/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/040607.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Monday, June 7, 2004, Vol. 5, Issue 111 Headlines A R G E N T I N A CANNING 210: Court Converts Bankruptcy to Reorganization COMPANIA LACTEA: Judge Approves Bankruptcy COOPERATIVA DE TRABAJO: Court Declares Company Bankrupt CROMO'S INTERNACIONAL: Court OKs Creditor's Bankruptcy Motion EL SERRANO: Court Grants Reorganization Over Bankruptcy LION D'Or S.A.C.I. y F.: Debt Payments Halted, Set To Reorganize MAC ARTHUR S.A.: Liquidates Assets Under Court Order PUBLICACIONES Y NEGOCIOS: Court To Oversee Liquidation RAMTUR: Obtains Court Authorization to Reorganize SANCOR: Signs Preliminary Debt Accord With Creditors SOCIEDAD ARGENTINA: Bankruptcy Initiated on Court Orders * Argentina's Revised Debt Proposal Faces Rejection Anew B E R M U D A NORTHERN OFFSHORE: Proposes Restructuring Terms B R A Z I L CSN: Board Authorizes $43.4M Investment CSN: Issues $162M, 8-Yr. Securities to Amend Debt Profile ENRON: Seeks Court Endorsement Of Settlement Plan GERDAU ACOMINAS: Places 2nd Export Notes Tranche C H I L E TELEFONICA CTC: Anti-Monopoly Court Still Analyzing Merger TELEFONICA CTC: Board Revises Voting Rules on Mobile Sale J A M A I C A C&WJ: Asset Write Downs Spur $5.3B Loss KAISER ALUMINUM: U.S. Bankruptcy Court OK's Alpart Sale M E X I C O AEROMEXICO: Commits to Posting Profit Despite Industry Woes HYLSAMEX: Fitch Raises Ratings on Hylsa's Note VITRO: Launches New Retailing Efforts in Glass Market P A R A G U A Y COPACO: Explores Debt Coverage Options With Mobile Operators P E R U AERO CONTINENTE: Founder Seeks Justice in US Courts * Fitch Revises Peru's BB- Sovereign Rating Outlook to Positive T R I N I D A D & T O B A G O CDC: Managers Downplay Strike Impact on Product Quality - - - - - - - - - - ================= A R G E N T I N A ================= CANNING 210: Court Converts Bankruptcy to Reorganization -------------------------------------------------------- The bankruptcy order issued by Buenos Aires Court No. 18 against Canning 210 S.A.C.I.F. E I. has been revoked in favor of reorganization. Clerk No. 36 assists the court on this case. Infobae states that the reorganization will proceed under the direction of Mr. Walter Arturo Calleja, the court-appointed trustee. Creditors with outstanding claims against Canning 210 must submit proofs of these debts before August 18, 2004 in order to qualify for the settlement proposal being prepared by the Company. CONTACT: Canning 210 S.A.C.I.F. E I. Scalabrini Ortiz 210 Buenos Aires Mr. Walter Arturo Calleja, Trustee Lambare 1140 Buenos Aires COMPANIA LACTEA: Judge Approves Bankruptcy ------------------------------------------ Compania Lactea Argentina S.A. was declared bankrupt after Judge Ottolenghi of Buenos Aires Court No. 4 endorsed the petition of Obra Social del Personal de la Industria Lactea for the Company's liquidation. Argentine daily La Nacion reports that the said creditor has claims totaling US$13,449.05 against the cheese-making company. The court assigned Mr. Ernesto Iob to supervise the liquidation process as trustee. He will validate creditors' proofs of claims until August 23, 2004. Dr. Juarez, Clerk No. 7, assists the court on this case. CONTACT: Compania Lactea Argentina SA Monroe 1199 Buenos Aires Mr. Ernesto Iob, Trustee Teniente General Juan Domingo Peron 1186 Buenos Aires COOPERATIVA DE TRABAJO: Court Declares Company Bankrupt ------------------------------------------------------- Judge Gutierrez Cabello declared local company Cooperativa de Trabajo de Vigilancia Bic▋ Ltda. "Quiebra", relates local daily La Nacion. The court approved the bankruptcy petition filed by G.D.A., to whom the Company failed to pay debts amounting to US$4,000. The Company will undergo the bankruptcy process with Mr. Augusto Fernandez as its Trustee. Creditors are required to present their proofs of claims to the trustee for verification before August 17, 2004. Creditors who fail to have their claims authenticated by the said date will be disqualified from the payments that will be made after the Company's assets are liquidated at the end of the bankruptcy process. Dr. Giardinieri, Clerk No. 14, assists the court on the case. CONTACT: Cooperativa de Trabajo de Vigilancia Bic▋ Ltda. Avenida Corrientes 1515 Buenos Aires Mr. Augusto Fernandez, Trustee La Rioja 1746 Buenos Aires CROMO'S INTERNACIONAL: Court OKs Creditor's Bankruptcy Motion ------------------------------------------------------------- Cromo's Internacional S.A., a company engaged in the sale and distribution of books, entered bankruptcy after Buenos Aires Court No. 18 approved a bankruptcy motion filed by Igam S.A., reports La Nacion. The Company's failure to pay US$1,000 in debt prompted the creditor to file the petition. Working with Dr. Vivono, the city's Clerk No. 36, the Company assigned Ms. Alicia Kurlat as trustee for the bankruptcy process. The trustee'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 claims to the trustee before August 9, 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: Cromo's Internacional S.A. Parana 426 Buenos Aires Ms. Alicia Kurlat, Trustee Carlos Pellegrini 1079 Buenos Aires EL SERRANO: Court Grants Reorganization Over Bankruptcy ------------------------------------------------------- An Olavarrian court converted the involuntary bankruptcy order against El Serrano S.A. into a reorganization, relates Argentine news source Infobae. The conversion allows the Company to draw- up a settlement plan to satisfy its creditors instead of liquidating its assets to repay its liabilities. Mr. Luis Alberto Matheu, the court-appointed trustee assigned on the case, will verify all claims submitted by the Company's creditors until June 24, 2004. Tribunal civil y comercial de 1era. Instancia de Olavarria (Departamento Judicial de Azul) handles the bankruptcy case. CONTACT: El Serrano S.A. Avda Ituzaingo 850 Olavarria Mr. Luis Alberto Matheu, Trustee Vicente Lopez 2479 Olavarria LION D'Or S.A.C.I. y F.: Debt Payments Halted, Set To Reorganize ---------------------------------------------------------------- Judge Garibotto of Buenos Aires Court No. 2 is currently reviewing the merits of Lion D or S.A.C.I. y F's petition to reorganize. Clerk No. 4, Dr. Romero assists the court on tbis case. La Nacion recalls that the chocolate manufacturing company filed the petition following cessation of debt payments. A reorganization will allow the Company to avoid bankruptcy by negotiating a settlement with its creditors. CONTACT: Lion D or S.A.C.I. y F. Avda Corrientes 1469 Buenos Aires MAC ARTHUR S.A.: Liquidates Assets Under Court Order ---------------------------------------------------- Buenos Aires-based Mac Arthur S.A. will begin liquidating its assets following the pronouncement of the city's Court No. 20 that the Company is bankrupt, reports Infobae. The bankruptcy ruling places the Company under the supervision of court-appointed trustee, Mr. Carlos Leon Desseno. The trustee will verify creditors' proofs of claim until June 30, 2004. The validated claims will be presented in court as individual reports on August 25, 2004. Mr. Desseno will also submit a general report, containing a summary of the company's financial status as well as relevant events pertaining to the bankruptcy, on October 6, 2004. The bankruptcy process will end with the disposal of the Company's assets in favor of its creditors. CONTACT: Mr. Carlos Leon Desenno, Trustee Tte Gral Juan Domingo Peron 1558 Buenos Aires PUBLICACIONES Y NEGOCIOS: Court To Oversee Liquidation ------------------------------------------------------ Publicaciones y Negocios Internacionales S.A. prepares to wind- up its operations following the bankruptcy pronouncement issued by Buenos Aires Court No. 22. The declaration effectively prohibits the Company from administering its assets, control of which will be transferred to a court-appointed trustee. Infobae reports that the court appointed Ms. Cecilia B. Montelvetti as trustee. She will be reviewing creditors' proofs of claims until July 15, 2004. The verified claims will be the basis for the individual reports to be presented for court approval on September 9, 2004. Afterwards, the trustee will also submit a general report on October 21, 2004. Clerk No. 44 assists the court on this case, which will end with the disposal of the Company's assets to cover its liabilities. CONTACT: Ms. Cecilia B. Montelvetti, Trustee General Urquiza 2134 Buenos Aires RAMTUR: Obtains Court Authorization to Reorganize ------------------------------------------------- The preventive reorganization motion filed by Ramtur S.A. in response to a prior liquidation order has been approved by the Civil and Commercial Tribunal of Olavarria, reports Infobae. With the court's endorsement, the Company will proceed with reorganization under the supervision of court-appointed trustee Mr. Luis Alberto Matheu. Mr. Matheu will be validating creditors' proofs of claims until June 24, 2004. Creditors with validated claims will be included in the settlement plan being prepared by the Company. CONTACT: Ramtur S.A. Vicente Lopez 3045 Olavarria Mr. Luis Alberto Matheu, Trustee Vicente Lopez 2479 Olavarria SANCOR: Signs Preliminary Debt Accord With Creditors ---------------------------------------------------- Argentine dairy cooperative SanCor struck a preliminary debt accord with its creditor committee Thursday to restructure US$167 million in debt, reports Dow Jones Newswires. The creditor committee includes the International Finance Corporation, the World Bank's private sector arm; Argentina state-owned Banco de la Nacion; Citibank NA, a unit of Citigroup Inc. (C); Rabobank; Banca Nazionale del Lavoro (BNL.MI); and Banco Rio de la Plata SA (BRIO.BA), which belongs to Spanish- owned Banco Santander (STD). Under the agreement, SanCor will repay the debt in eight years with a grace period of two years. The first stage will consist of interest payments, followed by capital payments with "minimal (interest) rates," the Company said SanCor sees a definitive debt agreement within the next three months. SOCIEDAD ARGENTINA: Bankruptcy Initiated on Court Orders -------------------------------------------------------- Sociedad Argentina de Franquicias S.A. will conclude its operations after Buenos Aires Court No. 3, with the assistance of Clerk No. 5, ordered the Company's liquidation. The bankruptcy order effectively transfers control of the Company's assets to the court-appointed trustee who will also supervise the liquidation proceedings. Infobae reports that the court selected Mr. Juan Lewin as the court's trustee. She will be verifying creditors' proofs of claims until the end of the verification phase on July 13, 2004. Argentine bankruptcy law requires the trustee to provide the court with individual reports on the forwarded claims and a general report containing an audit of the company's accounting and business records. The individual reports will be submitted on September 8, 2004 followed by the general report, which is due on October 21, 2004. CONTACT: Sociedad Argentina de Franquicias S.A. Uruguay 651 Buenos Aires Mr. Juan Lewin, Trustee Quirno 353 Buenos Aires * Argentina's Revised Debt Proposal Faces Rejection Anew -------------------------------------------------------- Another group of disgruntled Argentine creditors lodged an attack against the embattled government's revised restructuring proposal for US$100 billion in defaulted debt. Rejecting the proposal unveiled Tuesday by Economy Minister Roberto Lavagna, the Association of the Condemned by Pesification and Default in a statement said: "There was not dialogue between the Argentine government and the savers that are its creditors. If there was one, it was with the U.S. Treasury, the International Monetary Fund, the World Bank and the InterAmerican Development Bank, who aren't creditors in default. A proposal without consultation has been created, without defining beforehand an economic plan or a profound change to resolve the problems that we drag along with us." The Association of the Condemned by Pesification and Default claims to be the biggest group of local bondholders. Its complaint follows that of the Global Committee of Argentine Bondholders (GCAB), the largest creditor group, which immediately rejected the proposal, saying it had been made without promised consultation and calling it "unilateral." ============= B E R M U D A ============= NORTHERN OFFSHORE: Proposes Restructuring Terms ----------------------------------------------- Northern Offshore Ltd. announced on June 1 a proposal to restructure its US dollar denominated 10% Senior Notes due 2005 and Norwegian krone denominated Floating Rate Notes due 2004. As previously announced on May 18, 2004, the Company believes a restructuring of its debt is necessary to allow Northern Offshore to continue operating. Following deliberation by the Board of Directors, the Company is proposing a transaction whereby the Company's Notes would be exchanged for newly issued shares of common stock representing 85% of the Company's fully diluted share capital, with the remaining 15% to be retained by current shareholders. The transaction would be consummated under Bermuda law through a scheme of arrangement and an increase in share capital approved by Northern Offshore's shareholders. Additionally, the Company anticipates repaying the Company's secured debt using a portion of its existing cash balance such that the Company would be debt free following the transaction. The Company believes it is in the best interests of all stakeholders to implement a restructuring as quickly as possible. To that end, the Company is prepared to coordinate with a Committee of Noteholders to work toward implementing a consensual transaction. To facilitate this process, the Company has prepared a comprehensive due diligence package that will be available to the Committee under confidentiality agreement and has hired Houlihan Lokey Howard & Zukin (Europe) Ltd as its financial advisor to assist in implementing the plan. It is the Company's opinion that the implementation of such a plan is critical to the continued operation of the Company. Absent a consensual agreement, the Company believes it may be forced to appoint a Bermuda-based liquidator who will be responsible for the liquidation of the Company's assets for the benefit of its creditors. It is, in the Company's opinion, most likely that the Company's current equity would have no value and its unsecured debt would be substantially impaired in such a liquidation process. CONTACT: Company Tor Olav Troim Tel: 44 77 34 97 65 75 Jon-Aksel Torgersen Tel: 47 22 93 60 00 Houlihan Lokey Howard & Zukin Joseph Swanson, Director Tel: 44 20 7747 2727 Peter Marshall, Director Tel: 44 20 7747 2724 Joseph Cleverdon, Associate Tel: 44 20 7747 2735 =========== B R A Z I L =========== CSN: Board Authorizes $43.4M Investment --------------------------------------- Companhia Siderurgica Nacional announced Thursday that the Board of Directors approved an investment in the amount of up to S$43.4 million in order to build a plant aiming at processing slag and its by-product (cement), which shall use as principal raw material the slag produced in the Company's steelmaking operations. Such investment aims to increase the level of use of its slag production and create better efficiency in the steel process. The completion of such investment is subject to the approval of an adequate financing structure. CSN: Issues $162M, 8-Yr. Securities to Amend Debt Profile --------------------------------------------------------- As part of an ongoing securitization program aimed at improving Companhia Siderurgica Nacional's debt profile, the Brazilian steelmaker placed US$162 million in eight-year securities backed by export receivables Thursday, Dow Jones Newswires reports. According to CSN's Financial Director Otavio Lazcano, the international securities sold at 350 basis points over five-year U.S. Treasurys and demand surpassed US$200 million. With Thursday's deal and two placements that brought in US$267 million last year, the Company's placement under the securitization program now totals US$430 million. However, Lazcano said CSN doesn't expect to offer another tranche of similar securities in the short term. ENRON: Seeks Court Endorsement Of Settlement Plan ------------------------------------------------- Enron Corp., the bankrupt energy-trading firm that once claimed to be "The World's Greatest Company", presented a settlement plan that would allow it to emerge out of the second-largest bankruptcy in U.S. history. Bloomberg reports that the court will likely confirm the proposal, unless major technical objections are presented. Only 27 out of the 100 objections to the settlement proposal remain unresolved says Mr. Brian Rosen, Enron counsel, during the hearings that started on June 3 to assess the plan. The plan, currently under review by New York Bankruptcy Judge Arthur Gonzalez, will leave most creditors with an estimated 20 cents out of every dollar Enron owes them. Mooody's Investor Service states that this rate is below the 80 cents on the dollar that bondholders of diversified public utilities usually recover after reorganization. Enron's scheme classifies payments according to the amount owed to the different classes of creditors. Creditors with more than US$74 billion in claims, such as Citigroup Inc. and the University of California, would split more than $7.4 billion in cash, stock in Enron's surviving businesses valued at $3.7 billion and the proceeds Enron receives from lawsuits filed against former banks, law firms and other business partners. Unsecured creditors of its Enron North America unit would get 20.1 percent of what they're owed, and Enron Power Marketing Inc. creditors would get 22.9 cents on the dollar. Creditors holding $9.9 billion in Enron bonds plus interest, and other unsecured creditors will get an estimated recovery of 17.4 cents on the dollar. The ongoing liquidation of Enron's portfolio of contracts for supplying natural gas, power and commodities has raised more that US2.5 billion for the company. Since filing for bankruptcy protection in December of 2001, the company has made 45 major divestitures, including Wessex Water Plc in May 2002 for $1.76 billion and Portland General Electric earlier this year for $1.25 billion. Last month, Enron entered talks exploring the sale of its U.S. natural-gas pipelines for US$1.77 billion to a group of investors that includes one of its biggest creditors, Citigroup Inc. Enron owns several assets in the Caribbean, Central and South America. GERDAU ACOMINAS: Places 2nd Export Notes Tranche ------------------------------------------------ GERDAU S.A. (Bovespa: GGBR, NYSE: GGB, Latibex: XGGB) announces that, on June 3, 2004, its controlled company Gerdau Acominas S.A. successfully placed through Brazilian Steel Importer, Ltd. the second tranche of US$ 128 million of its Export Receivables Notes program. This program represents an important tool to improve the debt profile of Gerdau Acominas. This second tranche was placed with a final maturity of 8 years (April 2012) and a coupon of 7.321% p.a. The notes have a quarterly amortization schedule starting in July 2006. The operation was concluded in parallel with a US Treasury Lock derivative, yielding Gerdau an effective final cost of 6.798% p.a. This represents, at the time of pricing (May 24, 2004), 488 basis points lower than the Brazilian Sovereign for an equivalent average life, and 292 basis points above the five- year US Treasury yield, which is the average duration of this tranche. The operation was granted a "BBB-" rating by Fitch. This rating was issued based on receivables to be generated by sales of steel products produced by Gerdau Acominas. In the first quarter of 2004, Gerdau Acominas S.A. exported 714 thousand metric tons of steel products, 43.8% of total sales of 1.6 million metric tons in the period. These exports generated revenues of US$ 220 million in the quarter. This announcement does not constitute an offer of securities for sale in the United States. The notes have not been and will not be registered under the Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or an exemption from registration. The notes were offered in the United States only to accredited investors under Section 4(2) of the Securities Act and to qualified institutional buyers under Rule 144A thereof and outside the United States under Regulation S thereof. ========= C H I L E ========= TELEFONICA CTC: Anti-Monopoly Court Still Analyzing Merger ---------------------------------------------------------- Chile's Tribunal of Free Competition is yet to issue a ruling on whether the planned merger of the mobile unit of Telefonica CTC Chile and Bellsouth is a threat to fair competition, reports Reuters. In March, Spain's Telefonica SA agreed to purchase BellSouth's Latin America assets for US$5.85 billion. In May, Spain's Telefonica SA, through Telefonica Moviles S.A., announced plans to acquire CTC's mobile business, Telefonica Movil Chile SA, and merge it with Bellsouth to have a total of 3.6 million customers. Concerned that the resulting company will be too dominant and prevent other players from competing on fair terms, CTC's rivals Entel and Telmex Chile have both sought to block the merger through preventive legal action before the Chilean anti-monopoly court. But the tribunal said it would disregard those complaints for the moment. Independently of them, it must judge whether the new merged company would harm free competition in Chile's telecommunications sector. Should the tribunal authorize the merger, CTC still needs the vote of two-thirds of shareholders to go through with the deal. CTC shareholders are scheduled to vote before mid-July. CONTACT: TELEFONICA CTC CHILE Sofia Chellew E-mail: schelle@ctc.cl Tel.:56-2-691 3867 Veronica Gaete E-mail: vgaete@ctc.cl Tel.:56-2-691 3867 M.Jose Rodriguez E-mail: mjrodri@ctc.cl Tel.:56-2-691 3867 Florencia Acosta E-mail: macosta@ctc.cl Tel.:56-2-691 3867 TELEFONICA CTC: Board Revises Voting Rules on Mobile Sale --------------------------------------------------------- The board of Chilean telco Telefonica CTC Chile adjusted the rules for voting on the sale of mobile division Telefonica Movil to Telefonica Moviles S.A. for US$1 billion, reports Business News Americas. Instead of 50% plus one vote, the threshold determining a majority vote has been raised to 66.7%. The adjustment grants a request from CTC's minority shareholders - Cuprum, Consorcio, Celfin and The Chile Fund. These minority shareholders represent almost 6% of CTC shareholders and come from a group of local pension fund administrators (AFPs), insurance firms and foreign venture capital firms that have a total stake of 28.4%. To overturn Telefonica Moviles' offer and force it to raise the bid, this group will also depend on votes from holders of freely circulating shares that represent 13.3% of the firm. ============= J A M A I C A ============= C&WJ: Asset Write Downs Spur $5.3B Loss --------------------------------------- Substantial write downs of Cable and Wireless Jamaica's fixed assets, including its TDMA network and fixed line equipment, drove the company's financials to a sharp US$5.3 billion loss in just over a one year period. C&WJ has reduced the values of these assets as part of a strategic plan to migrate its costumers to the GSM network in the next three years. The company now has some 100,000 GSM customers from a mobile customer base of more than 600,000. Company executives questioned by The Observer Business Reporter on Thursday say that the write downs totaling US$11.06 billion which pushed C&WJ in the red will not affect profits since it was a non-cash item in the books. Impairment losses or write- downs are incurred when cash earning estimates for an asset are less than the asset's book value. Despite the reported loss, the company's Income Statement reflects an improvement in its gross margin of 70 percent, up 2.5 percent from last year's 67.5 percent. C&WJ records profit from operations of US$3.6 billion. However, the impairment item had significant consequences for the company's balance sheet position, stripping down its net assets by $9.6 billion to $28.5 billion. KAISER ALUMINUM: U.S. Bankruptcy Court OK's Alpart Sale ------------------------------------------------------- Kaiser Aluminum said that, in a special hearing that concluded Thursday, the U.S. Bankruptcy Court for the District of Delaware ruled that the company should proceed with the sale of its interests in and related to the Alpart alumina refinery in Jamaica to Hydro Aluminium a.s. in accordance with Hydro's previously announced exercise of its right of first refusal under the Alpart partnership agreement. As disclosed in Kaiser's Form 10-Q for the first quarter of 2004, the base purchase price is $295 million plus certain adjustments, which are expected to be in the range of $20 million. The transaction is expected to result in a gross sales price in the range of $315 million and a pre-tax gain of approximately $100 million. The company is currently working with the lenders under the Post-Petition Credit Agreement for an amendment that would, among other things, authorize the sale of the company's interests in Alpart and certain other commodity assets. In the interim, Kaiser Aluminum has obtained a waiver under this Credit Agreement that, among other things, permits the sale of the company's interests in Alpart. The company currently expects that the proceeds from the sale will be held in escrow pending the completion and approval by the Court of the amendment to the Credit Agreement and the Intercompany Agreement. Based on the Court order, Kaiser intends to proceed expeditiously toward a closing within the next several weeks. However, no assurances can be given in this regard. Kaiser Aluminum (OTCBB:KLUCQ) is a leading producer of fabricated aluminum products, alumina, and primary aluminum. =========== M E X I C O =========== AEROMEXICO: Commits to Posting Profit Despite Industry Woes ----------------------------------------------------------- Mr. Fernando Flores, Aeromexico's general director, reiterated Thursday the Company's commitment to register profits this year despite rising fuel costs and the current difficulties besetting the international aviation industry. Local daily Cronicas reports that along with the temporary MXN50 - MXN100 (US$4.40-8.75) fee slapped on ticket prices, the Company also plans to slash advertising and promotional budgets to offset the increase in operating costs. The executive also adds that the 2004 investment plan presented by the Company at the end of 2003 will be revised to reflect the unfavorable outlook for the aviation sector in the coming months. Meanwhile, Aeromexico's subsidiary Aerolitorial recently signed a US$100 million contract to rent five 50-seater jets from Brazilian company Embraer. HYLSAMEX: Fitch Raises Ratings on Hylsa's Note ---------------------------------------------- Fitch raised its rating on Hylsa's medium-term HYLSA POOU notes and its HYLSA 03U notes to "B(mex)" from "CCC(mex)" with a stable outlook, reports Reuters. The improved rating for the two debt issues, which total about US$67 million and are considered junk bonds by investors, came after Hylsa prepaid US$85 million in bank loans last month and promised to reduce debt more. Hylsa is the main subsidiary of Mexico's No. 3 steel maker Hylsamex, which in turn is in the process of being spun off by its majority shareholder Mexican conglomerate Alfa. Higher metals prices and improved cash flows also prompted Fitch to raise the unit's debt ratings. "What we are seeing is that they have been improving their operating position, and that in turn generates additional cash flows that can be used to prepay debt," Fitch analyst Sergio Rodriguez told Reuters. He warned that Hylsa's ability to make debt payments depends on the favorable development of the economy and the company's business. CONTACT: Hylsamex S.A. de C.V. 101 Ave Munich Cuauhtemoc 66452 San Nicolas de los Garza Nuevo Leon Mexico Phone: +52 81 8865 2828 Fax: +52 81 8865 1210 Home Page: http://www.hylsamex.com.mx Contact: Engr. Dionisio Garza Medina, Chairman Alejandro Elizondo Barragan, Chief Executive Engr VITRO: Launches New Retailing Efforts in Glass Market ----------------------------------------------------- In order to promote growth and profitability among its glass distribution channel by better integrating them to its value chain, to be closer to its final consumers by achieving and anticipating their needs, as well as to consolidate its market share in Mexico, Vitro (BMV: VITROA; NYSE: VTO) launched Thursday Vitromart, its new store chain dedicated to distribution of architectural and construction glass by which Flat Glass initiates the integration of 150 stores in 100 cities in Mexico, and revolutionize the glass industry. With the opening of Vitromart El Castillo, located in the San Nicolas de los Garza, a suburban area of Monterrey, Mexico, Vitro takes important steps in its strategy of supporting its customers that have a key position and experience in the glass market, and through this effort strengthen the construction and interior design glass value chain to benefit its final consumers. Vitromart, the solution's center for construction and interior design glass requirements, applications and use, will meet the needs of architects, construction professionals, interior designers, installers, product processing businesses, as well as of retailers, furniture manufacturers and home owners, among other. Three are the key objectives of this new distribution store chain in Mexico: 1. To promote growth and profitability among Vitro's glass distribution channel by better integrating them to its value chain. 2.To be closer to its final consumers by achieving and anticipating their needs. 3.To consolidate its market share in Mexico. "Vitromart will strengthen the construction and interior's design commercial channel by integrating its dealers to the distribution process in order to support their profitability and growth", said Humberto Flores, Flat Glass' Commercial Director. There are several advantages for customers who buy their products and services at every Vitromart shop; first, they will find an integral solution to their construction and interior design glass challenges; second, they will have access to best quality products and services; third, there will be solutions for each customer's problem; forth, competitive prices; fifth, we guarantee safety products; sixth, they will have access to the wide variety of Vitro's products in the same store, and the seventh reason is that our dealers will have the important support of know-how and experience of a Company that has been serving the market for close to 100 years. Vitro, S.A. de C.V. (NYSE: VTO; BMV: VITROA), through its subsidiary companies, is one of the world's leading glass producers. Vitro is a major participant in three principal businesses: flat glass, glass containers and glassware. Its subsidiaries serve multiple product markets, including construction and automotive glass; food and beverage, wine, liquor, cosmetics and pharmaceutical glass containers; glassware for commercial, industrial and retail uses, and aluminum containers. Vitro also produces raw materials and equipment and capital goods for industrial use. Founded in 1909 in Monterrey, Mexico-based Vitro has joint ventures with major world-class partners and industry leaders that provide its subsidiaries with access to international markets, distribution channels and state-of-the-art technology. Vitro's subsidiaries have facilities and distribution centers in nine countries, located in North, Central and South America, and Europe, and export to more than 70 countries worldwide. CONTACT: Media Monterrey: Mr. Albert Chico Smith Vitro, S. A. de C.V. +52 (81) 8863-1335 achico@vitro.com Media Mexico D.F.: Eduardo Cruz Vitro, S. A. de C.V. +52 (55) 5089-6904 ecruz@vitro.com Web Site: www.vitro.com =============== P A R A G U A Y =============== COPACO: Explores Debt Coverage Options With Mobile Operators ------------------------------------------------------------ Paraguay's state fixed telephony provider Copaco is now analyzing ways to raise cash in order to meet its financial obligations with mobile operators, reports Business News Americas. Citing Copaco president Francisco Godoy, local daily La Nacion reports that Copaco is looking at the possibility of taking possession of some government buildings as a means of eliminating the state's US$20-billion telephony debt. If Copaco does take control of some buildings it could relocate some of its sections to these buildings, particularly customer service centers. The rent saved would serve as part payment for the bills currently outstanding. Just recently, President Nicanor Duarte confirmed that Copaco's debt with mobile operators amounts to US$38 million, which Copaco's president pledged would be fully paid off by year-end. ======= P E R U ======= AERO CONTINENTE: Founder Seeks Justice in US Courts --------------------------------------------------- Fernando Zevallos, the founder of Peruvian airline Aero Continente, challenged the U.S. to open a trial against him in U.S. Courts so that he can defend himself against cocaine trafficking charges that led to his inclusion on a list of overseas drug kingpins released by the U.S., the AP reports. "I'm sending a letter to the president of the United States asking that they open a trial in the United States so that I can present my case and the American justice system can decide if I am guilty or innocent," Zevallos said at a news conference Wednesday. Last Tuesday, a Lima court opened a retrial against Zevallos on cocaine trafficking charges, to which he pleaded not guilty. Later that day, the White House announced that it placed the Peruvian airline mogul on its list of overseas drug kingpins and froze the U.S. based assets of Aero Continente and several related companies Under the 1999 Drug Kingpin Act, people placed on the U.S. list of drug traffickers and their related businesses are denied access to the U.S. financial system and any transactions involving U.S. companies and individuals. The U.S. government's decision came as another heavy blow to the Peruvian airline's operations since it would mean that U.S. companies that sell Boeing airplane parts are now banned from providing them to Aero Continente to maintain its fleet of jets. Maintenance history has already dogged the airline. In April, the U.S. Federal Aviation Administration banned Aero Continente from flying to the U.S. after discovering a pattern of safety violations, including the use of unauthorized motor parts and falsified maintenance records, a U.S. official told AP. * Fitch Revises Peru's BB- Sovereign Rating Outlook to Positive --------------------------------------------------------------- Fitch Ratings, the international ratings agency, upgraded the Rating Outlook on Peru's long-term foreign currency rating to Positive from Stable, on improving public and external finances, and reduced public financing vulnerabilities. The long-term foreign currency rating remains at 'BB-'. The long-term local currency (Peruvian Nuevo Sol) rating was affirmed at 'BB+' with a Stable Outlook. According to sovereign analyst Therese Feng at Fitch Ratings, 'Fiscal consolidation has been achieved in spite of a challenging political climate, which has helped to stabilize Peru's high public indebtedness and enhance the credibility of fiscal management'. Since 2001, 4% GDP growth, tax reform, and restraint in spending growth have underpinned a 1% of GDP reduction in the general government deficit. The government has also been resourceful in generating new sources of revenue to anticipate added expenditures. Furthermore should a second vote in Congress to approve constitutional reform of the public pension system be secured in the fall, both near-term public finances and the actuarial deficit of the pension system would improve. Peru has also significantly diversified public financing by accessing the international market and developing the public domestic debt market. The sovereign has issued US$3.7 billion in global bonds at favorable terms since 2002. After the government resolved concerns regarding market transparency and liquidity, domestic issuance provided 18.6% of 2003 public financing needs. As of May 2004, 41.5% of 2004 planned issuance had been completed. The domestic market also represents a good source of contingency financing should international market conditions prove unfavorable. Solid export growth has steadily decreased Peru's current account deficit from 8.7% of GDP in 1995 to 1.8% in 2003, and also reduced the gross external financing requirement to 29% of reserves. The Camisea natural gas project and mining expansions have spurred strong net FDI inflows that more than cover the current account deficit, supporting a steady and continuing reduction in net external debt. The central bank's accumulation of international reserves also helps offset vulnerabilities arising from high dollarization and potential political shocks, as reflected in limited 2% real depreciation of the currency during 2002 regional turmoil. Political risk remains a major credit constraint. Nonetheless GDP growth has proceeded in the face of political and social turmoil while fiscal consolidation has advanced, and policy settings have remained prudent. Fitch's base case is that despite the erosion in his governing mandate, President Alejandro Toledo will serve out the remainder of his term, though a scenario involving impeachment cannot be ruled out. Nevertheless the overriding question of who will prevail in the spring 2006 presidential election will weigh on sovereign risk perceptions over time. In particular the existence of a major contender in the presidential elections who followed a heterodox policy path as president in the late 1980s increases uncertainty about economic policy beyond 2006. At 150% of external receipts, Peru's net external debt is high relative to peer sovereigns, and reflects heavy public external debt and a narrow export base. General government debt to revenue of 272% is also comparatively high. Political uncertainty and structural and regulatory barriers could continue to depress non-mining investment in the near-term, which could in turn hinder expansion of the manufacturing sector and further diversification of the commodity-dependent economy. 'In the near-term we will closely monitor political developments, as well as whether economic momentum is likely to continue. Fitch will also look for further fiscal consolidation to make inroads into general government indebtedness, a declining net external debt ratio, and stronger investment as factors underpinning improved creditworthiness,' said Feng. On the other hand, should political shocks - including changes in President Toledo's cabinet, social unrest, or impeachment proceedings - negatively impact the conduct of economic policy, improving credit trends could reverse. ================================= T R I N I D A D & T O B A G O ================================= CDC: Managers Downplay Strike Impact on Product Quality ------------------------------------------------------- The ongoing strike by workers of Caribbean Development Company at the Champs Fleurs factory hasn't compromised the quality of the Company's products, the Trinidad Guardian reports, citing CDC managers. "Work at Carib Brewery goes on. Quality work goes on and in the safest conditions and in terms of the quality of the product that has not dropped," Colin Murray, Sponsorship and Events Manager, said. However, Mr. Murray admitted that the Company was losing money due to the strike. The industrial action stemmed from demands for a wage hike and monthly pensions. The National Union of Government and Federated Workers (NUGFW) is seeking a 17 percent increase in wages plus a special bonus plan whereby workers will receive 50 cents on each saleable carton. The Company is offering only 12 percent, which was turned down by the union. The union was also objecting to the Company's proposal to include random drug testing in the collective agreement, as well as reduce the number of union officers at the plant. *********** 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. 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. * * * End of Transmission * * *