/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/040210.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 Tuesday, February 10, 2004, Vol. 5, Issue 28 Headlines A R G E N T I N A BANCO HIPOTECARIO: Additional Time Granted to Repay Loans COMERCIAL ZOMA: General Report Filing Expected Today CONTREX: Court Declares Company Bankrupt CONVIVIR: Receiver Ends Claims Validation in Bankruptcy Process COTENOR: Receiver Reviewing Creditor Claims Until March 9 DILC: Credit Review in Bankruptcy Closes Today DURBIKE: Receiver To File Bankruptcy General Report GATIGOM: Deadline for Individual Reports Filing Expires GRISCAN ILUMINACION: Reorganization Claims Review Ends Today GRUPO GALICIA: Net Loss Shrinks In 2003 LABORATORIO REYES: Preventative Reorganization Motion at Court MOLDAVIANA: Receiver Prepares Individual Reports in Bankruptcy SABORE: Individual Reports Due at Court Today SANIMAT: Proof of Claims Period Ends Today SOCIEDAD TECNOINDUSTRIAL: Creditor Claims Review Closes Today SOMECAL: Receiver To File General Report with Court Today TRAKE TRADE: Court Outlines Bankruptcy Process Timeline B R A Z I L BANCO SANTOS: Fitch Affirms Ratings, Withdraws Future Outlook CSN: Fitch Issues Favorable View on Proposed US$780M Investment EMBRATEL: Anatel Opposes Data Room Opening PARMALAT BRASIL: No Truth to Allegations Over Cash Transfers C H I L E ENDESA CHILE: Obtains Bank Syndicated $250M Loan PARMALAT CHILE: Bethia Anticipates Closing Acquisition Next Week C O S T A R I C A ICE: Samsung Electronics To Supply $23M Equipment To Costa Rica D O M I N I C A N R E P U B L I C AES CORP.: May Divest 50% Stake in Ede-Este By Year-End * S&P Affirms Dominican Republic's 'CC' Long-Term Debt Rating M E X I C O ASARCO: Fitch Upgrades Rating to 'CCC' AXTEL: Moody's Assigns B2 Ratings to Debt Securities GRUPO MEXICO: Expects SPCC's Decision on Proposal This Year XIGNUX: Extends Proxy Payment, Withdrawal Rights Deadlines - - - - - - - - - - ================= A R G E N T I N A ================= BANCO HIPOTECARIO: Additional Time Granted to Repay Loans --------------------------------------------------------- Argentine authorities gave the country's leading mortgage bank, Banco Hipotecario more time to pay back discount loans handed out during the 2002 financial crisis. The decision was announced Thursday by the joint Economy Ministry-Central Bank committee overseeing the restructuring of the financial system. A press release from Argentina's Economy Ministry gave no details of how much extra time the bank would have to repay its loans. It also didn't say how much the mortgage bank owed, however Banco Hipotecario wasn't among the top five recipients of central bank assistance. Banco Hipotecario recently wrapped up a debt restructuring deal with creditors holding just under US$1 billion in debt. The central bank had made it clear it will give banks more time to get their financial situations in order, providing they are taking their own steps to deal with private debts, improve their credit portfolio and face up to other challenges presented by the financial crisis. Argentina's government owns 44% of Banco Hipotecario. The rest is held by real estate developer Inversiones y Representaciones SA. COMERCIAL ZOMA: General Report Filing Expected Today ---------------------------------------------------- Ms. Ana Maria Calzada Percivale, receiver for Buenos Aires company Comercial Zoma S.A., is required to file the general report on the Company's reorganization today. This reports was prepared after the individual reports were processed at court. The individual reports, submitted at court late last year, contain the results of the credit verification process begun at the start of the reorganization process. Buenos Aires' Court No. 22, which handles the Company's case, set the informative assembly date on April 7, 2004, the Troubled Company Reporter - Latin America earlier reported. CONTACT: Ana Maria Calzada Percivale Ave. San Martin 2805 Buenos Aires CONTREX: Court Declares Company Bankrupt ---------------------------------------- Buenos Aires Court No. 6 ordered the bankruptcy of local company Contrex S.A. recently. Argentine news portal Infobae indicates that the city's Clerk No. 11 assists the court on the case, which will close with the liquidation of the Company's assets to repay its creditors. The court assigned Mr. Luiz Traverso as the Company's receiver. His duties include the verification of creditors' claims until April 16 this year. Verifications are done to determine the nature and amount of the Company's debts. The individual reports, which contain the results of the verification process, are due at the court on May 31. The general report, which is to be prepared after the individual reports are processed at court, must be filed on July 15. CONTACT: Luis Traverso Ave Corrientes 1820 Buenos Aires CONVIVIR: Receiver Ends Claims Validation in Bankruptcy Process --------------------------------------------------------------- Buenos Aires accountant, Ms. Maria Paulina Alva, receiver for Convivir S.A. closes the credit verification for the Company's bankruptcy process today. Creditors' claims are validated to ascertain the nature and amount of the Company's debts. The receiver will prepare the individual reports on the verification results. She will also prepare a general report after the individual reports are processed at court. Local sources, however, did not mention whether the court has set the deadlines for the filing of these reports. Buenos Aires Court No. 4 handles the Company's case with assistance from Clerk No. 7, the Troubled Company Reporter - Latin America said in an earlier report. CONTACT: Maria Paulina Alva Montevideo 536 Buenos Aires COTENOR: Receiver Reviewing Creditor Claims Until March 9 --------------------------------------------------------- Mr. Jorge Daniel Alvarez, receiver for Buenos Aires company Cotenor S.A., will validate creditors' claims until March 9. Verifications are done to determine the nature and amount of the Company's debts. The Company entered bankruptcy on orders from the city's Court No. 7, Argentine news portal Infobae relates. Clerk No. 14 assists the court on the case, which will end with the liquidation of the Company's assets to repay its creditors. CONTACT: Jorge Daniel Alvarez Bartolome Mitre 1738 Buenos Aires DILC: Credit Review in Bankruptcy Closes Today ---------------------------------------------- Creditors of Dilc S.R.L. must have their claims authenticated by the Company's receiver as the deadline for verifications expires today. Claims are examined to investigate the existence, nature and amount of the Company's debts. Mr. Jose Larrory, the Company's receiver, is required to prepare the individual reports on the results of the verification process. After these reports are processed at court, the receiver also has to prepare a general report. An earlier report by the Troubled Company Reporter - Latin America related that Buenos Aires Court No. 1 issued the bankruptcy order, Infobae relates. Clerk No. 2 assists the court on the case. The Court will order the liquidation of the Company's assets to reimburse creditors. CONTACT: Dilc S.R.L. Ave Independencia 2783 Buenos Aires Jose Larrory Viamonte 1348 Buenos Aires DURBIKE: Receiver To File Bankruptcy General Report --------------------------------------------------- Today, February 10, is the deadline for the filing of the general report in connection with the bankruptcy of Argentine company Durbike S.A., according to an earlier article by the Troubled Company Reporter - Latin America. The Company's receiver, Mr. Alberto Jorge Rotehberg, prepared the report after the individual reports were processed at court. The individual reports, which were due at court last November 25, contain the results of the verification process done to determine the nature and amount of the Company's debts. Buenos Aires Court No. 14 handles the Company's case with assistance from Clerk No. 28. CONTACT: Alberto Jorge Rotenberg Ave. Cordoba 1336 Buenos Aires GATIGOM: Deadline for Individual Reports Filing Expires ------------------------------------------------------- The individual reports for the bankruptcy of Argentine company Gatigom S.A. are due at the court today. These reports contain results of the credit verification process, which was done "por via incidental", according to the Troubled Company Reporter - Latin America in an earlier report. Buenos Aires Court No. 14 and Clerk No. 27 handle the Company's case. The court ordered the receiver, Mr. Angel Vello Vazquez, to file the general report on March 23. This report is a consolidation of the data in the individual reports. The Company's assets will be liquidated at the end of the bankruptcy process to repay its creditors. Payments will be based on the results of the credit verification process. CONTACT: Gatigom S.A. Viamonte 1592 Buenos Aires GRISCAN ILUMINACION: Reorganization Claims Review Ends Today ------------------------------------------------------------ The credit verification process for the reorganization of Argentine company Griscan Iluminacion S.H. ends today. The Company's receiver, Mr. Raul Bremer, will prepare the individual reports on the verification results. An earlier report by the Troubled Company Reporter - Latin America indicated that Buenos Aires Court No. 25 handles the case. Local sources, however, did not mention whether the court has set the deadlines for the filing of the receiver's reports. CONTACT: Raul Bremer Lambare 1140 Buenos Aires GRUPO GALICIA: Net Loss Shrinks In 2003 --------------------------------------- Argentina's Grupo Financiero Galicia posted a net loss of ARS217.1 million in 2003, an improvement over the massive ARS1.471 billion net loss of 2002. While the Company wasn't able to return to profitability for the year or in the fourth quarter, the latest results reflect the Company's slow but continuing recovery from the nightmare years of 2001 and 2002, when the financial system was devastated by Argentina's crisis. In 2003, financial income came in at ARS1.682 billion, down from the ARS5.376 billion posted one year earlier. Financial expenses were also lower, totaling ARS1.503 billion in 2003 against ARS4.508 million in 2002. As of the end of 2003, Grupo Galicia said deposits stood at ARS5.584 billion, higher than the ARS4.733 billion at the closing of 2002. The group's troubled Banco Galicia unit, one of Argentina's biggest banks, posted a loss of 198.97 million pesos in 2003. LABORATORIO REYES: Preventative Reorganization Motion at Court -------------------------------------------------------------- Argentine company Laboratorio Reyes S.R.L. seeks court permission to undergo reorganization at Buenos Aires Court No. 16. A report by local news portal Infobae indicates that the Company has voluntarily submitted its motion for "Concurso Preventivo". Clerk No. 31 assists the court on the matter. CONTACT: Laboratorio Reyes S.R.L. Pedro Goyena 1433 Buenos Aires MOLDAVIANA: Receiver Prepares Individual Reports in Bankruptcy -------------------------------------------------------------- Mr. Raul Mencia, receiver for Moldaviana S.R.L., will prepare the individual reports concerning the Company's bankruptcy as the credit verification period is due to end today. The court- appointed receiver examined and authenticated creditors' claims to determine the nature and amount of the Company's debts. The receiver is also required to prepare a general report after the individual reports are processed at court. Local sources did not mention whether the court has set the filing deadlines for these reports. The Troubled Company Reporter - Latin America earlier reported that the Company entered bankruptcy on orders from Buenos Aires Court No. 1. CONTACT: Moldaviana S.R.L. Loyola 587 Buenos Aires Raul Mencia Uruguay 328 Buenos Aires SABORE: Individual Reports Due at Court Today --------------------------------------------- Buenos Aires Court No. 6 expects the individual reports for the reorganization of Sabore S.R.L. to be filed today. The Company's receiver, Ms. Veronica Bartella, prepared the reports after the credit verification process was completed late last year. The receiver will then prepare the general report, to be filed on March 23 next year, after the individual reports are processed at court. An earlier report by the Troubled Company Reporter - Latin America indicated that the city's Court No. 6 approved the Company's motion for "Concurso Preventivo." Clerk No. 12 works with the court on the case. CONTACT: Veronica Bartella Quevedo 3338 Buenos Aires SANIMAT: Proof of Claims Period Ends Today ------------------------------------------ The credit verification process for the bankruptcy of Buenos Aires-based company Sanimat S.A. ends today, according to an earlier report by the Troubled Company Reporter - Latin America. The city's Court No. 18 handles the Company's case with assistance from Clerk No. 35 said the report. The designated receiver, Mr. Osvaldo Nicolini, is required to prepare individual and general reports on the bankruptcy process. However, local sources did not mention whether the court has set the deadlines for these reports. CONTACT: Sanimat S.A. Ave. Monroe 1869 Buenos Aires Osvaldo Nicolini Alvarez Thomas 3036 Buenos Aires SOCIEDAD TECNOINDUSTRIAL: Creditor Claims Review Closes Today ------------------------------------------------------------- The bankruptcy of Argentine plastic maker Sociedad Tecnoidustrial S.R.L. moves a step further as the credit verification period ends today. On orders from Buenos Aires Court No. 1, the Company's receiver, Mr. Otto Reinaldo Munch, will prepare the individual reports on the verification results. The Company entered bankruptcy after Insolvency Judge Dieuzeide approved a petition filed by the Company's creditor for nonpayment of debt. The city's Clerk No. 2, Dr. Pasina, assists the court on the case. CONTACT: Sociedad Tecnoindustrial S.R.L. Ave Fernandez de la Cruz 2116 Buenos Aires Otto Reinaldo Munch 3rd Floor Maipu 509 Buenos Aires SOMECAL: Receiver To File General Report with Court Today --------------------------------------------------------- Mr. Ruben Toytoyndjian, the court-appointed receiver for the reorganization of Buenos Aires-based Somecal S.A., must file the general report at the city's Court No. 14 today. The receiver prepared the report after the individual reports were processed at court. The individual reports contain the results of the credit verification process completed late last year. The receiver examined and authenticated creditors' claims to determine the nature and amount of the Company's debts. According to an earlier article by the Troubled Company Reporter - Latin America, the Company was undergoing reorganization when the court issued the bankruptcy order. CONTACT: Ruben Toytoyndjian Ave. Roque Saenz Pena 1219 Buenos Aires TRAKE TRADE: Court Outlines Bankruptcy Process Timeline ------------------------------------------------------- Buenos Aires Court No. 6 sets the schedule for the bankruptcy of local company Trake Trade S.A., reports local news portal Infobae. The Company's receiver, Mr. Norberto Markel, must prepare the individual reports after the credit verification process is closed on April 12. Working with Clerk No. 11, the court ordered the receiver to file the individual reports on May 24. The general report, due at court on July 8, will be prepared after the individual reports, which contain the verification results, are processed at court. The Company's assets will be liquidated at the end of the bankruptcy process to reimburse its creditors. CONTACT: Norberto Markel Tucuman 1657 Buenos Aires =========== B R A Z I L =========== BANCO SANTOS: Fitch Affirms Ratings, Withdraws Future Outlook ------------------------------------------------------------- Fitch Ratings, the international rating agency, affirmed and withdrawn on Friday Banco Santos S.A.'s ("Santos") Long-term foreign and local currency ratings of 'B-' (B minus), Short-term foreign and local currency ratings of 'B' Individual rating of 'D/E', Support rating of '5', Long-term National rating of 'BB+(bra)' and its Short-term National rating of 'B(bra)'. The Long-term rating Outlook was Stable. CONTACT: Peter Shaw New York Phone: +1 212 908-0553 Rafael Guedes Sao Paulo Phone: +55-11-287-3177 Rita Goncalves Rio de Janeiro Phone: +55-21-2224-3558. Jaqueline Ramos de Carvalho, Media Relations Rio de Janeiro Phone: +55-21-2224-3558. CSN: Fitch Issues Favorable View on Proposed US$780M Investment --------------------------------------------------------------- Fitch Ratings views positively Companhia Siderurgica Nacional's (CSN) proposed $780 million investment plan. The most important component of this plan is the expansion of the production capacity of its Casa de Pedra iron ore mine to 40 million metric tons from 14 million tons by mid-2006. The Casa de Pedra iron ore mine is one of the most valuable in the world due to its large reserves and the high iron content of its ore. Currently, CSN sells most of its excess iron ore production of approximately 8 million tons to Brazilian steel producers. Fitch believes that the proposed project to essentially monetize this high quality asset makes strategic sense given the current pricing environment for iron ore and the positive outlook for demand over the near- to medium-term. Iron ore prices rose by about 9% in 2003 and by about 18% in 2004. These increases in price, along with that for several other commodities, have been driven by the confluence of an improving global economy and China's surging demand for raw materials. The investment would involve not only the expansion of the Casa de Pedra mine, but also of the Sepetiba port infrastructure to allow for sales to the export market. The project may also include the construction of a 6 million ton pellet plant. When the project is concluded in 2006, the mine is expected to yield an additional $200 million in free cash flow. Although this incremental cash flow is significant, approximately 80% of CSN's total future cash flow will be generated from its low-cost steel production business. Given CSN's annual expected free cash flow of about $300 million, the project could be financed, even under most downside scenarios, using CSN's internally generated funds without a significant effect on CSN's credit ratios. Even if outside financing were used to fund up to 75% of the investment, CSN's credit protection measures would remain within the existing rating categories throughout the three-year investment period. Under a conservative base case scenario, CSN's ratio of EBITDA- to-interest expense would still remain at about 5 times (x), while leverage, as measured by total debt-to-EBITDA, would remain below 3x. Only under a severe and sustained drop in global steel prices over 2004-2005, would CSN's credit ratings be affected. Fitch maintains a 'B+,' foreign currency rating, a 'BB+,' senior unsecured local currency rating and a 'A+(bra)' national scale rating for CSN. The Rating Outlook is Stable. CSN's foreign currency rating is constrained by the Federative Republic of Brazil's 'B+,' foreign currency rating. Fitch also maintains ratings for CSN's export securitizations issued through CSN Islands VI Corp. Fitch rates both the series 2003-1 $142 million fixed-rate notes and the series 2003-2 $125 million floating-rate notes 'BBB-'. In 2003 and January 2004 CSN was successful in tapping the international capital markets via several straight bond issuances through its CSN Islands subsidiaries, totaling approximately $1.2 billion. The proceeds were used primarily to refinance existing obligations and extend the company's debt maturity profile. Now only about 30% of CSN's total debt is short-term, compared to 45%-55% during 2002. In 2003, also CSN benefited from a lower overall cost of financing. Due to increased production volumes, a higher value-added product mix and a currently strong pricing environment for steel, Fitch expects CSN to continue to generate healthy operating cash flow into 2004. With EBITDA of more than $1 billion expected in 2004, CSN's ratio of EBITDA-to-interest expense should be above 5 times (x), while leverage, as measured by net debt-to-EBITDA, should remain below 2x. Fitch also expects to see a reduction in net debt in 2004 such that CSN's net debt-to-EBITDA could improve to less than 1.5x; CSN's management and key shareholder has stated that they are committed to reducing the company's ratio of net debt-to-EBITDA to 1.1x by the end of 2004. Although a significant reduction in net debt is expected in the near term, Fitch believes that further debt reduction will be constrained over the next several years by the aggressive capital expenditure program and the debt-service requirements of the company's controlling shareholder, Vicunha Siderurgia S.A. (Vicunha), which has a 46% stake in CSN but no operating assets. In 2003, about one quarter of CSN's EBITDA, or about $270 million, was needed for dividends in order for Vicunha to meet debt service on its debentures of approximately $120 million. The estimated required dividend from CSN would likely be about $235 million in 2004, $300 million in 2005 and $335 million in 2006. With an expected EBITDA of more than $1 billion in 2004, capital expenditures of about $200 million (including the potential Casa de Pedra expansion), interest expense of $200 million, taxes of $100 million, and increases in working capital of $150 million, Fitch believes that CSN will be able to meet the estimated dividend requirement. CSN seems especially poised to grow in the current global environment of high commodity prices due to its ownership of the Casa de Pedra mine. CSN's ratings are also supported by its modern production facilities, vertical integration and access to low-cost labor. The ratings also factor in the concentrated nature of the Brazilian steel industry, which limits competition based solely upon price. In addition, transportation barriers minimize the amount of steel imported into the Brazilian market. These factors allow CSN to generate strong cash flows during troughs in the steel cycle and in economic downturns in Brazil. CSN ranks as one of the largest steel producers in Latin America with annual production capacity of 5.8 million tons of crude steel. CSN's fully integrated steel operations, located in the state of Rio de Janeiro in Brazil, produce steel slabs and hot- and cold-rolled coils and sheets for the automobile, construction and appliance industries, among others. CSN also holds leading market shares in the galvanized and tin-mill products. CONTACT: Fitch Ratings Anita Saha, CFA Chicago Phone: 312-368-3179 Joe Bormann, CFA Chicago Phone: 312-368-3349 Jayme Bartling Sao Paulo Phone: +55-11-287-3177 James Jockle, Media Relations Phone: 212-908-0547 EMBRATEL: Anatel Opposes Data Room Opening ------------------------------------------ Brazil's telecommunications regulator Anatel refused to allow the opening of Embratel Participacoes SA's financial records to potential buyers, reports Bloomberg News. Anatel President, Pedro Jaime Ziller, said the regulator didn't want Embratel's business secrets falling into the hands of its main competitors, such as Telefonica SA, Telemar Norte Leste SA, and Brasil Telecom Participacoes SA, all of which formed a coalition to try to acquire Embratel. The country's economic antitrust authority SDE has earlier voiced its opposition to opening up Embratel's data room, saying it would damage competition in the local market. "If Embratel makes available data that allows a unification of its commercial strategies with those of its three main competitors... such behavior could damage economic order," SDE official Alessandra Viana Reis said earlier. CONTACT: Silvia M.R. Pereira, Investor Relations Tel: (55 21) 2121-9662 Fax: (55 21) 2121-6388 Email: silvia.pereira@embratel.com.br invest@embratel.com.br PARMALAT BRASIL: No Truth to Allegations Over Cash Transfers ------------------------------------------------------------ A director of Parmalat Brasil Industria de Alimentos denied allegations that the Brazilian subsidiary of Italy's Parmalat made any illegal transfers of cash abroad, reports Reuters. "Brazil never sent any (cash abroad)," Andrea Ventura, Parmalat Brasil's finance director, told reporters after being summoned to a Sao Paulo court in connection with an injunction granted to Japan's Sumitomo Mitsui blocking Parmalat Brasil from selling any units and transferring assets abroad. On Thursday, Paulo Rubem, a member of a congressional commission investigating Parmalat's activities in Brazil, said the Company had transferred up to BRL1.7 billion (US$580 million) out of the country between 1996 and 2002. According to him, the Central Bank has evidence of at least one transfer of BRL580 million to a Uruguayan unit of Parmalat known as Wishaw Trading SA. Parmalat Brasil's president Ricardo Goncalves also denied such transfers had occurred during his four years in charge. Brazil's Central Bank also has said it did not register any transfer of cash in Brazilian currency out of the country by Parmalat Brasil between the start of 2000 and beginning of 2004. ========= C H I L E ========= ENDESA CHILE: Obtains Bank Syndicated $250M Loan ------------------------------------------------ Chilean generator Endesa Chile (NYSE: EOC) announced Wednesday that it signed a US$250-million loan with Santander bank, BBVA, Caja de Madrid, Citibank and Bank of Tokyo, relates Business News Americas. The loan is for 3.5 years with a 1.15% spread over Libor. The Company said it will use the funds to refinance a syndicated loan signed in May 2003 and save it US$5.2 million annually in financial expenses. The loan is not guaranteed, which releases Endesa's subsidiaries Pangue, Pehuenche and Celta from their guarantees related to the May 2003 loan. PARMALAT CHILE: Bethia Anticipates Closing Acquisition Next Week ---------------------------------------------------------------- Chilean company Inversiones Bethia expects to close an accord to acquire Parmalat Finanziaria SpAs local unit next week. It is also thinking of acquiring other Parmalat subsidiaries in Latin America, a top executive at Bethia informed Friday. The source pointed out that the possibility of Chilean businessman Max Marambio and Swedish-Danish group Arla Foods being interested in Parmalat's assets would not affect Bethia's decision. Bethia has the first priority in the negotiations with Parmalat in Chile, as well as in Latin America, the source affirmed. Parmalat operates in most of Latin American countries, including Argentina, Brazil, Uruguay, Colombia, Dominican Republic, Ecuador, Mexico, Nicaragua, Paraguay and Venezuela. =================== C O S T A R I C A =================== ICE: Samsung Electronics To Supply $23M Equipment To Costa Rica --------------------------------------------------------------- South Korean technology giant Samsung Electronics Co. (KSE:005930) won a US$23 million contract to supply high-speed Internet equipment to Costa Rica. The agreement was signed between Pablo Cob, the president of Costa Rica's state owned telecoms operator ICE, and Samsung vice president Hwan Woo Chung. Under the agreement, Samsung is to supply a full range of network infrastructure products as well as professional products such as training over the next three years. The contract was won over eight international technology heavyweights, including Lucent Technologies, Siemens and Cisco Systems. =================================== D O M I N I C A N R E P U B L I C =================================== AES CORP.: May Divest 50% Stake in Ede-Este By Year-End ------------------------------------------------------- US power company AES Corporation is mulling the sale of its 50% stake in Dominican distributor Distribuidora del Este (EDE-Este) by end-2004, Scott Cunningham, VP of investor relations at AES, told Business News Americas. AES bought EDE-Este for US$110 million in 1999 but discontinued Ede-Este's operations in the fourth quarter of 2003. "Despite our actions to improve the operations of EDE-Este, the crisis in the county's electricity sector has undermined the business and made it financially unviable," executive VP and COO for integrated utilities, Joseph Brandt, said in a statement. "Given the current outlook, to remain in it would mean substantial losses that we are not prepared to incur," he said. Ede-Este was involved in legal proceedings against state power company CDEEE for freezing its accounts in a dispute over debt payments. In the meantime, AES vows to keep its generation business in the Dominican Republic despite the country's worsening energy sector crisis. Cunningham admitted that the generation business has been a "difficult environment" in terms of cash flow but said, "we believe there is still going to be good value down the road." * S&P Affirms Dominican Republic's 'CC' Long-Term Debt Rating ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CC' long-term sovereign credit and senior unsecured debt ratings on the Dominican Republic. Standard & Poor's also said that it affirmed its 'C' short-term sovereign credit rating on the republic. The outlook remains negative. According to credit analyst Jane Eddy, despite Thursday's payment of US$27 million in interest on the 9.04% bond due 2013 (the republic missed payment on the Jan. 23, 2004, due date, but remained within the grace period allowed under the financing documents) and the Inter-American Development Bank's (IADB) disbursement of US$150 million to the Dominican Republic expected over the next few days, the heightened probability of a default on debt still remains. "With the government in discussion with the Paris Club to reschedule its debt service obligations to its bilateral creditors, the probability of default on debt due to the private sector increases," Ms. Eddy said. "Given the general provisions of the Paris Club's Evian Approach, this could imply that the government may be asked to seek comparability of treatment from its private creditors, under which the government would have to reschedule all of its external debt," she added. Ms Eddy explained that the IADB monies should help alleviate a cash crunch in the near term, but liquidity concerns remain throughout 2004. "The government is already in arrears to its bilateral creditors and to many of its suppliers," she concluded. ANALYST: Jane Eddy, New York (1) 212-438-7996 =========== M E X I C O =========== ASARCO: Fitch Upgrades Rating to 'CCC' -------------------------------------- Fitch Ratings has upgraded the rating of Asarco Inc. (Asarco) to 'CCC' from 'C'. The rating applies to Asarco's notes due in 2013 and 2025. The Rating Outlook is Stable. This rating action reflects Fitch's belief that Asarco's credit profile is no longer one of imminent default, as indicated by our 'C' rating. In 2003, Asarco reduced its outstanding debt by about $600 million through the sale of its stake Southern Peru Copper Corporation (SPCC) and faces no significant maturities until 2013. Fitch's 'CCC' rating maintains that default is a real possibility and a company's capacity for meeting financial commitments is solely reliant upon sustained favorable business or economic conditions over the medium-term. In conjunction with the debt restructuring in April 2003 of Asarco's affiliate, Minera Mexico (formerly Grupo Minero Mexico), Asarco sold its 54.2% stake in SPCC for $765 million to its direct parent company, Americas Mining Corporation (AMC), a subsidiary of Grupo Mexico S.A. de C.V. (GM). The proceeds were used to pay off $550 million in overdue debt obligations (consisting of a $450 million bank facility due in November 2001 and a $100 million bond due in February 2003). For the sale of its stake in SPCC, Asarco received $500 million in cash, $223 million in notes payable from AMC, as well as $42 million in debt forgiveness of a loan from AMC. The $223 million in notes consists of: 1) a $123 million obligation of AMC to pay Asarco $8.8 million semiannually over seven years at a rate of 7%; and 2) a $100 million obligation of AMC to pay Asarco up to $12.5 million (based on copper prices) over eight years at a rate of 8%. The payments on this note were endorsed by Asarco to an environmental trust fund. Asarco now has total debt of about $440 million (consisting of $250 million of unsecured debt due 2013-2025 and $190 million in pollution control bonds due 2004-2033), and has no significant maturities until a $100 million note matures in 2013. Approximately $36 million of debt matures in 2004-2009. Fitch's 'CCC' rating of Asarco's debt obligations reflects the substantial uncertainly regarding the company's potential environmental lawsuits as well as its inability to generate significant cash flow due to its high cash cost of production. Asarco is 100%-owned by AMC, a direct subsidiary of Grupo Mexico. The company's mining operations in the United States consist of three open-pit copper mines, Ray, Mission and Silver Bell in the state of Arizona. Asarco also operates a custom smelter in Hayden, Arizona, a refinery in Amarillo, Texas and two SX/EW plants. In 2003, Asarco produced 170,000 tons of copper and it expects output to be about 180,000 tons in 2004, (110,000 tons from copper contained in concentrate and 70,000 tons via the SX/EW process). This level of production is lower than prior years in which output was about 230,000-240,000 tons. Asarco has reduced production at its Mission and Ray mines due to the high cost of production above the average price of copper. In 2003, Asarco's cash cost of production was $0.85/lb. Contact: Joe Bormann, CFA Chicago Phone: +1-312-368-3349 Anita Saha, CFA Chicago Phone: +1-312-368-3179 James Jockle, Media Relations Phone: +1-212-908-0547 AXTEL: Moody's Assigns B2 Ratings to Debt Securities ---------------------------------------------------- Moody's Investors Service assigned ratings to various debt securities issued by Axtel, S.A. de C.V., a telephone company based in the city of Monterrey, Mexico. Moody's assigned B2 ratings to the following: - Senior Implied Rating - Senior Unsecured Issuer Rating - US$175 million of New Guaranteed 11% Senior Unsecured Notes due 2013 The outlook on the ratings is stable. Axtel's ratings reflect the risks inherent in the Company's limited track record of positive FCF, relatively smaller size compared to other rated telecommunications companies, existing competition from the dominant telephone carrier, declining prices in traditional telephone services, dependence on a key customer, currency mismatch, and mobile substitution. Somewhat mitigating these concerns, however, are the company's status as the second largest local telephone company in Mexico, its solid operating performance and significant success at controlling churn, its "bill and keep agreement" with Telmex, a relatively healthy balance sheet, improved maturity profile, under penetration of local telephone services, strong sponsorship from large shareholders and a favorable regulatory framework. GRUPO MEXICO: Expects SPCC's Decision on Proposal This Year ----------------------------------------------------------- Grupo Mexico (G-Mex) expects the special committee of board members with Southern Peru Copper (SPCC) to decide this year whether to accept the transfer of G-Mex shares in mining unit Mineral Mexico to SPCC, reports Business News Americas. G-Mex earlier revealed a proposal to transfer all of its shares in 99%-owned Mineral Mexico to SPCC, meaning SPCC shares would trade as a single class on the New York Stock Exchange, while G- Mex would maintain its listing on Mexico City's bourse. SPCC said it had established a special committee to analyze G- Mex's transfer plan and recommend to the board and shareholders whether the move is in the Company's best interests. "There is no specific timeframe to carry this out, but we expect the evaluation to wrap up in the next few months," Juan Rebolledo, G-Mex's vice-president of international relations said. XIGNUX: Extends Proxy Payment, Withdrawal Rights Deadlines ---------------------------------------------------------- Xignux, S.A. de C.V. (formerly known as Axa, S.A. de C.V.) ("Xignux") announced Friday an extension of the Proxy Payment Deadline and Withdrawal Rights Termination Deadline for its previously announced exchange offer to 5:00 pm, New York City time, on February 12, 2004 (the "Extended Proxy Payment Deadline and Withdrawal Rights Deadline") from the previous deadline of 5:00pm, New York City time, on February 5, 2004. In the exchange offer Xignux is offering to exchange its 9-3/4% Senior Guaranteed Notes due 2014 for its outstanding 9% Guaranteed Notes due 2004 (the " Existing Notes") and is soliciting proxies from holders of the Existing Notes in favor of an extraordinary resolution to adopt certain proposed amendments to the terms and conditions of the Existing Notes and the trust deed under which the Existing Notes were issued. Following Friday's announcement, holders who validly tender their Existing Notes and deliver validly executed proxies in favor of the extraordinary resolution on or prior to the Extended Proxy Payment and Withdrawal Rights Deadline, will be eligible to receive a proxy payment of US$40 per US$1,000 principal amount of Existing Notes tendered and as to which proxies are granted and accepted. Holders may withdraw their proxies at any time prior to the Extended Proxy Payment Deadline and Withdrawal Rights Deadline. Citigroup Global Markets is the dealer manager and Global Bondholder Services is the information agent for the Exchange Offer. Requests for documentation should be directed to Global Bondholder Services at +1(212) 430-3774 (collect - for banks and brokers) and (866) 470-3800 (for all others). Questions regarding the transaction should be directed to Citigroup Global Markets at (800) 558-3745. CONTACT: Matthew Radley, Citigroup Global Markets Phone: +1-212-723-6106 *********** 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. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. 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