/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030806.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Wednesday, August 6, 2003, Vol. 4, Issue 154 Headlines A R G E N T I N A CENTRO PRIVADO: Starts Reorganization Process CHOIZ: Seeks Court Permission For Reorganization CODEPSRL: To Hold Informative Assembly Today EMPRESA DE OMNIBUS: Court Approves `Concurso' Motion EXPRESO MASER: Claims Authentication Period Ends Friday EZEMAR: Court Orders Liquidation INDUSTRIA TALVARI: Court Authorizes Reorganization INSTELEC ELECTRONICA: Court Assigns Receiver For Reorganization INTEGRALCO: Files Motion For "Concurso Preventivo" LEBREVA: Court Approves Motion For "Concurso Preventivo" MJABCJSH: Seeks Court OK for Voluntary Reorganization REPSOL YPF: Court Bans Well Drilling SOCIEDAD COMERCIAL: Registration Period Ends Friday TRASO: Credit Verification Lasts Until Friday Only WESLY: Bankruptcy Proceeds With Claims Verification Process B E R M U D A ALPHASTAR: Non-Copliance Prompts Nasdaq Delisting GLOBAL CROSSING: Releases Operating Results for June 2003 LORAL SPACE: Unsecured Creditors Brace for Bad News B R A Z I L CEMIG: To Seek BRL240 Mln In Loans to Settle MAE Payments EMBRATEL: Wins Infraero's Bid GERDAU: Predicting Stable Domestic Sales In Short Term TELEMAR: Merrill Ups Recommendation To `Buy' C H I L E ENDESA CHILE: Increases Net Income in the 1H03 By 28.4% C O L O M B I A ALIANZA SUMMA: Narrows Losses Despite Economic Conditions M E X I C O CFE: To Confront $1.08B Debt Maturities by Year-End INDUSTRIAS UNIDAS: Outlook Revised to Negative ISPAT MEXICANA: Hopes To Reach Agreement With Strikers Soon SATMEX: Resolves Conflicts With Telesat VITRO: Reclassifies 2Q03, Balance Sheet Accounts VITRO: Expands Business Relationship With Casa Herradura T R I N I D A D & T O B A G O CARONI: Retrenched Workers Upset Over VSEP Payments U R U G U A Y UTE: To Find Other Alternatives To Invalidate Power Contracts *IMF Concludes 2003 Article IV Consultation with Uruguay V E N E Z U E L A PDVSA FINANCE: Monthly Collections Higher than Before Stoppage PDVSA FINANCE: Presents Financial Statements to SEC - - - - - - - - - - ================= A R G E N T I N A ================= CENTRO PRIVADO: Starts Reorganization Process --------------------------------------------- La Rioja-based Centro Privado de Maternidad y Ginecologia S.R.L. starts its reorganization process following approval of its motion for "Concurso Preventivo". The Civil and Commercial Tribunal of La Rioja handles the Company's case. Local news portal Infobae relates that the court assigned Mr. Lino Jorge Guardia as receiver for the reorganization. The Court expects the receiver to file the individual reports on September 25 this year, followed by the general report on October 24. CONTACT: Centro Privado de Maternidad y Ginecologia S.R.L. 9 de Julio 569 La Rioja Lino Jorge Guardia Barrio Habitat La Rioja CHOIZ: Seeks Court Permission For Reorganization ------------------------------------------------ Court No. 9 of Buenos Aires received a motion for "Concurso Preventivo" from local company, Choiz S.R.L. recently. Local news portal Infobae said that the motion was filed "Propia Instancia", which means that that the Company is voluntarily seeking to reorganize itself. In the meantime, the report did not indicate whether the court, which is assisted by the city's Clerk No. 17, has approved the motion. CONTACT: Choiz S.R.L. Paysandu 1862 Buenos Aires CODEPSRL: To Hold Informative Assembly Today -------------------------------------------- The reorganization of Neuquen-based company CO. DE. P. S.R.L. proceeds with an informative assembly today, August 6. The meeting comes after the credit verification process and the individual and general reports have been presented to the court. An earlier report from local news source Infobae said that the Company's reorganization came after the Civil and Commercial Tribunal of Neuquen approved the company's motion for "Concurso Preventivo." Court No. 4 of Neuquen handles the company's case. EMPRESA DE OMNIBUS: Court Approves `Concurso' Motion ---------------------------------------------------- Empresa de Omnibus Sierras Cordobesas S.A. received permission to start its reorganization as the Civil and Commercial Tribunal of Rio Cuarto approved its motion for "Concurso Preventivo". Court No. 5 of Rio Cuarto handles the Company's case, according to local news source, Infobae. The informative assembly will take place on September 25 this year. EXPRESO MASER: Claims Authentication Period Ends Friday ------------------------------------------------------- The credit authentication period for the bankruptcy of Buenos Aires company Expreso Maser S.A. ends on Friday, August 8. Creditors must submit their claims to the receiver, Mr. Jorge Tomas Byrne, for verification before the deadline. Court No. 24 of Buenos Aires, which handles the Company's case, gave Mr. Byrne up to October 10 this year to file the required individual reports. The Court also set November 10, 2003 as the deadline for the general report. CONTACT: Jorge Tomas Byrne Piedras 1319 Buenos Aires EZEMAR: Court Orders Liquidation -------------------------------- Argentine company Ezemar S.A. will be liquidated as ordered by the Civil and Commercial Tribunal of San Isidro. Court No. 11, which handles the Company's case, ruled that the Company should undergo "Quiebra Decretada". The process continues with the verification of credit claims. Creditors must submit their claims to the receiver, Mr. Jose Guillermo Lego, before August 18 this year. The Court expects the individual reports to be filed by September 30, followed the general report on November 5 this year. The report, however, did not mention whether the court has chosen the date for an informative assembly. CONTACT: Ezemar S.A. Nazarre 1199 Pilar, San Isidro Jose Guillermo Lego L Martinez 276 Martinez, San Isidro INDUSTRIA TALVARI: Court Authorizes Reorganization -------------------------------------------------- Industria Talvari Argentina S.A. received court permission to start its reorganization, relates local news source Infobae. The Civil and Commercial Tribunal of San Martin approved the Company's motion for "Concurso Preventivo" recently. Court-designated receiver Mr. Oscar Rojas Muniz will verify claims until September 12 this year. After that, he will prepare the individual reports, which are due for filing on November 7 this year. The court expects the general report to be filed on February 6 next year. CONTACT: Oscar Rojas Muniz Ayacucho 18 San Martin INSTELEC ELECTRONICA: Court Assigns Receiver For Reorganization --------------------------------------------------------------- Buenos Aires Court No. 16 assigned Mr. Abel Gomez Meana as receiver for the reorganization process local company Instelec Electronica S.R.L. is undergoing. Infobae reports that creditors must present their claims to the receiver for authentication before September 3 this year. The Court set October 25, 2003 as the deadline for the individual reports, while the general is report must be filed by November 26. The report added that the general assembly will be on July 7, 2004. Clerk No. 32 assists the court on the case. CONTACT: Abel Gomez Meana Roque Saenz Pena 1219 Buenos Aires INTEGRALCO: Files Motion For "Concurso Preventivo" -------------------------------------------------- Buenos Aires-based Integralco S.A. is seeking court authorization to start its reorganization. Infobae reports that the Company has submitted its motion for "Concurso Preventivo" voluntarily. The motion was filed at the city's Court No. 23, which is assisted by Clerk No. 46. The report, however, did not reveal whether the court has approved the petition. CONTACT: Integralco S.A. Avenida del Libertador 774 Buenos Aires LEBREVA: Court Approves Motion For "Concurso Preventivo" -------------------------------------------------------- Court No. 20 of Buenos Aires approved a motion for "Concurso Preventivo" filed by local company Lebreva S.A. recently. The Company will now start its reorganization process. With assistance from Clerk no. 40, the court assigned Ms. Susana Graciela Roiter as receiver for the reorganization. The deadline for the authentication of credit claims is September 29 this year. The Court ordered the receiver to file the individual reports, which are to be prepared after the verification period, on November 10 this year. The general report comes due on December 23. CONTACT: Susana Graciela Rioter Marcelo T de Alvear 1430 Buenos Aires MJABCJSH: Seeks Court OK for Voluntary Reorganization ----------------------------------------------------- Maldonado Jorge Ariel, Bruno Carlos Jorge S.H. (MJABCJSH), which is domiciled in Buenos Aires, has voluntarily filed a motion for "Concurso Preventivo", asking the court for permission to start its reorganization. Court No. 24 of Buenos Aires handles the Company's case with assistance from Clerk No. 48, local news portal Infobae relates, without revealing the court's stance on the matter. CONTACT: Maldonado Jorge Ariel, Bruno Carlos Jorge S.H. Avenida Corrientes 1670 Buenos Aires REPSOL YPF: Court Bans Well Drilling ------------------------------------ The government of Argentina's Mendoza province was ordered to stop from giving permission to Spanish oil company Repsol-YPF to drill more wells in the Llancanelo lagoon, reports Business News Americas. The order issued by a local court grants an injunction brought against the Mendoza government by an environmental group known as Oikos, according to a Repsol-YPF source. The court ruled that the Mendoza government must define the borders of the Llancanelo protected reserve area before Repsol- YPF can be permitted to drill any more wells, the source said. Repsol-YPF was scheduled to restart drilling in February after the Mendoza government approved plans to drill five of eight proposed wells, but the environmental group brought the injunction to stop the work from going ahead. SOCIEDAD COMERCIAL: Registration Period Ends Friday --------------------------------------------------- Holders of notes issued by Sociedad Comercial del Plata S.A., who wish to participate at the noteholder's meeting, have until Friday, August 8, to register. Earlier, the Company issued a notice informing noteholders to register at its Buenos Aires office. At the registry, noteholders are required to present proof of possession of the company's notes. According to the notice, a certificate issued by the trustee, the registration agent or the issuer with the corresponding individualization, balance account statement issued by the registration agent, or bank certificate of custody of the notes will also be valid. Other documents that qualify are bank certificates evidencing an interest in the global note, statement of custody accounts or certificates evidencing deposits in escrow or evidence of note holding. The noteholder's meeting will be on October 10 this year at the following address: Camara de Sociedades Anonimas, Florida 1, 3rd Floor, City of Buenos Aires, Argentina. Noteholders may be present at the Noteholders Meeting either personally or represented by an attorney-in-fact (adequately empowered), according to the announcement. CONTACT: Sociedad Comercial del Plata S.A. 2nd Floor Marcelo T. de Alvear 883 Buenos Aires TRASO: Credit Verification Lasts Until Friday Only -------------------------------------------------- The receiver for the reorganization process of Traso S.R.L. will verify creditor's claims until Friday, August 8 only. The end of the verification period means that the creditor will now prepare the individual reports, which are due for submission on October 8 this year. Last month, Infobae reported that the Civil and Commercial Tribunal of San Miguel de Tucuman approved the Company's motion for "Concurso Preventivo". The Court expects the receiver to file the general report on November 13 this year. CONTACT: Traso S.R.L. Maipu 471 San Miguel de Tucuman Tucuman WESLY: Bankruptcy Proceeds With Claims Verification Process ----------------------------------------------------------- The bankruptcy process Argentine company Wesly S.A. is undergoing proceeds with the verification of credit claims. The designated receiver for the Company's case is Ms. Rosa Gersovich, to whom creditors must submit their claims for authentication. Court No. 3 of Buenos Aires, which handles the Company's case, ruled that the individual reports must be filed by November 10 this year. Local news portal Infobae relates that the general report must be filed by November 21 this year. However, the report did not indicate whether the court has chosen the date for an informative assembly. CONTACT: Rosa Gerscovich Tucuman 540 Buenos Aires ============= B E R M U D A ============= ALPHASTAR: Non-Copliance Prompts Nasdaq Delisting ------------------------------------------------- AlphaStar Insurance Group Limited (Nasdaq: ASIGE) reported Monday that the Nasdaq Listing Qualifications Department notified the Company on August 1, 2003 that its securities will be delisted at the opening of business on Tuesday, August 5, 2003. The reason for the delisting is the Company's inability to demonstrate full compliance with the requirements for continued listing on The Nasdaq Small Cap Market. In particular, the Company has failed to timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003. The Company therefore is not in compliance with the filing requirements for continued listing set forth in NASD Marketplace Rule 4310 c(14), which requires that Nasdaq issuers timely file their periodic reports in compliance with the reporting obligations under the federal securities laws. The Company was further informed that its shares will not be immediately eligible for trading on the OTC Bulletin Board due to these same filing deficiencies. Stephen A. Crane, the Company's Chairman, President and Chief Executive Officer, commented that: "We believe that the current regulatory environment, together with the Company's publicly announced plans to divest itself of a major subsidiary and its deteriorating overall results, have delayed completion of our periodic reports. We will continue to work with the auditors to try to bring this gridlock to an end." As of the opening of business on April 22, 2002, the Company's trading symbol, "ASIG", was amended to include the fifth character "E" to denote the Company's filing delinquency. AlphaStar Insurance Group Limited is a Bermuda-domiciled holding company with subsidiaries in the United States and United Kingdom. Among its subsidiaries are a property-casualty insurance company, managing general agencies, and reinsurance intermediaries. GLOBAL CROSSING: Releases Operating Results for June 2003 --------------------------------------------------------- Global Crossing filed Monday a Monthly Operating Report (MOR) with the U.S. Bankruptcy Court for the Southern District of New York, as required by its Chapter 11 reorganization process. Results reported in the June 2003 MOR are unaudited. In June 2003, Global Crossing reported consolidated revenue of approximately $252 million. Consolidated access and maintenance costs were reported as $168 million, while other operating expenses were $81 million. "Our business showed steady growth in several areas during June, including gains in revenue and EBITDA. Additionally, June was a strong month for cash performance, with healthy cash collections. We ended June with $559 million in consolidated cash, a $22 million increase from the previous month," noted John Legere, Global Crossing's CEO. "Our company remains strong, our customers and employees have stayed loyal, and we continue to look positively toward our emergence from Chapter 11 as a bright new beginning for Global Crossing." Global Crossing's consolidated cash balance of approximately $559 million as of June 30, 2003 was comprised of approximately $222 million in unrestricted cash (including $67 million of cash held by Global Marine) and $337 million in restricted cash. Consolidated EBITDA was reported at $3 million. The consolidated net loss for June 2003 was $99 million. The net loss increase from May is in part due to higher professional fees and one-time restructuring costs. As discussed below, the reported June 2003 depreciation and amortization of $95 million, and therefore the June operating loss and net loss, would have been reduced substantially if the financial statements in the June MOR had reflected the tangible asset impairment anticipated by Global Crossing. As previously reported, in connection with the independent audits being conducted for 2001 and 2002, Global Crossing concluded that its Global Marine subsidiary should no longer be classified as a discontinued operation since the newly emerged Global Crossing expects to retain this business. As a result, Global Marine was reclassified into Global Crossing's continuing operations beginning with the May MOR. When historical financial statements are filed for 2001 and 2002 Global Marine will be presented as continuing operations for all periods presented. The April financial information in the tables below have been amended from previous press releases to include Global Marine as part of continuing operations to enhance comparability with June financial results. MOR RESULTS MONTHLY RESULTS APRIL THROUGH JUNE 2003 MONTH CONSOLIDATED CONSOLIDATED NET INCOME REVENUE EBITDA (LOSS) June 2003 $252 million $3 million $(99) million May 2003 $247 million $0 million $(86) million April 2003 $241 million $(10) million $(75) million Notes The MOR reports revenue and cash balances according to generally accepted accounting principles in the United States of America (US GAAP). US GAAP revenue includes revenue from sales of capacity in the form of indefeasible rights of use (IRUs) that occurred in prior periods, recognized ratably over the lives of the relevant contracts. Beginning on October 1, 2002, Global Crossing ceased recognizing revenue from exchanges of leases of capacity. Consolidated EBITDA is defined as operating income/(loss) from the consolidated statements of operations, less depreciation and amortization expense. EBITDA is not a measurement under US GAAP and may not be similar to EBITDA measures of other companies. Management believes that EBITDA is a relevant indicator of operating performance, especially in a capital-intensive industry such as telecommunications, since it excludes items that are not directly attributable to ongoing business operations. In addition, the depreciation and amortization of $95 million for the month of June 2003, and therefore the June operating loss, would have been reduced substantially if the financial statements in the June MOR had reflected the tangible asset write-down described below. Pursuant to Regulation G, the following table provides a reconciliation of consolidated EBITDA, which is a non-GAAP financial metric, to net income, which is the most directly comparable GAAP measure. MONTH CONSOLIDATED DEPRECIATION OTHER REORGANIZATION NET EBITDA AND INCOME ON ITEMS- INCOME AMORTIZATION (LOSS) GAIN (LOSS) (LOSS) June 2003 $3 $95 $(3) $(4) $(99) million million million million million May 2003 $0 $95 $13 $(4 $(86) million million million million million April 2003 $(10) $98 $24 $9 $(75) million million million million million The information contained in this press release is qualified in its entirety by reference to the MORs for the months of February 2002 through June 2003, including the footnotes to the financial statements contained therein, copies of which are available through the U.S. Bankruptcy Court for the Southern District of New York and on Global Crossing's Web site http://www.globalcrossing.com/pdf/investors/inv_mor_june_03.pdf. These MORs have been prepared pursuant to the requirements of the Bankruptcy Code and the unaudited consolidated financial statements contained in these MORs do not include all footnotes and certain financial presentations normally required under GAAP. In addition, any revenues, expenses, realized gains and losses, and provisions resulting from the reorganization and restructuring of Global Crossing are reported separately as reorganization items in these MORs. As discussed more fully in the footnotes to the financial statements contained in the MORs, Global Crossing has not yet filed its Annual Report on Form 10-K for the year ended December 31, 2001. On November 25, 2002, the United States Trustee appointed Martin E. Cooperman, a partner of Grant Thornton LLP, as the Examiner in Global Crossing's bankruptcy proceedings. In general, the Examiner's role is limited to reviewing the financial statements of the Global Crossing companies in bankruptcy for the fiscal years ended December 31, 2001 and 2002 and earlier periods if any restatement of those periods is necessary. As part of his role, the Examiner, with the assistance of Grant Thornton LLP, will audit any revised financial statements and issue a report as to such financial statements. Separately, on January 8, 2003, Grant Thornton was appointed as independent auditors of Global Crossing effective as of November 25, 2002. The Examiner filed interim reports with the Bankruptcy Court on February 24, 2003 and June 30, 2003. Certain matters relating to Global Crossing's accounting for, and disclosure of, concurrent transactions for the purchase and sale of telecommunications capacity between Global Crossing and its carrier customers are being investigated by the Securities and Exchange Commission (SEC) and other governmental authorities. In addition, the U.S. Department of Labor is conducting an investigation into the administration of Global Crossing's benefit plans. These and other investigations are described more fully in footnote one to the financial statements contained in the June MOR. Any changes to the financial statements resulting from any governmental investigations and adjustments arising out of the 2001 and 2002 financial statement audits could materially affect the unaudited consolidated financial statements contained in the MORs and the information presented in this press release. On October 21, 2002, Global Crossing announced that it would restate certain financial statements previously filed with the SEC. These restatements, which are more fully described in footnote one to the financial statements contained in the June MOR, will record exchanges between carriers of leases of telecommunications capacity at historical carryover basis, resulting in no recognition of revenue. Reflecting this accounting treatment, the June MOR excludes amounts previously recognized as revenue over the lives of the lease contracts governing these capacity exchanges. The restatements have no impact on cash flow. As previously announced, Global Crossing's net loss for the three months ended December 31, 2001, which has not yet been reported pending the completion of the audit of financial statements for 2001, is expected to reflect the write-off of the remaining goodwill and other intangible assets, which total approximately $8 billion. Furthermore, as previously disclosed, Global Crossing has determined that it will write down its tangible assets in light of the terms contained in the previously announced agreement with Hutchison Telecommunications and Singapore Technologies Telemedia, and the bankruptcy filings of Asia Global Crossing and its subsidiary, Pacific Crossing Ltd. Global Crossing has concluded that the tangible asset impairment will be recorded in the fourth quarter of 2001 and will approximate at least $7 billion, an estimate that excludes any amounts attributable to the restatement of exchanges of capacity leases described above and excludes any impairment attributable to the assets of Asia Global Crossing and its subsidiaries, which Global Crossing deconsolidated effective November 18, 2002. The financial information included within this press release and the June MOR reflects the restatement of exchanges of capacity leases as described above and the $8 billion write-off of all of the goodwill and other identifiable intangible assets, but does not reflect any write-down of tangible asset value. Accordingly, the net loss of $99 million for the month of June 2003 would have been reduced substantially if the financial statements in the June MOR had reflected the reduction in depreciation and amortization expense resulting from this tangible asset write- down. The write-off of the intangible assets and the write-downs of tangible assets are described more fully in the June MOR. ABOUT GLOBAL CROSSING Global Crossing provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. On January 28, 2002, Global Crossing Ltd. and certain of its subsidiaries (excluding Asia Global Crossing and its subsidiaries) commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court) and coordinated proceedings in the Supreme Court of Bermuda (Bermuda Court). On the same date, the Bermuda Court granted an order appointing joint provisional liquidators with the power to oversee the continuation and reorganization of the Bermuda-incorporated companies' businesses under the control of their boards of directors and under the supervision of the Bankruptcy Court and the Bermuda Court. Additional Global Crossing subsidiaries commenced Chapter 11 cases on April 23, August 4 and August 30, 2002, with the Bermuda incorporated subsidiaries filing coordinated insolvency proceedings in the Bermuda Court. The administration of all the cases filed subsequent to Global Crossing's initial filing on January 28, 2002 has been consolidated with that of the cases commenced on January 28, 2002. Global Crossing's Plan of Reorganization, which was confirmed by the Bankruptcy Court on December 26, 2002, does not include a capital structure in which existing common or preferred equity will retain any value. On November 18, 2002, Asia Global Crossing Ltd., a majority-owned subsidiary of Global Crossing, and its subsidiary, Asia Global Crossing Development Co., commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda, both of which are separate from the cases of Global Crossing. Asia Global Crossing has announced that no recovery is expected for Asia Global Crossing's shareholders. Asia Netcom, a company organized by China Netcom Corporation (Hong Kong) on behalf of a consortium of investors, has acquired substantially all of Asia Global Crossing's operating subsidiaries except Pacific Crossing Ltd., a majority-owned subsidiary of Asia Global Crossing that filed separate bankruptcy proceedings on July 19, 2002. Global Crossing no longer has control of or effective ownership in any of the assets formerly operated by Asia Global Crossing. Please visit www.globalcrossing.com for more information about Global Crossing. CONTACTS: GLOBAL CROSSING: Press Contacts Tisha Kresler + 1 973-937-0146 PR@globalcrossing.com Kendra Langlie Latin America + 1 305-808-5912 LatAmPR@globalcrossing.com Mish Desmidt Europe + 44 (0) 7771-668438 EuropePR@globalcrossing.com Analysts/Investors Contact Ken Simril + 1 310-385-3838 investors@globalcrossing.com LORAL SPACE: Unsecured Creditors Brace for Bad News --------------------------------------------------- Unsecured creditors of Loral Space and Communications are now taking measures in preparation for a potentially lengthy process that will determine what fraction of their investments in the bankrupt company can be recouped. According to Satellite News, creditors have thus far, picked a committee, chosen Jefferies Group as their financial advisor, and named the law firm Akin Gump Strauss Hauer & Field as their legal advisor. Elected to the creditors committee are two hedge funds, MHR Fund Management and P. Schoenfeld Asset Management, as well as the investment firm Mackay Shields, Finmeccanica's Italian satellite manufacturing arm Alenia Spazio, and Mitsubishi Electric, a manufacturer of equipment used in space development and satellite communications. The creditor's trustees, Bank One Trust and HSBC Bank, were pre- determined by contract language when the Loral's indentures were underwritten. Both Bank One and HSBC also are on the creditors committee. With seasoned bankruptcy professionals now positioned to aid the creditors, they are readying themselves for Loral's submission of a plan of reorganization. Once a plan is submitted, the creditors and other stakeholders in the bankruptcy proceedings will be able to respond, says Satellite News. =========== B R A Z I L =========== CEMIG: To Seek BRL240 Mln In Loans to Settle MAE Payments --------------------------------------------------------- Brazilian Development Bank (BNDES) lent Minas Gerais state power company Cemig some money to pay wholesale energy auction market (MAE) financial settlement, says Business News Americas. The BNDES lent the entire BRL335 million (today US$109mn) to cover first-quarter MAE payments but lent only BRL176.5 in the second quarter, leaving Cemig to obtain short-term loans to the tune of BRL240 million to cover the rest. EMBRATEL: Wins Infraero's Bid ----------------------------- Last Wednesday, July 30, Embratel and NT Software won on a jointly basis the bid launched by Empresa Brasileira de Infra- Estrutura Aeroportu ria (Infraero) for the supply of a high- capacity (broadband) ATM and Frame Relay network interconnecting all the 65 airports managed by said company, its main office building (located in Bras�lia) and 27 air traffic groupings spanned all over the country. The 60-month contract tops R$ 84 million. In addition to the main network (lot 1), Embratel won the 0800 service lot as well, to be made available to Infraero for the next 60 months, in the total amount of R$ 1,2 million. In this partnership NT Software will be in charge of managing the services. "We already were the providers of Infraero's current network", explains Maria Teresa Lima, Embratel's director of Corporate Sales- Government. "Embratel was given the best technical rates among all competitors, which proves once more our top quality, experience and excellence edges vis-�-vis the SLA (Service Level Agreement) levels", points out the executive. Embratel's competitors in this bid were a consortium made up of Brasil Telecom, Telef�nica and P�gasus led by the latter, in addition to Comsat and Intelig. Embratel is the premium telecommunications provider in Brazil, offering a wide range of telecommunication services, such as advanced voice, high-speed data transmission, internet, data communication by satellite and corporate networks. The company is national leader in data and internet services, in a privileged position to become the Latin American carrier with an all- distance network. Embratel network has national coverage with almost 17,500 miles of optic cables, representing around one million miles of fiber optics. CONTACT: EMBRATEL Advertising, Press and Public Relations Department: Further information: (02121) 2121 7837 / 2121 6291 Fax: (02121) 2121 7791 Mid-West- Phone: (02161) 242-9058 / 2845 / 916-9188 Contact: Flavio Resende E-mail: cmsocial@embratel.net.br Embratel on the internet: www.embratel.com.br GERDAU: Predicting Stable Domestic Sales In Short Term ------------------------------------------------------ Brazilian long steelmaker Gerdau expects sales in the domestic market to remain stable in the short term, Business News Americas reports, citing CFO Osvaldo Schirmer. The executive, however, told analysts during a teleconference that exports are expected to grow. Due to sluggish economic growth at home, Gerdau increased exports in the second quarter. Compared to the first quarter of this year, sales volumes in Brazil fell 6.5% to 798,200t in the second quarter, while export volumes jumped 20.6% to 792,900t. "There is no space for price increases [on the domestic market because of low demand]," said the executive, who added that international prices are forecast to rise. Gerdau posted a net profit of BRL262 million (currently US$90.3mn) for the second quarter, up 54% compared to BRL170 million in the second quarter of 2002. TELEMAR: Merrill Ups Recommendation To `Buy' -------------------------------------------- Merrill Lynch upgraded its recommendation on Telemar, Brazil's largest fixed line operator, to `buy' from `neutral,' reports Agencia Estado. The US investment bank said in a statement that Telemar shares have a potential upside of 35% from Friday's $10.45 close. Telemar should be propped up by local phone charge increase and fresh revenues from long distance and data transmission, Merrill said. ========= C H I L E ========= ENDESA CHILE: Increases Net Income in the 1H03 By 28.4% ------------------------------------------------------- - Operating income improved by 2.5% following better results in Argentina, Colombia and Chile. - The company's financial debt declined by approximately US$ 419 million. _ As part of its financial strengthening plan, the company managed to refinance US$ 743 million of bank debt over five years and then placed US$ 600 million of long-term bonds to refinance other debts. Endesa Chile, a subsidiary of Enersis, produced a net income of Ch$ 47,903 million in the first half of this year, implying a 28.4% increase over the Ch$ 37,317 million produced in the same period of 2002. Among the aspects most influencing this improvement were the growth in operating income, the fall in financial debt, the refinancing of bank debt over five years and lower financial expenses as a result of the company's lower debt load. OPERATING INCOME Operating income in the first half increased by 2.5% to Ch$180,831.million, i.e. Ch$ 4,442 million more than that in the first half of 2002. This was the result of improved operating results in Chile, Argentina and Colombia. NON-OPERATING RESULT The non-operating result for the first half also improved by 22.4% from a loss of Ch$ 116,712 million in 2002 to a loss of Ch$ 90,614 million this year. The reduced loss is basically explained by a fall in financial expenses, a better result from exchange differences and price-level restatements and higher income on investments in related companies. This was partially offset by higher net non-operating expenses. FINANCIAL PLAN AND SALE OF ASSETS Endesa Chile has successfully complied with the principal points set out in its financial strengthening plan and has repaid all its loans punctually and on the agreed terms. In May, the company signed bank loan refinancing agreements covering its maturities due in 2003 and 2004 amounting to a total of US$ 743 million. The new loan has an interest rate of Libor + 3%, matures in May 2008 and carried a 30-month grace period. Later, on July 23, 2003, Endesa Chile successfully placed an unsecured bond issue for a total de US$ 600 million. The transaction was structured in two tranches, the first amounting to US$ 400 million expiring in 2013 with an interest rate of 8.3 % and the second for US$ 200 million expiring in 2015 with an interest rate of 8.6 %. The proceeds of this issue are to be used to refinance liabilities, thus extending maturities and providing a clear improvement in the debt profile. In addition to the above were the sale of transmission assets on Chile's Northern Grid system (SING) for US$ 110 million; the sale of the assets of the Canutillar plant for US$ 174 million; the repayment of the debt of the subsidiary Empresa El�ctrica Pehuenche S.A. amounting to US$ 170 million of yankee bonds, and lastly the disposal of Infraestructura Dos Mil S.A. for UF 2,305,507 (approximately US$ 55 million) which also allowed the deconsolidation of UF 9,011,000 of debt (close to US$ 220 million). INVESTMENTS Of the company's investments, the Ralco plant, whose start-up is planned for the second half of 2004, was 87.94% advanced in its construction. Concerning the relocation agreements, Endesa Chile sought the application of the Electricity Law, which provides for the appraisal of the lands by a Commission of Wise Men, in view of the refusal by four Pehuenche owners of the company's offer to exchange land titles. The company has recently deposited the legal indemnity established by this Commission, with the competent court. TARIFFS AND LEGISLATION IN CHILE In Chile, the Alto Jahuel monomic node price taking effect from May 1, 2003 was increased by 3.5% in US dollar terms compared to that set in October 2002. This rise, although welcomed positively, still does not compensate the unjustified reductions made in earlier revisions. The company hopes this is the beginning of a recovery period for prices in order for the investments necessary for assuring supplies to be viable. Endesa Chile has assumed an active role in defining jointly with other generating companies an agreed proposal in the context of the public debate generated by the "Short Law" covering transmission systems remuneration. The company expects that the proposal will serve as a basis for freeing up this debate and for establishing as soon as possible the necessary corrections to the toll calculation scheme. Endesa Chile has also insisted with the regulatory authorities that the "Short Law" process is favorable for resolving the negative effect on investment in generation produced by the modification of clause 99 bis of the law and the promulgation of Resolution 88 which forces generators to be responsible for the supply requirements of distributors without contract and at a regulated price that provides insufficient signs for undertaking new projects. =============== C O L O M B I A =============== ALIANZA SUMMA: Narrows Losses Despite Economic Conditions --------------------------------------------------------- Colombian airline group Alianza Summa stays in the red with CLP128.6 billion (US$44.4 million) in losses for the first six months of 2003. The results were an improvement from the results during the same period last year, which according to Reuters News was a CLP104.3 trillion loss. The Company posted losses despite tagging CLP980.7 billion in sales for the said period. The report said the war in Iraq, the currency depreciation, and the rise in fuel and insurance costs affected the Company's results. The group, which is composed of Colombian airlines Avianca, Aces and SAM, said last year that they had saved US$80 million in costs following the formation of the alliance in May last year. Things seem to be looking up for the group, which is expecting another US$32 million in savings for this year. The report said that the savings will probably be from the fleet and staff reduction measures. In fact, the group has asked the Colombian government to permit a 47% staff reduction. Summa is owned by Colombian conglomerate Valores Bavaria and the National Coffee Growers' Federation. Avianca sought Chapter 11 bankruptcy protection in the United States in March this year. =========== M E X I C O =========== CFE: To Confront $1.08B Debt Maturities by Year-End --------------------------------------------------- Mexico's state power company CFE revealed that it is facing debt maturities of US$1.08 billion by year-end, according to Business News Americas. As of June 30, 2003, total debts stood at US$6.85 billion, compared to US$7.04 billion at December 31, 2002. Debts related to the Pidiregas projects - productive infrastructure projects that figure on the CFE balance sheet once they start operations - made up 48% of total debt at June 30, compared to 46% six months earlier. Debt contracted directly by the CFE was 33% of the total, compared to 34% at December 31. Of this, foreign debt was US$1.72 billion and domestic debt US$561 million. The balance of the debt (19%) comes from items not included in the budget. By the end of 2007, the Company faces debts totalling US$3.83 billion. INDUSTRIAS UNIDAS: Outlook Revised to Negative ---------------------------------------------- Standard & Poor's Ratings Services said Monday that it revised its outlook on the local and foreign currency long-term corporate credit ratings of Industrias Unidas S.A. de C.V. (IUSA), to negative from stable. The 'B+' local and foreign currency long-term corporate credit ratings were affirmed. Mexican-based IUSA has leading market positions, in Mexico and the U.S., in the manufacture and distribution of copper and copper-alloy products, electrical products, and watt-hour meters. "The outlook revision reflects the weakening of the company's operating margin and key financial ratios. Despite Standard & Poor's expectations that an improved capital structure would allow IUSA to improve its financial condition, the very competitive operating environment, particularly in copper products, and a more aggressive business strategy continue to drag down the company's profitability and its financial performance," said credit analyst Jose Coballasi. Despite the 16% increase in revenues, some improvement during the second quarter of 2003, and a higher market share during the first six months of the year, IUSA's operating margin dropped to 6% from the 8% posted in 2002. The latter resulted in a 16% drop in EBITDA versus the same period of last year. The very competitive environment in the copper products business is the main contributor to the negative trend in the company's profitability. IUSA's efforts to increase its market share have resulted in higher working capital requirements, which have led to an increase in the use of debt and a reduction in the company's operating cash flow generation. The impact of the aforementioned factors in the company's financial performance has led to a deterioration of IUSA's key financial ratios. For the last 12 months ended June 30, 2003, IUSA posted EBITDA interest coverage, total debt to EBITDA and FFO to total debt ratios of 2.0x, 4.1x, and 4.6%. Liquidity is tight. As of June 30, 2003, the company had about $18 million in cash and equivalents and faced short-term debt maturities of $76 million, which include the company's commercial paper program, with $25 million outstanding. The company's free operating cash flow generation for the year is expected to be negative, and the shortfall will have to be funded with debt. As a result, the company depends on its efforts to refinance its short-term debt maturities successfully. IUSA has access to about $150 million in uncommitted credit lines and a $100 million uncommitted commercial paper program. The company is also negotiating a waiver on a $30 million secured credit facility, given that IUSA did not meet the required total to debt EBITDA ratio test. Further weakness in the company's key financial indicators and liquidity could lead to a negative rating action. An improvement in the company's liquidity and operating cash flow generation could lead to a stable outlook. ANALYSTS: Jose Coballasi, Mexico City (52) 55-5279-2014 Manuel Guerena, Mexico City (52) 55-5279-2011 ISPAT MEXICANA: Hopes To Reach Agreement With Strikers Soon ----------------------------------------------------------- Ispat Mexicana S.A. de C.V., the Mexican subsidiary of Ispat International N.V. (NYSE:IST US; AEX: IST NA), confirms that the workers of Sindicato Nacional de Trabajadores Mineros, Metalurgicos y similares de la Republica Mexicana (the National Mining, Mineral and similar workers Union of Mexico) Section 271, declared a strike at its Lazaro Cardenas plant and at three other companies on August 1, 2003 at 12:01 AM. Ispat Mexicana S.A. de C.V. has a common workers' union and a common collective labour agreement with three other companies. The strike is the result of a disagreement between the union and one of the other three companies. The company in disagreement with the workers' union is not related to Ispat Mexicana or any other subsidiary of Ispat International N.V. Ispat Mexicana hopes that the disagreeing parties will reach an agreement soon so that normal operations can be resumed. CONTACT: T. N. Ramaswamy Paul Weigh Director, Finance Corporate Communications Ispat International N.V. Ispat International N.V. Tel: +44 20 7543 1174 Tel: +44 20 7543 1172 SATMEX: Resolves Conflicts With Telesat --------------------------------------- Mexican satellite operator Satmex resolved interference and orbital issues with Canada's Telesat on Friday, reports Business News Americas, citing a Satmex executive. Satmex operations VP Arturo Gonzalez revealed that the Company and Telesat reached a radio interference agreement that will allow the Satmex 6 satellite to operate at full capacity. "Satmex signed a (transmission) strength agreement with Telesat, but that agreement also includes an exchange of orbital positions between the governments of Canada and Mexico," Gonzalez said. Gonzalez expects the two governments to ratify a deal that will see Canada giving Mexico the 114.9 degrees West orbital position in exchange for Mexico's 102.9 degrees West position. The swap will eliminate the potential for interference between Satmex 6 and Canadian TV broadcasting. Satmex 6 would have only been able to operate at 70-80% capacity if the orbital exchange had fallen through, according to Gonzalez. VITRO: Reclassifies 2Q03, Balance Sheet Accounts ------------------------------------------------ Vitro, S.A. de C.V. (NYSE: VTO; BMV: VITROA) -- The Company reconsidered its position of netting within the debt balance its reserve and collection accounts in connection with the syndicated facilities of Flat Glass and Glass Containers. Therefore, such amounts were reclassified and placed, in the case of the reserve accounts, as "long-term restricted assets," totaling US$36.1 million as of the end of 2Q'03, and in the case of the collection account, as "cash and cash equivalents", totaling US$7.8 million for the same date, thus increasing long-term and short-term debt in such amounts respectively. Historical figures were also reversed to their original classifications. After giving effect to these reclassifications, we continue to comply with our financial obligations. The following tables show the effect of the reclassifications over debt balances and debt profile. Considering the changes, total consolidated debt stands at US$1,486 million as of June 30, 2003, instead of US$1,442 million previously reported, with the corresponding US$44 million increase also taking place in the asset side of our balance sheet. Leverage (Total Debt / EBITDA) Total Short Term Long Term (LTM) (Times) Debt Debt Debt 2Q03 1,486 456 1,030 4.2 1Q'03 1,576 495 1,080 4.2 4Q'02 1,455 458 997 3.7 3Q'02 1,370 492 878 3.4 2Q'02 1,535 612 923 3.8 Vitro, S.A. de C.V. (NYSE: VTO; BMV: VITROA), through its subsidiary companies, is one of the world's leading glass producers. Vitro is a major participant in three principal businesses: flat glass, glass containers, and glassware. Its subsidiaries serve multiple product markets, including construction and automotive glass; fiberglass; food and beverage, wine, liquor, cosmetics and pharmaceutical glass containers; glassware for commercial, industrial and retail uses; plastic and aluminum containers. Vitro also produces raw materials, and equipment and capital goods for industrial use. Founded in 1909 in Monterrey, Mexico-based Vitro has joint ventures with major world-class partners and industry leaders that provide its subsidiaries with access to international markets, distribution channels and state-of-the- art technology. Vitro's subsidiaries have facilities and distribution centers in eight countries, located in North, Central and South America, and Europe, and export to more than 70 countries worldwide. For further information, please visit our website at: http://www.vitro.com VITRO: Expands Business Relationship With Casa Herradura -------------------------------------------------------- - Will provide labeling and filling services besides manufacturing glass containers - Consolidates its leading position as supplier for the Mexican Tequila Industry Servicios Integrados de Envasado S.A. de C.V. (SIESA), a Vitro subsidiary has initiated an important project with Casa Herradura, a Mexican leading Tequila producer, to develop a product named "New Mix" which consist of a cocktail mix of tequila and grape fruit, that will be bottled in a new attractive glass container that was recently awarded by the Mexican Packaging Association in 2003. SIESA will provide added value to Casa Herradura, which consists not only by developing the cocktail mix, but manufacturing the product's glass container, and providing the labeling and filling services also. SIESA's strategic location allows companies such as Casa Herradura to introduce its products to Mexico's Central, Southern and Western regions. This new service will significantly expand both companies successful business relationship, which started many years ago. Casa Herradura, one of the international leading tequila producers and Vitro have established one of the most traditional relationship since the beginning of the 20th century. "Vitro manufactures glass containers for tequila producers in each of its facilities. Our technological capability allows us to provide the most advanced products and services to meet our customer's needs", said Alfonso Gomez Palacio, Vitro's President of Containers. Since its foundation, Casa Herradura trusted Vitro to create synergies and fulfill its glass bottles design and manufacturing requirements, such as Tequila Herradura, Herradura Antiguo, Herradura Seleccion Suprema, and Jimador, among other leading tequila brands. "Versatility, service and quality are the main elements that Casa Herradura values most from Vitro. Also the company seeks for durability, resistance, and different bottle shapes around the classic tequila bottle concept that customers demand", said Jose Giusti, President of Procurement and Logistics of Casa Herradura. Vitro is a major supplier of the leading tequila producers in Mexico because glass bottles are the ideal container system to preserve tequila properties and quality. Vitro promotes multiple advantages of glass recycling among public opinion and coordinates, sponsors and participates in many regional, national and international programs. Vitro coordinates nationwide more than 50 recycling programs with City Governments, schools, hospitals, shopping malls, hotels, Non-profit organizations, as well as sponsors glass collection and solid waste disposal centers throughout the country. For more details from Casa Herradura, please click the following address: http://www.herradura.com/ing/index3.html CONTACT: (Media Monterrey): Albert Chico Smith VITRO, S. A. DE C.V. +52 (81) 8863-1335 achico@vitro.com (Media Mexico D.F.): Eduardo Cruz VITRO, S. A. DE C.V. +52 (55) 5089-6904 ecruz@vitro.com (Financial Community): Beatriz Martinez/Jorge Torres VITRO, S. A. DE C.V. +52 (81) 8863-1258/1240 bemartinez@vitro.com jtorres@vitro.com (U.S. Contacts): Susan Borinelli BREAKSTONE & RUTH INT. (646) 536-7012 / 7018 sborinelli@breakstoneruth.com ================================= T R I N I D A D & T O B A G O ================================= CARONI: Retrenched Workers Upset Over VSEP Payments --------------------------------------------------- Disappointment hovered outside the Brechin Castle and Ste Madeleine factories where workers gathered on Sunday to get payment of their Voluntary Separation of Employment Packages (VSEP). According to the Trinidad Express, close to 700 of the total number of 1,000-plus workers only received 50% of their VSEP payments. But Jai Ramkissoon, president of the Sugar Industry Staff Association, assured workers that full payment would be made as soon as the Board of Inland Revenue approved all packages. He explained, up to last Thursday, just 390 workers got full approval. "We understand that it is a lot of work to go through more than 9,000 workers' tax returns," he said. President of the All Trinidad Sugar and General Workers Trade Union, Rudy Indarsingh, told the Sunday Express that with respect to daily-paid workers, all 8,000 of them were paid in full. CONTACT: Caroni Limited Old Southern Main Road, Caroni, Trinidad & Tobago Phone: (868) 663-1781 or 662-0879 Fax: (868) 663-1404 ============= U R U G U A Y ============= UTE: To Find Other Alternatives To Invalidate Power Contracts ------------------------------------------------------------- Uruguay's state power company UTE will find "other means" to annul power contracts with two Argentine generators - Piedra del Aguila and Central Puerto - after an Argentine arbitration court prevented it to appeal its case to the Supreme Court. Business News Americas recalls that UTE holds contracts to buy power from the two generators, and rejects the Argentine presidential decree of early 2002 that converted power export contracts into US dollars. UTE claims that following the devaluation of the Argentine peso, the decree effectively pushed up prices threefold. UTE refused to pay the full amount in US dollars. In early 2003, it tore up the contracts, and signed a new supply contract with Argentine power trader Cemsa. On June 2, a lower court ruled that UTE acted illegally by tearing up contracts and said that UTE owes US$6.6 million to Piedra del Aguila and US$4.2 million to Central Puerto in back payments. UTE had wanted to appeal its case to the Supreme Court but on July 22, the Argentine arbitration court prevented the Company from doing so. *IMF Concludes 2003 Article IV Consultation with Uruguay -------------------------------------------------------- On July 11, 2003, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Uruguay. Background During 1990-98, Uruguay enjoyed relatively high rates of growth, averaging 3.9 percent a year. In 1999, however, Uruguay's economy fell into a prolonged recession, following a series of external shocks that were compounded by domestic fragilities. These external shocks included: slower economic growth in Argentina and Brazil, two of Uruguay's major export markets; the outbreak of foot-and-mouth disease, which harmed Uruguay's meat exports; and a severe outflow of nonresident deposits, associated with the financial crisis in Argentina. In 2002, the economy contracted by nearly 11 percent, wiping out most of the per-capita GDP gains that had been achieved during the 1990s. The public debt dynamics also deteriorated significantly. In June and August 2002, Uruguay's existing Stand-By Arrangement was augmented to SDR 2.13 billion (694 percent of quota). In March 2003, at the completion of the second review, the arrangement was extended to March 2005, with a rephasing of purchases. Uruguay's economy is now showing signs of improvement. In the first quarter of 2003, real GDP grew by � percent (quarter-on- quarter, seasonally adjusted), and leading indicators point to a stronger increase in activity during the second quarter, led by an improvement in exports. Uruguay is expected to benefit further from the reopening of North American markets to beef exports. Financial indicators have also improved. Private sector deposits are now almost back to their end-July 2002 level, when a bank holiday was declared. Reflecting the reflow of deposits, as well as sizeable loan disbursements from multilateral organizations, gross official reserves have more than doubled since mid-March, to US$1 billion in late-June (five months of imports of goods and services). On May 29, Uruguay successfully completed a comprehensive and voluntary exchange, covering almost all of its market debt in foreign currency (US$5.4 billion). Overall participation reached 93 percent, well above the 80-percent threshold established for completion. The exchange reduced the net present value of participating bonds by about 20 percent on average. Under the Stand-By Arrangement, the primary balance of the combined public sector is programmed to rise from equilibrium in 2002 to 3 percent in 2003, and to 4 percent over the medium term, consistent with debt sustainability. To meet these primary surplus objectives, the government intends to continue restraining expenditure and improving revenue collection. The government is also implementing measures to restore the functioning and stability of the banking system. Several banks were liquidated during the financial crisis and US$2.2 billion in savings and time deposits in the public banks BROU and BHU were reprogrammed. A new bank has been opened with assets of three liquidated banks. With the adoption of a flexible exchange rate system, monetary policy has shifted to targeting the monetary base as an intermediate target. So far this year, inflation has come down faster than projected. In the structural area, several reforms are being adopted, in conjunction with the World Bank and Inter-American Development Bank, to help foster a return to growth. These measures include: deregulation of utilities, reform of the specialized pension systems, and restructuring of the public bank BHU. Executive Board Assessment Directors noted that, since the last Article IV consultation with Uruguay, the country has suffered a protracted recession and a deep financial crisis, resulting in a large output loss and a significant increase in poverty. While external shocks have triggered these adverse developments, their impact was compounded by deep-seated weaknesses and rigidities in Uruguay's economy. Directors commended the authorities for the significant progress made in recent months in containing the crisis, stabilizing the economy, and preparing the foundations for a durable recovery. They were encouraged by the recent improvements in economic and financial indicators, and welcomed the exemplary manner in which the authorities have conducted a landmark debt exchange, which has addressed near-term financing needs and helped to improve confidence. Directors agreed that significant challenges nevertheless still lie ahead, and that returning the economy to a path of lasting growth and stability will require continued sound macroeconomic policies and structural reforms. Decisive progress on fiscal and banking reforms will be critical to further improve confidence, while in the coming years, the Uruguayan economy will need to develop new sources of growth against the backdrop of an external environment which is likely to be less sanguine, an ageing population, and constraints to capital accumulation. To surmount these constraints, Directors urged the authorities to implement policies that promote a shift of resources toward higher- productivity sectors and increase the economy's resilience to shocks. Such policies, coupled with better targeting of social support, will be key to raising economic growth and reducing poverty. Directors emphasized that a strong fiscal policy will need to remain the cornerstone of the authorities' economic strategy. A permanent strengthening of the primary surplus will be needed to ensure medium-term debt sustainability, regain the capacity for countercyclical policies, and allow room for private sector growth. The challenging fiscal targets to which the authorities have committed themselves are appropriate, but Directors stressed that they will require a sustained reform effort, together with continued readiness to adjust fiscal policies as needed, to achieve them. Directors commended the authorities for their commitment to improve the tax system and strengthen revenue administration. They welcomed the recent submission to congress of a revised tax reform package, and looked forward to its full implementation. On the expenditure side, Directors underscored the need for deep reforms to reduce rigidities, especially in wages and pensions, and to continue enhancing the efficiency of social spending programs. Directors welcomed the authorities' continued commitment to the floating exchange rate regime, with base money as the intermediate target for monetary policy. They supported the authorities' intention to move over time toward an inflation targeting framework, and noted that to achieve this goal the central bank should continue to broaden the range of monetary instruments, deepen technical capacity, and strengthen its operational and administrative autonomy. While progress has been made in stabilizing the banking system, Directors stressed the need for further work to address remaining balance sheet vulnerabilities in the economy and restore a sound financial system. They urged the authorities to accelerate the restructuring of the public banks, which will be key to restoring confidence and contain fiscal costs. Looking ahead, Directors underscored that a strong and well-supervised banking sector will be a cornerstone of the strategy to enhance the role of the private sector in the economy. They also encouraged the authorities to continue promoting the development and use of peso instruments, and to work towards the development of a properly funded, limited deposit insurance scheme. Directors urged the authorities to press ahead with a wide range of structural reforms to promote growth and reduce vulnerabilities. They agreed that further efforts to strengthen competition, governance, and regulatory frameworks, and expand the room for private sector activity in the economy, will be key to improving resource allocation, raising investment, and attracting higher levels of foreign direct investment. In this respect, Directors emphasized the need to reduce the size of the public sector by improving its efficiency and opening up to private activity those sectors currently reserved for the state. They also encouraged the authorities to take advantage of Uruguay's well-educated population to implement policies aimed at diversifying the country's production and export base, including by pursuing ongoing trade liberalization efforts and streamlining investment procedures. In this regard, a number of Directors also highlighted the importance of further market-opening efforts by Uruguay's trade partners. Directors were encouraged that Uruguay's political and legal institutions have proved effective in dealing with the recent economic and financial challenges, and that the rule of law and private contracts have been safeguarded in difficult circumstances. They urged the authorities to build on these foundations by continuing to make strong efforts to forge a sufficient consensus and broad ownership that will help them to move forward with their ambitious structural reform agenda. Mobilizing support for the privatization of state-owned enterprises ought to be a priority in this regard. Directors commended the authorities for the progress in improving the quality and timeliness of data dissemination. They welcomed the authorities' intention to subscribe to the Special Data Dissemination Standard and to implement the recommendations of the safeguards assessment. CONTACT: INTERNATIONAL MONETARY FUND 700 19th Street, NW Washington, D.C. 20431 USA IMF EXTERNAL RELATIONS DEPARTMENT Public Affairs: 202-623-7300 - Fax: 202-623-6278 Media Relations: 202-623-7100 - Fax: 202-623-6772 ================= V E N E Z U E L A ================= PDVSA FINANCE: Monthly Collections Higher than Before Stoppage -------------------------------------------------------------- A recent report by Bear, Stearns & Co. points out that current monthly collections by PDVSA Finance, from sales of crude and refined products, are more than three times higher than the level recorded in January 2002. "This points to a substantial recovery in the amounts of (traded) crude which we believe has increased the resilience of (PDVSA Finance papers) to changes in the price of oil to well within pre-strike levels," the report says. Bear, Stearns & Co. adds that in light of this quick recovery, "we feel the stage is set for the rating agencies to upgrade PDVSA from the near-crisis ratings of January 2003 and keep up with (PDVSA Finance's) improved outlook." "We feel that the risks facing the holders of (PDVSA Finance papers) have decreased since the beginning of the year," the report notes. Therefore, investors in search of yield may find the 7-10 percent yield offered by PDVSA Finance papers interesting on a risk-reward basis, it adds. PDVSA FINANCE: Presents Financial Statements to SEC --------------------------------------------------- The financial statements of Petr�leos de Venezuela, S.A affiliate PDVSA Finance, for the first quarter of 2003, are to be presented to the U.S. Security and Exchange Commission Sunday, PDVSA Finance has announced. The PDVSA affiliate presented these reports to its Fiscal Agent and Trustee on July 31, thus fulfilling previously established commitments. "The presentation of these reports indicates that a full normalization of the corporation's finances is well underway," PDVSA Finance indicated. At the same time, work continues in order to present the financial statments covering the second quarter of 2003 during the last week of August, it added. PDVSA must still present the U.S. Security and Exchange Commission with its 20-F Report, which is expected to be completed before September 30. This report includes information on operations, trade and financial data. At present, all this information is being audited by the external auding firm, KPMG. *********** 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 America is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. John D. Resnick, Edem Psamathe P. Alfeche and Oona G. Oyangoren, Editors. Copyright 2003. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *