/raid1/www/Hosts/bankrupt/TCRLA_Public/031103.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
Monday, November 3, 2003, Vol. 4, Issue 217
Headlines
A R G E N T I N A
BANCO SUQUIA: Nacion Negates Reports of Roggio's Rejected Offer
CASA NERVION: Court Assigns Receiver For Bankruptcy
EMBALCORR: Court Approves Petition For Reorganization
ESTRUCTURA Y SERVICIOS: Credit Check in Bankruptcy Ends
GATIC: Two Private Equity Funds In Acquisition Talks
GROUP WISE: Verifications in Bankruptcy Process End
HANKE CULCUY: Receiver Prepares Individual Reports
NOI DUE: Receiver Verifies Claims in Bankruptcy Process
PETROBRAS ENERGIA: Reports Oil & Gas Production Jan-Sep. 2003
SOCIEDAD COMERCIAL: S&P Rates $400M of Bonds `raD'
TGS: $100M of Bonds Rated `raD' by Local Standard & Poor's
B E R M U D A
FLAG ATLANTIC: Relates First Meeting Information
FLAG ATLANTIC: Gives Notice of First Meeting
FLAG TELECOM: Issues Notice of First Meeting
FLAG TELECOM: Announces First Meeting Info
B R A Z I L
AES CORP.: Reports Results of Ops for First 9 Months, 3Q 2003
BCI: Announces Third Quarter 2003 Results
BCI: Issues Update on Remaining Assets Held for Disposition
BCI: Updates Plan of Arrangement
BCP: Telemar Balks At Acquisition Plans
TELEMAR: Reports Results for the 3Q03
C H I L E
ENDESA CHILE: Results Show Improvement During First 9-Mos of 2003
LE MANS DESARROLLO: Likely To Go Bankrupt
MARBELLA: Struggles to Deal With an Enormous Debt
M E X I C O
CINTRA: Reports $6.21M Loss in 3Q03
GRUPO IUSACELL: In Talks For Temporary Amendment, Waiver
* IMF Concludes 2003 Article IV Consultation with Mexico
P A N A M A
BLADEX: Reports 3Q03 Net Income Of $17.8 Million
- - - - - - - -
=================
A R G E N T I N A
=================
BANCO SUQUIA: Nacion Negates Reports of Roggio's Rejected Offer
---------------------------------------------------------------
Argentine federal bank Nacion denied reports by the local press
that it has rejected local group Roggio's offer for bank Suquia,
relates Business News Americas.
According to a Nacion spokesperson, the bank is still evaluating
Roggio and rival Banex's offers for Suquia.
Nacion is handling the sale of local banks Suquia, Bersa and
Bisel.
French bank Credit Agricole exited Argentina last year due to the
country's financial and economic crises and left behind Suquia
together with Banco Bisel and Bersa, which were taken over by
Nacion.
CASA NERVION: Court Assigns Receiver For Bankruptcy
---------------------------------------------------
Jorge Omar Inafuku is now receiver for Casa Nervion S.A., which
is undergoing the bankruptcy process. Argentine news portal
Infobae related that Clerk No. 51 assists the court on the case.
Mr. Inafuku will verify creditors' claims until November 26 this
year, after which the receiver will prepare the individual
reports. The individual reports must be submitted to the court on
February 12 next year.
The general report, which is prepared after the individual
reports are processed at the court, must be filed on March 25
next year. The Company's assets will then be liquidated to
reimburse clients.
CONTACT: Jorge Omar Inafuku
Cerrito 1070
Buenos Aires
EMBALCORR: Court Approves Petition For Reorganization
-----------------------------------------------------
Court No. 10 of the Civil and Commercial Tribunal of the
Argentine province of Moron approves a motion for "Concurso
Preventivo" filed by local company Embalcorr S.A. recently. The
Company will undergo reorganization under the care of Mr.
Baldomer Oscar Gonzalez, who was assigned as the Company's
receiver.
The credit verification process will end on November 28 this
year. This will clarify the nature and amount of the Company's
debts. The court orders the receiver to submit the reports March
5 next year.
The general report, which must be submitted to the court on April
30 next year, will be prepared after the individual reports are
processed at court. The informative assembly will then be held on
June 25 next year.
CONTACT: Embalcorr S.A.
Scheitzer 2784
Ituzaingo, Moron
Baldomer Oscar Gonzalez
Bartolome Mitre 1222
Moron
ESTRUCTURA Y SERVICIOS: Credit Check in Bankruptcy Ends
-------------------------------------------------------
The credit verification process for the reorganization of Buenos
Aires' Estructura y Servicios S.A. ends today, according to an
earlier report by the Troubled Company Reporter - Latin America.
The Company is undergoing reorganization after the city's Court
No. 1 approved the Company's motion for "Concurso Preventivo".
The Company's receiver, Mr. Jorge Raul Mencia, will prepare the
individual reports based on the verifications' results. These
reports must be submitted December 18 this year. The receiver
will also prepare a general report, to be submitted on March 2
next year, after the individual reports are processed.
The informative assembly will be held August 4 next year.
CONTACT: Estructura y Servicios S.A.
Ecuador 337
Buenos Aires
Jorge Raul Mencia
Uruguay 328
Buenos Aires
GATIC: Two Private Equity Funds In Acquisition Talks
----------------------------------------------------
Two private equity funds are making negotiations in order to
acquire Argentine textile firm Gatic. According to market
sources, the investors are Dolphin, which has been in talks for
the past four months, and another fund led by Guillermo Gotelli,
Alpargatas' ex-CEO.
Gatic, which has ARS465 million in debt, initiated a formal
restructuring proceeding in October 2001. All of its plants are
out of operation and its 4,500 workers are currently suspended.
The entrance of a new shareholder into the Company's ownership is
one of the conditions set by the State in order to aid the firm.
The State holds 62% of Gatic's debt, while other 30% belongs to
private investors and 8% to its staff.
Fabian Bakchellian, its CEO, said he has come to the conclusion
that the only way out for the Company would be to close down
three of its eight plants, lay off 1,000 employees and get aid of
between US$10 and US$15 million.
"This was a restructuring I had carried out two years ago, but
when my father came back he rehired the staff we had dismissed,"
explained Bakchellian in a press conference Tuesday.
The executive said he was handling several alternatives to save
Gatic. One of them would be to sell the firm entirely and another
one would be to sell a great part of the shares and keep a
minority stake.
GROUP WISE: Verifications in Bankruptcy Process End
---------------------------------------------------
The credit verification process for the bankruptcy of Argentine
company Grupo Wise S.R.L. ends today. The Company's receiver, Mr.
Carlos Alberto Ortiz, who verified the claims, will prepare the
individual reports.
Court No. 3 of the Civil and Commercial Tribunal of the Argentine
province of Cordoba, which handles the Company's case, also
requires the receiver to prepare a general report on the case.
Local sources, however, did not mention the deadlines for the
receiver's reports.
CONTACT: Group Wise S.R.L.
Punilla 2066
Cordoba
Carlos Alberto Ortiz
Arturo M Bas 60
Buenos Aires
HANKE CULCUY: Receiver Prepares Individual Reports
--------------------------------------------------
The credit verification process for the reorganization of
Argentine company Hanke Culcuy y Compania S.A. ends today,
November 3, 2003. The Company's receiver, Mr. Daniel Francisco
Puimetti, will prepare the individual reports, which are due for
submission on December 16 this year.
The receiver will prepare the general report after the individual
reports are processed at court. These must be submitted to the
court on February 27 next year.
An earlier report from the Troubled Company Reporter - Latin
America indicated that the Company started reorganization after
Buenos Aires Court No. 3 approved its motion for "Concurso
Preventivo".
The court has also called for an informational assembly to be
held on August 13 next year.
CONTACT: Hanke Culcuy y Compania S.A.
Km 14 Ruta Nacional 19
San Agustin, Santa Fe
Daniel Francisco Piumetti
San Martin 2347
Buenos Aires
NOI DUE: Receiver Verifies Claims in Bankruptcy Process
-------------------------------------------------------
Creditors of Argentine company Noi Due S.R.L. must submit their
claims for verification before the December 15 this year. The
court-appointed, Mr. Jorge Guillermo Podesta, will authenticate
the claims.
Court No. 11, which handles the Company's case, will prepare the
individual reports, which are due on February 26 next year, upon
completion of the verification process. He will also prepare the
general report after the individual reports are processed at
court. This must be filed on April 8 next year.
CONTACT: Jorge Guillermo Podesta
Reconquista 336
Buenos Aires
PETROBRAS ENERGIA: Reports Oil & Gas Production Jan-Sep. 2003
-------------------------------------------------------------
Petrobras Energia Participaciones S.A., controlling company with
a 98.21% stake in Petrobras Energia S.A., announced Petrobras
Energia S.A.'s oil and gas production for the Jan-September 2003.
In a Business News Americas report, the Company reported total
oil and gas production of 159,200 barrels of oil equivalent a day
(boe/d) for the period.
Total oil production was 112,500boe/d, with Argentina accounting
for 58,000boe/d, Venezuela 38,500boe/d, Peru 11,600boe/d, Ecuador
3,000boe/d and Bolivia 1,400boe/d.
Total gas production was 46,700boe/d, with Argentina accounting
for 35,800boe/d, Bolivia 6,400boe/d, Venezuela 3,300boe/d and
Peru 1,200boe/d.
SOCIEDAD COMERCIAL: S&P Rates $400M of Bonds `raD'
--------------------------------------------------
Standard & Poor's International Ratings, Ltd. Sucursal Argentina
rates US$400 million of bonds `raD', relates the Comision
Nacional Valores, the country's securities regulator.
The bonds were described as "obligaciones negociables" and were
classified under "program". The bonds' maturity date, however,
was not revealed.
S&P said that the rating, issued on Monday, was based on the
Company's finances as of June 30 this year. The `raD' rating is
issued to bonds that are in default or whose obligor has filed
for bankruptcy.
TGS: $100M of Bonds Rated `raD' by Local Standard & Poor's
----------------------------------------------------------
Some US$100 million worth of corporate bonds issued by Argentine
company Transportadora de Gas del Sur S.A. received default
ratings from Standard & Poor's International Ratings, Ltd.
Sucursal Argentina on Monday. The `raD' rating was based on the
Company's finances as of the end of June this year.
The Comision Nacional de Valores described the bonds as
"Obligaciones Negociables emitidas bajo el Programa Global de
T¡tulos de Corot y Mediano Plazo por USD 500 Mio, vencido en
diciembre de 1998". These bonds, classified under "Simple Issue",
matured on December 2 last year.
The rating is assigned to financial commitments that are in
default or whose obligor has filed for bankruptcy.
=============
B E R M U D A
=============
FLAG ATLANTIC: Relates First Meeting Information
------------------------------------------------
In the Supreme Court of Bermuda
Companies Winding -Up, 2002
No. 152
Notice is hereby given that the first meeting of Creditors in the
matter of the Companies Act of 1981 and in the matter of Flag
Atlantic Holdings Limited will be held at the offices of KMPG at
11:00 a.m. on Friday, the 14th day of November 2003 the following
address:
KMPG LLP
Crown House
4 Par-la-Ville Road,
Hamilton HM08, Bermuda.
Proxies must be lodged with the Joint Provisional Liquidators at:
KMPG LLP
P.O. Box HM906
Hamilton, Bermuda
no later than 5:00 p.m. Bermuda time on Thursday, November 13,
2003.
To entitle you to vote at the meeting your proof of debt must be
lodged with the Joint Provisional Liquidators at the above
address not later than 5:00 p.m. Bermuda time on Thursday,
November 13, 2003.
At the first meetings of the creditors, they may by resolution
determine whether or not an application is to be made to the
court to appoint Liquidators and, if so, who the Liquidators are
to be.
They may also by resolution determine whether or not an
application shall be made to the Court for the appointment of a
Committee of Inspection to act with the Liquidators, and if so,
who the members of the Committee are to be.
If a Liquidator or Liquidators is/are not appointed by the Court
the Official receiver will be the Liquidator.
CONTACT: KMPG LLP
Shane Hodges
London
Phone: +44 (0) 20 7694 3163
FLAG ATLANTIC: Gives Notice of First Meeting
--------------------------------------------
In the Supreme Court of Bermuda
Companies Winding-Up, 2002
No. 387
Notice is hereby given that the first meeting of Creditors in the
matter of the Companies Act of 1981 and in the matter of Flag
Atlantic Holdings Limited will be held at the offices of KMPG at
12:00 p.m. on Friday, the 14th day of November 2003 the following
address:
KMPG LLP
Crown House
4 Par-la-Ville Road,
Hamilton HM08, Bermuda.
Proxies must be lodged with the Joint Provisional Liquidators at:
KMPG LLP
P.O. Box HM906
Hamilton, Bermuda
no later than 5:00 p.m. Bermuda time on Thursday, November 13,
2003.
To entitle you to vote at the meeting your proof of debt must be
lodged with the Joint Provisional Liquidators at the above
address not later than 5:00 p.m. Bermuda time on Thursday,
November 13, 2003.
At the first meetings of the creditors, they may by resolution
determine whether or not an application is to be made to the
court to appoint Liquidators and, if so, who the Liquidators are
to be.
They may also by resolution determine whether or not an
application shall be made to the Court for the appointment of a
Committee of Inspection to act with the Liquidators, and if so,
who the members of the Committee are to be.
If a Liquidator or Liquidators is/are not appointed by the Court
the Official receiver will be the Liquidator.
CONTACT: KMPG LLP
Shane Hodges
London
Phone: +44 (0) 20 7694 3163
FLAG TELECOM: Issues Notice of First Meeting
--------------------------------------------
In the Supreme Court of Bermuda
Companies Winding-Up, 2002
No. 150
Notice is hereby given that the first meeting of Creditors in the
matter of the Companies Act of 1981 and in the matter of Flag
Telecom Holdings Limited will be held at the offices of KMPG at
9:30a.m. on Friday, the 14th day of November 2003 the following
address:
KMPG LLP
Crown House
4 Par-la-Ville Road,
Hamilton HM08, Bermuda.
Proxies must be lodged with the Joint Provisional Liquidators at:
KMPG LLP
P.O. Box HM906
Hamilton, Bermuda
no later than 5:00 p.m. Bermuda time on Thursday, November 13,
2003.
To entitle you to vote at the meeting your proof of debt must be
lodged with the Joint Provisional Liquidators at the above
address not later than 5:00 p.m. Bermuda time on Thursday,
November 13, 2003.
At the first meetings of the creditors, they may by resolution
determine whether or not an application is to be made to the
court to appoint Liquidators and, if so, who the Liquidators are
to be.
They may also by resolution determine whether or not an
application shall be made to the Court for the appointment of a
Committee of Inspection to act with the Liquidators, and if so,
who the members of the Committee are to be.
If a Liquidator or Liquidators is/are not appointed by the Court
the Official receiver will be the Liquidator.
CONTACT: KMPG LLP
Shane Hodges
London
Phone: +44 (0) 20 7694 3163
FLAG TELECOM: Announces First Meeting Info
------------------------------------------
In the Supreme Court of Bermuda
Companies Winding -Up, 2002
No. 150
Notice is hereby given that the first meeting of Creditors in the
matter of the Companies Act of 1981 and in the matter of Flag
Atlantic Holdings Limited will be held at the offices of KMPG at
10:00 a.m. on Friday, the 14th day of November 2003 the following
address:
KMPG LLP
Crown House
4 Par-la-Ville Road,
Hamilton HM08, Bermuda.
Proxies must be lodged with the Joint Provisional Liquidators at:
KMPG LLP
P.O. Box HM906
Hamilton, Bermuda
no later than 5:00 p.m. Bermuda time on Thursday, November 13,
2003.
To entitle you to vote at the meeting your proof of debt must be
lodged with the Joint Provisional Liquidators at the above
address not later than 5:00 p.m. Bermuda time on Thursday,
November 13, 2003.
At the first meetings of the creditors, they may by resolution
determine whether or not an application is to be made to the
court to appoint Liquidators and, if so, who the Liquidators are
to be.
They may also by resolution determine whether or not an
application shall be made to the Court for the appointment of a
Committee of Inspection to act with the Liquidators, and if so,
who the members of the Committee are to be.
If a Liquidator or Liquidators is/are not appointed by the Court
the Official receiver will be the Liquidator.
CONTACT: KMPG LLP
Shane Hodges
London
Phone: +44 (0) 20 7694 3163
===========
B R A Z I L
===========
AES CORP.: Reports Results of Ops for First 9 Months, 3Q 2003
-------------------------------------------------------------
The AES Corporation announced Thursday that income from
continuing operations for the nine months ended September 30,
2003 was $247 million, or $0.42 per diluted share, up from a loss
of $(211) million, or $(0.39) per diluted share, for the nine
months ended September 30, 2002. Income from continuing
operations for the quarter ended September 30, 2003, was $46
million, or $0.07 per diluted share, up from a loss of $(207)
million, or $(0.38) per diluted share for the third quarter of
2002.
Revenues for the nine months ended September 30, 2003 were $6.3
billion, up from $5.7 billion for the nine months ended September
30, 2002. Revenues for the quarter ended September 30, 2003 were
$2.3 billion, up from $1.9 billion for the quarter ended
September 30, 2002. Operating income for the nine months ended
September 30, 2003 was $1.5 billion, up from $1.3 billion for the
nine months ended September 30, 2002. Operating income for the
quarter ended September 30, 2003 was $541 million, up from $370
million for the quarter ended September 30, 2002. Included in
operating income for the third quarter of 2003 and 2002 were
charges (before income taxes) related to the write-off of
terminated construction projects of $75 million and $168 million,
respectively.
AES also announced that consolidated net cash provided by
operating activities for the first nine months of 2003 was $1.1
billion and $349 million for the third quarter of 2003.
Additionally, its subsidiary distributions to parent and
qualified holding companies for the first nine months of 2003
totaled $799 and $319 million for the third quarter of 2003.
Net income for the nine months ended September 30, 2003 was $41
million, or $0.07 per diluted share compared to a loss of $(743)
million, or $(1.38) per diluted share, for the nine months ended
September 30, 2002. Net income for the quarter ended September
30, 2003 was $76 million, or $0.12 per diluted share compared to
a loss of $(315) million, or $(0.58) per diluted share for the
third quarter of 2002. The results for all periods include
amounts related to discontinued operations, including Drax,
because of the Company's decision during the third quarter of
2003 to withdraw its support for a restructuring at that
business.
Paul Hanrahan, Chief Executive Officer, stated, "I am pleased
with our results this quarter. We are beginning to see the
positive financial impacts of our efforts to improve operating
performance at our businesses as well as the effects of our
corporate debt reduction efforts. Additionally, we continue to
see possibilities for attractive growth globally. The financial
closing this quarter of our new 1200 mw contract generation power
facility in Spain is one example of the select opportunities we
are pursuing."
Barry Sharp, Chief Financial Officer, stated, "Our operating
income, earnings per share and cash flow results continue to be
in line with our expectations. We are also pleased with the
continued progress we made in reducing our corporate level debt.
During the quarter we reduced parent debt by $605 million,
resulting in cumulative corporate debt reduction of $1,028
million since the beginning of 2003. During the quarter we also
completed the final component of our recent corporate refinancing
efforts with the successful execution of our $950 million term
loan and revolver financings."
AES is a leading global power company comprised of contract
generation, competitive supply, large utilities and growth
distribution businesses.
The company's generating assets include interests in 118
facilities totaling over 45 gigawatts of capacity, in 28
countries. AES's electricity distribution network sells 89,614
gigawatt hours per year to over 11 million end-use customers.
For more general information visit our web site at www.aes.com or
contact investor relations at investing@aes.com.
To see financial statements:
http://bankrupt.com/misc/AES_CORP.htm
CONTACT: AES Corporation
Kenneth R. Woodcock, 703-522-1315
BCI: Announces Third Quarter 2003 Results
-----------------------------------------
As a result of the adoption on July 17, 2002 of BCI's Plan of
Arrangement, BCI's consolidated financial statements for the
third quarter of 2003 reflect only the activities of BCI as a
holding company. BCI's 75.6% interest in Canbras Communications
Corp. ("Canbras") is recorded under Investments on the balance
sheet at $15 million, being the lower of its carrying value and
estimated net realizable value. Canbras' operating results are
not reflected on BCI's consolidated statements of earnings.
Third Quarter Results
As at September 30, 2003, BCI's shareholders' equity was $209.1
million, down by $4 million from the second quarter of 2003. This
decrease was mainly as a result of interest expense of $4.6
million on the BCI's 11% senior unsecured notes and
administrative expenses of $2.2 million, partially offset by
interest income of $3.0 million.
During the quarter, pursuant to the Axtel transaction announced
on March 27, 2003, BCI received a cash payment of US$ 1.2
million, representing the second instalment on the Axtel short
term note. The remaining balance of the Axtel short term note of
$1.6 million, being the equivalent of US$1.2 million, is due on
December 31, 2003 and is recorded as notes receivable on BCI's
balance sheet.
BCI's cash and temporary investments as at September 30, 2003
were $393 million representing approximately 95% of the company's
total assets.
Total liabilities of $205 million include BCI's 11% senior
unsecured notes due September 2004 in the amount of $160 million.
Accrued liabilities were $17.7 million at the end of the third
quarter of 2003, down $4.6 million from the second quarter of
2003 mainly as a result of the payment of the accrued interest on
the BCI's 11% senior unsecured notes on September 30, 2003.
Total liabilities also include a provision for the Vesper loan
guarantees in the amount of $27.3 million (being the equivalent
of US$20.2 million). On September 23, 2003 BCI reached an
agreement with the Vespers, Vespers majority shareholder QUALCOMM
Incorporated ("Qualcomm") and a syndicate of the Vespers'
Brazilian banks (the "Vespers' Banks"), pursuant to which BCI
will pay US$ 12 million in consideration for the absolute release
of the Vesper loan guarantees. This agreement has been reached in
connection with a series of other transactions involving
Qualcomm, the Vespers, the Vespers' Banks, BCI and Embratel
Participacoes S.A (the "Vespers Transactions").
As required in accordance with BCI's Plan of Arrangement, BCI
sought and obtained on October 7, 2003 the approval of the
Ontario Superior Court of Justice (the "Court") for the payment
of US$ 12 million as a settlement of BCI's Vesper loan
guarantees. The settlement transaction is conditional on, and the
payment of the US$ 12 million will be made concurrently with, the
closing of the balance of the Vespers Transactions, which are
subject to regulatory approval in Brazil and certain other
contingencies. BCI will only record the settlement of the Vesper
loan guarantees and the reduction in the provision upon closing
of the Vespers Transactions, which is expected in the fourth
quarter of 2003.
Net costs from October 1, 2003 to December 31, 2004 are estimated
at approximately $15.0 million, including interest expense on the
11% senior unsecured notes of approximately $18.4 million,
interest income of approximately $12.0 million and operating
costs of approximately $8.6 million. These future net costs
exclude any amounts that may be required to settle contingent
liabilities such as law suits. These estimates for future net
costs are consistent with the estimates provided at the end of
the second quarter of 2003.
The net loss for the third quarter was $4.0 million, or $0.10 per
share.
To see financial statements: http://bankrupt.com/misc/BCI.htm
CONTACT: Bell Canada International Inc.
Howard N. Hendrick, 514-392-2260
howard.hendrick@bci.ca
BCI: Issues Update on Remaining Assets Held for Disposition
-----------------------------------------------------------
On October 8, 2003, Canbras Communications Corp. announced that
it had entered into definitive agreements to sell all of its
broadband communications operations in Brazil for $32.6 million
of which $22.2 million will be received in cash and the balance
of $10.4 million in the form of a one-year promissory note
bearing interest at 10%. The amount of the note is subject to
reduction in the event indemnification obligations of Canbras
arise under the terms of its agreement with Horizon Cablevision
do Brasil S.A. ("Horizon"), one of the parties to the sale
transactions. BCI expects to receive its proportionate share of
the net proceeds to be distributed by Canbras, currently
estimated to be approximately $21 million assuming the full
repayment of the one-year note.
Canbras' sale transactions are subject to a number of conditions,
including the obtaining of all required regulatory approvals in
Brazil and other third-party approvals. The transactions are also
subject to the approval of the shareholders of Canbras. In
connection with such shareholder approval, BCI, which owns 75.6%
interest in Canbras and controls 76.6% of the outstanding Canbras
shares, has undertaken to enter into a voting agreement (the
"Voting Agreement") with Horizon pursuant to which BCI will vote
all Canbras shares owned or controlled by it in favour of the
Horizon sale transaction, subject to approval of the Voting
Agreement by the Court pursuant to BCI's Plan of Arrangement. On
October 29, 2003, a hearing was held on this matter but no
decision has yet been rendered by the Court.
The Canbras sale transactions are expected to close during the
first quarter of 2004.
BCI: Updates Plan of Arrangement
--------------------------------
The claims identification process established in connection with
BCI's Plan of Arrangement was concluded on August 31, 2003 and
September 30, 2003 for claims from taxation authorities. BCI
announced the initial results of this process on September 2,
2003. The Court appointed monitor under the BCI's Plan of
Arrangement (the "Monitor") is currently in the process of
reviewing all the claims filed in this process, and expects to
file a report with the Court in November 2003. It is expected
that the Court, based on advice of the Monitor in its report,
will make further orders with respect to the timing,
determination and resolution of the identified claims. Additional
details concerning the results of the claims identification
process can be found in notes 1 and 9 of the accompanying
consolidated financial statements.
BCI is operating under a court supervised Plan of Arrangement,
pursuant to which BCI intends to monetize its assets in an
orderly fashion and resolve outstanding claims against it in an
expeditious manner with the ultimate objective of distributing
the net proceeds to its shareholders and dissolving the company.
BCI is listed on the Toronto Stock Exchange under the symbol BI
and on the NASDAQ National Market under the symbol BCICF. Visit
our Web site at www.bci.ca.
BCP: Telemar Balks At Acquisition Plans
---------------------------------------
Telemar Norte Leste (TMAR), operational subsidiary of Tele Norte
Leste Participacoes (NYSE: TNE), announced Thursday that it has
decided not to acquire an interest in BCP once America Movil
(NYSE:AMX) completes its acquisition; both companies will work
for the six months following the BCP acquisition to develop and
execute commercial and operational agreements.
CONTACT: TNE - INVESTOR RELATIONS
Roberto Terziani (terziani@telemar.com.br) 55 21 3131
1208
Carlos Lacerda (carlosl@telemar.com.br) 55 21 3131 1314
Fax: 55 21 3131 1155
THE GLOBAL CONSULTING GROUP
Kevin Kirkeby (kkirkeby@hfgcg.com)
Mariana Crespo (mariana.crespo@hfgcg.com)
Tel: 1 646 284 9400
Fax: 1 646 284 9494
TELEMAR: Reports Results for the 3Q03
-------------------------------------
HIGHLIGHTS OF THE QUARTER
- The fixed plant in service comprised 15,075 thousand lines at
the end of Sep/03, up 1.2% from the previous quarter and stable
from the same period of the prior year. The mobile plant
encompassed 2,849 thousand subscribers, a 27.4% increase during
the quarter.
- ADSL accesses totaled 146 thousand units in service at the end
of Sep/03, +77.7% over 2Q03.
- Consolidated gross revenues reached R$5,152 million, During
3Q03, gross revenues amounted to R$14,175 million, up 20.8% from
the same period of the previous year.
- Consolidated net revenues stood at R$3,771 million, up 12.8%
and 22.3% from 2Q03 and 3Q02, respectively. Year-to-date (end of
3Q03) figures amounted to R$ 10,332 million, up 19.5% from the
same period of the previous year (R$8,648 million).
- Wireline ARPU (average revenues per user) stood at R$ 78, 12.1%
above 2Q03 levels, chiefly as a result of the tariff adjustment
at the end of Jun/03.
- Wireless ARPU reached R$ 29, with a 12.4% decrease in
comparison with 2Q03, due to change revenues and interconnection
costs (new regulatory system, based on "bill & keep").
- Consolidated operating costs and expenses (ex-depreciation and
amortization) totaled R$2,107 million (increasing 13.0% and
17.2%, respectively, compared with 2Q03 and 3Q02).
- Year-to-date levels amounted to R$5,713 million, approximately
23.7% above prior year levels (R$4,618 million).
- During 3Q03, the Company recorded provisions for contingencies
of R$83 million, related to tax, civil and mainly labor calims,
due to an increase in the number of suits and updated expectancy
of losses.
- Consolidated provisions for doubtful accounts (PDA), in the
amount of R$ 160 million were equal to 3.1% of gross revenues for
the quarter (2Q03 - 3.3%; 3Q02 - 3.0%). On a year-to-date basis,
PDA amounted to R$454 million or 3.2% of gross revenues (9M02 -
4.2%).
- Consolidated EBITDA for 3Q03 reached R$1,663 million
(increasing 12.4% and 29.4%, respectively, compared with 2Q03 and
3Q02), with a 44.1% margin. Year-to-date, EBITDA reached R$4,618
million, with 44.7% margin.
- Net financial expenses totaled R$606 million, +17.0% from 2Q03
and 29.5% lower than 3Q02.
- Net losses amounted to approximately R$24million (R$166 million
for 2Q03 and R$382 million for 3Q02), bringing year-to-date
losses to R$301 million.
- Capital Expenditures (Capex) for 3Q03 amounted to R$290 million
(R$231 million allocated to wireline and R$53 million to
wireless), in line with the previous quarter's levels. Year-to-
date CapEx reached R$770 million (7.5% of net revenues).
- Consolidated Cash Flow after CAPEX reached R$ 1,423 million for
the quarter, an increase of 51.1% over 2Q03 figures.
- Consolidated net debt for 3Q03 totaled R$8,655 million, down
9.1% and 3.9% from levels recorded for 2Q03 and 3Q02,
respectively.
OPERATING PERFORMANCE REVIEW
Wireline Services
The wireline installed plant comprised 17,428 thousand lines at
the end of 3Q03, stable in comparison with the previous quarter,
while the plant in service totaled 15,075 thousand lines, a
increase of 1.2% over 2Q03, with no changes from 3Q02 levels.
The residential lines were up 2% over the previous quarter and
commercial lines remained unchanged. Compared to the same period
of the previous year, the increase in commercial lines was 2.4%.
The utilization rate was 86.5% as of Sep/03, compared with 85.2%
in Jun/03 and 85.8% in Sep/02.
About 846 thousand lines were activated and 672 thousand lines
were disconnected, with net additions to the plant in service of
174 thousand lines.
The main reason behind that expansion was the increase in the
term for partial blockage for up to three months for some
clients, based on a good payment track record and when the
request for disconnection is due to a temporary inability to pay
their bills. In such cases, the Company is offering appropriated
level products but with restricted usage, until the customer's
financial condition recovers. With these punctual measures, the
Company has been able to recover approximately 20% of the
customer base otherwise disconnected.
At the end of the quarter, approximately 1,064 thousand lines
(2Q03 - 1,021 thousand lines) were blocked.
The average plant in service comprised 14,976 thousand lines for
3Q03 (up 0.4% from 2Q03).
Public Phones totaled 674 thousand units at the end of 3Q03,
meeting the requirements established in the concession agreement
and the current demand levels.
The digitalization rate of the local network stood at 98.8% in
Sep/03, compared with 98.6% in Jun/03 and 97.8% in Sep/02.
At the end of 3Q03, around 191 thousand high-speed Internet
accounts were in service, as shown in the next chart. Of this
total, ADSL represented 146 thousand units, a 77.7% increase
compared with 2Q03. ISDN comprised 45 thousand units
(approximately 90 thousand lines in service allocated to this
kind of access).
Wireless Services
Oi's customer base at the end of Sep/03 comprised 2,849 thousand
subscribers, a net addition of 613 thousand customers during the
quarter, or a 27.4% increase over the prior quarter. The reasons
behind this significant expansion are multiple sale campaigns,
customer loyalty programs, product bundling (Oi fam¡lia),
Father's Day promotions in August, as well as continued growth in
the overall market. Oi's estimated share in its Region's total
net additions was equal to 46.0% in the quarter.
The customer mix remained unaltered from the prior quarter's
levels (80% under prepaid and 20% under postpaid plans). For
3Q03, the average customer base included 2,529 thousand
subscribers, increasing by 30.4% compared with 2Q03.
At the end of 3Q03, Oi had an estimated 15.1% market share in its
region (2Q03 - 12.5%). The average estimated penetration of
wireless services in Region I was equal to approximately 17.1% at
the end of the quarter.
Churn rates during 3Q03 stood at 4.8% (2Q03 - 2.2%), as a result
of approximately 111 thousand disconnections during the period
(2Q03 - 40 thousand). It should be noted that, in Jul/03,
cancellations within the prepaid base reached the significant
level of 59 thousand customers, of which 47 thousand related to
adjustments from prior periods. Excluding such adjustments, churn
rate for the quarter was 2.7%.
During the quarter, 43 million short messages were sent, up 13.2%
from 2Q03, as a result of advertising campaigns to foster greater
use of this service, in addition to the interoperability of
messages with other providers starting Jul/03, as well as the
growth in the customer base.
CONSOLIDATED RESULTS
Revenues
The increase in revenues during the quarter arose mainly from the
tariff adjustment effective late Jun/03, in addition to the
continuing growth of wireless, long-distance and data services.
Consolidated gross revenues grew by 12.7% during the quarter,
amounting to R$5,152 million, 22.5% up from 3Q02. Major
contributors to this result were local wireline services
(excluding fixed-to-mobile calls), with a 17.7% growth in
revenues during the quarter; long-distance services (ex-VC2/3),
up 22.4%; and data transmission (+4.8%), in addition to wireless
services (+24.7%).
It should be pointed out that since late Jun/03, when Anatel
ratified the tariff increase in accordance with the terms of the
concession agreement, a number of preliminary injunctions granted
by the Judiciary Power prevented the Company from implementing
the full tariff increases approved by Anatel (see "Main events of
the Quarter").
Compared with 3Q02, revenues grew by R$946 million (+22.5%).
The composition of wireline revenues for the quarter reflects the
above mentioned tariff increase, with an increased share of local
services (from 44% to 46%), mainly to the detriment of local
fixed-to-mobile service/VC-1 (from 18% to 15%), as compared to
the prior quarter.
With respect to 3Q02, long-distance services (ex-VC2/3) stand
out, with a 49.8% growth during the period, increasing their
share in total revenues from 11% to 13%.
Consolidated net revenues increased by 12.8% during the quarter,
amounting to R$3,771 million, up 22.3% from 3Q02. Year-to-date
net revenues totaled R$10,332 million, 19.5% above the levels
recorded in the same period of the prior year.
With respect to 3Q02, long-distance services (ex-VC2/3) stand
out, with a 49.8% growth during the period, increasing their
share in total revenues from 11% to 13%.
Consolidated net revenues increased by 12.8% during the quarter,
amounting to R$3,771 million, up 22.3% from 3Q02. Year-to-date
net revenues totaled R$10,332 million, 19.5% above the levels
recorded in the same period of the prior year.
Wireline Services
Gross revenues from wireline services amounted to R$4,765 million
for 3Q03, increasing by 12.0% during the quarter and by 18.3% on
3Q02. Year to date wireline services revenues totaled R$13,235
million, up 14.6% from the same period of 2002, on account of the
expansion in long-distance and data transmission services, as
well as the increase in tariffs for local services.
- Local (monthly subscription, traffic, installation fee and
fixed-to-mobile/VC1): revenues amounted to R$2,936 million, a
12.2% and 12.9% increase over 2Q03 and 3Q02, respectively, as a
result of the tariff adjustment at the end of Jun/03. Excluding
fixed-to-mobile revenues, the increase amounted to 17.7% and
15.8% compared with 2Q03 and 3Q02, respectively.
Following we highlight the performance of local services:
- Revenues from Monthly Subscription amounted to R$1,440 million,
up 17.7% from 2Q03 and 3Q02, on account of the average tariff
increase effective late Jun/03, in addition to a moderate
expansion in the average lines in service.
- Pulse-based traffic revenues reached R$710 million, increasing
by 19.2% as compared to 2Q03, due to the tariff adjustment and
increased traffic during the quarter (+1.6%). It should be noted,
however, that 3Q03 had five more business days than 2Q03.
Compared with 3Q02, the tariff rise in Jun/03 offset the reduced
traffic during the period (-4.7%), leading to a revenue growth of
15.5% for the period.
- Installation fees amounted to R$18 million, decreasing by 16.9%
and 40.8% compared with 2Q03 and 3Q02, respectively, as a result
of promotional campaigns offering the installation of a second
(residential) line free of charges and a 50% discount on non-
residential installations.
- Local fixed-to-mobile calls (VC1) revenues stood at R$733
million, down 1.7% from 2Q03, essentially due to the reduction in
traffic (1.3%). Compared with 3Q02, the 4.9% increase is
attributable to the tariff increase ratified in Feb/03, of 24.8%
on average, partly offset by the reduction in traffic during the
period (17.3%). The reduction in fixed-to-mobile traffic is a
response to Company actions aimed fostering fixed-to-fixed
traffic, stressing tariff differences.
- Long-distance (intra and inter-regional, international and
VC2/VC3): revenues reached R$775 million, a 13.8% and 42.1%
increase over 2Q03 and 3Q02, respectively, largely due to the
tariff rise in Jun/03 and the growth in traffic (5.6% and 19.4%)
in the periods under review as a result of marketing campaigns
and a number of promotions launched by the Company to enhance
customer loyalty. Telemar received, for the second consecutive
year, the "Top of Mind" award from the Instituto Data Folha, for
DLD operator.
The introduction of the selection code for long distance calls by
mobile operators that migrated to the SMP regime led to an
increase in long-distance revenues from both mobile-mobile and
mobile-fixed calls, in the quarter, which amounted to R$ 38
million in the quarter (2Q03 - R$ 22 million).
Intra-state revenues reached R$377 million, up 22.1% and 26.8%
from 2Q03 and 3T02, respectively, as a result of tariff rises and
traffic growth (7.2% for the quarter and 5.4% for the year).
Inter-state revenues amounted to R$151 million, increasing by
22.0% and 42.8% compared with 2Q03 and 3Q02, respectively. In
addition to the tariff increase, this growth was brought about by
a higher traffic on quarterly and annual bases (7.0% and 27.0%).
Inter-regional revenues totaled R$87 million, 25.3% above 2Q03
levels, as a result of the tariff increase mentioned above and
increased traffic (+10.0%).
International revenues reached R$ 20 million, up 19.3% from the
previous quarter.
Fixed-to-mobile (VC2/3): gross revenues amounted to R$140
million, down 13.7% from 2Q03, mainly as a result of the
decreased traffic during the period. The decrease is a
consequence of the reduction of areas with long distance tariff
for this kind of call, after the migration of mobile operators to
SMP regime. Compared with 3Q02, the 14.8% growth is mainly
attributable to the tariff increase effective Feb/03.
- Remuneration for network usage totaled R$362 million, growing
by 14.2% and 9.6% when compared with 2Q03 and 3Q02, respectively.
The main reason for the growth was the interconnection rate
increases in Jun/03.
- Data transmission services: revenues totaled R$303 million, up
4.7% (+R$ 14 million) and 30.4% (+R$71 million) from 2Q03 and
3Q02, respectively.
Regarding the prior quarter, the main contribution came from the
ADSL service, with revenues of R$ 33 million, 37.5% above prior
quarter levels, on account of the increased sales during the
period (+77,7%). Additionally, line rental services to other
telecom operators (EILD) contributed R$6 million, owing to the
recovery in revenues of R$5 million in the period.
When compared to 3Q02, except for the drop in EILD revenues (due
to contract renegotiations), all other services showed expansion,
in particular IP services (+R$28 million) and ADSL (+R$25
million).
- Public telephone revenues for the quarter reached R$210
million, up 8.2% and 16.7% from 2Q03 and 3Q02, respectively,
largely as a result of a rate increase for phone cards during
3Q03, partly offset by a reduction in sales during the quarter (-
3.5% compared to 2Q03).
- Other services revenues totaled R$111 million, a 14.3% and
42.6% increase on 2Q03 and 3Q02, respectively, due to the
increased sale of value-added services such as voice mail, caller
ID, call waiting, etc. which totaled, at the end of the quarter,
5,524 thousand units in service. Revenues from address change and
reallocations were also up in the quarter, following the rate
increase in Jun /03.
Wireless Services
Oi recorded gross revenues of R$496 million for 3Q03, a 27.0%
increase compared with the previous quarter, as a result of the
growth in handset sales and services offered during the period.
Year-over-year, the 170.5% growth is attributable to the
expansion in the customer base and services provided.
Consolidated gross revenues from wireless services (excluding
revenues from TMAR) came to at R$364 million, R$72 million above
2Q03 figures (+24.7%) and R$199 million in excess of 3Q02 levels
(+120.6%).
When compared with the previous quarter, the main contributions
arose from the increased sale of handsets, up R$45 million
(+38.1%), and the growth in revenues from services provided
(excluding remuneration for network usage) up R$36 million
(+29.5%), in line with the expansion in the average customer base
(30.4%).
The growth on 3Q02 figures is chiefly due to service revenues,
whose contribution amounted to R$201million (against revenues of
R$19 million for 3Q02).
Under consolidated results, gross revenues from the usage of the
mobile network (interconnection) amounted to R$43 million, after
elimination of R$82 million received from TMAR (R$52 million,
after elimination of R$70 million in 2Q3). The reduction in these
revenues as compared with 2Q03 was due to a change in the billing
method. With the migration of most wireless companies to SMP,
they started to adopt a clearing system, based on "bill and
keep". As of Jul/03, payments are made only on the amount that
exceeds the 45/55% traffic balance between two operators.
Accordingly, both service revenues and interconnection costs are
reduced.
Net revenues from handset sales amounted to R$124 million in the
3Q03, up 29.3% from 2Q03 (R$96 million). In the quarter, 778
thousand handsets were sold, up 51.7% from 2Q03.
The average revenue per user (ARPU) for 3Q03 stood at
approximately R$29, decreasing by 12.4% compared with the
previous quarter, due to the change to the new bill & keep
system.
Contact Center
Gross revenues from our contact center subsidiary, Contax, for
3Q03, reached R$122 million, up 20.8% and 93.7% from the previous
quarter and year, respectively.
Year to date, Contax gross revenues amount to R$306 million and
net revenues total R$281 million. The latter represents a 104.0%
increase on the figure recorded in the same period of the prior
year.
During the quarter, this subsidiary contributed with gross
revenues of R$24 million to the consolidated results. This
contribution exceeds by 9.1% the figure for 2Q03, as a result of
the increased number of new contracts entered into with third
parties (other than TMAR and Oi).
At the end of the quarter, the company had 10,244 attendant
positions, a 19.6% growth compared with 2Q03.
Operating Costs and Expenses
Consolidated Operating Costs and Expenses (ex-depreciation and
amortization) reached R$2,107 million in the quarter, a 13.0%
increase over 2Q03 figures.
Compared with the previous quarter, the R$243 million increase
was due to higher costs of SMP handsets (+R$56 million), third-
party services (+R$23 million), marketing (+R$19 million),
personnel (+R$16 million), interconnection (+R$15 million) and
provision for doubtful accounts (+R$8 million), in addition to
the increase of other operating expenses (+ R$78 million).
To better reflect accounting criteria, billing expenses that were
recorded as administrative expenses, until 2Q03, are now being
recognized as selling expenses.
Compared with the same period of last year, costs went up R$309
million, chiefly due to other operating expenses, third-party
services, mobile handsets, interconnection and provision for
doubtful accounts.
Interconnection costs totaled R$636 million, up 2.4% from 2Q03
mainly as a result of the newly implemented requirement for
companies to use the selection code for completion of long
distance calls, which result in higher LD revenues and
interconnection costs with mobile operators.
Compared with the same period of last year, interconnection costs
increased by 6.7%, mainly due to a 22% tariff adjustment on
fixed-mobile calls in Feb/03, partly offset by a traffic decrease
in the period.
Cost of services (ex-interconnection) totaled R$776 million, up
16.1% and 10.1% on 2Q03 and 3Q02 figures, respectively, due to
higher handset and personnel costs. Such expenses are chiefly
attributable to the growth in wireless and contact center
operations, as detailed below.
- Materials: these costs totaled R$46 million, increasing by R$13
million (+39.4%) on 2Q03. This increase is largely due to a
change in the fuel purchase policy that went into effect in
Jul/03. These purchases were allocated to third parties up to
2Q03. Compared with 3Q02, the 16.4% costs reduction is due to
lower expenses with wireline plant.
- SMP handset costs amounted to R$212 million, up 35.8% and 22.4%
from 2Q03 and 3Q02, respectively. In both instances, increases
were due to the growth in the volume of sales (778 thousand
handsets sold in the quarter against 513 thousand for 2Q03 and
590 thousand for 3Q02).
- Third-party services: these costs totaled R$254 million, a 5.0%
increase (+R$12 million) on 2Q03, essentially due to the
maintenance of the wireline and wireless plants.
When compared to 3Q02, these costs decreased by 2.3% (-R$6
million), mostly because fewer adjustments required at Oi's
network, compared to the start-up phase in
2002.
Selling expenses reached R$455 million, increasing by 11.2% and
35.0% compared with the prior quarter and prior year,
respectively. Compared with 2Q03, this growth is mainly
attributable to higher advertising and marketing expenses (+R$19
million), third-party services (+R$16 million) and provisions for
doubtful accounts (+R$8 million).
Compared with 3Q02, the main increases were in third-party
services (+R$70 million), and provisions for doubtful accounts
(+R$ 34 million).
- Third-party services amounted to R$176 million, 10.0% above
2Q03 figure, chiefly due to the increased sales commissions for
the period. When compared to 3Q02, the 66.0% increase is due to
higher sales commissions, distribution of mobile and payphones
cards and expenses with the design and preparation of sales
campaigns.
- Marketing expenses amounted to R$56 million, increasing by
52.0% and 17.5% on 2Q03 and 3Q02, respectively, as a result of
the launching of new campaigns to foster the use of our long
distance and wireless services.
- Provisions for doubtful accounts - PDA totaled R$160 million
for the quarter, up 4.8% and 26.7% from 2Q03 and 3Q02,
respectively.
Consolidated PDA for the quarter represented 3.1% of gross
revenues, slightly below 2Q03 levels and unaltered from 3Q02.
Such decrease is mainly due to higher revenues, since the main
effects on delinquency arising from the tariff increase shall
only be seen as of 4Q03.
PDA levels for wireline services - including provisions for long
distance services rendered by Oi - stood at 2.8% for the quarter
(2Q03 - 3.2%). On wireless services, PDA levels represented 3.3%
of gross revenues, a significant reduction compared with 2Q03
(4.4%), as a result of several measures adopted by Company, such
as increasing collection efforts, regularization of blockage,
disconnections and a stronger use of credit protection agencies,
as already anticipated in 2Q03 press release.
General and administrative expenses (G&A) amounted to R$167
million, down 2.2% and 5.8%, when compared to the previous
quarter and 3Q02, respectively. Lower consultancy expenses and
management fee charges offset the increased expenses with IT
systems in the period.
Other Operating Expenses (Revenues) reached an expense of R$72
million for the quarter, compared with revenues of R$6 million
for 2Q03 and R$17 million for 3Q02. The company recorded net
previsions for civil, tax and -mainly- labor contingencies in the
amount of R$83 million, well above the previous quarters.
Additions to labor provisions stemmed from the increased number
of claims and unfavorable rulings, leading to higher probability
of losses and revised amounts provisioned.
Personnel expenses (CSP, DECOM, G&A) reached R$235 million,
increasing by 7.2% (+R$ 16million) and 16.1% (+R$33 million) when
compared to 2Q03 and 3Q02, respectively. The increase in
personnel expenses is essentially attributable to the expansion
in Contax staff to meet the demand from third parties, in
addition to new attendant positions to serve Oi's increasing
customer base. Personnel expenses at Contax were up R$19 million
for the quarter and R$39 million from 3Q02 figures. Year to date,
operating costs and expenses amounted to R$5,713 million,
compared with R$4,618 million in the same period of the previous
year (+23.7%).
The main changes in the period can be attributed to the startup
of the mobile operations, as of 3Q02, and to the increase in
third party services and other operating expenses in the wireline
business.
EBITDA
Consolidated EBITDA stood at R$1,663 million, increasing by 12.4%
over the previous quarter and 29.4% on 3Q02. During the quarter,
EBITDA and respective margin were impacted by the increase in
provisions for labor and civil contingencies. EBITDA margin for
the quarter was 44.1% (44.3% and 41.7% on 2Q03 and 3Q02,
respectively).
- TMAR posted consolidated EBITDA of R$1,626 million (up 14.9%
from 2Q03) and a margin of 43.4%. TMAR holding (wireline) EBITDA
for the quarter reached R$1,545 million, with an 11.7% increase
on 2Q03. EBITDA margin was 44.9%.
- Oi's EBITDA reached R$ 81 million, with a 20.2% margin for
3Q03. The positive result was affected by an extraordinary
revenue of R$93 million received from TMAR as a penalty for the
cancellation of positions not used by TMAR on its wireless local
loop (WLL) operations, according to an infrastructure rental
agreement between the two companies.
Deferred expenses, net of appropriations, contributed R$3.5
million to Oi's EBITDA, resulting from R$36 million deferrals
relating to handset subsidies and installation fees, and R$33.4
million taken as expenses.
- Contax recorded EBITDA of R$14 million for the quarter, with a
12.8% margin.
Depreciation and Amortization
Depreciation and amortization charges totaled R$ 914 million,
down 3.3% and 6.3% from 2Q03 and 3Q02, respectively, as a result
of the end of the useful lives of part of the components of the
fixed-line plant.
Consolidated Financial Results
The Company posted net financial expenses of R$606 million for
3Q03 (2Q03 - R$518 million).
Financial revenues totaled R$205 million, increasing by R$71
million on the prior quarter. The main changes during the quarter
were in interest on financial investments (+R$31 million), due to
the increase in average cash and short term investments during
the period and interest on other assets (+R$37 million), arising
from the monetary restatement of withholding taxes.
Financial expenses totaled R$811 million, being R$160 million
above the prior quarter figures, primarily impacted by:
(i) Exchange results on loans and financing, with a negative
change of R$ 139 million compared with the prior quarter, mainly
due to:
- Net exchange losses of R$80 million on the unhedged portion of
foreign currency debt: the positive impact of the exchange rate
during the previous quarter (+14.3%) on the unhedged balance of
dollar-denominated debt translated into a R$73 million revenue
for 2Q03, while the currency depreciation in 3Q03 (-1.8%) brought
about a R$ 7 million expense for the period;
- Currency option gains of R$23 million, not recorded in the
quarter, once the results with options are recognized only upon
maturity of the transactions.
(ii) Interest on other liabilities, up R$51 million from 2Q03,
mainly resulting from interest accrued on federal taxes
refinanced under Brazilian Government REFIS Program (R$66
million);
(iii) Monetary restatement of provisions for contingencies of
R$76 million, with a R$ 14 million increase compared with the
previous quarter;
(iv) Taxes on financial revenues (IOF/PIS/COFINS) decreased by
R$31 million over the prior quarter, reflecting the recovery of a
tax provision in the period (related to Cofins).
Net Results
TNE posted a consolidated loss of R$24 million (R$0.06 per
thousand shares) compared with losses of R$166 million for 2Q03,
and R$382 million for 3Q02.
TMAR recorded a R$9 million loss for 3Q03, compared with a loss
of R$39 million for 2Q03. Oi stated a loss of R$190 million for
the quarter, compared with a R$348 million loss for 2Q03.
COMMENTS ON FINANCIAL STATEMENTS
Accounts Receivable
At the end of Sep/03, accounts receivable consolidated balances
(net of a provision of R$419 million for doubtful accounts) were
R$3,665 million, up 10.1% (+R$337 million) from the balance at
the end of Jun/03 figures. The increase was mainly due to higher
fixed-line revenues and handsets sales.
Debt
At the end of Sep/03, the Company's total consolidated debt
amounted to R$11.1 billion. Of this total, 72.3% was in foreign
currency (being 98.4% of it the object of protection against
devaluation of currency, and 27.7% in local currency.
At the end of the quarter, cash and financial investments of
R$2.5 billion were equal to 95.9% of the Company's short-term
debt.
Consolidated net debt amounted to R$8.7 billion at the end of the
quarter, decreasing by 9.1% from 3.9% on Jun/03 and 13.5% from
Mar/03.
Of the total debt, approximately R$454 million (4.1%) will be
repaid during 4Q03. At the end of Sep/03, total debt in local
currency amounted to R$3.1 billion.
Approximately R$1.7 billion was due to BNDES, at an average cost
of long term (TJLP) interest rate plus 3.85% p.a.. Some R$1.3
billion refers to non-convertible debentures, bearing interest at
CDI rates plus 0.7% p.a.. The balance is due to other financial
institutions.
Loans denominated in foreign currency, in the amount of R$8.1
billion - including swap results of R$664 million - bear interest
at contractual average rates of (a) Libor + 5% p.a., for
transactions in U.S. dollar; (b) fixed 1.5% p.a. for transactions
in Japanese yen, and (c) fixed 12.2% p.a. for a basket of
currencies (BNDES). As of Sep/03, approximately 88.5% of the
company's total debt (before currency swaps) bore interests at
floating rates.
Of the total foreign currency financing, approximately 98.4% had
some kind of hedge as of Sep/03: 93.2% with foreign exchange swap
transactions, and 5.2% with financial investments linked to the
exchange variation.
Under exchange swap transactions, the exposure to foreign
currency fluctuations are transferred to local interest rates
(CDI). The average cost of such transactions at the end of the
quarter was equivalent to 99.7% of the CDI rate.
The debt denominated in local currency, after foreign exchange
swap transactions, represents nearly 95.2% of the total debt. Its
average cost stands at 19.2% p.a., based on a CDI rate of 20%
p.a.
During 3Q03, total funds obtained amounted to R$173 million,
being R$131 million allocated to the wireless business.
At the end of the quarter, supplier's account recorded a balance
of R$1.2 billion, a R$154 million increase compared with the end
of 2Q03, due to investments made and higher handset acquisitions.
At the end of Sep/03, the amount of inter-company loans with TNE
reached R$3.3 billion, down 14.9% from the end of Jun/03. TMAR's
debt was R$3.1 billion and Contax debt R$ 87 million, and the
balance outstanding with other subsidiaries.
Capital Expenditure
CapEx totaled R$290 million, in line with the previous quarter.
Approximately R$231 million was addressed to fixed-line quality
improvements and to data transmission services and R$53 million
to expand the coverage of Oi.
Year to date, investments reached R$770 million, decreasing by
73.0% when compared with the same period of 2002.
Summary of Consolidated Cash Flow (TNE)
Cash flow from operations reached R$1.8 billion in the quarter
(2Q03 - R$1.1 billion). After investing activities, consolidated
cash flow reached R$1.4 billion for the quarter (R$ 942 million
in 2Q03), and a total of R$2.5 billion for the first nine months
of 2003.
MAIN EVENTS OF THE QUARTER
Tariff increase
On June 27, 2003, Anatel approved tariff increases based on the
IGP-DI variation, in accordance with the Concession Agreements.
On Jul/3, however, a preliminary injunction awarded by the
Regional Federal Court of Cear determined that the IPCA instead
should be applied pro rata to the tariff increases.
On Aug/27, the preliminary injunction was overthrown according to
a higher court, The Superior Court of Justice (STJ). Pursuant to
STJ's decision, the Regional Federal Court of Bras¡lia - DF,
should decide all suits relating to the 2003 tariff adjustments.
An additional preliminary injunction awarded on Sep/11 by the
Regional Federal Court in Brasilia - DF stayed the effects of the
Anatel acts, establishing that the IPCA be applied as a ceiling
to the tariff increases and determining that Anatel should
communicate this decision to the wireline companies, which took
place on Sep 16.
On Sep/26, a further decision from the Regional Federal Court
Decision in Bras¡lia established that the IGP-DI be replaced with
the IPCA in the Concession Agreement adjustment formulas for 2003
rate increases.
The Company is enforcing the Court's determination but keeps on
searching for a reversal of such decision through the proper
legal forums.
TMAR declares dividends (interest on capital) in the amount of R$
151 million for shareholders of record on Sep 30, 2003 and R$ 301
million for shareholders of record on Oct 28, 2003.
Share Buyback Program (TMAR)
From Jun/03 to Sep/03, TMAR bought back 395 million TMAR5 shares
(currently held in treasury).
Leadership in Ibovespa
During the period of Sep/Dec 2003, Telemar's stock weight in the
Bovespa index will be 16.7%. The high liquidity of both TNLP4 and
TMAR5 shares in the domestic market supports this position.
International data transmission
In Jul/03, Telemar entered the international data transmission
market, pursuing its strategy to offer integrated
telecommunication solutions to corporate customers in Brazil.
Telemar formed partnerships with Sprint, British Telecom, and
iPass, to cover 150 countries, including the United States,
United Kingdom, France, Germany, and Italy.
In Sep/03 Telemar entered into an agreement with Gol Linhas
A‚reas, to service its corporate data network, including
airports, offices and data centers in Brazil and the United
States.
TAM: One more national client
In Aug/2003, Telemar signed a two-year countrywide data
transmission agreement with TAM. Since February/03, upon starting
operations outside its concession area, Telemar has acquired
large national clients, such as ABN AMRO Real and Globex.
Oi and Banco do Brasil announce the first Mobile Bank in Brazil
This partnership enables Oi customers to use their cell phones to
carry out all financial transactions available via Internet or
ATMs. Access to the bank account via cell phone uses the same
password as on the Internet.
Contax into a service agreement with Net Cable TV
In Oct/03, Contax signed a R$ 72 million, 3-year agreement with
Net Services to provide consumer support services to Net CableTV
on a nationwide basis. To this end, Contax will invest R$6.5
million in infrastructure and personnel training. This initiative
will involve 550 attendant positions dedicated to Net.
=========
C H I L E
=========
ENDESA CHILE: Results Show Improvement During First 9-Mos of 2003
-----------------------------------------------------------------
Chilean generator Endesa Chile said earnings in the first nine
months of 2003 were slightly up from the same period a year
earlier due to improved results in Argentina and Colombia.
According to a report by Reuters, the Company's operating profit
increased 0.2% to CLP272 billion. Net profit also rose 0.8% to
CLP67.383 billion (US$101.9 million). However, nine-month revenue
was down by 0.5% to CLP732.42 billion (US$1.1 billion) from a
year earlier.
In a report to Chile's stock market regulator, Endesa said its
January-September net earnings got a boost this year from the
improved performance of Argentine transmission affiliate CIEN, in
which it owns a 45% stake, and by a sharp appreciation of the
Chilean peso currency.
The earnings rise "is due mainly to better results in Argentina
and Colombia ... despite the sale of Canutillar (power plant) and
the deconsolidation of Infraestructura Dos Mil," Endesa said in a
statement.
Endesa's energy output and sales grew in Argentina in the nine-
month period as the currency there gained against the dollar. In
Colombia, energy prices rose due to low rainfall this year, the
statement said.
In its non-operating numbers, Endesa trimmed losses by 4.4% to
CLP127.0 billion.
"The lower loss is explained principally by better net profits in
investments in related companies (CIEN), better earnings from
exchange rate differences and lower financial expenses," Endesa
said.
LE MANS DESARROLLO: Likely To Go Bankrupt
-----------------------------------------
Chilean life insurance company Le Mans Desarrollo may be declared
bankrupt. The firm is currently being audited by the Insurance
Superintendence, SVS, and the watchdog believes its deficit makes
it unfeasible.
The Company has 3,200 life annuity beneficiaries and its
resources are only enough to meet its commitments during the next
13 years. After that, the State guarantee would start covering
the policies.
The Company, formerly owned by holding Inverlink, is being
managed by official receiver Fernando Perez since March 7. The
audit was ruled in an attempt to safeguard the Company's net
assets and to assure the accomplishment of the insurance law and
the well-timed payment of its commitments.
The SVS has also tried to sell the Company, but there were no
interested investors. The firm has around CH$35 billion (US$
55.73 million) in assets and over CH$ 45 billion (US$ 85.22
million) in liabilities.
It is believed that the SVS might decide to liquidate the Company
and request its bankruptcy.
MARBELLA: Struggles to Deal With an Enormous Debt
-------------------------------------------------
Chile's seaside resort Marbella is facing serious difficulties.
The economic crisis in Chile and an unbearable indebtedness level
tied to an old expansion plan had a hard impact on the Company.
Its owner, Mexican businessman Javier Creixell, is looking for a
solution to the crisis. He has started to search for investors
willing to partner with him or even acquire the entire share
capital. Sources related to the Company revealed Creixell is even
willing to sell the resort and that talks have already begun. The
owners would be in a hurry because creditors are putting pressure
on them. Some have already requested the Company's involuntary
bankruptcy, although it has been denied.
Located 150 km away from Santiago, Marbella Resort has a five-
star hotel, a golf course, a convention center and other
facilities facing the ocean.
Creixell purchased the resort from the Pico family in 1989 and
re-launched it, with an investment of some US$100 million.
Such project was funded with loans and the debt burden became too
heavy to stand when the crisis in Chile started and the demand
went down. The Company has US$17 million in overdue debt.
===========
M E X I C O
===========
CINTRA: Reports $6.21M Loss in 3Q03
-----------------------------------
The Cintra consortium, which controls Mexico's main airlines,
reported a net loss of MXN69 million (US$6.21 million) in the
third quarter of this year.
While that is a year-on-year improvement for the controller of
Aeromexico and Mexicana, it adds to the losses accumulated so far
this year, bringing the nine-month total to MXN1.85 billion.
For the third quarter, the Company reported total revenues of
MXN8.15 billion (US$733.86 million), that's a 0.4% improvement
from the revenue reported in the same period in 2002. The
turnaround was achieved despite the price war affecting the
industry during the quarter, Cintra said.
The marginal increase was a result of other income and excess
baggage charges, which compensated for a drop in international
passenger and freight capacity.
The State-run controller also was affected by the variable
exchange rate and a 38% increase in the price of turbosine, a
statement explained.
Cintra is comprised of Aeromexico, Mexicana de Aviacion,
Aerocaribe and Aerolitoral, as well as an airline cargo company,
another for airport land support and a training center.
CONTACT: CINTRA
Xola 535, Piso 16, Col. del Valle
03100 Mexico, D.F., Mexico
Phone: +52-5-448-8050
Fax: +52-5-448-8055
Contacts:
Jaime Corredor Esnaola, Chairman
Juan Dez-Canedo Ruiz, CEO
Rodrigo Ocejo Rojo, CFO
OR
C.P. Francisco Cuevas Feliu, Investor Relations
Xola 535, Piso 16
Col. del Valle
03100 Mexico, D.F.
Tel. (52) 5 448 80 50
Fax (52) 5 448 80 55
infocintra@cintra.com.mx
GRUPO IUSACELL: In Talks For Temporary Amendment, Waiver
--------------------------------------------------------
Grupo Iusacell, S.A. de C.V. ("Iusacell" or the "Company")
announced Thursday that its subsidiary, Grupo Iusacell Celular,
S.A. de C.V. ("Iusacell Celular") is discussing a temporary
Amendment and Waiver of certain provisions and defaults under its
US$266 million Amended and Restated Credit Agreement, dated as of
March 29, 2001 (the "Credit Agreement") with its lenders.
During the first half of 2003, Iusacell Celular exceeded the
permitted leverage ratio of 2.50 under the Credit Agreement. On
April 28, 2003 Iusacell Celular and the lenders entered into a
temporary amendment and waiver to the Credit Agreement to
increase the permitted leverage ratio from 2.50 to 2.70. After
various extensions, the amendment and waiver terminated, and the
lenders are now considering another amendment and waiver to the
Credit Agreement.
If an additional amendment and waiver is not granted, an Event of
Default (as defined in the Credit Agreement) will occur as if no
amendment and waiver had ever been executed. Accordingly, the
bank lenders under the Credit Agreement would continue to have
the right to declare the indebtedness under their loan
immediately due and payable.
About Iusacell
Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE: CEL; BMV: CEL) is a
wireless cellular and PCS service provider in seven of Mexico's
nine regions, including Mexico City, Guadalajara, Monterrey,
Tijuana, Acapulco, Puebla, Leon and Merida. The Company's service
regions encompass a total of approximately 92 million POPs,
representing approximately 90% of the country's total population.
Grupo Iusacell, S.A. de C.V. press releases and all other written
materials may from time to time contain statements about expected
future events and financial results that are forward-looking and
subject to risks and uncertainties. For those statements, the
Company claims the protection of the safe harbor for forward-
looking statements contained in the Private Securities Litigation
Reform Act of 1995. Discussion of factors that may affect future
results is contained in our filings with the Securities and
Exchange Commission.
CONTACT: Grupo Iusacell, S.A. de C.V.
Jose Luis Riera K., Chief Financial Officer
TEL: +5255-5109-5927,
Carlos J. Moctezuma, Head of Investor Relations
TEL: +5255-5109-5759
carlos.moctezuma@iusacell.com.mx
URL: http://www.iusacell.com
* IMF Concludes 2003 Article IV Consultation with Mexico
--------------------------------------------------------
On October 15, 2003, the Executive Board of the International
Monetary Fund (IMF) concluded the Article IV consultation with
Mexico.
Background
After a strong performance from 1997 to 2000, output fell in 2001
in response to the U.S. downturn. While growth rebounded in the
first half of 2002, it has stalled since, reflecting both the
delayed U.S. recovery and sluggish domestic spending. In spite of
lower wage growth, higher administered and agricultural prices
pushed up headline inflation to 5.7 percent at end-2002, compared
with the Bank of Mexico's (BOM) target of 4.5 percent. Stagnant
non-oil export volumes since 2001 have been more than offset by
higher oil exports and a contraction in imports, leading to a
narrowing in the current account deficit. The current account
deficit has been almost entirely financed by FDI inflows.
Real GDP remained subdued in the first half of 2003, with growth
of 1.4 percent (seasonally adjusted) in the four quarters ending
in the second quarter. While recent indicators of activity have
been mixed, most observers still expect the economy to recover in
the second half of the year, in line with U.S. recovery. Headline
inflation also continued to rise in the first months of 2003, but
then dropped significantly to 4 percent in August and September,
as inflation expectations declined and earlier price shocks
unwound. Core inflation fell to 3.5 percent in April, and then
stabilized around that level through September. The current
account deficit continued to moderate in the first half of 2003.
Private external borrowing also declined in the first half of the
year, as firms increasingly switched from foreign to domestic
capital markets to meet their financing needs.
During 2002 and the first quarter of 2003, net international
reserves increased by US$9.3 billion, largely due to the impact
of high oil prices on PEMEX receipts. A new mechanism was
implemented in May to slow the pace of reserve accumulation and
lower the cost associated with carrying those levels of reserves.
Gross international reserves amounted to 106 percent of short-
term debt by residual maturity at end-September 2003.
The pace of fiscal consolidation, viewed in terms of the broad
public sector deficit, has been slower than envisaged in the
authorities' 2002 medium-term plan. While the budget target of an
augmented deficit of 3.4 percent of GDP for 2003 is likely to be
met, higher oil revenues are expected to offset shortfalls in
other revenues, increasing the sensitivity of the fiscal
situation to swings in oil prices. Expenditures are also expected
to exceed budget estimates.
The BOM tightened its monetary stance starting September 2002 in
response to rising inflation expectations. With the subsequent
reduction in both headline inflation and inflation expectations,
prospects are favorable for bringing end-year headline inflation
below 4 percent. After rising to about 10 percent in early March,
short-term interest rates fell below 5 percent in July, but have
increased in recent weeks in response to the weakness in the
peso. At the same time, the recent depreciation of the peso
implies that monetary conditions have eased further, providing
support to activity.
Market sentiment toward Mexico remains positive, as reflected in
its investment-grade status. Turbulence in emerging markets in
2002 was weathered well, and sovereign bond spreads have declined
to a historical low of 200 basis points in recent weeks.
The government has made significant progress in strengthening the
structure of public debt. Public external debt, for instance, has
fallen further from 15 percent of total debt in 2000 to
13« percent in 2002. The government successfully issued five
bonds with collective action clauses this year. The latest issue
(US$1 billion of 10-year bonds) would pre-fund part of the 2004
financing requirements on terms favorable to Mexico. In addition,
Mexico became the first country to redeem all of its Brady bonds.
Nevertheless, some public debt vulnerabilities remain, with a
large portion of domestic debt either short-term or linked to
short-term interest rates, and a significant gross public sector
borrowing requirement.
Executive Board Assessment
Executive Directors commended the Mexican authorities for their
substantially strengthened policies, which have helped underpin
macroeconomic stability and investor confidence and enabled
Mexico to successfully weather the difficult global and regional
conditions of recent years. They welcomed in particular the
continued modernization of the financial sector, the strengthened
structure of the public debt, the reduction in inflation to low
levels, and the progress made in reducing poverty. The key
challenges going forward will be to diversify the sources of
economic growth, and strengthen medium-term growth prospects
sufficiently to achieve significant further reductions in
poverty.
Against this background, Directors urged the authorities to
restart quickly the process of fiscal consolidation and
reinvigorate the implementation of productivity-enhancing
structural reforms-areas in which recent progress has been
disappointing owing to difficulties in forging the needed
political consensus. Of particular importance will be rapid
approval and implementation of structural reforms with respect to
the tax system, the energy sector, the labor market, and the
judicial system, which together will help boost private
investment and employment and maintain competitiveness in an
environment of heightened global competition. It was noted in
this context that further efforts to build greater public
awareness of the importance of these reforms will be helpful for
achieving the appropriate degree of ambition in their scope and
speed. Directors supported the authorities' efforts to improve
governance, fight corruption, and enhance transparency, and they
encouraged them to persevere in these efforts.
Directors endorsed the authorities' medium-term fiscal framework,
which calls for further fiscal adjustment to lower the public
debt-to-GDP ratio. To achieve this objective, the authorities
will need to give renewed impetus to the consolidation process in
2004, while ensuring effective management of oil revenues. Over
the medium term, they will also need to address the challenges
posed by the significant reliance of public sector revenues on
oil prices and the growing spending pressures. Fiscal reforms
based on measures that increase efficiency and boost confidence
in sustainability will help strengthen the foundations for faster
medium-term growth while limiting any near-term negative
consequences.
Directors welcomed the authorities' recent efforts to renew tax
reform discussions. A broad-based tax reform would enhance the
efficiency of the tax system and promote fiscal stability.
Directors agreed with the view that formally linking the annual
budget discussions to a medium-term plan that incorporates a
comprehensive view of fiscal developments would serve to
strengthen the fiscal framework. In addition, a fiscal
responsibility law would provide a useful framework for setting
medium-term targets, including for the debt path, and for
reconciling the tax, expenditure, and social sector policy
objectives. Directors suggested that the authorities set and
regularly update specific medium-term objectives for the
augmented deficit and debt to underpin the annual budget
discussions.
Directors commended the Bank of Mexico for implementing a prudent
and forward-looking monetary policy, which has served to boost
market confidence and promote financial stability. They
considered that declining inflation expectations and economic
slack will contribute to the convergence of inflation toward the
target by end-2003, while the recent easing in monetary
conditions will help support activity in the period ahead.
In discussing the operating procedures for monetary policy,
Directors noted that the corto has allowed for large and rapid
adjustments in interest rates, and contributed to Mexico's
impressive record in reducing inflation. Many Directors
considered, however, that as inflation and interest rates
stabilize at low levels, a short-term interest rate target would
provide a greater degree of monetary control and increase
transparency, thereby helping to keep inflation within a narrow
target range and communicating the authorities' monetary policy
intentions more clearly. At the same time, given the importance
of correct timing and careful management of the transition
process, they considered that the authorities are best qualified
to define the appropriate timing.
Directors observed that Mexico's flexible exchange rate regime
has been effective in cushioning the economy from external
shocks. They agreed that the new rules-based mechanism to reduce
the pace of accumulation of foreign reserves does not change the
authorities' transparent approach to reserves management and the
commitment to a market-determined exchange rate. Directors
encouraged the authorities to ensure that reserves remain
adequate.
Directors welcomed the authorities' efforts to further strengthen
the financial regulatory framework. Important challenges in the
period ahead will be to deepen financial intermediation without
excessive risk-taking, and to streamline financial rules and
regulations to encourage innovation and competition. In this
regard, Directors welcomed the high priority attached by the
authorities to strengthening oversight of the rapidly growing
nonbank institutions. They commended Mexico's continued efforts
to combat money laundering and the financing of terrorism.
Directors endorsed the authorities' commitment to continue to
reduce vulnerabilities relating to the public debt through
increasing issuance of fixed-rate, domestic-currency instruments
and extending the yield curve. Directors commended Mexico's
leadership in debt management, including its recent inclusion of
collective action clauses in sovereign debt contracts and the
early redemption of all outstanding Brady bonds. Directors were
encouraged by Mexico's efforts to deepen the domestic bond
market, which will foster the diversification of financing
sources for the private sector and reduce reliance on foreign
currency-denominated private debt, thus alleviating a potential
risk factor.
Directors recognized that Mexico's data are generally of high
quality, and are adequate to conduct surveillance effectively.
They encouraged the authorities to implement the recommendations
of the 2003 statistical Report on the Observance of Standards and
Codes.
===========
P A N A M A
===========
BLADEX: Reports 3Q03 Net Income Of $17.8 Million
------------------------------------------------
Banco Latinoamericano de Exportaciones, S.A. ("BLADEX" or the
"Bank") reported results for the third quarter ended September
30, 2003.
3Q03 Financial Highlights
* Net income was $17.8 million, compared to $67.1 million for the
2Q03 and $15.8 million for the 3Q02.
* Short-term trade loans of $1.2 bn. up 9% for the quarter and
46% year-to-date. Non-trade loans of $0.8 bn down 16% for the
quarter, 23% year-to-date.
* The Bank sold $123 million of Argentine obligations. Net
exposure in the country is $272 million, down 41% from a year
ago.
Third Quarter 2003 Earnings of $17.8 million
The Bank reported third quarter 2003 net income of $17.8 million,
or $0.45 per share, compared with net income of $67.1 million or
$3.65 per share in the previous quarter, and with net income of
$15.8 million, or $0.90 per share, in the third quarter of 2002.
Earnings per share calculations are based on the average number
of shares outstanding during each period. During the third
quarter of 2003 the average number of common shares was 39.3
million shares, compared to 18.3 million shares in the second
quarter of 2003, and compared to 17.3 million shares during the
third quarter of 2002.
Net income for the third quarter reflected the sale, partial
payment and fair market value adjustment of Argentine loans and
securities, which generated gains on the sale of securities and
reversals of the allowance for loan and off-balance sheet losses.
The Bank also increased specific reserve coverage of certain
borrowers. The net positive impact on earnings of these factors
was $57.1 million and $13.8 million in the second and third
quarters of 2003, respectively. Net income for the third quarter
also reflects a loss of $6.7 million on derivatives and hedging
activities related to the Bank's decision to unwind interest rate
swaps associated with certain fixed-rate securities.
Net income for 2003 year-to-date amounted to $95.3 million, or
$3.78 per share, compared to a $283.8 million loss, or a loss of
$16.41 per share, for the same period in 2002. The loss in the
first nine-months of 2002 reflected $279.9 million of provisions
for credit losses and a $44.3 million charge resulting from
impairment losses on securities, both related to the Bank's
Argentine portfolio.
Commenting on the latest quarterly figures, Jose Castaneda, Chief
Executive Officer of BLADEX, said, "The latest quarter was the
first in the last year and a half in which the Bank was able to
focus on its business, without the significant diversion of
management's time to the capitalization project. Our entire
organization is now fully engaged in executing our strategy of
making BLADEX into the supplier of choice for trade finance
services in the Latin American region.
To this end, we continue working to leverage the balance sheet by
adding new trade finance loans, while collecting on our remaining
medium-term, non-trade loans. The 9% growth in our short-term
trade loan portfolio (excluding Argentina) during the latest
quarter is more reflective of the underlying market demand and
risk profile of the region than the previous quarter's 21%
increase, which resulted from pent-up demand that we were able to
satisfy in anticipation of our capitalization. Year-to-date, we
have been able to grow this core business component by 46%, in
spite of challenging underlying market conditions.
We continue to assess the risk in our remaining Argentine
portfolio, of which 88% has been restructured or is in
negotiation, and we are periodically reviewing the adequacy of
our allowances for credit losses which involves an in depth
analysis of each borrower, its ability to repay and market
conditions. As a result of this evaluation, we increased the
specific reserve coverage for certain borrowers.
BLADEX has recovered its historical ability to fund all the
lending business it originates and desires to book. Deposit
balances are increasing, lines of credit to the Bank are being
re-established on improved terms, and funding with tenors at the
long end of the spectrum is available again.
Deployment of our new U.S dollar clearing service for banks, in
collaboration with Bank of America, is proceeding as planned.
Our clients have reacted positively to this new service and the
first operating accounts have already been opened.
While BLADEX has many growth and governance initiatives under
way, all are subsets of the two basic pillars of our strategy:
strengthening our trade finance franchise and maximizing the
value of our Argentine portfolio. Among the more significant
current initiatives are product diversification through
additional strategic alliances, improved country and product
capital allocation methodologies, and the formulation of a cash
dividend policy," Mr. Castaneda concluded.
BLADEX, with $2.5 billion in assets, is a specialized
multinational bank established to finance trade in the Latin
American and Caribbean region. Its shareholders include central
banks from 23 countries in the region and 140 commercial banks
(from the region, as well as international banks) and private
investors. Its mission is to channel funds for the development
of Latin America and the Caribbean, and to provide integrated
solutions for the promotion of the region's exports. BLADEX is
listed on the New York Stock Exchange. Further investor
information can be found at http://www.blx.com.
CONTACT: BLADEX, Head Office
Calle 50 y Aquilino de la Guardia, Panama City
Attention: Carlos Yap, Senior VP, Finance
Tel. No. (507) 210-8581, e-mail: cyap@blx.com,
THE GALVIN PARTNERSHIP
76 Valley Road, Cos Cob, CT 06807
Attention: William W. Galvin
Tel. No. (203) 618-9800
E-mail: wwg@galvinpartners.com
***********
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., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA. 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
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Information contained herein is obtained from sources believed to
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