/raid1/www/Hosts/bankrupt/TCRLA_Public/040414.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, April 14, 2004, Vol. 5, Issue 73
Headlines
A R G E N T I N A
CIGAS: Court OKs Creditor's Involuntary Bankruptcy Motion
CORREO ARGENTINO: Government Searching for New Tender
EIME: Court Approves Bankruptcy Petition
EL MAGO: Court OKs Creditor's Bankruptcy Call
LAMI: Court Approves Reorganization Proceedings
STOP CAR: Court Approves Concurso Motion
TELECOM ARGENTINA: Studying Restructuring Plan Sweeteners
B R A Z I L
AOL LATIN AMERICA: Brazil Unit Launches Interactive Section
EMBRATEL: MCI Mulling Generous Calais Offer
EMBRATEL: MCI To Resist Sought Ouster of Auditor
EMBRATEL: Response To CVM Enquiry
LIGHT SERVICOS: To Offer Stake To BNDES
C H I L E
PARMALAT CHILE: Assets Eyed By Bethia For US$15M
E C U A D O R
PETROECUADOR: Board Member Named New Energy Minister
M E X I C O
GRUPO COVARRA: Still Sparking Investors' Interest
HYLSAMEX: Ups 1Q EBITDA Outlook
PROVO MEXICO: Settles Debt Obligation to Major Supplier
SINGER MEXICO: Parent Reports Large Decline in 2003 EBITDA
TMM: KCS Clarifies Obligations Under Stipulation Agreement
P E R U
NUEVO MUNDO: Liquidation Restarted By Court Ruling
- - - - - - - -
=================
A R G E N T I N A
=================
CIGAS: Court OKs Creditor's Involuntary Bankruptcy Motion
---------------------------------------------------------
Judge Ballerini of Buenos Aires Court No. 24 declared
Construcciones Civiles de Gas SA (Cigas) bankrupt, reports La
Nacion. The ruling comes in approval of the bankruptcy petition
filed by Ramon Dos Santos, to whom the Company owes ARS5055,77.
The court, assisted by Clerk No. 48, Dr. Diaz, appointed Mr.
Eduardo Echaide as receiver, who will authenticate creditors'
claims until May 19, 2004. This process is done to determine the
nature and amount of the Company's debts. Creditors must have
their claims authenticated by the said date in order to qualify
for payments to be made after the Company's assets are
liquidated.
CONTACT: Construcciones Civiles de Gas SA (Cigas)
Avenida Santa Fe 1114
Buenos Aires
Eduardo Echaide, Receiver
Sanchez de Loria 155, piso 6ø "C"
Buenos Aires
CORREO ARGENTINO: Government Searching for New Tender
-----------------------------------------------------
The Argentine government is now seeking a new tender for the
selection of a new operator for bankrupt mail service Correo
Argentino, as personnel hired by the Macri Group continue to
manage the company despite the termination of its concession to
operate five months ago, the La Nacion newspaper reports.
Correo Argentino's postal concession was cancelled by the
government in November for missed payments and failure to meet
other terms of their contract. With debts of ARS900 million,
ARS450 million of which is owed to the state, the former
operator is also undergoing local bankruptcy proceedings.
Correo's contract was established in 1997, making the Company
the world's first fully privatized mail service. It is owned by
Sideco Americana, a consortium run by Argentine businessman
Francisco Macri. It's main asset is the postal processing plant
at Monte Grande, that has absorbed investments of US$30 million
and is still running at 30% of its capacity.
EIME: Court Approves Bankruptcy Petition
----------------------------------------
Judge Herrera of Buenos Aires Court No. 3 declared EIME SRL
"Quiebra," granting a petition filed by one of the Company's
creditors.
La Nacion reports that Lloyd's TSB Bank SA sought to have EIME
SRL declared bankrupt on failure to pay debts amounting to
ARS3,019.88.
With assistance from Dr. Gutierrez Huertas, Clerk No. 6, the
court assigned Mr. Marcelo Rodriguez as receiver who will
authenticate creditors' proofs of claim until June 8, 2004.
Creditors must have submitted their claims by the said date in
order to qualify for the payments that will be made after the
Company's assets are liquidated.
CONTACT: EIME SRL
Malabia 465, piso 1ø
Buenos Aires
Marcelo Rodriguez, Receiver
Cerrito 146, piso 6ø
Buenos Aires
EL MAGO: Court OKs Creditor's Bankruptcy Call
---------------------------------------------
El Mago SA entered bankruptcy after Judge Ferrario of Buenos
Aires Court No. 6 approved a bankruptcy motion filed by Jose
Arriola, says La Nacion. The Company's failure to pay ARS5362,63
in debt prompted the creditor to file the petition.
Working with Dr. Mendez Sarmiento, the city's Clerk No. 12, the
Court assigned Mr. Luis Traverso as receiver for the bankruptcy
process. The receiver's duties include the verification of
creditors' claims until May 27, 2004 and the subsequent
preparation of the individual and general reports.
The Company's assets will be liquidated at the end of the
bankruptcy process to repay creditors. Payments will be based on
the results of the verification process.
CONTACT: El Mago SA
Azcuenaga 668
Buenos Aires
Luis Traverso, Receiver
Avenida Corrientes 1820, piso 10 "B"
Buenos Aires
LAMI: Court Approves Reorganization Proceedings
-----------------------------------------------
Judge Gutierrez Cabello of Buenos Aires Court No. 7 approved the
"Concurso Preventivo" petition filed by Lami SA, reports local
news source La Nacion.
The Company, which listed assets of ARS202,271.78 and
liabilities of ARS263,769.42, will undergo a reorganization
process, with Mr. Gabriel Bigal as receiver.
The court-appointed receiver will verify creditors' proofs of
claim until June 9, 2004. Verifications are done to ascertain
the nature and amount of the Company's debts. The receiver will
also prepare the individual and general reports on the case.
Clerk No. 14, Dr. Giardinieri, assists the court on the case.
CONTACT: Lami SA
Avenida Julio A. Roca 546, piso 3ø "3"
Buenos Aires
Gabriel Bigal, Receiver
Reconquista 1011, piso 6ø "5"
Buenos Aires
STOP CAR: Court Approves Concurso Motion
----------------------------------------
Judge Gutierrez Cabello of Buenos Aires Court. No. 7 approved a
petition for reorganization filed by Stop Car SA, reports La
Nacion.
The Company is entrusted to its receiver, Ms. Alicia Romeo, who
will verify claims and prepare the necessary reports. Creditors
must present their claims for authentication before August 4,
2004.
The receiver will then prepare the individual reports. After
these reports are processed in court, the receiver will submit
the general report. The deadlines for the submission of these
reports are yet to be disclosed.
Dr. O'Reilly, Clerk No. 13, assists the court on the case.
CONTACT: Stop Car SA
Talcahuano 1071
Buenos Aires
Alicia Romeo, Receiver
Rodriguez Pena 694, piso 5ø "G"
Buenos Aires
TELECOM ARGENTINA: Studying Restructuring Plan Sweeteners
---------------------------------------------------------
Local newspaper El Cronista reports that Telecom Argentina
(NYSE: TEO) is figuring out ways to enhance its US$3.2 billion
debt restructuring plan after the rejection of the first offer
made in January by creditors that hold some 40% of the debt,
says BNamericas.
Before Telecom can propose its plan in the works to
international regulators such as the SEC and Italy's Consob, the
rules of Argentina's out of court restructuring framework or APE
call for the Argentine firm to first secure the approval of its
creditors.
Telecom's first proposal on January 9 was unanimously turned
down by its creditors, with El Cronista quoting JP Morgan
analyst William Perry as saying that it ""does not represent the
company's true payment capacity and does not share the load of
the crisis."
The company's shareholders, however, received the proposal
favorably, as indicated in the 29% rise in the share price
during the first six days after January 9.
===========
B R A Z I L
===========
AOL LATIN AMERICA: Brazil Unit Launches Interactive Section
-----------------------------------------------------------
As part of its strategy of market segmentation, the Brazil unit
of US internet service provider (ISP) America Online (AOL) is
setting its sights on courting the corporate sector with a new
interactive section, reports BNamericas, citing local paper
Gazeta Mercantil.
The new section, called "Business & Companies," provides content
on corporate strategy, the finance sector, industry, services,
telecom, information technology, retail and non-profit. It also
allows corporate users to publish opinion articles.
Launched in September, AOL's market segmentation strategy has
special services aimed at catering to the information needs of
businessmen, youth and family niches.
Claiming to be Brazil's number three ISP behind local company
Universo Online (UOL) and Spain's Terra, AOL Brazil is AOL's
first operation in Latin America. AOL also has units in Mexico,
Argentina and Puerto Rico.
EMBRATEL: MCI Mulling Generous Calais Offer
-------------------------------------------
Daniel Golden, an attorney for the official creditors committee
of MCI, said the U.S. telecommunications company is studying the
sweetened offer by Brazilian consortium Calais de Participacoes
SA for the acquisition of its controlling stake in Brazil's
largest long-distance carrier Embratel Telecom Participacoes SA,
Dow Jones reports.
This could mean that Calais' bitter weeks-long campaign for the
reconsideration of Embratel's sale to Mexico's dominant carrier,
Telefonos de Mexico SA (Telmex) might just bear fruit. MCI
agreed March 12 to sell its 51.8% voting stake in Embratel to
Telmex for $360 million in cash, ignoring Calais's much higher
bid of US$550 million, saying the bid had "significant"
regulatory risks that "pose the very real threat of significant
delays to closing, if closing could ever occur at all."
But the winds apparently shifted last week when Calais sweetened
its bid and offered to guarantee that MCI would receive at least
US$360 million even if the deal is rejected by Brazilian
regulators by July 8, 2005, and US$550 million if it is
approved.
Calais' main investors -- Tele Norte Leste Participacoes SA, or
Telemar; SP Telecomunicacoes Holding Ltd., a Brazil unit of
Spain's Telefonica SA; and Brasil Telecom Participacoes -- are
Embratel's biggest competitors. Brazilian laws prevent one
telecommunications firm from controlling another in the same
region and business. The Calais bid, say critics, is a challenge
to the same laws designed to promote competition in the
telecommunications industry.
However, Calais claims that its complex ownership structure
makes it possible for the three phone companies that are
investors to purchase and break into pieces one of their
competitors without violating competition laws.
Embratel's management in Brazil has just complicated things
further when, according to a press release, it submitted a
report prepared by Boston Consulting Group showing that the
Calais proposal wasn't economically or financially sound to
Brazil's three competition watchdogs as well as the country's
telecommunications regulator. The statement also said the report
contained opinions from eight prominent lawyers and economists -
including a former justice minister -- that show the
"illegality" of the possible sale of Embratel to Calais.
For its part, Calais disputed in a statement Monday the claims
of Embratel, saying that its bid "doesn't represent any kind of
regulatory risk, as proved by several legal opinions signed by
experts, including the ones responsible for the development of
the Brazilian General Telecommunications Law." "The action
implemented today by Embratel's management contradicts any
business logic, directly hurting the interests of its
shareholders and MCI's creditors," said the Calais announcement.
In its agreement with Telmex last month, MCI agreed not to
"solicit or initiate any inquiries regarding alternate bids."
However the terms of the agreement say that MCI is allowed to
consider "an unsolicited written alternate proposal," which
appears to apply to the new offer from Calais last week.
MCI and Telmex agreed to request a delay of a bankruptcy court
hearing to approve the Embratel sale shortly after Calais
tendered its new offer last week. Originally scheduled this
week, the U.S. Bankruptcy Court of the Southern District of New
York in Manhattan granted the request and moved the hearing to
April 27. MCI will no longer need court approval to sell
Embratel if the U.S. Company has exited bankruptcy protection,
which it says it hopes to do by the end of April.
EMBRATEL: MCI To Resist Sought Ouster of Auditor
------------------------------------------------
With state taxing authorities seeking to unseat KPMG LLP as
auditor for embattled MCI Inc. (formerly WorldCom), the
telecommunications company is set to file before the judge
overseeing its bankruptcy proceedings its argument against the
states' motion, the Associated Press reports.
Several states led by Massachusetts have sought the dismissal of
KPMG, claiming that the firm's work as mastermind of a
challenged tax strategy creates a conflict in the bankruptcy
case. "How is anyone who gave tax advice to the company and
audited the books of the company able to guarantee that what
they are doing is in the best interests of all creditors, of
which we are one?" said Alan LaBovidge, commissioner of revenue
for Massachusetts.
MCI owes US$90 million in back taxes for a royalty strategy
under which it "licensed" the foresight of its top executives in
such a way that allowed it to maneuver revenue out of high-tax
jurisdictions, according to Massachusetts.
Some 15 states have questioned or are expected to question MCI's
tax strategy, saying that it should probably sue KPMG if the
strategy does not stand up in court. Richard Thornburgh, who has
been appointed by the bankruptcy court to examine WorldCom's
books, called KPMG's royalty strategy "improper tax advice." The
states also want KPMG to return more than US$140 million in
fees.
For its part, KPMG and the company said that in court papers,
the tax advice was sound and there is no conflict of interest
between the company and its auditor.
U.S. Bankruptcy Judge Arthur Gonzalez told MCI in March to stop
paying KPMG temporarily until the disqualification question is
resolved.
The telecommunications company said in court papers that in the
event KPMG is disqualified, it could mean the indefinite delay
of MCI's emergence from Chapter 11 protection, since the auditor
still has to certify 2003 statements.
EMBRATEL: Response To CVM Enquiry
---------------------------------
In response to CVM's enquiry, Embratel Participacoes has
received the following explanation from MCI's Vice President,
Corporate Development:
April 12, 2004
VIA FACSIMILE: (5521) 2121-8860
Norbert Glatt, Director, Investor Relations
Embratel Participacoes S.A.
cc: Claudia Azeredo Santos, General Counsel
Dear Norbert:
Please be advised that by correspondence dated April 6, 2004 and
April 8, 2004,WorldCom, Inc. ("MCI") received additional
communications from Calais Participacoes S.A. ("Calais")
expressing further interest in purchasing the shares of Empresa
Participacoes S.A. ("Embrapar") owned indirectly by MCI (the
"Shares").
With respect to the Bankruptcy Court hearing that had been
scheduled for April 13, 2004 to approve the Stock Purchase
Agreement, dated as of March 12, 2004 (the "Agreement"), by and
among certain affiliates of MCI and Telefonos de Mexico, S.A. de
C.V. ("Telmex"), as amended on April 7, 2004 ("Amendment No.
1"), which provides for the sale to Telmex of the Shares, MCI
has requested, and the Bankruptcy Court has approved, the
adjournment and rescheduling of such hearing to April 27, 2004.
Amendment No. 1, which was filed with the Bankruptcy Court on
April 9, 2004, provides, among other things, that Telmex may
terminate the Agreement pursuant to Section 7.01(i) thereof if
the Sale Order has not been entered by the Bankruptcy Court by
April 28, 2004. All other provisions of the Agreement remain in
full force and effect. Prior to the parties entering into
Amendment No. 1, Telmex had been entitled to terminate the
Agreement pursuant to Section 7.01(i) thereof if the Sale Order
had not been entered by the Bankruptcy Court by April 19, 2004.
Very truly yours,
Douglas C. Webster
Vice President
Embratel is the premium telecommunications provider in Brazil
and offers and ample variety of telecom services -local and long
distance telephony, advanced voice, high-speed data
transmission, Internet, satellite data communications, and
corporate networks. The company is a leader in the country for
data services and Internet, and is highly qualified to be an
all-distance network carrier in Latin America. Embratel's
network spreads countrywide, with almost 29 thousand kms of
optic cables, which represents about one million and sixty-nine
thousand km of fiber optics.
CONTACT: Silvia M.R. Pereira, Investor Relations
Tel: (55 21) 2121-9662
Fax: (55 21) 2121-6388
E-mail: silvia.pereira@embratel.com.br
invest@embratel.com.br
LIGHT SERVICOS: To Offer Stake To BNDES
---------------------------------------
Brazilian electric company Light Servicos de Electricidade is
planning to present a proposal to national development bank
Banco Nacional de Desenvolvimento Economico e Social (BNDES) for
its possible participation in the capitalization program aimed
at the distribution sector, the Gazeta Mercantil reports.
To be directed at paying 25% of Light's US$500 million debt, the
support sought from BNDES could be made possible by the bank's
freeing US$230 million through an issuance of debentures to be
converted into common stocks.
The power distributor has promised creditors that it will reduce
losses from 24% to 18% in a period of four years, as well as
reduce the default rate by BRL1 billion. The renegotiation of
its debt, which will commence on May, will also include the
extension of debt for three years and seven months.
=========
C H I L E
=========
PARMALAT CHILE: Assets Eyed By Bethia For US$15M
------------------------------------------------
Chilean holding company Bethia has offered to acquire all of
Parmalat Chile's assets, including two production plants in
Chillan and Victoria and the right to use the Parmalat brand,
for US$15 million, reports the Estrategia newspaper.
Bethia's offer is the highest among interested groups, which
include businessman Max Marambio and dairy company Loncoleche,
in the assets of Parmalat Chile, whose parent, Italian dairy
giant Parmalat Finanziaria, has collapsed under the weight of a
multibillion-dollar scandal.
Market sources, however, said the reason Bethia's offer was the
highest is that it is the only bidder interested in purchasing
all of Parmalat Chile's assets. Mr. Marambio is only keen on
buying the Victoria plant, while Loncoleche only has eyes for
the plant in Chillan, the sources said.
The successful bidder will be announced by Parmalat's creditors
on May 3.
=============
E C U A D O R
=============
PETROECUADOR: Board Member Named New Energy Minister
----------------------------------------------------
In a statement, the Office of Ecuador President Lucio Gutierrez
announced Monday it has appointed Eduardo L¢pez, the
presidential representative on the board of state oil company
Petroecuador, as energy minister after the resignation of Carlos
Arboleda, reports BNamericas.
According to a Petroecuador spokesman, Mr. L¢pez knows
Petroeucador well because, aside from having served on its
board, he is also trained as an oil engineer and businessman.
"As a businessman, he has a different vision [from Arboleda] and
we hope he will be more acceptable to private companies," the
spokesperson said.
The statement also said Mr. Lopez is set to meet with President
Gutierrez next week to discuss the country's short, medium and
long-term energy strategies.
Mr. Arboleda, a retired military colonel and personal friend of
Guti‚rrez, resigned for "strictly personal reasons, the
statement said. The spokesman, however, said, "he made too many
enemies on too many fronts and that has caused all his
problems," the spokesperson said.
The spokesman was apparently referring to Mr. Arboleda's
handling of a tender to boost crude production on four of
Petroecuador's main oil producing Amazon fields. Unions and
left-leaning political parties say the former minister was
giving away the country's oil reserves too cheaply after he
eliminated a minimum 35% state participation.
The Left Democratic party claimed in a suit it filed last week
with the national constitutional court that the terms of the
tender are unconstitutional.
===========
M E X I C O
===========
GRUPO COVARRA: Still Sparking Investors' Interest
-------------------------------------------------
Investors are still interested in acquiring Mexican textile
company Grupo Covarra despite its imminent bankruptcy, reports
the El Financiero newspaper.
Monterrey Capital Partners, along with other interested
investors that include some US companies, have expressed that
their offers to buy 100% of the company's shares and its five
factories employing 1,500 workers still stand. In addition, the
employees, who have been on strike for over a year, have a plan
to create a cooperative and operate the company themselves.
In the three years that it had spent under bankruptcy
protection, Grupo Covarra still has to present authorities with
evidence of a supposed line of credit authorized by the
Avantrade International group.
HYLSAMEX: Ups 1Q EBITDA Outlook
-------------------------------
Mexican steel maker Hylsamex said Monday it expects its first
quarter earnings before interest, taxes, depreciation and
amortization (EBITDA) to hit US$110 million, US$30 million
higher that its previous March forecast, according to Reuters.
"Favorable tendencies in international prices, more domestic
market share and renewed cost competition ... are the reasons
that explain the change in the EBITDA estimate given one month
ago," Hylsamex said in a statement. The March EBITDA estimate
for Mexico's third-largest steel company was between US$70
million and US$80 million.
The company said that in the quarter, revenues of about US$461
million were registered with the sale of 788,000 metric tons of
steel. "Hylsamex remains prudently optimistic for the rest of
2004, as a result of the price and volume tendencies so far,"
the company said.
Hylsamex said much would depend on economic growth in China and
the United States and volatility in energy prices.
PROVO MEXICO: Settles Debt Obligation to Major Supplier
-------------------------------------------------------
Provo International, Inc. (formerly Frontline Communications
Corp., AMEX:FNT) announced Monday that its Provo Mexico division
has entered into a settlement agreement with its supplier of
pre-paid phone cards, eliminating its debt obligation to the
supplier. Under the settlement agreement, Provo Mexico
transferred approximately US$2 million in assets to the supplier
in full satisfaction and release of the Company's US$6,940,363
in debt. The assets transferred included eight non-revenue
generating real estate properties and certain additional assets.
The settlement agreement also provides that Provo Mexico will
have a term of 45 days to transition out of the wholesale
distribution of pre-paid calling cards issued by the supplier,
and neither Provo Mexico nor its principal officers may engage
in the wholesale distribution of pre-paid calling cards issued
by the supplier for a period of fifteen years from the date of
the agreement. Provo Mexico will continue to distribute pre-paid
cellular calling time, which presently represents approximately
60% of Provo Mexico's monthly revenue, in addition to its other
product lines.
Mr. Ventura Martinez del Rio, Sr., Chairman of Provo
International, commented, "We are extremely pleased that we were
able to come to an amicable resolution with regard to this debt.
As in the United States, pre-paid calling cards in Mexico and
Latin America are quickly being replaced by cellular products.
We see a great opportunity in focusing our efforts on the sale
and distribution of our pre-paid cellular airtime products,
which have been a rapidly growing market over the past year."
Provo's network of retail outlets comprises over 20,000 point of
purchase locations throughout Mexico and includes convenience
stores, drug stores, restaurants, lottery stands, newspaper and
magazine stands and other general stores.
About Provo International Inc.
Founded in 1995 as Frontline Communications Corporation, traded
on the American Stock Exchange under the symbol FNT, Provo
International Inc. has two operating divisions, Provo Mexico and
Provo US.
The Provo Mexico division (www.provo.com.mx), acquired in April,
2003, is a Mexican corporation which maintains a dominant
position within the pre-paid calling card and cellular phone
airtime markets in Mexico. Provo Mexico and its affiliates have
been in operation for over seven years, and had combined audited
revenue in 2002 of approximately $100 million, with operating
profits of over $800,000. The company currently anticipates
expanding existing Provo Mexico services to the continental
United States, and intends to begin marketing cash cards,
payroll cards and other forms of payroll and money transfer
services, through both the Mexico and US divisions, in the near
future.
The Provo US division is a leading provider of Internet
bandwidth services and award winning E-commerce, programming and
website development, design and hosting services through its
PlanetMedia group, www.pnetmedia.com. Provo US plans on
expanding its current services and offerings beyond the
traditional internet sector with the launch of the Provo Paycard
and other payroll disbursement products and services.
SINGER MEXICO: Parent Reports Large Decline in 2003 EBITDA
----------------------------------------------------------
Singer N.V. ("Singer" or "the Company") announced Monday its
results for the year ended December 31, 2003 and for the fourth
quarter of 2003.
2003 Year Results
Overview
During the year ended December 31, 2003, the Company entered
into several significant transactions intended to strengthen the
Company and improve liquidity during the year and into the
future.
These transactions were:
* In January 2003, a subsidiary of the Company entered into
an agreement with the Pension Benefit Guaranty
Corporation ("PBGC") to purchase all 40 Preferred A
Shares of the Company for US$3.8 million. This
transaction was closed in December 2003.
* In March 2003, Singer U.S. successfully refinanced the
Singer Sewing Credit facility, providing additional
long-term liquidity.
* In July 2003, the Company concluded the placement with a
private investment fund of a 43.2% minority equity
interest in the Company's Asia Retail operations for
US$30 million.
* In July 2003, the Company sold Singer Guyana for
consideration of US$1.6 million.
* In September 2003, the Company exited the loss-making
Retail and finance business in Mexico. A new company in
Mexico has been formed to carry on the wholesale sewing
business.
* In October 2003, Singer Asia acquired an additional 4.1%
of the outstanding shares of Singer Thailand to bring its
holdings in that company to 52.1%. This resulted in
Singer Thailand's operations being consolidated in Singer
N.V.'s operations, effective, as of that date.
* In December 2003, Singer Turkey sold its factory, land
and building for US$11.0 million, with the proceeds going
to its principal lenders in payment of the principal and
interest due in September and December 2003 and the
payments that are due March 2004 through December 2004.
Results of Operations
For the twelve months ended December 31, 2003, the Company
reported consolidated revenues of US$382.8 million as compared
to US$337.7 million for the twelve months of 2002, an increase
of US$45.1 million or 13.4%. The increase in revenues was
primarily due to the inclusion of Thailand's results in the
Company's results for the last nine weeks of the year, which
totaled US$19.9 million, coupled with strong retail sales
performances in Sri Lanka and Pakistan, and strong growth in
sewing marketing sales in the United States, Italy and Canada.
These sales increases were partially offset by weaker retail
sales in Bangladesh and Philippines and weaker sewing sales in
Brazil.
The Company's consolidated revenues for the full year 2003
include US$17.8 million of finance charges on consumer credit
sales and US$5.8 million of royalty and licensing income; the
corresponding amounts for the full year 2002 were US$12.3
million and US$5.7 million, respectively. The increase in
finance charges is primarily due to the inclusion of Thailand's
finance charges for the last nine weeks of the year along with
increased finance charges in Sri Lanka due to their strong
retail sales.
Gross profit for the twelve months ended December 31, 2003 was
US$140.0 million, representing a gross margin of 36.6%, as
compared to US$130.1 million and a gross margin of 38.5% for the
same period in 2002. The decrease in the gross margin percentage
was primarily due to lower margins in the Company's
manufacturing operations due to the strengthening of the
Brazilian Real against the U.S. dollar. Also contributing to the
drop was a decline in the gross margin percentage in the
Company's Retail segment due to the introduction of new products
with lower margins along with lower margins in Singer U.S. due
to a shift in sales mix between dealers and mass merchants.
Selling and administrative expenses for the twelve months ended
December 31, 2003 were US$106.6 million, representing 27.8% of
revenues, as compared to US$93.6 million and 27.7% of revenues
for the same period in 2002.
Operating income for the twelve-month period of 2003 and of 2002
was US$33.4 million and US$36.5 million, respectively, while
EBITDA (net income before interest expense, taxes, depreciation
and amortization) was US$31.5 million and US$47.9 million,
respectively. The loss from operations in Mexico Retail during
2003 was responsible for the large decline in EBITDA.
Interest expense for the twelve-month period ended December 31,
2003 was US$19.2 million as compared to US$20.6 million for the
twelve-month period ended December 31, 2002. The US$1.4 million
decrease in interest expense was due both to a reduction in
borrowings and lower interest rates.
Equity in earnings from Operating Affiliates totaled US$5.8
million during the twelve-month period ended December 31, 2003
as compared to US$4.2 million for the same period in 2002. The
US$1.6 million increase is primarily due to higher profitability
from an Operating Affiliate in Sri Lanka.
In September 2003, the Company sold its equity interest in the
parent company of Singer Mexico and, as a result, exited the
Retail and finance business in Mexico. During the second quarter
of 2002, Singer Greece was sold to a third party buyer. In
accordance with SFAS No. 144, the Company has recorded these
transactions as a sale of discontinued operations and
accordingly recorded a net loss from discontinued operations of
US$19.6 million and US$1.7 million for the years ended December
31, 2003 and 2002, respectively.
Miscellaneous other income was US$9.0 million in the full year
2003 as compared to other income of US$3.7 million for the same
period in 2002. The increase in other income for the year was
due to US$19.9 million of gains in Singer Brazil related to a
revaluation of the Brazil B Bonds of US$6.7 million and the
reversal of tax accruals totaling US$13.2 million due to
favorable court rulings. In addition, there was a US$4.3 million
gain in the estimated recovery on receivables from a former
subsidiary that is in liquidation, a US$2.7 million gain
recognized by Singer U.S. as a result of the successful
refinancing of their debt and a US$1.6 million gain on the sale
of land in Indonesia. These gains were partially offset by the
US$13.9 million loss recorded as a result of the sale of 43.2%
of Singer Asia, which included US$10.9 million of goodwill that
was allocated to this reporting segment, and a US$5.6 million
loss on the sale of land and buildings in Turkey.
Provision for income taxes amounted to US$5.3 million
representing an 18.2% effective tax provision in the twelve-
month period ended December 31, 2003, as compared to US$3.3
million and a 14.1% provision for the same period in 2002. The
higher effective tax rate in 2003 is primarily due to increased
income in higher tax jurisdictions and also contributing was a
favorable tax assessment in 2002 for Bangladesh.
The minority interest share in income was US$3.4 million for
year ended 2003 compared to US$1.3 million for the same period
in 2002. This increase reflects the 43.2% minority equity
interest in the Company's Asia Retail operations effective July
2003.
Income from continuing operations for the year ended 2003 was
US$20.3 million; a US$1.2 million or 6.3% increase over the
US$19.1 million recorded in the same period in 2002.
The Company's net income for the twelve-month period of 2003 was
US$0.7 million as compared to US$17.4 million for the same
period in 2002. The US$16.7 million decline from prior year was
due primarily to the US$19.6 million loss from the discontinued
operations in Mexico.
During the first quarter of 2003, a subsidiary of the Company
entered into an agreement with the PBGC to purchase all of the
issued and outstanding Preferred Shares of the Company for
US$3.8 million. Payments were made throughout 2003; the final
payment was made on December 31, 2003.
Dividends on the Series A Convertible Preferred Shares equal to
4% per annum, calculated on the shares' US$20.0 million
liquidation preference, amounted to US$0.6 million in the nine-
month period to September 2003; the shares were reclassified as
Preferred Treasury Shares during the fourth quarter. Dividends
for the twelve-month period ending December 31, 2002, amounted
to US$0.8 million. This dividend was cumulative and was accrued
but not paid. An additional amount of US$0.2 million and US$0.3
million for the 2003 and 2002 periods, respectively, was accrued
representing the accretion in the value of the Preferred Shares.
The net loss available to Common Shares was US$0.1 million,
equivalent to basic loss per Common Share of US$0.01, for the
twelve months ended December 31, 2003, as compared to net income
available to Common Shares of US$16.3 million, equivalent to
basic earnings per common share of US$2.01, for the same period
in 2002.
The Retail operations (including Thailand for the full year)
accounted for 49% of Singer's revenues for the twelve-month
period and for 43% of Singer's operating earnings before
corporate expenses and eliminations. The major contributors to
the results for this segment during the period include the
Retail businesses in Thailand and Sri Lanka. The comparable
figures for the 2002 period were 49% of Singer's revenue and 40%
of operating earnings.
The Sewing Marketing and Manufacturing operations accounted for
51% of Singer's revenues for the twelve-month period and for 57%
of operating earnings before corporate expenses and
eliminations. The Sewing Marketing operations in the United
States and Italy were major contributors to this segment. The
comparable figures for the 2002 period were 51% of Singer's
revenue and 60% of operating earnings.
The report of the Company's independent auditors for the twelve
months ended December 31, 2003 and 2002, includes a "going
concern qualification". Continuation of the Company's business
is dependent on its ability to achieve successful future
operations and repay or refinance certain significant
outstanding debt obligations in 2004 and later years.
2003 Fourth Quarter Results
For the fourth quarter ended December 31, 2003, the Company
reported consolidated revenues of US$134.8 million as compared
to US$96.1 million for the fourth quarter of 2002, an increase
of US$38.7 million or 40.2%. The increase in revenues was
primarily due to the inclusion of Thailand's results in the
Company's results for the last nine weeks of the year, which
totaled US$19.9 million, coupled with strong retail sales
performances in Sri Lanka and Pakistan, and strong growth in
sewing marketing sales in the United States, Italy and Turkey.
These sales increases were partially offset by weaker retail
sales in Bangladesh, Philippines and India.
The Company's revenues for the fourth quarter of 2003 included
US$7.3 million of finance charges on consumer credit sales and
US$1.6 million of royalty and licensing income; the
corresponding amounts for the fourth quarter of 2002 were US$3.2
million and US$1.6 million, respectively. The increase in
finance charges is primarily due to the inclusion of Thailand's
finance charges for the last nine weeks of the year along with
increased finance charges in Sri Lanka due to their strong
retail sales.
Gross profit for the three months ended December 31, 2003 was
US$48.2 million, representing a gross margin of 35.8%, as
compared to US$37.7 million and a gross margin of 39.2% for the
same period in 2002. The decrease in the gross margin percentage
was primarily due to lower margins in the Company's
manufacturing operations due to the strengthening of the
Brazilian Real against the U.S. dollar and a shift in sales mix
towards lower gross margin sewing machines. Also contributing
was a decline in the gross margin percentage in the Company's
Retail segment due to the introduction of new products with
lower margins.
Selling and administrative expenses for the three months ended
December 31, 2003 were US$35.2 million, representing 26.1% of
revenues, as compared to US$25.5 million and 26.5% of revenues
for the same period in 2002. The improvement as a percentage of
revenue was primarily due to the booking in the fourth quarter
of 2002 of a large accounts receivable reserve associated with a
significant sewing distributor.
Operating income for the 2003 and 2002 quarters was $13.0
million and US$12.2 million, respectively, while EBITDA was
US$28.6 million and US$15.3 million, respectively. The increase
in EBITDA in the quarter was primarily due to the increase in
other income.
Interest expense for the three-month period ended December 31,
2003 was US$4.7 million as compared to US$5.5 million for the
fourth quarter of 2002. The US$0.8 million decrease in interest
expense was due both to a reduction in borrowings and lower
interest rates.
Equity in earnings from Operating Affiliates totaled US$1.3
million during the three-month period ended December 31, 2003 as
compared to US$1.7 million for the same period in 2002. The
US$0.4 million decrease is due to the fact that Singer Thailand
was accounted for as an equity investment in the fourth quarter
of 2002 while in most of the 2003 fourth quarter Thailand was
included in the Company's consolidated results. This was
partially offset by higher profitability from an operating
affiliate in Sri Lanka.
Miscellaneous other income was US$13.9 million the three-month
period ended December 31, 2003 as compared to other income of
US$0.4 million for the same period in 2002. The increase in
other income for the quarter was due to US$17.8 million of gains
in Singer Brazil related to the revaluation of the Brazil B
Bonds by US$6.7 million and the reversal of tax accruals
totaling US$11.2 million due to favorable court rulings. There
was also a US$1.6 million gain on the sale of land in Indonesia.
These gains were partially offset by a US$5.6 million loss on
the sale of land and buildings in Turkey.
Provision for income taxes amounted to US$1.9 million
representing an 8.0% effective tax provision in the three-month
period ended December 31, 2003, as compared to a US$0.1 million
benefit for the same period in 2002. The lower effective tax
rate in 2002 is primarily due to higher income from affiliates
which is net of taxes, the utilization of tax loss carry
forwards by certain subsidiaries that are currently profitable
and a reduction in the deferred tax liability in Mexico. The low
8.0% effective tax provision in the 2003 fourth quarter as
compared to the full year 2003 effective tax rate is primarily
due to the non-taxable gains relating to the Brazil operations
that were recorded in other income in the quarter.
Minority interest share in income was US$1.7 million for the
2003 fourth quarter compared to US$0.4 million for the same
period in 2002. This increase reflects the 43.2% minority equity
interest in the Company's Asia Retail operations effective July
2003.
The Company's net income for the fourth quarter of 2003 was
$20.5 million as compared to US$8.2 million for the same period
in 2002. The US$12.3 million increase from prior year is
primarily due to the other income booked in the quarter.
Dividends on the Series A Convertible Preferred Shares equal to
4% per annum, calculated on the shares' US$20.0 million
liquidation preference, amounted to nil for the three-month
period ending December 31, 2003 and US$0.2 million for the
three-month period ended December 31, 2002. This dividend was
cumulative and was accrued but not paid. An additional amount of
nil and US$0.1 million for the 2003 and 2002 three-month
periods, respectively, was accrued representing the accretion in
the value of the Preferred Shares. No dividend was accrued in
the 2003 quarter as the Preferred Shares were reclassified as
Preferred Treasury Shares during the quarter.
The net income available to Common Shares was US$20.5 million
for the three months ended December 31, 2003 as compared to net
income available to Common Shares of US$8.0 million for the same
period in 2002. This is equivalent to basic earnings per Common
Shares of US$2.60 and US$0.99, respectively.
The Retail operations (including Thailand for the full quarter)
accounted for 43% of Singer's revenues for the 2003 fourth
quarter, and for 24% of Singer's operating earnings before
corporate expenses and eliminations. The major contributors to
the results for this segment during the period include the
Retail businesses in Thailand and Sri Lanka. The comparable
figures for the fourth quarter of 2002 were 47% of Singer's
revenue and 33% of operating earnings.
The Sewing Marketing and Manufacturing operations accounted for
57% of Singer's revenues for the 2003 fourth quarter and for 76%
of operating earnings before corporate expenses and
eliminations. The Sewing Marketing operations in the United
States, Brazil and Italy were major contributors to this
segment. The comparable figures for the fourth quarter of 2002
were 53% of Singer's revenue and 67% of operating earnings.
Chairman's Comments
Reviewing the 2003 year results, Stephen H. Goodman, Singer's
Chairman, President and CEO, noted, "2003 was a very interesting
and challenging year for Singer. The difficulties in Mexico and
the resulting disposition of our Retail and finance business
there essentially added a year to the Company's restructuring
and recovery program. The US$19.6 million Mexico loss largely
offset the US$20.3 million in 2003 income from continuing
operations, reducing net income for the year to just US$0.7
million".
"At the same time, and despite the Mexico loss, significant
progress was made. There was a meaningful improvement both in
top line (revenues) and bottom line (income from continuing
operations) performance, up 13.4% and 6.3%, respectively, as
compared with prior year. The outstanding Convertible Preferred
Shares were repurchased, saving US$1.1 million annually in
future dividend accruals and accretion. Corporate debt was
reduced an additional US$13.8 million during the year. US$12.5
million was raised to help fund the growth of Singer Asia".
"2004 promises also to be a very interesting year, and
potentially a rewarding one. With the additional cash now
available to help fund growth in Asia, the Retail business is
better positioned to take advantage of emerging opportunities.
The Sewing business continues to benefit from new products and
enhanced promotion, with a growing worldwide market share. While
liquidity remains tight and a number of significant financings
need to be repaid or refinanced during the year, management is
pursuing a number of funding initiatives".
Share Distribution
On or about April 15, 2003, the Singer Creditor Trust made the
final distribution of the Common Shares of Singer N.V. to the
holders of allowed, general unsecured claims against Singer's
predecessor company.
The Company does not anticipate that its Common Shares will be
listed on any U.S. or overseas securities exchange, the NASDAQ
National Market System, the NASDAQ Small Cap Market, the OTC
Bulletin Board or a similar trading system in the near future.
Price quotations for the Company's Common Shares became
available on the "Pink Sheets" quotation service under the
symbol "SNGR" in March 2002. Brokers should be able to continue
trading Singer's Common Shares using the "Pink Sheets" quotation
service as long as the Company is current in submitting to the
Securities and Exchange Commission ("SEC") the materials that it
makes available to its shareholders or is required to file under
its own country jurisdiction. If the Common Shares cease to be
traded, shareholders seeking to sell or buy shares will only be
able to do so with considerable difficulty and at prices that
may not reflect the shares' theoretical inherent value. Even to
the extent that quotations on the "Pink Sheets" service
continue, there is no assurance that there will be adequate
liquidity or that there will not be wide swings in prices and
significant differences between "bid" and "asked" prices, which
will make trading difficult and could cause prices for the
Company's shares to deviate substantially from their theoretical
inherent value.
About Singer N.V.
Singer N.V. was incorporated under the laws of the Netherlands
Antilles on December 21, 1999. Effective September 2000, as a
result of a successful Chapter 11 reorganization, Singer became
the parent company of several Operating Companies formerly owned
by The Singer Company N.V. ("Old Singer"), as well as acquiring
ownership of the SINGERr brand name, one of the most widely
recognized and respected trademarks in the world. Through its
Operating Companies, Singer is engaged in two principal
businesses, Retail and Sewing. The SINGERr trademark ties the
two businesses together and also stands on its own with
licensing and wholesaling potential.
The Retail business consists primarily of the distribution
through company-owned retail stores and direct selling of a wide
variety of consumer durable products for the home in selected
emerging markets, primarily in Asia and Jamaica. Retail sales
activities in these markets are strengthened by the offer of
consumer credit services provided by the Company to its
customers. In some of the markets where it operates, Singer is
recognized as a leader retailer of products for the home.
The Sewing business consists primarily of the distribution of
consumer and artisan sewing machines and accessories, produced
by Singer and certain third- party manufacturers, through
distribution channels operated by its Sewing Operating Companies
and through third-party distributors and dealers, as well as
through the Operating Companies which operate Singer's Retail
business. Singer is one of the world's leading sellers of
consumer and artisan sewing machines, with an estimated
worldwide unit market share of 23% (excluding China, the former
Soviet Republics and Eastern European countries).
To see financial statements: http://bankrupt.com/misc/Singer.txt
TMM: KCS Clarifies Obligations Under Stipulation Agreement
----------------------------------------------------------
On April 7, 2004, Grupo TMM, S.A. (TMM) (NYSE:TMM) and Kansas
City Southern (KCS) (NYSE:KSU) issued a joint press release in
English at 6:54 a.m. (CDT) outlining the provisions of a
Stipulation Agreement that both parties had agreed to and signed
and the arbitration panel had approved on April 4, 2004.
KCS simultaneously filed a copy of the Stipulation Agreement
with the United States Securities and Exchange Commission (SEC)
in an 8-K filing.
Item six of the Stipulation Agreement, which states "The parties
agree to discharge in good faith all of the obligations of the
Acquisition Agreement," is unambiguous. However, prior to the
joint press release announcing the Stipulation Agreement, TMM
issued and filed a Spanish version of the press release without
KCS' review or approval. The Spanish version led to an early
morning story by one news service that stated, in part, ... "the
two companies have agreed to free themselves from all
obligations of the contract of sale." This interpretation is the
exact opposite of what was agreed to by KCS and TMM.
Clarification of the interpretation was difficult as a TMM
spokesman was quoted as saying in subsequent news reports that
the Stipulation Agreement was only a "cooling off" exercise for
both parties.
Kansas City Southern entered into the April 4, 2004, Stipulation
Agreement with the understanding that both parties agreed to
discharge in good faith all of the obligations of the
Acquisition Agreement, including TMM seeking to get its
bondholders approval of the Agreement and supporting KCS's
application with the Mexican Foreign Investment Commission
(FIC), along with the other actions required by the Agreement.
More than seven months have passed since the date of TMM's
purported termination of the Acquisition Agreement on August 22,
2003. If all of TMM's obligations under the Acquisition
Agreement are not fulfilled promptly, KCS intends to return to
the next round of arbitration as provided for by the Agreement.
KCS is comprised of, among others, The Kansas City Southern
Railway Company ("KCSR") and equity investments in Grupo TFM,
Southern Capital Corporation ("Southern Capital") and Panama
Canal Railway Company ("PCRC").
CONTACT: Kansas City Southern
Media Contact U.S.:
Warren K. Erdman, 816-983-1454
Warren.k.erdman@kcsr.com
or
Media Contact Mexico:
Vladimir Saldana, 011-5255-5273-5359
vsaldana@gcya.net
or
Investors Contact:
William H. Galligan, 816-983-1551
William.h.galligan@kcsr.com
=======
P E R U
=======
NUEVO MUNDO: Liquidation Restarted By Court Ruling
--------------------------------------------------
With the intention of protecting the interest of Banco Nuevo
Mundo's creditors and depositors, the Supreme Court of Peru has
ordered the continuation of the liquidation of the intervened
local bank, local financial regulator SBS said in a statement,
BNamericas reveals.
In effect, the court ruling rejects an earlier decision by
another branch of the same court to suspend the process until
the resolution of legal disputes between the SBS and the local
Levy group, owner of Nuevo Mundo.
Along with NBK Bank, Nuevo Mundo was intervened in December
2000, when former President Alberto Fujimori sought asylum in
Japan. Fujimori's surprise exit provoked a run on deposits at
some banks, which prompted authorities to intervene Nuevo Mundo
and NBK Bank due to liquidity problems.
NBK Bank was cleaned up, with its healthiest part sold off to
Banco Financiero. However, the case of Nuevo Mundo turned out
quite differently as the Levy group began a legal battle against
the SBS to prevent the liquidation or sale of the bank.
For its part, the SBS said that its intervention of Nueveo Mundo
had been deemed "legally valid" by Peru's constitutional
tribunal, and at the same time rejected a petition by the Levy
group against the SBS' action.
***********
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 and Edem Psamathe P. Alfeche,
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. Additional e-mail subscriptions for
members of the same firm for the term of the initial
subscription or balance thereof are $25 each. For subscription
information, contact Christopher Beard at 240/629-3300.
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