/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/040920.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, September 20, 2004, Vol. 5, Issue 186 Headlines A R G E N T I N A BERKELIA: Begins Liquidation Proceedings CINCO LADOS: Enters Bankruptcy on Court Orders DEPORTES NEXO: Plans to Liquidate Assets to Pay Debts DISCO: Cencosud Enters New Deal To Keep Company A Bit Longer GIT S.A.: Court Issues Liquidation Order LA VAINILLA: Asks Court for Reorganization MASTELLONE HERMANOS: Introduces New Debt Offer MATYS S.R.L.: Court Orders Liquidation SIDECO AMERICANA: Bonds Get `B(arg)' Rating From Fitch S.H. LADRILLOS: Court Grants Reorganization Plea B E R M U D A FOSTER WHEELER: Secures Eastern Petrochemical Contract LUNG KEE: Robin Mayor Appointed as Liquidator MWD TECHNOLOGIES: Members Agree To Wind-Up B R A Z I L ACESITA: Plans to Group Shares to Bolster Stock Liquidity CSN: S&P Affirms Ratings; Rates Notes 'B+' C O L O M B I A * COLOMBIA: Exchanges 2005 Treasurys For 2007, 2009 Notes E C U A D O R PETROECUADOR: Takes U.S. Company to Court M E X I C O GRUPO IUSACELL: Sees Debt Accord Before Yearend GRUPO POSADAS: Moody's Rates Proposed $150M Notes Offering Ba3 GRUPO TMM: Regulator Denies Kansas City Bid for Stake P A R A G U A Y * PARAGUAY: IMF Concludes Article IV Consultation U R U G U A Y UTE: Wants More Time to Study Offer for Turnkey Contract V E N E Z U E L A PDVSA: NB Power Hopes to Gain High-sulfer Fuel Agreement - - - - - - - - ================= A R G E N T I N A ================= BERKELIA: Begins Liquidation Proceedings ---------------------------------------- Berkelia S.A. of Buenos Aires will begin liquidating its assets now that court no. 9 of the city's civil and commercial tribunal declared the company bankrupt. Infobae reveals that the bankruptcy process will commence under the supervision of court- appointed trustee, accounting firm "Estudio Edgardo Brodersen y Asociados." The trustee will review claims forwarded by the company's creditors "por via incidental". A general report on the case is scheduled for court submission on November 10, 2004. Clerk No. 17 assists the court on this case. CONTACT: Berkelia S.A. Avda Corrientes 4027 Buenos Aires Estudio Edgardo Brodersen y Asociados - Trustee 25 de Mayo 611 Buenos Aires CINCO LADOS: Enters Bankruptcy on Court Orders ---------------------------------------------- Court no. 16 of Buenos Aires' civil and commercial tribunal declared local company Cinco Lados S.A. bankrupt after the company defaulted on its debt payments. The order effectively places the company's affairs as well as its assets under the control of court-appointed trustee, Mr. Carlos Erasmo Moreno. As trustee, Mr. Moreno is tasked with verifying the authenticity of claims presented by the company's creditors. The verification phase is ongoing until November 23, 2004. Infobae reports that clerk no. 31 assists the court on this case, which will end with the disposal of the company's assets in favor of its creditors. CONTACT: Mr. Carlos Erasmo Moreno, Trustee Tucuman 1658 Buenos Aires DEPORTES NEXO: Plans to Liquidate Assets to Pay Debts ----------------------------------------------------- Deportes Nexo S.A. will begin liquidating its assets following the bankruptcy pronouncement issued by court no. 20 of Buenos Aires' civil and commercial tribunal. The ruling places the company under the supervision of court- appointed trustee, Mr. Jorge Wilcke. The trustee will verify creditors' proofs of claims until November 1, 2004. Next, the validated claims will be presented in court as individual reports on December 15, 2004. Mr. Wilcke 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 March 1, 2005. CONTACT: Mr. Jorge Wilcke, Trustee Paraguay 435 Buenos Aires DISCO: Cencosud Enters New Deal To Keep Company A Bit Longer ------------------------------------------------------------ Chilean group Cencosud established an agreement with Dutch giant Royal Ahold to keep Argentine supermarket chain Disco S.A. until next year. The deal came shortly after Argentine businessman Francisco de Narvaez revealed his intention to present to Ahold a new offer, bigger than Cencosud's, for the supermarket chain. In a preliminary accord in March, Cencosud agreed to buy Disco for US$315 million. The recent agreement also came amidst strong resistance from the Peirano Family, former partners of Ahold in Disco, who are doing all they can in order to block Cencosud from buying the supermarket chain. CONTACT: DISCO S.A. Larrea 847, Piso 1 1117 Buenos Aires, Argentina Phone: +54-11-4964-8000 Fax: +54-11-4964-8076 Home Page: http://www.disco.com.ar GIT S.A.: Court Issues Liquidation Order ---------------------------------------- Jewelry manufacturer Git S.A. enters bankruptcy protection after court no. 4 of Buenos Aires' civil and commercial tribunal issued an order allowing the Company's liquidation. Local information source Clarin reports that unpaid debts totaling US$110,000 prompted the bankruptcy petition. Clerk No. 8, assists the court on the case, which will culminate in the liquidation of all of its assets. CONTACT: Git S.A. Libertad 359 Buenos Aires LA VAINILLA: Asks Court for Reorganization ------------------------------------------ La Vainilla de Oro S.A. requested reorganization, as it has failed to pay its liabilities since August 31, 2003, says local information source Clarin. The reorganization petition, once court-approved, will allow the company to negotiate a settlement with its creditors in order to avoid a straight liquidation. The case is pending before court no. 16 of Buenos Aires' civil and commercial tribunal. Clerk no. 31 assists the court on this case. CONTACT: La Vainilla de Oro S.A. Avda. Cabildo 1493 Buenos Aires MASTELLONE HERMANOS: Introduces New Debt Offer ---------------------------------------------- Struggling to persuade creditors to agree to restructure some US$330 million in defaulted notes, Argentine dairy company Mastellone Hermanos (MLH.YY) launched a new and improved offer Thursday. According to Dow Jones Newswires, Mastellone sweetened the terms on one of the new bonds, which was originally to come due in 2014 and carry an interest rate of 7%. The company brought the maturity forward to 2012 and upped the interest rate to 8%. Interest began accruing July 31, 2004, rather than on the closing date of the offer, as initially planned. Another option for creditors, says the report, was a floating- rate bond due in 2011. The maturity remained unchanged for this new paper, and the company said it would no longer pay out on this bond early if it has the excess cash to do so. The third alternative gives creditors a cash payment worth 60% of their original holdings. Mastellone Hermanos said its new offer will now be available to both qualified institutional buyers and individual investors in the U.S., as well as foreign creditors. Before, the deal wasn't offered to non-qualified institutional buyers in the U.S. The new deadline is Oct. 14. The dairy company said it has already secured agreement from creditors holding US$290.4 million, or 88.3%, for the new offer. As of Wednesday, the company had US$131.7 million on board. Creditors that had accepted the deal before won't have to start the process over again. Rather, their original choices will simply be counted as agreement for the modified alternatives. Mastellone said it won't pursue its out-of-court debt restructuring agreement, known as an APE, if acceptance reaches 98%, relates Dow Jones. Under APE rules, two-thirds approval from creditors allows a company to submit its offer for legal clearance, which then makes the repayment terms binding on all creditors. CONTACT: Mr. Pascual Mastellone, President MASTELLONE HERMANOS S.A. Av. Leandro N. Alem 720 (1001) - Buenos Aires Argentina Phone: 54 1 318-5000 Fax: 54 1 313-6822 MATYS S.R.L.: Court Orders Liquidation -------------------------------------- Matys S.R.L. prepares to wind-up its operations following the bankruptcy pronouncement issued by court no. 2 of Buenos Aires' civil and commercial tribunal. 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 Mr. Mario Norberto Aragon as trustee. He will be reviewing creditors' proofs of claims until November 2, 2004. The verified claims will be the basis for the individual reports to be presented for court approval on December 27, 2004. The trustee will also submit a general report March 14 next year. Clerk no. 4 assists the court on this case, which will end with the disposal of the company's assets to pay its liabilities. CONTACT: Mr. Mario Norberto Aragon, Trustee Adolfo Alsina 1535 Buenos Aires SIDECO AMERICANA: Bonds Get `B(arg)' Rating From Fitch ------------------------------------------------------ Fitch Argentina Calificadora de Reisgo S.A. assigned a `B(arg)' rating to US$56Mln worth of corporate bonds issued by Sideco Americana S.A. The rating, based on the Company's finances as of June 30, 2004, affects these issues: - US$13.5 million worth of bonds described as "Obligaciones Negociables" that will mature on September 30 2014. - US$42.5 million worth of bonds described as "Obligaciones Negociables" with undisclosed maturity date. Fitch explains that the `B(arg)' rating indicates significant credit risk although a limited margin of safety remains. Financial commitments at this point are still being met. However, capacity for continued payment depends on a sustained, favorable business and economic environment. CONTACT: Sideco Americana S.A. Carlos Maria Della Paolera 299 P 27 1001) Buenos Aires Tel: (011) 4319-3800 Fax:(011) 4319-3880 S.H. LADRILLOS: Court Grants Reorganization Plea ------------------------------------------------ S.H. Ladrillos Tristan Suarez, "conformada por David Torres Vieira y Jose Carlos Vieira," successfully petitioned for reorganization after court no. 12 of Lomas de Zamora's civil and commercial tribunal issued a resolution opening the company's insolvency proceedings. During reorganization, the company will continue to manage its assets subject to certain conditions imposed by Argentine law and the oversight of a court-appointed trustee. Infobae relates that Mr. Santo Ernesto Luparelli will serve as trustee during the course of the reorganization. He will be accepting creditors' proofs of claims for verification until October 1, 2004. After the verification period, the trustee will prepare the individual reports and submit it in court on November 16, 2004. The firm will also present a general report for court review on February 8, 2005. The company will endorse the settlement proposal, drafted from the submitted claims, for approval by the creditors during the informative assembly scheduled on April 1, 2005. CONTACT: Mr. Santo Ernesto Luparelli, Trustee San Antonio 865 Temperley ============= B E R M U D A ============= FOSTER WHEELER: Secures Eastern Petrochemical Contract ------------------------------------------------------ Foster Wheeler Ltd. (OTCBB: FWLRF) announced Thursday that its UK subsidiary Foster Wheeler Energy Limited has been awarded a program management services contract by Eastern Petrochemical Company (SHARQ) for the expansion of SHARQ's existing petrochemicals complex known as the SHARQ 3rd Expansion Project to be located at Jubail Industrial City, Jubail, Kingdom of Saudi Arabia. SHARQ is a joint venture between Saudi Basic Industries Corporation (SABIC) and Saudi Petrochemical Development Corp. The terms of the award were not disclosed. The project will be included in third-quarter bookings. "We are delighted to be involved in this major investment program to be undertaken by Eastern Petrochemical Company," said Steve Davies, chairman and chief executive officer, Foster Wheeler Energy Limited. "This is yet another significant win for Foster Wheeler and continues our recent success for similar work with our clients in the Kingdom. We are already working as project management consultant with SABIC for its new grassroots petrochemicals facility to be built at Yanbu Industrial City. This award further underscores the quality of our technical and project management expertise and demonstrates Foster Wheeler's competitiveness in the market- place." "The selection of Foster Wheeler as Program Management Contractor underlines our developing relationship with Foster Wheeler," commented Mohammad Al-Jabri, president, Eastern Petrochemical Company. "We are confident that this project will benefit significantly from the similar work Foster Wheeler is executing for SABIC's Yanbu facility." The expansion of the existing petrochemicals complex will include the following units: a grassroots 1,300 kilo tonnes per annum (kta) ethylene cracker, a 800 kta polyethylene plant, a 600 kta ethylene glycol plant and associated offsites and utilities. Foster Wheeler's scope of work as Program Management Contractor (PMC) will include the preparation of front-end engineering design (FEED) and preparation and issue of invitations to bid for each of the process units, including bid evaluation and award recommendations for engineering, procurement and construction (EPC) contractors. Foster Wheeler will also manage all EPC contractors and provide the overall management, coordination and control of all phases of the program. Mechanical completion is expected in early 2008. Foster Wheeler Ltd. is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the refining, upstream oil and gas, LNG and gas-to-liquids, petrochemical, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. The corporation is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, New Jersey, USA. CONTACT: Media Contact: Foster Wheeler Ltd. Ms. Maureen Bingert Tel: 908-730-4444 or Other Inquiries: Tel: 908-730-4000 Web Site: http://www.fwc.com/ LUNG KEE: Robin Mayor Appointed as Liquidator --------------------------------------------- IN THE MATTER OF THE COMPANIES ACT OF 1981 and IN THE MATTER OF Lung Kee Holdings Limited The Sole Member of Lung Kee Holdings Limited, acting by written consent without a meeting on September 2, 2004 passed the following resolutions: 1) That the Company be wound up voluntarily, pursuant to the provisions of the Companies Act 1981; 2) That Robin J. Mayor be and is hereby appointed Liquidator for the purposes of such winding-up. Mr. Mayor, the Liquidator, informs that: - a final general meeting of the Sole Member of Lung Kee Holdings Limited will be held at the offices of Messrs. Conyers Dill & Pearman, Clarendon House, Church Street, Hamilton, Bermuda on October 20, 2004 at 9:30 a.m., or as soon as possible thereafter, for the purposes of: 1) receiving an account laid before them showing the manner in which the winding-up of the Company has been conducted and its property disposed of and of hearing any explanation that may be given by the Liquidator; 2) by resolution determining the manner in which the books, accounts and documents of the Company and of the Liquidator shall be disposed of; and 3) by resolution dissolving the Company. - The Creditors of Lung Kee Holdings Limited, which is being voluntarily wound up, are required, on or before September 29, 2004 to send their full Christian and Surnames, their addresses and descriptions, full particulars of their debts or claims, and the names and addresses of their lawyers (if any) to the Liquidator at Messrs. Conyers Dill & Pearman, Clarendon House, Church Street, Hamilton, HM DX, Bermuda, and if so required by notice in writing from the said Liquidator, and personally or by their lawyers, to come in and prove their debts or claims at such time and place as shall be specified in such notice, or in default thereof they will be excluded from the benefit of any distribution made before such debts are proved. CONTACT: Mr. Robin J Mayor Liquidator Clarendon House, Church Street Hamilton in the Islands of Bermuda MWD TECHNOLOGIES: Members Agree To Wind-Up ------------------------------------------ IN THE MATTER OF THE COMPANIES ACT OF 1981 and IN THE MATTER OF MWD Technologies Limited The Members of MWD Technologies Limited held a special meeting on the 23rd day of August 2004 and passed the following resolutions: 1. That the Company be wound up voluntarily, pursuant to the provisions of the Companies Act 1981; 2. That Malcolm Butterfield be and is hereby appointed Liquidator for the purposes of such winding-up. Mr. Butterfield, the Liquidator, informs that: - The Creditors of MWD Technologies Limited, which is being voluntarily wound up, are required, on or before September 30, 2004 to send their full Christian and Surnames, their addresses and descriptions, full particulars of their debts or claims, and the names and addresses of their solicitors (if any) to Malcolm Butterfield, the undersigned, at KPMG Financial Advisory Services Limited, Crown House, 4 Par-La-Ville Road, Hamilton, HM 08, Bermuda, the Liquidator of the said Company, and if so required by notice in writing from the said Liquidator, and personally or by their solicitors, to come in and prove their debts or claims at such time as shall be specified in such notice, or in default thereof they will be excluded from the benefit of any distribution made before such debts are proved. CONTACT: Mr. Malcolm Butterfield KPMG Financial Advisory Services Limited Crown House, 4 Par-La-Ville Road Hamilton in the Islands of Bermuda =========== B R A Z I L =========== ACESITA: Plans to Group Shares to Bolster Stock Liquidity --------------------------------------------------------- Stainless steelmaker Acesita informed the Sao Paulo stock exchange that it has secured approval from the board to group its shares to increase stock liquidity and cut costs, reports Business News Americas. The proposal, which awaits approval from the company's shareholders at a meeting scheduled for October 5, allows Acesita to convert each 10,000 shares into one. Currently, Acesita (Bovespa: ACES4) is traded in lots of 1,000 shares. The company's 745.48 billion shares, which include 249.01 billion common shares and 496.47 billion preferred shares, will be converted into 74.54 million shares, which would include 24.9 million common shares and 49.64 million preferred shares. At the same time, Acesita's ADRs will be traded in the proportion of one share for each two ADRs, the company said in a statement to the bourse. Acesita is controlled by European steel group Arcelor and local pension funds. CSN: S&P Affirms Ratings; Rates Notes 'B+' ------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BB' local- currency and 'B+' foreign-currency corporate credit ratings on Brazil's integrated carbon flat steel maker Companhia Siderurgica Nacional (CSN). At the same time, Standard & Poor's assigned its 'B+' foreign-currency rating to the forthcoming $200 million guaranteed notes, due January 2015, to be issued by CSN Islands IX Corp. and unconditionally and irrevocably guaranteed by CSN. The outlook on the local-currency corporate credit rating is stable. The outlook on the foreign-currency corporate credit rating is positive. The local-currency rating on CSN reflects the company's exposure to the volatile and cyclical global steel industry, which despite its current favorable price environment, is intrinsically exposed to strong price oscillations; the company's relative exposure to the volatile Brazilian economy; and a still-heavy gross leverage profile (for analytical purposes, Standard & Poor's takes account of gross leverage ratios, adding up debts at the controlling shareholder level). Despite its improved duration and strengthened liquidity, current debt levels still pose some risks to CSN, as there is some debt maturity concentration in years ahead. Finally, the ratings incorporate the risks of CSN's significant capital expenditure program for the next three to four years, aimed at bringing the production capacity of its Casa de Pedra iron ore mine up to a pace of 40 million metric tons per year (tpy). These risks are offset by CSN's very sound and favorable operating and business profiles, evidenced by its distinguished positioning in the global steel industry as one of the lowest- cost integrated carbon flat steel producers in the world; strong and growing export capabilities; and increasing business diversification projected for the near term with the addition of an iron ore export operation. "The ratings also factor CSN's strong liquidity in the form of high cash reserves as a source of financial flexibility, as well as resilient and robust positive free operating cash flow projected for the next several years, even more so under the current favorable price environment," said Standard & Poor's credit analyst Reginaldo Takara. Prospects for the rest of 2004 remain favorable. While there are some signs that global steel prices may be reaching accommodation and that peak prices are to be left behind, the industry fundamentals remain strong enough to sustain prices at much higher levels than those of past years. CSN is sold out through the next several months at solid price levels, and negotiations for 2005 are expected to remain favorable. In Brazil, utilization rates for all Brazilian steel makers remain close to full capacity by now, equally pointing to a favorable price environment and positive spreads that traditionally have been practiced relative to international prices. In the specific case of CSN, margins should also be positively affected by product mix improvements, as the company grows higher value- added sales with the acquisition of GalvaSud S.A. In the medium to long term, CSN's business profile is enhanced by the expansion of its proprietary iron ore mine, Casa de Pedra. The addition of exports of more than 20 million tpy of iron ore products (starting in 2005 and reaching capacity in 2007) is a relevant positive for CSN's business profile, as the iron ore seaborne market tends to be considerably more stable than is the global steel market. CSN is one of the largest integrated flat steel makers in Brazil, producing slabs, hot-rolled, cold-rolled, and galvanized flat steel products to a diverse group of domestic and foreign clients. The company produced 2.7 million tons of crude steel in first-half 2004, selling 2.5 million tons of steel products in the same period. The stable outlook on CSN's local-currency corporate credit rating reflects Standard & Poor's expectations that CSN will manage to preserve reasonably strong liquidity in the future thanks to its strong cash generation and despite capital commitments already announced. The outlook also assumes that CSN will be able to maintain sound operating results through the steel industry cycle thanks to its favorable cost position and reasonably fair access to global steel markets. Acquisitions or further capital commitments that could potentially hurt this condition or add financial leverage were not assumed by Standard & Poor's and could lead to a negative revision of the ratings or outlook. On the other hand, strengthening results to levels not factored yet or a much more conservative financial profile (essentially embedded in lower total gross debt balances) could lead to a positive revision of the ratings or outlook in the medium term. The positive outlook on the foreign currency rating reflects that of the sovereign currency rating of the Federative Republic of Brazil. ANALYSTS: Reginaldo Takara, Sao Paulo (55) 11-5501-8932 Milena Zaniboni, Sao Paulo (55) 11-5501-8945 =============== C O L O M B I A =============== * COLOMBIA: Exchanges 2005 Treasurys For 2007, 2009 Notes --------------------------------------------------------- Colombia swapped Thursday COP1.34 trillion ($1=COP2,518.15) of local TES Treasurys maturing in 2005 for TES maturing in 2007 and 2009 in an operation that allows the government to cut 2005 local debt amortizations by 13%, Dow Jones Newswires reports. According to the Ministry of Finance, the yield for TES notes maturing in March 2007 was priced at 10.70%, while the July 2009 notes yield 12.70%. "We think that this transaction will not be the last one, since fiscal pressures increase in the next years. The government has to give priority to higher-than-expected pension obligations and military spending," said Arnoldo Casas, a fixed-income analyst at Promotora Bursatil. ============= E C U A D O R ============= PETROECUADOR: Takes U.S. Company to Court ----------------------------------------- State oil company Petroecuador sued US-based Occidental Petroleum Corp. (NYSE: OXY) for failing to obtain Ecuador's authorization at the proper time to transfer a 40% stake in its operations in block 15 to Canada's EnCana Corp., reports Business News Americas. Occidental, which has already been notified of the complaint, has 10 days to respond. If Petroecuador is not satisfied with Occidental's response, the state firm could present its case to the minister of energy Eduardo Lopez, who would make a final decision. If the decision went against Occidental, the company could appeal to local courts or an international arbitrator. Occidental, which invested more than US$1 billion in block 15, has vowed to fight the case. The transfer operation between Occidental and Encana was reported to US regulators in 2001 but Occidental did not solicit approval from Ecuador's energy ministry for the deal until July 2004. As a result, both Ecuador's attorney general and the energy ministry are pressuring Petroecuador to end Occidental's oil production contract, signed in 1999. The dispute arose after an international tribunal in August ordered Ecuador to pay Occidental a US$75-million tax rebate. The government is appealing the decision. =========== M E X I C O =========== GRUPO IUSACELL: Sees Debt Accord Before Yearend ----------------------------------------------- Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE and BMV: CEL), a wireless cellular and PCS service provider in Mexico, hopes to seal a debt deal with creditors by the end of the year. In an interview with Reuters, Iusacell's Chief Executive Gustavo Guzman said: "There is real communication between the parties." "This will enable us, in a reasonable length of time of three or four months, to start thinking about being able to reach an accord." Guzman said this would mean a deal before the end of the year. "This is what I expect and this is what I am asking for from the chief financial officer." Iusacell, owned by retail and media tycoon Ricardo Salinas, has defaulted on debt obligations over the past year, sparking legal battles with some of its creditors. The company has not been able to renegotiate its debt pile of about US$800 million. Earlier this year, Iusacell hired New York-based financial advisory firm Hill Street Capital to help it with debt negotiations. CONTACTS: Ricardo Salinas Pliego, Chairman Gustavo Guzman, CEO, Director GRUPO IUSACELL SA DE CV Prolongacion Paseo, De La Reforma 1236 Mexico, D.F., 05348 Phone: (525) 109-4400 Web Site: http://www.iusacell.com.mx GRUPO POSADAS: Moody's Rates Proposed $150M Notes Offering Ba3 ------------------------------------------------------------- Moody's Investors Service assigned a Ba3 Senior Implied Rating to Mexican hotels operator Grupo Posadas S.A. de C.V. and a Ba3 rating to the company's proposed offering of US$150 million in Senior Unsecured Guaranteed Notes due 2011. The outlook is stable. Grupo Posadas recently announced its intention to sell approximately US$150 million senior notes to pay down existing short-term debt and extend the maturity profile. The notes, which are to be 100% guaranteed by its subsidiaries, won't be registered under the Securities Act of 1933. The Ba3 rating on the notes is supported by upstream guarantees from the company's restricted subsidiaries, which, in conjunction with the holding company, generate around 75% of consolidated EBITDA. Posadas reported debt of US$331.5 million at the end of the second quarter, with an average life of 2.5 years, which it said it was hoping to extend. In 2003, the company reported sales of MXN3.9 billion with an EBITDA of MXN953 million. GRUPO TMM: Regulator Denies Kansas City Bid for Stake ----------------------------------------------------- Kansas City Southern (NYSE:KSU) and Grupo TMM, S.A. (NYSE:TMM) and (BMV: TMM A) announced Thursday that Mexico's Foreign Investment Commission ("FIC") delivered a notice that the FIC had resolved to deny KCS' application for authorization of KCS' proposed acquisition of TMM's interest in TFM, S.A. de C.V., which operates a major rail freight carrier in Mexico. The approval of the FIC is necessary for a foreign company to become a majority owner of a Mexican-based railway company. KCS and TMM stated that they are disappointed by this decision, and that it is not in the spirit of the North American Free Trade Agreement ("NAFTA") nor consistent with previous decisions made by the FIC on foreign majority ownership, including ownership of another railroad in Mexico. KCS and TMM are actively involved in discussions with the FIC and believe that they are close to an agreement to resolve these matters. KCS and TMM will seek reconsideration of this decision and remain confident that they should ultimately obtain approval of the transaction. KCS and TMM have agreed to extend the current deadline under the April 20, 2003 acquisition agreement until June 15, 2005 to provide additional time to complete this transaction. KCS is a transportation holding company that has railroad investments in the United States, Mexico, and Panama. Its primary holding is The Kansas City Southern Railway Company. Headquartered in Kansas City, Missouri. KCS serves customers in the central and south central regions of the U.S. KCS' rail holdings and investments are primary components of a NAFTA Railway system that links the commercial and industrial centers of the United States, Canada and Mexico. Headquartered in Mexico City, Grupo TMM is Latin America's largest multimodal transportation company. Through its branch offices and network of subsidiary companies, Grupo TMM provides a dynamic combination of ocean and land transportation services. Grupo TMM also has a significant interest in TFM, which operates Mexico's Northeast railway and carries over 40 percent of the country's rail cargo. CONTACT: Grupo TMM Investor Relations: Mr. Brad Skinner Tel: 011-525-55-629-8725 203-247-2420 e-mail: brad.skinner@tmm.com.mx Media Relations, Proa/Structura: Mr. Marco Provencio Tel: 011-525-55-629-8708 011-525-55-442-4948 e-mail: mp@proa.structura.com.mx Desner Corporate Services: (general investors, analysts and media) Ms. Kristine Walczak Tel: 312-726-3600 e-mail: kwalczak@dresnerco.com Kansas City Southern: Mr. Warren K. Erdman Tel: 816-983-1454 e-mail: warren.k.erdman@kcsr.com Media Relations Mr. Gabriel Guerra Tel: 011-525-55-273-5359 e-mail: gguerra@gcya.net Web Site: http://www.tfm.com.mx/ =============== P A R A G U A Y =============== * PARAGUAY: IMF Concludes Article IV Consultation ------------------------------------------------- On July 30, 2004, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Paraguay. Background The Paraguayan economy is beginning to emerge from a long period of slow growth. The regional crisis, problems with drought and foot-and-mouth disease in agriculture, and a banking crisis, all contributed to a drop of 2.3 percent in GDP in 2002. There was a sharp depreciation of the exchange rate in 2002 and inflation accelerated, reaching 20 percent in early 2003. A bumper harvest produced positive GDP growth of an estimated 2.6 percent in 2003. Banking system deposits recovered, the exchange rate appreciated against the dollar, and inflation eased to 9 percent at year-end. In 2004, the economy has stabilized but growth remains modest. A late season drought depressed output of soy, the largest export crop, reducing expected agricultural output growth to near zero, but nonagricultural output is recovering. The guaran� has strengthened by 4 percent against the dollar so far in 2004. The strong guaran� contributed to a sharp fall in inflation. Year- on-year inflation through June was 5.5 percent, with inflation for the year as a whole expected at around 4-5 percent. The fiscal situation has improved markedly since the new government took office in August 2003. The consolidated balance of the nonfinancial public sector moved from a deficit of 3.1 percent of GDP in 2002 to balance in 2003. The primary balance improved from a deficit of 1.3 percent of GDP in 2002 to a surplus of 2.4 percent in 2003. The government has made significant progress in clearing substantial public sector payments arrears. Monetary policy has been geared toward a flexible exchange rate regime since the de facto currency peg was abandoned in 2001. Official reserves rose by US$342 million-to US$983 million- during 2003. Base money growth accelerated sharply in 2003, as the economy began to remonetize after the banking crises. Interest rates on Central Bank bills have declined from their peak of 33 percent in August 2002, reaching 13 percent by December 2003. Executive Board Assessment Directors praised Paraguay's strong economic performance over the past year, with growth rebounding and a sharp decline in inflation. The vulnerability of the economy has been reduced and the country's credit rating improved, as the authorities increased international reserves, resolved external payments difficulties, and embarked on courageous fiscal and structural reforms. In particular, Directors welcomed the approval of the Administrative Reorganization and Fiscal Adjustment Law and the Customs Code, and the government's strong determination to improve governance. They commended the authorities for the remarkable progress in raising the efficiency of tax and customs collections. Directors agreed that important challenges nevertheless remain. They encouraged the authorities to continue to work for the timely passage of the Public Bank Reform Law, to institutionalize the progress achieved on fiscal sustainability, and to further deepen the reform effort in areas that are critical to raising Paraguay's growth performance. Directors considered that the Administrative Reorganization and Fiscal Adjustment Law, along with the additional measures announced by the authorities, provides a sound basis for balanced budgets in the medium term by raising new revenue, broadening the value-added tax (VAT) and income tax base, eliminating exemptions, and strengthening tax administration. Full implementation of these measures will also help generate resources for a much-needed increase in capital investment and social spending. Directors commended the authorities for raising the efficiency of tax and customs collections, as evidenced by the strong increase in revenue so far in 2004-with no increase in tax rates. They urged the authorities to institutionalize these gains by restructuring the tax and customs authorities, and ensuring that they have the resources needed to carry out fully their responsibilities as defined in the new law. Directors welcomed the authorities' tight control of current expenditures and urged continued prudence, in particular on wage increases. They also stressed that new capital investment and social spending should be of high quality and well prioritized. Directors encouraged the authorities to remain firm on resisting pressures for increased spending to stimulate demand, as this would likely endanger fiscal stability without supporting sustainable increases in growth. Looking ahead, the authorities should undertake a full-fledged public expenditure reform, including civil service reform, which will be critical to ensuring long-term sustainability. Directors welcomed the progress in eliminating domestic and external payments arrears, while urging the authorities to further improve debt monitoring and cash flow procedures, and to resolve disputed arrears. Directors also welcomed the improvement in the outlook for public enterprises, but noted that cash flow problems in some of them underscore the need for continued restructuring. They encouraged the authorities to permit private investment and management of the public enterprises, and take further measures to improve their governance and transparency, including through timely completion of the audits of public entities. Directors welcomed the improvement in the management of monetary policy, as reflected in the marked decline in inflation and the increase in international reserves. They encouraged the authorities to continue with preparations for inflation targeting while noting that the ground must be well-prepared before a move in that direction. In this context, they urged the authorities to clarify their monetary policy objectives by limiting their interventions in the foreign exchange market and giving freer play to market forces in determining the exchange rate. They also encouraged legislation to strengthen the formal independence of the central bank as well as further development of market-based instruments to facilitate the conduct of monetary policy. Directors noted that banking system risks have eased, although the level of nonperforming loans remains high. They stressed that public banking reform, including passage by congress of the Public Bank Reform Law, remains crucial to further strengthen the system. The authorities also need to work toward approval of comprehensive banking legislation, extension of a supervisory regime to cooperatives, and mandatory introduction of international risk classifications for all banks. Directors supported the authorities' request for an FSAP. They commended the authorities' AML/CFT efforts, and looked forward to the timely enactment of legislation in this area. Directors observed that a deepening of the reform effort will be needed to raise Paraguay's growth potential and make faster progress, with international support, toward the Millennium Development Goals. Building on recent commendable progress in strengthening governance, further efforts are needed to address corruption, reform the judicial system, and restructure the public sector to increase its professionalism and transparency, and reduce its size and scope. Programs to promote human capital development will also play an important role in increasing productivity and growth. Directors welcomed the authorities' commitment to maintaining an open exchange and trade system, and encouraged them to undertake additional actions to capture unregistered trade. NOTE: Public Information Notices (PINs) are issued, (i) at the request of a member country, following the conclusion of the Article IV consultation for countries seeking to make known the views of the IMF to the public. This action is intended to strengthen IMF surveillance over the economic policies of member countries by increasing the transparency of the IMF's assessment of these policies; and (ii) following policy discussions in the Executive Board at the decision of the Board. To view selected economic indicators: http://bankrupt.com/misc/Paraguay.htm CONTACT: International Monetary Fund External Relations Department 700 19th Street, NW Washington, D.C. 20431 USA Public Affairs: Tel: 202-623-7300 Fax: 202-623-6278 Media Relations: Tel: 202-623-7100 Fax: 202-623-6772 ============= U R U G U A Y ============= UTE: Wants More Time to Study Offer for Turnkey Contract -------------------------------------------------------- A source from Uruguay's state-owned power company UTE said that the utility is seeking more time to study bids for a turnkey contract to build a 350-400MW combined cycle thermoelectric power plant in San Jose department, some 15-20km from Montevideo, says Business News Americas. Companies that have already submitted their bids include Fiat Engineering do Brasil, General Electric, Alstom and Siemens Westinghouse in June. The offers are set to expire this week, but the source said UTE asked companies to extend the validity of their offers for 30 days. The technical offers have been opened already, but not the economic bids. "We don't know the investment because we haven't opened the economic bids yet," the spokesperson said. The tender is "very complicated" and recent estimates have increased the cost of the project from US$160mn initially to more than US$200mn "which changes the equation of the business," newspaper El Pais quoted other UTE sources as saying. "The investments involved have changed value and...the turbines required could be available today but not tomorrow," the sources said. Moreover, the plant's Argentine gas supplies are in doubt, because it is unclear if the operator would have to pay for the gas in US dollars or if there is sufficient availability of gas given Argentina's ongoing gas crisis. "The comparison between the offers is very difficult - also, none of them comply with all the requirements," the sources said. ================= V E N E Z U E L A ================= PDVSA: NB Power Hopes to Gain High-sulfer Fuel Agreement -------------------------------------------------------- Jeffrey Carleton, a spokesperson of Canadian energy company NB Power, announced that his company is negotiating with Venezuela's state oil company PDVSA to supply high-sulfur fuel instead of orimulsion to operate its US$750-million, 1,050MW Coleson Cove generator. Business News Americas recalls that NB Power committed over US$600 million to convert Coleson Cove to orimulsion from oil after it reached an agreement with PDVSA's Bitor subsidiary. However, Venezuela decided in September 2003 to discontinue orimulsion contracts and said it would absorb Bitor's operations into PDVSA. The decision prompted NP Power to lodge a US$2-billion suit against PDVSA and Bitor for breaking the 20-year agreement to supply orimulsion to Coleson Cove. PDVSA denied a firm agreement ever existed. Now, NB Power is reconfiguring Coleson Cove to allow the plant to operate with an inexpensive fuel other than orimulsion once the conversion is completed this year. *********** 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. 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