/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/031217.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Wednesday, December 17, 2003, Vol. 4, Issue 249 Headlines A R G E N T I N A ACINDAR: Majority of Creditors Approve APE ADDAR: Court Declares Company Bankrupt AGEA: Debt Offer Gets Much-Needed Backing From Creditors AMEXA: Enters Bankruptcy on Court Orders BROOKER: Receiver Verifies Claims in Bankruptcy CAMMESA: To Use A Portion of Salex Funds to Settle $350M in Debt CLINICA CRUZ AZUL: Court Approves Reorganization Petition DENT SUR: Receiver Verifies Claims in Bankruptcy EASA: $200M of Bonds Get Default Ratings From Fitch EDEMSA: Argentine Fitch Rates $150M of Bonds `D(arg)' EDENOR: Argentine Fitch Issues Default Ratings on $600M of Bonds EDESUR: $450M of Bonds Get `B(arg)+' from Local Fitch EDITORIAL AGEDIT: Court Orders Bankruptcy FAINGOLD CAVALLERA: Seeks Court's OK on Reorganization Plans FRIGORIFICO INDUSTRIAL: Enters Bankruptcy on Court Orders IMAGEN POSTAL: Receiver Oversees Bankruptcy Proceedings MOLDES 1716: Court Assigns Receiver for Reorganization PRODUCCIONES GRAFICAS: Files "Concurso Preventivo" Motion RECICLADOS ECOLOGICOS: Leaves Bankruptcy, to Reorganize Instead TELECOM ARGENTINA: Nortel Shareholders To Make Cap Contribution B R A Z I L CEMIG: To Be Split Into Three Due To New Power Sector Rules EL PASO CORPORATION: Announces Long-Range Plan TCP: Extends Conversion Period to Its Preferred Shareholders TELEMAR: Board Authorizes Payment of Interest on Capital TELEMAR: Board Authorizes Accrual of IOC * IMF OK's $6.6B Augmentation of Brazil's Stand-By Loan C H I L E AES GENER: Gets Necessary Consents To Proceed With Bond Buyback M E X I C O AXTEL: To Invest Part of Funds Raised From Recent Debt Issue DESC: Begins Administrative Restructuring N I C A R A G U A ENITEL: Govt. To Hold Second Round of Bidding Today P A R A G U A Y * IMF Approves $73M Stand-By Arrangement for Paraguay - - - - - - - - ================= A R G E N T I N A ================= ACINDAR: Majority of Creditors Approve APE ------------------------------------------ Argentine steel company Acindar Industria Argentina de Aceros SA announced Monday it has received approval from two thirds of creditors for its offer to restructure some US$230 million in debt. In a filing to the Buenos Aires stock exchange, the company stated that creditors representing over 66% of its debt approved an out-of-court agreement, or APE. The APE will be submitted for court approval. An APE is an extrajudicial accord on a debt restructuring that needs two-thirds creditor approval to proceed. Once the APE has legal approval, it applies to all creditors. The proposed debt restructuring contemplates the repayment of the debt within 9 years. Acindar will maintain the original amount of the indebtedness and will pay a 4% interest rate in 2004, Libor + 2% in 2005, Libor + 2.5% in 2006 and Libor + 3% from 2007 to 2012. In the report issued Monday, the Company said that under the terms of the agreement it will make an advanced payment if its cash position permits it to do so. Creditors will have the chance to choose between four alternatives for the settlement of their credits: - Dollar-denominated notes ruled by foreign legislation; - Participation in a restructured syndicated loan contract denominated in US dollars, also ruled by foreign laws; - Restructured non-syndicated loan contract, denominated in Argentine pesos and governed by Argentine legislation; - Restructured non-syndicated loan contract, denominated in US dollars and governed by foreign laws. ADDAR: Court Declares Company Bankrupt -------------------------------------- Buenos Aires Court No. 7 declared local company Addar S.A. "Quiebra", placing the Company under bankruptcy protection. Clerk No. 13 assists the court on the case, which will close with the liquidation of the Company's assets to reimburse creditors. The court-appointed receiver, Mr. Manuel Cibeira, will validate claims and prepare the individual and general reports. Infobae, however, did not indicate whether the court has set the schedule for the bankruptcy process. CONTACT: Addar S.A. Blanco Enaclada 2377 Buenos Aires Manuel Cibeira Ave Cordoba 1247 Buenos Aires AGEA: Debt Offer Gets Much-Needed Backing From Creditors -------------------------------------------------------- Argentine media group Arte Grafico Editorial Argentino SA (AGEA) revealed in a filing to the Buenos Aires stock exchange that it received strong backing from creditors for its offer to restructure some US$400 million in debt. Citing Friday's filing, Dow Jones reports that the Company obtained the backing of creditors holding 87.3% of its financial debt and 74% of its US$250 million bond issue, which is currently in default. At the same time, the group's subsidiary Artes Graficas Rioplateneses SA received the backing of creditors representing 74% of its debts of some US$50 million, adds Dow Jones. The group needs creditor participation representing just 66% of each type of debt in order to get the formal approval of an Argentine judge. The subscription period for the debt offer runs from Dec. 3 to Dec. 16. Creditors have three options to choose from: One option is a par bond, whose maturity would be extended for 10 years. Those who opted for this before Dec. 11 will get an additional 2% on the nominal value of the bond. A second option is a debt repurchase. The group demanded a 68% nominal haircut on those who signed up for this by Dec. 11 and a 72% haircut on those who did so thereafter. Option three is to give creditors US$520 in new seven-year bonds for every US$1,000 offered for restructuring. In addition, creditors will get US$120 in cash. If the creditor agreed to participate after Dec. 11, they will receive US$480 in bonds and US$80 in cash. The Company says it will not settle unpaid interest. AGEA's creditors include the local unit of Fleet Boston Financial Corp SA (FBF), the Argentine unit of Citigroup Inc. (C), BBVA Banco Frances SA (BFR.BA), local bank Banco de Galicia y Buenos Aires SA (GAL.BA) and the Export-Import Bank of the United States of America. AGEA holds leading Argentine daily Clarin and cable channel Multicanal SA. AMEXA: Enters Bankruptcy on Court Orders ---------------------------------------- Amexa S.A., based in Buenos Aires, entered bankruptcy on orders from the city's Court No. 23. A report by local news portal Infobae relates that the city's Clerk No. 45 assists the court on the case. The court assigned Mr. Salomon S. Wilhelm as the Company's receiver with instructions to verify creditors' claims until December 30 this year. The receiver is also required to prepare the individual reports, due on March 11 next year; and the general report due on April 27. The Company's assets will then be liquidated to reimburse creditors. Payments will be based on the results of the verification process. CONTACT: Salomon S. Wilhelm Lavalle 1290 Buenos Aires BROOKER: Receiver Verifies Claims in Bankruptcy ----------------------------------------------- Ms. Susana Manrique, receiver for Brooker S.A., is verifying creditors' claims for the Company's bankruptcy process. Argentine news source Infobae reported that the verification period ends on February 26 next year. Buenos Aires Court No. 5 issued the bankruptcy order earlier this year, and assigned the receiver. Clerk No. 9 assists the court on the case. The court ordered the receiver to hand in the individual reports on April 14, 2004. These are to be prepared after the credit verification process is completed. After these reports are processed at court, the receiver will prepare a general report consolidating the information in the individual reports. The court requires the receiver to submit the general report on May 27 next year. CONTACT: Susana Manrique Lavalle 1675 Buenos Aires CAMMESA: To Use A Portion of Salex Funds to Settle $350M in Debt ---------------------------------------------------------------- Compania Administradora del Mercado Mayorista El‚ctrico (Cammesa) will use part of the Salex funds -- to be used for financing electrical infrastructure between the places of Comahue and Cuyo -- to pay US$350 million in debt owed to various hydroelectrical entities, among them the Entidad Binacional Yacyreta (EBY). Cammesa is in charge of administrating the Major Electrical Market. CLINICA CRUZ AZUL: Court Approves Reorganization Petition --------------------------------------------------------- Clinica Cruz Azul S.A., based in Salta, will undergo reorganization after Court No. 2 of the province's Civil and Commercial Tribunal approved its motion for "Concurso Preventivo". Infobae related that the receiver assigned to the case is Mr. Gustavo Daniel Segura. The source did not mention the deadline for the claims validation period. The individual reports on the results of the verification process are due for filing on December 26 this year. The receiver is also required to prepare a general report after the individual reports are processed at court. Infobae did not indicate whether the court has set the filing deadline for this report. CONTACT: Clinica Cruz Azul S.A. Alberdi 359 Salta Gustavo Daniel Segura 20 de Febrero 1245 Salta DENT SUR: Receiver Verifies Claims in Bankruptcy ------------------------------------------------ Creditors of Buenos Aires' Dent Sur S.A. must have their claims authenticated by the Company's receiver before April 6 next year. The receiver, Ms. Sara Maria Rey de Lavolpe, will prepare the individual reports afterwards. Argentine news source Infobae indicates that the city's Court No. 8 issued the bankruptcy order. Clerk No. 15 works with the court on the case. Infobae, however, did not mention whether the court has set the schedule for the bankruptcy process. CONTACT: Dent Sur S.A. Hidalgo 857 Buenos Aires Sara Maria Rey de Lavolpe Cerrito 1136 Buenos Aires EASA: $200M of Bonds Get Default Ratings From Fitch --------------------------------------------------- A total of US$200 million worth of Electricidad Argentina S.A. corporate bonds were rated `D(arg)' by Fitch Argentina Calificadora de Riesgo S.A. on Thursday. The default ratings applies to bonds called "obligaciones negociables", relates the country's securities regulator, the Comision Nacional de Valores. The bonds were classified under "Simple issue". Fitch said that the given rating is assigned to financial commitments that are currently in default. The rating assigned as based on the Company's finances as of the end of September this year. EDEMSA: Argentine Fitch Rates $150M of Bonds `D(arg)' ----------------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. rated bonds issued by Empresa Distribuidora de Electricidad de Mendoza S.A. `D(arg)' on Thursday. The rating was based on the Company's finances as of the end of September this year. The affected bonds were described as "Programa de emisi¢n de Obligaciones Negociables simples". Argentina's securities regulator, the Comision Nacional de Valores relates that the bonds, worth a total of US$150M, will mature on April 13, 2005. Fitch said that the given rating is assigned to bonds that are currently in default. EDENOR: Argentine Fitch Issues Default Ratings on $600M of Bonds ---------------------------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. assigned Thursday default ratings to corporate bonds issued by Edenor S.A., according to the Commision Nacional de Valores, Argentina's securities regulator. The `D(arg)' rating, based on the Company's finances as of the end of September this year, is assigned to financial commitments that are currently in default, the ratings agency said. The affected bonds are described as "obligaciones negociables", with undisclosed maturity date. The bonds, worth a total of US$600 million, are classified under "Program", the CNV adds. EDESUR: $450M of Bonds Get `B(arg)+' from Local Fitch ----------------------------------------------------- A total of US$450 million worth of corporate bonds issued by Argentine utility Edesur S.A. received `B(arg)+' ratings from Fitch Argentina Calificadora de Riesgo S.A. on Thursday. The Comision Nacional de Valores indicated that the rating affects bonds called "Programa de Obligaciones Negociables". The bonds, with undisclosed maturity date, are classified under "Program". Fitch said that the rating denotes a significantly weak credit risk relative to other issuers in Argentina. Financial commitments are currently being met but a limited margin of safety remains and capacity for continued timely payments is contingent upon a sustained, favorable business and economic environment. EDITORIAL AGEDIT: Court Orders Bankruptcy ----------------------------------------- Buenos Aires Court No. 2 declared local company Editorial Agedit S.A. bankrupt. Working with Clerk No. 4, the court assigned Mr. Raul Horacio Trejo as receiver for the bankruptcy proceedings. Infobae reported creditors are given until February 13, 2004, to have their claims authenticated by the receiver. Verifications are done to determine the nature and amount of the Company's debts, as well as to set a measure for the distribution of payments after the Company's assets are liquidated. The individual reports are due at the court on April 9, followed by the general report on May 21. The individual reports contain the results of the verification process, while the general report is a summary of the individual reports. CONTACT: Raul Horacio Trejo Montevideo 205 Buenos Aires FAINGOLD CAVALLERA: Seeks Court's OK on Reorganization Plans ------------------------------------------------------------ Argentina's Faingold Cavallera S.R.L. sought court permission to undergo reorganization. The Company has filed a motion for "Concurso Preventivo" at Buenos Aires Court No. 21, related Infobae. Clerk No. 42 works with the court on the case. CONTACT: Faingold Cavallera S.R.L. Avenida Cordoba 836 Buenos Aires FRIGORIFICO INDUSTRIAL: Enters Bankruptcy on Court Orders --------------------------------------------------------- Court No. 9 of the Civil and Commercial Tribunal of Mar del Plata in Argentina ordered the bankruptcy of local company Frigorifico Industrial Marplatense S.A., reported Infobae. Ms. Angelica Beatriz Ercoreca will oversee the bankruptcy process as the court-appointed receiver. The credit verification period will end on February 12 next year. Creditors must have their claims authenticated by the receiver before the said date in order to qualify for payments to be made after the Company's assets are liquidated at the end of the process. The receiver's duties cover the preparation of the individual and general reports on the case. However, the source did not mention whether the court has set the reports' deadlines for submission. CONTACT: Frigorifico Industrial Marplatense S.A. 25 de Mayo 2837 Mar del Plata Angelica Beatiz Ercoreca Corrientes 1847 Mar del Plata IMAGEN POSTAL: Receiver Oversees Bankruptcy Proceedings ------------------------------------------------------- Silvia Beatriz Cusel will oversee the bankruptcy process of Argentine company Imagen Postal S.R.L., according to local news portal Infobae. She is verifying creditors' claims until February 13 next year and will prepare the requisite reports. Buenos Aires Court No. 14, which handles the Company's case, requires the receiver to file the individual reports on March 24, 2004. These reports contain the results of the verification process. The general report, due at court on May 10, is prepared after the individual reports are processed at court. The Company's assets will be liquidated at the end of the process. Proceeds will be used to repay creditors based on the results of the verification process. CONTACT: Silvia Beatriz Cusel Manuel Trelles 2350 Buenos Aires MOLDES 1716: Court Assigns Receiver for Reorganization ------------------------------------------------------ Buenos Aires Court No. 6 assigned local accountant Juan Vilanova as receiver for the reorganization of Moldes 1716 S.R.L., related Argentine news portal Infobae. Clerk No. 11 aids the court on the case, the source adds. Creditors must file their claims before April 6, 2004. The receiver will examine and authenticate claims to determine the nature and amount of the Company's debts. The receiver is also required to prepare the individual and general reports on the case, but the source did not mention whether the court has set the filing deadlines for these reports. CONTACT: Moldes 1716 S.R.L. Moldes 1716 Buenos Aires Juan Vilanova Hipolito Yrigoyen 1349 Buenos Aires PRODUCCIONES GRAFICAS: Files "Concurso Preventivo" Motion --------------------------------------------------------- Producciones Graficas Condor S.A., based in Buenos Aires, filed its motion for "Concurso Preventivo" at the city's Court No. 24, according to Argentine news portal Infobae. The Company will undergo reorganization if the court approves the petition. Clerk No. 48 assists the court on the case, Infobae adds. However, it did not mention whether the court is likely to approve the motion or not. CONTACT: Producciones Graficas Condor S.A. Condor 2752 Buenos Aires RECICLADOS ECOLOGICOS: Leaves Bankruptcy, to Reorganize Instead --------------------------------------------------------------- Reciclados Ecologicos S.R.L., which was undergoing the bankruptcy process, will now reorganize, reported Argentine news source Infobae. Buenos Aires Court No. 5 handles the Company's case with assistance from Clerk No. 10. The credit verification process will close on February 24 next year. Creditors must present their proofs of claims to the receiver, Mr. Norberto Jose Perrone, for verification before the said date. The individual reports on the results of the verifications are due at the court on April 7, 2004, followed by the general report on May 21. The receiver will prepare the general report after the individual reports are processed at court. The informative assembly will be held on November 17 next year, as ordered by the court. This signals the conclusion of the reorganization process. CONTACT: Reciclados Ecologicos S.R.L. Parana 26 Buenos Aires Norberto Jose Perrone Constitucion 2894 Buenos Aires TELECOM ARGENTINA: Nortel Shareholders To Make Cap Contribution --------------------------------------------------------------- Pedro Insussarry, Market Relations officer at Telecom Argentina STET-France Telecom S.A., sent a letter to the Buenos Aires Stock Exchange to provide the bourse information about the article 3ø of Chapter XXI of the Rules. Below are the contents of the letter dated December 12, 2003: I am writing you as Responsible for Market Relations of Telecom Argentina STET-France Telecom S.A. ("the Company") to inform you that yesterday "the Company" was notified by the Secretariat of Communications that it has issued Resolution Nø 111 dated December 10, 2003 pursuant to which it has authorized: 1. the shareholders of the Company's holding company Nortel Inversora S.A. ("Nortel") to make a capital contribution with all of their ordinary Class A and B shares of Nortel to Sofora Telecomunicaciones S.A. ("Sofora"); 2. France Cables et Radio y Atlas Belgium Services S.A. to transfer its ownership interest in 48% of the total share capital of Sofora to W de Argentina - Inversiones S.L.; 3. Telecom Italia Group to be the exclusive operator of Telecom Argentina STET-France Telecom S.A, and 4. Telecom Argentina STET-France Telecom S.A to change its name to Telecom Argentina S.A. The authorization of the Commission for the Defense of Competition (Comision Nacional de Defensa de la Competencia) is still pending. CONTACT: TELECOM ARGENTINA STET - FRANCE TELECOM SA(TELECOM) Alicia Moreau de Justo 50, 10th Floor Capital Federal (1107) Repoblica Argentina Phone: +54 11 4968 4000 Home Page: http://www.telecom.com.ar CONTACTS: Pedro Insussarry, Investor Relations Manager Alberto J. Ricciardi, Chief Financial Officer Elvira Lazzati, Finance Director Phone: (5411) 4968-3626/3627 Fax: (5411) 4313-5842/3109 Email: inversores@intersrv.telecom.com.ar =========== B R A Z I L =========== CEMIG: To Be Split Into Three Due To New Power Sector Rules ----------------------------------------------------------- In order to comply with the new power sector rules in Brazil, Minas Gerais state-controlled power company Cemig (NYSE: CIG) will have to be split into three different companies. According to local newspaper Valor Economico, Cemig will be split into a generation, a transmission and a distribution company. The Company is looking to speed up the split to be able to sell energy from new generation projects it is completing, said CFO Flavio Decat. However, Cemig will negotiate with the government over compensation for the expected BRL20-million (US$6.8 million) increase in tax expenses as a result of the split. CONTACT: COMPANHIA ENERGETICA DE MINAS GERAIS Luiz Fernando Rolla, Investor Relations Phone: + 011-5531-299-3930 Fax: + 011-5531-299-3933 E-mail: lrolla@cemig.com.br EL PASO CORPORATION: Announces Long-Range Plan ---------------------------------------------- El Paso Corporation (NYSE: EP) announced Monday a long-range plan that defines the company's future businesses, targets significant debt reduction, establishes specific financial goals, and closely aligns compensation with shareholder interests. "The plan is the roadmap for the future of El Paso," said Doug Foshee, president and chief executive officer of El Paso Corporation. "It provides the details of how El Paso will reduce debt to $15 billion by the end of 2005, identifies the long-term businesses of the company, details a corporate reorganization that will result in significant cost savings, and establishes a new strategic direction for El Paso's exploration and production business. The plan is clear, achievable, and is the first step to making El Paso a strong natural gas provider that generates long- term value for our shareholders. It establishes specific performance objectives and clear milestones so that our shareholders can measure our progress." PLAN HIGHLIGHTS * El Paso's core businesses will be natural gas pipelines in the United States and Mexico, oil and natural gas production operations in the United States and Brazil, and a marketing and physical trading group focused primarily on El Paso's natural gas and oil production. * The company will streamline its operations into a new corporate structure organized around regulated and unregulated businesses. * The regulated businesses will consist of the company's three pipeline divisions-Southern Pipelines, Western Pipelines, and Eastern Pipelines (which includes joint ventures and operations in Mexico). * The unregulated businesses will consist of production and processing; the company's Brazilian integrated business; Asian power operations; domestic, European, and Central American power operations; marketing and trading; the company's ownership in GulfTerra Energy Partners, L.P. (NYSE: GTM); El Paso Global Networks, the company's telecom business; and discontinued operations. * GulfTerra and Enterprise Products Partners, L.P. (NYSE: EPD) announced Monday their plan to merge and become the industry's leading midstream company. As a part of this transaction, El Paso will sell a 50-percent interest in the general partner of GulfTerra, approximately 14 million GulfTerra common units, and certain processing assets, and will realize approximately $1 billion of cash that will accelerate El Paso's debt restructuring program. The company will retain a significant ownership in a new midstream company with unequaled opportunities. Investors should read the press release on this transaction for more details. * The long-range plan is designed to reduce the company's total debt (net of cash) to approximately $15 billion at year-end 2005 from approximately $22 billion at September 30, 2003. This will be achieved primarily through $3.3 billion to $3.9 billion of additional asset sales, the sale of restructured power contracts, the recovery of $500 million to $600 million in working capital, the conversion of the company's 9.00% equity security units ($575 million), free cash flow generation, and actions already taken in the fourth quarter of 2003. * The company expects that the majority of its plan will be complete by year-end 2005. El Paso's financial targets for 2006 include: -- $500 million to $725 million of net income, or earnings per share of $0.75 to $1.10; -- Cash flow from operations of $1.9 billion to $2.2 billion; -- Free cash flow after capital expenditures and dividends of $200 million to $400 million; -- Annual growth and maintenance capital of $1.6 billion to $1.7 billion; and -- $150 million in cost reductions in addition to the $445 million already identified. * El Paso expects to maintain significant liquidity through 2005, based upon operating cash flow generation, $2.1 billion of available cash and lines of credit on November 30, 2003 and the completion of planned asset sales. * The company identified potential sources of earnings volatility over the next several years. These include the impact of natural gas prices, discount rates utilized in its trading and restructured power contract portfolios, movement of the Euro relative to the dollar, the impact of commodity prices on its trading portfolio and possible changes in natural gas and liquids reserve estimates, which could cause ceiling test charges. In addition, the company identified areas where its restructuring activities may have an impact on earnings. These include severance and restructuring costs, asset impairments, and gains and losses on asset sales. BUSINESS UNIT OBJECTIVES Pipelines El Paso's Pipeline Group comprises the largest and most geographically balanced set of natural gas pipelines in North America and is poised to benefit from the regional supply and demand growth that is anticipated over the next several years. El Paso expects this segment to generate stable earnings and cash flow with average earnings growth of 2 to 5 percent annually. The Pipeline Group's annual capital budget will be approximately $800 million to $900 million over the next five years. Key business drivers will include major pipeline expansions, cost control, and continued success in capacity recontracting efforts. Exploration & Production El Paso will change the focus of its exploration and production business from production growth to managing for returns on invested capital. The company will focus its future operations on several growth areas: the deep shelf of the Gulf of Mexico, coal bed methane development, onshore Texas (primarily Vicksburg and Wilcox trends), and central operations (north Louisiana and east Texas). Capital expenditures will be approximately $850 million per year; however the company expects to achieve incremental benefits from third-party capital as it brings in partners on a promoted basis. The combined capital is expected to generate a production rate of approximately 1 billion cubic feet equivalent per day in 2006. The company plans to divest its international holdings in Canada (other than Nova Scotia), Hungary, and Indonesia. The following table shows natural gas production volumes that El Paso Production has hedged for 2004 through 2006: 2004 2005 2006 Volume (TBtu) 75 130 84 Price ($/MMBtu) $2.55 $3.22 $3.28 Expected Production (TBtu) 288 to 311 304 to 326 333 to 356 Marketing, Trading, and Global Power El Paso plans to liquidate the majority of its existing trading positions by the end of 2004 with the goal of maximizing return of cash. The long-range plan includes a marketing and physical trading group that will continue to manage the marketing of El Paso Production Company's natural gas production and certain of its existing contractual positions as part of the company's going-forward operations. El Paso expects to sell the majority of its domestic power business by mid 2004. Over the next three to five years, the company intends to operate its international power assets to maximize cash flow and value. Compensation and Governance El Paso's new performance management system will be designed to link compensation with metrics tied directly to shareholder value created by the business units, as well as total shareholder return relative to its peer companies. With 10 of 12 independent directors on its board, separate chairman and CEO positions, no staggered board and no poison pill, El Paso continues to demonstrate its commitment to strong corporate governance. In addition, the company has added five new directors in 2003, all of whom have extensive backgrounds in the production business. "We are creating a 'fit-for-purpose' organization designed to provide natural gas in a safe, efficient, dependable manner," said Foshee. "We have a great group of employees and directors, and I'm confident we can deliver on the commitments in the plan." TCP: Extends Conversion Period to Its Preferred Shareholders ------------------------------------------------------------ Telesp Celular Participacoes S.A. -- "TCP" (NYSE:TCP) (BOVESPA: TSPP3 (Common), TSPP4 (Preferred)), the largest company of the group of companies that comprise the joint venture wholly owned by Portugal Telecom and Telefonica Moviles, which operates under the brand VIVO, announced on Dec. 11, 2003, that it extended until 2:00 p.m., New York time, on Jan. 6, 2004 its offer to convert preferred shares, no par value, for common shares, no par value, of TCP at a ratio of one-to-one, up to a limit of 78,752,717,772 in the aggregate for all shareholders. Holders of American Depositary Shares ("ADSs") of TCP may participate in the offer to convert if they first withdraw the preferred shares underlying those ADSs from TCP's ADS program and pay the applicable fees of the depositary and any taxes and governmental charges. Questions about withdrawing preferred shares underlying ADSs in order to participate in the offer may be directed to: The Bank of New York 101 Barclay Street New York, NY 10286 Telephone: 1-888-BNY-ADRS CONTACT: Telesp Celular Participacoes S.A. Fernando Abella Garcia Av. Roque Petroni Jr. 1464, Sao Paulo, SP Brazil 04707-000 Telephone: 55-11-5105-1182 TELEMAR: Board Authorizes Payment of Interest on Capital -------------------------------------------------------- The Board of Directors of Tele Norte Leste authorized the payment of BRL458.1 million as Interest on Capital ("IOC"), to be distributed along with the mandatory dividends to be declared for 2003, to be credited to the positions held on December 30, 2003. Such payments shall be proposed and determined until April 30, 2004, according to the terms described below: 1. Amounts Payable: To holders of common shares (TNLP3), preferred shares (TNLP4) and Depositary Receipts (TNE) on December 30, 2003, the amount of BRL1.20 per thousand shares (BRL1.20 per ADR) will be paid as IOC, which represents BRL1.02 net of withholding taxes; 2. Remuneration: the principal amount of IOC determined above shall bear interest based on the Taxa Referencial (TR) for the period from January 01, 2004 until the initial payment date. 3. Payment: The payment dates will be determined by the Company and proposed for approval until April 30, 2004; 4. Taxes: The principal amount of the IOC (item 1) and the accrued interest (item 2) will be subject to witholding tax, as determined by Brazilian law. Tax-exempt shareholders or legal representatives should prove such condition by presenting the appropriate documents at Banco do Brasil branches until December 26, 2003; 5. "Ex-Date": The shares will start trading "ex-IOC" in Brazil as of January 02, 2004. TELEMAR: Board Authorizes Accrual of IOC ---------------------------------------- Telemar Norte Leste S/A (Bovespa: TMAR3, TMAR 5 and TMAR6) announce that the Company's Board of Directors authorized the accrual of Interest on Capital (IOC) in the amount of BRL336.8 million to be credited to Company's shareholders based upon their holdings as of December 30, 2003. The Company will propose the following payment details for approval until April 30, 2004: 1. Amounts to be credited: Holders on December 30, 2003 of Common Shares (TMAR3) will be allocated IOC in the gross amount, of BRL1.329 per thousand shares, which amounts to BRL1.130 net of withholding tax. Holders of Class "A" Preferred Shares (TMAR5) will be allocated IOC in the gross amount of BRL1.463 per thousand shares, which amounts to BRL1.244 net of withholding tax (per thousand shares). Holders of Class "B" Preferred Shares (TMAR6) will be allocated IOC in the gross amount of BRL0.860 per thousand shares, which amounts to BRL0.731 net of withholding tax (per thousand shares), pursuant to item "4" below. Any additional amounts paid as IOC or dividends will be communicated and credited in due time, according to the rights attached to each type and class of shares in the Company By-laws; 2. Remuneration of allocated IOC: The amounts above will bear interest from January 1, 2004 through the initial date of payment, at the TR rate ("Taxa Referencial); 3. Payment: Payment dates will be those established by the Company, as reviewed for approval until April 30, 2004; 4. Taxation: The amounts in "1" and "2" above are subject to IRRF (withholding tax). Tax-exempt shareholders must file due documentation at Banco do Brasil until December 26, 2003; 5. Trading Date "ex-IOC": Shares will be traded "ex-Interest on Capital" as of January 2, 2004, based on their equity position as of December 30, 2003. 6. IOC previously declared: the amount now declared complement the amounts declared in previous notices, in accordance with the amount of up to BRL870 million approved by the Board of Directors on September 25, 2003. Holders of Company's shares as of September 30, 2003, October 28, 2003 and November 28, 2003, were allocated IOC in the total amounts of BRL150.4 million, BRL300.9 million, and BRL80 million, respectively, as announced in the company's Notices to Shareholders of September 25, 2003, October 23, 2003 and November 26, 2003. * IMF OK's $6.6B Augmentation of Brazil's Stand-By Loan ------------------------------------------------------- The Executive Board of the International Monetary Fund (IMF) has approved an extension for 15 months and an augmentation by SDR 4.5 billion (about US$6.6 billion) of Brazil's stand-by credit, originally approved on September 6, 2002 (see Press Release No. 02/40). The Board also approved the authorities' request for a shift of repurchases expectations in the credit tranches of an amount SDR 4 billion (about US$5.8 billion) into an obligations basis in each 2005 and 2006. The Board's decision was taken simultaneously with the completion of the fifth and last scheduled review of the original program, which made SDR 5.6 billion (about US$8.2 billion) immediately available to Brazil. However, in light of improvements in Brazil's balance of payments, the authorities have indicated that they do not intend to make further drawings. Following the Executive Board's discussion of Brazil on December 12, 2003, Horst K”hler, Managing Director and Chairman of the Board, stated: "Brazil's performance under the Stand-By Arrangement approved on September 6, 2002 remains exemplary. All performance criteria and structural benchmarks associated with the fifth review were met. "Supported by the commitment of significant Fund resources, Brazil has come a long way since last year's financial market volatility. The response of the new administration to financial pressures has been both ambitious and courageous, balancing fiscal and monetary policy discipline with the resolute pursuit of key social goals to relieve poverty and strengthen the social safety net. To allay concerns over debt sustainability, the government increased the primary surplus target. The central bank responded proactively to guide inflation back to the government's targets. Moreover, early in its tenure, the administration took the difficult political step of seeking approval of key structural measures-including pension and tax reform-that will deepen the foundations for sustainable and equitable growth of output and employment. "The successful implementation of these policies has resulted in a rapid restoration of confidence, which is being clearly reflected in the performance of financial market variables. Improved market sentiment, in part reflected in those variables, is driving an emerging recovery of economic activity, and demand growth should continue to accelerate in the coming year. Ensuring that all members of Brazilian society participate in the country's vast potential will be the government's key challenge for the coming years. "To support the government's efforts to put Brazil firmly on a path to sustained growth with improved equity, the Fund's Executive Board has approved an extension and augmentation of the Stand-By Arrangement. The Fund regards this step as an important component of the government's strategy for a smooth exit from Fund financial support. The Fund will also assist Brazil in smoothing its schedule of external commitments by shifting some Fund repurchases from an expectations to an obligations basis in 2005 and 2006. The authorities' stated intention to treat the arrangement as precautionary, given the absence of a balance of payments need, is welcome. "Prudent monetary and fiscal policies will remain at the core of the Fund arrangement. At the same time, the program also provides support for essential spending to help achieve the government's social objectives. The maintenance of a strong primary fiscal position, along with continued further improvements in Brazil's debt structure, will be key to ensuring medium-term sustainability and promoting favorable investment decisions. The program also features important structural measures that will both support and sustain dynamic growth in Brazil in which the private sector will continue to play the major role. These include steps to reduce banking spreads, increase financial intermediation, and improve the business environment, while also undertaking the preparatory work towards increasing the flexibility of the budget. These policies will help nurture the recovery now underway in Brazil and sustain investment and economic growth into the medium term," Mr. K”hler stated. ANNEX Recent Economic Developments Brazil's monetary and fiscal policies have remained disciplined, actual and expected inflation have declined steadily, and market forecasts put end-2004 inflation solidly within the official target range. In addition, the external adjustment remains impressive, with record trade surpluses and the current account moving into surplus. Both the public and private sectors have regained access to international capital markets, and country risk has dropped to levels not seen since 1998. The real has appreciated by 30 percent in nominal terms from its weakest point during the crisis, and, in real terms, is now close to its January 2002 level. Important progress has also been made in moving forward the government's structural reform agenda, and this has been a key driver of market sentiment. This strong performance has laid the foundation for a resumption of growth. Following disappointing performance earlier this year, there are now clear signs that domestic demand has begun to recover. Due to the slow start this year, output is unlikely to rise by more than 0.6 percent, but growth is forecasted at 3.5 percent in 2004, with consumption and investment both rising solidly. Program summary Despite the recent successes, Brazil remains vulnerable to negative shifts in market sentiment. The authorities have therefore committed to a policy program for 2004 that will continue making progress in addressing core vulnerabilities, such as the large external borrowing requirement, and relatively low net reserves, currently at about US$17 billion. The extension for 15 months of the current Stand-By credit, and the shifting of some repayments to the Fund, are also part of the authorities' strategy to reduce vulnerabilities and to exit from Fund assistance. The program calls for a continued healthy public sector primary surplus in 2004. The budget for 2004 is consistent with a primary surplus target of 4.25 percent of GDP. The authorities plan to continue to build on recent progress in improving the composition of the domestic debt, further reducing another important vulnerability. Details of their public debt management plan for 2004 are still being finalized, and will be published in January. The authorities' overall goals will be identical to those in 2003: to further reduce the share of debt that is indexed to the exchange rate or is at floating rates, while increasing the share of fixed rate and inflation-linked debt. The central bank's proactive conduct of monetary policy has ensured the credibility of the inflation targeting regime over the past year. As a result, the central bank has been able to ease policy steadily over the last several months as inflation expectations have continued converging to the government's targets. The authorities' structural reform agenda for 2004 is another element in the effort to address vulnerabilities and stimulate growth. Key priorities include increasing financial intermediation, reducing bank lending spreads, and improving the business environment. In addition, the authorities will work to implement the tax and pension reforms currently before congress. Significant reforms are also under way to reduce bureaucratic barriers to international trade. Enhancements to the regulatory framework are an important element of the authorities' strategy to improve the environment for private investment. They include a new regulatory model for the energy sector and the removal of tax and regulatory inefficiencies, including the conversion of the COFINS contribution to a value-added-type basis, to reduce the distortions arising from its current cascading format. Following the recent experience with streamlining export regulations, the government will undertake a study to identify measures to simplify, integrate, and reduce registration requirements for businesses. The authorities are also continuing to introduce reforms to improve the delivery of social services, which they see as central to their policy platform. In addition to the creation of the Fome Zero (Zero Hunger) program, the government has consolidated existing social assistance under the umbrella Bolsa Familia (Family Stipend) program. The authorities believe that improvements in infrastructure spending in this area have the potential for large social returns. Brazil is an original member of the IMF; its quota is SDR 3.04 billion (about US$4.4 billion). Brazil's outstanding use of IMF credit currently totals SDR 23.19 billion (about US$33.86 billion). CONTACT: INTERNATIONAL MONETARY FUND 700 19th Street, NW Washington, D.C. 20431 USA IMF EXTERNAL RELATIONS DEPARTMENT Public Affairs Phone: 202-623-7300 Fax: 202-623-6278 Media Relations Phone: 202-623-7100 Fax: 202-623-6772 ========= C H I L E ========= AES GENER: Gets Necessary Consents To Proceed With Bond Buyback --------------------------------------------------------------- AES Gener, a Chilean unit of U.S. based energy group AES Corp., received the necessary consents from holders of Yankee notes and US senior convertible bonds by the December 5 deadline to make certain amendments to the notes, reports Business News Americas. In a statement Friday, the Company revealed creditors holding US$140.2 million (70.1%) of the Yankee bonds and US$49.8 million (67.34%) of the convertible bonds placed in the USA gave their approval. AES Gener needs the bondholders' consent so it can proceed with its tender offers to buy back the notes. Deutsche Bank Securities is managing the tender offers. However, AES Gener has postponed its refinancing plan until early 2004 because bondholders of US$403 million in Chilean convertible bonds due 2005, who also met on December 5, requested more information. AES Gener plans to finance its tender offers by issuing US$400 million in new bonds on international markets, increasing capital by up to US$80 million, and receiving the repayment of a US$290- million loan from parent AES. CONTACT: AES GENER S.A. Mariano Sanchez Fontecilla 310 Piso 3 Santiago de Chile Phone: (56-2) 6868900 Fax: (56-2) 6868991 Home Page: www.gener.com Contact: Robert Morgan, Chief Executive Laurence Golborne Riveros, Chief Financial Officer =========== M E X I C O =========== AXTEL: To Invest Part of Funds Raised From Recent Debt Issue ------------------------------------------------------------ Axtel S.A. de C.V., a privately held Mexican competitive local exchange carrier, plans to invest US$68 million of the US$175 million raised in last weeks' debt placement, Business News Americas reports, citing a company source. While it didn't reveal where the money will be invested in, the source said that the balance will be used to pay down the Company's debts including a loan of US$75 million from Mexican bank Banorte, US$24 million for equipment vendor Nortel Networks (NYSE: NT), and US$8 million to Bell Canada International. Once those payments are made, Axtel's net debt will stabilize at about US$100 million, the source said. Last week, Axtel sold US$175 million of 10-year senior notes in the 144a private placement market. The size of the deal was increased from an originally planned US$150 million. Credit Suisse First Boston was the sole lead manager for the sale. Axtel provides local, long distance and data services in six cities and has about 332,500 lines in service. Mexican investors own 58% of the Company, with the other 42% divided between international investors that include AIG-GE Capital Latin American Infrastructure Fund and the Blackstone Group. DESC: Begins Administrative Restructuring ----------------------------------------- DESC, S.A. de C.V. (NYSE: DES; BMV: DESC) announced Monday that Luis Tellez will resign as Executive Vice President of Desc effective December 31, 2003. Tellez has accepted a position at an investment fund beginning January of 2004. Fernando Senderos, Chief Executive Officer and Chairman of the Board of Desc, appreciates his contributions and acknowledges his performance within the Company's Executive Committee. Luis Tellez will remain a member of the Board of Directors. Fernando Senderos M. has decided that due to this resignation, and as part of the Company's cost-reduction program, a replacement for the position of Executive Vice President will not be named. Mr. Senderos will perform the duties of the Executive Vice President and will propose eliminating the Executive Committee at the next Shareholders' Meeting. In the next few days, the Company will announce a new administrative and operating structure that will allow Desc to be a more efficient, competitive and flexible company according to the current business environment. Mr. Senderos stated, "These are challenging years and we are certain that with these measures we will be able to successfully face and achieve the Company's main objectives, which are to have a profitable company and to give value to our shareholders. With respect to Luis' decision, I wish him great success in his new position, and I am certain that we will continue to work together within Desc's Board in creating value for its shareholders." Desc, S.A. de C.V. is one of Mexico's largest industrial groups with sales of approximately US$ 2 billion during 2002, and over 16,000 employees. Through its subsidiaries, the Company is a leading operator in the Autoparts, Chemical, Food and Real Estate Sectors. CONTACTS: Arturo D'Acosta Ruiz Alejandro de la Barreda Phone: (5255) 5261-8037 alejandro.delabarreda@desc.com.mx Melanie Carpenter Tel: 212-406-3693 mcarpenter@i-advize.com ================= N I C A R A G U A ================= ENITEL: Govt. To Hold Second Round of Bidding Today --------------------------------------------------- The Dec. 12 deadline for offers to buy the Nicaraguan government's 49% stake in fixed line incumbent Enitel failed to see a winning bid, reports Business News Americas. In this light, the government's Enitel holding unit Uretel will hold a second round of bidding today, Dec. 17. This time around, the government revealed a base price of US$49.5 million for the 49% stake. Uretel head Carlos Fernandez revealed that Mexico's America Movil (NYSE: AMX) and Swedish-Honduran group Megatel had placed initial bids on Dec. 12, but as part of the process, had not been informed of the minimum price and neither bid made the mark, prompting them to request for another round of bidding. Megatel already owns 40% of Enitel and is also present in Honduras, where it recently launched a mobile operation. Enitel employees hold the remaining 11% of the company. =============== P A R A G U A Y =============== * IMF Approves $73M Stand-By Arrangement for Paraguay ----------------------------------------------------- The Executive Board of the International Monetary Fund (IMF) approved Monday a 15-month SDR 50 million (about US$73 million) Stand-By Arrangement for Paraguay to support the country's economic program. The approval opens the way for the immediate release of SDR 30 million (about US$44 million). The authorities have indicated their intention to treat the arrangement as precautionary. Following the Executive Board discussion, Shigemitsu Sugisaki, Deputy Managing Director and Acting Chairman, said: "Paraguay has launched an ambitious reform program to stabilize the economy and begin a process of structural reform to raise growth, reduce poverty, and improve governance. The government has actively sought broad consensus from political parties and civil society for the key elements of its reform program, and this participatory approach should enhance prospects for successful program implementation. "The stabilization effort is anchored on an ambitious fiscal agenda. The authorities are committed to eliminating the fiscal deficit in 2004, undertaking lasting reform of the institutions of the public sector, restructuring and reducing debt, and clearing all payment arrears. "Strengthening revenues is a critical component of the program, and will be achieved through increasing key excise tax rates, broadening the base of the value-added tax and the income tax, implementing a new vehicles tax, and strengthening tax and customs administration. "Efforts at fiscal consolidation will include spending austerity, redirecting spending to the social sectors and public investment, reforming the public employees' pension plan, and containing the losses of public enterprises through efficiency enhancement and adequate pricing policy for fuel and utilities. Expenditure management will benefit from the implementation of the recently approved Public Procurement Law, and the undertaking of external audits of public institutions. "To ensure successful medium-term fiscal consolidation, the authorities intend to continue working on normalizing relations with external and domestic creditors, and to prepare reforms of the civil service, the social security system, and public enterprises. "Paraguay's monetary policy will be geared to controlling inflation and allowing a freely floating exchange rate. The central bank will undertake institutional reforms to improve its ability to conduct an independent monetary policy. The authorities will also take important steps to improve the financial system. These measures include restructuring the public banks, strengthening the bank resolution framework, strengthening regulation and supervision of financial entities, including cooperatives, and requiring independent credit ratings of banks. "With resolute implementation of the policies contemplated in the program and sustained efforts to improve transparency and governance, Paraguay should move into a period of greater economic stability and more robust growth. This, in turn, will contribute to reducing poverty and providing resources to address the country's social challenges," Mr. Sugisaki stated. CONTACT: INTERNATIONAL MONETARY FUND 700 19th Street, NW Washington, D.C. 20431 USA IMF EXTERNAL RELATIONS DEPARTMENT Public Affairs Phone: 202-623-7300 Fax: 202-623-6278 Media Relations Phone: 202-623-7100 Fax: 202-623-6772 *********** 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. 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