/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030711.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 Friday, July 11, 2003, Vol. 4, Issue 136 Headlines A R G E N T I N A AUTOPISTAS DEL SOL: Extends, Amends APE Solicitation CARRIZO CONSTRUCCIONES: Informative Assembly Scheduled CEMEFIR: Court Announces Bankruptcy DIRECTV LA: Raven Media Files Motion To Appoint Trustee/Examiner SAN DIEGO: Receiver Filing Individual Report Next Month B E R M U D A SEA CONTAINERS: Extends Exchange Offer For Senior Debentures B R A Z I L AES CORP.: Latest Talks With BNDES Fail To Produce Accord CELG: Reveals $52M Investment Plan CEMAR: Aneel Decision on SVM's Offer for Cemar Pending GERDAU: Acominas May Absorb Steelmaking Activities USIMINAS: Maintenance Work, Slumping Demand To Reduce Sales USIMINAS: Expects To Reduce Debt By $300M By Year-End C H I L E AFP MAGISTER: Audit Saves It From Liquidation ENDESA CHILE: Plans $250M Bond Sale To Refinance Debt C O L O M B I A ACES COLOMBIA: Losses Prompt Fleet Reduction E C U A D O R PETROECUADOR: Study Used As Political Tool, Workers Say PETROECUADOR: Losing US$300 Million a Year, Says Study E L S A L V A D O R MILLICOM INTERNATIONAL: Announces Subscriber Growth for the 2Q03 J A M A I C A GRAINS JAMAICA: JFM Expresses Interest in Plant M E X I C O GRUPO IMSA: Obtains Financing for MXP960 Million, US$70 Million ISPAT INLAND: Reaches Agreement With Pension Agency PEMEX: Restarts Talks With Unions PG&E NEG: PG&E Corp. Reports Voluntary Chapter 11 Filings PG&E NEG: S&P Downgrades Subsidiaries to 'D' Due to Bankruptcy V E N E Z U E L A PDVSA: Natural Gas Supplies Not Enough For Region's Needs PDVSA: Commences Sweeping Boardroom Changes - - - - - - - - ================= A R G E N T I N A ================= AUTOPISTAS DEL SOL: Extends, Amends APE Solicitation ---------------------------------------------------- Autopistas del Sol S.A. (the "Company") announced Wednesday that it has amended its solicitation (the "APE Solicitation") from holders of its 9.35% Series A Senior Notes due 2004 and 10.25% Series B Senior Notes due 2009 (together, the "Existing Notes"), and other unsecured financial indebtedness (the "Bank Debt" and, together with the Existing Notes, the "Existing Debt"), subject to certain eligibility requirements, of powers of attorney in favor of an attorney-in-fact to execute a consent to an acuerdo preventivo extrajudicial (the "APE"). As a result of such amendment, the Company has extended the APE Solicitation until 5:00 p.m., New York City time, on July 23, 2003, unless further extended by the Company. The Company also announced that it has amended its offer to apply up to U.S.$18 million to repurchase its Existing Debt for cash (the "Cash Tender Offer") at a purchase price to be determined through a modified dutch auction. The Company has extended the Cash Tender Offer until 5:00 p.m., New York City time, on July 23, 2003, unless further extended by the Company. Holders that tender their Existing Debt pursuant to the APE Solicitation or the Cash Tender Offer will have the right to withdraw their Existing Debt at any time before the applicable expiration date. APE Solicitation As of 5:00 p.m., New York City time, on July 8, 2003, approximately U.S.$334 million principal amount, or approximately 82%, of Existing Debt had been tendered in the APE Solicitation or agreed, subject to certain conditions, to participate in the APE by entering into a support agreement. To date, the Company has executed support agreements with certain financial institutions that hold approximately U.S.$56 million aggregate principal amount of Existing Debt. The APE Solicitation is being extended as a result of changes to the terms of the APE Solicitation agreed to pursuant to these support agreements. Certain terms of the APE Solicitation have been amended, including, among others: -- The Company has modified the combination option to include the option to receive either listed fixed-rate discount notes or unlisted fixed-rate discount notes. -- The Company has increased the total number of new shares it will issue from 52,580,000 to 52,735,000 if the combination option is fully subscribed, but has decreased the number of shares it will issue for each U.S.$1,000 principal amount of Existing Debt accepted in the combination option from 239 to 199, in order to avoid the issuance of fractional shares. The Cash Tender Offer As of 5:00 p.m., New York City time, on July 8, 2003, approximately U.S.$5 million principal amount of Existing Debt had been tendered in the Cash Tender Offer. The terms of the Cash Tender Offer remain substantially unchanged, with the exception of the addition of withdrawal rights in connection therewith. CONTACT: Autopistas del Sol S.A. Phone: (54 11) 5789-8700. CARRIZO CONSTRUCCIONES: Informative Assembly Scheduled ------------------------------------------------------ Creditors of Carrizo Construcciones S.R.L. were informed that the informative assembly following the Company's reorganization process will be on July 21 this year. The Company has applied for "Concurso Preventivo" at the Civil and Commercial Tribunal of Jujuy, relates Infobae. However, the report did not indicate if a receiver was assigned to the case. CEMEFIR: Court Announces Bankruptcy ----------------------------------- Court No. 4 of Buenos Aires decided that Cemefir S.A. should enter bankruptcy proceedings. According to Infobae, the Court assigned Mr. Mario Kahan as receiver. Creditors must have their claims verified by September 2, 2003. CONTACT: Mr. Mario Kahan Lavalle 2306 Buenos Aires DIRECTV LA: Raven Media Files Motion To Appoint Trustee/Examiner ---------------------------------------------------------------- The Company related that William H. Sudell, Jr., Esq., at Morris, Nichols, Arsht & Tunnell, in Wilmington, Delaware, notes that there is a pervasive interrelationship between DirecTV and Hughes Electronics Corporation and its remaining affiliates: -- Hughes owns 75% of DirecTV's equity; -- four of the five members of DirecTV's executive committee and six of DirecTV's seven senior officers are Hughes employees; -- Hughes is DirecTV's DIP financing lender; and -- Hughes affiliates provide DirecTV with critical satellite services and are many of the local operating companies to whom DirecTV provides programming services and funding. Mr. Sudell points out that these incestuous relationships preclude DirecTV from proceeding objectively with its business restructuring, which requires the re-evaluation and probable renegotiation of virtually all relationships. Furthermore, even DirecTV's business relationships with independent programmers are subject to conflicts regarding Hughes because those same programmers also deal extensively with Hughes' 100% owned United States subsidiary, DirecTV, Inc. In addition, Mr. Sudell argues that the conflicts are equally fatal to DirecTV's ability to pursue a Chapter 11 plan. Central to a plan will be resolution of DirecTV's numerous claims against Hughes and its affiliates, including alter ego, preference and fraudulent transfer claims as well as substantive consolidation issues. Correspondingly, a Chapter 11 plan will require resolution of the treatment of the $1,345,000,000 of claims Hughes asserted against DirecTV, as well as the Claims of Hughes' affiliates, including whether the claims should be equitably subordinated or re-characterized as equity. DirecTV's current management and executive committee cannot be relied on to address these issues. Mr. Sudell explains that not only virtually all of them are Hughes employees, but also their bonus and stock compensation are all based on Hughes' performance, not DirecTV's. Indeed, there are no meaningful internal checks and balances at DirecTV. The one non-Hughes designee on DirecTV's executive committee is an employee of Darlene Investments, LLC, which, like Hughes, has substantial investments in the LOCs and entered into a prepetition agreement with Hughes regarding their joint interests in DirecTV's restructuring. Accordingly, Raven Media Investments LLC, as a holder, inter alia, of a general unsecured claim against DirecTV of not less than $189,000,000, asks the Court to appoint a Trustee or Examiner for DirecTV's case. Mr. Sudell argues that cause exists for the appointment of a Trustee pursuant to Section 1104(a) of the Bankruptcy Code because: (a) The conflict of interest renders the current management incapable of discharging its fiduciary duties since: -- these Hughes employees at DirecTV are the same people who will evaluate Hughes' claims and interests; and -- the compensation of the vast majority of DirecTV's senior officers and directors who are Hughes employees is directly tied to the bonuses from Hughes and its ownership of stock and options; (b) DirecTV's ability to develop a long-term business plan is crippled by the conflicts inherent in Hughes' multiple roles and interest regarding DirecTV, among which are: -- DirecTV currently pays CBC $6,300,000 per month for satellite services that CBC acquires from PanAmSat. DirecTV acknowledges those fees to be above current market rates. However, renegotiations of the satellite arrangement cannot be at arm's length when DirecTV is controlled by Hughes and Hughes also owns 75% of CBC and 81% of PanAmSat; -- The LOCs owe DirecTV over $600,000,000 for royalties, of which about $400,000,000 is owed by the LOCs that are Hughes affiliates; -- For the treatment of future LOC royalty payments, the LOCs will have to determine how to allocate their limited resources between royalty payments due to DirecTV and debt payments due to SurFin, which is 75% owned by Hughes and which has Hughes as its principal creditor. In addition, certain LOC obligations to SurFin are guaranteed by DirecTV and by Hughes Holdings; -- Under the DIP Financing Budget, DirecTV would provide a number of LOCs substantial funding to cover operating losses that give uncertain benefits to DirecTV; -- DirecTV has entered into local operating agreements with the LOCs that, inter alia, allocate a royalty fee to the LOCs based on DirecTV's costs to obtain programming and satellite services. As Hughes and DirecTV have different economic interests in the LOCs, Hughes employees should not be entrusted with determining the fairness of the allocations and whether or not the allocations should be revised; and -- DirecTV must renegotiate most of its programming contracts. Many of the key programmers also provide programming to Hughes' U.S. subsidiary. There is too much risk of Hughes taking a less favorable deal for DirecTV to obtain a more favorable deal for DirecTV, Inc.; (c) DirecTV's ability to negotiate a reorganization plan will be hampered by Hughes' conflicting roles and interests in DirecTV, among which are: -- There is a possibility that DirecTV will be substantially consolidated with one or more of its Hughes affiliates, particularly Hughes Holdings. Correspondingly, DirecTV will need to investigate and pursue related alter ego claims against Hughes and its affiliates; -- Hughes and its affiliates' prepetition claims allegedly exceed $1,345,000,000 or 70% of the total claims asserted against DirecTV. There is ample basis to seek either equitable subordination of those claims or re-characterization of those claims as equity, including without limitation, Hughes' prepetition domination and control of DirecTV for Hughes and its affiliates' benefit and Hughes making disguised equity contributions to DirecTV in the form of prepetition debt. While Hughes denied the validity of any challenges to its claims, the point remains that DirecTV can neither investigate nor resolve the issues; -- A related plan matter will be the resolution of DirecTV's fraudulent transfer and similar claims against Hughes and its affiliates arising from their prepetition transactions with DirecTV. DirecTV is disqualified from handing this matter; -- Even plan issues concerning how reorganized DirecTV's equity should be allocated will be infected by Hughes conflicts; -- Hughes has a conflict with plan tax considerations since much of DirecTV's organizational structure and that of other Hughes affiliates relate to tax considerations; and -- Hughes will be conflicted on any plan issues concerning Darlene, including DirecTV's releases of Darlene because Hughes agreed to the release in the Darlene/Hughes Restructuring Term Sheet; (d) DirecTV's checks and balances on Hughes' control are totally inadequate given that: -- its restructuring advisor, Alix Partners, LLC, worked with DirecTV for nearly two years, thus, effectively hired and worked for Hughes; -- Alix Partners' retention agreement has a bonus compensation formula geared to DirecTV's prompt exit from Chapter 11, which would favor Hughes' goals rather than maximizing creditor recoveries generally or to penalize Hughes appropriately; -- As recently as February 2003, Hughes was not clear that its counsel, Weil, Gotshal & Manges LLP, no longer represents DirecTV; -- No comfort can be taken that the fifth executive committee member, a Darlene employee, would be independent; (e) In contrast, having an independent party involved early in the case would speed the process and save costs by avoiding the lengthy conflicts exemplified by the Hughes DIP financing hearings; and (f) While Hughes can threaten to stop providing the DIP financing if a trustee is appointed, it is unlikely in light of Hughes' substantial economic interests in DirecTV's reorganization. In any event, Hughes may not foreclose remedies under its DIP Financing loan without first obtaining a Court order. In the event the Court does not appoint a Trustee, Mr. Sudell asserts that an examiner must be appointed for the same reasons. Raven asks Judge Walsh to give the examiner expanded duties to act for DirecTV on all business and legal issues between DirecTV and Hughes and its affiliates and insiders. Alternatively, Raven asks the Court to appoint an examiner with the responsibility to investigate and file a report on: (i) the validity and effect of all inter-company transactions between DirecTV and Hughes and its affiliates and insiders; (ii) the treatment of Hughes' claims against DirecTV, including, without limitation, as to issues regarding re-characterization; (iii) potential claims available to DirecTV's estate against its insiders and affiliates, especially Hughes; and (iv) substantive consolidation of DirecTV with any of its affiliates. (DirecTV Latin America Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) SAN DIEGO: Receiver Filing Individual Report Next Month ------------------------------------------------------- The Civil and Commercial Tribunal of Las Lomas (San Luis) informs creditors of San Diego S.R.L. that receiver Federico Gabriel Estrada will file the individual reports on August 21 this year. Las Lomas' Court No. 1 handles the Company's reorganization process, following its filing of the "concurso preventivo" motion. CONTACT: Mr. Federico Gabriel Estrada Lavalle 1416 San Luis Argentina ============= B E R M U D A ============= SEA CONTAINERS: Extends Exchange Offer For Senior Debentures ------------------------------------------------------------ Sea Containers Ltd. (NYSE: SCRA and SCRB, www.seacontainers.com), marine container lessor, passenger and freight transport operator, and leisure industry investor, announced Wednesday that it has extended the offer to exchange its outstanding 12-1/2% Senior Subordinated Debentures due 2004 for its 12-1/2% Senior Notes due 2009. This exchange offer, which commenced on May 28, 2003, will now expire at 5:00 p.m., New York City time, on Wednesday, July 23, 2003. Based on the information received from the exchange agent for the exchange offer, approximately $18.4 million aggregate principal amount of the Debentures has been tendered for exchange. Under the rules of the U.S. Securities and Exchange Commission, Sea Containers has filed exchange offer materials with the Commission and disseminated them to the holders of the Debentures. These materials may be obtained by contacting Georgeson Shareholder Communications Inc., the information agent for the exchange offer, 17 State Street, New York, New York 10004. Banks and brokers call 1-212-440-9800; U.S. debentureholders call toll free 1-866-324-5897; and foreign debentureholders call collect +44-207-335-8700. The exchange offer materials and other documents filed by Sea Containers with the U.S. Securities and Exchange Commission also are available at the Commission's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549, or at the Commission's website www.sec.gov. Investors are urged to read these materials and documents carefully. Contact: Sea Containers Services Ltd. Sea Containers House 20 Upper Ground, London SE1 9PF Contact: Steve Lawrence, Phone: +44 20 7805 5830 Email: steve.lawrence@seacontainers.com =========== B R A Z I L =========== AES CORP.: Latest Talks With BNDES Fail To Produce Accord --------------------------------------------------------- Brazil's National Development Bank and U.S. power firm AES Corp. met Wednesday to discuss a solution to the latter's long overdue debts to the bank. However, talks ended without an agreement, Reuters reports, citing a spokesman from BNDES. "AES's proposal brought no advances to the talks," the spokesman said, without revealing when talks would resume. The latest round has been delayed several times in the past weeks. The BNDES is threatening to auction off the controlling package of shares in power distributor Eletropaulo ELPL4.SA -- Latin America's biggest in revenue terms -- which belongs to AES. The shares serve as guarantee for a $1.2 billion BNDES loan. The bank is demanding that AES immediately repay overdue debts of up to $750 million and provide additional guarantees backed by its other assets in Brazil. CELG: Reveals $52M Investment Plan ---------------------------------- Brazil's Goias state power company Celg will spend BRL96.6 million to build nine transmission lines totaling 350km, and 24 substations, according to Celg president Jos� Paulo Loureiro. The move, Business News Americas suggests, is part of the Company's plan to invest BRL150 million (US$52 million) by mid- 2004 to improve the quality of service. Aside from the transmission lines, the Company will also invest in the expansion of the distribution system, said Paulo Loureiro. The Company has been struggling to avoid financial meltdown for several years. In order to help the Company, the new state government introduced a series of drastic measures, including tearing up a power purchase agreement with the Cachoeira Dourada hydroelectric power plant. Celg sold Cachoeira Dourada to Chilean generator Endesa in August 2001 and the Company is saving some BRL8 million (today US$2.8mn) a month since then, Loureiro said. CEMAR: Aneel Decision on SVM's Offer for Cemar Pending ------------------------------------------------------ Brazilian power sector regulator Aneel is expected to decide on SVM Participacoes e Empreendimentos Ltda's offer to buy Maranhao state utility Cemar on August 12. In its decision published in the country's Federal register on Tuesday, Aneel prequalified SVM alone for the Cemar purchase. The regulator said that SVM must present a solution to Cemar's financial problems by July 25. The government intervened in Cemar after the company's default on about BRL700 million of debt last year. A recent report from Business News Americas indicates that other bidders have failed to meet Aneel's requirements. Arres do Brasil Participacoes Ltda, Citissimo do Brasil Participacoes Ltda and Orteng Equipamentos e Sistemas Ltda, which submitted a joint proposal, and Acon Offshore Partners, were among the bidders who failed. GERDAU: Acominas May Absorb Steelmaking Activities -------------------------------------------------- Porto Alegre, Rio Grande do Sul-based Gerdau is expected to present to the Company's board later this week or early next week proposals regarding the restructuring of its assets in Brazil. AE-Setorial news service quoted Jorge Gerdau Johannpeter, Gerdau's president, as saying, that the Company's subsidiary Acominas could incorporate its steelmaking activities. The restructuring is not expected to affect operations, but could help the Company save on tax liabilities. USIMINAS: Maintenance Work, Slumping Demand To Reduce Sales ----------------------------------------------------------- Paulo Penido, the head of finance and investor relations at Usiminas, told analysts that the Brazilian flat steelmaking group expects its consolidated sales volumes to slip 2% to 7.56Mt this year from 7.72Mt in 2002, reports Business News Americas. The executive attributed this reduction to the maintenance work at the Company's blast furnace as well as a slump in demand. Usiminas' consolidated results for the second quarter, which include Sao Paulo-based flat steelmaking subsidiary Cosipa, remain positive, said the official. Price increases in the first three months should be wholly reflected in 2Q03's consolidated Ebitda, Penido said. But increases in the price of iron ore and coke will reduce margins in the same quarterly comparison, he added. The steel company reported that consolidated net revenue increased 60.2% to BRL2.1 billion (currently US$737mn) in the first quarter compared to same-period 2002, and its consolidated Ebitda jumped 153% to BRL882 million. Domestic prices are forecast to remain stable after hikes in the first quarter of this year, and Usiminas does not expect to raise prices during the rest of this year. Meanwhile, international slab prices are in the US$210-215/t range for Q3 contracts, down from US$240-250/t for the end of 2002. But according to Penido, there are signs of a recovery in global slab prices. USIMINAS: Expects To Reduce Debt By $300M By Year-End ----------------------------------------------------- Usiminas is focusing its efforts on the reduction of its debt this year, Business News Americas reports, citing Paulo Penido, the Company's head of finance and investor relations. The Company expects to see its debt fall by US$300 million by year-end. Consolidated net debt at the end of the first quarter stood at US$1.78 billion. At the end of last year, Usiminas' debt, not including Cosipa, fell from US$1.08 billion to US$895 million by the end of 1H03, Penido said. As a result, net debt-to-Ebitda dropped from 2.4 at the end of last year to 2.0 by the end of the first half and is predicted to fall even more by the end of 2003, Penido said. Cosipa's net debt-to-Ebitda fell from 5.2 at the end of last year to 4.7 by the end of 1H03, and should decline even more in the second half, he said. ========= C H I L E ========= AFP MAGISTER: Audit Saves It From Liquidation --------------------------------------------- The results of the audit conducted by two external auditors into intervened Chilean pension fund manager AFP Magister saved the Company from liquidation. According to Business News Americas, auditors Deloitte & Touche and Ernst & Young upheld a previous external audit endorsed by Magister, which identified accounting irregularities in the classification of US$22 million in debts resulting from a failed merger with rival fund AFP Planvital. As such, Chile's pension regulator SAFP decided against liquidating AFP Magister, saying that both reports conclude that the US$22 million shortfall in the Company's equity following the failed merger negotiations could not be classified as a demandable liability. The regulator, however, gave Magister until July 31 to come up with a solution to its financial woes and avoid liquidation. AFP Magister is a subsidiary of intervened financial group Inverlink, whose owners stand accused of fraud and theft from the central bank and state development agency Corfo. ENDESA CHILE: Plans $250M Bond Sale To Refinance Debt ----------------------------------------------------- Empresa Nacional de Electricidad S.A., the Chilean subsidiary of Spain's Endesa S.A., is planning to sell at least US$250 million of bonds abroad, said investors. The move is seen as part of the company's actions towards refinancing debt. The Chile-based unit, which has a non-investment grade rating of Ba3 from Moody's, needs funds to pay EUR400 million of debt coming due in the near future. The Company hopes to tap the international market. Jonathan Binder, chief investment officer at Standard Asset Management in Miami said the debt would likely be "a relatively straightforward and hopefully non-volatile way to be invested." Santander Central Hispano SA and Morgan Stanley will manage the sale, reports Bloomberg, citing Dario Pedrajo of Biscayne Americas Advisors in Miami. He added that the new bonds might need a higher yield to draw investors. The report aid that yields on Empresa Nacional's 8.5 percent 10- year bonds maturing in 2009 were 4.05 percentage points on Tuesday over comparable U.S. Treasuries, compared with 8 percentage points in early March. Rodolfo Nieto, spokesman for Empresa Nacional declined to comment. CONTACT: Endesa SA Principe de Vergara 187 - pta3 28002 Madrid Spain Phone: +34 91 213 10 00 Fax: +34 91 563 81 81 Home Page: http://www.endesa.es Contacts: Manuel Pizarro Moreno, Chairman Rafael Miranda Robredo, Chief Executive =============== C O L O M B I A =============== ACES COLOMBIA: Losses Prompt Fleet Reduction -------------------------------------------- Aces Colombia, which posted a US$9.6-million loss for the first quarter of the year, is returning its eight ATR 42s to lessors and surrendering many regional routes, according to an article released by Reed Business Information. As a result, the airline, which is part of the Summa alliance with Avianca and SAM, will see its domestic route network reduce significantly to comprise only scheduled flights linking Bogot , Cali, Cartagena and Medell�n. Meanwhile, the airline is retaining its five Airbus A320s to continue operating international services from Bogot and Medell�n to Fort Lauderdale, Lima and Miami. Just recently, Colombian shareholder National Coffee Federation (FNC) announced a plan to sell its 23.5% stake in the loss-making airline. If FNC pushes through with the plan, shareholders indicated that some or all of the other Colombian coffee agencies, which hold a combined 49.19% slice in the carrier, might follow suit. Such a move would spell the end of Aces within two years, according to local analysts. ============= E C U A D O R ============= PETROECUADOR: Study Used As Political Tool, Workers Say ------------------------------------------------------- Workers of Ecuador state oil company, Petroecuador say the government is using results of a study it commissioned as a political tool to change the hydrocarbon laws. The workers added that the move may even result in the eventual privatization of the Company, said Business News Americas. Local paper El Universo cited the country's central bank president Mauricio Yepez as saying that the Company is losing as much as US$300 million per year. The figure was reportedly determined through a study conducted by Venezuela's PdVSA officials. Recently, Petroecuador workers staged a nationwide protest against the nature of the government's proposal to award contracts to private companies. According to them, such contracts seem like a step towards Petroecuador's privatization. PETROECUADOR: Losing US$300 Million a Year, Says Study ------------------------------------------------------ Ecuador state oil company Petroecuador is losing about US$300 million per year, said the country's central bank chief Mauricio Yepez, citing a government-commissioned study. However, the loss "has nothing to do with the efficiency of the company", a company source told Business News Americas. The study was done by officials of Venezuela's state oil firm Petroleos de Venezuela S.A. (PdVSA), hired by the World Bank and the International Monetary Fund. According to local newspaper El Universo, the loss was due to electricity generators and distributors' failure to pay Petroecuador transport arm, Petrocommercial. The source explained that the company is obliged to supply diesel to these companies, otherwise the country will suffer power cuts. In the meantime, generators claim that they cannot pay Petroecuador because they have not received payment from distributors, who also claim that they are not being paid by their clients. The report added that Ecuador president Lucio Gutierrez will consider the new information before approving hydrocarbon law reform aimed at improving Petroecuador. The energy ministry expects the congress to approve the modifications if they get the president's approval. ===================== E L S A L V A D O R ===================== MILLICOM INTERNATIONAL: Announces Subscriber Growth for the 2Q03 ---------------------------------------------------------------- - 28% annual growth in total subscribers to 4.5 million* - 25% annual growth in proportional subscribers to 3.1 million* - Best ever quarterly subscriber additions recorded in Asia Millicom International Cellular S.A. (MIC) (Nasdaq:MICC), the global telecommunications investor, announced Wednesday that in the second quarter of 2003 its worldwide operations in Asia, Latin America* and Africa added 223,121 net new cellular subscribers, resulting in an increase of over 5% from the total subscribers recorded at March 31 2003. On a proportional basis, 121,352 subscribers were added. At June 30, 2003, MIC's worldwide cellular subscriber base* increased by 28% to 4,471,835 cellular subscribers from 3,483,573 as at June 30, 2002. Particularly significant percentage increases were recorded in Ghana, Cambodia, Senegal and Vietnam. Sanbao Telecom recorded best ever net additions, adding 218,237 subscribers in the quarter, whilst MIC Africa recorded its best quarterly result for 2 years, adding 20,955 subscribers. Subscriber numbers for MIC Latin America were lower than for the previous quarter due to the removal of inactive, non-revenue generating subscribers in South America. At June 30, 2003, MIC had 3,083,955 proportional cellular subscribers*, an increase of 25% from the 2,472,960 proportional subscribers reported at June 30, 2002. Cellular Operations (i) Proportional Proportional Annua Total Total Annua (ii) (ii) lized Subs at Subs at lized Subs at Subs at Incre June 30, June 30, Incre June 30, June 30, ase 2003 2002 ase 2003 2002 Asia 1,444,201 1,038,880 39% 2,328,731 1,607,647 45% Latin 1,393,363 1,255,495 11% 1,798,128 1,597,531 13% America* Africa 246,391 178,585 38% 344,976 278,395 24% Total 3,083,955 2,472,960 25% 4,471,835 3,483,573 28% Cellular Ops* (i) All numbers and comparatives exclude divested operations (ii) Proportional subscribers are calculated as the sum of MIC's percentage ownership of subscribers in each operation. * Excluding El Salvador Within the 3,083,955 proportional cellular subscribers* reported at the end of the second quarter, 2,764,099 were pre-paid customers, representing a 31% increase on the 2,110,002 proportional prepaid subscribers* recorded at the end of June 2002. Pre-paid subscribers currently represent 90% of gross reported proportional cellular subscribers. Millicom International Cellular S.A. is a global telecommunications investor with cellular operations in Asia, Latin America and Africa. It currently has a total of 16 cellular operations and licenses in 15countries. The Group's cellular operations have a combined population under license (excluding Tele2) of approximately 382 million people. In addition, MIC provides high-speed wireless data services in five countries. MIC also has a 6.0% interest in Tele2 AB, the leading alternative pan-European telecommunications company offering fixed and mobile telephony, data network and Internet services to 17.7 million customers in 22 countries. The Company's shares are traded on the Luxembourg Bourse and the Nasdaq Stock Market under the symbol MICC. CONTACTS: Millicom International Cellular S.A., Luxembourg Marc Beuls, President and Chief Executive Officer Telephone: +352 27 759 101 Andrew Best, Shared Value Ltd, London Telephone: +44 (0) 20 7321 5022 URL: http://www.millicom.com ============= J A M A I C A ============= GRAINS JAMAICA: JFM Expresses Interest in Plant ----------------------------------------------- Grains Jamaica, a bankrupt Montego Bay rice processing plant, attracted the interest of Jamaica Flour Mills, a subsidiary of the American agro-industrial giant, Archer Daniel Midlands (ADM), reports The Jamaican Observer. JFM's CEO James Gill confirmed Tuesday that it is indeed interested in acquiring Grains Jamaica, which was established in the mid 1980s by American businessman, Bill Taylor, who died nearly three years ago. "Yes, we have shown an interest (in the plant)," Gill told the Business Observer. Grains Jamaica was placed in receivership last August by the Trade Board after the state-run agency won a $210-million judgment against the milling company for its failure to hand over the proceeds of American rice aid it had processed and sold on behalf of the government. The money, for an estimated 13,000 tons of rice that Grains Jamaica milled during the 1999/2000 fiscal year, should have been used to help finance the agriculture ministry's food tree crop rehabilitation project, which is being partially financed through America's PL480 food program. =========== M E X I C O =========== GRUPO IMSA: Obtains Financing for MXP960 Million, US$70 Million --------------------------------------------------------------- Grupo Imsa, S.A. de C.V. (NYSE:IMY) (BMV:IMSA) announced Wednesday that it has successfully obtained a multi-currency syndicated loan of 960 million Mexican pesos and 70 million U.S. dollars. The credit is payable over five years with an 18-month grace period. The part denominated in pesos is payable at an interest rate of TIIE plus 85 basis points, while the dollar- denominated portion bears interest at a rate of 105 basis points over six-month LIBOR for the first three years, with rate increases in the fourth and fifth years. Since Grupo Imsa's revenues are closely tied to the U.S. dollar, the Company used a swap to convert the 960 million pesos of the loan to 92.7 million dollars bearing interest at a rate of 110 basis points over six-month LIBOR. The resources obtained from the transaction will mainly be used to pay debt. The loan was structured by BankBoston and ING Capital. Marcelo Canales, Grupo Imsa's Chief Financial Officer explained, "This is the first peso-denominated syndicated loan in Grupo Imsa's history and represents a significant advance in our strategy to diversify our financing sources." Mr. Canales added, "We will use the resources from the transaction to prepay more expensive long-term debt and to pay off short-term debt, thus improving both the average life and cost of our debt." Grupo IMSA, a holding company, dates back to 1936 and is one of Mexico's leading diversified industrial companies. It operates in four core businesses: steel processed products; automotive batteries and related products; steel and plastic construction products; and aluminum and other related products. With manufacturing facilities in Mexico, the United States, and throughout Central and South America, Grupo IMSA currently exports to all five continents. In 2002 Grupo IMSA's sales reached US$2.6 billion, of which close to 55% was generated outside Mexico. Grupo IMSA shares trade on the Mexican Stock Exchange (IMSA) and, in the United States, on the NYSE (IMY). CONTACT: Grupo Imsa, S.A. de C.V. Marcelo Canales Phone: 52 (81) 8153-8349 Adrian Fernandez Phone: 52 (81) 8153-8433 Jose Luis Fornelli Phone: 52 (81) 8153-8416 Email: jfornell@grupoimsa.com ISPAT INLAND: Reaches Agreement With Pension Agency --------------------------------------------------- Ispat Inland Inc. reached agreement with the Pension Benefit Guaranty Corp. Wednesday regarding the funding of its pension obligations. The agreement came before today's scheduled expiration of a $160 million letter of credit that had been provided to the PBGC in 1998 to provide financial assurance with respect to Ispat Inland's pension plan. Under terms of the agreement, Ispat Inland contributed an additional $50 million to its pension trust today, agreed to make further contributions going forward and granted the PBGC $160 million security in certain assets. The letter of credit was allowed to expire, and won't be renewed. Since 1998, Ispat Inland has contributed more than $290 million into the trust to maintain the strength of its pension plan. Ispat Inland Inc. is a subsidiary of Ispat International N.V. (NYSE: IST), one of the largest steel producers in the world. The company manufactures a broad range of semifinished and finished flat and bar steel products and is one of the world's lowest-cost steel producers. In addition to Ispat Inland in East Chicago, Ind., USA, the company has major steelmaking facilities in Mexico, Trinidad, Canada, Germany and France. It markets its products to more than 55 countries worldwide. Ispat International is a member of the LNM Group, the world's second-largest steelmaker, which also operates in Algeria, Czech Republic, Indonesia, Kazakhstan and South Africa. PEMEX: Restarts Talks With Unions --------------------------------- Mexico's state oil company, Pemex, has restarted talks with unions regarding the Company's working conditions and medical care. Local paper El Norte says that the two parties would try to reach an agreement for the 2003-2005 period before the end of this month. STRM spokesperson said that they will discuss the matter of pay after conditions and medical care matters are resolved. Business News Americas says that four different labor groups in Pemex have made pay claims, but the claims have not yet been submitted. The talks were reportedly stalled by the involvement of some union leaders involved in campaigns for the recent elections. PG&E NEG: PG&E Corp. Reports Voluntary Chapter 11 Filings --------------------------------------------------------- PG&E Corporation (NYSE: PCG) reported Tuesday that, as expected, its PG&E National Energy Group, Inc. (PG&E NEG) unit and certain PG&E NEG subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Maryland, Greenbelt Division. As previously disclosed, PG&E Corporation does not expect that the outcome of PG&E NEG's bankruptcy proceedings will have a material adverse effect on the financial condition of PG&E Corporation, which has no material obligations to PG&E NEG. In May 2003, PG&E Corporation stated that the restructuring of PG&E NEG would inevitably be implemented through a Chapter 11 proceeding and that a bankruptcy filing could take place as early as the second quarter of 2003. Although PG&E Corporation worked hard and in good faith for many months to structure an agreement that would allow PG&E Corporation to retain ownership of PG&E NEG for the benefit of the Corporation's shareholders, those efforts were ultimately unable to produce a consensus among creditors. The Plan of Reorganization filed by PG&E NEG provides that PG&E Corporation will have no equity interest in PG&E NEG or any of its subsidiaries after its Chapter 11 reorganization plan is implemented. The entities filing for Chapter 11 reorganization Tuesday are: -- PG&E National Energy Group, Inc.; -- PG&E Energy Trading Holdings Corporation; -- PG&E Energy Trading - Gas Corporation; -- PG&E Energy Trading - Power Corporation; -- PG&E ET Investments Corporation; and -- USGen New England, Inc. Other PG&E NEG subsidiaries, including PG&E Gas Transmission Northwest and numerous independent electric producers, are not filing for Chapter 11 reorganization. It is expected that day-to- day operations at these affiliates will be largely unaffected by Tuesday's Chapter 11 filings. PG&E Corporation has no equity infusion agreements, material contingent liabilities, or tax-sharing agreement with PG&E NEG. The Corporation also does not expect the outcome of PG&E NEG's bankruptcy to have any effect on its utility subsidiary, Pacific Gas and Electric Company, or the utility's reorganization plan and proposed settlement agreement to end its Chapter 11 bankruptcy. "Today's Chapter 11 filings are the next step forward for PG&E NEG and its creditors, and they advance the Corporation's goal of resolving uncertainties we have been managing since the onset of the energy crisis," said Robert D. Glynn, Jr., Chairman, CEO and President of PG&E Corporation. "Moving forward, PG&E Corporation will continue to focus on several critical objectives, including implementing the proposed settlement agreement to end the utility's Chapter 11 case, maximizing the value of our utility operations, and strengthening our balance sheet." PG&E NEG: S&P Downgrades Subsidiaries to 'D' Due to Bankruptcy -------------------------------------------------------------- Standard & Poor's Ratings Services lowered Tuesday its corporate credit rating on two of PG&E National Energy Group Inc.'s (NEG) subsidiaries, PG&E Energy Trading Holdings (ETH) and USGen New England Inc. (USGenNE), to 'D' from 'C' and removed the ratings from CreditWatch. "We lowered the ratings on ETH and USGenNE and removed the ratings from CreditWatch, following NEG's announcement on Tuesday that it has voluntarily filed petitions for protection under Chapter 11 of the federal bankruptcy code," said Standard & Poor's credit analyst Arleen Spangler. At the same time, Standard & Poor's lowered its corporate credit ratings on another NEG subsidiary, PG&E Gas Transmission Northwest (GTN), to 'CC' from 'CCC' and removed the rating from CreditWatch. The outlook is negative. GTN's rating was lowered to reflect a differential between a rating on a ring-fenced entity and its ultimate parent; in this case, NEG. While GTN benefits from the legal protection of various structural enhancements that allow Standard & Poor's to rate it primarily on its own merits, it guarantees several obligations of its energy trading affiliate, which, if demanded may be difficult to fund and may result in GTN seeking protection from its creditors. The ratings on Indiantown Cogeneration Funding Corp. and Selkirk Cogen Funding Corp. are not affected by the rating action on NEG because these project financings are structured as bankruptcy- remote entities and are not 100% owned by NEG. Therefore, the incentives to consolidate them in a bankruptcy of NEG is low. Analyst: Arleen Spangler New York Phone: (1) 212-438-2098 ================= V E N E Z U E L A ================= PDVSA: Natural Gas Supplies Not Enough For Region's Needs --------------------------------------------------------- Natural gas supplies from Venezuela state oil company PdVSA are 20 percent below the region's industrial needs, said Corporacion Venezolana de Guayana President Francisco Rangel. The country cannot meet natural gas demand in the southeastern industrial part of the country, says Bloomberg. "At this time, we are receiving 423 million cubic feet of natural gas a day, which is 106 million cubic feet less than what we need," Mr. Rangel told Venpres, the state news agency. "Petroleos de Venezuela has just assured us that before year-end, they will boost natural gas output to the 529 million cubic feet that we require," he added. PDVSA: Commences Sweeping Boardroom Changes ------------------------------------------- Venezuela state oil enterprise Petroleos de Venezuela S.A. is having a major boardroom shakeup, relates local news source Vheadline.Com, citing exclusive sources. PdVSA president Ali Rodriguez was quoted by El Universal as saying, "These are normal movements; people are always rotated after a time." The two sources report the Luis Marin is replacing Oswaldo Contreras as head of PdVSA's U.S. unit CITGO. PdVSA Puerto La Cruz executive Nelson Martinez will now head the company's eastern operations. Bitumenes del Orinoco (BITOR) president Alfredo Riera will be retiring, says Vheadline. In the meantime, there are no reports on who will replace Mr. Riera at BITOR. Vheadline said that Bariven president Mari Lizardo, Intevep president Luis Andres Rojas and PDVSA Gas director Luis Aray are among the possible candidates for the post. *********** 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. 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