/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/040505.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, May 5, 2004, Vol. 5, Issue 88 Headlines A R G E N T I N A ACINDAR: Maintains `raD' Rating on $100M Worth of Bonds CONSTRUCCIONES METALICO: Court Declares Company Bankrupt DIRECTV LA: Warner Bros.' Files Motion To Compel $38,121 Payment INTERNATIONAL CONTRACTORS: Court OKs Bankruptcy Petition MASTELLONE HERMANOS: Debt Offer Extended OGDEN-RURAL: SRA Assembly Approves Sale Of 50% Stake B E R M U D A GLOBAL CROSSING: Retains Accounting Firm for Independent Review GLOBAL CROSSING: Receives Nasdaq Delisting Notification GLOBAL CROSSING: Fundraising Options Slim Says Analyst B R A Z I L EMBRATEL: Telmex Offers Star One Stake to Brazil TELEMAR: Brings Mobile Long-distance Rates Down C H I L E MADECO: Posts Big Turnaround in 1Q04 Net Profit C O L O M B I A EMCALI: Urged to Become Shareholding Model *Fitch Revises Colombia's Sovereign Credit Outlook to Stable E C U A D O R PETROECUADOR: New Head Named E L S A L V A D O R AES CORP.: S&P Revises Outlooks On Units To Stable M E X I C O CORPORACION DURANGO: Debt Offer Gets 55% Creditor Nod CYDSA: Posts 8.2% Growth in 1Q04 Sales ELAMEX: Reports Lower Net Sales in the 1Q04 EMPRESAS ICA: Steel Prices Pushing Dam Project Cost Up GRUPO SIMEC: Posts Final Audited Ops Results for 2003 P A N A M A * S&P Affirms Panama's Credit Ratings V E N E Z U E L A SIDOR: Strikers Promise "More Radical" Actions PDVSA: Hopes to Obtain Loans From Foreign Banks - - - - - - - - ================= A R G E N T I N A ================= ACINDAR: Maintains `raD' Rating on $100M Worth of Bonds ------------------------------------------------------- Standard & Poor's International Ratings, Ltd. Sucursal Argentina maintains an `raD' rating on US$100 million worth of corporate bonds issued by local company Acindar (Acindar Industria Argentina de Aceros) under `Simple Issue.' Argentina's securities regulator, the Comision Nacional de Valores, or CNV, described the bonds affected as "Obligaciones Negociables simples, no convertibles en acciones, autorizadas por AGOyE de fecha 5.8.96." These bonds matured on February 16, 2004. S&P said that an obligation is rated `raD' when it is in payment default, or the obligor has filed for bankruptcy. The rating is used when interest or principal payments are not made on the date due, even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. CONTACT: Acindar Industria Argentina de Aceros SA 2739 Estanislao Zeballos Beccar Buenos Aires Argentina B1643AGY Phone: +54 11 4719 8500 Fax: +54 11 4719 8501 Home Page: http://www.acindar.ar.com Contact: Arturo Tomas Acevedo, Chairman CONSTRUCCIONES METALICO: Court Declares Company Bankrupt -------------------------------------------------------- Judge Dieuzeide of Buenos Aires Court No. 1 ordered Construcciones Metalico SA to begin bankruptcy proceedings under the receivership of Mr. Tito Gargaglione. La Nacion reports that Mr. Mario Peralta, to whom the Argentinean mining company owes debts amounting to US$25,422.16, petitioned the bankruptcy. Clerk No. 1, Dr. Fernandez Garello, assists the court on the case, which will conclude with the liquidation of the Company's assets. Creditors must have their claims authenticated by the receiver before July 2, 2004 in order to qualify for the payments that will be made after the liquidation. CONTACTS: Construcciones Metalico SA Concepci▋ Arenal 2323 Buenos Aires Mr. Tito Gargalione, Receiver Medrano 833 Buenas Aires DIRECTV LA: Warner Bros.' Files Motion To Compel $38,121 Payment ---------------------------------------------------------------- Wayne M. Smith, Esq., in Burbank, California, relates that as of April 26, 2004, DirecTV Latin America, LLC, is indebted to Warner Bros. International Television Distribution for $38,121. By this motion, Warner Bros. asks the Court to compel DirecTV to pay its $38,121 Claim. Following the Petition Date, DirecTV entered into and has broadcast programming under license no. VN001500 with Warner Bros., and has made various payments under those agreements during the postpetition period. DirecTV failed to satisfy all of its administrative obligations to Warner Bros. in connection with license no. VN001500, aggregating $14,518. DirecTV continued to broadcast programming under license nos. VN01150M, VN0003M, and VN0019M, which had expiration dates following the Petition Date. DirecTV incurred overages on these licenses after the Petition Date for $21,108, which has not been paid to Warner Bros. Furthermore, Mr. Smith informs the Court that DirecTV incurred certain materials expenses in connection with various license agreements under which it continued to broadcast totaling $2,497, which remains unpaid. Mr. Smith contends that Warner Bros. is entitled to priority of distribution on the Claim pursuant to Sections 503(b) and 507(a)(1) of the Bankruptcy Code, plus any future amounts owing under the license agreements that are not paid by Warner Bros. during the pendency of the Chapter 11 case. Mr. Smith clarifies that any payments made have been credited and deducted from the Claim. The Claim is not subject to any set-off or counterclaim. (DirecTV Latin America Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERNATIONAL CONTRACTORS: Court OKs Bankruptcy Petition --------------------------------------------------------- International Contractors S.R.L., an Argentinean Construction Company, entered bankruptcy after Judge Ottolenghi of Buenos Aires Court No. 4 approved a bankruptcy motion filed by Mr. Juan Rojas Quintana, reports La Nacion. The Company's failure to pay US$ 23,743.65 in debt prompted Mr. Quintana to file the petition. Working with Dr. Anta, the city's Clerk No. 8, the Company assigned Mr. Oscar Arias as receiver for the bankruptcy process. The receiver's duties include the authentication of the Company's debts and the preparation of the individual and general reports. Creditors are required to present their proofs of claim to the receiver before June 30, 2004. 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: International Contractors SRL Cerrito 1070 Buenos Aires Oscar Arias, Receiver Carlos Pelligrini 1063 Buenos Aires MASTELLONE HERMANOS: Debt Offer Extended ---------------------------------------- Argentine dairy company Mastellone Hermanos - owner of the dairy product brand La Serenisima - said Monday it has extended the deadline on its offer to restructure US$329.1 million in debt to May 7, according to Dow Jones. This is the company's second extension on the offer it launched on March 5. The company said it is still waiting for the national securities regulator to approve the issuance of new bonds for the debt swap. This pending authorization was the same reason Mastellone Hermanos cited when it last extended its proposal in early April. Mastellone's proposal is offering two alternatives. The first one is a cash payment equal to 60% of face value, up to a maximum of US$85 million of face value, which means the Company is willing to spend up to US$51 million in the cash option. The second alternative is an exchange of non-secured notes for new secured notes at par value. Two new notes will be offered. One has a 7% fixed annual interest rate and expires in 2007. The principal will be cancelled in a sole payment in 2014. The second bond has a floating interest rate of Libor +2.5% (5% maximum), is expiring in 2011 and the principal starts to be repaid in 2007. A company filing to the local stock exchange on April 21 states that as of April 20, Mastellone Hermanos had secured approval from creditors representing $127.9 million, or 38.9%, of its total debt burden. The company didn't release updated figures in its Monday press statement. Mastellone is also asking consent from creditors to subscribe to an out-of-court agreement, or APE, which means that after getting two-thirds agreement, Mastellone can secure legal approval for its APE that will make the debt restructuring binding for all creditors. If the company completes the APE process, bondholders that do not accept the company's current offer will be ineligible for the cash payment option. OGDEN-RURAL: SRA Assembly Approves Sale Of 50% Stake ---------------------------------------------------- Members of the Argentine Rural Society (SRA) voted in favor of selling the entity's 50% stake in Ogden Rural, the company that holds the concession to manage exhibition center La Rural until year 2025. Now Francisco De Narvaez and Alejandro Shaw, who own the other half of Ogden Rural, will have a chance to acquire the full ownership. During an extraordinary meeting that took place last Friday, 226 members voted in favor while 20 people voted against the sale. According to SRA sources, De Narvaez and Shaw would have offered to pay an annual fee of US$720,000, as well as 20% of the income from the exhibitions that generate a billing of as least ARS3.5 million. The sale's approval would have been one condition to maintaining the refinancing accord between state-owned bank Banco Provincia and Ogden Rural for a debt of ARS109 million. ============= B E R M U D A ============= GLOBAL CROSSING: Retains Accounting Firm for Independent Review --------------------------------------------------------------- Global Crossing (Nasdaq: GLBC) announced Monday that its independent Audit Committee has retained Deloitte & Touche LLP to conduct an independent review of the company's cost of access liabilities and cost of access expenses and the related internal control environment and Grant Thornton LLP to evaluate the company's procedures and its determination regarding the potential restatement of its financial statements. Upon completion of its evaluation, Grant Thornton LLP will determine whether it can reissue its previously withdrawn audit reports. The Audit Committee is committed to resolving the issues presented by the company's previously disclosed review of these matters as soon as possible and returning Global Crossing to compliance with SEC reporting and Nasdaq listing requirements. The Audit Committee took this action in light of the company's public announcement on April 27, 2004 that its previously reported financial statements for the years ended December 31, 2003 and 2002 should be disregarded because of the company's review and the previously reported subsequent notification by Grant Thornton LLP that its audit reports dated March 8, 2004, December 23, 2003 and September 10, 2003 can no longer be relied upon. CONTACTS: Press Contacts Becky Yeamans + 1 973-937-0155 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 Mitch Burd +1 800-836-0342 glbc@globalcrossing.com Web Site: WWW.Globalcrossing.com GLOBAL CROSSING: Receives Nasdaq Delisting Notification ------------------------------------------------------- Global Crossing announced Monday that it received a Nasdaq Staff Determination on April 29, 2004 indicating that the company's common stock is not in compliance with the filing requirements for continued listing on The Nasdaq National Market and will be de-listed unless the company requests a hearing with a Nasdaq Listing Qualifications Panel to review this determination. The company will request this hearing shortly. Pending the hearing and the Panel's determination, Global Crossing's common stock will continue to be listed on The Nasdaq National Market. While there can be no assurance that the Panel will grant the company's request for continued listing, the company is hopeful that it will have sufficient time to complete its review and return to compliance with Nasdaq filing requirements. The company's trading symbol will change from GLBC to GLBCE at the opening of business today due to the non- compliance with the filing requirements. CONTACTS: Press Contacts Becky Yeamans + 1 973-937-0155 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 Mitch Burd +1 800-836-0342 glbc@globalcrossing.com Web Site: WWW.Globalcrossing.com GLOBAL CROSSING: Fundraising Options Slim Says Analyst ------------------------------------------------------ Unless its rather dim financial picture clears, an analyst said fiber-optic network operator Global Crossing Ltd. (GLBCE) is not likely to raise much-needed cash from anyone other than its majority shareholder, Singapore Technologies Telemedia (STL.YY), Dow Jones says. "The company has to get a clean set of (financial) numbers" to attract financing from outside creditors, Jefferies & Co. analyst Romeo Reyes said. Singapore Technologies, which has a 61.5% stake in Global Crossing, has recently reiterated that it may provide Global Crossing with up to US$100 million in short-term financial support. Global Crossing, however, needs an estimated US$200 million to fill its "funding gap" and survive, said the analyst. Some say that it needs more than that, pegging the figure up to US$250 million. Last week, Global Crossing's shares plummeted after it said its reported results for 2003 and 2002 would be restated and would delay the release of its 2004 results. The restatement has something to do with expenses like the fees Global Crossing owes other phone companies that handle its traffic. At the time, Global Crossing said in a prepared statement that its reported results for 2003 and 2002, as well as its 2004 guidance, "should be disregarded pending the outcome of the review." On Monday, Global Crossing announced its retention of Deloitte & Touche LLP and Grant Thornton LLP to review its accounting and procedures. It also revealed that the Nasdaq Stock Market has notified the company that it is not complying with financial filing requirements and may be delisted. The company said it plans to appeal, but its trading symbol was changed to GLBCE, from GLBC, beginning Monday. "While there can be no assurance that (Nasdaq) will grant the company's request for continued listing, the company is hopeful it will have sufficient time to complete its review and return to compliance with Nasdaq filing requirements," Global Crossing's statement said. =========== B R A Z I L =========== EMBRATEL: Telmex Offers Star One Stake to Brazil ------------------------------------------------ Brazil's communications minister announced on Monday that the Brazilian government has received a document from Mexican telephone company Telmex (TMX) guaranteeing that it will get a golden share in its coveted satellite company Star One, Reuters reveals. The announcement came after communications minister Eunicio Oliveira met with chief executive Jaime Chico Pardo of Telmex, which is in the process of buying for US$400 million the company which owns 80% of Star One, long-distance carrier Embratel. The remaining 20% is under the control of Luxembourg-based SES Global (SESF), the world's biggest satellite operator. "Before, we had the commitment of the two Embratel suitors about the stake in Sat One. Now, with this document (from Telmex) we have a confirmation," Mr. Oliveira said after the meeting. He added that the government was satisfied with Telmex's golden share guarantee. A senior official at the state National and Economic and Social development Bank (BNDES) said last week the government, which is already using Star One's satellites for military, state bank and federal data communications, wanted to negotiate buying control of the satellite unit. TELEMAR: Brings Mobile Long-distance Rates Down ----------------------------------------------- In a statement, Brazilian fixed-line operator Telemar (NYSE: TNE) announced it has lowered rates for domestic long distance calls made from mobile phones, BNamericas reports. "Domestic long distance via mobiles are the poster girls of Telemar and one of the areas where the company is making significant investments in marketing," Telemar long-distance manager Jorge Braga said in the statement. Telemar is one of three incumbent Brazilian telcos making up the Calais Participacoes consortium, which just lost its bid for Brazilian long-distance carrier Embratel to Telmex of Mexico. ========= C H I L E ========= MADECO: Posts Big Turnaround in 1Q04 Net Profit ----------------------------------------------- Thanks to lower debt costs, exchange-related losses and strong sales, Chilean copper cable manufacturer Madeco (Santiago:MAD.SN - News; NYSE:MAD - News), has recorded a first quarter net profit of CLP1.692 billion (US$2.7mln) against a loss of CLP5.061 billion in the same period last year, Reuters reports. "This positive change is due primarily to lower losses due to exchange rate differences in the local currency of each of the countries it operates in ... and a reduction in financial expenses because of lower debt and low interest rates," Madeco said in a statement to Chile's stock market regulator late Friday. A 28% increase in its cable business sales also enabled the company to increase its revenue for the period by 19% to CLP73.87 billion. Meanwhile, its operating profit -- defined in Chile as earnings before interest, taxes, one-time items and noncash financial charges -- came in at CLP5.917 billion, a 174% gain from the year-ago period. On the other hand, its non- operating profit fell from CLP6.949 billion in the first quarter of 2003 to CLP2.774 billion this year. Madeco, which is 77% owned by financial and industrial conglomerate Quinenco (Santiago:QNN.SN - News; NYSE:LQ - News), produces cables, tubes, flexible packages and aluminum in Chile, Argentina, Peru and Brazil. =============== C O L O M B I A =============== EMCALI: Urged to Become Shareholding Model ------------------------------------------ The president of Colombia has called on Cali utility Emcali to set an example for the Colombian people by becoming a shareholding model, BNamericas relates, citing a report by state news agency SNE. "Cali now has to constitute a great example of how it can take forward a state public services company with a model of citizen ownership through a capitalization fund," the SNE report quoted President Alvaro Uribe as saying. The restructuring agreement proposed by public services Superservicios for Emcali will be voted on by its creditors in a meeting scheduled on May 5. The agreement, which has already been signed by 79% of the company's creditors, requires the Colombian government to pay US$20 million a year for the next eight years to repay loans to the Inter-American Development Bank (IDB) and the Japan Bank for International Cooperation (JBIC). The creditors of Emcali, in which Supervicios intervened in 2000 after the company's finances collapsed, have also agreed to a grace period from March 2003 to December 2004, which would save Emcali some COP170 billion in interest on the total debt of roughly COP1 trillion. The agreement would also allow Emcali to invest COP2.8 trillion (US$1.15bn) over the next 20 years, as well as meet its pension liabilities of COP3 trillion. *Fitch Revises Colombia's Sovereign Credit Outlook to Stable ------------------------------------------------------------ Fitch Ratings revised the Rating Outlook on Colombia's sovereign ratings to Stable from Negative on improved fiscal performance and better GDP growth prospects. The long-term foreign currency rating remains at 'BB' and the long-term local currency (Colombian peso) rating at 'BBB-'. According to sovereign analyst Morgan C. Harting at Fitch Ratings, 'Public finances appear to be stabilizing as the economy gathers momentum, higher taxes boost the primary surplus and recent peso appreciation keeps a lid on government debt -- about half of which is in foreign currency -- relative to GDP.' For the last four years, large deficits and slow economic growth drove general government debt up by 30% of GDP. As with many other countries in the region, competitiveness is benefiting from improved terms of trade and faster global growth is underpinning stronger external demand. In Colombia's case, local confidence has also risen on the perception of improvements in domestic security, a grave concern in this country struggling with a decades-old guerrilla movement and very high crime rates. Whether the rosier near-term outlook can be carried forward to improvements in the credit over the medium term will depend upon the extent to which the government is able to advance reforms to public finances. The two key weaknesses are pensions and expenditure inflexibility. Changes in these areas will be politically difficult and although the government is proposing certain adjustments this year, they would represent partial improvements but not complete reforms. Cash and actuarial imbalances in the public pension system would remain larger than other 'BB' sovereigns. Rigidities in public expenditures will not appear as constraining in the context of a growing economy, but earmarking provisions will drive the spending base up, limiting the potential for deficit reduction. 'Unless action is taken to control pensions and earmarked expenditures in the coming year, higher deficits and growth in public debt would likely recur once the current expansion eases. The current era of stabilization would then appear to be a pause in a longer arc of credit deterioration rather than a turning point toward consolidation,' said Harting. CONTACTS: Fitch Ratings Roger M. Scher, 212-908-0240 Morgan C. Harting, 212-908-0820 Nick Eisinger, +44 (0)20 7417 4341 James Jockle, 212-908-0547 (Media Relations) ============= E C U A D O R ============= PETROECUADOR: New Head Named ---------------------------- Ecuador's state oil company Petroecuador has a new executive president, Luis Camacho, a 27-year oil industry veteran, according to Reuters. He replaced Pedro Espin, who resigned last week to give newly-appointed Energy Minister Energy Minister Eduardo Lopez a free rein in forming his own team. "We have named a new executive president, Luis Camacho, a very qualified and competent technician who has the enormous responsibility of leading this process to raise Petroecuador's efficiency," minister Lopez said. Mr. Camacho had served in foreign oil companies such as Petrobras and Texaco. Camacho, who has a master's degree in petroleum engineering, takes over Petroecuador as it strives to raise weak crude output, which has hit its lowest levels in more than a decade. With a daily output of about 196,460 barrels per day (bpd), the company now comes up with only less than 40% of the country's oil production, with private companies operating in the crude- rich Amazon jungle picking up the majority. ===================== E L S A L V A D O R ===================== AES CORP.: S&P Revises Outlooks On Units To Stable -------------------------------------------------- Standard & Poor's Ratings Services changed the outlooks to stable from negative on AES Corp. electric distribution subsidiaries Compania de Alumbrado Electrico de San Salvador S.A. de C.V. (CAESS), Empresa Electrica de Oriente S.A. de C.V. (EEO), and Distribuidora Electrica de Usulutan, S.A. de C.V. (DEUSEM), and affirmed its 'BB+' credit corporate ratings on the companies. At the same time, Standard & Poor's affirmed its 'AAA' rating on the companies' US$120 million wrapped fixed-rate notes due 2011. The rating reflects the unconditional and irrevocable guarantee of full payment on principal and interest as scheduled, provided by MBIA Insurance Corp. (AAA/Stable/--), pursuant to MBIA Insurance Corp.'s financial guaranty insurance policy. Arlington, Va.-based AES (B+/Stable/--), through its subsidiaries, holds a majority interest CAESS (75.11%) and EEO (89.11%). CAESS, in turn, owns 98.32% of the shares in DEUSEM. "In addition to the quasi-monopoly environment in which the companies operate and the U.S. dollar-based Salvadoran economy, the rating reflects the companies' ability to generate stable cash flow, a stable tariff structure and customer base, and AES' strong management experience in successfully operating other distribution companies in Latin America," said credit analyst Fabiola Ortiz. The rating also reflects the risks that the tariff formula remains untested in a stress environment and the companies' limited financial flexibility in El Salvador's undeveloped capital markets. Standard & Poor's rating on CAESS, EEO and DEUSEM is higher than its rating on AES. In most circumstances, Standard & Poor's will not rate the debt of a wholly owned subsidiary higher than the rating of the parent. Standard & Poor's can make exceptions, and did so in these cases, on the basis of the cumulative value provided by enhancements such as structural protections, covenants, a pledge of stock, and an independent director, assuming the stand-alone credit quality of the entity supports such elevation. These provisions serve to make these subsidiaries bankruptcy remote from a sponsor with weaker credit quality. Standard & Poor's views these provisions as supportive in that they reduce the risk of a subsidiary being included in a bankruptcy filing of a parent, but does not view them as 100% preventative of such a scenario. Therefore, Standard & Poor's limits the rating differential provided by such structural enhancements to three notches. On that basis, AES subsidiaries' corporate credit ratings cannot be higher than 'BB+'. CAESS, EEO and DEUSEM distribute electricity to 70% of El Salvador's population, including the country's capital city of San Salvador. They served a total of approximately 707,225 customers during 2003. =========== M E X I C O =========== CORPORACION DURANGO: Debt Offer Gets 55% Creditor Nod ----------------------------------------------------- The proposal of Corporacion Durango, Mexico's largest manufacturer of brown paper and newsprint, to restructure its US$715 million debt has already met the approval of 55% of its creditors, says a report by local business newspaper El Financiero. "The company's creditors controlling around 55% of guaranteed paper and non-guaranteed bank debt have signed the agreement to support the company's proposals," said Corporacion Durango president Miguel Rincon. He added that the proposal, which Durango plans to carry out through a recapitalization plan that would help improve the fiscal situation of the company and its subsidiaries, would not affect non-financial creditors, including customers and suppliers. Creditors without guarantees, according to Mr. Rincon, have also agreed to exchange their financial debt for one or more portions of the debt to be issued by the company. CYDSA: Posts 8.2% Growth in 1Q04 Sales -------------------------------------- In a statement to the Mexico City stock exchange, Mexican industrial group Cydsa (BMV: CYDSASAA.MX) said its sales in the first quarter reached MXN1.67 billion, an 8.2% rise from the same period last year, BNamericas reveals. The group also posted a big turnaround in its net losses for the quarter, down to MXN17.8 million from its 1Q03 net loss of MXN149 million. The high prices of input materials such as petrochemicals products, coupled with expensive energy rates, put pressure on Cydsa's margins. Sales volumes grew for products such as PVC resins plus tubing-connection material. Cydsa said its domestic sales inched up 4% to MXN1.22 billion and exports grew 17% to US$41 million. Cydsa, which produces textiles, industrial packages, chemicals, petrochemicals and plastics, also reported an operating loss of MXN32.3 million for the first quarter compared to a MXN90 million operating loss year-on-year. ELAMEX: Reports Lower Net Sales in the 1Q04 ------------------------------------------- Elamex S.A. de C.V. (NasdaqNM:ELAM - News), a diversified manufacturing services company with food, plastics and metals operations and real estate holdings in Mexico and the United States, today announced financial results for the first quarter of 2004. First Quarter Results First quarter 2004 operations are comprised of the Food Products segment (Franklin Connections) and Shelter Services. As explained below, the results of operations for Precision Tool, Die and Machine Company ("Precision") are reflected in the Elamex consolidated statement of operations through December 19, 2003, but are excluded from consolidation in subsequent periods. The Company also has a 50.1% investment in Qualcore, an unconsolidated joint venture that manufactures plastics and metal parts. The equity method of accounting is used to recognize the results of operations for Qualcore. The company is actively working to sell its interests in both Precision and Qualcore. First quarter consolidated net sales totaled $19.8 million compared with $39.4 million for the first quarter of 2003. The Food Products segment represented $19.2 million, or 97.0%, of first-quarter 2004 consolidated net sales, compared with $16.7 million, or 42.4%, of consolidated net sales for the first quarter of 2003. Because the operations of Precision are excluded from consolidation in 2004, year-over-year comparison of quarters shows a large decrease in net sales. In the first quarter of 2003, Precision recorded $18.2 million of net sales, which was 46.2% of consolidated net sales. Shelter Services generated $4.0 million in first-quarter 2004 net sales, a year- over-year decrease of 53.5%, due primarily to the divestiture of certain operations related to that segment during the second quarter of 2003. Intersegment sales between Food Products and Shelter Services are eliminated in consolidation. The eliminations totaled $3.4 million for the first quarter of 2004 and $4.0 million in the first quarter of 2003. Gross profit was $4.6 million, or 23.2% of sales, for the first quarter of 2004, compared with gross profit of $4.7 million or 11.9% of net sales for the first quarter of 2003. Total operating expenses for the first quarter of 2004 were $5.0 million compared with $9.5 million for the first quarter of 2003. In the first quarter of 2003, recognition of $3.6 million of expense for impairment of goodwill attributable to Precision contributed to the net loss of $5.4 million, or $0.72 per basic and diluted share, compared to a net loss of $1.3 million, or $0.18 per basic and diluted share, in the first quarter of 2004. Financial Reporting for Precision Tool, Die and Machine Company In December 2003, Elamex announced that its board of directors had authorized the sale of Precision, the company's Metal Stamping segment, which filed for Chapter 11 protection on December 19, 2003. Neither Elamex nor any of its subsidiaries or affiliates have guaranteed any of the obligations of Precision. As a consequence of seeking protection under bankruptcy laws, and in view of the specific pattern of facts in this situation, accounting rules require that Precision results of operations are included in the consolidated results of operations for Elamex and subsidiaries only through December 19, 2003. Thereafter, earnings or losses of Precision are recognized in accordance with the equity method of accounting, as defined by generally accepted accounting principles. Accordingly, no Precision revenues or expenses occurring subsequent to December 19, 2003, are reflected in the Elamex consolidated statement of operations. Management expects that no future losses will be recognized in connection with Precision because Elamex's investment in this subsidiary has been reduced to zero, it is now recorded under the equity method, and Elamex does not guaranty any of the debt of Precision. The equity method also defines the balance sheet presentation of Precision. As of December 31, 2003, and March 31, 2004, the net amount of Elamex's investment in Precision is zero. Financial Condition At March 31, 2004, the Company had cash and cash equivalents totaling $1.6 million and total assets of $69.1 million. Long- term debt and capital leases, excluding current portion, totaled $16.8 million at March 31, 2004, and stockholders' equity totaled $29.7 million. Solid First Quarter "We are off to a good start in this first quarter of 2004, with top line growth and significant improvement in gross profits in our Food Services segment," Elamex President and Chief Executive Officer Richard P. Spencer said. "At the outset of this year we announced that we would concentrate our efforts on this segment, and that we would be focusing on continuing to build on current sales growth momentum and would work to improve the profit margin structure. We further stated that we would focus on expanding our food contract manufacturing business and would continue the ongoing process of sizing operating expenses to revenues. This quarter we achieved meaningful improvements in the operation of Franklin Connections. The first quarter is a seasonally low period in this industry, but Franklin Connections net sales increased 15.0% over the prior year first quarter. During that period the amount of gross profit increased 38.7%, and gross profit as a percentage of net sales increased to 22.4% in 2004 from 18.6% in 2003. Gross profit improvement was achieved primarily by higher capacity utilization in candy manufacturing operations and further migration of candy product sales from bulk to packaged quantities. Franklin Connections general and administrative expenses, selling expenses and distribution expenses decreased in comparison to the prior year quarter, even though net sales increased by 15%." "Clearly we have made good progress on the stated objectives of sales growth and margin improvement, while reducing expenses below the gross profits level. Additionally, we have expanded our contract manufacturing operations by increasing the volumes on our existing customers and by initiating operations on a new contract manufacturing customer that has excellent potential," Spencer stated. About Elamex Elamex is a Mexican company with manufacturing operations and real estate holdings in Mexico and the United States. The Company is involved in the production of food items related to its candy manufacturing and nut packaging operations, and metal and plastic parts for the appliance and automotive industries. Elamex's competitive advantage results from its demonstrated capability to leverage low cost, highly productive labor, strategic North American locations, recognized quality and proven ability to combine high technology with labor-intensive manufacturing processes in world-class facilities. As a value added provider, Elamex's key business objectives include superior customer satisfaction, long-term supplier relationships and employee growth and development, with the ultimate goal of continuously building shareholder value. CONTACT: Sam Henry 915-298-3061 sam.henry@elamex.com EMPRESAS ICA: Steel Prices Pushing Dam Project Cost Up ------------------------------------------------------ Mexican engineering and construction company Empresas ICA SA (ICA) said Monday the surge in steel prices since November are raising the cost of building El Cajon, touted as the current Mexican administration's most important infrastructure project, Dow Jones relates. Chief Financial Officer Jose Luis Guerrero of ICA said the company is also documenting the impact of the raised construction costs for presentation to the state-owned Federal Electricity Commission (CFE). El Cajon, a hydroelectric project in Mexico's northwestern state of Nayarit, is projected to generate 750 megawatts for CFE. Mr. Guerrero said the US$750 million contract for El Cajon, which was awarded to a consortium led by ICA, is a mixed contract that includes a lump-sum payment, and individual unit costs. The unit prices are increased with each invoice, and it's the lump sum component of the contract that CFE is considering, he said. "We expect they would recognize such an increase, because it was impossible to include in any projections," he said. "We are not contemplating any impact or margin reduction." The El Cajon project, which is expected to be finished in 2007, accounted for nearly half of ICA's MXN14.7 billion ($1=MXN11.4420) construction backlog and 30% of its MXN2.17 billion in construction revenue in the first quarter. GRUPO SIMEC: Posts Final Audited Ops Results for 2003 ----------------------------------------------------- Grupo Simec, S.A. de C.V. (Amex: SIM - News; "Simec") announced Monday its final audited results of operations for the year ended December 31, 2003. Net sales increased 27% to Ps. 2,786 million in 2003, compared to Ps. 2,196 million in 2002, primarily due to higher finished product prices and also resulting from modestly higher production levels. Primarily as a result of the foregoing and significantly lower financial expense in 2003, Simec recorded net income of Ps. 293 million in 2003, versus net income of Ps. 123 million for 2002. Simec sold 628,243 metric tons of basic steel products during 2003, as compared to 609,202 metric tons in 2002. Exports of basic steel products were 80,744 metric tons in 2003, versus 80,179 metric tons in 2002. Additionally Simec sold 63,616 tons of billet in 2003, as compared to 23,137 tons of billet in 2002. Prices of finished products sold in 2003 increased 18% in real terms versus 2002. Simec's direct cost of sales was Ps. 1,830 million in 2003, or 66% of net sales, versus Ps. 1,470 million, or 67% of net sales, for 2002. Indirect manufacturing, selling, general and administrative expenses (including depreciation) was Ps. 464 million during 2003, compared to Ps. 461 million in 2002. Simec's operating income increased 86% to Ps. 492 million during 2003, from Ps. 265 million in 2002. Operating income was 18% of net sales in 2003 compared to 12% of net sales in 2002. Simec recorded other expense, net, from other financial operations of Ps. 30 million in 2003 compared to other expense, net, of Ps. 37 million in 2002. In addition, Simec recorded a provision for income tax and employee profit sharing of Ps. 145 million in 2003, versus a positive provision of Ps. 23 million in 2002. Simec recorded financial expense of Ps. 24 million in 2003, compared to financial expense of Ps. 128 million in 2002 as a result of (i) net interest expense of Ps. 13 million in 2003 compared to net interest expense of Ps. 55 million in 2002, reflecting lower debt levels in 2003; (ii) an exchange loss of Ps. 2 million in 2003, compared to an exchange loss of Ps. 104 million in 2002, reflecting lower debt levels in 2003 and a decrease of 9% in the value of the peso versus the dollar in 2003, compared to a decrease of 12.8% in the value of the peso versus the dollar in 2002; and (iii) a loss from monetary position of Ps. 9 million in 2003 compared to a gain from monetary position of Ps. 31 million in 2002, reflecting the domestic inflation rate of 4% in 2003, compared to the domestic inflation rate of 5.7% in 2002 and lower debt levels during 2003. At December 31, 2003, Simec's total consolidated debt consisted of approximately $2 million of U.S. dollar-denominated debt, while at December 31, 2002, Simec had outstanding approximately $47.8 million of U.S. dollar-denominated debt. Simec's lower debt level at December 31, 2003 reflects the prepayment of $31.4 million of bank debt in 2003, the conversion to common stock in March 2003 of $16.1 million of loans (plus accrued interest thereon) from Simec's parent company Industrias CH, S.A. de C.V. ("ICH") at a conversion price equivalent to U.S. $1.35 (Ps. 14.588) per American Depositary Share and the conversion to common stock in November 2003 of a capital contribution from ICH made to Simec in May 2003, in the amount of $14.5 million (the proceeds of which were used to retire debt owed to ICH) at a conversion price equivalent to U.S $1.41 (Ps. 14.588) per American Depositary Share. Simec currently owes no amounts to ICH. All figures were prepared in accordance with Mexican generally accepted accounting principles and are stated in constant Pesos at December 31, 2003. Simec is a mini-mill steel producer in Mexico and manufactures a broad range of non-flat structural steel products. CONTACT: Grupo Simec, S.A. de C.V., in Mexico Adolfo Luna Luna Jose Flores Flores Tel: +011-52-33-1057-5740 =========== P A N A M A =========== * S&P Affirms Panama's Credit Ratings ------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' long-term foreign and local and its 'B' short-term foreign currency sovereign credit ratings on the Republic of Panama. The outlook on the ratings remains negative (in place since March 10, 2003), reflecting the possibility of a downgrade should high fiscal deficits persist during 2004-2005. Mr. Martin Torrijos of the Partido Revolucionario Democr tico (PRD) will become president of Panama in September 2004 after winning 47 % of the votes in the May 2, 2004, election. The president-elect is expected to pursue various reforms, including that of the social security system (CSS). Deterioration in CSS has contributed to higher fiscal deficits in recent years, and large fiscal imbalances are incompatible with the framework of Panama's dollarized economy. The depth and breadth of the president-elect's reform program is unclear, as are other specific measures his administration might implement to reduce the deficit. The worsening CSS deficit, possibly along with some greater- than-anticipated spending under President Mireya Moscoso's (Partido Arnnulfista - PA) Administration, is expected to keep the general government deficit high in 2004. Standard & Poor's projects a general government deficit of 4.8% of GDP in 2004 (on a cash basis), up from 5.3% of GDP in 2003. Further, Standard & Poor's expects some fiscal tightening by the new government that will lead to a further decline in the deficit in 2005, to a still-high 3.9% of GDP. The ratings on the Republic of Panama are supported by: -- A stable political environment since General Manuel Noriega's dictatorship (1985-1989) ended; and -- Long-standing monetary stability anchored by use of the U.S. dollar. The ratings are constrained by: -- Growing fiscal imbalances that limit policy flexibility and are incompatible with the framework of Panama's dollarized economy; -- Moderate trend growth and foreign direct investment absent reform; and -- Dual economic structure that limits domestic demand. Panama's ratings could come under downward pressure if the general government deficit continues to remain near its recent high levels. The ratings could stabilize if the government engineers a meaningful reform of the fiscal accounts via pension reform or other measures that ease expenditure or revenue rigidities. Progress on a bilateral trade agreement with the U.S. or further development of the former Canal Zone that in turn boosts productivity and growth, thereby easing fiscal constraints, could contribute to a stable outlook. ANALYSTS: Lisa M Schineller, New York (1) 212-438-7352 Jane Eddy, New York (1) 212-438-7996 Joydeep Mukherji, New York (1) 212-438-7351 ================= V E N E Z U E L A ================= SIDOR: Strikers Promise "More Radical" Actions ---------------------------------------------- The roughly 11,000 workers of Venezuelan steel producer of Siderurgica del Orinoco (Sidor) who have been on strike since April 22 have threatened to step up their protests if representatives of the company fail to initiate talks on their demands for back pay and company stock, The Associated Press relates. "Somebody must listen to us," said Ramon Machuca, president of the steel workers' union. He added that future protests "are going to be more exhaustive and more radical," to force company representatives to negotiate with them. Mr. Machuca's statement could only mean that the strikers are threatening do more than just block entrances and force non- striking employees out of Sidor, which is what they did last week. These actions alone have forced the company to halt all activities and deploy National Guard troops around Sidor's installations in southeast Bolivar state. Sidor said it only had the safety of its workers in mind when it deployed the troops. Despite the strike, which is costing Sidor about US$3 million a day in losses, the company had managed to maintain activities and deliver shipments before the strikers blocked the entrances last week. PDVSA: Hopes to Obtain Loans From Foreign Banks ----------------------------------------------- Venezuelan state oil company PdVSA, which is embarking on a US$37-billion, five-year investment plan, is seeking for US$10 billion in loans from Japanese, Chinese and U.S. banks, Dow Jones Newswires reports, citing an official from a division of the Company. PDVSA Gas president, Mr. Nelson Martinez, said that the Company is now in advanced talks with a Japanese bank, which could lend up to US$3 billion. Meanwhile, Chinese banks, according to Mr. Martinez, would most likely finance an Orimulsion project, which produces a trademark boiler fuel that is sold to China. Previously, PDVSA announced it will invest a total of US$5 billion this year to increase its oil production capacity and upgrade the refining network. *********** 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 Lucilo Junior M. Pinili, 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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