosting and Integrated voice and data services. XO has assembled an unrivaled set of facilities-based broadband networks and Tier One Internet peering relationships in the United States. XO currently offers facilities-based broadband communications services in more than 60 markets throughout the United States. CONTACT: XO Communications, Inc. Kara Palamaras, 703/547-2011 GLOBAL CROSSING: XO Presents Yet Another Unsolicited Offer ---------------------------------------------------------- Had the court rejected the request of Singaporean Technologies Telemedia for more time to get regulatory approval for its takeover bid, XO Communications would have offered US$200 million to Global Crossing bondholders and another US$495 million to its lenders, Reuters said Tuesday. The revised offer was the fourth made by the Virginia-based company, which emerged from bankruptcy in January. But even if the court had allowed XO to talk to Global Crossing concurrently with STT, unsecured bondholders would have spurned the offer just the same. "The value that is being proffered is in our opinion woefully inadequate," said Edward Weisfelner, an attorney with Brown Rudnik Berlack Israels, which is representing Global Crossing's unsecured creditors. STT became the sole bidder for Global Crossing this year after Hong Kong-based Hutchinson Whampoa Ltd. walked away from a joint bid in April. Other bidders for Global Crossing include IDT Corp, a telecommunications company that has acquired the assets of several financially troubled rivals. =========== B R A Z I L =========== ENRON: South America LLC's Case Summary, 16 Unsecured Creditors --------------------------------------------------------------- Debtor: Enron South America LLC 1400 Smith Street Houston, Texas 77002 Bankruptcy Case No.: 03-14229 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: June 27, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: More than $100 Million Estimated Debts: $10 Million to $50 Million Debtor's 16 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Wilson Management Trade debt $67,031 Associates Inc. American Express Bank Credit debt $43,857 Limited Arthur Andersen LLP Trade debt $35,500 Edward Graham Trade debt $29,277 Diana Perez Trade debt $14,508 Roberto Pensotti Trade debt $5,702 Vedior North America Trade Debt $3,098 Kathleen Wagner Trade debt $2,797 Travieso Evans Hughes Legal Fees $2,390 Arria Huntlaw Corporate Trade debt $500 Svcs Ltd Sigma Internet, Inc. Trade debt $449 Momentum Document Trade debt $132 Services Inc. Stevenson Enterprises Trade debt $75 Ala Carte Express/ Trade debt $61 Citi Express Southwestern Bell Trade debt $0.85 Telephone John Hardy Jr. Trade debt $0.62 (TROUBLED COMPANY REPORTER, Vol. 7, Issue 128, July 1, 2003) LIGHT SERVICOS: Misses $150M Debt Payment Tuesday ------------------------------------------------- Light Servicos de Eletricidade SA, the Brazilian unit of Electricite de France (EDF), Europe's biggest power producer, did not make a required payment on US$150 million debt on Tuesday, said Oswaldo Telles, an analyst at BBVA Securities in Sao Paulo. The missed payment comes while the Brazilian distributor is seeking to negotiate with creditors an extension on the maturity of its obligations. The Company has fired its financial adviser, Citigroup Global Markets, according to Business News Americas. Light began a financial restructuring process on April 24, saying it faced a liquidity crisis and was unable to meet debt payments. According to the Company's 1Q03 financial statements, it has short-term debts of BRL824 million (US$291mn) and long-term debts of BRL4 billion. Light serves an estimated 9 million users in the city of Rio de Janeiro. CONTACT: LIGHT SERVICOS DE ELETRICIDADE S.A. Avenida Marechal Floriano, 168 20080-002 Rio de Janeiro, Brazil Phone: +55-21-2211-2794 Fax: +55-21-2211-2993 Home Page: http://www.lightrio.com.br Contact: Bo Gosta Kallstrand, Chairman Michel Gaillard, President and CEO Joel Nicolas, Executive Director, Operation Paulo Roberto Ribeiro Pinto, Executive Director, Investor Relations and CFO TELEMAR: Rate Hike Prompts UBS Equity Upgrade --------------------------------------------- UBS Warburg upped its equity recommendations on Brazilian fixed- line telecom companies Tele Norte Leste Participacoes SA (Telemar) and Telemar Norte Leste to Buy 2. The move, according to Dow Jones, follows an improved outlook for Brazil's currency and recently announced tariff increases for the sector. Brazil's telecom watchdog Anatel late Thursday decided to hike fixed-line companies' tariffs by an average 28.75% for clients, although the government had been hoping Anatel would set an average below 20% by breaking the price increase into two installments. The "2" in the ratings indicates relatively high risk to the price targets. VARIG-TAM: Merger Agreement May Come This Week ---------------------------------------------- Brazilian airlines Varig and TAM are now in their final phase of merger negotiations, and may disclose merger terms and sign an "irreversibility" agreement on Friday, Bloomberg reports, citing local daily Folha de S. Paulo. Varig, Latin America's largest air carrier, and TAM, its main domestic rival, signed a letter of understanding on Feb. 6 to explore the possibility of combining their operations. The merger is aimed at resolving the airlines' financial difficulties. Brazil Development, Industry and Trade Minister Luiz Fernando Furlan and Defense Minister Jose Viegas will be at the event Friday to demonstrate the government's commitment to supporting the merger, including some financing, Folha said. Meanwhile, the government is also expected to announce Friday a US$120 million credit line to Varig through Brazil's BNDES development bank, said the daily. BNDES will later release another US$480 million credit line to the new company. The carriers may trim their workforce by 5,000 to form the new company, the newspaper said. 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 ========= ENERSIS: Concludes $2B Capital Increase --------------------------------------- Chilean power sector holding Enersis closed Monday its US$2 billion capital increase, selling US$1.88 billion of new stock, or 94% of the total increase, Business News Americas reports, citing a company statement. Minority shareholders bought a total of US$663 million at an average of US$31.5 million a day. According to Enersis, the subscription is one of the largest-ever by minority shareholders to a capital increase in Latin America. International investment firm Elesur, through which Endesa Spain owns Enersis, bought US$1.22 billion. Endesa subscribed to the increase through the capitalization of inter-company loans from Elesur to Enersis. The preferential period for shareholders outside the Endesa group for the remaining shares will begin in November. The capital increase also includes a buyback of bonds issued on the Chilean market. From November 1-15, holders will be able to exchange their bonds for Enersis stock at 60.4202 pesos a share, the same price as the new stock issued in the increase. According to Business News Americas, Endesa had previously said it would buy any shares that are not subscribed by shareholders or bondholders. CONTACT: Enersis SA Avenida Kennedy Vitacura No 5454 Santiago Chile 1557 Phone: +56 2 353 4400 Fax: +56 2 378 4768 Home Page: http://www.enersis.cl Contacts: Engr Alfredo Llorente Legaz, Chairman Engr Rafael Miranda Robredo, Vice Chairman Endesa SA Principe de Vergara 187 28002 Madrid Spain Phone: +34 91 213 10 00 Fax: +34 91 563 81 81 Telex: 22917 ENE Home Page: http://www.endesa.es Contacts: Rodolfo M. Villa, Chairman Rafael Miranda Robredo, Managing Director TELEFONICA CTC: Regulator Snubs Chilesat's Request -------------------------------------------------- Chile's telecoms regulator Subtel announced that it has trashed corporate services provider Chilesat's request to remove a consultant from the panel of experts convened to evaluate the government's guidelines for the telco's next tariff decree, reports Business News Americas. Chilesat had sought to remove Patricio Rojas from the panel on grounds that he had previously voiced support for Telefonica CTC to have greater rate setting flexibility in certain areas. He was one of two members on the antimonopoly commission CRA that favored CTC's stance in a crucial decision to determine whether CTC should be subject to a tariff decree at all. But according to Subtel, Chilesat was effectively asking for an injunction, which is a legal option to suspend the activities of judges or judicial staff in lawsuits, whereas finalizing the tariff decree is an administrative process. =================================== D O M I N I C A N R E P U B L I C =================================== BANCO POPULAR: Moody's Puts D+ BFSR On Review For Downgrade ----------------------------------------------------------- Moody's Investors Service placed on review for downgrade the D+ bank financial strength rating (BFSR) of Banco Popular Dominicano (BPD), the strongest private bank in the Dominican Republic's banking system. According to Moody's, its review of BPD's BFSR reflects the continued erosion of the operating environment. Both the recent failure of a top bank, and the financial difficulties at another, have put enormous pressure on the nation's financial industry. Meanwhile, Moody's changed the outlook of the bank's Ba3 foreign- currency deposit rating to negative. The action came as a direct result of the outlook change to negative from stable of the Dominican Republic's ceilings for foreign- currency bank deposits and for foreign- currency bonds and notes. Moody's emphasizes that this change in the country's debt outlook does not affect BPD, which has no rated foreign currency bonds or notes. BPD's Baa1 domestic currency deposit rating is also not affected. * Moody's Assigns Negative Outlook To DR's Credit Ratings --------------------------------------------------------- Moody's Investors Service assigned a negative outlook to the Dominican Republic's Ba2 foreign-currency country ceiling for bonds and notes and to the Ba3 foreign-currency country ceiling for bank deposits. The negative outlook also applies to the government's Ba2 local-currency rating. The move was prompted by mounting concerns about potential adverse consequences of the current macroeconomic environment on the Dominican Republic's external payments position. The government's external debt ratios continue to denote a moderate and manageable debt burden, Moody's indicated in its report. But still, a weak international liquidity position constrains the ability of the government to effectively confront adverse domestic and external shocks. ============= E C U A D O R ============= PACIFICTEL: Andinatel Receives Three Offers For Telecsa ------------------------------------------------------- The period to make a bid in Ecuadorian state-run fixed line operator Andinatel's selection of a strategic partner for its mobile venture Telecsa ended Monday. According to Business News Americas, only three of the 16 companies that bought the bidding rules offered to make a bid. These are German consultancy Detecon, Sweden's Swedtel and Spain's Telefonica Mobile Solutions. Telecsa chairman Richard Jaramillo indicated that the three bidders are highly qualified to ensure that Telecsa competes adequately with incumbent operators Conecel and BellSouth Ecuador. However, Andinatel will be very price conscious and may call another selection process if their offers prove too expensive, he said. Andinatel will select the winning firm on July 18 and sign the contract on August 1. The eventual partner will receive a three- year contract to implement Telecsa's business and investment plans, as well as the launch and operation of the company. The partner will also have right of first refusal should Telecsa shares go on sale. For the time being, Telecsa will be a joint venture between Andinatel and sister company Pacifictel, although Andinatel has said Cuenca-based telco Etapa will be offered a 3-5% stake. In recent weeks, there has been some doubt about Pacifictel's part in the venture since the telecoms regulatory enforcement agency Suptel has recommended intervention of the Company because it has failed to meet buildout goals. According to Business News Americas, telecoms regulator Conatel will hand down its decision on the matter next Monday. =========== M E X I C O =========== AZTECA HOLDINGS: Crucial Bond Swap Garners Enough Subsribers ------------------------------------------------------------ A majority of bondholders has reportedly acquiesced to the latest bond swap proposal of Azteca Holdings S.A., increasing the likelihood of a win-win solution to the four-month deadlock before July 15, the day the bonds will due. According to Bloomberg, among those that have agreed to accept the revised swap proposal is J.P. Morgan Chase & Co., believed to be holding at least US$20 million in bonds in trading, private banking and investing positions. Chief Financial Officer Diego Foyo, who is currently in the U.S. to round up support for the swap, confirmed to Bloomberg that the end to the deadlock is near. "The terms were set in complete accordance with the bondholders led by J.P. Morgan," said Mr. Foyo, adding, "We believe they'll tender their bonds this week or early next week." The report did not indicate the amount of bonds that will fall due next week, but Bloomberg said the company must swap at least US$43 million of its 10.5% bonds to have enough cash to pay what it owes. Mr. Foyo said he is targeting up to US$150 million. The company first offered to swap the bonds due next week in March, but was spurned by bondholders for being paltry. In exchange for extending maturity to 2008, the bondholders were only offered a 10.75% interest on the new bonds. About two weeks ago, the company filed a new offer of an 11 percent coupon and a maturity date of 2009, valid for both the holders of the bonds that are due next week and those holders who already swapped bonds for new ones under the earlier offer. Still failing to get enough backing, the company finally offered last week an interest rate of 12.25% with maturity reset to 2008. It also pledged to pay back the principal in four yearly installments starting in 2005. Daniel Lerner, a Bear Stearns & Co. debt analyst who believes a majority bondholders will participate in the offer this time, said the new bonds are less risky because they have first call on TV Azteca's cash flow. Fifty-five percent owned by Azteca Holdings, TV Azteca is Mexico's second-largest broadcaster. "It's a market-clearing offer and I think the larger creditors will be in... They finally got to the price that the market had responded to them," Mr. Lerner told Bloomberg. In related development, Standard & Poor's Manuel Guerena told Bloomberg the agency will continue to consider the new offer an event of default: "[The offer] just reiterates the importance for Azteca Holdings to bring more bondholders into the offer, precisely because if some of them still don't accept the offer, the company may not be able to get its act together." S&P currently rates Azteca Holdings 'CC', two notches above default. GRUPO IUSACELL: Defaults On $25M Interest Payment ------------------------------------------------- Grupo Iusacell, S.A. de C.V. (BMV:CEL) (NYSE:CEL) previously publicly announced that pending agreement with its lenders on a restructuring plan, it would not make the US$25 million interest payment due on June 1, on its 14.25% bonds due 2006. The 30-day period within which to make the interest payment has expired. As a result, an event of default has occurred under the Indenture governing the bonds, and the bondholders have the right to declare the principal of and the accrued interest under the bonds due and payable or take other legal actions specified in the Indenture, as they deem appropriate. About Iusacell Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE: CEL; BMV: CEL) is a wireless cellular and PCS service provider in seven of Mexico's nine regions, including Mexico City, Guadalajara, Monterrey, Tijuana, Acapulco, Puebla, Leon and Merida. The Company's service regions encompass a total of approximately 92 million POPs, representing approximately 90% of the country's total population. CONTACT: Grupo Iusacell, S.A. de C.V., Mexico City Russell A. Olson, 011-5255-5109-5751 russell.olson@iusacell.com.mx or Carlos J. Moctezuma, 011-5255-5109-5780 carlos.moctezuma@iusacell.com.mx GRUPO IUSACELL: Verizon Announces Effect of Stake Sale ------------------------------------------------------ Verizon Communications Inc. (NYSE:VZ) announced Tuesday details of second-quarter charges primarily driven by an accounting change in its directory business and by the effect of its recent decision to sell its consolidated interest in Grupo Iusacell. Verizon's full-year 2003 guidance for adjusted revenue growth and adjusted earnings per share (EPS) remains unchanged. Accounting for Directories Verizon has changed its method for recognizing revenues and expenses, resulting in an after-tax, non-cash charge to earnings of approximately $1.6 billion, or 59 cents in fully diluted EPS, retroactive to Jan. 1, 2003, in accordance with generally accepted accounting principles. This reflects the cumulative effect of the change related to expenses and revenue from prior-year directory publications. Because this change is retroactive, it will impact first-quarter 2003 financial results. In addition, because of this change, quarterly earnings results are expected to be more evenly distributed throughout the year. The directory accounting change will result in different revenue and expense recognition due to the adoption of the amortization method of accounting instead of the publication-date method. The publication-date method recognizes revenues and expenses when directories are distributed. Under the amortization method -- which is increasingly becoming the industry standard -- revenues and expenses are recognized over the life of the directory, which is usually 12 months. This accounting change affects the timing of the recognition of revenues and expenses but does not affect the timing of cash flows. It also does not affect full-year earnings for Verizon Information Services, the Verizon business segment responsible for directory publishing. As a result of the directory accounting change, the previously reported first-quarter 2003 revenues and operating expenses of Verizon and its Information Services segment will be increased by $321 million and $89 million, respectively, and net income will increase by $143 million, or 5 cents per diluted share. Verizon's first-quarter 2003 diluted EPS is reduced from $1.41 to 87 cents. Effect of Decision to Sell Iusacell Stake As a result of Verizon's recent decision to sell its consolidated interest in Grupo Iusacell, the company also announced that it is reporting its 39.4 percent investment as a discontinued operation in accordance with FAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." As such, Verizon expects to record a second-quarter after-tax charge to earnings of $0.9 billion, or 33 cents per diluted share. Prior-period financial results will be reclassified to reflect reporting the company's investment in Grupo Iusacell as a discontinued operation. Other Charges Verizon also anticipates recording second-quarter after-tax charges to earnings of approximately $0.4 billion to $0.5 billion, or 14 cents to 19 cents per diluted share, related to severance, the early redemption of debt, and impairments of long-lived assets primarily due to consolidation and integration of facilities. Historical financial information reflecting these changes will be available at a later date on Verizon's Investor Relations Web site at www.verizon.com/investor. Verizon's second-quarter results are scheduled to be announced on July 29. A Fortune 10 company, Verizon Communications (NYSE:VZ) is one of the world's leading providers of communications services. Verizon companies are the largest providers of wireline and wireless communications in the United States, with 136.6 million access line equivalents and 33.3 million Verizon Wireless customers. Verizon is the third-largest long-distance carrier for U.S. consumers, with 13.2 million long-distance lines, and the company is also the largest directory publisher in the world, as measured by directory titles and circulation. With approximately $67 billion in annual revenues and 227,000 employees, Verizon's global presence extends to the Americas, Europe, Asia and the Pacific. For more information on Verizon, visit www.verizon.com. MEDIA CONTACTS: Peter Thonis, 212-395-2355 Bob Varettoni, 212-395-7726 TV AZTECA: Azteca America Network Adds Two Affiliates in Arizona ---------------------------------------------------------------- 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 Azteca America, the company's wholly-owned broadcasting network focused on the U.S. Hispanic market, affiliated two new stations in Arizona. With these new affiliations, KPSW Channel 43 in Phoenix and KQBN Channel 14 in Tucson, Azteca America reaches 26 markets, covering 63% of U.S. Hispanic households, introducing its programming to the ninth and twenty-fourth largest Hispanic markets in the United States, respectively. As a result, Azteca America now covers 12 of the top 15 Hispanic markets. Hispanics represent a significant proportion of Arizona's total population, as one out of every four people living in the state is Hispanic, of which 82% are Mexican. In Tucson, 32% of the population is Hispanic, while in Phoenix this proportion is 23%. "We are thrilled to introduce our programming to Arizona, a state that shares a long history with Mexico," said Luis J. Echarte, Azteca America's President and Chief Executive Officer. "The increase in coverage and growth of Azteca America is a result of the quality of our programming and continues to be our strategic priority." The two new affiliates are added to Azteca America's 24 existing markets, including Los Angeles, New York, Miami, Houston, San Antonio, San Francisco- Oakland-San Jose, Albuquerque, San Diego, Fresno-Visalia, Sacramento-Stockton- Modesto, Orlando, Austin, Las Vegas, Monterey-Salinas, Bakersfield, West Palm Beach-Ft. Pierce, Salt Lake City, Santa Barbara, Palm Springs, Naples-Ft. Myers, Wichita, Oklahoma City, Reno and Victoria. 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 U.S. Hispanic market; Unefon, a Mexican mobile telephony operator focused on the mass market; and Todito.com, an Internet portal for North American Spanish speakers. =============================== T R I N I D A D & T O B A G O =============================== BWIA: Government Minister Announces First Aid Traunch Available --------------------------------------------------------------- A large chunk of the TT$116.8 million aid granted by the government to struggling national carrier, BWIA, could now be drawn anytime by the company, Trade Minister Kenneth Valley told The Trinidad Express recently. He said TT$30 million of the financial assistance is now available, while the remaining TT$85 million could be accessed upon request to Prime Minister Patrick Manning, who have the discretion to grant it or not. Mr. Valley said the government is keeping the balance because of its earlier assurance to International Lease Finance Corporation, the lessor of the BWIA's aircrafts. "This is to protect the government since the government has given BWIA's lessor the assurance that BWIA will make its lease payments," Mr. Valley told the Express. According to the paper, BWIA's outstanding lease payments amount to TT$25 million. Another reason for making the release of the remaining balance conditional is the company's obligation to set aside TT$55 million to pay the severance packages of the 617 workers retrenched in January. Responding to Mr. Valley's announcement, BWIA's Corporate Communications director Clint Williams said: "We continue to work with the unions. One has to remember there is an allocation for separation packages and in order to access these funds, the unions will have a significant role to play in getting concessions the government has called for before BWIA can access separation funding of TT$55 million. The sooner we can meet the criteria, the less discomfort separated staff will have to go through." Meanwhile, St Vincent and the Grenadines Prime Minister Dr. Ralph Gonzalves is expected to bare this Friday the mechanics for the planned merger of BWIA and Liat. Mr. Valley confirmed to the Express that by July 15, a new holding company would be established to oversee the operations of both airlines. "The name of the company will be Caribbean Airlines (Holding) Ltd, subject to the approval of the Registrar of Companies. This will initially be a paper company which will start buying BWIA shares over the next three months," the Express said. A technical coordinator will be appointed to prepare the implementation of the plan and former BWIA CEO Ian Bertrand is believed to be leading the race for the post, the paper added. ============= U R U G U A Y ============= BANCO SURINVEST: Moody's Confirms LTFC, STFC Ratings ---------------------------------------------------- Moody's confirmed Banco Surinvest S.A.'s (Surinvest) long term foreign currency deposit rating at Caa1 with a negative outlook and short term foreign currency at Not Prime with a stable outlook. The outlook on the long term foreign currency deposit rating remains negative in line with the outlook of the Uruguayan country ceiling for deposits, said Moody's. Moody's also lowered the National Scale Rating (NSR) of Surinvest to B3.uy from Ba1.uy, reflecting the severe weakening of the bank's financial condition as a result of the Uruguayan financial crisis and deep recession, together with the uncertain capital support expected from its consortium of shareholders going forward. Furthermore, Moody's assigned new bank financial strength ratings (BFSRs) of E to Surinvest, reflecting its weak stand-alone financial strength and operating environment. BNL URUGUAY: Moody's Confirms Foreign Currency Deposit Ratings -------------------------------------------------------------- Moody's confirmed Banca Nazionale del Lavoro's (BNL Uruguay) long term foreign currency deposit rating at Caa1 with a negative outlook and the short term foreign currency deposit rating at Not Prime with a stable outlook. The outlook on the long term foreign currency deposit rating remains negative in line with the outlook of the Uruguayan country ceiling for deposits, said Moody's. Moody's also confirmed BNL Uruguay's NSR at A1.uy, and placed it on review for possible downgrade. BNL is a wholly-owned subsidiary of Banca Nazionale del Lavoro S.p.A., rated A2/Prime-1 by Moody's. The subsidiary's rating reflects this ownership structure. The rating was placed on review for possible downgrade in light of the parent bank's recent announcements that it might sell its operation to an undetermined third party. Moody's said the review would focus on any change in ownership. Moody's also assigned new bank financial strength ratings (BFSRs) of E to BNL Uruguay, reflecting its weak stand-alone financial strength and operating environment. ================= V E N E Z U E L A ================= REPSOL YPF: Raises Venezuelan Oil Reserves by 8.2M Barrels ---------------------------------------------------------- Repsol YPF has acquired from Tecpetrol the 25% stake owned by the latter in the Quiamare-La Ceiba block, in Venezuela, thus raising its full share in the block to 75%. Repsol YPF is operator, in a partnership with Exxon Mobil, owner of the other 25%. As a result of this acquisition, effective as of 1 January 2003, the company has boosted its production in Venezuela by 3,900 barrels per day, and proved reserves by 8.2 million barrels of oil equivalent. Apart from Quiamare La Ceiba, Repsol YPF is operator of the Quiriquire Barrancas and Mene Grande fields. The Quiamare La Ceiba block is located in the State of Anzo tegui, in west Venezuela, and was awarded in the second round of operating concessions, tendered for offer in 1993. Fields contained in this block currently produce 15,600 barrels of oil per day. At present, Repsol YPF is the top private gas producer in Venezuela, producing its gas from the Quiriquire field (9.1 million m3 per day), of which it owns 100%. The company also produces 17,500 barrels of crude oil and condensate from the aforementioned field. This operation consolidates Repsol YPF's operations in Venezuela, one of the largest oil producing countries in the world, and furthers the Company's strategy of balancing its presence in Latin America, by adding new assets with a high development potential to its exploration & production portfolio. *********** 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. 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