/raid1/www/Hosts/bankrupt/TCRLA_Public/031128.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Friday, November 28, 2003, Vol. 4, Issue 236
Headlines
A R G E N T I N A
A T MARKETING: Bankruptcy Continues as Credit Verifications End
ARTEPOL: Files Motion to Reorganize
BANCO BI CREDITANSTALT: Fitch Rates Bonds `D(arg)'
BROOKER: Creditor's Bankruptcy Petition Gets Court Approval
CAISSA: Receiver Closes Claims Review Period
CIT: Two Classes of Bonds Receive `raBB+' Ratings from S&P
DISCO: Argentine Businessman Challenges Expected Cencosud Sale
EDENOR: Argentina S&P Assigns Default Ratings to $600M of Bonds
EDESUR: S&P Moves $450M of Bonds Moved to Junk Territory
ELEMAR CARGAS: Seeks Court Authorization to Reorganize
EMBALCORR: Credit Check Deadline Expires Today
ESTABLICIMIENTO METALURGICO: Creditor Claims Due for Filing
FIRE KILLER: Voluntarily Files for Bankruptcy Protection
GRUPO GALICIA: Seeking Shareholder Approval for Capital Increase
MIEL CARRASCO: Informative Assembly Slated for Today
MIR: Seeks Court OK for Proposed Reorganization
PAN AMERICAN: Updates Manantial Espejo Drilling
REPSOL YPF: Fitch Upgrades Ratings To 'BBB+'; Outlook Stable
SUAT: Seeks Bankruptcy Protection
B R A Z I L
AHOLD: Reports EUR42 Mln Net Loss For 1st Three Quarters Of 2003
C H I L E
ENERSIS: Prepays $1.59B Loan
C O S T A R I C A
ICE: Board To Choose GSM Contract Winner
J A M A I C A
JUTC: 280 Employees Likely to be Dismissed Next Year
KAISER ALUMINUM: Analyzing Bids For Assets
M E X I C O
BIONOVA HOLDING: AMEX to Delist Shares Despite Appeal
EMPRESAS ICA: Stock Price Adjusted As Rights Offering Closes
GRUPO BIMBO: $138M Early Loan Payment Improves Debt Picture
SATMEX: Losses Mount in 3Q03
P E R U
* IDB Approves $300M Loan To Peru To Improve Competitiveness
V E N E Z U E L A
PDVSA: Recovery, Future Plans Please US Financial Community
PDVSA: Seeks Speedy Liquidation of Bankrupt IT JV
- - - - - - - - - -
=================
A R G E N T I N A
=================
A T MARKETING: Bankruptcy Continues as Credit Verifications End
---------------------------------------------------------------
The bankruptcy process, which Argentine television producer A T
Marketing y Comunicacion S.A. is undergoing, moves one step
closer to completion as the Company's receiver ends the credit
verification period today. Proofs of claims were required to
determine the nature and amount of the Company's liabilities.
The Troubled Company Reporter - Latin America reported recently
that Judge Braga of Buenos Aires Court No. 22 approved the
bankruptcy motion filed by the Company's creditor, ATC S.A., for
nonpayment of debt.
The court designated Mr. Angel Mantero, a local accountant, as
the receiver for the process. Aside from verifying creditors'
claims, the receiver's duties cover the preparation of the
individual and general reports.
CONTACT: A T Marketing y Comunicacion S.A.
6th Floor, Room A
Ayacuho 1584
Buenos Aires
Angel Mantero
8th Floor
Lavalle 1125
Buenos Aires
ARTEPOL: Files Motion to Reorganize
-----------------------------------
Buenos-Aires based Artepol S.A. submitted a "Concurso Preventivo"
motion to the city's Court No. 5. The Company, which makes
plastic bags, filed the reorganization petition after failing to
meet its financial obligations since November last year.
Judge Vassallo handles the Company's case, relates local
newspaper La Nacion. Clerk No. 9, Dr. Perez Casado, assists the
court on the case.
CONTACT: Artepol S.A.
1st Floor, Room A
Ave Belgrano 634
Buenos Aires
BANCO BI CREDITANSTALT: Fitch Rates Bonds `D(arg)'
--------------------------------------------------
A total of US$250 million worth of corporate bonds issued by
Banco B.I. Creditanstalt S.A. received default ratings from Fitch
Argentina Calificadora de Riesgo S.A. on Tuesday. The rating is
based on the Company's finances as of September 30, 2003.
The Comision Nacional de Valores described the affected bonds as
"Programa Global de Emision de Oblig. Negociables a Mediano
Plazo". The bonds, which matured in July 200, were classified
under "Program".
BROOKER: Creditor's Bankruptcy Petition Gets Court Approval
-----------------------------------------------------------
Judge Vassallo of Buenos Aires Court No. 5 approved a petition
for the bankruptcy of local company Brooker S.A., relates La
Nacion. Working with Dr. Perez Casado, the city's Clerk No. 9,
the court assigned Ms. Raquel Manrique as the Company's receiver.
Credit verifications run until February 26 next year. The
receiver will prepare the individual reports after verifying
claims. She will also prepare the general report after the
individual reports are processed at court. La Nacion, however,
did not reveal the filing deadlines for the receiver's reports.
Argentine company Hilandarria Capen S.A. filed the bankruptcy
petition on the Company's failure to pay its debts to it.
CONTACT: Brooker S.A.
3rd Floor
Sarmiento 1758
Buenos Aires
Susana Raquel Manrique
12th Floor, Office 9 & 10
Lavalle 1675
Buenos Aires
CAISSA: Receiver Closes Claims Review Period
--------------------------------------------
Buenos Aires accountant Hugo Daniel Pantaleo, receiver for local
company Caissa S.A., will end the credit verifications regarding
the Company's reorganization today. As ordered by the court, the
receiver will prepare the individual reports on the verification
reports and pass them to the court on February 12, 2004.
The receiver is also required to prepare a general report, due on
March 25 next year, after the individual reports are processed at
court. The city's Court No. 12 handles the Company's case with
the assistance of Clerk No. 24, an earlier report by the Troubled
Company Reporter - Latin America revealed.
CONTACT: Caissa S.A.
San Martin 201
Buenos Aires
Hugo Daniel Pantaleo
Avenida Corrientes 1450
Buenos Aires
CIT: Two Classes of Bonds Receive `raBB+' Ratings from S&P
----------------------------------------------------------
Standard & Poor's International Ratings, Ltd. Sucursal Argentina
assigns `raBB+' ratings to two classes of bonds issued by local
Compa€Ąa Internacional de Telecomunicaciones. The Comision
Nacional de Valores relates that the rating was based on the
Company's finances as of the end of September this year.
The affected bonds include US$225 million worth of "Clase A bajo
el Programa de U$S 800 millones", and ARP175 of "Clase B bajo el
Programa de U$S 800 millones". Both sets were classified under
"Series and/or class", and matured on Monday.
S&P said that an obligation rated `raBB' denotes somewhat weak
protection parameters relative to other Argentine obligations.
The obligor's capacity to meet its financial commitments on the
issue is somewhat weak because of major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions.
DISCO: Argentine Businessman Challenges Expected Cencosud Sale
--------------------------------------------------------------
Ahold is likely to encounter a political setback in its efforts
to conclude the sale of Argentine Disco Supermarket to Chilean
retailer Cencosud. According to Dow Jones, Francisco De Narvaez,
one of the bidders for Disco and is a prominent Argentine
businessman with previous retail holdings, published an
advertisement Wednesday, challenging the sale of Disco to
Cencosud.
"I lead a group that has the vocation, the prestige, the
experience and the responsibility to bring forward such an
important and sensitive project as recovering for the country a
firm that represents Argentine work in the hands of Argentines,"
De Narvaez said in the full-page advertisement that ran widely in
local newspapers.
Earlier this week, Cencosud executives said the group, which
previously subscribed an accord for the acquisition of Disco,
will share the ownership of the supermarket chain with three
international investors: Capital International, AIG Capital
Partners and the International Finance Corporation - the
private-sector investment arm of the World Bank. These investors
will pay 50% of the amount of the operation.
Executives say the transaction should be final by the end of the
year, though the deal needs approval from Argentina's antitrust
authority, the Secretariat for the Defense of Competition and the
Consumer.
De Narvaez's public appeal for "the strengthening of an
intelligent state that promotes a responsible market" is seen as
a political effort to influence this remaining regulatory hurdle
to Cencosud's purchase.
"I am an Argentine that is disposed to invest in a company like
Disco because I believe in our country and I believe it is
possible to reconstruct a national enterprise thinking of the
well-being of the population," De Narvaez said. "Disco belongs to
a strategic sector. It is a grand chain of distribution and sale
of food and basic necessity products, a shaper of prices for the
basic family basket."
De Narvaez currently heads the Rural Argentine Society, which
runs the country's major agricultural fair every year.
The intended divestment of Disco is part of Ahold's strategic
plan to restructure its portfolio, to divest underperforming
assets, and to concentrate on its mature and most stable markets.
EDENOR: Argentina S&P Assigns Default Ratings to $600M of Bonds
---------------------------------------------------------------
Standard & Poor's International Ratings, Ltd. Sucursal Argentine
rated US$600 million worth of Edenor S.A.'s corporate bonds
`raD'. The rating, issued on Monday, was determined from the
Company's finances as of September 30 this year.
Argentine securities regulator Comision Nacional de Valores
described the bonds as "Programa Global de Obligaciones
Negociables". Classified under "Program", the bonds would matire
on November 5, 2006.
The ratings agency said that an obligation is rated `raD' when it
is in payment default, or the obligor has filed for bankruptcy.
The `raD' rating is used when interest or principal payments are
not made on the date due, even if the applicable grace period has
expired, unless Standard & Poor's believes that such payments
will be made during such grace period.
EDESUR: S&P Moves $450M of Bonds Moved to Junk Territory
--------------------------------------------------------
Based on Edesur S.A.'s finances as of September 30, 2003,
Standard & Poor's International Ratings, Ltd. Sucursal Argentina
on Monday moved a total of US$450 million of the Company's
corporate bonds into junk territory.
The ratings agency said that an obligation rated `raCCC' is
currently vulnerable to nonpayment, and is dependent upon
favorable business and financial conditions for the obligor to
meet its financial commitments on the obligations.
The Comision Nacional de Valores described the affected bonds as
"Programa de Obligaciones Negociables", with undisclosed maturity
date. Classification was given as "program", but the CUSIP was
not indicated.
ELEMAR CARGAS: Seeks Court Authorization to Reorganize
------------------------------------------------------
Argentine cargo transport company Elemar Cargas S.A. filed a
motion for "Concurso Preventivo", seeking court permission to
undergo reorganization. A report by local newspaper La Nacion
indicates that the Company stopped making debt payments in
September this year.
Judge Sala of Buenos Aires Court No. 14 handles the Company's
case with assistance from Clerk No. 28, Dr. Sarmiento, La Nacion
adds. The report, did not mention if the motion is likely to
merit court approval.
CONTACT: Elemar Cargas S.A.
7th Floor, Room A
Uruguay 1134
Buenos Aires
EMBALCORR: Credit Check Deadline Expires Today
----------------------------------------------
Creditors of Argentine company Embalcorr S.A. must have their
claims authenticated by the Company's receiver as the
verifications deadline expires today. The receiver, Mr. Baldomer
Oscar Gonzales, will start working on the individual reports,
which are due for filing on March 5 next year.
Court No. 10 of the Civil and Commercial Tribunal of the
Argentine province of Moron handles the Company's case, which
will close with the liquidation of the Company's assets to
reimburse creditors.
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
ESTABLICIMIENTO METALURGICO: Creditor Claims Due for Filing
-----------------------------------------------------------
The credit verification period for the bankruptcy of Buenos
Aires-based Establecimiento Metalurgico Weber S.R.L. is set to
expire today, according to an article revealed earlier by the
Troubled Company Reporter - Latin America. The Company's
receiver, Mr. Eduardo Hector Vasini, who verified the claims,
will prepare the individual reports to be filed at the court on
February 16 next year.
The receiver will also prepare a general report after the
individual reports are processed at court. Buenos Aires Court No.
10, which handles the Company's case, requires the receiver to
submit this report on March 29, 2004.
The bankruptcy process will end with the disbursement of funds to
creditors from the sale of the Company's assets. Payment
distribution will be based on the results of the verification
process.
CONTACT: Eduardo Hector Vasini
Rivadavia 4783
Buenos Aires
FIRE KILLER: Voluntarily Files for Bankruptcy Protection
--------------------------------------------------------
Fire Killer S.R.L., which is based in Buenos Aires, voluntarily
filed for bankruptcy at the city's Court No. 16, relates La
Nacion, a local newspaper. The Company, which makes security-
related products, stopped debt payments in March this year.
Judge Kolliker Frers handles the case, which could result in the
liquidation of the Company's assets to repay creditors. Clerk No.
31, Dr. Ibarzabal assists. La Nacion, however, did not mention
whether the court is likely to approve the filing or not.
CONTACT: Fire Killer S.R.L.
3rd Floor, Office 313
Ave Cordoba 679
Buenos Aires
GRUPO GALICIA: Seeking Shareholder Approval for Capital Increase
----------------------------------------------------------------
Grupo Financiero Galicia S.A. ("Grupo Galicia") (Buenos Aires
Stock Exchange / NASDAQ: GGAL) announced Tuesday that it intends
to call an ordinary and extraordinary shareholders' meeting to
increase its share capital. The capital increase is in connection
with the restructuring of the foreign currency debt subject to
foreign law of Banco de Galicia y Buenos Aires S.A. (the "Bank"),
a 93.59% subsidiary of Grupo Galicia.
The Board of Directors will recommend to its shareholders a
capital increase through the issuance of up to 149 million
mandatorily convertible preferred shares in exchange for cash or
up to US$100 million of nominal value in subordinated debt of the
Bank. The mandatorily convertible preferred shares will
mandatorily convert into Class B shares of Grupo Galicia on the
first anniversary of their issuance. The subscription price will
be determined by the Board of Directors within the range of
prices that the shareholders will determine.
The Board of Directors highlighted that the capital increase is
necessary for the Bank to conclude its debt restructuring
successfully.
Grupo Galicia was formed on September 14, 1999 as a financial
services holding company organized under the laws of Argentina.
Its most significant asset is its interest in the Bank. The main
objective of Grupo Galicia is to be one of Argentina's leading
comprehensive financial services companies while continuing to
strengthen the Bank's position as one of the country's leading
financial institutions.
CONTACT: Pablo Firvida
VP Investor Relations
Telefax: (5411) 4343-7528
pfirvida@gfgsa.com
investorelations@gfgsa.com
www.gfgsa.com
MIEL CARRASCO: Informative Assembly Slated for Today
----------------------------------------------------
The informative assembly in connection with the reorganization of
local company Miel Carrasco S.A. will be held today. The meeting
is one of the last parts of a reorganization process. Court No. 2
of the Civil and Commercial Tribunal of Tandil in Argentina holds
jurisdiction over the Company's case. The court is responsible
for assigning a receiver to the Company and setting the
reorganization schedule.
Local sources however, did not reveal the name of the receiver
who managed the Company's reorganization.
MIR: Seeks Court OK for Proposed Reorganization
-----------------------------------------------
Buenos Aires-based Mir S.A. filed a reorganization petition with
local Judge Ojea Quintana of Court No. 12, according to a report
by Argentine newspaper La Nacion. Should the judge approve the
motion, the Company will be assigned a receiver to oversee the
reorganization process. Dr. Medici Garrot, the city's Clerk No.
24 assists the court on the case.
CONTACT: Mir S.A.
Salcedo 2855
Buenos Aires
PAN AMERICAN: Updates Manantial Espejo Drilling
-----------------------------------------------
Pan American Silver Corp (NASDAQ: PAAS, TSX: PAA) is pleased to
report initial results from a 4,500-meter infill and geotechnical
program of diamond drilling underway at the Manantial Espejo
silver-gold property in Santa Cruz province, Argentina. The
completion of the infill drilling will allow a mineable reserve
to be estimated for the property. Pan American Silver and Silver
Standard Resources Inc.(NASDAQ: SSRI) are 50/50 joint venture
partners on the property.
To date, assays have been received on 17 infill drill holes
completed on the Maria Vein and one on the Melissa Vein for a
total of 2,209 metres, which includes hole T-334 on the Maria
Vein that intersected 11.2 metres grading 10.23 grams/tonne gold
and 135.7 grams/tonne silver and hole T-343 on the Melissa Vein
that intersected 13.7 metres grading 9.61 grams/tonne gold and
542.5 grams/tonne silver. In addition, mineralization was
intersected in the hanging wall of the Maria Vein in an area that
had not previously been recognized as mineralized, with hole T-
326 intersecting 23.4 metres grading 0.09 grams/tonne gold and
382.8 grams/tonne silver. The 18 infill drill holes completed and
assayed to date bring total drilling on the property to 47,411
meters in 431 holes.
The joint venture partners have initiated a feasibility study for
the property, with geotechnical work underway and environmental
work to commence shortly ahead of permitting. The feasibility
study is anticipated to be completed in late 2004 or early 2005.
At December 31, 2002, the Manantial Espejo project contained
measured and indicated resources totaling 4.39 million tonnes
grading 263.8 grams/tonne silver and 4.5 grams/tonne gold.
Inferred resources total an additional 1.59 million tonnes
grading 258.5 grams/tonne silver and 3.7 grams/tonne gold. C.
Stewart Wallis, P.G., P.Geo., is the independent qualified person
for the Manantial Espejo resource review. An updated resource
estimate that incorporates results of infill drilling at the
Maria and Melissa veins will be prepared following completion of
the infill drill program.
To see latest financial statements:
http://bankrupt.com/misc/Pan_American.htm
CONTACT: Brenda Radies
Vice-President Corporate Relations (604) 806-3158
www.panamericansilver.com
REPSOL YPF: Fitch Upgrades Ratings To 'BBB+'; Outlook Stable
------------------------------------------------------------
Fitch Ratings, the international ratings agency, upgraded Tuesday
integrated petroleum group Repsol YPF's Senior Unsecured rating
to 'BBB+' from 'BBB' and the Short-term rating to 'F2' from 'F3'.
The ratings of the preference shares, issued by Repsol
International Capital BV, are upgraded to 'BBB-' ('BBB minus')
from 'BB+'. The Outlook remains Stable.
The upgrade reflects a further strengthening of Repsol YPF's
financial profile, despite ongoing uncertainty in the Argentine
operating environment. In 1Q03-3Q03, reported net debt reduced by
a further EUR 1.5 billion to EUR 5,951 million, largely due to a
combination of free cash flows (EUR684m) and exchange-rate
translation effects (EUR801m). The group is likely to close FYE03
with a net debt / EBITDA ratio of around 1x, from 1.3x at FYE02
and 2.2x at FYE01. At EUR8bn, liquidity in the form of cash &
equivalents (EUR4.6bn at end-3Q03) and undrawn credit facilities
(EUR3.4bn) is very strong, covering short-term debt obligations
more than two times. Going forward, a portion of available funds
is likely to be used for debt repayment, enabling further gross
debt reduction from EUR10.9bn at end-September 2003.
The upgrade also captures targets set in the new 2003-2007
strategic plan. These targets include leverage (as measured by
net debt / capitalisation; treating preference shares of
EUR3,725m as equity-like, in line with Fitch's approach) in the
15%-20% range and additional annual cost savings of EUR240m.
Whilst management intends to return future surplus cash flows to
shareholders in the form of dividends or share buybacks, it has
stated that the first priority is to remain within the parameters
of its leverage target.
Although the financial profile is now close to levels prior to
the YPF acquisition in 1999, at the 'BBB+' level the rating
continues to incorporate the risks associated with the group's
exposure to Argentina, which represented 58% of consolidated
operating income in the period ending 30 September 2003. The main
government-induced measures that continue to impact the group's
performance include a 20% tax on crude oil exports and a freeze
on domestic gas prices. Exchange controls remain in place, but
Fitch understands that they have so far not significantly limited
Repsol YPF's ability to repatriate funds generated by YPF, partly
because of its ability to retain 70% of exports-related earnings
offshore. The group's exploration and production (E&P)
diversification strategy should enable it to reduce the
proportionate contribution of Argentina to E&P earnings.
The ratings continue to reflect Repsol YPF's dominant market
positions in Spain, where it refines close to 60% of all crude
processed, maintains a 45% share of the retail market, and
distributes a very large portion of liquid pertroleum gas (LPG)
consumed. Fitch also expects the group to retain a strong
presence in Latin America, where its 40% share of the Argentine
retail market and strong position in natural gas distribution and
sales is likely to retain significant value following the current
crisis.
CONTACT: Erwin van Lumich or Tom Saul
Barcelona
Phone: +34 93 323 8400
Graeme Marks
London
Phone: +44 207 862 4086
Media Relations
Alex Clelland
London
Phone: +44 20 7417 4222
SUAT: Seeks Bankruptcy Protection
---------------------------------
Argentine company Suat S.R.L. petitioned Buenos Aires Court No. 5
Judge Vasallo to declare it bankrupt, buckling under pressure
from debt. A report by local newspaper La Nacion reveals that the
Company failed to meet its financial obligations since October
last year. Dr. Perez Casado, the city's Clerk No. 9, assists the
court on the case.
CONTACT: Suat S.R.L.
1st Floor
Tte. Gral. Peron 1711
Buenos Aires
===========
B R A Z I L
===========
AHOLD: Reports EUR42 Mln Net Loss For 1st Three Quarters Of 2003
----------------------------------------------------------------
Highlights for the first three quarters of 2003:
- Net sales amounted to Euro 43.3 billion, a decrease of 10.5%
compared to the same period last year, or an increase of 3.3%
excluding foreign currency translation impact
- Operating income before impairment and amortization of goodwill
and exceptional losses amounted to Euro 857 million, a decrease
of 53.4% compared to the same period last year, or a decrease of
45.5% excluding foreign currency translation impact
- Net loss amounted to Euro 42 million (net income of Euro 17
million last year), including exceptional non-cash losses of Euro
110 million
- Net cash from operating activities totaled Euro 873 million
compared to Euro 1,692 million in the same period last year
Ahold published Wednesday its results for the first three
quarters of 2003. Commenting on the results, Hannu Ryppnen,
CFO, said: "The results for the third quarter of 2003 reflected
the trends of the first half-year as published on November 7,
2003 with some slippage of operating income in our U.S. retail
operations and an increase in operating losses at U.S.
Foodservice. Non-recurring items have negatively affected results
both at our U.S. retail operations and in U.S. Foodservice.
Operating income in Europe declined primarily due to a decrease
at Albert Heijn."
Net sales
The 10.5% decrease in net sales was largely attributable to lower
currency exchange rates against the Euro, particularly for the
U.S. Dollar. The average U.S. Dollar to Euro exchange rate
decreased approximately 16.7% in the first three quarters of 2003
compared to the same period last year. Net sales excluding
currency impact increased by 3.3% mainly due to a 3.2% increase
in net sales in the U.S. retail trade operations, a 1.3% increase
in the Europe retail trade operations and a 1.2% increase at U.S.
Foodservice.
In addition, net sales in the first three quarters of 2003 were:
- favorably impacted by the full period consolidation in Ahold's
consolidated financial statements of Disco and Santa Isabel in
South America, which began to be consolidated in the second and
third quarters of 2002, respectively;
- favorably impacted by the acquisition of Lady Baltimore and
Allen Foods in September and December 2002, respectively, which,
together with the consolidation of Disco and Santa Isabel
discussed above, contributed approximately 1.2% of the 3.3% net
sales growth; and
- marginally negatively impacted by the divestments of Jamin and
De Tuinen in The Netherlands in the second quarter of 2003 and of
the Company's Chilean, Malaysian, Indonesian and Paraguayan
operations and De Walvis in The Netherlands in the third quarter
of 2003.
Operating Income
The 47.3% decrease in operating income was primarily caused by
weaker operating performance in all business segments, the
weakening of the U.S. Dollar against the Euro and higher audit,
legal and consultancy fees. In addition, as discussed below,
exceptional losses of Euro 110 million were recorded in the third
quarter of 2003 related to the divestment of a number of foreign
subsidiaries, principally Ahold's Chilean activities. Operating
income in the same period last year was negatively impacted by an
exceptional loss of Euro 372 million in the first three quarters
of 2002. The exceptional loss was caused by the default by Velox
Retail Holdings (VRH), Ahold's former joint venture partner, on
bank debt that Ahold had guaranteed.
Operating income before impairment and amortization of goodwill
and exceptional losses in 2003 decreased by 53.4% compared to the
same period last year. Excluding currency impact, operating
income before impairment and amortization of goodwill and
exceptional losses would have decreased by 45.5% in the first
three quarters of 2003 compared to the same period last year. As
mentioned above, this decrease was primarily caused by a weaker
operating performance across all business segments, as well as
higher audit, legal and consultancy fees.
Goodwill Amortization
Goodwill amortization in the first three quarters of 2003
amounted to Euro 131 million, a decrease of 35.1% compared to the
same period last year. This decrease was primarily due to lower
goodwill balances at year-end 2002 resulting from the goodwill
impairment charges of Euro 1,281 million recorded in fiscal 2002
of which Euro 1,185 million were recognized in the fourth quarter
of fiscal 2002 and to the lower average currency exchange rate of
the U.S. Dollar against the Euro.
Goodwill Impairment
No goodwill impairment charges were recorded in the first three
quarters of 2003 compared to Euro 96 million in the same period
last year. The goodwill impairment charge recorded in the first
three quarters of 2002 mainly related to the purchase of the
remaining shares in DAIH in July and August 2002.
Exceptional Losses
Exceptional losses of Euro 110 million were recorded in the third
quarter of 2003 related to the divestment of foreign
subsidiaries, principally Ahold's Chilean activities. Of these
exceptional losses, Euro 70 million related to the recognition of
accumulated foreign currency translation adjustments in the
statement of operations and Euro 36 million to the reversal of
goodwill, both of which had previously been charged to
shareholders' equity. These exceptional losses were non-cash and
had no impact on the overall level of shareholders' equity.
Exchange rate differences related to the translation of the
financial results of foreign subsidiaries are recorded directly
in shareholders' equity.
When these exchange rate differences are realized upon the sale
or liquidation of the underlying foreign subsidiary, the
cumulative foreign currency translation adjustments are
recognized in the statement of operations. Also, under Dutch
GAAP, goodwill previously deducted directly from shareholders'
equity upon acquisition has to be reclassified pro-rata to the
statement of operations if sold within six years of the initial
acquisition.
Net sales
The 10.5% decrease in net sales was largely attributable to lower
currency exchange rates against the Euro, particularly for the
U.S. Dollar. The average U.S. Dollar to Euro exchange rate
decreased approximately 16.7% in the first three quarters of 2003
compared to the same period last year. Net sales excluding
currency impact increased by 3.3% mainly due to a 3.2% increase
in net sales in the U.S. retail trade operations, a 1.3% increase
in the Europe retail trade operations and a 1.2% increase at U.S.
Foodservice.
In addition, net sales in the first three quarters of 2003 were:
- favorably impacted by the full period consolidation in Ahold's
consolidated financial statements of Disco and Santa Isabel in
South America, which began to be consolidated in the second and
third quarters of 2002, respectively;
- favorably impacted by the acquisition of Lady Baltimore and
Allen Foods in September and December 2002, respectively, which,
together with the consolidation of Disco and Santa Isabel
discussed above, contributed approximately 1.2% of the 3.3% net
sales growth; and
- marginally negatively impacted by the divestments of Jamin and
De Tuinen in The Netherlands in the second quarter of 2003 and of
the Company's Chilean, Malaysian, Indonesian and Paraguayan
operations and De Walvis in The Netherlands in the third quarter
of 2003.
Operating Income
The 47.3% decrease in operating income was primarily caused by
weaker operating performance in all business segments, the
weakening of the U.S. Dollar against the Euro and higher audit,
legal and consultancy fees. In addition, as discussed below,
exceptional losses of Euro 110 million were recorded in the third
quarter of 2003 related to the divestment of a number of foreign
subsidiaries, principally Ahold's Chilean activities. Operating
income in the same period last year was negatively impacted by an
exceptional loss of Euro 372 million in the first three quarters
of 2002. The exceptional loss was caused by the default by Velox
Retail Holdings (VRH), Ahold's former joint venture partner, on
bank debt that Ahold had guaranteed.
Operating income before impairment and amortization of goodwill
and exceptional losses in 2003 decreased by 53.4% compared to the
same period last year. Excluding currency impact, operating
income before impairment and amortization of goodwill and
exceptional losses would have decreased by 45.5% in the first
three quarters of 2003 compared to the same period last year. As
mentioned above, this decrease was primarily caused by a weaker
operating performance across all business segments, as well as
higher audit, legal and consultancy fees.
Goodwill Amortization
Goodwill amortization in the first three quarters of 2003
amounted to Euro 131 million, a decrease of 35.1% compared to the
same period last year. This decrease was primarily due to lower
goodwill balances at year-end 2002 resulting from the goodwill
impairment charges of Euro 1,281 million recorded in fiscal 2002
of which Euro 1,185 million were recognized in the fourth quarter
of fiscal 2002 and to the lower average currency exchange rate of
the U.S. Dollar against the Euro.
Goodwill Impairment
No goodwill impairment charges were recorded in the first three
quarters of 2003 compared to Euro 96 million in the same period
last year. The goodwill impairment charge recorded in the first
three quarters of 2002 mainly related to the purchase of the
remaining shares in DAIH in July and August 2002.
Exceptional Losses
Exceptional losses of Euro 110 million were recorded in the third
quarter of 2003 related to the divestment of foreign
subsidiaries, principally Ahold's Chilean activities. Of these
exceptional losses, Euro 70 million related to the recognition of
accumulated foreign currency translation adjustments in the
statement of operations and Euro 36 million to the reversal of
goodwill, both of which had previously been charged to
shareholders' equity. These exceptional losses were non-cash and
had no impact on the overall level of shareholders' equity.
Exchange rate differences related to the translation of the
financial results of foreign subsidiaries are recorded directly
in shareholders' equity.
When these exchange rate differences are realized upon the sale
or liquidation of the underlying foreign subsidiary, the
cumulative foreign currency translation adjustments are
recognized in the statement of operations. Also, under Dutch
GAAP, goodwill previously deducted directly from shareholders'
equity upon acquisition has to be reclassified pro-rata to the
statement of operations if sold within six years of the initial
acquisition.
Net Financial Expense
Net interest expense increased by 4.1% due to an increase in
banking fees and interest expenses related to the credit facility
signed on March 3, 2003, new debt assumed or incurred in
connection with acquisitions in the course of 2002 and an
increase in cash dividends paid in 2002. This increase in banking
fees and interest expenses was partly offset by a favorable
currency impact, especially relating to the U.S. Dollar against
the Euro. Net interest expense excluding currency impact
increased by 18.8%.
The increase in banking fees and interest expenses was due in
part to the higher applicable borrowing rate for the 2003 credit
facility compared with the previous credit facility. The
applicable borrowing rate under the 2003 credit facility as of
the end of the third quarter of 2003 was LIBOR (or EURIBOR on
Euro borrowings) plus 3.25%. The applicable borrowing rate under
the previous credit facility as of year-end 2002 was LIBOR (or
EURIBOR on Euro borrowings) plus a margin of 0.35% to 0.40%,
depending upon the amount of debt drawn under the facility.
Ahold's level of borrowing and letters of credit under its 2003
credit facility have increased compared to the level under the
previous credit facility. Ahold also has incurred significant
fees under the 2003 credit facility and in connection with the
extension and amendment of its accounts receivable securitization
programs. Ahold's borrowings under the 2003 credit facility as of
the end of the third quarter of 2003 were USD 750 million and
Euro 600 million, plus USD 353 million of issued letters of
credit that bore a fee of 3.25% of the stated amount. Its
borrowings under the previous credit facility as of year-end 2002
were USD 80 million, plus USD 150 million of issued letters of
credit with a fee of 0.40%.
The gain on foreign exchange in the first three quarters of 2003
amounted to Euro 16 million and mainly related to the positive
impact of the revaluation of the Argentine Peso on U.S. Dollar-
denominated debt in Argentina. In the first three quarters of
2002, a foreign exchange loss of Euro 85 million was mainly
incurred related to the negative impact of the devaluation of the
Argentine Peso on U.S. Dollar-denominated debt and inflation
adjustment losses related to Argentine Peso-denominated debt in
Argentina.
Income Taxes
The effective income tax rate, adjusted for the impact of non-
tax-deductible impairment and amortization of goodwill and
exceptional losses, increased to 50.9% in the first three
quarters of 2003 compared to 30.0% in the same period last year.
The main factor contributing to this increase in the effective
tax rate was a different geographic mix of earnings, and higher
losses in areas where no tax credit could be recorded.
Share in Income (Loss) of Joint Ventures and Equity Investees
The share in income (loss) of joint ventures and equity investees
in the first three quarters of 2003 amounted to an income of Euro
139 million, compared to a loss of Euro 42 million in the same
period last year. The share in income of ICA, included in
European joint ventures, increased considerably in the first
three quarters of 2003 mainly as a result of a gain related to
the sale and leaseback of several distribution centers.
The loss in the first three quarters of 2002 was primarily caused
by losses at DAIH. The loss at DAIH of Euro 126 million reflects
the losses incurred at Disco and Santa Isabel at the time that
they were not consolidated, which were mainly caused by the
negative impact of the devaluation of the Argentine Peso on U.S.
Dollar-denominated debt, as well as inflation adjustment losses
on third-party Argentine Peso-denominated debt in Argentina. The
losses in the first three quarters of 2002 at DAIH were partially
offset by income from ICA AB, Jerąnimo Martins Retail (JMR) and
Paiz Ahold in this period.
Net Income (Loss)
Net loss in the first three quarters of 2003 was Euro 42 million,
compared to a net income of Euro 17 million in the same period
last year. The net loss in the 2003 period was primarily caused
by lower operating performance at all business segments and
higher audit, legal and consultancy fees, as well as the
weakening of the U.S. Dollar against the Euro and the Euro 110
million of exceptional losses related to divestments.
Net Income (Loss) after Preferred Dividends per Common Share-
Basic Net loss after preferred dividends per common share-basic
amounted to Euro 0.08 per common share in the first three
quarters of 2003 compared to a net loss of Euro 0.01 per common
share in the same period last year.
Set forth below is a discussion of net sales and operating income
for Ahold's business segments and certain other financial
information.
Retail Trade - United States
Third Quarter 2003
Operating income before impairment and amortization of goodwill
and exceptional losses in the third quarter of 2003 decreased as
a result of reduced gross margin due to increased promotional
activity, particularly at Giant-Landover and Tops. Stop & Shop
continued its solid performance during the quarter.
Operating income also was significantly impacted by impairment
charges relating to long-lived assets and other non-recurring
items. In addition, in the third quarter of 2002, real estate
gains totaling Euro 29 million had a positive impact on operating
income, as reported last year, versus a gain of Euro 4 million
this year.
First Three Quarters 2003
The decrease in net sales in the first three quarters of 2003 was
largely attributable to a lower U.S. Dollar to Euro exchange
rate. U.S. Dollar net sales increased by 3.2% resulting from
comparable sales growth and the opening of new stores. Identical
sales increased by 0.1% and comparable sales at existing and
replacement stores increased by 0.9%. At Stop & Shop and Giant-
Carlisle, U.S. Dollar net sales increased by 6.6% and 7.8%,
respectively. Giant-Landover and Tops experienced pressure on net
sales due to the weak economy and heightened competition,
resulting in only slight increases in U.S. Dollar net sales. Due
to the difficult trading environment in the southeastern United
States, U.S. Dollar net sales at Bruno's and BI-LO (excluding
Golden Gallon) were lower.
Operating income before impairment and amortization of goodwill
and exceptional losses in the first three quarters of 2003
decreased primarily as a result of the decline in the third
quarter. Operating expenses at all of the companies in the U.S.
retail operations were impacted by higher pension expenses, as
well as continued rising health care costs. The pressure on
operating expenses caused by these factors was partially offset
by various cost saving initiatives.
Retail Trade - Europe
Third Quarter 2003
Operating income before impairment and amortization of goodwill
and exceptional losses at Albert Heijn in the third quarter of
2003 decreased significantly compared to the same period in 2002.
The decrease was primarily due to lower net sales and gross
margins partially offset by lower operating expenses from cost
reduction programs. As part of these programs, Albert Heijn is
restructuring its head office and logistics functions, including
through the reduction of 440 jobs.
Operating income before impairment and amortization of goodwill
and exceptional losses at other Europe retail trade operations
increased in the third quarter of 2003, compared to the same
period in 2002. This increase was primarily due to a strong
increase at Schuitema as a result of higher sales and lower
operating costs. In Central Europe, operating loss before
impairment and amortization of goodwill and exceptional losses
increased partly due to fixed asset impairment charges related to
the sale of two hypermarkets in Poland and increased operating
costs due to new stores. Spain incurred a small operating loss
before impairment and amortization of goodwill and exceptional
losses mainly due to slightly lower gross margins and higher
operating costs partly related to new stores as well as fixed
asset impairment charges.
First Three Quarters 2003
Net sales at Albert Heijn in the first three quarters of 2003
decreased by 2.0% compared to the same period last year.
Identical sales at Albert Heijn in the first three quarters of
2003 declined by 2.0% primarily due to lower consumer spending
and a negative market sentiment towards Albert Heijn. As a
result, Albert Heijn introduced a new pricing strategy in October
2003.
Net sales at other Europe retail trade operations in the first
three quarters of 2003 increased by 4.1% compared to the same
period last year, primarily due to strong net sales growth at
Schuitema and an increase in net sales in Central Europe and
Spain. Net sales were marginally offset by the disposals of
Ahold's specialty stores (Jamin and De Tuinen) in The
Netherlands, which were completed in the second quarter of 2003.
In Central Europe and Spain, net sales increased due to the
opening of new stores, however, net sales in Central Europe were
negatively impacted by deflation and a negative currency impact.
Operating income before impairment and amortization of goodwill
and exceptional losses in the Europe retail trade operations
decreased primarily due to lower operating income at Albert
Heijn. This was principally caused by lower net sales and gross
margins, partially offset by lower operating expenses due to the
start-up of cost reduction programs. In response to the
competitive environment, Albert Heijn announced its price
repositioning campaign on October 5, 2003.
Operating income before impairment and amortization of goodwill
and exceptional losses at other Europe retail trade operations in
the first three quarters of 2003 was almost at the same level as
the comparable period of last year.
Foodservice
Foodservice - United States
Third Quarter 2003
The operating loss before impairment and amortization of goodwill
and exceptional losses in the third quarter of 2003 was primarily
due to continued substantial pressure on gross profit at U.S.
Foodservice as a result of its continued focus on controlling
inventory levels and, hence, reduced purchases from vendors. As a
result of the latter, volume allowances, which are based on
purchases from vendors and which are an offset against cost of
goods sold, were reduced.
First Three Quarters 2003
Net sales at U.S. Foodservice in the first three quarters of 2003
decreased by 15.7% compared to the same period last year
primarily due to a lower currency exchange rate of the U.S.
Dollar against the Euro. U.S. Dollar net sales increased slightly
by 1.2% due to the acquisition of Lady Baltimore and Allen Foods
in September and December 2002, respectively, which contributed
approximately 1.8% of the increase in net sales in the first
three quarters of 2003, meaning that there has been a slight
decrease in net sales excluding these acquisitions.
The operating loss before impairment and amortization of goodwill
and exceptional losses was primarily due to substantial pressures
on operating profit at U.S. Foodservice principally as a result
of the repercussions from the accounting issues and
investigations in 2003. Furthermore, U.S. Foodservice experienced
a weakening of its procurement leverage as vendors raised prices
and shortened payment terms, resulting in a sharp deterioration
in profitability.
Food Service - Europe
Net sales at the Deli XL food service operations, located in The
Netherlands and Belgium, in the first three quarters of 2003
decreased by 3.3% compared to the same period last year. This
decrease was primarily due to continuing unfavorable economic
circumstances.
Operating income at the Deli XL food service operations in the
first three quarters of 2003 decreased by 75.0% compared to the
same period last year.
Other Business Areas
Retail Trade - South America
Net sales in the South America retail trade operations in the
first three quarters of 2003 increased by 13.6% compared to the
same period last year. This increase was mainly due to the
consolidation of Disco and Santa Isabel since the second and
third quarter of 2002, respectively. This increase was partially
offset by the impact of the divestment of Santa Isabel's Chilean
and, to a lesser extent, Paraguayan operations in July and
September 2003, respectively.
The operating loss before impairment and amortization of goodwill
and exceptional losses in the first three quarters of 2003 was a
result of the consolidation of Disco and Santa Isabel since the
second and third quarter of 2002, respectively, both of which had
operating losses, and the negative impact of lower net sales and
lower margins recorded at the company's Brazilian operations.
Retail Trade - Asia
Net sales in the Asia retail trade operations in the first three
quarters of 2003 decreased by 17.7% compared to the same period
last year. This decrease was primarily due to the disposal of
operations in Malaysia and Indonesia completed in September 2003
and a decline in net sales in Thailand due to strong competition.
The increase in operating loss was primarily due to lower net
sales and gross margin and to restructuring charges incurred as a
result of the divestment program in Asia in the first three
quarters of 2003.
Other Activities
Other activities include operations of three real estate
companies, which acquire, develop and manage store locations in
Europe and the United States and corporate overhead costs of the
Ahold parent company. The operating loss before impairment and
amortization of goodwill and exceptional losses in the first
three quarters of 2003 partially reflected corporate costs of
Euro 124 million compared to Euro 24 million in the same period
last year. The higher corporate costs in the 2003 period were
mainly caused by the significant costs incurred in connection
with the forensic accounting and legal investigations that have
been conducted, ongoing litigation and ongoing government and
regulatory investigations, as well as higher audit fees in
connection with the audit of the company's 2002 financial
statements. Furthermore, corporate costs increased as a result of
an increase in the company's provision for self insurance and a
decrease in gains from the sale of real estate compared to the
same period last year.
Cash Flow Statement
Net cash from operating activities in the first three quarters of
2003 decreased by 48% compared to the same period last year,
mainly as a consequence of lower operating income. Changes in
working capital resulted in a cash outflow of Euro 131 million in
the first three quarters of 2003 partly due to shorter payment
terms imposed by certain suppliers to U.S. Foodservice as a
consequence of the discovery of the accounting irregularities as
announced. As a consequence, changes in accounts payable resulted
in a cash outflow of Euro 532 million in the first three quarters
of 2003. This was offset by a cash inflow related to changes in
inventory partly as a result of U.S. Foodservices' focus on
controlling inventory levels and purchases from vendors.
Investments in tangible fixed assets in the first three quarters
of 2003 amounted to Euro 805 million compared to Euro 1,445
million in the same period last year. Divestments of tangible and
intangible fixed assets amounted to Euro 455 million in the first
three quarters of 2003 compared to Euro 318 million in the same
period last year.
Shareholders' Equity
Shareholders' equity, expressed as a percentage of the balance
sheet total, was 10.0% at the end of the third quarter of 2003
compared to 10.5% at year-end 2002.
The rolling interest coverage ratio at the end of the first three
quarters of 2003 amounted to 1.2, compared to 2.5 at the end of
the same period last year. The rolling net debt / EBITDA ratio
amounted to 4.3 at the end of the third quarter of 2003, compared
to 3.1 at the end of the same period last year.
Outlook for 2003
Ahold expects that its consolidated net sales in 2003, excluding
currency impact, will be slightly higher than in 2002, primarily
as a result of an increase in net sales in the U.S. retail trade
operations resulting from comparable sales growth and the opening
of new stores. This positive factor will be partially offset by
the weakened global economy and strong competition in the markets
that the company serves, as well as the need for management to
deal with the repercussions of the announcements on February 24,
2003 and related developments. In addition, 2003 net sales will
be negatively affected by completed and future divestments closed
in 2003.
Operating expenses, excluding the impact of currency exchange
rates and the impact of goodwill impairment and amortization and
exceptional losses, are expected to be significantly higher in
2003 than in 2002. The company expects that net interest expense,
excluding currency impact, will be above 2002 levels.
Nevertheless, the company expects to report net income for the
full year 2003, excluding the impact of any goodwill impairment
and amortization that may be incurred in the fourth quarter of
2003 and excluding exceptional losses with respect to its
divestments.
At the end of 2003, Ahold will evaluate the carrying amount of
its goodwill for possible impairment and will determine whether
any goodwill impairment charges are required to be taken. No
triggering event has been identified in 2003 as of the date of
this press release.
Ahold expects that it will incur exceptional losses upon
completion of the divestitures of certain Latin American
operations, which is expected to occur prior to the end of 2003
or in 2004. The completion of these divestitures will lead to the
recognition of accumulated foreign currency translation
adjustments in the statement of operations as well as in some
cases the reversal of goodwill previously charged to
shareholders' equity. The cumulative exchange rate differences
charged to shareholders' equity at the end of the third quarter
of 2003 amounted to Euro 265 million and Euro 201 million for
Brazil and Argentina, respectively. The respective amounts of
goodwill reversed should a transaction have taken place at the
end of the third quarter of 2003 would have been Euro 255 million
for Brazil and Euro 82 million for Argentina, respectively.
The performance of U.S. retail in the fourth quarter of 2003 is
expected to improve compared to the third quarter partly due to
seasonality. The company expects EBITA margin in the fourth
quarter to improve to approximately the level achieved in the
first three quarters of 2003.
At Albert Heijn, operating profit will be negatively impacted in
the fourth quarter by the price repositioning announced on
October 5. However, the company expects that this negative impact
will be partly offset by higher volume. So far, the customer
response to Albert Heijn's price repositioning has been positive.
Ahold expects its food service operations in the United States to
have a clearly lower operating loss before impairment and
amortization of goodwill and exceptional losses in the fourth
quarter of 2003 compared to the third quarter of 2003, excluding
currency impact.
US GAAP Reconciliation
The audited 2002 Financial Statements on Form 20-F filed with the
U.S. Securities and Exchange Commission contains a reconciliation
from Dutch GAAP to US GAAP of net income (loss) and shareholders'
equity. Ahold has not provided a US GAAP reconciliation on a
quarterly basis in 2003 but intends to do so in 2004.
Accounting Principles
The accounting principles applied have not changed compared to
the accounting principles as stated in the Ahold 2002 Annual
Report, which was published in English and Dutch, both of which
have been posted on the Ahold web site (www.ahold.nl).
In November 2002, the Emerging Issues Task Force ("EITF") of the
Financial Accounting Standards Board in the United States reached
consensus on Issue No. 02-16, Accounting for Consideration
Received from a Vendor by a Customer (Including a Reseller of the
Vendor's Products) ("EITF 02-16"). Under the consensus, cash
considerations received from a vendor should be considered an
adjustment to the price of the vendor's products or services and,
therefore, characterized as a reduction of cost of sales when
sold unless (1) the cash consideration represents a reimbursement
of a specific, incremental, identifiable cost incurred in selling
the vendor's products and therefore characterized as a reduction
of those costs or (2) the cash consideration represents a payment
for assets or services delivered to the vendor and therefore
characterized as revenue.
The Company will adopt the provisions of EITF 02-16 for Dutch
GAAP in the fourth quarter of 2003. The Company has not yet
completed its analysis of the effect on the consolidated
financial statements as a result of the adoption of EITF 02-16.
The 2002 numbers included in this press release have been
restated as disclosed in note 3 of the Ahold 2002 Annual Report.
=========
C H I L E
=========
ENERSIS: Prepays $1.59B Loan
----------------------------
As part of an effort reduce debt, Chile-based Latin American
energy holding Enersis prepaid all of a syndicated loan for
US$1.59 billion it took out in May last year, reports Reuters.
Enersis paid off the loan using a US$500 million credit signed on
November 14 last year with a syndicate of banks led by BBVA and
10-year Yankee bonds placed recently in the United States for
US$350 million at an annual interest rate of 7.37 percent.
The prepayment frees the Company from guarantees to bank
creditors.
Enersis, the largest private electricity distribution group in
Latin America, is in the process of improving its finances after
it was battered by economic crises in Argentina and Brazil.
CONTACT: Enersis SA
Avenida Kennedy Vitacura No 5454
Santiago Chile 1557
Phone: +56 2 353 4400
Fax: +56 2 378 4768
Home Page: http://www.enersis.cl
Contacts:
Engr Alfredo Llorente Legaz, Chairman
Engr Rafael Miranda Robredo, Vice Chairman
===================
C O S T A R I C A
===================
ICE: Board To Choose GSM Contract Winner
----------------------------------------
The board of Costa Rica's state-run telecoms monopoly ICE aims to
decide on a winner for an equipment contract regarding the
Company's GSM mobile network soon. Business News Americas relates
that the board plans to meet on Tuesday to discuss the issue.
Three big companies have submitted bids. Motorola offers to do
add equipment for ICE's 600,000 users for US$130 million.
Ericsson has offered to do the job for only US$120 million, while
Alcatel pegged its price at US$199 million.
Aside from the price difference, the board also has to consider
varying preferences among its members, as well as the conflicting
recommendations from its technical team and Costa Rica's
comptroller general.
The board is also torn between its technical team's
recommendation to award a fiber optic cabling contract to Alcatel
and the comptroller's recommendation to reject the US$44 million
bid. BNAmericas adds that the board may decide on the issue in
the next 15 days.
=============
J A M A I C A
=============
JUTC: 280 Employees Likely to be Dismissed Next Year
----------------------------------------------------
Jamaica's state-run bus company Jamaica Urban Transit Company
(JUTC) expects to sack 280 employees, or 10% of the 2,980
employees, over the next year, thus aligning its staff-to-asset
ratio with international standards.
The measure, according to a Jamaica Gleaner report, is part of
the Company's effort towards achieving viability.
"Based on the current staff complement at the JUTC and with us
moving to international benchmark standard ... it would require a
reduction in staff by next year," Keith Goodison, vice-president
of the JUTC, told the Business Observer in an interview on
Monday.
"We would be looking at cutting 280 people," he said.
The bus service, which was re-nationalized a few years ago, after
a disastrous experimentation with private ownership and
management, has been operating at a deficit of just under $3
million per day.
Though the JUTC has acknowledged that having the appropriate
staff-to-bus ratio was critical to running a viable operation,
none of its executives has up to now publicly placed a figure or
timeline on any future layoffs at the Company.
The JUTC operates 450 buses, which gives it a ratio of 6.5
employees per bus -- given its current workforce of 2,980. In
January, prior to making 300 employees redundant, the ratio was
8.3 employees to each bus.
KAISER ALUMINUM: Analyzing Bids For Assets
------------------------------------------
Kaiser Aluminum Corp., which filed for Chapter 11 protection from
creditors under US bankruptcy laws in Feb. 2002, said Tuesday it
was evaluating bids for assets that are scheduled to go on sale,
reports Reuters.
The assets in question are Kaiser's 65% interest in Alumina
Partners of Jamaica (Alpart); its 49% stake in Kaiser Jamaica
Bauxite Company (KJBC); its 49% share of the Anglesey Aluminum
Ltd. in Wales; and its wholly owned alumina refinery in Gramercy,
Louisiana.
Offers for these assets were due on Nov. 7. In a recent financial
filing, Kaiser said it was possible that one or more of the sales
may occur during the first half of 2004.
A Kaiser spokesman on Tuesday declined to identify any of the
bidders or potential terms.
However, Norman Da Costa, vice president of the National Workers'
Union in Jamaica, said Alpart has issued a statement identifying
China Minmetals Group; Texas-based Sherwin Alumina Co., a
division of privately-held BPU Reynolds; a joint venture between
Century Aluminum Co. and Toronto's Noranda Inc.; Swiss-based
Glencore International AG; and Japan's Mitsubishi Corp as
bidders.
Norway's Norsk Hydro ASA owns the other 35% of Alpart's bauxite
mine and alumina refinery in Nain, Jamaica, while diversified
miner Rio Tinto Ltd/Plc owns 51% of the Anglesey primary aluminum
smelter in Holyhead, Wales.
Both Norsk Hydro at Alpart and Rio Tinto at Anglesey have the
right of first refusal to buy Kaiser's stake in those assets.
Once a winning bidder is selected, the other owners would have 30
days to purchase remaining shares in their respective assets.
===========
M E X I C O
===========
BIONOVA HOLDING: AMEX to Delist Shares Despite Appeal
-----------------------------------------------------
Bionova Holding Corporation (Amex: BVA - News) has been informed
that its appeal to retain its listing on the American Stock
Exchange was rejected by the Listing Qualifications Panel of the
AMEX Committee on Securities and that trading of its common stock
on the AMEX will be suspended within the next several trading
days. The Company expects its shares to begin trading on the pink
sheets simultaneously with the suspension of trading by the AMEX.
As stated in the Company's 12b-25 filing on November 19, Bionova
Holding experienced an issue in reconciling the financial
statements of its Mexican subsidiary for the quarter ending
September 30, 2003. This reconciliation was finally completed
Wednesday, November 26, and the Company's financial management
expects to complete its review with its audit committee by no
later than Monday, December 1. The Company will file its 10-Q for
the quarter ending September 30, 2003 immediately following
satisfactory review by the Company's Audit Committee.
CONTACT: BIONOVA HOLDING CORPORATION
(609)-744-8105
EMPRESAS ICA: Stock Price Adjusted As Rights Offering Closes
------------------------------------------------------------
Mexican construction company ICA had the price of its stock
adjusted downward on Wednesday, as the shares went ex-rights as
part of a new MXN2.486-billion (US$224 million) share offer,
reports Reuters.
Under the share offer, current shareholders can buy two new
shares for every one they own for MXN2/share. To account for the
share offer, the company's stock price adjusted to MXN2.46, which
is the average of the MXN3.37 previous closing price and the cost
of two new shares, according to analysts.
The new share offer is open only to Mexican investors, although
the company has said it could consider a new share offer for
foreign shareholders in the future.
Proceeds from the share offering will be used to pay down debt,
which in September stood at MXN5.133 billion (US$460 million),
and to finance new construction projects.
GRUPO BIMBO: $138M Early Loan Payment Improves Debt Picture
-----------------------------------------------------------
Mexican baking giant Grupo Bimbo SA said Tuesday it made an early
loan payment of US$138 million as part of an effort to improve
its debt profile by using excess cash. The Company said in a
filing with the Mexican Stock Exchange that the debt prepayment
represents 50% of a syndicated loan that had to begin to be
amortized in the fourth quarter of 2004. The Company has
disbursed US$263 million this year for early debt payments.
Bimbo sells over 100 brands in 690 sales outlets in 14 different
countries, including Brazil, Guatemala, El Salvador, Costa Rica,
Colombia, Venezuela, Peru, Chile, Argentina, Honduras, Nicaragua,
the United States and the Czech Republic.
SATMEX: Losses Mount in 3Q03
----------------------------
Mexican satellite operator Satmex saw its losses balloon to
US$18.2 million in the third quarter of the year from a loss of
US$4.5 million in the same period of 2002, reports Business News
Americas.
In a filing with the SEC, the Company revealed revenues declined
2.1% year-over-year to US$19 million, while operating expenses
grew 2.4% to US$21.1 million.
Satmex said that from April 2001 through March 2003, it
experienced significant contract terminations, and was unable to
renew contracts upon expiration.
"During the third quarter of 2003, contract cancellations slowed
and the company's backlog ended the period at US$256mn,"
according to Satmex.
Satmex took a US$5.87-million tax deferred tax loss during the
quarter, compared to US$2.28 million gain the year before. Third
quarter results from last year were also skewed by a US$3.3
million insurance gain for the loss of the Company's Solidaridad
1 satellite.
At the end of the third quarter of 2003, Satmex listed
liabilities totaling US$652 million, of which US$561 million were
short-term debts. Cash and cash equivalents were totaled US$14.7
million, down from US$26.8 million the year before.
=======
P E R U
=======
* IDB Approves $300M Loan To Peru To Improve Competitiveness
------------------------------------------------------------
The Inter-American Development Bank announced Wednesday the
approval of a $300 million policy-based loan to Peru to promote
national competitiveness.
The program supports reform in three basic areas. The first area
provides a framework for public-private cooperation in the design
and coordination of government policies intended to improve
productivity and competitiveness. To this end the National
Competitiveness Council, which is composed of senior officials
from both the public and private sectors will be strengthened and
restructured to allow for greater independence in the selection
of the private sector members. This will contribute to the
stability of the Council and its credibility and effectiveness as
a high-level, public-private consensus building body.
The second area includes reforms designed to improve the climate
for private-sector investment and addressing specific policy and
institutional impediments to greater efficiency at the enterprise
level. These reforms include government efforts to enhance
productivity through new regulations and other measures that will
enable entrepreneurs to start new businesses more quickly, make
the port system more efficient, strengthen job training, and
streamline commercial dispute resolution.
Other measures will enhance creditor rights, improve access to
credit histories to promote better banking, increase the use of
information technology and improve the efficiency of scarce
public funds invested in science and technology.
The third area of reform supported by the program will also
promote public-private cooperation to develop business
efficiencies through the creation of linkages and clusters.
A stable macroeconomic framework will be maintained, and the
program will be coordinated with related initiatives of the World
Bank, the Andean Development Corporation and the United States
Agency of International Development.
The loan, which will be disbursed in two tranches, reflects the
IDB strategy for Peru to increase the economy's productivity and
competitiveness and thereby contribute to the reduction of
poverty.
It brings the Bank's total lending to Peru during 2003 to $523.9
million. Other IDB investments support transportation, housing,
financial markets, urban transportation and reform of the state.
The loan is for 20-year term, with a five and « year grace
period, at variable interest rate based on LIBOR.
=================
V E N E Z U E L A
=================
PDVSA: Recovery, Future Plans Please US Financial Community
-----------------------------------------------------------
This week a committee of high level executives from Petrąleos de
Venezuela S.A. (PDVSA) culminated a non-deal roadshow, aimed at
presenting the recovery and future plans of the company to
investors and rating agencies in New York and Boston. The program
for the visit -coordinated by JP Morgan, Morgan Stanley, and
Goldman Sachs- included visits to more than fifty investors and
important rating agencies based in the United States.
"The financial community has been grateful and pleased by our
trip to share first hand information on the success we had in the
recovery of PDVSA, which strengthens every day as an ethical,
trustworthy, competitive, and sustainable enterprise that offers
attractive business opportunities to international investors",
said Flix RodrĄguez, Director of PDVSA, who was accompanied by
Luis MarĄn, President and CEO of CITGO (a subsidiary of PDVSA);
Jos Gregorio Morales, Executive Director of Finance; Richar
Ląpez, Manager of International Finance; Carlos Figueredo,
Manager of Strategic Planning; and Acacio RodrĄguez, Manager of
Treasury for CITGO.
"This is a good time to embrace our relationships and reopen
direct channels of communication with the international financial
community. They are all pleased and impressed by the rapid
operational and financial recovery of PDVSA and by our excellent
operating results up to date. We have consolidated our
accomplishments from the time after the crisis faced in December
2002 and the first quarter of 2003, and have outlined our
Business Plan 2004-2009, which is aimed at obtaining the maximum
value out of our oil and gas resources", stated RodrĄguez.
The high level executive emphasized that "the meetings have been
very cordial and enriching. They demonstrated the yearning for
complete, legitimate, and timely information about our
activities. Investors have expressed that despite rumors and
speculation -which not only affect PDVSA and the Venezuelan
society, but also the interest of investors- they believe firmly
that the truth is on our side. In conclusion, they have thanked
us for the time and effort we are dedicating to them to create a
better knowledge and understanding of the reality of the
Venezuelan oil industry."
With respect to the trust foreign investors have on PDVSA,
RodrĄguez recalled that 55 international companies, from 19
countries, are currently participating in the Venezuelan oil
industry. "These companies have ratified that they continue to be
confident in the present and future of both Venezuela and PDVSA.
Furthermore, they have reiterated their interest in expanding
their business in the Venezuelan oil industry."
On a side note, Luis MarĄn, President and CEO of CITGO,
highlighted to investors the success of the committee of
executives from the Ministry of Mines and Energy and Mines and
PDVSA that visited Washington, DC last week to meet with high
ranking officials of the government, legislature, media, and
corporate and financial sectors. "We all ratified that the US and
Venezuela have common interests, especially in the oil and gas
sector. In this sense, PDVSA plays a leading role in the supply
of energy to the US, where CITGO owns 11% of the market for
gasoline," noted MarĄn.
Financial Health
Jos Gregorio Morales, Executive Director of Finance, emphasized
that "despite the crisis, PDVSA has never ceased to honor its
financial commitments, which is irrefutable proof of its
willingness to honor its commitments even in the most adverse
circumstances. To this date, PDVSA has paid US$ 2.0 billion of
debt, of which US$ 1.8 billion correspond to amortization. For
the rest of the year, the company has to pay US$ 245 million;
while in 2004 it will pay US$ 758 million."
Mr. Morales explained that the amortization profile and
projections of the debt balance show ample room for the eventual
raising of new financing. Furthermore, as of October 2003, PDVSA
Finance had a 22-point debt service ratio (implying it had the
resources to pay up to 22 times the suitable amount), well above
of the required amount.
Referring to collection, Richar Ląpez, Manager of International
Finances, informed that in the January - October 2003 period
PDVSA registered sales of US$ 14.8 billion while the level of
collected funds reached US$ 13.89 billion, indicating that the
company is at an excellent liquidity level. Mr. Ląpez emphasized
that "if you add the fact that the worst and unthinkable took
place and we were able to recover from the crisis at the end of
2002 and beginning of 2003 with great success, we can conclude
that our risks are at a minimal level. Without a doubt, PDVSA
enjoys good and solid financial health."
Carlos Figueredo, Manager of Strategic Planning, stressed that
"PDVSA provided for 13% of total crude oil and derivatives
imports to the United States in 2002 and it is estimated this
figure will increase to 15% in 2003." He added that PDVSA has oil
reserves of approximately 312 billion barrels (77 billion barrels
of conventional crude, 235 billion of heavy and extra-heavy crude
from the Orinoco Belt) and 147 trillion cubic feet of gas.
Additionally, it is expected the discovery of 62 billion barrels
of crude oil and 196 trillion cubic feet of gas. As of closing on
October 2003, the Venezuelan oil industry registered production
of 3.1 million barrels per day; refining of 1.1 million barrels
per day (in Venezuela and Curacao) and exports of 2.2 million
barrels per day of crude oil and derivatives, of which 53% was
directed to the United States and Canada.
PDVSA: Seeks Speedy Liquidation of Bankrupt IT JV
-------------------------------------------------
Venezuela's state oil company PDVSA is looking for a quick
liquidation of Intesa, its bankrupt IT joint venture with US tech
firm Science Applications International Corp (SAIC), reports
Business News Americas. Already, SAIC has classified Intesa as a
"discontinued operation" in its financial statements.
"The idea at PDVSA is that there should be a friendly dissolution
[of Intesa]," PDVSA's automation, technology and telecoms unit
(AIT) director, Socorro Hern ndez, was quoted as saying.
Other PDVSA executives have recently expressed a desire for
Intesa to survive.
The liquidation process was scheduled to be completed by end-2002
but was stopped after the two-month strike at PDVSA at the end of
the year, Ms. Hernandez said.
"From then on, things have been much more difficult," she said.
***********
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