/raid1/www/Hosts/bankrupt/TCRLA_Public/031110.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 10, 2003, Vol. 4, Issue 222
Headlines
A R G E N T I N A
CONSTRUCCIONES HELIC: Court Sets Schedule for Bankruptcy Process
CONVIVIR: Court Orders Bankruptcy
DISTRIRED: Court Approves Creditor's Petition For Bankruptcy
EL CUIDADANO: Court Designates Receiver for Bankruptcy
FRANCI: Court Gives Go Ahead For Reorganization
GEROM: Receiver Verifies Claims in Bankruptcy Process
INTERCLINICAS: Individual Reports Due For Filing Today
INTERNATIONAL LINGERIE: Court Orders Bankruptcy
MEDIZIN: Seeks Court Permission to Undergo Reorganization
MOLDAVIANA: Receiver Verifies Claims in Bankruptcy Process
MULTIMEDICAL: To Undergo Reorganization
PUMPETE: Creditor's Motion For Bankruptcy Approved
SATEL BUSINESS: Bankruptcy Proceedings In Progress
SECURITY CONSULTANTS: Individual Reports Due Today
TALLERES VADEZ: Credit Verifications To Close Today
B E R M U D A
CRP: SCOR Releases Results for the First Nine Months of 2003
CRP: A.M. Best Changes SCOR's Under Review Status To Negative
FOSTER WHEELER: Appoints New General Counsel
TYCO INTERNATIONAL: Placing $1 Billion in Debt Securities
TYCO INTERNATIONAL: Announces Credit Facilities Negotiation
TYCO INTERNATIONAL: Fitch Rates $1B Unsecured Notes `BB'
TYCO INTERNATIONAL: S&P Assigns `BBB-' Senior Unsecured Rating
B R A Z I L
ACESITA: Reports Significant Improvement in Financial Performance
ESCELSA: Positive Earnings Have No Effect on Rating
FERRONORTE: Gets C(bra) Rating For $27.9M Of Notes
GERDAU: Directors Conclude Studies On Integration With Acominas
* Fitch Upgrades Brazil's Sovereign Rtg to 'B+'; Outlook Stable
D O M I N I C A N R E P U B L I C
* Issues IMF Statement on the Dominican Republic
M E X I C O
DESC: S&P Cuts Ratings to 'B+' from 'BB-'
GRUPO TMM: Court Denies Govt.'s Request for VAT Lawsuit Review
ISPAT INTERNATIONAL: Reports Third Quarter 2003 Results
V E N E Z U E L A
CANTV: Reduces Loss Estimate As Economy Rebounds
- - - - - - - -
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A R G E N T I N A
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CONSTRUCCIONES HELIC: Court Sets Schedule for Bankruptcy Process
----------------------------------------------------------------
Buenos Aires Court No. 21 has set the schedule for the bankruptcy
process of Construcciones Helic S.A., reports local news portal
Infobae. The court requires the receiver to submit the individual
and general reports on June 18, 2004, and August 21, 2004,
respectively.
An earlier report by the Troubled Company Reporter - Latin
America revealed that Judge Paez Castaneda, who handles the case,
approved a petition for the Company's bankruptcy. The Company's
creditor filed the petition for nonpayment of debt.
The receiver, Ms. Mabel Mansanta, will authenticate creditors'
claims until May 5 next year.
CONTACT: Construcciones Helic S.A.
1st Floor, Room A
Malabia 495
Mabel Mansanta
9th Floor, Room C
Tucuman 14828
Buenos Aires
CONVIVIR: Court Orders Bankruptcy
---------------------------------
Court No. 4 of Buenos Aires declared local company Convivir S.A.
"Quiebra", local news portal Infobae reports. The Company will
undergo the bankruptcy process with Ms. Maria Alva as receiver.
The credit verification process is set to end on February 10 next
year, Infobae adds. This part of the bankruptcy process
determines the nature and amount of the Company's debts.
CONTACT: Convivir S.A.
M. Acosta 171
Buenos Aires
Maria Alva
Montevideo 536
Buenos Aires
DISTRIRED: Court Approves Creditor's Petition For Bankruptcy
------------------------------------------------------------
Buenos Aires Court No. 18 approved a petition for the bankruptcy
of local company Distrired S.A., according to a report by local
Argentine newspaper La Nacion. The Company's creditor, SA
Organizaci˘n Coordinadora Argentina (OCA), filed the bankruptcy
motion after the Company failed to honor its debts.
The Company's receiver, Mr. Walter Callejas, will verify
creditors' claims until February 11 next year. This part of the
bankruptcy process determines the nature and amount of the
Company's debts. The receiver is also required to prepare the
individual and general reports, but the report did not mention
whether the court has set the deadlines for these.
Clerk No. 36, Dr. Vivono aids the court on the case. The
transport services company's assets will be liquidated at the end
of the process to reimburse its creditors.
CONTACT: Distrired S.A.
Rio Limay 1472
Buenos Aires
Walter Callejas
Lambare 1140
Buenos Aires
EL CUIDADANO: Court Designates Receiver for Bankruptcy
------------------------------------------------------
Buenos Aires Court No. 11 assigns local accountant Roberto Di
Martino as receiver for the bankruptcy of El Ciudadano y la
Region S.A., relates Argentine news source Infobae. The receiver
is instructed to verify creditors' claims until February 4 next
year.
The individual reports, which are prepared upon conclusion of the
verification process, must be submitted to the court on March 17
next year. The receiver will also prepare a general report after
the individual reports are processed at court. This report is due
for filing on April 28 next year.
The receiver's assets will be liquidated at the end of the
process to reimburse creditors. Payments will be based on the
results of the verification process.
CONTACT: Roberto Du Martino
Ave Callao 449
Buenos Aires
FRANCI: Court Gives Go Ahead For Reorganization
-----------------------------------------------
Court No. 2 of the Civil and Commercial Tribunal of Junin in
Argentina approved a motion for "Concurso Preventivo" filed by
local company Franci S.R.L., relates local news source Infobae.
The Company's reorganization process kicks off with its receiver,
Mr. Carlos Giacobini, verifying creditors' claims.
The credit verification period ends on December 1 this year,
after which the receiver will prepare the individual reports. The
court requires the individual reports to be filed by February 20,
2004. The receiver will then consolidate the results of the
individual reports after these are processed at court into a
general report, which is due for filing on March 20 next year.
The source, however, did not indicate whether the court has set
the date for the informative assembly.
CONTACT: Franci S.R.L.
San Martin 408
Junin
Carlos A Giacobini
Av Arias 81
Junin
GEROM: Receiver Verifies Claims in Bankruptcy Process
-----------------------------------------------------
Creditors of Buenos Aires-based Gerom S.A. must present their
claims to the Company's receiver for verification before the
December 12 deadline expires. Argentine news portal Infobae
relates that the assigned receiver is Mr. Carlos Eduardo Foresti,
a local accountant.
Court No. 11, which handles the Company's case, set February 25,
2004 as the deadline for the filing of the individual reports.
These reports contain the results of the verification process.
The receiver will summarize the information in the individual
reports after these are processed at court into a general report,
which is due on April 7 next year.
The bankruptcy process will end with the liquidation of the
Company's assets to pay off creditors. Payments will be gauged on
the results of the verification process.
CONTACT: Carlos Eduardo Foresti
Avenida Callao 449
Buenos Aires
INTERCLINICAS: Individual Reports Due For Filing Today
------------------------------------------------------
Mr. Silvio Gustavo Borbacz, receiver for Buenos Aires company
Interclinicas S.A., must submit the individual reports for the
Company's reorganization process today. The reports were prepared
after the credit verification process was completed on October 17
this year.
The Troubled Company Reporter - Latin America earlier revealed
that the city's Court No. 6 approved the Company's petition for
"Concurso Preventivo", and assigned the said receiver.
The court also ordered the receiver to prepare a general report
after the individual reports are processed at court. This report
is to be submitted to the court on February 23 next year. The
court has set the informative assembly to take place on August 3
next year. The time and venue of the meeting is yet to be
announced.
CONTACT: Interclinicas S.A.
Ave. Cordoba 456
Buenos Aires
Silvio Gustavo Borbacz
Tucuman 1484
Buenos Aires
INTERNATIONAL LINGERIE: Court Orders Bankruptcy
-----------------------------------------------
International Lingerie S.A., which is based in Buenos Aires,
enters bankruptcy on orders from Judge Dieuzeide of Buenos Aires
Court No. 1. Clerk No. 2 aids the court on the case.
Argentine newspaper La Nacion says that the ruling comes after
the Company's creditor filed a petition for bankruptcy for
nonpayment of debt.
The court assigned local accountant Ruben Faure as the Company's
receiver. Creditors must present their proofs of claim to the
receiver for verification before February 12 next year. The
Company's assets are to be liquidated at the end of the
bankruptcy process. Proceeds will be used to repay creditors.
CONTACT: International Lingerie S.A.
Ave Corrientes 2495
Buenos Aires
Ruben Faure
3rd Floor, Room F
Rivadavia 1237
Buenos Aires
MEDIZIN: Seeks Court Permission to Undergo Reorganization
---------------------------------------------------------
Argentine medical services provider Medizin S.A. filed a motion
for "Concurso Preventivo" at Buenos Aires' Court No. 18, relates
local newspaper La Nacion. Documents submitted indicate that the
Company stopped making debt payments by the second half of last
year.
The city's Clerk No. 35, Dr. Estevarena, aids the court on the
case. In the meantime, the source did not mention whether the
petition is likely to merit court approval.
CONTACT: Medizin S.A.
3rd Floor, Room C
Solis 330
Buenos Aires
MOLDAVIANA: Receiver Verifies Claims in Bankruptcy Process
----------------------------------------------------------
Mr. Jorge Mercia, receiver for Buenos Aires' Moldaviana S.R.L.,
will authenticate creditors' claims until February 10 next year.
Creditors must have their claims validated in order to qualify
for any payments to be made from the liquidation of the Company's
assets.
The Company, which is involved in the textile industry, entered
bankruptcy after Judge Dieuzeide of Buenos Aires Court No. 1
approved a motion filed by its creditor for nonpayment of debt.
Clerk No. 1, Dr. Fernandez Garello, assists the court on the
case, reports local newspaper La Nacion.
CONTACT: Moldaviana S.R.L.
Loyola 587
Buenos Aires
Jorge Mercia
2nd Floor, Office 3
Uruguay 328
Buenos Aires
MULTIMEDICAL: To Undergo Reorganization
---------------------------------------
Multimedical S.A., which is based in Buenos Aires, will undergo
reorganization. A report by Argentine news portal Infobae
indicates that the city's Court No. 5 approved the Company's
motion for "Concurso Preventivo".
The court assigned Ms. Edith Ghiglione as receiver for the
process, the source adds. The credit verification period is due
to end on February 9 next year. The receiver's duties cover the
preparation of the individual and general reports. The deadlines
of these reports were not revealed.
CONTACT: Multimedical S.A.
Cuidad de la Paz 1157
Buenos Aires
Edith Ghiglione
Paraguay 1225
Buenos Aires
PUMPETE: Creditor's Motion For Bankruptcy Approved
--------------------------------------------------
Buenos Aires Court No. 4, which is under Dr. Ottolenghi, approved
a petition for the bankruptcy of local company Pumpete S.A.
relates Argentine newspaper La Nacion. The Company's failure to
meet its financial obligations prompted a creditor to file the
bankruptcy motion.
With assistance from Clerk No. 8, Dr. Anta, the court designated
Buenos Aires accountant Mario Leizerow, as receiver for the
bankruptcy process. Creditors must have their claims
authenticated by the receiver before the February 6, 2004
deadline expires.
CONTACT: Pumpete S.A.
5th Floor
Tucuman 633
Buenos Aires
Mario Leizerow
6th Floor, Office F
Ave Corrientes 1250
Buenos Aires
SATEL BUSINESS: Bankruptcy Proceedings In Progress
--------------------------------------------------
Satel Business S.R.L., which is based in Buenos Aires, entered
bankruptcy on orders from the city's Court No. 3. Argentine news
source Infobae relates that the Company has been placed in the
hands of its receiver, Mr. Javier Hernan Gandara.
The credit verification period ends on December 22 this year.
Creditors must have their claims authenticated by the receiver
before that date in order to qualify for payments to be made
after the liquidation of the Company's assets.
The individual reports must be submitted to the court on March 8
next year followed by the general report on April 26. These
reports contain the results of the verification process and the
receiver's opinions on the factors that led to the Company's
bankruptcy.
CONTACT: Javier Hernan Gandara
Riovbamba 719
Buenos Aires
SECURITY CONSULTANTS: Individual Reports Due Today
--------------------------------------------------
The individual reports for the reorganization process of
Argentina-based Security Consultants Office are due for filing
today, according to the Troubled Company Reporter - Latin America
in an earlier report. The Company's receiver, Ms. Marta Susana
Polistina, is responsible for preparing the reports after the
credit verification process was completed.
Buenos Aires Court No. 10, which handles the Company's case, will
process the claims, after which the receiver will consolidate the
results in the individual reports into a general report. This
report is to be filed at the court on February 4 next year.
The TCR-LA added that the court called for an informative
assembly to be held on July 8, 2004, without indicating the
intended venue.
CONTACT: Marta Susana Polistina
Ave. Corrientes 745
Buenos Aires
TALLERES VADEZ: Credit Verifications To Close Today
---------------------------------------------------
The credit verification process for the reorganization of
Argentine company Talleres Vadez S.A. ends today, an earlier
report by the Troubled Company Reporter - Latin America revealed.
The Company's receiver, Mr. Jorge Eldaio Feito, will prepare the
individual reports on the results of the verifications.
The court ordered the receiver to submit the individual reports
on December 23 this year. After these are processed, the receiver
is to prepare a general report and submit these to the court on
March 4 next year.
The court has ordered an informational assembly to take place on
August 25 next year, the TCRLA added, without revealing the
meeting's venue.
CONTACT: Jorge Eladio Feito
Medrano 537
Buenos Aires
=============
B E R M U D A
=============
CRP: SCOR Releases Results for the First Nine Months of 2003
------------------------------------------------------------
The Board of Directors of SCOR, chaired by Denis Kessler met on
November 5, 2003.
At the end of the Board meeting, Chairman and Chief Executive
Officer Denis Kessler stated:
"The Group's results demonstrate the profitability of 2002-2003
underwriting worldwide. The Back on Track plan is bearing fruit.
However, these good results are weighed down by the need for the
Group to bolster its reserves in respect of business written in
the United States in 1997-2001. As pledged, SCOR now books its
reserves based on best estimates each year and has consequently
decided to bolster these reserves in the wake of a detailed
actuarial review carried out in October 2003.
The Board of Directors has decided to pursue the transformation
of its Life reinsurance business to form a subsidiary while
retaining 100% control of this subsidiary, which generates
satisfactory and recurring profits.
The Board has approved the plan for a EUR 600 million capital
increase in order to strengthen the Group's solvency and allow it
to pursue its existing underwriting policy, thereby profiting
fully from buoyant reinsurance market conditions.
The capital increase with allow SCOR Group to forge ahead with
its strategy, which is to be a mid-sized reinsurer with global
ambitions, operating selectively in all reinsurance classes,
pursuing a profit-driven underwriting policy, providing value-
added services, and having opted for a policy of conservative
asset management, in order to offer its customers the) level of
security they expect it to provide."
1. NEW BUSINESS IS PROFITABLE AND DISCIPLINED
The profitability of SCOR's new business is in line with targets
laid down in the Back on Track plan.
1.1 New business is profitable
Business written all over the world in 2002-2003 is profitable.
For the first nine months of 2003, the net underwriting ratio for
these underwriting years works out to 91% for P&C treaty
business, equivalent to a net combined ratio of 96% while the net
underwriting ratio for Large Corporate Accounts works out to 83%,
equivalent to a net combined ratio of 91% for the same period,
despite the impact of the May 2003 tornadoes in the United
States. These ratios are in line with our stated objectives.
Our subsidiary Irish Reinsurance Partners (IRP), which reinsures
25% of SCOR Group's P&C and Large Corporate Accounts business
written since 2002, reported earnings of EUR 41 million at 30
September 2003. These healthy results reflect the quality of
underwriting worldwide over the past two years.
In Life and Accident reinsurance, the technical operating margin
works out to 5.2% for the first nine months of 2003, exceeding
the Back on Track plan's 3% target.
Operating expenses are down 7% for the first nine months of 2003,
putting SCOR on course to achieve its 15% target for the end of
2004.
Operating cash flow at September 30, 2003 totaled EUR 295
million, against EUR 100 million one year earlier.
1.2 New business is disciplined
Reflecting this tight control is the change in the geographic mix
of business, the shutdown of unprofitable, non-core operations,
and in the priority given to underwriting in short-tail classes.
The Group has shifted the geographic balance of its portfolio.
Premiums written in North America now account for 30% of total
premiums written at September 30, 2003, versus 43% at September
30, 2002. Premiums written in Europe account for 49% of total
premiums at September 30, 2003, against 43% at September 30,
2002. Premiums for the rest of the world account for 21% of total
premium income at September 30, 2003, against 14% at September
30, 2002.
The Group has either halted ( "program business" and CRP's
alternative risk transfer business) or very sharply curbed (
buffer layers and workers' compensation) its business in certain
lines in the United States.
The Group has focused on short-tail classes in preference to
long-tail ones. The former accounted for 53% of P&C reinsurance
underwriting for the first three quarters of 2003, against 49%
for the same period last year.
1.3 A conservative asset management policy
SCOR has shifted its investment policy priorities, characterized
by prudence, holding the bulk of its investment portfolio in
bonds (61%) and cash (30%). The bond portfolio is of good
quality, with more than 95% of lines being rated better than A,
with a relatively short average duration.
2. ACTIVE MANAGEMENT OF THE THREE DIFFICULT LEGACY ISSUES
2-1 Additional reserve strengthening, essentially in the US,
required to be in line with best estimates
SCOR has pledged to account for its reserves at "best estimates"
level each year.
During 2003, and especially in the third quarter, the Group
suffered the impact of adverse trends in loss claims in the
United States with respect to business written in 1997-2001.
As announced, the Group undertook In October 2003 an annual
actuarial review of its exposures, with the aid of both in-house
and outside actuaries.
Adverse loss developments which have impacted all reinsurance
companies doing business in the American market have led to
additional reserve strengthening in the amount of EUR 241 million
following the actuarial review and coming on top of trends
already observed since the beginning of the year. These
additional reserves mainly concern classes deemed non-core, where
activity has either been halted or very sharply reduced, i.e.
"buffers layers", "program business," and "workers comp." The
factors behind these runaway costs are primarily due to medical
cost inflation, particularly in some states like California. This
reserve strengthening of EUR 241 million includes an increase in
IBNRs of EUR 9 million which brings SCOR's survival ratio up to
12 years.
Group exposures in all other countries are covered by "best
estimates" reserves, as evidenced by the actuarial reviews, with
only a marginal additional reserving of EUR 7 million.
On completion of the review, total Group reserves in the end-
September 2003 financial statements amount to EUR 10,750 million.
2.2 - SCOR US: a profitable new underwriting plan
Having made profitability a key priority, SCOR began focusing on
the most profitable underwriting segments in 2001.
The emphasis has been on short-tail business with medium-sized
regional ceding companies. SCOR has also continued writing
business with large corporates through its Business Solutions
division.
Recent business written by SCOR US is profitable. Gross premiums
written in the first nine months of the year total EUR 445
million, down 44% at current exchange rates and 34% at constant
exchange rates. The net underwriting ratio for P&C business is
84%, an equivalent of anet combined ratio of 89% and the net
underwriting ratio for Large Corporate Accounts,is 89%, an
equivalent net combined ratio of 97% despite the impact the
tornadoes in May 2003. In addition, SCOR US is now actively
managing its portfolio of run-off business.
2-3 Commercial Risk Partners: speeding up withdrawal
A first commutation, concerning approximately 20% of the Bermuda-
based subsidiary was completed in July 2003, underwriting having
been halted with effect from January 2003.
In light of the actuarial reviews carried out, the Group has
increased CRP's reserves at September 30 2003 by EUR 49 million
to meet best estimates reserving.
Several negotiations are currently underway with a view to
commute a large portion of CRP's book.
2-4 Significantly reduced risks on Credit Derivatives
No claims were reported on Credit Derivatives in the third
quarter of 2003.
SCOR Group has recorded only two claims for the whole of 2003 to
date, total cost EUR 27 million, which is less than the loss
assumptions underlying the current level of reserves.
The Group has reduced its credit derivatives exposure. In the
first place, it has sold 77 names out of a total portfolio of 669
names, thereby reducing its notional risk by 20%. Second, since
January 2003 the portfolio's maturity has been reduced from 2.4
to 1.7 years. Finally, portfolio risk ratings have improved
overall.
Since the beginning of the year, the Group has decided to
maintain its reserves covering the residual portfolio at EUR 111
million. This represents an strengthened level of cover in view
of the reduction in risk exposure.
3 - Consolidated income for the first nine months of 2003
Despite profitable recent underwriting, the Group registered a
net loss of EUR -349 million due to the burden of past US
underwriting and to the prudent writedown on certain tax credits.
For Non-life business (P&C, Commercial Risks, Credit & Bond, and
CRP), all of the developments discussed above have resulted in a
net Non-life underwriting loss (i.e. the difference between net
earned premiums and the cost of claims, additional reserves,
acquisition costs and commissions) of EUR 435 million for the
first nine months of 2003.
Before additional reserve strengthening of EUR 297 million
detailed herebelow, the underwriting results breakdown as
follow:This result is made up as follows:
-- a net underwriting profit of EUR 154 million for business
excluding the 2001 and earlier underwriting years for SCOR US,
CRP, and credit derivatives,
-- a net underwriting loss of EUR 292 million for the 2001 and
earlier underwriting years for SCOR US, CRP, and the credit
derivatives portfolio.
The Non-life technical operating results (i.e. underwriting
result minus operating expenses, and plus allocated investment
investment income) amounted to a loss of EUR 339 million for the
first nine months of 2003.
Taking into account a technical operating profit of EUR 56
million in Life reinsurance, the Group registered a technical
operating loss of EUR 283 million.
After other income and charges (in particular a write down on
deferred tax credits), the Group registered a net loss of EUR 349
million.
In view of this loss and exchange range movements, Group
shareholders' equity has been reduced from EUR 1,070 million at
December 31, 2002 to EUR 629 million at September 30, 2003,
necessitating a strengthening of shareholders' equity.
4 - MEASURES TO STRENGTHEN SHAREHOLDERS' EQUITY
4.1. - Life operations: spinning off the Group's life business
with no change of ownership
SCOR has decided not to open up the capital of its Life
reinsurance subsidiary. Bids received for the sale of this
subsidiary do not fully reflect the value of this business, which
represents a source of stable and recurring revenues for the
Group. SCOR nevertheless plans to proceed with the transfer of
its Life reinsurance activities to this newly-formed subsidiary
in order to bolster its development.
4.2 - Launching capital increase
In order to bolster the Group's solvency, allowing it to pursue
its current underwriting policy and so profit fully from
favorable conditions in the reinsurance marke, the Board of
Directors has approved the plan to increase SCOR's capital with
preferential subscription rights. of around EUR 600 million.
This amount will allow the Group, after taking into account the
losses, to significantly increase the net asset value of the
Group compared to December 31 2002. Shareholders will shortly be
invited to attend an Extraordinary General Meeting to vote on the
financial resolutions necessary for this capital increase and to
the prior reduction in the nominal value of the shares.
The shareholder Board Members have unanimously decided to
subscribe to this capital increase, which will already guarantee
as of now the transaction. .
Results at September 30, 2003
1. Results at September 30, 2003
The Group has registered a technical operating loss of EUR 283
million at September 30, 2003, compared with a loss of EUR 495
million at end-September 2002.
The net loss for the Group for the first nine months of the year
works out to EUR 349 million, representing a net loss per share
of EUR 2.56.
Net assets per share at end-September 2003 amount to EUR 4,62,
against EUR 7.84 one year earlier.
Operating cash flow totaled EUR 295 million at September 30,
2003, compared with EUR 100 million at September 30, 2002. Net
cash for the first nine months of 2003 amounts to EUR 2 121
million.
Technical reserves have risen 3.6% to EUR 10,750 million. At
constant exchange rates, the increase would have been 9.1%. The
main reason for the change was the addition to reserves in the
United States.
Group shareholders' equity amounted to EUR 629 million at
September 30, 2003.
Group long-term capital (revalued net assets, quasi-equity and
long-term borrowings) now stands at EUR 1 659 million, compared
with EUR 2,183 million at December 31, 2002.
2. Business activity at September 30, 2003
Gross written premiums at September 30, 2003 are 24% below the
comparable figure one year earlier. They totalled EUR 3,038
million, versus EUR 3,975 million for the first nine months of
2002. On a like-for-like basis, the decrease would have been
limited to 10%.
Net earned premiums for the first nine months of 2003 amounted to
EUR 3,033 million, down 8% from the corresponding figure one year
earlier (EUR 3,292 million).
Non-life reinsurance (P&C treaty business and Large Corporate
Accounts, excluding Credit & Bond and CRP) reported premium
income of EUR 1,830 million at September 30, 2003, a fall of 22%
(18% at constant exchange rates) compared with the first nine
months of 2002.
Taking into account the foregoing elements, technical operating
income amounted to a negative EUR 272 million at September 30,
2003, compared with a negative EUR 309 million for the same
period last year.
Life / A & H reinsurance premium income is stable at constant
exchange rates. Premium income at September 30, 2003 amounted to
EUR 1,151 million, down 6%.
Technical operating income reached EUR 56 million for the first
nine months of of 2003, up sharply compared to the September 30,
2002 figure of EUR 12 million.
The Credit & Bond business, with revenue of EUR 57 million, was
down 35% compared to September 30, 2002.
It generated a technical operating profit of EUR 4 million,
compared with a loss of EUR 84 million at September 30, 2002 and
a loss of EUR 111 million for full-year 2002.
CRP reported a technical operating loss of EUR 71 million for the
first nine months of 2003, compared with a loss of EUR 112
million at September 30, 2002 and a loss of EUR 172 million for
full-year 2002.
3. Asset Management, first nine months of 2003
Total investment income for the first nine months of 2003
amounted to EUR 413 million, compared with EUR 190 million at
September 30, 2002. Income from ordinary investing activities
contributed EUR 237 million (EUR 276 million for the same period
in 2002), realized capital gains, including allowances for long-
lived impairment, totaled EUR 95 million (EUR -121 million), and
foreign exchange gains or losses amounted to EUR 81 million (EUR
36 million).
Unrealized capital gains amounted to EUR 244 million at September
30, 2003, compared with EUR 303 million at December 31, 2002. At
September 30, 2003, the equity portfolio carried an unrealized
capital gain of EUR 1 million, the bond portfolio unrealized
gains of EUR 128 million, and real estate investments unrealized
gains of EUR 115 million.
Investments (marked to market) at September 30, 2003 amounted to
EUR 9,535 million, down 2% compared with December 31, 2002, but
up 3% at constant exchange rates. Investments are weighted as
follows: bonds (61%), cash and cash equivalents (22%), cash
deposits (8%), real estate (5%) and equities (4%).
This is not an offer of securities for sale in the United States.
The securities referred to in this document have not been and may
not be registered in the United States. Securities may not be
offered or sold in the United States unless they are registered
or exempt from registration.
CRP: A.M. Best Changes SCOR's Under Review Status To Negative
-------------------------------------------------------------
A.M. Best Co. has changed the under review status of SCOR's
(Paris, France) financial strength rating of B++ (Very Good) to
negative from developing. This also applies to its core
subsidiaries. At the same time, A.M. Best has downgraded and
placed under review negative the ratings on debt instruments
issued or guaranteed by SCOR. (See below for a full list of rated
companies and debt ratings.)
These actions follows SCOR's decision not to divest its soon to
be established new life subsidiary, the reported EUR 349 million
(USD 398 million) loss in its consolidated third quarter results
and the announcement that it plans to raise at least EUR 600
million (USD 684 million) through a rights issue. A.M. Best
believes that the proposed rights issue is likely to restore
SCOR's prospective consolidated capital to a level commensurate
with a B++ (Very Good) rating despite a substantial expected net
loss in the region of EUR 300 (USD 342 million) for the full year
(as a result of underwriting losses and reserve strengthening).
However, A.M. Best believes that this prospective positive impact
on capital will be somewhat offset by reduced financial
flexibility. In addition, commutation negotiations at Commercial
Risks Partners Limited (CRP), Bermuda have proven more protracted
than anticipated, and negotiations remain open. A.M. Best is in
discussions with SCOR management regarding the time-frame of this
rights issue and new commutation proposals for CRP. In addition,
A.M. Best is closely reviewing the potential for further reserve
deterioration. A.M. Best aims to resolve this under review status
upon completion of the proposed rights issue. A significant delay
or unsuccessful completion will most likely trigger a downgrade.
The implications of the under review status of SCOR's financial
strength rating of B++ (Very Good) has been changed to negative
from developing. This applies to the following companies:
-- SCOR
-- SCOR Canada Reinsurance Company
-- SCOR Deutschland Rueckversicherungs AG
-- SCOR Italia Riassicurazioni S.p.A
-- SCOR Reinsurance Asia-Pacific Pte Ltd
-- SCOR Reinsurance Company*
-- SCOR UK Company Ltd
-- General Security Indemnity Company of Arizona
-- General Security National Insurance Company
-- SCOR Life U.S. Re Insurance Company
-- SCOR Life Insurance Company
-- Investors Insurance Corporation
*SCOR Reinsurance Company is a U.S. trading company.
The following debt ratings have been downgraded to "bbb-" from
"bbb", and the implications of the under review status has been
changed to negative from developing:
-- five-year convertible bonds
-- senior unsecured EUR medium term note program
The following debt ratings have been downgraded to "bb+" from
"bbb-", and the implications of the under review status has been
changed to negative from developing:
-- EUR 100 million cumulative subordinated notes, due 2020
-- USD 100 million subordinated step-up notes, due 2029
-- EUR 50 million subordinated perpetual step-up notes issued by
Societe d'Etudes et de Placements Financiers and guaranteed by
SCOR
The following commercial paper rating has been affirmed, and the
implications of the under review status have been changed to
negative from developing:
-- AMB-2 rating on EUR commercial paper program
A.M. Best Co., established in 1899, is the world's oldest and
most authoritative insurance rating and information source. For
more information, visit A.M. Best's Web site at www.ambest.com.
CONTACT: A.M. Best Co.
Public Relations:
Jim Peavy
Phone: +(1) 908 439 2200, ext. 5644
Email: james.peavy@ambest.com
Rachelle Striegel
Phone: +(1) 908 439 2200, ext. 5378
Email: rachelle.striegel@ambest.com
Analysts:
Miles Trotter
Phone: +(44) 20 7626 6264
Email: miles.trotter@ambest.com
Jose Sanchez-Crespo
Phone: +(44) 20 7626
FOSTER WHEELER: Appoints New General Counsel
--------------------------------------------
Foster Wheeler Ltd. announced Thursday the appointment of the law
firm of Heller Ehrman White & McAuliffe, LLP to serve as the
Company's General Counsel effective January 1, 2004. Victor
Hebert, 66, a senior member of Heller Ehrman, will resign from
the Foster Wheeler Board of Directors to lead the Company's legal
team. Thomas R. O'Brien, 64, General Counsel and Senior Vice
President of Foster Wheeler since 1994, will officially retire on
January 1, 2004, and will rejoin his former law firm, Wolf &
Samson. In that position, he will continue to serve the Company
as a special counsel on a number of legal and legislative
matters.
"Victor Hebert has been a very valuable member of the Company's
Board and I am delighted that he has agreed to lead the future
Foster Wheeler engagement with Heller Ehrman," said Raymond J.
Milchovich, chairman, president and chief executive officer of
Foster Wheeler. "Vic's broad understanding of our business along
with his extensive experience and expertise in all areas of
corporate finance will be invaluable as we continue with our
restructuring. Tom O'Brien has been an integral part of our
executive team over the last ten years managing critical
litigation and other issues, including asbestos matters for the
Company. We are pleased that he has agreed to serve as special
counsel going forward."
Victor Hebert joined Heller Ehrman in 1962 and has over forty
years' experience in corporate finance, corporate governance and
mergers and acquisitions. He has been involved in public and
private offerings of debt and equity securities and has handled
numerous mergers and acquisitions for clients across a wide range
of industries. Mr. Hebert served as Co-Chairman of Heller Ehrman
from 1987 to 1993 and is a director or officer of several
corporations and non-profit organizations. He is a graduate of
the University of California, Berkeley and holds a law degree
from that university's Boalt Hall School of Law.
Foster Wheeler Ltd. is a global company offering a broad range of
design engineering, construction, manufacturing, project
development and management, research and plant operation
services. Foster Wheeler serves the refining, oil and gas,
petrochemical, chemicals, power, pharmaceutical, biotechnology
and healthcare industries. Foster Wheeler Ltd. is based in
Hamilton, Bermuda, and its operational headquarters are in
Clinton, New Jersey. For more information about Foster Wheeler
Ltd. and its affiliates, visit its website at www.fwc.com.
CONTACT: Media:
Richard Tauberman, 908-730-4444
or
Other Inquiries, 908-730-4000
TYCO INTERNATIONAL: Placing $1 Billion in Debt Securities
---------------------------------------------------------
Tyco International Ltd. announced Thursday that it has agreed to
privately place $1 billion in debt securities due November 15,
2013 of its wholly-owned subsidiary, Tyco International Group
S.A. with a coupon of 6%, pursuant to Rule 144A and Regulation S
of the Securities Act. The Company expects to use the proceeds
from the offering to pay-down outstanding debt under its $2
billion 5-year revolving credit facility due February 2006 upon
completing negotiation of a replacement of the credit facilities.
The debt securities will not be registered under the Securities
Act of 1933. Unless so registered, the debt securities may not be
offered or sold in the United States except pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and applicable
state securities laws. This press release shall not constitute an
offer to sell or a solicitation of an offer to buy, nor will
there be any sale of these debt securities in any state or
jurisdiction in which such an offer, solicitation or sale would
be unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction.
ABOUT TYCO INTERNATIONAL LTD.
Tyco International Ltd. is a diversified manufacturing and
service company. Tyco operates in more than 100 countries and had
fiscal 2003 revenues from continuing operations of approximately
$37 billion.
TYCO INTERNATIONAL: Announces Credit Facilities Negotiation
-----------------------------------------------------------
Tyco International Ltd. announced Thursday that it has begun
negotiations for new bank credit facilities of $2.5 billion,
consisting of both a three-year and a 364-day revolving credit
facility. The new facilities will replace the $1.5 billion
undrawn 364-day revolving credit facility, due to expire at the
end of January 2004, and the $2 billion drawn 5-year revolving
credit facility, due to expire in February 2006.
TYCO INTERNATIONAL: Fitch Rates $1B Unsecured Notes `BB'
--------------------------------------------------------
Fitch Ratings has assigned a 'BB' rating to $1 billion of 10 year
notes to be issued by Tyco International Group S.A. and
guaranteed by Tyco International Ltd. (Tyco). The Rating Outlook
is Stable.
Proceeds from the new issuance will be used to pay down existing
debt and serve to extend the average maturity of Tyco's
outstanding debt. Tyco is expected to replace or renegotiate its
364-day facility, currently $1.5 billion, which expires in
January 2004. A renewal or replacement would support short term
liquidity that will decline upon the completion of Tyco's
outstanding tender offer for $2.5 billion (cash purchase price
offer) of LYONs (the offer expires on November 17, 2003). After
the repurchase of the LYONs, Tyco's cash balance of $4.2 billion
as of Sept. 30, 2003 would decline to approximately $1.7 billion
on a pro forma basis as of September 30. As there are no
significant scheduled debt maturities until the first quarter of
fiscal 2005, the combination of free cash flow and borrowing
capacity under Tyco's bank facilities should provide ample short
term liquidity. Future debt maturities will be relatively well
distributed with maturities in calendar 2004 and 2005 scheduled
to be approximately $1.0 billion (in the fourth calendar quarter)
and $800 million, respectively. Debt of $3.7 billion due in 2006
represents the largest amount due in any single year and includes
$2 billion outstanding under the fully used bank revolver.
Further debt reduction is supported by stronger free cash flow of
$3.2 billion reported for the fiscal year ended Sept. 30, 2003 as
compared to $779 million in 2002. The increase reflects
substantial reductions in capital spending including expenditures
on the TyCom Global Network (TGN), purchases of dealer accounts,
regular capital expenditures across the rest of Tyco, and cash
paid for purchase and earn-out liabilities. These reductions in
spending provide much needed financial flexibility as Tyco
addresses its longer term goals for paying down debt, perhaps to
around the $12 billion range, investing in organic growth and a
modest level of acquisitions, and compensating for low margins in
certain businesses, such as Engineered Products, until economic
conditions improve.
The ratings also reflect concerns about legal liabilities
relating to shareholder lawsuits and ongoing investigation by the
SEC, demonstrating full access to capital markets, completing the
resolution of Tyco's debt structure, and successfully executing
plans to realign and improve the company's operations. Fitch
believes Tyco is taking important and effective actions with
respect to these issues, a number of which were announced earlier
this week pertaining to restructuring and to the sale of TGN and
over 50 other low-margin or non-core businesses. Further
demonstration of the company's ability to reduce debt from
operating cash flow, as well as stabilization at ADT Security,
could result in a review of the rating in the relatively short
term. Debt/Capitalization was slightly over 44% at Sept. 30 after
$1.2 billion of charges in the fourth quarter, including $942
million for TGN, well below the maximum 52.5% allowed under bank
covenants. Fitch looks for Debt/EBITDA of 3.3 times (x) at Sept.
30, 2003 to trend down in 2004 as cash flow is used to reduce
debt.
CONTACT: Eric Ause, CFA
Phone: +1-312-606-2302
Mark Oline
Phone: +1-312-368-2073
Media Relations:
James Jockle
Phone: +1-212-908-0547
TYCO INTERNATIONAL: S&P Assigns `BBB-' Senior Unsecured Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services said Thursday that it affirmed
its 'BBB-' corporate credit rating on Tyco International Ltd.
(Tyco, or TIL) as well as its ratings on its related entities. At
the same time, Standard & Poor's assigned its 'BBB-' senior
unsecured debt rating to Tyco International Group S.A.'s proposed
$1 billion notes, which will be issued under SEC Rule 144A with
registration rights, and will be guaranteed by TIL. Proceeds from
the debt issue are expected to be used to repay outstanding debt.
At Sept. 30, 2003, Tyco had total debt of approximately $24
billion. The outlook is stable.
"We view the proposed debt issuance, as well as Tyco's recent
announcements about divestitures--including Tyco Global Network--
restructuring, its 2004 earnings and cash flow outlook, and its
reaffirmation toward paying down debt, as favorable to long-term
credit quality," said Standard & Poor's credit analyst Joel
Levington. The proposed debt issuance should provide additional
flexibility as the company manages through the likely put of $2.5
billion zero coupon notes later this month.
"Although some of the actions announced on Tyco's Nov. 4, 2003,
conference call may reduce book equity, they should result in
improved operating margins and cash flow, and less debt usage.
None of the actions as described, in part or in whole, should
meaningfully affect financial covenants under Tyco's bank credit
agreements," Mr. Levington said.
ANALYST: Joel Levington
New York
Phone: (1) 212-438-7802
===========
B R A Z I L
===========
ACESITA: Reports Significant Improvement in Financial Performance
-----------------------------------------------------------------
ACESITA S.A., Latin America's only integrated stainless and
silicon flat steel producer, released its operational results for
the third quarter 2003 (3Q03). The operational and financial
information of the company, except where otherwise stated, is
represented in Reais, based on the Parent Company's figures, as
per Brazilian corporate legislation. All the comparisons in this
release, except where otherwise indicated, are made with the
third quarter 2002 (3Q02).
Comments from Mr. Gilberto Audelino Correa, Financial and
Investor Relations Director
" The third quarter of this year was a stable period for Acesita,
both from an industrial standpoint, and in terms of commercial
and financial performance. This stable performance, the benefit
reaped from restructuring work carried out over the last few
years, can be considered to be an extremely positive result
bearing in mind the difficult scenario in the segment during the
period. Despite the adverse market conditions, with sluggish
demand for stainless steels in local and international markets -
with low product prices, strong speculative variations in alloy
prices, especially nickel - Acesita managed to obtain a positive
operating result, in line with expectations. Additionally, the
company suffered with the difference between its sales prices and
its costs, which were hit by the high inflation rates in the end
of 2002. Strategic positioning, as determined by the company's
Management, is being achieved, confirming that we are well
positioned to benefit from better market conditions ahead.
Financial restructuring is on track, as envisaged in the
company's strategic plan. We are in the process of negotiating
new loan operations, with a view to reducing the cost of debt and
lengthening its term."
OPERATIONAL PERFORMANCE
Sales
Acesita has maintained a good sales performance in the quarter,
with total steel sales of 181,300 tons, a volume in line with
that in previous quarters, based on the new industrial
configuration established in the third quarter of 2002. Sales
volume was 5.3% up on the previous quarter (2Q03) and 3.5% lower
than in the third quarter of 2002. Of particular note is the
increased proportion of stainless steel as a percentage of volume
sold, accounting for 55.4% of total sales volume, recording an
increase of 9,800 tons, compared to the volume sold in 2Q03.
Sales accumulated in the period from January to the end of
September amounted to 510,300 tons, down just 0.8% in relation to
the same period in 2002, when mechanical bars were still included
in the company's product mix. From 1st July 2002, liquid steel,
previously used for the production of mechanical bars, was
transferred to the manufacturing of steel products with a higher
aggregate value. Since then, 467,000 tons of stainless steel have
been sold, a monthly average increase of 10,000 tons for this
product.
Despite the slowdown in the stainless steel markets, largely due
to the high inventory levels in the industry, the market
maintained its customarily high demand levels for this product
usually seen in the third quarter. In local markets, Acesita's
total sales amounted to 110,500 tons, down 15.9% compared to the
third quarter of 2002, basically reflecting the low level of
activity in the Brazilian economy. On the other hand, sales to
external markets increased by 25.5% over the same period,
amounting to 70,800 tons.
Sales Mix in 3Q03 - Volume
The company expanded its exports based on a strategy of
maintaining focus on the production and sale of specialty steels,
particularly stainless. And as a consequence, enlarging its
presence in external markets, seeing that total demand in Brazil
for this product is less than Acesita's production capacity. As a
result, Acesita's stainless steel exports accounted for 67% of
total sales volume for this product, exceeding domestic sales of
stainless steel for the fifth quarter running. The company's
ability to expand its international sales is clear proof of the
competitiveness and quality of its products, seeing that world
stainless steel markets are currently suffering from an excess of
supply over demand.
Exports in the quarter increased by 25.5% in relation to the same
period a year earlier, amounting to 70,800 tons. Taking the first
three quarters of the year (9M03), total accumulated export
volume in the period was up 64.5%, year-over-year.
Market and prices
The prices in the local market, mirroring the trend observed in
international markets, remained stable compared to the previous
quarter. The fluctuations seen in Acesita's sales prices refer
basically to alterations in the company's product mix, in its
various product lines.
The slow demand in international markets and the excess supply of
stainless steel, Acesita's main export product, has been keeping
product prices below their historic average. However, Acesita
continues to direct a significant portion of its exports to Asian
markets, currently one of the most competitive in the world.
Net Operating Revenues
Despite the adverse market scenario, Acesita's good sales
performance and its sales of products with a higher aggregate
value - stainless and silicon steels accounted for 75% of the
volume sold -, ensured the company's satisfactory net revenue
performance in the quarter, which amounted to R$ 556.3 million.
Revenues were up 11.5% compared to the same period in 2002 and
3.7% higher in relation to the previous quarter.
Taking the good performance in the quarter, net accumulated
operating revenues for the year to date amounted to R$ 1,634.1
million, up 40.0% in relation to the first nine months of 2002
(9M02). This figure confirmed the company's revenue expectations
of R$ 2 billion for the full year.
Since the implementation of the company's current industrial and
sales structure, export revenues have gained greater importance
in relation to total sales. In the period from January to end-
September, export sales amounted to R$ 671.8 million, accounting
for 41.1% of total net revenues.
The higher volume of STAINLESS STEEL sales, due to the growth in
exports (an increase of 31.3% on the volume exported in 2Q03),
compensated for the fallback in the average product sales price.
As a result, the segment saw revenue increase by 3.7% on the
previous quarter, and 12.5% compared to the same period in 2002.
Stainless steel sales accounted for 74.6% of net revenues in the
quarter, and 75.1% of the revenues accumulated in the first nine
months of the year.
SILICON STEELS, also considered specialty steels and an important
focus of Acesita's business, accounted for net revenues of R$76.3
million in the quarter and R$224.2 million accumulated in the
year to end-September, accounting for 13.7% of the company's
total revenues in both periods. The demand for grain-oriented
silicon steels has remained weak, seeing that the main consumer
of this product is the electricity sector and there are currently
no significant ongoing investments in this area in Brazil. Non
grain-oriented silicon steels have experienced stronger demand,
especially on the part of the motors and compressors
manufacturing industries.
In the CARBON STEELS/ALLOYS segment, Acesita sells differentiated
products with a higher aggregate value than the standard product,
catering to a local niche market with specific requirements for
special alloys, such as the agricultural and re-rolling sectors.
These steels represent an addition to the company's production
line and an alternative product mix in its search for optimizing
earnings, having accounted for 6.3% of total net revenues in the
quarter, as well as in the first nine months of the year.
Gross Earnings
Acesita reported gross earnings in the quarter of R$ 134.1
million, on a gross margin of 24.1%. In the period January to
end-September, gross earnings amounted to R$ 434.9 million, on
margin of 26.6%.
Nickel, the principal cost item in the production of stainless
steel, saw a 22% increase in price in the quarter, weighing
heavily on the company's cost of goods sold (COGS). This input
has risen by 67%, in the year with its price rising to
US$11,880.00/ton as at 31 October 2003, putting strong pressure
on the cost base for stainless steel producers throughout the
world. The rise in the price of this input, the weak global
demand and the excess supply of this product over demand, has had
the effect of squeezing stainless steel producer margins
everywhere.
While most of Acesita's sales incorporate a mechanism to make
adjustments for variations in alloy prices in the price of
stainless steel (alloy surcharge), there is a time-lag between
accounting for changes in production cost and passing them on to
end-prices through the alloy surcharge; this timelag caused a
temporary further squeezing of operating margins.
Acesita has one of the most competitive stainless steel
production costs in the world, which enables it to face the
current adverse conditions in the market and still obtain good
results. As the current industrial structure builds in stringent
cost controls, Acesita confirms that it is well prepared to reap
extensive benefits the moment that the current market cycle sees
an upturn.
Operational Cash Generation- EBITDA
Acesita's operational cash generation in the quarter amounted to
R$ 107.6 million, up 7.9% in relation to the previous quarter.
This was based on EBITDA margin of 19.3%, a slight recovery in
relation to the previous quarter.
Acesita obtained a good operational result in the quarter,
despite the increases seen in input costs at this depressed
moment in local and international markets, and the weak prices
currently prevailing.
Financial Result
Financial expenses in the quarter, net of financial revenues and
disregarding monetary variation, amounted to R$ 50.0 million,
down 52.8% in relation to the same period in 2002 and down 34.9%
in relation to the second quarter 2003 (2Q03). This performance
is evidence of Acesita's improved financial situation after the
first measures taken to restructure the company's debt profile.
The lower financial expenses in the period reflect a reduction in
the level of debt after the receipt of the proceeds from the
partial sale of the company's stake in CST on 24 April 2003 and a
reduction in the average cost of debt, as a result of the base
rate cuts and the company's most recent loan operations, agreed
at lower rates.
Net monetary variation in the quarter produced a negative effect
of R$ 26.4 million, as a result of the 1.8% variation in the
exchange rate (R$ vs. US$), on the company's foreign currency-
denominated debt and the result of swap operations (exchange-rate
hedge). In the first nine months of the year, the appreciation of
the real against the dollar reached 17,3%, thus increasing in
R$12,1 million the results by means of a net positive monetary
variation. This situation was the opposite of what had occurred
in the same period of last year, when the real was devalued by
67,8%, thus affecting the results in R$370,million by means of a
net negative monetary variation. The negative impact in the swap
transactions must be taken into account since the CDI rate
variation in the first nine months of the year exceeded the
foreign exchange variation (asset vs. liability).
Although the coverage index from an accounting standpoint has
seen a gradual reduction, the company will maintain its policy of
hedging a minimum of 70% of its dollar-denominated debt,
excluding the portion of debt which is secured on export
receivables, with a view to protecting its cash flow and
maintaining the integrity of the company.
The position as at 30 September showed a net indebtedness of R$
1,497 million (including data from subsidiary Acesita
International and deducting hedge operations - swap/margin
account), a drop of 33.2% (R$ 743 million) in the first nine
months of the year. Compared to the net debt position at the end
of September 2002, this represented a drop of 42.2% (R$1,092
million). This reduction in indebtedness reflects the company's
strategy of equating its debt levels to the new operational
performance achieved after the completion of its investments in
the Tim˘teo plant. The current operational structure has
permitted higher levels of cash generation and Acesita's payment
capacity indicators and debt ratios are now compatible with the
average for the Brazilian steel sector. After the sale of assets
outside its core business focus, and the use of the sale proceeds
to reduce debt levels, Acesita has been working to extend its
average debt term and the cost of its remaining debt. In
September, the company appointed an international bank to lead a
syndicate for the structuring of a US$ 125 million export
prepayment operation. The payment conditions, still under
discussion, are likely to involve a term of 3 years with a 1-year
grace period.
The concentration of short-term debt has already been reduced to
51.1% of the total, compared to 58.6% at the end of the previous
quarter, due to two export related loans carried out in August by
the company to raise US$ 67 million, with an average term of more
than 4 years. It is expected that the ongoing financial
operations, currently under negotiation, will be concluded by the
end of the year. As a result, approximately 65% of Acesita's debt
will then be of a long-term nature.
Net Result
Acesita reported positive net earnings in the quarter of R$ 8.4
million, accumulating net earnings of R$ 109.7 million in the
first nine months of the year. This is the fourth consecutive
quarter for which the company has been able to report a net
profit.
The market for stainless steel has remained sluggish both
domestically and internationally. The prices of this product are
currently at a cyclical historic low. On the other hand, the
price of nickel, one of the main inputs for the production of
stainless steel, is at its historical peak. Bearing in mind the
adverse scenario, Acesita's result was very positive, confirming
that the company is well prepared for the moment when its market
sees an upturn.
Investments (Capex)
R$4.5 million was invested in the quarter, in accordance with the
strategic plan of limiting investments to maintaining industrial
competitiveness. Investments in the first nine months of year
amounted to R$18.7 million.
Outlook
General expectations for the start of a recovery in the Brazilian
economy should have a positive effect on the market for steel
products in 2004. For the fourth quarter 2003, however, it is
expected that demand and prices will remain at similar levels to
those seen in the third quarter.
In the stainless steel segment, China's stocks remain high, which
could postpone the recovery of international prices. While there
is no certainty as to how long this scenario is likely to
continue, it is expected that that country will continue to
experience high levels of economic growth, with a consequent
strong demand for steel products, at least until the Olympic
Games in 2008.
ACESITA S.A. is an integrated steel company, having reported net
revenues of R$1,698 million in 2002. With its head office in Belo
Horizonte and plant in Tim˘teo, in the Vale do A‡o region of
Minas Gerais State, it has an annual production capacity of
900,000 tons of molten steel. The company is the only integrated
producer of flat stainless and silicon steel in Latin America.
CONTACT: ACESITA SA
Fabio Abreu Schettino
Financial Operations and Investor Relations Manager
Tel: (31) 3235-4241
Adriana Lucia Fernandes
Investor Relations Co-ordinator
Tel: (31) 3235-4270
Flavia Bozzolla Vieira
Analyst
Tel: (31) 3235-4235
www.acesita.com.br
ri@acesita.com.br
THOMSON
Doris Pompeu Brasil
Consultancy
Tel: (11) 3897-6408
doris.pompeu@thomsonir.com.br
ESCELSA: Positive Earnings Have No Effect on Rating
---------------------------------------------------
Standard & Poor's Ratings Services said Thursday that the
significant improvement in Espˇrito Santo Centrais Eletricas
S.A.'s (Escelsa; B+/Negative/--) net profit in the quarter ended
September 2003 does not affect the ratings or outlook on the
company. The BrR167 million consolidated positive net result in
September 2003 stems from the noncash gains of the local currency
appreciation against the dollar. Cash generation remains tight
for the rating category, with funds from operations (FFO) of
about BrR44 million in the period, 10% lower than the same period
last year, as a result of higher cash interest expenses. The
company's FFO interest coverage also dropped in the period to
1.17x from 1.25x. Although presenting tight cash protection
measures, the interim result already demonstrates a small
enhancement from other quarters in 2003, reflecting the downward
trend in the base interest rate and the tariff revision increase
for Escelsa since August (full benefit in the fourth quarter).
Standard & Poor's expects Escelsa to show improved consolidated
FFO for the full-year 2003, resulting in FFO interest coverage
above 1.20x. Escelsa has US$431 million 10% senior notes, which
is more than half of Escelsa's consolidated debt and pays
interests semiannually. As one source of financial flexibility,
the ratings incorporate the fact that the controlling
shareholder, Portugal-based EDP group, holds 83% of its
outstanding senior notes.
ANALYST: Marcelo Costa, Sao Paulo (55) 11-5501-8955
FERRONORTE: Gets C(bra) Rating For $27.9M Of Notes
--------------------------------------------------
Brazilian rail concessionaire Ferronorte received a C(bra)
national short-term rating for its BRL80 million (US$27.9mn)
worth of promissory notes from Fitch Atlantic Ratings, reports
Business News Americas.
In a statement issued Wednesday, Fitch said that the rating
assigned was due to the elevated debt volume of Ferronorte's
controller Brasil Ferrovias that prevents the group from meeting
the entirety of its commitments, which means Brasil Ferrovias
must constantly renegotiate.
Brasil Ferrovias also controls local rail concessionaires
Ferroban and Ferrovia Novoeste. But of the three rail
concessionaires, only Ferronorte posted a positive cash flow in
the first semester, Fitch added.
Recently, Romulo Martins dos Santos, transport and logistics
department head at Brazil's national development bank BNDES, was
quoted as saying that the Bank was working on turning close to
BRL400 million of the BRL1.5 billion rail concessionaire
Ferronorte owes it into preferential shares.
GERDAU: Directors Conclude Studies On Integration With Acominas
---------------------------------------------------------------
GERDAU S.A., in compliance with the Brazilian Securities and
Exchange Commission regulation - CVM 358, of January 3rd, 2002,
hereby informs its shareholders and investors that, as announced
in a press release issued on June 12th, 2003, its directors have
concluded the studies regarding the integration of its operations
with its subsidiary A‡o Minas Gerais S.A. - Acominas
("Acominas"), as described below:
1. Gerdau S.A. will transfer its directly and indirectly
controlled operations in Brazil to Acominas. Acominas will be
renamed Gerdau Acominas S.A. ("Gerdau Acominas"), and will
continue to be headquartered in Ouro Branco, Minas Gerais. All
Gerdau Group steel activities in Brazil will be conducted by
Gerdau Acominas, which will remain a closed capital corporation.
2. Gerdau S.A. will remain a publicly traded company with control
over Gerdau Acominas, Gerdau Ameristeel Corporation (with
operations in the United States and Canada) and its subsidiaries
in South America (Gerdau Aza, in Chile; Gerdau Laisa, in Uruguay
and a minority shareholding in Argentina).
3. The above-mentioned operation will combine complementary
assets into a single company (Gerdau Acominas). This will result
in an improved product mix and in a solid growth platform for the
Gerdau Group. By means of a combined structure of ten steel mills
and an installed capacity of 7.4 million metric tons of crude
steel, Gerdau Acominas will be able to be more efficient in
delivering its products to clients domestically and abroad. These
steel units will operate in an integrated manner along with nine
long steel service centers (fabrication shops), five
transformation units and Comercial Gerdau, with 73 branches and
five service centers. This new structure will allow for
operational and commercial synergies, as well as the optimization
of administrative processes. Additionally, the operation will
enhance cash generation providing savings in taxes in all three
levels: federal, state and municipal.
4. Gerdau Acominas will become one of the leading crude steel
producers in the Americas and an important global player with
internationally competitive production costs and products. Its
product line includes slabs, blooms, billets, concrete
reinforcing bars, merchant bars, wire rod, specialty steel, drawn
products, nails and fabrication services, to name a few.
5. The table below presents some pro forma numbers and ratios of
Gerdau Acominas on September 30th, 2003, compared to those of
Gerdau S.A. and Acominas as stand alone companies:
Jan - Sep 2003 Gerdau S.A. Acominas Gerdau Acominas
Crude steel
output (1.000 t) 2,954 2,203 5,157
Number of employees
(thousand) 9.6 4.0 13.6
Gross revenue
(R$ million) 4,879 1,974 6,698
EBITDA (R$ million) 1,125 605 1,730
Net Debt (R$ million) 2,705 702 3,281
Gross Margin 37.9% 38.7% 38.1%
EBITDA Margin 28.8% 36.4% 31.1%
Net Debt / EBITDA 2.4x 1.2x 1.9x
6. In order to be able to implement the operation described
above, the companies mentioned above will call for Extraordinary
Shareholders' meetings to be held on November 28th, 2003.
7. The assets, rights and obligations of each company will be
evaluated by a specialized firm and the results will be submitted
to the shareholders' meeting for approval, as per the terms of
Article 8 of the Brazilian Corporate Law # 6,404, of December
15th, 1976 and subsequent amendments.
8. After the operation is concluded, Gerdau S.A.'s stake will
increase to approximately 92%, up from 78.9% of the total capital
stock of Gerdau Acominas. This company will be presenting its
financials along with the consolidated financials of Gerdau S.A.
9. Gerdau S.A. shareholders will retain all their statutory
rights with no impact whatsoever in the way these shares are
traded at the different stock exchanges (Bovespa: GGBR, NYSE: GGB
and Latibex: XGGB). The combination of these operations into a
single company will lead to improved disclosure of information to
shareholders, investors, creditors, analysts and capital markets
investment professionals and regulatory agencies.
10. No changes will be made to the corporate governance structure
of Gerdau S.A. Its Board of Directors, responsible for the
general orientation of the business, and its Executive Committee,
in charge of the coordination of the operations of the Group,
remain unchanged.
11. At Gerdau Acominas, the Board of Directors remains the same,
with five members, of which one will be appointed by the CEA -
Clube dos Empregados da Acominas (Employee investment club). The
management of Gerdau Acominas will be conducted by its directors,
and its executive committee will handle the business units:
Gerdau Long Steel Brazil, Gerdau Specialty Steel and Gerdau
Acominas. The latter is understood as being the current Acominas
operation involved with the production and commercialization of
slabs, blooms, billets, structurals and the up-coming wire rod
mill. Each business will have its own operational Executive
committee. At Acominas, this committee will be formed by the
existing directors.
Gerdau S.A. informs that it has decided to invest US$ 1.2 billion
in duplicating the installed capacity of the Arthur Bernardes
industrial unit at Gerdau Acominas, in Ouro Branco, to six, up
from three million metric tons. This includes the installation of
the following equipment: blast furnace #2, a coke oven, a sinter
oven, a melt shop, a continuous caster for blooms, a billet
inspection line, dephosphorization and operational security.
* Fitch Upgrades Brazil's Sovereign Rtg to 'B+'; Outlook Stable
---------------------------------------------------------------
Fitch Ratings upgraded Thursday Brazil's sovereign rating to 'B+'
from 'B', reflecting the improving performance of the country's
economy as well as its macroeconomic policy framework. Fitch
believes that the precautionary agreement with the IMF announced
Nov. 5 demonstrates the commitment of the Brazilian authorities
to appropriate fiscal policy settings and signals the IMF's
intention to help financially insulate Brazil from external
shocks over the medium term. The Rating Outlook is Stable.
Balance of payments performance in Brazil has improved and should
continue to underpin an easing external debt burden. Brazil's
trade surplus is likely to exceed US$23 billion this year, up
from US$13.1 billion last year, as exports have expanded 20% in
the year to end-October. Brazil's diverse export base is
reflected in strong growth in exports to China and the European
Union and in such products as soy beans, metals and
transportation equipment. As a result, Brazil could show a small
current account surplus this year of nearly US$3 billion, the
first since 1993. A rebound in domestic demand next year will
probably push the current account back into deficit. This,
combined with external amortizations of US$36.9 billion next
year, would result in a high external financing need of 52% of
current external receipts, though down from 111% in 1999.
Capital inflows have improved, with a rollover rate on medium and
long-term debt amortizations of 85% in the year to September,
about where Fitch estimates rollover rates need to be to keep
foreign exchange reserves stable. The IMF program announced this
week would make near-term balance of payments support available
(including US$6 billion in new funds) and pushes forward heavy
amortization payments due in 2005. Likewise, the program signals
the Fund's support of Brazil's macroeconomic policy framework and
financial backing in the event of unforeseeable shocks.
Monetary policy has been successful in the last year, yielding a
reduction in consumer price inflation from a high of 17.2% in May
(year-on-year) to 14.0% in October and likely below 10% by year-
end. In the process, the monetary authorities have already
unwound 750 basis points (bps) of the 850 bps in rate hikes made
over the last year. Further rate cuts are likely, given inflation
expectations for next year near 6%, which should continue to
underpin a rebound in economic activity. Yet recent double-digit
private sector wage hikes suggest that backward wage indexation
could slow progress on inflation reduction and therefore any
future monetary easing. Likewise, such wage settlements could
have a fiscal impact if they translate into higher wage pressures
in the public sector next year.
The Brazilian authorities have agreed to maintain a 4.25% public
sector primary surplus target through 2004. Fitch believes that
Brazil's high government debt burden and heavy external financing
needs warrant a primary surplus of 4.25% of GDP or higher over
the medium term. Gross general government debt is expected to end
2003 at 79% of GDP, comparing unfavorably with other speculative
grade sovereigns. Higher primary surpluses would increase the
likelihood of a virtuous cycle of lower real interest rates,
higher GDP growth, a firm exchange rate, and therefore a
declining debt-to-GDP ratio, which Fitch believes would be
necessary for further improvements in sovereign creditworthiness.
Debt management operations this year, which have reduced the
sovereign's foreign currency exposure by US$14.4 billion, support
sovereign creditworthiness. The portion of U.S. dollar-indexed
liabilities fell to 25.5% of total domestic debt by late October
from 37% at year-end 2002.
An economic environment of slow growth and declining inflation
this year has put tax revenues under pressure, with real tax
revenues (excluding non-recurring items) up only 1.6% in
September 2003 over the year-earlier period, versus an average of
5.7% 3Q03/3Q02 and 16.7% 2Q03/2Q02. Nevertheless, through
spending restraint, the authorities have achieved a primary
surplus of R$57 billion in September YTD, exceeding the R$54.2
billion target. Yet Brazil's margin above its target has
narrowed, and unless economic activity picks up, the authorities
could be pressed to produce the requisite primary surpluses next
year in an environment of high unemployment (12.9% in September)
and expectations of increased social spending under the Lula
government.
Finally, President Lula remains popular and commands majorities
in Congress nearly large enough to pass Constitutional
amendments. Fitch expects social security, tax and bankruptcy
reforms to pass by early 2004, which, while modest in economic
terms, will represent major political victories. Second-stage
reforms in revenue earmarking, central bank autonomy, social
security, taxation, privatization and regulation would be
important for future sovereign credit improvements.
CONTACT: Fitch Ratings
Roger M. Scher
Phone: 212-908-0240
Morgan C. Harting
Phone: 212-908-0820
David Riley
Phone: +44 (0)20 7417 6338
Matt Burkhard (Media Relations)
Phone: 212-908-0540
===================================
D O M I N I C A N R E P U B L I C
===================================
* Issues IMF Statement on the Dominican Republic
------------------------------------------------
Thomas C. Dawson, Director of External Relations at the
International Monetary Fund (IMF), issued the following statement
Thursday on the Dominican Republic:
"The first review of the Dominican Republic's Stand-By
Arrangement with the Fund was delayed last month, pending further
analysis of the economic implications of the government's
decision to purchase two major electricity distribution
companies. The independent expert panel that is looking into this
issue is making good progress, and its final report is expected
next week. An IMF team will thus be returning to Santo Domingo
later next week to resume the discussions for the first review of
the program," Mr. Dawson stated.
CONTACT: INTERNATIONAL MONETARY FUND
700 19th Street, NW
Washington, D.C. 20431 USA
IMF EXTERNAL RELATIONS DEPARTMENT
Public Affairs: 202-623-7300 - Fax: 202-623-6278
Media Relations: 202-623-7100 - Fax: 202-623-6772
===========
M E X I C O
===========
DESC: S&P Cuts Ratings to 'B+' from 'BB-'
-----------------------------------------
Standard & Poor's Ratings Services said Thursday that it lowered
its local and foreign currency corporate credit ratings on Desc
S.A. de C.V. (Desc) and its auto-parts subsidiary,
Desc Automotriz S.A. de C.V., to 'B+' from 'BB-'. Desc is a
Mexico-based diversified holding company whose subsidiaries
operate in the auto-parts, chemical, food, and real estate
sectors.
Standard & Poor's also lowered the rating on Desc's 8.75% notes
due 2007 to 'B' from 'B+' The rating on the notes reflects the
structural subordination of the issue. The ratings remain on
CreditWatch with negative implications, where they were placed on
Dec. 19, 2002.
"The rating action reflects Standard & Poor's expectations that
Desc's future financial performance will not be adequate for its
former rating category, given the company's recent performance
and the challenging operating environment faced by its business
units, particularly Desc Automotriz, and the company's limited
liquidity," said Standard & Poor's credit analyst Jose Coballasi.
Desc's CreditWatch listing will be resolved upon the completion
of the company's debt restructuring. The company has revealed
that it expects to conclude negotiations in the next few months.
Standard & Poor's believes that it is likely that the company
will successfully refinance its debt and will continue to
rollover its short-term credit facilities over the next few
months. Nevertheless, failure to accomplish the aforementioned
refinancing will lead to a negative rating action.
GRUPO TMM: Court Denies Govt.'s Request for VAT Lawsuit Review
--------------------------------------------------------------
Grupo TMM, S.A. announced that on Tuesday, the Federal Court of
the First Circuit (the "Federal Court") found no merit to the
requested review which the Tax Attorney of the Mexican Government
(Procuradurˇa Fiscal de la Federaci˘n) had filed regarding the
favorable resolution that the Federal Tribunal of Fiscal and
Administrative Justice (the "Fiscal Court") had previously issued
on August 13 regarding TFM, S.A. de C.V. ("TFM") Value Added Tax
("VAT") lawsuit. As a result, the August 13 Fiscal Court ruling
remains in place.
Headquartered in Mexico City, Grupo TMM is a Latin American
multimodal transportation company. Through its branch offices and
network of subsidiary companies, Grupo TMM provides a dynamic
combination of ocean and land transportation services. Grupo TMM
also has a significant interest in TFM, which operates Mexico's
Northeast railway and carries over 40 percent of the country's
rail cargo. Grupo TMM's web site address is www.grupotmm.com and
TFM's web site is www.tfm.com.mx.
To see financial statements:
http://bankrupt.com/misc/Grupo_TMM.htm
CONTACT: GRUPO TMM
Juan Fernandez, 011-525-55-629-
8778
juan.fernandez@tmm.com.mx
or
Brad Skinner (IR)
011-525-55-629-8725 /203-247-2420
brad.skinner@tmm.com.mx
or
DRESNER CORPORATE SERVICES
Kristine Walczak, 312-726-3600
kwalczak@dresnerco.com
or
AT PROA STRUCTURA
Marco Provencio
011-525-55-629-8708 /011-525-55-442-4948
mp@proa.structura.com.mx
ISPAT INTERNATIONAL: Reports Third Quarter 2003 Results
-------------------------------------------------------
Ispat International N.V. reported Thursday a net loss of $10.0
million or negative 8 cents per share for the third quarter of
2003 as compared to net income of $26 million or 21 cents per
share for the third quarter of 2002.
Consolidated sales and operating loss for the third quarter were
$1.3 billion and $4.0 million, respectively, as compared to $1.3
billion and an operating income of $92 million, respectively, for
the third quarter of 2002. Total steel shipments decreased by 8%
to 3.6 million tons, as compared to 3.9 million tons shipped in
the same period last year.
Two events significantly affected this quarter's operating
income. Firstly, the reline of Blast Furnace No 7 at Ispat Inland
resulted in additional costs for purchasing slabs to service
customer orders during the reline period. Secondly, the strike at
Ispat Mexicana in August resulted in 11 days of lost slab
production.
Debt at the end of third quarter was $2.3 billion. Capital
expenditure for the third quarter of 2003 totaled $79 million. At
September 30, 2003 the Company's consolidated cash, cash
equivalents and short-term liquid investments totaled $71
million. The Company also has approximately $276 million
available to it under various undrawn lines of credit and bank
credit arrangements2.
Ispat International N.V. is one of the world's largest and most
global steel producers, with major steelmaking operations in the
United States, Canada, Mexico, Trinidad, Germany and France. The
Company produces a broad range of flat and long products sold
mainly in the North American Free Trade Agreement (NAFTA)
participating countries and the European Union (EU) countries.
Ispat International is a member of the LNM Group.
CONTACT: ISPAT INTERNATIONAL LIMITED
T.N. Ramaswamy
Director, Finance
+ 44 20 7543 1174
CITIGATE FINANCIAL INTELLIGENCE
John McInerney / Shoshana Dubey
Investor Relations
+1 201 499 3535 / +1 201 499 3572
=================
V E N E Z U E L A
=================
CANTV: Reduces Loss Estimate As Economy Rebounds
------------------------------------------------
Underscoring the Venezuelan government's claims that the
economy's decline has slowed, CA Nacional Telefonos de Venezuela
(CANTV) reduced its 2003 loss estimate, says Bloomberg.
CANTV Chief Financial Officer Armando Yanes expects the loss will
be between VEB30 billion ($18.8 million) and VEB100 billion, or
between VEB280 and VEB910 per American depositary receipt, down
from an earlier estimate of a loss between VEB135 billion to
VEB360 billion, or VEB1,190 to VEB3,220 an ADR.
"In the last three months, we continue to observe improvements in
key macroeconomic indicators," CANTV CEO Gustavo Roosen said.
"The economy, however, would have to improve a lot to reach year-
ago levels."
The economy shrank 18.5% in the first half of the year because of
a two-month long nationwide strike. The government is forecasting
a contraction for the year of about 10%. The recession is the
worst since the central bank began keeping records in the 1950s.
Verizon Communications Inc. owns 28.9% of CANTV shares, including
the publicly traded Class D stock. Spain's Telefonica SA owns
6.9%. The government owns 6.6%, and employees own 12%. The rest,
or about 46%, is traded.
CANTV had 2.7 million fixed lines in service as of June 30, with
2.5 million cellular subscribers.
CONTACT: Gustavo Antonetti
CANTV Investor Relations
011-58-212-500-1831
FAX: 011-58-212-500-1828
E-Mail: invest@cantv.com.ve
Mariana Crespo
The Global Consulting Group
646-284-9407
E-Mail: mcrespo@hfgcg.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
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Maryland USA. John D. Resnick, Edem Psamathe P. Alfeche and Oona
G. Oyangoren, Editors.
Copyright 2003. All rights reserved. ISSN 1529-2746.
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