/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/040126.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Monday, January 26, 2004, Vol. 5, Issue 17 Headlines A R G E N T I N A BANCO HIPOTECARIO: Sells 994,015 Class D Shares DIRECTV LA: Court Approves Infront Rejection Claim Settlement DISCO: Casino Balks At Bidding PONCE MARCELO: Court Approves Reorganization Petition PROMOBOX: Court Assigns Receiver to Oversee Reorganization RESIMAR: Commences Reorganization Process TRANSFER EJECUTIVO: Enters Bankruptcy on Court Orders B E R M U D A GLOBAL CROSSING: Court Approves Cable & Wireless Settlement Pact GLOBAL CROSSING: Stock to Begin Trading on NASDAQ National Market TYCO INTERNATIONAL: UBS Analyst Issues `Buy' Rating on Stock TYCO INTERNATIONAL: Prudential Analyst Issues "Overweight" Rating B R A Z I L CEMAR: Sell Off Resumes, Reports Local Paper CFLCL: Summons Extraordinary Shareholders' Meeting PARMALAT BRASIL: Congress To Call CEO, Govt. Officials To Testify PARMALAT BRASIL: Suspends Certain Activities At Jundiai Complex PARMALAT BRASIL: Senior Shares of Parmalat FIDC Redeemed Early TCP: To Sell $500M Worth of Bonds C H I L E PARMALAT CHILE: Bethia Offers $30M To Take Over PARMALAT CHILE: Fedeleche Issues Ultimatum on Debt C O L O M B I A AVIANCA: LanChile Studies Acquisition Options D O M I N I C A N R E P U B L I C * IDB President Iglesias Welcomes DR's Economic Measures M E X I C O CNI CANAL: To Hold Constitutional Audience Feb. 2 GRUPO TRIBASA: Avoids Bankruptcy INDUSTRIAS UNIDAS: Moody's Rates Proposed Notes Caa1 SATMEX: Hikes Up Insurance Coverage on Satmex 5 TFM: Moody's To Review Ratings For Possible Downgrade P A N A M A * Fitch Assigns 'BB+' Rating to Panama's $250M Issue V E N E Z U E L A PDVSA: To Undergo Corporate Restructuring PDVSA: Eastern Division to Form "New Relationship" With Suppliers * Fitch Projects Venezuelan Growth of 6% With Caveats - - - - - - - - ================= A R G E N T I N A ================= BANCO HIPOTECARIO: Sells 994,015 Class D Shares ----------------------------------------------- Argentine mortgage bank Banco Hipotecario sold 994,015 class D shares for ARS6.87 million (US$2.34mn) in a recently concluded operation, reports Business News Americas. The sale represented 0.66% of the bank's total share capital value of ARS1.5 billion. Of the shares sold, 579,860 were sold to existing class D shareholders. At the beginning of this month, class D shareholders Delaware- based EMOF LLC and Cayman Island-based Quantum Industrial Partners sold their 7.26% stake in Hipotecario to fellow minority shareholders IRSA Inversiones and Ritelco for US$26mn. Hipotecario is controlled by the Argentine government, through federal bank Banco de la Nacion Argentina, with some 54% of the share capital. DIRECTV LA: Court Approves Infront Rejection Claim Settlement ------------------------------------------------------------- DirecTV Latin America, LLC obtained the U.S. Bankruptcy Court's approval of a Rejection Claim Settlement with Infront WM GmbH. Backgrounder DirecTV Latin America, LLC's principal goal in its Chapter 11 case was to use the means provided under the Bankruptcy Code to effectively address the increasing problems caused by its uneconomic programming agreements. As an initial step in that effort, the Debtor sought to reject certain uneconomic agreements, including the agreement it has with Infront WM GmbH, formerly known as Kirsch Media WM GmbH. Pursuant to the Agreement, the Debtor licensed the right to broadcast and make available to its ultimate subscribers the 2002 and 2006 FIFA World Cups, and was afforded certain sublicensing and other rights. Before the Petition Date, Infront commenced litigation in Switzerland seeking damages for alleged breaches by the Debtor under the World Cup Agreement. The Debtor has taken the position in the Swiss Action that the World Cup Agreement had terminated. The Swiss Action remains pending but is presently stayed. The Debtor rejected its remaining obligations under the World Cup Agreement. Based on the rejection, Infront timely filed a proof of claim for $272,500,000 in damages allegedly resulting from the Debtor's rejection. Subsequently, the Office of the United States Trustee appointed Infront to the Creditors Committee. The Debtor reviewed Infront's proof of claim and assessed the extent to which, consistent with its five-year business plan, it can broadcast the World Cup and certain other FIFA additional events on an economic basis. The Debtor negotiated with Infront to settle the Infront Rejection Claim and to continue broadcasting the World Cup Soccer. Infront and the Debtor agreed that the Infront Rejection Claim will be allowed as a general unsecured claim for $185,000,000. The Agreement is conditioned, however, on the filing and the ultimate confirmation of the Debtor's Plan, which provides for a cash distribution to allowed general unsecured claimholders in an amount not less than 20% of the holder's allowed claims. As an integral part of the Settlement, Infront and the Debtor agreed on the terms of a new programming agreement pursuant to which Infront will license to the Debtor certain non-exclusive rights to broadcast the 2006 World Cup to its ultimate subscribers. The effectiveness of the New Infront Agreement remains expressly subject to the Plan Effective Date. As a further integral part of the Settlement, the Debtor and Infront's affiliate, Infront WM AG, agreed to amend, and the Debtor agreed to assume, a certain Additional Events Agreement and to pay Infront a compromised cure claim. The New Infront Agreement incorporates substantial differences from the terms contained in the original rejected Infront Agreement including critical reductions in the rates to be paid by the Debtor. The Additional Events Agreement also contains significant rates reduction. As part of the Settlement, all litigation with respect to the World Cup Agreement, including the litigation pending in Switzerland, will be dismissed with prejudice. (DirecTV Latin America Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) DISCO: Casino Balks At Bidding ------------------------------ French retailer Casino SA, which had been working with Argentine businessman Franscisco de Narvaez on a joint bid for Ahold's ailing Argentine supermarket chain Disco SA, dropped out of the bidding, says Reuters. But an industry source close to the negotiations said de Narvaez is still interested in buying the assets. Reuters did not disclose Casino's reason for dropping out of the bidding. Earlier reports have suggested that Casino and De Narvaez have asked that Ahold assume continued responsibility for financial risks associated with a lawsuit by depositors in a now bankrupt Uruguayan bank owned by Ahold's former joint-venture partner in Disco, the Velox Group. Additionally, the bidders want the Dutch company to take on a claim by the Argentine tax authorities for some ARS300 million in unpaid taxes that the agency claims Disco should have withheld from subscribers to a 1998 bond issue. For their part, the bidders have substantially raised their bid price, to EUR350 million ($440 million), well above the US$280 million that De Narvaez had reportedly initially offered and higher than the US$350 million that Chilean retailer Cencosud was thought to be willing to pay. CONTACT: DISCO S.A. Larrea 847, Piso 1 1117 Buenos Aires, Argentina Phone: +54-11-4964-8000 Fax: +54-11-4964-8076 Home Page: http://www.disco.com.ar PONCE MARCELO: Court Approves Reorganization Petition ----------------------------------------------------- Ponce Marcelo, Risso Guillermo S.H., which is based on Santa Fe, Argentina, will undergo reorganization. Infobae reports that Court No. 14 of the Civil and Commercial Tribunal of Villa Constitution approved its motion for "Concurso Preventivo". The Court assigned Ms. Carmen Stella Veron as the Company's receiver. The individual reports, which contain the results of the verification process, are due at the court on March 5 followed by the general report on April 12. The informative assembly, which is one of the last parts of the reorganization process, will be on July 5, the source adds without revealing the intended venue. CONTACT: Ponce Marcelo, Risso Guillermo S.H. Salta 365 Villa Constitucion, Santa Fe Carmen Stella Veron Sarmiento 1069 Villa Constitucion, Santa Fe PROMOBOX: Court Assigns Receiver to Oversee Reorganization ---------------------------------------------------------- Court No. 10 of the Civil and Commercial Tribunal of Resistencia approved a motion for "Concurso Preventivo" filed by local company Promobox S.R.L., reports Infobae. The Court assigned Mr. Hugo Antonio Cleva to oversee the reorganization process as the Company's receiver. Creditors are required to file their claims before February 23 this year. The receiver will prepare the individual reports after verifications are closed and submit these to the court on April 6. The general report, a consolidation of the individual reports, are due at the court on May 20. The informative assembly will be on November 4 this year. CONTACT: Promobox S.R.L. Julio A Roca 1551 Resistencia, Chaco Hugo Antonio Cleva Saavedra 575 Resistencia, Chaco RESIMAR: Commences Reorganization Process ----------------------------------------- Argentine accountant Alfredo Fernandez Alvide will oversee the reorganization of Resimar S.R.L., reports local news portal Infobae. Court No. 14 of the Civil and Commercial Tribunal of Mar del Plata appointed the receiver after approving the Company's motion for "Concurso Preventivo". The credit verification process will close on March 8. The receiver, who will examine creditors' claims, will also prepare the individual and general reports, which are due at the court on April 5 and May 17, respectively. The informative assembly will be on September 27. CONTACT: Resimar S.R.L. Calle 1004 Esq. 1005 Banquina del Puerto Mar del Plata Alfredo Fernandez Alvide Avenida Luro 3894 Mar del Plata TRANSFER EJECUTIVO: Enters Bankruptcy on Court Orders ----------------------------------------------------- Transfer Ejecutivo S.A., which is based in Buenos Aires, entered bankruptcy on orders from the city's Court No. 24. Clerk No. 48 assists the court on the case, reports Infobae. The Company's receiver, Mr. Omar Villalba, will examine and authenticate creditors' claims until March 17. This is done to determine the nature and amount of the Company's debts. The individual reports, which contain the results of the verification process, must be filed at court on April 30, followed by the general report on June 8. The Company's assets will be liquidated at the end of the process to reimburse its creditors. Payments will be based on the results of the verification process. CONTACT: Omar Villalba Tucuman 1484 Buenos Aires ============= B E R M U D A ============= GLOBAL CROSSING: Court Approves Cable & Wireless Settlement Pact ---------------------------------------------------------------- The Global Crossing Debtors ask the Court to approve their settlement agreement with Cable & Wireless Global Network Limited and certain of its affiliates. Cable & Wireless and its affiliates are the Debtors' significant customers and suppliers. Michael F. Walsh, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that beginning in February 1999 and continuing through July 2001, the Debtors and Cable & Wireless entered into separate agreements, including, certain indefeasible right of use agreements and capacity purchase agreements. The Agreements include: (1) Dark Fibre Agreement between Global Crossing International Ltd. and Cable & Wireless Global Network Limited dated February 3, 1999, wherein Cable & Wireless purchased dark fiber on the Debtors' network in Europe; (2) Maintenance Agreement dated January 10, 2000 between Global Crossing Network Centre UK Limited, Global Crossing Ireland Limited, GC International and Cable & Wireless, pursuant to which GCNC agreed to provide maintenance services in respect of the fiber provided under the Dark Fibre Agreement; (3) Collocation Agreement between GC Pan European Crossing Holdings B.V. and Cable & Wireless dated January 10, 2000, wherein GC Holdings agreed to provide collocation services in respect of the dark fiber provided under the Dark Fibre Agreement; (4) Framework Agreement dated July 11, 2001 between GC PEC and Cable & Wireless, wherein GC PEC granted certain IRU rights in duct and fiber to Cable & Wireless; (5) Network Capacity Agreement dated September 28, 2000 between Global Crossing Services Europe Limited and Cable & Wireless, wherein Cable & Wireless agreed to provide, on an IRU basis, capacity on the Southern Cross Cable System; (6) Carrier Data Solutions Agreement dated May 2001 between Cable & Wireless UK Services Limited, wherein Cable & Wireless UK agreed to provide network connectivity to GC Holdings. The Carrier Data Solutions Agreement terminated on December 16, 2002; (7) Whitesands Agreement dated November 25, 1997 between Cable & Wireless Communications Services Limited and GT Parent Holdings LDC for the provision of backhaul capacity on the Atlantic Crossing Submarine Cable System; and (8) Various agreements between IXNet UK Limited and entities within the Cable & Wireless corporate group for the provision of network services. Mr. Walsh explains that a number of different disputes have arisen under the Agreements. Under the Dark Fibre Agreement, Cable & Wireless purchased $125,000,000 of IRUs along the Debtors' fiber optic network in Europe. When the parties entered into that agreement, the Debtors' network in Europe was not yet complete. Accordingly, the agreement required Cable & Wireless to pay, in advance, for the estimated amount of fiber that it would purchase on the Network, subject to a "true-up" at a later time of the difference between the price that was paid by Cable & Wireless and the price for the actual distance of fiber provided by the Debtors. Cable & Wireless has asserted that the Debtors owe $9,000,000 pursuant to such "true-up." The Debtors dispute the amount, arguing instead that Cable & Wireless owes them up to $5,000,000. In addition, Cable & Wireless was required to pay the Debtors certain operations and maintenance charges in connection with IRUs purchased by Cable & Wireless under the Dark Fibre Agreement. Cable & Wireless contends that the Debtors breached the Dark Fibre Agreement by not timely delivering the IRUs and that Cable & Wireless should be credited for the six months of O&M charges which it had paid in advance for the period when the IRU was not yet available. Accordingly, Cable & Wireless asserts that it negotiated with the Debtors and received six months' of O&M, on a go-forward basis, at no charge. Since there was no documentation of the agreement and those responsible for the relationship with Cable & Wireless are no longer employed by the Debtors, the Debtors have continued to charge Cable & Wireless over that six-month period for the O&M in the amount of $672,000. The Debtors also believe that Cable & Wireless owes an additional $399,000 for O&M under the Duct and Fibre Framework Agreement. Cable & Wireless has disputed the former O&M charges and has, to date, refused to pay either O&M charge. Furthermore, Cable & Wireless has asserted various claims in the Debtors' Chapter 11 cases including prepetition claims in excess of $4,000,000 and administrative claims of $2,000,000 for charges under the Agreements. The Debtors believe that a number of these claims are duplicative. The Debtors also dispute liability for certain other claims. The Debtors have not yet objected to Cable & Wireless' claims. Mr. Walsh also informs the Court that due to changes in market conditions and their downsizing of operations, the Debtors no longer require all of the network capacity provided to them under the Whitesands Agreement and the IXNet Agreements. Nevertheless, the Debtors cannot reject these agreements immediately without potentially causing severe disruption of service along their own Network. Accordingly, the Debtors want to reject the Whitesands Agreement and the IXNet Agreements effective December 31, 2003. Cable & Wireless has consented to this rejection date. Mr. Walsh states that after a series of arm's-length negotiations, the Debtors and Cable & Wireless have agreed to enter into a settlement agreement. The Settlement Agreement provides for, among other things, a resolution of all disputes between the Debtors and Cable & Wireless, and the assumption of a number of agreements that are critical to the Debtors' operations. The salient terms of the Settlement Agreement are: (a) The Debtors will assume 21 agreements with Cable & Wireless; (b) The other agreements not included in the list of assumed agreements, including the Whitesands and the IXNet Agreements, will be rejected effective as of December 31, 2003; (c) The Debtors will, on the Plan Effective Date, commit to pay Cable & Wireless: * $1,573,939 as full and final payment for all postpetition amounts due under the Carrier Data Services Agreement and the Southern Cross Capacity Agreement -- Fixed Payment; and * $2,350 per day for the period October 1, 2003 through the Plan Effective Date in respect of O&M due under the Southern Cross Agreement -- Unascertained Payment; (d) Cable & Wireless will pay the Debtors $922,482 as full and final payment for all postpetition amounts due under the Dark Fibre Agreement and the Duct & Fibre Framework Agreement; (e) The Debtors and Cable & Wireless will "net-off" the Fixed Payment against the Cable & Wireless Payment, and the Debtors will pay the difference of $651,457 plus the Unascertained Payment in three equal installments on January 30, 2004, February 27, 2004, and March 30, 2004 -- Net Payment; (f) All of Cable & Wireless' prepetition claims, to the extent liquidated, will be deemed allowed for distribution purposes under the Plan, except for Claim Nos. 4984, 4993, and 4994, which are duplicative and will be deemed disallowed. In addition, Cable & Wireless will also have allowed general unsecured claims for $4,400,000 on account of Claim No. 4986 and $732,250 for claims under the Southern Cross Agreement; (g) The Debtors will issue a credit to Cable & Wireless for amounts invoiced under the Dark Fibre Agreement for O&M charges for the period July 1, 2000 through January 31, 2001; (h) The parties will amend the Southern Cross Capacity Agreement to reduce O&M charges in respect of the two circuits that the Debtors require for their own use from $107,500 per year to $50,000 per year effective as of April 1, 2004. In addition, the agreement will be amended to permit the Debtors to sell, on an IRU basis, any of the capacity they purchased under the agreement to a third party; (i) The parties will amend the Duct and Fibre Framework Agreement to provide that quarterly O&M fees will be $38,766 starting on January 1, 2004; and (j) Upon payment of the Net Payment, the parties will mutually release each other from any and all claims that relate to or arise under the assumed agreements and rejected agreements. Mr. Walsh points out that the Settlement Agreement is a fair and equitable resolution of the disputes between the parties and falls well within the range of reasonableness. The Settlement Agreement resolves all claims, without the need for protracted litigation, for a fraction of the amount asserted by Cable & Wireless against the Debtors. In addition, under the Settlement Agreement, the Debtors will assume only those agreements that are necessary to the continuing operation of the Network, without the incurrence of significant payment obligations, other than the ongoing maintenance charges, as a result of the assumption. The Debtors will also lower their operating costs associated with the Southern Cross Agreement and will be permitted to sell any of the capacity to a third party without penalty. The Debtors expect to sell six of the eight circuits on approval of the Settlement Agreement, which will generate cash revenue for their operations. Mr. Walsh also notes that the Settlement Agreement resolves all disputes with Cable & Wireless that otherwise could have led to litigation. Given the complexity of the parties' contractual relationships, this litigation would be lengthy and expensive and would require extensive discovery. These undertakings would be a drain on the Debtors' resources, at a time when they are trying to maximize their liquidity. Accordingly, Judge Gerber approves the Debtors' Settlement Agreement with Cable & Wireless. (Global Crossing Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) GLOBAL CROSSING: Stock to Begin Trading on NASDAQ National Market ----------------------------------------------------------------- Global Crossing announced that its new common stock will begin trading on the NASDAQ National Market on Thursday, January 22, 2004, under the trading symbol GLBC. The company's stock had been trading in the over-the-counter market under the symbol GLBCF since Global Crossing's emergence from Chapter 11 on December 9, 2003. "Listing Global Crossing's new common stock to trade on the NASDAQ National Market should enhance its liquidity," said John Legere, Global Crossing's chief executive officer. "Qualifying to trade on NASDAQ represents the first of many milestones we intend to reach on the heels of our successful emergence." Global Crossing emerged from Chapter 11 with its core network in place, while retaining a revenue base of nearly $3.0 billion. During its restructuring, the company reduced operating expenses by 63 percent compared to the beginning of 2001. Global Crossing's long-term debt and convertible preferred stock were substantially reduced from approximately $11 billion at the end of 2001, including $1 billion of Asia Global Crossing debt, to $200 million of debt post-emergence. As previously announced, Global Crossing's plan of reorganization included the cancellation of existing preferred and common stock. The holders of these previously publicly traded securities received no consideration under the company's plan of reorganization. Under the plan of reorganization, Global Crossing issued 61.5 percent of the outstanding equity or 18 million shares of new preferred stock and 6.6 million shares of new common stock to Singapore Technologies Telemedia (ST Telemedia) in consideration for its $250 million equity investment in the new Global Crossing. The remaining 38.5 percent of the outstanding equity or 15.4 million shares of the new common stock has been distributed to Global Crossing's former secured and unsecured creditors. ABOUT GLOBAL CROSSING Global Crossing provides telecommunications solutions over the world's first integrated global IP-based network. Its core network connects more than 200 cities and 27 countries worldwide, and delivers services to more than 500 major cities, 50 countries and 5 continents around the globe. The company's global sales and support model matches the network footprint and, like the network, delivers a consistent customer experience worldwide. Global Crossing IP services are global in scale, linking the world's enterprises, governments and carriers with customers, employees and partners worldwide in a secure environment that is ideally suited for IP-based business applications, allowing e- commerce to thrive. The company offers a full range of managed data and voice products including Global Crossing IP VPN Service, Global Crossing Managed Services and Global Crossing VoIP services, to more than 40 percent of the Fortune 500, as well as 700 carriers, mobile operators and ISPs. Please visit www.globalcrossing.com for more information about Global Crossing. CONTACT: GLOBAL CROSSING Press Contacts Becky Yeamans + 1 973-937-0155 PR@globalcrossing.com Tisha Kresler + 1 973-937-0146 PR@globalcrossing.com Kendra Langlie Latin America + 1 305-808-5912 LatAmPR@globalcrossing.com Mish Desmidt Europe + 44 (0) 7771-668438 EuropePR@globalcrossing.com Analysts/Investors Contact Ken Simril + 1 310-385-3838 investors@globalcrossing.com TYCO INTERNATIONAL: UBS Analyst Issues `Buy' Rating on Stock ------------------------------------------------------------ UBS analyst David Bleustein issued a "buy" rating on Tyco International (TYC) and set the target price to US$34, according to a report by New Ratings. Shares of Tyco International, a global industrial conglomerate, offering health care, electronics, specialty products and security services, are currently trading at $28.10. In a research note published Wednesday, UBS stated Tyco International's stock valuation is likely to be in-line with the other diversified industrial stocks in the forthcoming 12 months. Consequently, the present 15%-20% discount that Tyco International's stock currently trades at would narrow during the period, the analyst said. The Company recently convened a meeting to report its overview of the major business segments, the analyst added. TYCO INTERNATIONAL: Prudential Analyst Issues "Overweight" Rating ----------------------------------------------------------------- Prudential Financial analyst Nicholas P Heymann issued an "overweight" rating on Tyco International (TYC) and set the target price to US$34, according to a report by New Ratings. In a research note published Wednesday, Prudential Financial said Tyco International is unlikely to experience any potential margin pressures in its Tyco Healthcare division in the near term. The analyst mentioned that the Company intends to offset any potential margins erosion with its cost reduction and product-mix improvement initiatives. Prudential Financial anticipates enhanced focus on Tyco International's organic revenue growth potential, in the absence of any potential acquisition activities until 2006. Tyco International expects its continued market share gains and additional research and development initiatives to significantly boost the organic sales growth at its healthcare segment over the next few years, the analyst added. Prudential Financial anticipates additional cost savings opportunities for the company's Tyco Healthcare division, through systems integration, migration to low-cost regions and product price reduction initiatives in the near term. =========== B R A Z I L =========== CEMAR: Sell Off Resumes, Reports Local Paper -------------------------------------------- Bidders for the assets of Companhia Energetica do Maranhao had until Friday to deliver their proposals as Agencia Nacional de Energia Eletrica (Aneel) resumes the sell off process, reports Folha de Sao Paulo. SVM Participacoes e Empreendimentos, GP Investimentos group and MT Baker Enterprises LCC were interested in buying Cemar, which has been under intervention since August 2002 after US utility PPL Global exited. Earlier, two injunctions issued by federal courts said neither of the two bidders, US company Mt Baker Enterprises and Brazilian company SVM Participacoes e Empreendimentos, controlled by GP Investimentos, proved they are in the necessary financial condition to bring Cemar back to financial health and make the necessary operational investments. Cemar has debts totaling BRL884 million (US$316mn) and negative net worth of BRL148 million. CONTACT: COMPANHIA ENERGETICA DO MARANHAO Av. Colares Moreira, 477 65075-441 - Sao Luiz- MA PHONE: (98) 217-2119 FAX: (98) 235-3024 WEBSITE: http://www.cemar.com.br/ CREDITORS: CENTRAIS ELETRICAS BRASILEIRAS S.A. - ELETROBRAS Avenida Presidente Vargas 409, 13 Andar 20071-003 Rio de Janeiro Brazil Phone: (21) 2514-5151 Fax: +55-21-2242-2697 Home Page: http://www.eletrobras.gov.br Contacts: Cladio da Silva avila, President Jose Alexandre Nogueira de Resende, Director of Financial and Market Relations Investor Relations Division Phone: (0XX21) 2514-6207 / 2514-6333 Av. Presidente Vargas, 409 - 9 andar 20071-003 - Rio de Janeiro - RJ Email: arlindo@eletrobras.gov.br CENTRAIS ELETRICAS DO NORTH DO BRAZIL - ELETRONORTE Av. Presidente Vargas, 489 -13 andar. 20071-003- Rio do Janeiro RJ Phone: + (55+61) 429 5139 Fax: +(55+61) 328 1373 E-mail: elnweb@eln.gov.br Home Page: http://www.eln.gov.br/ Contact: Mr. Arlindo Soares Castanheira, Investor Relations Phone: 55 21 2514.6331 55 21 2514.6333 Fax: 55 21 2242.2694 E-mail: arlindo@eletrobras.gov.br CFLCL: Summons Extraordinary Shareholders' Meeting -------------------------------------------------- At the request of the shareholders Fondelec Essential Services Growth Fund, L.P. and The Latin America Energy and Electricity Fund I, L. P., the shareholders of the COMPANHIA FORCA E LUZ CATAGUAZES-LEOPOLDINA ("Company") are invited, in accordance with Article 123 of Law No. 6404/76, to meet on February 18, 2004, at 10:00 a.m., at the Company's head office, located at Pra�a Rui Barbosa 80, in Cataguases (Minas Gerais), for an Extraordinary Shareholders' Meeting, which will deliberate on the following matters: (a) the proposed liability suit to be brought against the current members of the Board of Directors of the Company, in accordance with Article 158, II, of Law No. 6404/76, resulting from the request to effect and actually making a judicial deposit of the value corresponding to the preferred shares' dividends; (b) the dismissal of members of the Board of Directors of the Company and the appointment of new members to replace them. The Company considers that the request for the meeting is unjustified, in light of the fact that the matter is currently sub judice, due to the legal decision of His Honor, the reporting Appelate Court Judge, concerning the appeals currently pending before the 18th Civil Panel of the Rio de Janeiro Appelate Court, authorizing "the appellant Company to effect the payment of dividends to its shareholders, in compliance with the previous capital (i.e., not reduced), and determining to His Honor the lower court Judge, to issue the judicial deposit form in accordance with the amount to be declared by Companhia Forca e Luz Cataguazes-Leopoldina..." - Furthermore, the present summons is issued against the Company's will. The Company reserves its right to dispute in court the request for the said summons and to request the court to cancel of the Extraordinary Shareholders' Meeting, as well as to hold accountable the shareholders who made the request. - The Powers of Attorney granting special powers of representation at the Shareholders' Meeting, to which the present notice refers, must be deposited at the Company's head offices, at least 48 (forty-eight) hours before the scheduled time for the meeting to start. PARMALAT BRASIL: Congress To Call CEO, Govt. Officials To Testify ----------------------------------------------------------------- Ricardo Goncalves, the chief executive of Parmalat Finanziaria SpA's Brazilian unit, will be called on to testify in the probe of Parmalat's operations in Brazil, reports Bloomberg News. Brazil's congress launches an investigation into the Company's operations following comments from Parmalat's jailed accountant last week that some of the group's missing funds may be in Brazil. The committee also plans to call Finance Minister Antonio Palocci, Carlos Lessa, president of the Brazil's state development bank, and Roberto Rodrigues, the agriculture minister, Bloomberg says, citing deputy Leonardo Vilela, a member of the committee. Brazilian legislators want to know whether the local unit received some of the Italian group's missing funds, and to gain an understanding of the financial condition of the Company in Brazil, where it's the second biggest milk buyer, Vilela said. The Brazilian unit has been missing payments to several suppliers and has been struggling to keep its business afloat ever since its Italian parent collapsed. An Italian court declared the parent company insolvent after its admitted US$5-billion bank account of a Cayman Islands unit didn't exist. Prosecutors in the case have said Parmalat's former management created fake assets and hid losses of about EUR10 billion. PARMALAT BRASIL: Suspends Certain Activities At Jundiai Complex --------------------------------------------------------------- Parmalat Brasil suspended activities at its industrial complex located in Jundiai, Sao Paulo, reports Gazeta Mercantil. The unit suspended its cookies production unit since January 12. It was supposed to resume activities at the said plant on the 19th but didn't do so. At the same time, the unit also suspended the production of the Santal brand juices and teas unit, the largest in the complex, catching the Beverages & Food industries labor union by surprise. The plant employs 1,100 workers and also operates as a distribution center. PARMALAT BRASIL: Senior Shares of Parmalat FIDC Redeemed Early -------------------------------------------------------------- Standard & Poor's Ratings Services announced Thursday that the shareholders of Parmalat - Fundo de Investimento em Direitos Credit�rios (the Parmalat FIDC) voted for an early redemption of their senior shares of the fund during the Jan. 19, 2004, shareholders' meeting. On the same day, these investors received their original invested amount plus the respective targeted return on their investment (the Brazilian Spot Depositos Interfinanceiros index plus 1.7%). The shareholders received Brazilian reais (BrR) 112.8 million, the fund's holdings on its senior shares, out of a total BrR132 million (including the subordinated shares). The originators of the credit receivables, Parmalat Brasil S.A. and Batavia S.A., in Brazil, retained BrR19.2 million in subordinated shares. During the shareholders' meeting, the fund's sponsor, Intrag DTVM Ltda, and the servicer of the fund, Banco Itau S.A., announced that the originators, both indirectly controlled subsidiaries of Parmalat SpA, will not be repaid their original investment in the subordinated shares until the fund is fully liquidated. Intrag DTVM and Banco Itau also decided during the shareholders' meeting to maintain the legal structure of the fund by retaining a symbolic senior share equivalent to BrR21,250 and having the originators retain an additional subordinated share equal to BrR3,750, until a new shareholder meeting takes place. At that meeting, the shareholders will decide whether to change the terms and conditions of the fund (regulamento) to adapt it for other investment purposes or, instead, to redeem the remainder of the shares in their entirety. The remaining holdings of the Parmalat FIDC comprise permitted investments not related to Parmalat SpA or any of its subsidiaries. These permitted investments consist of overnight investments in 'brAA' rated financial institutions, government bonds, or shares of other fixed-income funds rated or assessed by Standard & Poor's. Following the early redemption, Standard & Poor's 'brAAAf' rating on the senior shares of the Parmalat FIDC will be maintained until the fund is either formally liquidated (Standard & Poor's would then withdraw its rating) or the fund's investment objectives are changed (Standard & Poor's would likely change its rating). In addition, according to Brazilian regulations, the fund's sponsor must rebalance the Parmalat FIDC's portfolio (adjust the portfolio composition to the limits established by the regulation) by Feb. 27, 2004; therefore, discussions on the fund's investment objectives and Standard & Poor's rating withdrawal process are expected to be concluded by that date. The Parmalat FIDC is a closed-ended fund whose main underlying assets originally consisted of trade receivables directly originated by Parmalat Brasil and Batavia (through the sale of shipped products to specified obligors), cash, and other specified investments. Senior shares of the fund originally totaled BrR110.5 million and were sold to investors Nov. 27, 2003, while the subordinated shares (originally BrR19.5 million) were retained by the originators. The fund had an original defined final maturity of three years from Nov. 27, 2003. ANALYSTS: Juan Pablo De Mollein, New York (1) 212-438-2536 Diane Audino, New York (1) 212-438-2388 Sergio Garibian, Sao Paulo (55) 11-5501-8944 TCP: To Sell $500M Worth of Bonds --------------------------------- Telesp Celular Participacoes SA, part of the Vivo wireless joint venture owned by Spain's Telefonica Moviles and Portugal Telecom (PT), plans to sell US$500 million of bonds. The plan, according to Bloomberg News, already has the approval of the Company's board of directors. The operator didn't disclose terms of the planned bond sale. Just like other companies, TCP is looking to raise funds abroad to take advantage of declining borrowing costs. 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 ========= C H I L E ========= PARMALAT CHILE: Bethia Offers $30M To Take Over ----------------------------------------------- Bethia, an investment group in Chile is offering US$30 million to take over Parmalat Chile, according to a report by local business tabloid Estrategia. Bethia is interested in acquiring the Company's assets, as well as its brand name and outstanding debt. Citing source close to both companies, the newspaper said that Parmalat would receive some $20 million, with the remainder going to the milk supplier. Dow Jones reported that the Company, which is the fifth-largest dairy company in Chile, has expressed interest in continuing operations in the country. PARMALAT CHILE: Fedeleche Issues Ultimatum on Debt -------------------------------------------------- Fedeleche, an organization of Chilean milk producers warned the local Parmalat unit that they would suspend supplies to the Company if it fails to pay its dues. The Associated Press reported that the Company must settle the US$2.1 million it owes to the farmers today. "We are giving a clear signal that we need a substantial payment," the Associated Press quoted Fedeleche's general manager Carlos Arancibia as saying. Arancibia said producers are considering "a variety of other legal alternatives against Parmalat." He added that the farmers have made contact with other processors that could buy their produce. A report by Dow Jones said that almost all the affected dairy farmers supply milk to Parmalat alone. Recently, Acting Agriculture Minister Arturo Barrera talked with the Company's top officials asking whether the Company plans to continue its operations in the country in spite of the financial crisis its parent Company is in. =============== C O L O M B I A =============== AVIANCA: LanChile Studies Acquisition Options --------------------------------------------- Chile's flagship airline LanChile is considering plans to acquire bankrupt Colombian carrier Avianca, reports Chilean daily El Mercurio. Avianca has attracted the attention of other airlines as well. Colombian papers report that Copa de Panama; Continental Airlines, of the US; and Taca (Transportes Aereo Centroamericano) might be interested in the troubled airline. Avianca has a U.S. subsidiary, which allowed it to apply for Chapter 11 proceedings last March to try to renegotiate US$269 million in debt while continuing to operate. The U.S. law is more generous with struggling debtor companies than Colombian legislation. The airline is awaiting approval from a U.S. bankruptcy judge to extend the deadline for its debt-restructuring plan until March 30. If granted, the deadline extension would be its fifth. Founded in 1919, Avianca is one of the oldest airlines in the world. The Colombian carrier provided scheduled passenger and cargo services throughout South America, the Caribbean and the US. CONTACT: Aerov�as Nacionales de Colombia S.A. Avenida Eldorado, No. 93-30 Bogota, Colombia Phone: +57-1-413-9511 Fax: +57-1-413-9702 Home page: http://www.avianca.com.co Contact: Vytis Didziulis, President Leonor Montoya, Chairman Nelson Gnecco, VP Administration and Finance =================================== D O M I N I C A N R E P U B L I C =================================== * IDB President Iglesias Welcomes DR's Economic Measures -------------------------------------------------------- Bank's board to consider emergency loan for the Dominican Republic Inter-American Development Bank President Enrique V. Iglesias welcomed Wednesday the economic policy measures adopted recently by the Dominican Republic's government as part of its technical understandings with the International Monetary Fund. In light of those steps, Iglesias sent to the IDB's Board of Executive Directors a proposal for a $200 million emergency loan to the Dominican Republic. The board is due to take up the issue in the coming days. =========== M E X I C O =========== CNI CANAL: To Hold Constitutional Audience Feb. 2 ------------------------------------------------- The continuity of the bankruptcy process promoted by TV Azteca against Televisora del Valle de Mexico (TVM), the concessionaire of CNI Canal 40, will be defined at a constitutional audience scheduled for Feb. 2. Mexican news source El Universal recalls that TV Azteca lodged bankruptcy proceedings against TVM before the Federal Institute of Bankruptcy Proceedings (IFECOM). However, lawyers for Canal 40 presented an appeal to IFECOM and obtained the definitive suspension of the case. Recently though, TV Azteca promoted a legal resource to appeal against the suspension. Tristan Canales, communications director of TV Azteca, said that the company had invoked the bankruptcy process because "we are proving that these gentlemen are not managing the channel properly." Canales said that the conflict with CNI Canal 40 is not about money, but principles. "We have the right. We have not changed our attitude as some are saying, but we are asking for rights agreed from the very beginning." Canales assured that TV Azteca did not want to kill off Canal 40, on the contrary, "we want to exercise that right so that Canal 40 can overcome its current situation." GRUPO TRIBASA: Avoids Bankruptcy -------------------------------- In an attempt to avoid a threatening bankruptcy, Mexican construction company Grupo Tribasa invoked the Bankruptcy Law and signed an agreement with 96% of the creditors to whom the Company owes MXN7.9 billion (US$719 million) in debt. According to Cronica, the agreement grants the firm greater time to repay the debts, as well as discounts. The Federal Institute of Bankruptcy Proceedings (IFECOM) revealed that it signed four agreements with Tribasa, and according to the current procedures, "the final goal is that debtors reach an agreement with creditors instead of directly declaring bankruptcy." CONTACT: GRUPO TRIBASA, S.A. DE C.V. Bosque de Cidros No. 173, Bosques de las Lomas 05120 Mexico, D.F., Mexico Phone: +52-55-5229-7400 Fax: +52-55-5229-7430 E-mail: tribasa@tribasa.com.mx Home Page: http://www.tribasa.com.mx INDUSTRIAS UNIDAS: Moody's Rates Proposed Notes Caa1 ---------------------------------------------------- Industrias Unidas, S.A. de C.V. (IUSA) got a Caa1 debt rating for its proposed guaranteed senior unsecured notes due 2014 from Moody's Investors Service. In addition, the Company obtained a B3 senior implied rating and Caa2 senior unsecured issuer rating from the ratings agency. The outlook on the ratings is stable. Approximately $175 million of debt securities affected. The agency assigned the ratings in light of IUSA's weak operating performance, significant competitive pressures, commodity product focus, and exposure to raw material prices, as well as its high adjusted debt levels, thin operating margins, and negative free cash flow generation. Moreover, Moody's ratings heavily discount the cash flows of IUSA's unrestricted joint venture subsidiaries, recognize the high degree of customer concentration, and consider approximately US$100 million of trade financing to be equivalent to debt. However, the ratings also reflect the Company's relatively strong market position and low manufacturing cost base in Mexico, product diversity, and continued focus on cost reductions. The ratings also incorporate the benefits the notes derive from guarantees provided by a restricted group of subsidiaries. IUSA is one of Mexico's largest diversified industrial companies, offering a large variety of products through integrated manufacturing and distribution operations located principally in Mexico and the U.S. The company's operations are conducted by seven principal business groups: copper tubing, wire and cable, copper alloys, electrical products, watt-hour meters, valves and controls, and diversified assets group. SATMEX: Hikes Up Insurance Coverage on Satmex 5 ----------------------------------------------- Satelites Mexicanos (Satmex) managed to raise the insurance coverage for its Satmex 5 satellite to US$150 million, reports El Universal. The Company is seeking to raise the coverage to as much as US$150 million, as the satellite was showing signs of technical failure. The Company is hoping that the U.S. manufacturer, Boeing, can resolve the propulsion problems that would allow the satellite to continue its orbit. Replacing the satellite would do cause damage on the Company's finances, the report adds. The Company is also in negotiations for the insurance coverage of Satmex 6, which has been in storage in October, said Satmex vice president Gonzalez Arquieta. It will be launched once its insurance issue is resolved. In the meantime, the issue Satmex 5 remains a priority. TFM: Moody's To Review Ratings For Possible Downgrade ----------------------------------------------------- Moody's Investors Service will review the B1 senior unsecured debt rating of TFM S.A. de C.V. for possible downgrade. Moody's was prompted to make a review on the rating because of TFM's deteriorating financial results and the uncertainty in its future financial profile arising from the ownership dispute between TFM's shareholders. In its review, Moody's will take into consideration the following factors: - TFM's ability to continue to grow free cash flow, particularly in light of the challenges in the core automotive business; - the prospects for refinancing near-term maturing bank obligations and compliance with financial covenants in those bank agreements; - the potential impact on TFM's operations and financial condition arising from the continuing dispute between TFM's shareholders Grupo TMM, S.A. (TMM, Caa1 negative) and Kansas City Southern (KCS, Ba3, negative); - the implications of the shareholders obligations for the TFM shares under the Mexican Government's put, and; - allocation of any value that may arise from settlement of the long-standing Value Added Tax (VAT) dispute. =========== P A N A M A =========== * Fitch Assigns 'BB+' Rating to Panama's $250M Issue ---------------------------------------------------- Fitch Ratings, the international rating agency, assigned Thursday a 'BB+' rating to the Republic of Panama's US$250 million bond issue maturing in April 2034. The Rating Outlook is Stable. Fitch expects the proceeds from the bonds to be used to finance debt amortizations and the budget deficit as well as the government's ongoing liability management. 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. Given the high levels of public debt, Panama is unlikely to graduate to investment grade during Fitch's foreseeable rating horizon. CONTACT: Fitch Ratings, New York Theresa Paiz Fredel Phone: 212-908-0534 Roger M. Scher Phone: 212-908-0240 Media Relations: James Jockle Phone: 212-908-0547 ================= V E N E Z U E L A ================= PDVSA: To Undergo Corporate Restructuring ----------------------------------------- The board at Venezuela's state oil company PDVSA is going to see some changes as the Company plans to embark on a corporate restructuring, Business News Americas reports, citing government news service Venpres. "The structure of the corporation has for years failed to adapt to the new strategies we have laid out, and for that reason we need a total restructuring at a national level," Venpres quoted PDVSA president Ali Rodriguez Araque as saying. The restructuring will include the Company's board, "since the one we appointed in December has fulfilled its task." President Hugo Chavez would announce the changes soon, some of which were already underway, he added. In the meantime, Rodgrigez Araque dismissed rumors that there would be further mass oil industry sackings. He described these rumors as "totally false," implying they are all part of the opposition's attempt to spread instability. But late last year, Chavez himself hinted at more redundancies at PDVSA. "We are committed to keep cleaning up PDVSA," Venpres quoted the Venezuelan president as saying at the end of December last year. PDVSA: Eastern Division to Form "New Relationship" With Suppliers ----------------------------------------------------------------- PDVSA Oriente, the eastern division of PDVSA, held a meeting with suppliers whereby it presented its 2004 business plan, Business News Americas reports. The business plan outlines what division head Nelson Martinez called a "new relationship" with them [the suppliers]. The new relationship would mean "not seeing them [the suppliers] on the other side of the fence but integrated into our production strategy. We are focusing on a new relationship between PDVSA and service suppliers, with the aim of being more efficient...as well as creating a win-win situation in which companies benefit and we improve our projects in order to meet the outline of the business plan," Martinez was quoted as saying. In the meantime, Martinez revealed that PDVSA Oriente will increase production by 170,000 barrels a day (b/d) to 1.28mb/d. "There is a very aggressive drilling plan...we're going to have 65 rigs during the year, from an average of 52 that we have at the moment," Martinez said. * Fitch Projects Venezuelan Growth of 6% With Caveats ----------------------------------------------------- Fitch Ratings, the international rating agency, projects Venezuela's economic growth of 6% or more this year. But according to a sovereign analysis just released, this will depend critically on political developments, the effect of releasing capital and exchange controls, and oil prices. Furthermore, this year's growth 'will primarily reflect the statistical comparison against a depression in the first half of 2003 rather than a true recovery or expansion this year,' according to Morgan Harting, a director at Fitch Ratings. According to the credit analysis, gradual easing of foreign exchange controls this year will have mixed near-term implications for government financing, could dampen banking system deposits, and may accelerate capital flight. On the other hand, it should help free some bottlenecks in the economy. Fitch Ratings expects public sector financing needs to exceed 9% of GDP, most of which should be sourced domestically. Fitch's 'B-' long-term sovereign rating on Venezuela balances a comparatively modest public external debt burden and strong external liquidity against substantial political risks. Additionally the ratings take into account a policy framework inconsistent with the medium-term objective of sustainable economic growth and diminished dependence on petroleum. CONTACT: Morgan Harting Phone: +1-212-908-0820 Therese Feng, PhD Phone: +1-212-908-0230 Media Relations: James Jockle Phone: +1-212-908-0547 *********** 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 2004. 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. 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