/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/031205.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, December 5, 2003, Vol. 4, Issue 241 Headlines A R G E N T I N A BANCO DE GALICIA: Central Bank Approves Debt Deal Terms BODEPES: General Financial Report Filing Due Today CABLEVISION: Re-Extends Debt Offer Expiration CASA LOPEZ: Receiver Closes Credit Verifications in Bankruptcy COB: Receiver To File Financial Reports at Court COPAMA: Court Orders Claims Filing Deadline DINAR: Two Investors Take Over Airline DISCO: Asset Freeze Won't Disrupt Sale Plans, Says Ahold FOTOGRAFIA APLICADA: General Report Anticipated Today MORESCO HERMANOS: Credit Verification Process Closes Today NATFROZ: Receiver Ends Claims Verification in Reorganization PAN AMERICAN: Capex Announcement Will Not Affect Ratings PETROBRAS ARGENTINA: Refutes Reports On Distrilec Sale PRO SUN: Proofs of Claim Due Today SHOWCENTER: Creditors Approve Sale To NAI B E R M U D A CRP: A.M. Best Downgrades Ratings to `B' TYCO INTERNATIONAL: Fitch Ups Senior Unsecured Rating to 'BB+' B R A Z I L AES CORP.: BNDES Top Official To Meet With Execs This Week CERJ: Increasing Capital Through Intercompany Debt Conversion EMBRATEL: Advances Local Strategy With Vesper Acquisition C H I L E VIDA PLENA: Clients Will Migrate to Other Healthcare Firms C O L O M B I A AVIANCA: In "Advanced" Talks With Potential Bidders N I C A R A G U A ENITEL: Potential Buyers Must Present Bid By December 12 P A N A M A * Fitch Affirms Panama's Ratings, Revises Outlook to Stable - - - - - - - - - - ================= A R G E N T I N A ================= BANCO DE GALICIA: Central Bank Approves Debt Deal Terms ------------------------------------------------------- Argentina's central bank issued a resolution on Nov. 27, approving the terms of Banco de Galicia y Buenos Aires SA's preliminary debt-restructuring agreement with its creditors. Banco Galicia, the main holding of Grupo Financiero Galicia SA, announced on Nov. 25 it had won initial approval from creditors to restructure some US$1.4 billion in foreign debt. It hasn't yet laid out the terms of the deal. But the bank, in a filing to the stock exchange Wednesday, said it would do so when it applies for permission from Argentina's security exchange to issue new bonds to be swapped for old ones as part of the debt deal. Creditors involved in talks with Galicia expect the bank to use a range of means to restructure its debt, including partial cash payments and swaps for debt or equity. BODEPES: General Financial Report Filing Due Today -------------------------------------------------- Bodepes S.A. moves closer to liquidation, as the Company's receiver is required to file the general report on the Company's bankruptcy process today. The report is prepared after the individual reports, submitted to the court last October 24 were processed. The receiver, Mr. Oscar Adolfo Sanchez, also verified the credit claims to determine the nature and amount of the Company's debts. Court No. 6 of the Civil and Commercial Tribunal of Mar del Plata handles the Company's case, according to a previous report by the Troubled Company Reporter - Latin America. CONTACT: Bodepes S.A. Acha 890 Mar del Plata Oscar Adolfo Sanchez Avenida Colon 2991 Mar del Plata CABLEVISION: Re-Extends Debt Offer Expiration --------------------------------------------- Argentine cable operator Cablevision has again extended for the sixth time the expiry date on its debt-restructuring offer, reports Dow Jones. The new deadline, which is Dec. 11, was set after the Dec. 1 deadline failed to see a satisfactory approval rate. Cablevision is trying to restructure US$797 million in defaulted debts. In a statement to the Buenos Aires stock exchange Tuesday, Cablevision revealed that creditors representing about US$244.4 million of the potential US$725 million in eligible bonds had accepted the offer as of Dec. 1. That is an increase of just US$2.5 million from Nov. 10, the prior deadline, and remains well below the US$270.4 million approval rate that had initially been attained by Oct. 20. The Company needs creditors representing two-thirds of eligible bonds to accept the out-of-court agreement, or APE, in order to obtain legal approval for its offer. Cablevision is proposing to buy back up to US$270 million of the debts at 37% of their original value. The Company will spend US$54.9 million of its own cash, with the remaining US$45 million coming from its two main shareholders, Hicks, Muse, Tate & Furst and Liberty Media Corp. CASA LOPEZ: Receiver Closes Credit Verifications in Bankruptcy -------------------------------------------------------------- Mr. Alberto Antonio Vilela, receiver for Casa Lopez Silver S.A., will close the credit verification process for the Company's bankruptcy today. As ordered by Buenos Aires Court No. 22, the receiver will prepare the individual reports, which are to be submitted to the court on February 23 next year. The receiver will also prepare a general report after the individual reports are processed at court. This report, a consolidation of the results in the individual reports is to be handed over to the court on April 6 next year. Clerk No. 44 aids the court on the case, the Troubled Company Reporter - Latin America said in an earlier report. CONTACT: Alberto Antonio Vilela Rodriguez Pena 431 Buenos Aires COB: Receiver To File Financial Reports at Court ------------------------------------------------ Mr. Eduardo Daniel Florez, receiver for Argentine company Compania de Omnibus la Bahiense S.R.L., is expected to file the individual reports on the Company's reorganization today. The reports were prepared after credit verifications were completed earlier this year. An earlier report by the Troubled Company Reporter - Latin America indicated that the receiver will also prepare a general report after the individual reports are processed at court. This report must be presented to the court on February 25 next year. Local sources, however, did not reveal whether the court has set the date for the informative assembly. The meeting is one of the last processes in a reorganization. CONTACT: Compania de Omnibus la Bahiense S.R.L. Lavalle 348 Bahia Blanca Eduardo Daniel Florez Hopilito Yrigoyen 227 Bahia Blanca COPAMA: Court Orders Claims Filing Deadline ------------------------------------------- Buenos Aires' Court No. 19 orders the receiver for local company Copama S.R.L. to close credit verifications for the Company's reorganization today. Mr. Aldo Markinan is the receiver for the process. The receiver is instructed to prepare the individual reports on the results of the verification process, and then the general report. These must be submitted to the court on February 20, and April 2 next year, respectively. The informative audience, which signals the end of the reorganization, will be on August 21 next year. CONTACT: Aldo Markinan Alsina 1441 Buenos Aires DINAR: Two Investors Take Over Airline -------------------------------------- Surprisingly, Argentina's troubled airline Dinar has been sold for the fourth time in the past 12 months. The Company, which stopped flying eight months ago, is carrying out a formal restructuring proceeding and has over ARS100 million (US$33.67 million) in liabilities. Part of its 330 employees has been hired by the recently set up state-owned carrier Lafsa and other 25 ones have been invited to return to their jobs at Dinar. The new owners are two businessmen: Walter Perochena (75%) and Roberto Beato (25%). "We know that people have qualms about our project and it's logical. They have faced four sales that have left the Company outside the runway," said Mr. Perochena, new vice-president at Dinar. Lawyer Hernan de las Carreras is the newly appointed president and Pierre Chapar is the new general manager. Mr. Perochena pointed out ARS6 million will be invested in order to make Dinars two planes suited to fly again and organize the commercial re-launching of the Company. We are also renegotiating the debt restructuring offer with the creditors, he added. DISCO: Asset Freeze Won't Disrupt Sale Plans, Says Ahold -------------------------------------------------------- Dutch retailer Ahold would not allow a recent court-ordered freeze on the assets of its troubled Argentine unit Disco to impede plans to sell the supermarket chain to Chilean retailer Cencosud, reports Reuters. In a statement late Tuesday, Disco said that an Argentine court had frozen the Company's "fixed assets" at the request of Argentina's tax agency, which has claimed that Disco owes it about ARS300 million (US$101 million) in taxes and fines. Ahold admits that the order would make the sale difficult but it won't disrupt sale plans. It expects a binding agreement by the end of 2003. "The company believes that this (decision) does not impede the sale of Disco, but it does make it more difficult," an Ahold Argentina spokesman told Reuters on Wednesday. The spokesman said the court freeze covered only "fixed assets" like real estate but did not affect Disco's stock, meaning the sale of shares could go ahead. He added the Company would appeal the decision. Cencosud President Horst Paulmann told Reuters last week that Disco's legal problems with the Argentine tax agency would not be an obstacle to its planned purchase. FOTOGRAFIA APLICADA: General Report Anticipated Today ----------------------------------------------------- The Civil and Commercial Tribunal of San Isidro in Argentina expects the receiver for Fotografia Aplicada S.A. to submit the general report for the Company's reorganization today. These reports were prepared after the individual reports were processed at court. An earlier report released by the Troubled Company Reporter - Latin America indicated that the receiver, Mr. Rodulfo Crespi verified creditors' claims and prepared the individual reports in the earlier stages of the reorganization process. CONTACT: Fotografia Aplicada S.A. Hipolito Yrigoyen 3926 Vicente Lopez, San Isidro Rodolfo Crespi Rivadavia 91 San Isidro MORESCO HERMANOS: Credit Verification Process Closes Today ---------------------------------------------------------- The credit verification period for the bankruptcy of Quilmes- based Moresco Hermanos S.R.L. expires today. An earlier report by the Troubled Company Reporter - Latin America indicated that the Company's receiver, Ms. Patricia Monica Narducci, will prepare the individual reports, which are due for filing on February 24. The receiver will also prepare a general report after the individual reports are processed at court. This report must be submitted to the court on April 7, 2004. The Company's assets may be liquidated shortly afterwards. Proceeds would go towards reimbursement of creditors, based on the results of the verification process. Court No. 1 of the Civil and Commercial Tribunal of Quilmes handles the Company's case. CONTACT: Moresco Hermanos S.R.L. Storni 30 Florencio Varela Patricia Monica Narducci Lavalle 328 Quilmes NATFROZ: Receiver Ends Claims Verification in Reorganization ------------------------------------------------------------ The reorganization of Natfroz S.R.L., which is based in Buenos Aires, moves a step further as the Company's receiver has instructions to close the credit verification process today. The receiver, Mr. Alberto Francisco Romeo, will also prepare the individual and general reports on the process. Buenos Aires Court No. 8 granted the Company permission to reorganize by approving its motion for "Concurso Preventivo", the Troubled Company Reporter - Latin America said in an earlier report. Clerk No. 16 assists the court on the case. The court is yet to schedule the deadlines for the filing of the receiver's reports. CONTACT: Alberto Francisco Romeo Parana 275 Buenos Aires PAN AMERICAN: Capex Announcement Will Not Affect Ratings -------------------------------------------------------- Standard & Poor's Ratings Services said Wednesday that Pan American Energy LLC's (PAE, B/Stable/--) announcement of capital expenditures for US$450 million during 2004 will not affect PAE's rating. According to the announcement, more than 75% of those investments will be made in the Golfo de San Jorge Basin, where the company's most important producing fields are concentrated. Although Standard & Poor's acknowledges the benefit of those investments in the company's business profile, particularly when considering PAE's strong investment track record, an aggressive capital expenditures program was already incorporated into the ratings. In addition, given that the company can pace the development of its reserves and considering its conservative financial profile, Standard & Poor's believes that PAE's capital expenditures will not jeopardize its credit quality. ANALYSTS: Pablo Lutereau, Buenos Aires (54) 114-891-2125 Marta Castelli, Buenos Aires (54) 114-891-2128 PETROBRAS ARGENTINA: Refutes Reports On Distrilec Sale ------------------------------------------------------ There's no truth to reports that Petrobras Energia SA is considering selling its shares in Distrilec, the Argentine subsidiary of Brazilian oil giant Petroleo Brasilerio SA said in a filing to the Buenos Aires stock exchange. Distrilec holds 56% of Argentine electricity distributor Edesur SA. According to Business News Americas, Petrobras Energia was responding to last week's report by Argentine Internet news page Infobae.com suggesting that Chilean utilities holding Enersis SA would be "on the way to acquiring" Petrobras' share in Distrilec. Enersis, which is a unit of Spanish Endesa SA, has previously said it was interested in running Edesur with a financial partner, but hasn't said it planned to buy out Petrobras or that any talks were underway. After a three-year dispute with Enersis over the allocation of board seats on Distrilec, the Paris-based International Chamber of Commerce ruled last year that Edesur's board should be split 50-50 between Petrobras Energia and Enersis. Enersis directly holds 16% in Edesur, as does Enersis unit Chilectra SA. PRO SUN: Proofs of Claim Due Today ---------------------------------- Creditors of Argentine company Pro Sun S.A. must have their claims authenticated by the receiver, Mr. Gonzalo Daniel Cueva, as the deadline for verifications expires today. The Company is under bankruptcy with Buenos Aires Court No. 4, holding jurisdiction over the case. Clerk No. 8 aids the court the Troubled Company Reporter - Latin America revealed earlier. The receiver is also required to prepare the individual and general reports on the case. However, local sources did not reveal the filing deadlines for these. CONTACT: Gonzalo Daniel Cueva Terrero 1752 Buenos Aires SHOWCENTER: Creditors Approve Sale To NAI ----------------------------------------- The trust that holds 80% of Showcenter's debt finally approved an acquisition proposal submitted by Entertainment Holding, a firm controlled by U.S. National Amusement International, or NAI. The proposal is pendant from approval by the court in charge of Showcenter's cramdown proceeding. Entertainment Holding says it will pay Showcenter's ARS150 million debt in full and will preserve its 500 jobs. It will make a 15% advanced payment in cash and assets that will be transferred to the trust. It also offers to delay the collection of a debt Showcenter has to NAI and promises to invest US$10 million in 2004 Showcenter owns two entertainment centers in Buenos Aires, Showcenter Haedo and Showcenter Norte. It started a formal restructuring proceeding in March 2001 and had not been able to agree with its creditors on a repayment schedule. For that reason, the judge in charge of its proceeding ruled the initiation of a cramdown process in August. ============= B E R M U D A ============= CRP: A.M. Best Downgrades Ratings to `B' ---------------------------------------- A.M. Best Co. has downgraded the financial strength ratings to B (Fair) from B+ (Very Good) of Commercial Risk Reinsurance Company Limited (Hamilton, Bermuda) and its U.S. subsidiary, Commercial Risk Re-Insurance Company (Burlington, VT), together known as Commercial Risk Partners. The companies are the insurance operating subsidiaries of the Bermudian holding company, Commercial Risk Partners Limited (CRP), ultimately wholly-owned by SCOR (Paris, France). The rating outlook for both companies has been changed to stable from negative. These rating actions reflect the precipitous decline in capital of Commercial Risk Partners in the third quarter of 2003, resulting from further reserve strengthening during the quarter combined with a decline in unrealized gains which together have reduced the company's risk-adjusted capital to a level that no longer supports a secure rating. These actions have also taken into consideration weak historical and prospective operating performance as well as the limited market profile due to the runoff status of both companies. The rating is contingent on A.M. Best's expectation that a commutation contract that has already been negotiated will be finalized by the end of 2003 and that Commercial Risk Partners will maintain consolidated risk-adjusted capital commensurate with its Fair rating. Subsequent rating actions may be warranted if these expectations are not met or maintained. 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. TYCO INTERNATIONAL: Fitch Ups Senior Unsecured Rating to 'BB+' -------------------------------------------------------------- Fitch Ratings upgraded its ratings to 'BB+' from 'BB' on the senior unsecured debt of Tyco International Ltd. (Tyco), as well as the unconditionally guaranteed debt of its wholly owned direct subsidiary Tyco International Group S. A. The commercial paper rating remains at 'B'. The Rating Outlook is Stable. Approximately $19 billion of debt is affected by this rating action. Fitch's upgrade of Tyco's long-term debt recognizes the progress made by the company with respect to debt reduction and improving cash flow. In addition, the debt maturity schedule no longer presents a major challenge to Tyco's liquidity as maturities in each of the next two calendar years approximate $1 billion or less, followed by $3.7 billion due in 2006. The rescheduling and paydown of debt is proceeding through a number of actions including the recent redemption in mid-November of $2.5 billion of convertible debt and the anticipated replacement and extension of Tyco's bank facilities in December, 2003 that are currently being negotiated. Liquidity is further supported by cash balances of $4.2 billion as of Sept. 30, 2003 (subsequently reduced by the payout of convertible debt), the issuance of $1.0 billion of new ten year unsecured notes in early November and an outlook for continued strong free cash flow that reflects significant reductions in capital spending for acquisitions and fixed assets. Tyco's credit profile should benefit as the company demonstrates progress in restoring better operating results, improved access to capital markets and using free cash flow to reduce debt and leverage. The ratings are constrained by concerns about operating challenges in several segments as well as by potential legal liabilities relating to shareholder lawsuits and ongoing investigation by the SEC. Operating margins, while below historical levels, appear to have stabilized. In the Fire & Security segment, ADT's European operation remains weak and ADT overall continues to experience elevated attrition rates, in part due to actions taken to improve the quality of its customer portfolio and rebuild long term profitability. Two other segments, Engineered Products and Plastics, face weak demand and will be part of the restructuring and divestiture program announced recently that involves all segments of Tyco. Although there likely will be accounting losses from the program, the impact on near term cash flow should be minimal with cash proceeds from asset sales expected to offset cash restructuring costs. Longer term, the restructuring should rationalize Tyco's cost structure and lead to improved margins and cash flow. The planned sale of the TyCom Global Network and other businesses represent 6% of Tyco's total sales. The divestitures are intended to contribute to a sharper focus on the company's core operations and help meet Tyco's objective for generating $3 billion in cash from ongoing strategic initiatives during the next 2-3 years that address strategic sourcing, Six Sigma programs and working capital. Liquidity continues to improve following ongoing debt restructuring as Tyco rebuilds its operating performance and further pays down debt. Weak operating earnings have offset the impact of modest debt reduction on leverage, resulting in little change in debt/EBITDA during 2003 as net debt/EBITDA declined from 2.8 times (x) at the beginning of the year to 2.7x at Sept. 30, 2003. Debt was reduced by $3.2 billion during 2003 but was funded in large part by the draw-down of excess cash balances. Cash flow and liquidity in 2004 would be modestly affected by any pension contributions (approximately $200 million contributed in 2003) and by cash spending against reserves for restructuring, purchase accounting and holdback/earn-out liabilities that totaled $881 million at June 30, 2003. Even with these funding requirements, Fitch looks for debt reduction to accelerate once Tyco has fully implemented its operating strategies. In addition, a normal cyclical rebound in the company's end-markets would further benefit operating cash flow and contribute to long term financial flexibility. CONTACT: Eric Ause, CFA +1-312-606-2302 Mark Oline +1-312-368-2073, Chicago MEDIA RELATIONS: James Jockle +1-212-908-0547, New York =========== B R A Z I L =========== AES CORP.: BNDES Top Official To Meet With Execs This Week ---------------------------------------------------------- Roberto Timotheo da Costa, finance director of Brazil's development bank BNDES, is scheduled to meet with the executives of AES Corp. this week in the U.S. to resolve issues that prevent a conclusion to a US$1.2 billion debt-rescheduling accord. Dow Jones relates that in September, BNDES and the U.S. power group agreed on a plan to restructure AES's US$1.2-billion debt with the federally-controlled bank through the creation of a joint venture, Novacom, that would hold AES's interests in Brazil. The assets include power distributor Eletropaulo Metropolitana, gas-powered thermoelectric plant AES Uruguaiana and hydroelectric generator AES Tiete. The utility AES Sul would be added to the venture after the completion of the restructuring. However, up to now, AES hasn't transferred its controlling stake in AES Tiete to Novacom. BNDES President Carlos Lessa has warned that the bank will go to court if AES doesn't do its share of the deal, and warned that BNDES wont extend the Dec. 15 deadline. CERJ: Increasing Capital Through Intercompany Debt Conversion ------------------------------------------------------------- Standard & Poor's Ratings Services said Wednesday that the US$250 million capital increase to be made by the Endesa/Enersis group to Companhia de Eletricidade do Rio de Janeiro--CERJ (foreign currency B+/Stable/--; local currency BB-/Negative/--) will not immediately affect the ratings or outlooks on the Company. The capital increase still depends on approvals of the board of shareholders, the regulatory agency ANEEL, and the Brazilian Securities and Exchange Commission, CVM. The ratings on CERJ already incorporated those US$250 million intercompany loans as "quasi-equity." On the other hand, this capital infusion is a positive indication of commitment from the parent group toward CERJ, and the debt conversion will enhance CERJ's financial figures regarding its capital structure as well as reduce foreign currency exposure. ANALYSTS: Marcelo Costa, Sao Paulo (55) 11-5501-8955 Milena Zanibon, Sao Paulo (55) 11-5501-8945 EMBRATEL: Advances Local Strategy With Vesper Acquisition --------------------------------------------------------- Embratel Participacoes S.A. (NYSE: EMT)(Bovespa: EBTP3 EBTP4) announced Wednesday that it has concluded the acquisition of Vesper Sao Paulo S.A. and Vesper S.A. (Vesper), the providers of competitive local telephony services in 17 states, with licenses covering 76 percent of the Brazilian population. In addition to providing a choice of local services for corporate customers, this acquisition will strengthen and expand Embratel's strategy to provide local dial tone and broadband services to the SOHO and residential markets. This investment further evidences Embratel's commitment to be the leader in the Brazilian marketplace and provide all clients with a broad range of communications service offerings. The transaction was approved by Anatel last week. This business combination of Vesper and Embratel goes one step further in preserving the competitive model in Brazil. Details of the Transaction Embratel acquired control of Vesper's shares from companies controlled by QUALCOMM Incorporated (QUALCOMM) for a nominal consideration. The companies were acquired free of bank debt and will have a small amount of liabilities related to equipment financing. Vesper has also sold 622 of its communication towers to an affiliate of QUALCOMM, while at the same time entered into a 10- year (renewable for 10 more years) agreement to access space on those towers. The value of the contract is US$45 million. Most of the proceeds from this sale have been used to retire all outstanding bank debt and other liabilities. Approximately US$6 million of the proceeds will be used to fund short-term operating needs of Vesper. Enhances Embratel's Competitive Position The acquisition of Vesper enables Embratel to accelerate its local business plan and deploy broadband Internet access in competition with ADSL and other high-speed access services. Embratel will be able to economically widen the scope of its local voice service business by providing individual lines to small businesses and residential clients in addition to its current business of addressing large corporate customers with multiple lines. Vesper revenues are expected to be approximately R$400 million in 2003. Embratel plans to upgrade Vesper's CDMA network in several Brazilian cities, which will enable the company to offer high- speed Internet access and other data/voice solutions. Embratel now has another technological solution that enables it to efficiently serve the residential market and offer broadband access to the Internet. Synergies With Embratel Embratel believes that its scope and size allow it to provide the necessary scale to turn Vesper into a profitable business -- savings on overhead, call center, network and interconnection. In addition, Embratel will leverage its brand name and marketing power to enhance sales of the services currently provided by Vesper. Several primary market surveys have shown positive support for this strategy. The combination of Embratel and Vesper will enable the majority of Embratel's 20 million customers to have a choice for local telephony services. Embratel is executing a transition plan to implement the operational savings in order to enable Vesper to have means to become EBITDA positive in 2004. Embratel is the premium telecommunications provider in Brazil and offers and ample variety of telecom services -- local and long distance telephony, advanced voice, high-speed data transmission, Internet, satellite data communications, and corporate networks. The company is a leader in the country for data services and Internet and is highly qualified to be an all-distance network carrier in Latin America. Embratel's network spreads countrywide, with almost 29 thousand kms of optic cables, which represents about one million sixty-nine thousand km of fiber optics. CONTACT: Silvia M.R. Pereira, Investor Relations Tel: (55 21) 2121-9662 Fax: (55 21) 2121-6388 Email: silvia.pereira@embratel.com.br invest@embratel.com.br URL: http://www.embratel.net.br ========= C H I L E ========= VIDA PLENA: Clients Will Migrate to Other Healthcare Firms ---------------------------------------------------------- The former affiliates of the recently-declared-bankrupt Chilean health services company Vida Plena will breathe a sigh of relief following reports that the healthcare regulator will transfer beginning Friday its 72,000 clients to other healthcare companies. "The anguish suffered by the affiliates has come to an end, we are studying all the possible scenarios to ensure that the distribution is carried out without fail," private healthcare regulator Manuel Inostroza was quoted by local daily La Segunda as saying. Vida Plena was recently declared bankrupt by the Chilean court of Justice, granting a petition from a creditor of the Company. The bankruptcy was requested by Clinica Presbiteriana Madre y Hijo, a Chilean medical services center, to which Vida Plena owes more than CLP200 million. According to Business News Americas, the authorities had sought for some time to sell Vida Plena to private investors but ultimately those efforts proved futile. =============== C O L O M B I A =============== AVIANCA: In "Advanced" Talks With Potential Bidders --------------------------------------------------- Speculation is mounting in the U.S. that Texas Pacific Group has joined LanChile and German Efromovich -owner of Brazil's regional airline Ocean Air, in a serious bid for a stake in Avianca, relates Airline Business. According to Avianca, negotiations with its potential investors are "advanced". Avianca has not disclosed how much new capital it seeks, but under Colombian law, no more than 20% of its shares may be owned by foreigners. The Colombian airline filed for reorganization under US Chapter 11 bankruptcy protection in March listing debts of US$240 million. The airline seeks approval to extend its repayment of a US$110 million pension deficit from 10 to 20 years, despite strenuous objections from its pilots, and it has restructured US$55 million in aircraft leases. The other US$65 million is owed to banks, bondholders, suppliers and vendors, who will be asked to capitalize at least part of that sum. The final phase of this reorganization is on a fast track, with Avianca's plan due to be before year-end. However, the New York court supervising the reorganization has granted Avianca another deadline extension, this time for 60 days. The decision follows earlier extensions, for 45, 60 and 32 days. ================= N I C A R A G U A ================= ENITEL: Potential Buyers Must Present Bid By December 12 -------------------------------------------------------- Companies interested in buying the Nicaraguan government's 49% stake in telecoms incumbent Enitel have until December 12 to make their bids, according to Enitel chairman Carlos Ramos. Business News Americas reports that three companies are carrying out due diligence on Enitel. These are Mexican holding company America Movil, Central American banking group Grupo Uno, and the Megatel consortium, which already owns 40% of Enitel. Enitel employees hold the remaining 11% of the Company. =========== P A N A M A =========== * Fitch Affirms Panama's Ratings, Revises Outlook to Stable ----------------------------------------------------------- Fitch Ratings affirmed Wednesday Panama's long-term foreign and local currency ratings at 'BB+' following the completion of a full rating review. The Rating Outlook has been revised to Stable from Negative, as the recent deterioration in credit fundamentals has halted and Fitch expects trends in the tax to GDP and government debt ratios to improve going forward. Since placing Panama's ratings on Negative Outlook in October 2002, the deterioration in creditworthiness trends appears to have bottomed out. Fitch was concerned that swift legislative action on tax and social security reform would not materialize, which could have caused a significant deterioration in credit fundamentals. Since this time, a tax reform, albeit diluted, has been passed, which combined with increased revenues due to the economic recovery and tax amnesties should stem the declining trend in tax revenues. After two years of economic stagnation, an improving external environment is expected to drive a modest economic recovery this year and short-term growth prospects have also strengthened. On the other hand, the government has yet to tackle social security reform, although the announcement of a balanced operational budget for the Social Security System (CSS) in 2004 has bought some time to address this weakness. Panama's credit ratings will continue to be constrained by a high level of public debt over the medium-term. Panama's general government debt ratio reached 63.6% of GDP at year-end 2002, one of the highest ratios among similarly rated sovereigns. Debt dynamics appear to have stabilized, in large part due to the economic recovery. However, Fitch maintains that Panama's high level of debt is unlikely to decline in a significant manner unless the government can generate primary surpluses greater than 2% of GDP, or the country returns to stronger growth rates experienced in the 1990s for an extended period of time. Even though the country has considerable financial assets, net external public debt, at 31% of GDP, is well above the median of 12% for sovereigns rated in the 'BB' categories. However, as a proportion of current external receipts, net external public debt is more in line with similarly rated peers. Given the small size of the economy, vulnerability to external shocks, rigidity in public finances and dollarization, maintaining a modest government burden is prudent. Panama's financing needs for 2003 have already been met and will remain modest, at 5.7% of GDP in 2004. Returning to the higher rates of growth experienced in the 1990s and reducing public sector indebtedness, a key constraint on the sovereign's rating, will be dependent on the new government's success in improving the investment climate by implementing important structural reforms. Fitch expects little to be accomplished on the reform front in the remaining months of the Moscoso administration as the campaign season for the May presidential and legislative elections has already begun. In addition, the government's candidate, Jose Miguel Aleman, is trailing by a large margin in the polls, which could provide incentive to increase government spending in the run-up to the elections. The new government will take office on Sept. 1, 2004. None of the candidates have put forward a clear policy agenda, but nonetheless Fitch does not anticipate any major changes in the overall direction of macroeconomic policy regardless of who wins. It also appears that the presidential candidate now leading the polls, Martin Torrijos, is the candidate that would be most likely to pursue market friendly policies. Dollarization, a stable financial system and the Government's considerable financial and land assets support the sovereign's ratings. Dollarization has resulted in a long history of monetary and price stability unseen in other emerging markets. In addition, it limits the probability of a devaluation-induced increase in public debt ratios or a balance of payment crisis. While the potential for further credit deterioration remains, Fitch believes the economy has reached a cyclical turning point. The improvement in growth prospects, combined with limited success on the reform front has stabilized creditworthiness trends. Fitch would be concerned if fiscal slippage in the run-up to the elections is beyond the typical slippage that occurs in Panama during the first half of next year. In addition, breaching the fiscal deficit target under the newly implemented Fiscal Responsibility Law could also be negative for creditworthiness as it would undermine the sincerity of the authorities' commitment to exercising fiscal discipline in the future. Given the high levels of public debt, Panama is unlikely to graduate to investment grade during Fitch's foreseeable rating horizon. CONTACT: Fitch Ratings Theresa Paiz-Fredel Phone: 212-908-0534 Shelly Shetty Phone: 212-908-0324 Matt Burkhard Media Relations Phone: 212-908-0540 *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter - Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. John D. Resnick, Edem Psamathe P. Alfeche and Oona G. Oyangoren, Editors. Copyright 2003. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *