/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030903.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, September 3, 2003, Vol. 4, Issue 174 Headlines A R G E N T I N A ACINDAR: Bond Issue Opens Way To Up Belgo Stake BANCO DE GALICIA: Faces Investigation By Securities Regulator DISCO: To Contest AFIP's Claims DISTRIBUTION SYSTEMS: Deadline For Credit Check Expires Today INSTELEC ELECTRONICA: Receiver Prepares Individual Reports DUETO: Receiver Closing Credit Verification Process FOCAR POOL: Credit Verification Process Ends PDL: Creditor's Request For Bankruptcy Approved PUENTES DEL LITORAL: Court Slaps Embargo on Accounts REPSOL YPF: 1H03 Argentine Investments Top $300M SOLBO: Court Orders Bankruptcy TEXPO: Court Approves Creditor Petition For Bankruptcy B A R B A D O S C&W BARBADOS: Reports $41.6M Pre-tax Loss B R A Z I L BCP: America Movil Acquires Interest BCP: Analysts Surprise By America Movil's Strategy CEMIG: Begins First Phase of Capim Branco Construction EMBRATEL: New Legal Director Assumes Post C H I L E EMBONOR: Embarks On Cost-Cutting Plan D O M I N I C A N R E P U B L I C BANCO MERCANTIL: Monetary Board Approves Sale To T&T Bank * IMF OKs US$600M Stand-By Arrangement for the Dominican Republic E C U A D O R BANCO DEL PACIFICO: Paribas To Submit Valuation to Central Bank TELECSA: Accepts Ericsson's $68M Offer To Supply CDMA Network J A M A I C A KAISER ALUMINUM: Chinese Firm Eyes Jamaican Assets M E X I C O CFE: Shell To Supply LNG To Fire Thermo Power Plants GRUPO TMM: Finance Ministry Seeks Proof of Tax Payments PEMEX: Deadline for Submission of CSM Applications Extended P E R U VOLCAN: Takes On Glencore's Offer T R I N I D A D & T O B A G O BWIA: Profitability Likely by Year-End, Says Minister BWIA: AATT Finalizing Evaluation of Application For Reviewer V E N E Z U E L A CITGO: Contributes Record-Breaking $7 Million to MDA DAEWOO MOTORS: Tax Regulators Order Asset Embargo PDVSA: Postpones Refinery Shutdown Until Next Weekend - - - - - - - - ================= A R G E N T I N A ================= ACINDAR: Bond Issue Opens Way To Up Belgo Stake ---------------------------------------------- The convertible bonds issued by Argentine long steelmaker Acindar will enable its shareholder Belgo-Mineira to increase its stake in the Company, reports Business News Americas, citing Gustavo Pittaluga, assistant to Acindar's president. "This issue is part of the restructuring proposal. It is the vehicle through which [Belo Horizonte-based] Belgo-Mineira will capitalize its credits. We have increased the size of the bonds in order to allow minority shareholders to participate in the issue," said the official as quoted by the report. Belgo Mineira currently owns 20% of Argentina's largest integrated producer of long steel. The Acevedo family controls another 20%, while the World Bank's International Finance Corporation controls 7%. The rest of the shares are floated. Acindar, which has been in default in November last year, issued US$80 million of convertible bonds recently. The Company presently faces US$220 million in debt. The Company's principal activity is the production of non-flat steel products such as steel pipe, cable, hot-rolled and cold- drawn steels for concrete, forged bars and blocks for distributors of steel products, other steel companies, manufacturers of original equipment for several industrial sectors including the automotive and the oil and gas industries and end users, mainly in the construction and agricultural sectors of the economy, according to the Financial Times. Its principal market is Argentina, although it exports its products to Brazil, Chile and the United States, Bolivia and Uruguay through its sales office. CONTACT: Acindar Industria Argentina de Aceros S.A. 2739 Estanislao Zeballos Beccar Buenos Aires Argentina B1643AGY Phone: +54 11 4719 8500 Fax: +54 11 4719 8501 Home Page: http://www.acindar.ar.com Contact: Arturo Tomas Acevedo, Chairman BANCO DE GALICIA: Faces Investigation By Securities Regulator ------------------------------------------------------------- For being habitually late in reporting developments at its sister bank, Banco de Galicia y Buenos Aires faces investigation from the Comision Nacional de Valores (CNV), Argentina's securities regulator. The CNV announced on Monday that it would look into the actions of the bank's trustees and directors, relates Dow Jones Newswires. Banco de Galicia, one of the country's largest banks, is required to report on developments at its sister bank, Banco Galicia de Uruguay, which is suspended. The two banks are the main units of financial group Grupo Galicia. The CNV pointed out that on at least five occasions, the bank was between four and seven days late in filing its reports on Galicia Uruguay. These violations occurred between February and November 2002. However, Dow Jones says that the group's stock was unaffected by the news, closing at ARS1.25, up by 0.8%. Banco de Galicia y Buenos Aires provides commercial banking services, personal and car loans, pension fund management, life insurance, automatic teller machines, letters of credit, credit cards, mortgage financing, foreign currency transactions, investment advisory services, electronic collections, custody of securities, traveler's checks, deposits, checking and savings accounts, and credit cards. CONTACT: Banco de Galicia Y Buenos Aires Tte Gral Juan D Peron 407 Buenos Aires Argentina C1038AAI Phone: +54 11 6329 0000 Fax: +54 11 6329 6100 Home Page: http://www.bancogalicia.com.ar Contact: Juan Martin Etchegoyhen, Chairman Antonio R. Garces, Vice Chairman Grupo Financiero Galicia SA 2nd Floor No 456 Tte Gral Juan D Peron Buenos Aires Argentina 1038 Phone: +54 11 4343 7528/9475 Home Page: http://www.gfgsa.com Contact: Atty. Abel Ayerza, Chairman DISCO: To Contest AFIP's Claims ------------------------------- Disco, the Argentine unit of embattled Dutch retailer Ahold, was scheduled to present Monday its argument regarding a local tax agency's claim that the Company owes some ARS300 million ($101 million) in fines and back-taxes on bonds issued in 1998. Reuters relates that the tax agency, AFIP, says Disco owes taxes on US$350 million in bonds it issued in May 1998. But, "Disco believes the agency's demands are unjustified and have no legal basis," a spokesman for Disco supermarkets said. The spokesman believes the tax dispute would not hold up Ahold's planned sale of the Argentine retail chain, but a government source familiar with the case told Reuters it would complicate it. "We have asked that the company's assets be blocked. ... It goes without saying this will complicate the sale," the source, who requested anonymity, said. Either Disco or the tax agency can sue in federal court if they cannot resolve the dispute themselves. The Company expects the administrative phase of the process to be resolved by year's end. DISTRIBUTION SYSTEMS: Deadline For Credit Check Expires Today ------------------------------------------------------------- The deadline for the credit verification process for the bankruptcy of Buenos Aires-based Distribution Systems, S.A. expires today, September 3, 2003. The receiver, Mr. Edgardo Alberto Borghi, a local accountant, will prepare the individual reports, which must be submitted to the court on October 15. The general report is due for submission on November 26, according to an earlier report from the Troubled Company Reporter - Latin America. Buenos Aires' Court No. 25 ordered the court's bankruptcy, reported Infobae earlier. CONTACT: Mr. Edgardo Alberto Borghi Luis Valle 2176 Buenos Aires INSTELEC ELECTRONICA: Receiver Prepares Individual Reports ---------------------------------------------------------- Buenos Aires Court No. 16 ordered Mr. Abel Gomez Meana, receiver for local company Instelec Electronica S.R.L. to prepare the individual reports, as the deadline for the credit verification process expires today. The Company is undergoing reorganization, which started when the court approved its motion for "Concurso Preventivo". The court, which works with Clerk No. 32 on the case, has set the deadlines for the individual and general reports. An earlier report by local news portal Infobae indicated that the individual reports must be submitted to the court on October 25, followed by the general report on November 26. The court also ordered an informative assembly to be held on July 7 next year. CONTACT: Abel Gomez Meana Roque Saenz Pena 1219 Buenos Aires DUETO: Receiver Closing Credit Verification Process --------------------------------------------------- Ms. Adriana Esnaola, receiver for Buenos Aires company, Dueto S.A., closes the credit verification process for the Company's reorganization today. The reorganization process now proceeds with the preparations for the individual reports, which should be presented to the court on October 17 this year. An earlier report by the Troubled Company Reporter - Latin America said that the City's Court No. 1, which is under Dr. Juan Dieuzeide, approved the Company's motion for "Concurso Preventivo", giving it permission to undergo reorganization. Ms. Esnaola, a local accountant, is also required to prepare a general report on the process. The court requires the individual report to be submitted on November 28. An informative assembly is set for June 4 next year. CONTACT: DUETO S.A. 2nd Floor Office 4 No. 1342 Rivadavia Ave. Buenos Aires Adriana Esnaola 10th Floor G No. 615 Juncal St. Buenos Aires Court No. 1 Dr. Juan Jose Dieuzeide Ground Floor No. 533 Libertad St. Buenos Aires FOCAR POOL: Credit Verification Process Ends -------------------------------------------- The credit verification process for the reorganization of San Isidro - based company Focar Pool S.R.L. ends today, according to an earlier report by the Troubled Company Reporter - Latin America. The Company's receiver, Mr. Antonio Florencio Canada will prepare the individual reports, as instructed by the court. Court No. 2 of the Civil and Commercial Tribunal of San Isidro holds jurisdiction over the Company's case. The Court requires the receiver to submit the individual reports on October 16. The general report, on the other hand, should be presented to the court on November 27. Local news source Boletin Oficial reveals that an informative assembly be held on June 3 next year. CONTACT: Focar Pool S.L.R. Bernabe Marquez 855 San Isidro PDL: Creditor's Request For Bankruptcy Approved ----------------------------------------------- A petition seeking the bankruptcy of Buenos Aires-based company PDL S.A., filed by its creditor, Cooperativa de CrＥito, Consumo y Vivienda Florida Ltda., was approved by the city's Court No. 4. A local source reveals that Dr. Ottolenghi, the insolvency judge handling the case, works with Clerk No. 8, Dr. Anta. The Company, which sells medical instruments, was placed in the hands of the receiver, Mr. Victor Tomasi, the report says. Creditors must present their claims to the receiver for verification before October 14. The receiver is also required to prepare individual and general reports on the bankruptcy process. The source, however, did not indicate whether the court has set the deadline for these reports. At the end of the process, the Company's assets will be liquidated to reimburse its creditors. CONTACT: PDL S.A. 3rd Floor Room 6 Alicia Moreau De Justo 1720 Buenos Aires Victor Tomasi Planta Baja D Ave. Acoyte 127 Buenos Aires PUENTES DEL LITORAL: Court Slaps Embargo on Accounts ---------------------------------------------------- A Buenos Aires commercial court put an embargo on toll concessionaire Puentes del Litoral's bank accounts, following a request by its subcontractor, Dutch Boskalis Ballast, which claims payment of a US$35 million debt has been in default since the beginning of 2002. Puentes del Litoral is made up of Impregilo, Hotchief, Roggio and Sideco. It has a construction and exploration contract for the route that links the cities of Rosario and Victoria. REPSOL YPF: 1H03 Argentine Investments Top $300M ------------------------------------------------ Repsol YPF invested US$300 million and spent about ARS3.21 billion in royalties and taxes in Argentina during the first six months of this year. Business News Americas cited a Company statement saying that some 40% of its total assets are in Argentina. The Company added that some US$1.1 billion has been invested in the country over the last eighteen months. A total of US$2 billion was spent with Argentine companies over the last 18 months, the report adds. Repsol's expenses in the country are concentrated in exploration and production. Headquartered in Spain, Repsol's main activities include the exploration, development and production of crude oil and natural gas. It is also involved in the transportation of petroleum products, liquefied petroleum gas (LPG) and natural gas; petroleum refining; production of a wide range of petrochemicals and marketing of petroleum products, petroleum derivatives, petrochemicals, LPG and natural gas. Refining and marketing accounted for 75% of 2002 revenues; exploration and production, 13%; gas and electricity, 7% and chemicals, 5%. CONTACT: Repsol YPF SA Paseo de la Castellana 278 28046 Madrid Spain Phone: +34 91 348 81 00 Fax: +34 91 348 28 21 Home Page: http://www.repsolypf.com Contacts: Alfonso Cortina de Alcocer, Chairman Alfonso Cortina de Alcocer, CEO Carmelo de las Morenas Lopez, CFO SOLBO: Court Orders Bankruptcy ------------------------------ Dr. Gutierrez Cabello, the insolvency judge in Buenos Aires' Court No. 7 declared local car dealer Solbo S.A. bankrupt. Working with Dr. Giardinieri, the city's Clerk No. 14, the judge appointed Ms. Raquel Polak as the Company's receiver. The ruling comes after the Company's creditor, Coafi S.A., sought for the Company's bankruptcy for failing to meet its obligations on some US$90,906 in debt. Creditors have until October 24 this year to present their claims for verification. After that, the receiver is required to prepare individual and general reports on the process. However, local sources did not indicate whether the court has set the deadlines for these reports. CONTACT: Solbo S.A. Ave. Constrituyentes 6000 Buenos Aires Raquel Pollack 4th Floor Room 16 Lavalle 1527 Buenos Aires TEXPO: Court Approves Creditor Petition For Bankruptcy ------------------------------------------------------ Buenos Aires' Court No. 21, which is under Dr. Paez Castaneda, approved a motion for the bankruptcy of local company Texpo S.A. recently. Fire Trucks and Equipment S.A., the Company's creditor filed the petition on grounds that the Company failed to meet its financial obligations to Fire Trucks. The Court appointed Mr. Juan Facoltini as the Company's receiver, with instructions to verify creditors' claims until April 27 next year. The court instructed Mr. Facoltini to prepare individual reports on the results of the credit verification process. A general report is also required. The Company, which is involved in the import-export business, faces liquidation at the end of the bankruptcy process. CONTACT: Texpo S.A. 7th Floor, Room 708 Rivadavia 717 Buenos Aires Juan Facoltini 2nd Floor, Room 36 Bernardo de Irigoyen 330 Buenos Aires =============== B A R B A D O S =============== C&W BARBADOS: Reports $41.6M Pre-tax Loss ----------------------------------------- Cable & Wireless (Barbados) Limited collected well over $200 million in domestic revenue during its last financial year, which ran from April 1, 2002 to March 31, 2003. However, according to a report published by The Barbados Advocate, the Company reported a huge operating loss before tax of $41.6 million during the period, compared to a profit of $102.2 million for the comparative period ended March 31, 2002. The adverse position stemmed from an impairment charge totalling $88.5 million on its fixed assets, and $23.9 million in restructuring costs. Chairman Robert Lerwill explained a review of the Company's asset base necessitated an impairment provision - mainly as it relates to customer premises apparatus. He also said that as with most telecommunications companies worldwide, the restructuring process entails an analytical review of the cost base and inevitably a reduction in staff, as processes are re-engineered to create a more streamlined and efficient organization. Some of the highlights of the performance of the telecommunications company include more than $20 million in dividends to shareholders, a record $88.2 million in capital expenditure, lower international revenues and higher costs. Cable & Wireless saw a 3% increase in revenue. This amount was given as $362.5 million, compared to the $353.4 million posted by the C&W companies a year ago. Of that amount netted for the year to March 31, 2003, domestic revenue was up 15% to reach $236.3 million, compared to $205.5 million, the previous year. In addition, Mobile revenues were up 13% as a result of the 83% growth in the mobile customer base. International revenues fell from $131.9 million during the 2001/2002 year, to $116.8 million, during the year under review, while costs were up 10%. Cable & Wireless submitted an application for an adjustment to its rates last month and is seeking at least $24 million from the adjustment. =========== B R A Z I L =========== BCP: America Movil Acquires Interest ------------------------------------ America Movil, S.A. de C.V. (America Movil) [BMV: AMX] [NYSE: AMX] [NASDAQ: AMOV] [LATIBEX:XAMXL], announced Thursday that its offer to acquire an interest in Brazilian Wireless Company BCP S.A. has been accepted. The company's enterprise value, including debt and equity, was set at US$625million. Such transaction is subject to regulatory approvals. In like manner, America Movil announces that it has entered into an agreement with Telemar Norte Leste in which the latter has an option to acquire a stake in the capital of BCP, S.A. Currently, BCP, S.A. has approximately 1.7 million subscribers and covers a population of around 19.2 million, operating in the metropolitan area of Sao Paulo. ABOUT AMERICA MOVIL America Movil is the leading provider of wireless services in Latin America. It has more than 36 million wireless subscribers across the continent. BCP: Analysts Surprise By America Movil's Strategy -------------------------------------------------- America Movil's offer to share BCP with Telemar caught analysts by surprise, reports Business News Americas. Telemar controls mobile operator Oi, which competes against America Movil's subsidiary Claro. A likely scenario, according to Yankee Group analyst Luis Minoru, is that the BCP deal is part of a larger asset-swapping agreement whereby America Movil will give Oi access to Sao Paulo in exchange for Oi giving America Movil access to Minas Gerais state and Brazil's northern region, for which Claro does not have a concession. Meanwhile, Minoru and BES Securities analyst Carolina Gava doesn't buy the idea that a joint venture in BCP could lead to a future merger between Claro and Oi over the short or medium term, even with all the consolidation pressures in Brazil's mobile market. Telemar should be expected to take a large minority stake in BCP, near 20%, Gava suggested. CEMIG: Begins First Phase of Capim Branco Construction ------------------------------------------------------ With an aim to begin operations of the first of the two plants that consist the Capim Branco hydroelectric power project in 29 months, Brazil's Minas Gerais state power company Cemig kicked off construction of the first plant, which has 240MW capacity. Citing a Cemig spokesperson, Business News Americas reveals that construction work is being undertaken by a consortium of Brazilian construction firms Andrade Gutierrez, Construtora Norberto Odebrecht and Quieroz Galvao. A second consortium of Germany's Voith Siemens and Vatec is supplying electro-mechanical equipment, including three 80MW Francis turbines for Capim 1, the spokesperson said. The Capim Branco project requires total investment estimated at BRL700 million (today US$235mn). The second plant, which has 210MW capacity, is scheduled to begin operations in 33.5 months. Cemig owns 21.1% of the project, mining companies CVRD and CMM own 48.4% and 12.6% respectively, and agricultural firm Comercial e Agricola Paineiras owns 17.9%. CONTACT: COMPANHIA ENERGETICA DE MINAS GERAIS Luiz Fernando Rolla, Investor Relations Phone: + 011-5531-299-3930 Fax: + 011-5531-299-3933 E-mail: lrolla@cemig.com.br EMBRATEL: New Legal Director Assumes Post ----------------------------------------- Cl udia de Azer�do Santos was expected to take office Monday, September 1st, as Embratel's new legal director, replacing Pedro Batista Martins who had been in office since May of 1999. The new director is highly skilled in corporate and financial law, and has held important positions during her professional career, like legal director of CSN for seven years, and legal advisor of Aracruz Celulose for eight years. To Cl udia Azer�do Santos the telecommunications industry represents a new, major challenge, very typical of her professional attitude: "I am really pleased to take office as Embratel's legal director, because I will have the opportunity to work in a totally new sector. Facing new challenges is part of my professional profile, in addition to the passion for my work." To Pedro Batista Martins, now leaving the job, being for more than four years Embratel's legal director was extremely rewarding. However, he is now dedicated to individual projects in the arbitration sphere, where he has acquired a 20-year experience. He was co-author of the Arbitration Law. 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 Attention: Flavio Resende E-mail: cmsocial@embratel.net.br Embratel on the internet: www.embratel.com.br ========= C H I L E ========= EMBONOR: Embarks On Cost-Cutting Plan ------------------------------------- Chile's second-largest Coca-Cola bottler, Embonor, is carrying out a cost reduction plan as part of an attempt to reduce the big debt burden it got when it acquired the Inchcape franchise in the region. In 2003, Embonor wants to pay US$53 million of its debt, US$33 million of which will come from an important cost reduction. The general manager of the firm, Andres Vicuna, stated that Embonor is also planning to issue up to US$100 million in bonds. Vicuna said Embonor's debt would amount to US$300 million by the end of the year. Additionally, the Company's sales started to show a slow but steady upturn. They registered a 4.3% growth - in volume - in the first quarter and are expected to grow 6% by the end of the year. CONTACT: Coca Cola Embonor SA Piso 10 Av Apoquindo 3721 Las Condes Santiago Chile Phone: +56 299 1400 Fax: +56 203 5021 Home Page: http://www.embonor.cl Contact: Hernan Vicuna Reyes, Chairman =================================== D O M I N I C A N R E P U B L I C =================================== BANCO MERCANTIL: Monetary Board Approves Sale To T&T Bank --------------------------------------------------------- Dominican Republic Central Bank Governor Jos� Lois Malkum announced at a press conference Friday that The Monetary Board has approved the sale of Banco Mercantil to the Republic Bank of Trinidad and Tobago. According to an article released by DR1 Daily News, the Republic Bank of Trinidad and Tobago bought up 94.16% of Banco Mercantil, formerly the seventh largest bank in the Dominican Republic. All local investors in Mercantil lost their assets, which total DOP1.5 billion, in the transaction, because the shares were rendered worthless when Banco Mercantil lost all its capital. The buyer will inject DOP1.25 billion into Banco Mercantil, which will be reinforced by a guarantee of DOP6 billion from the Central Bank to cover the bank's so-called "defective assets." Likewise, in 2003 the Central Bank had issued advances, rediscounts and other financial facilities for DOP3.1 billion to the bank. * IMF OKs US$600M Stand-By Arrangement for the Dominican Republic ----------------------------------------------------------------- The Executive Board of the International Monetary Fund (IMF) approved Thursday a two-year SDR 437.8 million (about US$600 million) Stand-By Arrangement for the Dominican Republic to support the country's economic program through August 2005. The approval opens the way for the release of SDR 87.6 million (about US$120 million) under the arrangement. Following the Executive Board discussion, Agustin Carstens, Deputy Managing Director and Acting Chairman, said: "After a decade of strong growth and broad economic stability, the Dominican economy is now facing major challenges. The failure of a large bank because of fraud has hurt confidence in the banking system and, together with the adverse effects of a succession of external shocks, has weakened the economy. Output has contracted, the currency has depreciated sharply and pushed up inflation, and the historically low public debt-to-GDP ratio has nearly doubled. "The Fund welcomes the government's commitment to addressing these challenges through a comprehensive economic program that focuses on strengthening confidence in the banking system, reversing the recent deterioration in the public finances, and implementing a tight monetary policy to reduce inflation and the immediate pressures on the currency. "The strategy to restore confidence in the banking system has four main planks. The first, already implemented, focused on resolving the problems of identified weak banks. The second, now under way, aims to assess the situation of the banking system as a whole through internationally-assisted audits of all banks, and to identify further necessary measures. The third will put in place a legal and regulatory framework to deal with systemic banking problems. The fourth plank is the enhancement of prudential regulations and supervision. "The Dominican Republic's tradition of sound fiscal policies and low public debt needs to be restored. A key objective of the program is to raise the fiscal primary surplus over the next three years to a level that would allow a gradual reduction in the public debt ratio over the medium term. In the near term, the fiscal effort relies on expenditure compression and temporary revenue measures. These initial steps will give way to a broader reform of the tax system and of spending, as well as asset sales to reduce public debt. Improved debt management also will help reduce vulnerabilities, with greater emphasis on the domestic market to meet the government's borrowing needs, and less reliance on foreign currency debt. "Monetary restraint will help contain pressures on the currency and inflation. The flexible exchange rate regime is being strengthened, with full unification of the dual exchange rate markets expected by the end of the year. "Over the medium term, efforts to open up the economy further, including through trade liberalization, and to eliminate infrastructural bottlenecks, especially in the power sector, will help boost growth. At the same time, the authorities are making additional efforts to reduce poverty, with improvements in the efficiency and targeting of social programs. They have sought to avoid cuts in social programs, and low-income households have effectively been exempted from planned increases in electricity prices. The authorities' program should lay the basis for restoring the Dominican Republic's strong record of high growth and economic stability," stated Mr. Carstens. ANNEX Recent economic developments With real GDP growth averaging 6 percent in the 1990s, the Dominican Republic was one of the fastest growing countries in the region. The rise in oil prices combined with the events of September 11, 2001 -and the ensuing slowdown in the world economy- dented this strong record. Exports and tourism receipts began falling in the second half of 2001, and the overall balance of payments shifted into deficit. The fiscal and monetary response of the authorities dampened the economic slowdown, but exacerbated macroeconomic imbalances. Despite some tax measures, the public sector deficit was allowed to widen by a half-percentage point to 2.6 percent in 2002, with a sharp increase in capital expenditure. Monetary conditions were also eased as reserve requirements were reduced and the central bank extended large liquidity assistance to a private bank, Baninter, that began to experience liquidity problems. The failure to sterilize liquidity support, and regulatory forbearance, contributed to the continued expansion of credit, which grew by 20 percent in 2002. The result was that real GDP growth picked up slightly to 4 percent, but the peso depreciated by 20 percent and inflation doubled to 10 percent. The central bank lost about half of its foreign reserves. The defining moment of the crisis was the failure of Baninter, the third largest private bank, in the spring of 2003. Once accounting malpractices and fraud were discovered, the bank was intervened. The central bank kept Baninter open to prevent a systemic run and financed the payout of its deposits, which fell some 80 percent. Problems soon extended to other banks, BancrＥito and Banco Mercantil, which were also affected by accounting malpractices and mismanagement. Central bank assistance to problem banks contributed to a near doubling in public debt. As confidence weakened, so did macroeconomic indicators. Real GDP in the first half of 2003 fell by about 1 percent, year-on-year, as a decline in output in domestically driven sectors was only partially offset by a strong recovery in exports and tourism. The peso fell by 42 percent in the first seven months of the year and 12-month inflation rose to nearly 30 percent by July. Program summary The Dominican Republic's program aims to restore confidence in the banking system and in the overall policy framework. The program centers on a comprehensive banking strategy, steps to limit the deterioration in the fiscal deficit, and a fully flexible exchange rate policy accompanied by a tight monetary policy. Real GDP is expected to contract by 3 percent in 2003 and to recover only by 0.5 percent next year. Inflation is projected to reach 35 percent in 2003 but to recede to single digit levels in 2004. With domestic demand weak, the external current account balance is projected to shift into surplus in 2003-04. The strategy for the banking sector addresses the root causes of the current bank problems, including the resolution of Baninter, a solution for the problems of other weak banks, the implementation of an improved bank resolution framework, and the reinforcement of prudential regulation and banking supervision. To uncover any remaining financial and governance problems in the banking sector, the authorities have launched an internationally- assisted audit of all banks, and the legal framework for dealing with bank problems is being strengthened. The program's fiscal policy aims to begin reversing the recent jump in the public debt ratio. Stabilization of the debt requires a major fiscal effort, given that the cost of servicing the debt will more than triple to 4ｫ percent of GDP in 2003 and rise further to nearly 6 percent of GDP in 2004. The program envisages a number of measures that would contain the combined public sector deficit to 3.5 percent of GDP in 2003 and 2.5 percent of GDP in 2004. The authorities are also determined to keep expenditure under control. On exchange rate and monetary policies, the program envisages a full unification of the foreign exchange markets by end-2003. Full unification by end-December would eliminate the possibility of engaging in multiple currency practices arising from a divergence of more than 2 percent at any given time between the official and market exchange rates. Reducing inflation will also be a key objective of monetary policy. The Dominican Republic joined the IMF on December 28, 1945; its quota is SDR 218.9 million (about US$300 million). Its outstanding use of IMF credits totals SDR 4.96 million (about US$6.8 million). CONTACT: INTERNATIONAL MONETARY FUND 700 19th Street, NW Washington, D.C. 20431 USA IMF EXTERNAL RELATIONS DEPARTMENT Public Affairs Phone: 202-623-7300 Fax: 202-623-6278 Media Relations Phone: 202-623-7100 Fax: 202-623-6772 ============= E C U A D O R ============= BANCO DEL PACIFICO: Paribas To Submit Valuation to Central Bank --------------------------------------------------------------- French investment bank BNP Paribas, which has been awarded the contract to manage the sale of Ecuador's state-owned bank Banco del Pacifico, will submit a valuation of the latter to the Ecuadorian central bank, Business News Americas reports, without providing a date for the submission. The valuation is one of the pledges with which the Ecuadorian government must comply in order to receive new funding from the International Monetary Fund (IMF). According to Leopoldo Baez, general manager at the central bank, which controls Pacifico, the valuation is a key step in the process to sell the bank, something that is expected to happen by September 2004. Once the valuation has been presented, the central bank will coordinate plans for BNP Paribas to take steps to identify potential buyers of Pacifico. Roberto Gonzalez, executive vice president of Pacifico, told Dow Jones Newswires on Thursday that in the coming days the bank will submit a report to the central bank on the state of the financial group. During the first seven months of the year, the bank posted a net profit of US$5.6 million. During the period, the bank granted US$29 million in new credit and private deposits increased 10%. The bank ended the period with US$625 million in total assets. Pacifico was one of the banks taken into government receivership during the country's 1998-1999 financial crisis. If the sale is completed, the bank will be the first Ecuadorian bank to be re- privatized since the crisis. TELECSA: Accepts Ericsson's $68M Offer To Supply CDMA Network ------------------------------------------------------------- Ecuadorian startup mobile operator Telecsa, a joint venture between state-run fixed line operators Andinatel and Pacifictel, accepted Ericsson's US$68-million bid to supply a CDMA network. The information was revealed to Business News Americas by Peter Burrowes, the representative of Telecsa administrator Swedish- based Swedtel. Ericsson will provide five-year financing with a two-year grace period and a 4.58% interest rate, Burrowes said, adding the contract calls for simultaneous deployment of CDMA 1900 and CDMA 2000 1xEV-DO technologies to ensure a competitive advantage. Telecsa will launch initially in Quito, Guayaquil and surrounding areas by December 1 and should be able to match rival operators' coverage by late 2004. Improved coverage in cities and along the highways connecting them should be complete by 2005, Burrowes added. ============= J A M A I C A ============= KAISER ALUMINUM: Chinese Firm Eyes Jamaican Assets -------------------------------------------------- The Jamaican assets of Kaiser Aluminum Company, which are now on the block, have attracted the interest of one of China's state- owned companies. China Minmetals Nonferrous Metals Company Limited is looking to purchase the assets, according to a report released by Reuters Monday. Citing an unnamed source, Reuters said China Minmetals is one of the companies which will be conducting due diligence for the Jamaican assets of Kaiser, which filed for protection from creditors in February last year. Reports have it that the Chinese metals trading company, which has been hit by a global shortage in alumina following China's expansion in aluminum production, is also considering buying Kaiser's Gramercy alumina plant in Texas. Under Kaiser's divestment plan, the Company will sell its 65% share of Alpart and 49% stake at Kaiser Jamaica Bauxite Company in Discovery Bay, St. Ann. =========== M E X I C O =========== CFE: Shell To Supply LNG To Fire Thermo Power Plants ---------------------------------------------------- Mexican state power company CFE has awarded Anglo-Dutch oil company Shell a 15-year contract to supply liquefied natural gas to fire its thermoelectric power plants, reports Business News Americas. The contract will see Shell building an LNG terminal at Altamira in Tamaulipas state to supply the gas. Previously, Shell managers have said that total investment would be approximately US$300 million to build two storage tanks with capacity of about 150,000 cubic meters each and capacity to supply 425 million cubic feet a day. IPD Latin America analyst Sergio Rosado revealed that Shell was the only one to bid for the 15-year contract as many companies have shied away from the tender because of problems securing LNG supplies within the Atlantic basin. LNG developers want firm supply contracts before they bid on expensive LNG receiving terminals, but suppliers want LNG developers to commit to building the terminals before they sign contracts, Rosado said. GRUPO TMM: Finance Ministry Seeks Proof of Tax Payments ------------------------------------------------------- Mexico's Finance Ministry said it would have to check whether transport company Grupo TMM really paid the taxes that it seeks to be refunded, Reuters reports, citing an unnamed spokesman from the ministry. Last week, TMM said a tax tribunal ruled in its favor on a value added tax (VAT) refund valued at US$950 million to TMM's railroad subsidiary Transportacion Ferroviaria Mexicana, or TFM. TMM must now prove to the ministry that it did pay MXN2.11 billion, or some US$192 million, in VAT. If the Company shows enough proof that it did, the case will move to a fiscal court, which would then order the government to issue a certificate to TFM to cover the VAT refund. TMM claimed that when it purchased TFM, it paid around US$268 million in VAT based on the exchange rate prevailing in December 1996. The tax paid for the transaction, including inflation and interest, totals some US$950 million to date. CONTACT: Grupo TMM Jacinto Marina, Chief Financial Officer 011-525-55-629-8790 (jacinto.marina@tmm.com.mx) or Brad Skinner, Senior Vice President Investor Relations 011-525-55-629-8725 or 203-247-2420 (brad.skinner@tmm.com.mx) or Marco Provencio Media Relations, Proa/StructurA 011-525-55-629-8708 and 011-525-55-442- 4948 (mp@proa.structura.com.mx) or Dresner Corporate Services (general investors, analysts and media) Kristine Walczak, 312-726-3600 (kwalczak@dresnerco.com) PEMEX: Deadline for Submission of CSM Applications Extended ----------------------------------------------------------- Petroleos Mexicanos (Pemex) said it will extend by four weeks the period in which it will accept applications for its CSM (Contratos de Servicios Multiples) contracts for the Monterrey- Reynosa, Mision, Cuervito and Corindon-Pandura blocks. The process was originally scheduled to close sometime in September but according to South American Business Information, the process is being extended in order to give interested companies more time to prepare their proposals. The deadline for the applications for CSM contracts for the Fronterizo, Ricos and Olmos blocks are also expected to change. This process is the culmination of two years of intense debate over the constitutionality of the contracts. Some energy sector consultants, such as Cambridge Energy Research Associates, have predicted that there would be few companies interested in the concessions because not all the blocks are attractive for investors given their size. Only four of the seven blocks are large. The CSMs are expected to boost Mexico's production of natural gas by 1bil cubic feet per day and attract investments to the tune of US$10 million. ======= P E R U ======= VOLCAN: Takes On Glencore's Offer --------------------------------- Peruvian zinc miner Volcan announced it has accepted an offer from Swiss resources group Glencore International to become the Company's strategic partner. Citing a filing with the Lima stock exchange, Business News Americas reports that Volcan's board gave green light to a US$40- million credit from Glencore to be paid off over seven years with two years' grace at a rate of Libor plus 3.5%. The credit will be guaranteed by Volcan's Andachagua assets, part of the cash- strapped company's Yauli unit in central Junin department, Volcan said. The offer also includes a long-term commercial agreement from 2004-2010 covering the sale of a part of Volcan's production of zinc, lead and copper concentrates, at "international market terms and conditions," the filing said. At the same time, the board authorized management to complete negotiations with a banking syndicate, led by Germany's WestLB, to restructure a US$110 million loan. CONTACT: COMPANIA MINERA VOLCAN Av Gregorio Escobedo 710 Jesus Mara Lima, Peru Tel: +51 1 219-4000 Fax: +51 1 261-9716 Contact: Mr. FMG Sayan (Francisco), Chairperson ================================= T R I N I D A D & T O B A G O ================================= BWIA: Profitability Likely by Year-End, Says Minister ----------------------------------------------------- Trinidad and Tobago Trade and Industry Minister, Ken Valley, told reporters at the post Cabinet news conference on Thursday afternoon that cash-strapped BWIA is expected to return to economic viability by December 31, The Antigua Sun reports. The announcement came after the airline reported a TT$61.9- million (US$10.3 million) operating loss for the first half of this year. According to the minister, the airline has informed the government that it did not expect to require immediate funding for about a month. The Patrick Manning administration has pledged TT$116 million to the airline under certain conditions, which include a reduction in its operating costs; increased production by flight staff; a review and revision of executive compensation contracts and all other salaries of employees; as well as a review and revision of the airline's policy on free and rebated tickets to staff. Valley said if the airline can return to economic viability by the target date, the government would consider asking the public to invest in it. But he told reporters "cold hard cash" was needed to provide a sustainable platform for the airline and, "We may ask the public to buy into the airline, including members of the media". Valley said that a government team recently returned from Miami where they held talks with the International Lease Finance Corporation (ILFC) that seized two of the Company's aircraft for its failure to meet a three million US dollar debt, earlier this year. He said the meetings were aimed at working out a program for the sustainability of BWIA. He described the talks as going "quite well" but that there were "one or two more issues to be resolved". He said the airline would be seeking to lease new aircraft from ILFC and that the government has informed the Company that it was willing to guarantee the maintenance schedule of the aircraft to international standards. Meanwhile, Valley revealed that BWIA will launch its inaugural flight to the Dominican Republic on 18 Nov. He assured that the government was committed to supporting the route over the next two years, following its earlier inaugural flights to Costa Rica and Cuba. CONTACT: British West Indies Airways Phone: + 868 627 2942 E-mail: mailto:mail@bwee.com Home Page: http://www.bwee.com/ BWIA: AATT Finalizing Evaluation of Application For Reviewer ------------------------------------------------------------ Officials from the Airports Authority are close to completing their evaluation of the local and international consultants who have applied for the job of reviewing BWIA operations, the Trinidad Guardian reports, citing AATT chairman Linus Rogers. AATT, which was given the responsibility of hiring a consultant to look at BWIA's operations, didn't reveal the exact date when it would hire a consultant but Rogers said hiring would come in "shortly." ================= V E N E Z U E L A ================= CITGO: Contributes Record-Breaking $7 Million to MDA ---------------------------------------------------- The employees, branded marketers and business associates of CITGO Petroleum Corporation presented a record-breaking $7 million contribution to the Muscular Dystrophy Association (MDA) and Jerry's Kids Monday on the Jerry Lewis Labor Day Telethon in Los Angeles, Calif. CITGO's 2003 contribution represents a 27 percent increase over the 2002 contribution of $5.5 million. Also, the number of CITGO marketers who participated in this year's fund-raising efforts increased to 245 in 2003 from 189 in 2002. Each year CITGO's top six fund-raising marketers from the previous year are invited to present their check at the Jerry Lewis Labor Day Telethon. This year's marketer representatives and their company's qualifying totals include: -- Gene Fuller - Granite Capital Holdings (New York) $228,000 -- Jinger Duryea - C.N. Brown Company (Maine) $224,600 -- Barry Trilla - Texor Petroleum (Illinois) $214,000 -- Ron Ford - 4 Front Petroleum (Oklahoma) $160,000 -- Don Smith - Huron Smith Oil Company (Mississippi) $145,000 -- Roy Foutz - Petroleum Marketers, Inc. (Virginia) $100,000 "CITGO is proud of our employees, branded marketers and business associates for their tremendous fund-raising efforts this year. Their hard work emphasizes their obvious commitment to helping people cope with these devastating neuromuscular diseases," said Luis Marin, CITGO's President and Chief Executive Officer. CITGO became a national sponsor of MDA in 1986. Over the life of the sponsorship, CITGO's marketers, employees and business associates have raised more than $57 million for MDA. Employees throughout the company and CITGO's marketers conduct fund-raising events during the year and are pleased that they can offer hope, help and friendship to individuals who are affected by neuromuscular disease. CITGO, based in Tulsa, Okla., is a refiner, transporter and marketer of transportation fuels, lubricants, petrochemicals, refined waxes, asphalt and other industrial products. The company is owned by PDV America, Inc., an indirect wholly owned subsidiary of Petroleos de Venezuela, S.A., the national oil company of the Bolivarian Republic of Venezuela. DAEWOO MOTORS: Tax Regulators Order Asset Embargo ------------------------------------------------- Venezuelan tax authorities ruled an embargo on the assets of Korean Daewoo Motors local subsidiary, due to a supposed tax evasion. Jos� Vielma Mora, head of Venezuelas tax bureau - SENIAT explained that there was suspicion of a possible US$8.3 million tax evasion. According to SENIAT, the company has been ignoring a series of summons that urged it to comply with its tax commitments. PDVSA: Postpones Refinery Shutdown Until Next Weekend ----------------------------------------------------- Instead of shutting down part of a refinery in Curacao for maintenance this week, Venezuela's state oil company PDVSA will shut down the refinery next weekend, reports Bloomberg. Without giving any reason for the delay, a plant spokeswoman said PDVSA will temporarily close next weekend La Isla refinery's distillation unit, which processes 35,000 barrels a day of (b/d) of oil used to make fuel, gasoline and other products. According to the source, the shutdown, the Company's third since a two-month labor strike ended February 1, will reduce output at La Isla to about 165,000b/d from its current 190,000-195,000b/d, but deliveries and exports won't be affected because the refinery has inventories. The refinery will resume normal operations in the first week of October, the spokeswoman added. *********** 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 * * *