/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/040928.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, September 28, 2004, Vol. 5, Issue 192 Headlines A R G E N T I N A ARDAN S.A.: Bankruptcy Process Begins with Court Order CROWS INTERNATIONAL: Claims Verification Period Ends Tomorrow DECARI S.A.: Court Approves Creditor's Bankruptcy Motion DISCO: Antitrust Regulator Awaits Judicial Decisions INSTRUMENTAL GMG: Individual Reports Due for Submission L ARLESIENNE: General Report Due Today MAZTLAN: Court Declares Company Bankrupt MON-TON S.A.: Court Favors Creditor's Bankruptcy Request NIVEL SALUD: Trustee to Submit General Report PARMALAT ARGENTINA: Local Group Agrees to Pay $20M For Ownership PROIN ALIMENTOS: Files Petition to Reorganize SANFER 2000: Liquidates Assets to Pay Debts B A H A M A S ULTRAPETROL BAHAMAS: S&P Affirms Ratings B A R B A D O S TRANS ISLAND AIR: Halts Flights But Business Continues B E R M U D A FOSTER WHEELER: Issues More Details on Exchange Offer Closing FOSTER WHEELER: Schedules Annual Shareholders' General Meeting B R A Z I L CEMIG: To Tap Deal Consultant This Week CSN: Fitch Rates $200M, 10-year Issuance 'B+' VASP: Regulator Grounds Six Aircraft C O L O M B I A ROYAL SHELL: Negotiating Sale of InterGen * COLOMBIA: Secures $100M World Bank Loan H O N D U R A S * HONDURAS: IMF Completes Review of $104.3M PRGF Arrangement M E X I C O EMPRESAS ICA: Joint Venture Inks $134M Pemex Deal GRUPO IUSACELL: Utilizing Lucent to Upgrade Network VITRO: Unit Takes Out $230M Credit To Pay Down Debt U R U G U A Y PLUNA: British Fund Offers to Buy Varig's Stake - - - - - - - - - - ================= A R G E N T I N A ================= ARDAN S.A.: Bankruptcy Process Begins with Court Order ------------------------------------------------------ Buenos Aires-based Ardan S.A. enters bankruptcy protection after court no. 23 of the city's civil and commercial tribunal ordered the Company's liquidation. The order effectively transfers control of the company's assets to the court-appointed trustee who will supervise the liquidation proceedings. Infobae reports that the court selected Ms. Susana H. Vacchelli as trustee. She will be verifying creditors' proofs of claims until the end of the verification phase on November 10, 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 December 23, 2004 followed by the general report, which is due on March 8 next year. CONTACT: Ardan S.A. Tacuari 32 Buenos Aires Ms. Susana H. Vacchelli, Trustee Montevideo 571 Buenos Aires CROWS INTERNATIONAL: Claims Verification Period Ends Tomorrow ------------------------------------------------------------- Ms. Marta Mabel Linares, the trustee overseeing the liquidation of Crows International S.A., will close the review and validation of creditors' claims pertaining to the case tomorrow, September 29, 2004. Creditors are required to submit all relevant documents to the trustee before the deadline to qualify for the post liquidation payments that will be made. The Company's creditor, Banco Regional de Cuyo S.A., filed the liquidation petition after Crows defaulted on a US$300,406.25 debt payment. Judge Dieuzeide of Buenos Aires' civil and commercial tribunal court no. 1 has jurisdiction over this case. CONTACT: Crows International S.A. Avenida Cordoba 1351 Buenos Aires Ms. Marta Mabel Linares, Trustee Parana 145 Buenos Aires DECARI S.A.: Court Approves Creditor's Bankruptcy Motion --------------------------------------------------------- Court no. 13 of Buenos Aires' civil and commercial tribunal declared local company Decari S.A., formerly named Petrone Hermanos S.A., bankrupt. La Nacion reports that the ruling comes in approval of the bankruptcy petition filed by the Company's creditor, Ms. Josefina Frias, for nonpayment of US$114,256.04 in debt. Court-appointed trustee Liliana Busto will examine and authenticate creditors' claims until November 5, 2004. This is done to determine the nature and amount of the Company's debts. Creditors must have their claims authenticated by the trustee by the said date in order to qualify for the payments that will be made after the Company's assets are liquidated. Dr. Cardama, clerk no. 26, assists the court on the case that will conclude with the liquidation of the Company's assets. CONTACT: Decari S.A. Pedro de Mendoza 2719 Buenos Aires Ms. Liliana Busto, Trustee Campana 2269 Buenos Aires DISCO: Antitrust Regulator Awaits Judicial Decisions ---------------------------------------------------- Federal court rulings blocking the sale of supermarket chain Disco to Chilean retailer Cencosud are causing delays in the antitrust authorities' decision over the transaction. Dow Jones Newswires recalls that two federal judges in separate cities in the province of Mendoza have issued rulings blocking Cencosud's acquisition. Mr. Ismael Malis, who heads Argentina's National Commission for Defense of Competition, said his office has appealed the Mendoza court decisions but isn't able to advance with the analysis in the meantime. "When the (judicial) decision arrives, we will take the study up again," Dow Jones quoted Malis as saying. Consumer groups and some lawmakers are opposed to the Disco- Cencosud, as it will lead to over-concentration in Argentina's retail sector. A required stage of the antitrust process that invites interested parties to present their views on the transaction hasn't yet taken place because of the court rulings. 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 INSTRUMENTAL GMG: Individual Reports Due for Submission ------------------------------------------------------- Court no. 6 of Buenos Aires' civil and commercial tribunal expects to receive individual reports from the Instrumental GMG bankruptcy case today. Mr. Miguel A. Franqueiro, the trustee handling the proceedings, prepared these reports from the claims submitted by the Company's creditors during the verification period. The court will base the final list of creditors eligible to receive post-liquidation payments from the individual reports. CONTACT: Mr. Miguel A. Franqueiro, Trustee Corrientes 534 Buenos Aires L ARLESIENNE: General Report Due Today -------------------------------------- A general report on the L Arlesienne S.R.L. bankruptcy case is due for court submission today. Trustee Alberto Jorge Rotenberg prepared this report from the company's accounting and business records. The report also provides the court with information on the Company's liquidation proceedings. Court no. 14 of Buenos Aires' civil and commercial tribunal, assisted by clerk no. 28, has jurisdiction over this case. CONTACT: Mr. Alberto Jorge Rotenberg, Trustee Av Cordoba 1336 Buenos Aires MAZTLAN: Court Declares Company Bankrupt ---------------------------------------- Court no. 7 of Buenos Aires' civil and commercial tribunal declared local company Maztlan Distribuciones S.A. "Quiebra", relates La Nacion. The order transfers control of the Company's assets to a court- appointed trustee who will supervise the liquidation proceedings. Clerk no. 14 assists the court on the case. CONTACT: Maztlan Distribuciones S.A. Enrique Finochietto 436 Buenos Aires MON-TON S.A.: Court Favors Creditor's Bankruptcy Request -------------------------------------------------------- Construction company Mon-Ton S.A. entered bankruptcy protection after court no. 3 of Buenos Aires' civil and commercial tribunal approved a bankruptcy motion filed by, Ms. Maria Elena Martinez de Olivieri. La Nacion says that the Company's failure to pay US$68,817 in debt prompted the creditor to file the petition. The Company's assets will be liquidated at the end of the bankruptcy process to repay creditors. CONTACT: Mon-Ton S.A. Av. de Mayo 950 Buenos Aires NIVEL SALUD: Trustee to Submit General Report --------------------------------------------- Trustee Fernando Ezequiel Aquilino will submit a general report on the Nivel Salud S.A. bankruptcy case today. The general report provides court no. 2 of Buenos Aires' civil and commercial tribunal with an audit of the Company's accounting and business records. The report also details important event during the proceedings. The Company's case will conclude with the liquidation of its assets to repay creditors. Clerk No. 3 assists the court on this case. CONTACT: Mr. Fernando Ezequiel Aquilino, Trustee Lavalle 1459 Buenos Aires PARMALAT ARGENTINA: Local Group Agrees to Pay $20M For Ownership ---------------------------------------------------------------- An Argentine group led by businessman Sergio Tasselli signed a deal Friday to purchase the local subsidiary of the embattled Italian dairy giant Parmalat for US$20 million, reports EFE. The transaction terms include that the buyer will assume Parmalat Argentina's US$70 million debt. The deal will be formally announced in a month after the Italian government approves the sale, as the company was placed under the management of a committee headed by turnaround expert Enrico Bondi, appointed by the Italian Industry Ministry. PROIN ALIMENTOS: Files Petition to Reorganize --------------------------------------------- Proin Alimentos S.A. filed a "Concurso Preventivo" motion, reports La Nacion. The Company is seeking to reorganize its finances after defaulting on debt payments since August 29, 2002. The Company's case is pending before Judge Braga of Buenos Aires' civil and commercial tribunal court no. 22. Clerk no. 44, Dr. Julianelli, assists the court in the proceedings. CONTACT: Proin Alimentos S.A. Lavalle 1523 Buenos Aires SANFER 2000: Liquidates Assets to Pay Debts ------------------------------------------- Sanfer 2000 S.A. will begin liquidating its assets following the bankruptcy pronouncement issued by court no. 2 of Buenos Aires' civil and commercial tribunal, reports Infobae. The ruling places the company under the supervision of court-appointed trustee, Ms. Beatriz Laura Colucci. The trustee will verify creditors' proofs of claims until November 5, 2004. Afterwards, the validated claims will be presented in court as individual reports on February 1, 2005. Ms. Colucci 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 18, 2005. The bankruptcy process will end with the disposal company assets in favor of its creditors. Clerk no. 4 assist the court on this case. CONTACT: Ms. Beatriz Laura Colucci, Trustee Eduardo Acevedo 217 Buenos Aires ============= B A H A M A S ============= ULTRAPETROL BAHAMAS: S&P Affirms Ratings ---------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' local and foreign corporate credit rating on Bahamas-based shipping transportation company Ultrapetrol (Bahamas) Ltd. The outlook is negative. The ratings on Ultrapetrol reflect its aggressive financial profile, characterized by substantial debt leverage; its plans to continue acquiring and building new vessels in the next several years; and a still-concentrated aging fleet and customer base, which exposes the company to higher operating and commercial risks in that they could affect revenues and cash generation. These negatives are partly offset by the company's expertise and niche positioning in the tanker and dry bulk business in South America, with particularly strong commercial relationships with the largest oil companies and trading companies in the region; and some increasing business diversification, with the strengthening of its position in the river barge operation and its minority stake in the construction and operation of platform supply vessels (PSVs). Ultrapetrol's total debt amounted to $184 million as of June 30, 2004. "We have expected Ultrapetrol to report improved financial ratios since the end of 2003, when tanker charter rates started rising substantially due to tight supply and increasing oil trades with the global economic recovery," said Standard & Poor's credit analyst Reginaldo Takara. "Nevertheless, the company's performance remained weak, lagging market improvement, because virtually all of its vessels were locked into charter contracts at lower rates." The 'BB-' rating assigned to Ultrapetrol factors continuing strengthening of cash generation and the maintenance of minimum cash reserves to service short-term debt, in particular because the company has plans to continue investing in acquisition of new vessels. The acquisition of UABL and favorable charter rates projected for the medium term should allow Ultrapetrol to continue improving credit measures and reporting much more robust cash generation. After divesting its oldest and single-hull vessels during 2003 and 2004, Ultrapetrol now operates a fleet of three Suezmax OBOs (Princess Katherine, Princess Nadia, and Princess Susana), one Aframax tanker (Princess Marina), and two oceangoing tug barges (Alianza G2 and Alianza G3). Through its subsidiary, UABL, it also operates 456 river barges and 22 pushboats used in cabotage in the Parana-Paraguay River System. UABL is the leading company in the region with a 46% capacity share. The company also holds 60% of Ultracape (Holdings) Ltd., a joint venture that currently owns a Capesize bulkcarrier (Cape Pampas), and a 27.8% stake in UP Offshore Ltd., a joint venture created to build and operate several PSVs in Brazil. The negative outlook addresses the risks associated with Ultrapetrol's substantial debt leverage, some refinancing risks posed by its existing 2008 debt maturity, and the company's weak financial performance that only by now is showing signs of recovery, despite the fact that market conditions have been quite positive for some time. The negative outlook also reflects the potential risks associated with the company's plans of new builds and acquisitions going forward, which may constrain liquidity somewhat. The current benign environment and Ultrapetrol's divestment of single-hull vessels should allow it to continually and consistently improve its financial ratios within the next several quarters, allowing it to reach ratios more commensurate with its rating category by first-half 2005. While debt is not expected to decline any time soon, the company's financial profile should substantially improve with more robust cash generation. Ultrapetrol's inability to reach expected financial ratios by mid-2005 or capital expenditures higher than projected would lead to a downward revision of the ratings. Standard & Poor's also assumes that Ultrapetrol will improve its debt duration throughout the next several years. On the other hand, the ratings outlook could be revised to stable if Ultrapetrol manages to strengthen liquidity and expand cash generation through the cycle, with a younger and more efficient fleet, and reinforce its leading position in river barges in the Parana river. ANALYSTS: Reginaldo Takara, Sao Paulo (55) 11-5501-8932 Milena Zaniboni, Sao Paulo (55) 11-5501-8945 =============== B A R B A D O S =============== TRANS ISLAND AIR: Halts Flights But Business Continues ------------------------------------------------------ Mr. Bruce Kaufman, CEO of Trans Island Air (TIA) 2000, caught his employees by surprise on Saturday when he announced his decision to halt the airline's flights. "Over the past five years the company has suffered large financial losses and there are no signs we can identify that would indicate we could expect any improvement in this regard in the near future which would make it possible for the company to expect any return on its invested capital," the Barbados Nation quoted Kaufman as saying. Kaufman told the SUNDAY SUN that during the first four years of business he made "personal sacrifices" to sustain the company and had even paid 50% of the salaries out of his pocket. "I had to cover all the expenses. When I took it over, the company hadn't made any money in a long time and I was thinking that I would be a magician and turn it around," he said. The airline, however, continues to operate with a downsized staff and continues to accept reservations. However, passengers will now be transported by TIA's partners, Mustique Airways and SVG Air Ltd. ============= B E R M U D A ============= FOSTER WHEELER: Issues More Details on Exchange Offer Closing ------------------------------------------------------------- Foster Wheeler Ltd. (OTCBB: FWLRF) announced Friday that it has successfully completed its equity-for-debt exchange. The exchange reduces Foster Wheeler's existing debt by approximately $447 million, improves the company's consolidated net worth by approximately $453 million, reduces interest expense by approximately $28 million per year, and, when combined with the sale of new notes to repay amounts currently outstanding under Foster Wheeler's existing domestic credit agreement, eliminates substantially all material scheduled corporate debt maturities prior to 2011. The exchange of any securities tendered during the company's ongoing subsequent offering period would have the effect of improving these results. "With this major financial milestone behind us, we can now focus on competing for quality contracts in the world arena and providing world class products and services to our clients," said Raymond J. Milchovich, chairman, president, and chief executive officer. "We truly appreciate the confidence shown by the investors who have exchanged their debt securities for equity ownership in our company." Accounting Treatment: The accounting related to the completed exchange will be described in detail in Foster Wheeler's Form 10-Q for the third quarter of 2004, which the company expects to file in early November 2004. The accounting treatment for the exchange is also described in the registration statement on Form S-4 (File No. 333-107054). The accounting treatment is dependent, in part, on the market value of the securities issued in connection with the exchange and on the results of the ongoing subsequent offering period. The company believes the preferred shares and the Class A warrants will begin trading on the OTC market in the near future. The exchange offer is expected to result in a reduction in shareholders' deficit of approximately $453 million in the third quarter of 2004. This results from an aggregate increase in common and preferred stock and paid in capital of approximately $623 million related to the issuance of new equity securities in exchange for debt, offset by a non-cash, after-tax charge to income of approximately $170 million. The pro forma, non-cash charge is related primarily to the accounting treatment required by SFAS 84 for the exchange of the Convertible Subordinated Notes, and it assumes the price of the company's common stock at market close Friday ($0.47). Any securities tendered during the current subsequent offering period would have the effect of further reducing the company's shareholders' deficit. The results of the subsequent offering period will be accounted for in the fourth quarter of 2004. As a result of the closing of the exchange, the number of shares of the company's common stock will increase from approximately 41 million shares to the equivalent of approximately 1,200 million shares. The foregoing: 1) assumes the preferred shares issued at the closing of the exchange are converted into common shares; 2) assumes the exercise of all warrants issued to (a) holders of record of the company's common stock as of 5:00 p.m. on the day immediately preceding the closing (Class B Warrants) and (b) those who tendered their trust preferred securities prior to 5:00 p.m. on September 21, 2004 (Class A Warrants); and 3) includes stock options and restricted stock expected to be issued to management. A pro forma balance sheet depicting the expected accounting treatment under the extinguishment method of accounting and based upon the value of the securities exchanged as of the close of business on September 24, 2004 can be viewed at: http://bankrupt.com/misc/FWLRF.htm Subsequent Offering Period: Foster Wheeler also reminds investors that its subsequent offering period will expire at 5:00 p.m., New York City time, on October 20, 2004. Investors and security holders are urged to read the following documents filed with the SEC, as amended from time to time, relating to the exchange offer because they contain important information: 1) the registration statement on Form S-4 (File No. 333-107054); and 2) the Schedule TO (File No. 005-79124). These and any other documents relating to the exchange offer, when they are filed with the SEC, may be obtained free at the SEC's Web site at www.sec.gov. The foregoing references to the exchange offer and any other related transactions shall not constitute an offer to buy or exchange securities or constitute the solicitation of an offer to sell or exchange any securities in Foster Wheeler Ltd. or any of its subsidiaries. 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, petrochemicals, 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: Foster Wheeler Media Contact: Ms. Maureen Bingert Phone: 908-730-4444 Investor Contact: Mr. John Doyle Phone: 908-730-4270 Other Inquiries: Phone: 908-730-4000 Web Site: http://www.fwc.com/ FOSTER WHEELER: Schedules Annual Shareholders' General Meeting -------------------------------------------------------------- Foster Wheeler Ltd. (OTCBB: FWLRF) announced Friday that it expects to hold its Annual General Meeting of Shareholders on Monday, November 29, 2004, at 3:00 p.m. at the company's offices located at Perryville Corporate Park, Clinton, New Jersey. A Notice of Meeting and Proxy Statement will be mailed to the company's shareholders prior to the meeting. =========== B R A Z I L =========== CEMIG: To Tap Deal Consultant This Week --------------------------------------- Brazilian power company Cemig will choose a consulting firm this week to evaluate the future of its telecom subsidiary Infovias, Business News Americas reports, citing Cemig assistant financial director Joao Batista Zolini Carneiro. Six bidders are vying for the contract. Cemig has evaluated technical proposals but has not yet evaluated the financial proposals. The winning consultancy must evaluate the best strategy for Infovias within 90 days. Based upon that evaluation, Cemig will determine whether to sell the subsidiary or possibly expand its interest in the company. "Cemig needs [a telecom unit] but we need to see if it is worthwhile. The consulting company is being commissioned to make this decision," Carneiro said. CONTACT: Companhia Energetica de Minas Gerais AV. Barbacenda 1200 Bello Horizonte MG 30161-970 Brazil Web Site: http://cemig.infoinvest.com.br/?language=enu CSN: Fitch Rates $200M, 10-year Issuance 'B+' --------------------------------------------- Fitch Ratings has assigned a 'B+,' foreign currency rating to Companhia Siderurgica Nacional's (CSN) US$200 million 10-year notes due January 2015 issued through its subsidiary CSN Islands IX Corp. on September 24, 2004. CSN's foreign currency rating is constrained by the Federative Republic of Brazil's 'B+,' foreign currency rating. Fitch affirms CSN's local currency rating of 'BBB-' as well as the company's national scale rating of 'AA- (bra)'. The Rating Outlook for all the ratings is Stable. In 2003, CSN generated EBITDA of BRL2.8 billion. In 2004, Fitch expects CSN to generate EBITDA of approximately BRL4.0 billion (about US$1.3 billion) due to the strong steel price environment and an improved value-added product mix. As of June 30, 2004 CSN had total debt of BRL8.8 billion and net debt of BRL6.2 billion. Due to the company's strong cash flow generation, the ratings consider an expected decrease in net debt to less than BRL 5.0 billion by year-end 2004. The proceeds of this US$200 million issuance will be used primarily to refinance upcoming debt obligations. For 2004, Fitch expects CSN to have a net debt-to- EBITDA ratio of less than 1.5 times (x) and a total debt-to- EBITDA ratio of less than 2.0x. Although Fitch expects CSN to reduce its net debt by about BRL1.0 billion by year-end 2004, further material decreases are not expected. Over the next several years, debt reduction will be constrained by management's view of its optimal capital structure, the company's capital expenditure plans and the debt- service requirements of CSN's controlling shareholder, Vicunha Siderurgia S.A. (Vicunha). Vicunha has a 46.5% stake in CSN but no operating assets to generate cash flow. Although CSN is not obligated to directly service Vicunha's debt, CSN paid dividends of BRL800 million in 2003 to allow Vicunha to make interest and principal payments of approximately BRL350 million on its debentures. In June 2004, CSN paid dividends of about BRL750 million. In order for Vicunha to continue meeting its debenture obligations, CSN expects its dividend payment to be about BRL900 million in 2005. CSN's ratings are supported by the company's position as one of the industry's lowest cost steel producers. CSN's low-cost structure is due primarily to its ownership of the Casa de Pedra mine, one of the world's largest high-quality iron ore bodies. The company also benefits from its modern production facilities, vertical integration and access to low-cost labor. These factors allow CSN to generate positive cash flows during troughs in the steel cycle and economic downturns in Brazil. The ratings also consider the concentrated nature of the Brazilian steel industry, which limits competition based solely upon price. Competition from foreign steel imports into Brazil is minimal. Barriers to entry include the logistical challenges of transporting steel to Brazil and within Brazil, as foreign steel producers have limited access to efficient distribution networks. In addition, foreign steel imports face tariffs of approximately 15%. Over the past several years, CSN has focused on modernizing and expanding its production facilities and divesting its noncore assets. The company's current expansion strategy involves a capital investment plan of up to US$780 million between 2004 and 2006. The project includes a US$310 million expansion of the production capacity of the Casa de Pedra iron ore mine to 40 million tons from 14 million tons by mid-2006. In order to export the increased iron ore production, CSN will also invest about US$130 million to expand the Sepetiba port where it currently operates a coal terminal under an exclusive concession agreement expiring in 2047. The project may also include a US$340 million investment to construct a 6.0 million-ton pellet plant. When the mine expansion is concluded in 2006, the iron ore export sales are expected to yield approximately US$400 million in incremental EBITDA. Fitch Ratings believes the mine expansion project makes strategic sense given the current pricing environment for iron ore and the positive outlook for demand over the near to medium term. Iron ore prices rose by about 9% in 2003 and by about 18% in 2004. These price increases, along with those of several other commodities, have been driven by the confluence of an improving global economy and China's surging demand for raw materials. Although this expected incremental cash flow from the iron ore mine expansion is significant, CSN's credit quality will continue to be closely linked to the performance of its steel business as approximately 80% of the company's future cash flow will be generated from its steel production operations. CSN has an annual crude steel production capacity of 5.8 million tons. Its fully integrated steel operations, located in the state of Rio de Janeiro in Brazil, produce steel slabs and hot- and cold-rolled coils and sheets for the automobile, construction and appliance industries, among others. CSN also holds leading market shares in the galvanized and tin-mill products. VASP: Regulator Grounds Six Aircraft ------------------------------------ Brazil's fourth-largest carrier Viacao Aerea Sao Paulo SA (Vasp) was forced to suspend about 70% of its flights over the past days after the country's aviation authority ordered six aircraft to be grounded due to poor maintenance, reports Bloomberg. According to the Commercial Aviation Department, the six Boeing 737-200 aircraft can only fly again after Vasp carries out maintenance work specified by the manufacturer. "The situation is critical," said Graziella Baggio, president of the country's flight attendants and pilot union. "The company's fleet is considered geriatric and it doesn't have money to replace the aircraft." Vasp saw its revenue fall 17% in the first quarter of the year to BRL298 million from the same period a year earlier. The company's losses nearly tripled in the first quarter to BRL25.8 million, the regulator said. =============== C O L O M B I A =============== ROYAL SHELL: Negotiating Sale of InterGen ----------------------------------------- In an effort to bring in some much-needed cash to fund vital upstream capital expenditure over the next few years, Anglo- Dutch oil company Royal Shell is selling InterGen, its under- performing joint venture with US engineering company Bechtel. Citing a banking source close to the deal, Business News Americas reports that Shell and Bechtel are looking to sell InterGen for some US$6 billion, including debt. Shell and Bechtel are reportedly talking to prospective buyers already and will start the sale process in October. InterGen is a global power generation firm, operating or building a total of 20 power stations representing over 16,000 megawatts (MW). It has projects operating, under construction or in active development in the United States, the United Kingdom, the Philippines, Mexico, Colombia, China, Egypt, Turkey, Australia, the Netherlands, Spain, Germany, and Singapore. In Mexico, InterGen owns the 1,065MW La Rosita natural gas-fired power plant in Baja California state, and earlier this month agreed to sell a 24.5% interest share in the 600MW Baj�o natural gas-fired power plant in Guanajuato state to Japanese gas distributor Tokyo Gas. After the sale, Intergen will maintain a 25.5% interest in the plant. In Colombia, Intergen owns 54% of the 265MW Termoemcali thermoelectric plant. Colombia's Cali-based multi-utility Emcali owns the rest. * COLOMBIA: Secures $100M World Bank Loan ----------------------------------------- The World Bank today approved a $100 million loan for Colombia to support the second phase of a program that seeks to strengthen Colombia's financial system and increase its capacity to fund future investment in the economy. "Strengthening the financial system and using norms aligned to international standards will attract greater domestic and foreign investment and increase the availability of financing," said Isabel Guerrero, World Bank Director for Colombia and Mexico. "A strong financial system is key for increased competitiveness, higher productivity and job creation." The Second Programmatic Financial Sector Adjustment Loan will support the modernization of bank, non-bank and securities market norms on capital adequacy; and strengthen the ability of financial market participants to absorb market and credit risks, as well as macroeconomic shocks. The program will benefit savers, consumers, borrowers, investors, homeowners, small and medium enterprises, and larger businesses. In addition, taxpayers will benefit from the reduced risks of financial institutions failures that could generate fiscal costs. The program will: - Follow up on the reforms initiated in the first phase with respect to the implementation of a stricter banking regulatory framework, addressing the increased allocation of capital for credit and market risks as well as the enforcement of governance responsibilities. - Support mechanisms to increase micro housing credit, and new instruments for guaranteeing collateral to provide lending incentives to the banking sector. - Modernize risk management norms in thenon-bank sector of mutual funds, trusts and pension funds through the implementation of uniform solvency capital margin rules, and harmonization in reporting of investment portfolio returns. - Support implementation of the new capital markets law (Law 795-2003) to raise standards for professional qualifications and governance in the securities business, while improving and lowering the cost of the market's operating infrastructure. "The improved operation and management of risks in the financial services industry will help all Colombians to improve their prospects for productive investments, broaden the scope of access to such services, and reduce the sector's vulnerability to economic shocks," said John Pollner, World Bank task manager for the project. The $100 million, fixed-spread loan from the International Bank for Reconstruction and Development (IBRD) is repayable in 12 years, and includes a grace period of 10 years. The Second Programmatic Financial Sector Adjustment Loan builds on the $150 million first phase of the program approved on April, 2003, which has fostered stabilization and contributed to improvements in the country's financial system. CONTACTS: Ms. Gabriela Aguilar Phone: (5255) 5480-4200 e-mail: Gaguilar2@worldbank.org Ms. Alejandra Viveros Phone: (202) 473-4306 e-mail: Aviveros@worldbank.org Web Site: http://www.worldbank.org/co =============== H O N D U R A S =============== * HONDURAS: IMF Completes Review of $104.3M PRGF Arrangement ------------------------------------------------------------ The Executive Board of the International Monetary Fund (IMF) completed Friday the first review of Honduras' performance and the financing assurances review under a SDR 71.2 million (about US$104.3 million) three-year Poverty Reduction and Growth Facility (PRGF) arrangement approved in principle on February 18, 2004 and effective since February 27, 2004. The completion of this review allows Honduras to draw a further SDR 10.17 million (about US$14.9 million), bringing the total amount released under the arrangement to SDR 20.34 million (about US$29.8 million). In completing the review, the Board waived the nonobservance of the performance criteria related to the approval of a package of financial sector laws before June 30. Following the Executive Board discussion on Honduras, Agustin Carstens, Deputy Managing Director and Acting Chair, said: "Honduras's performance under the PRGF arrangement has been strong. The economic recovery is gathering pace; the external position has strengthened, notwithstanding the impact of high oil prices; and anti-poverty spending has begun to rise. These favorable early results under difficult circumstances testify to the authorities' resolve in implementing their program and augur well for the economic outlook. It is now critical to build on these achievements to consolidate the hard-won stabilization and reform gains. "The government's commitment to social consensus has played an important role in maintaining domestic support for the program- which has remained strong across a wide spectrum of society. Congressional support for reform has been a key and welcome element in the success of the program to date. "Continued implementation of sound fiscal policies will be essential to sustaining the success of the program. In particular, this will require enactment of a 2005 budget that is in line with the program, followed by steadfast implementation of the budget in the course of the year. The support of congress in refraining from any unfinanced appropriations will play a vital role in this regard. "Adherence to the revised teachers' wage agreement reached in July 2004 will be essential to the success of the program, and the development of a permanent teachers' wage policy is key to medium-term fiscal sustainability. Moreover, wage policy in other parts of the public sector will also need to remain consistent with the program. "The central bank has sent a clear signal of its determination to preserve the important gains made in reducing inflation in recent years. Its plans for modernizing monetary operations are welcome, in particular, by strengthening monetary instruments and improving interest rate signaling. Successful implementation of these reforms will allow a progressive strengthening of the monetary policy framework. "The four financial sector laws recently approved by congress are significant milestones in addressing the weaknesses of the banking system. It is important that the new framework be implemented fully, as planned. Progress in financial sector reform is one of the trigger conditions for achieving the completion point under the enhanced HIPC Initiative-which Honduras aims to reach in early 2005. "Other institutional reforms are also moving ahead. The important political and judicial reforms under way will contribute to reducing perceptions of corruption and improving the investment climate. "Overall, Honduras's satisfactory performance under the PRGF arrangement is commendable. Continued implementation of the authorities' program should lay a strong foundation for durable growth and poverty reduction," Mr. Carstens said. CONTACT: International Monetary Fund External Relations Department 700 19th Street, NW Washington, D.C. 20431 USA Public Affairs Phone: 202-623-7300 Fax: 202-623-6278 Media Relations Phone: 202-623-7100 Fax: 202-623-6772 =========== M E X I C O =========== EMPRESAS ICA: Joint Venture Inks $134M Pemex Deal ------------------------------------------------- ICA Fluor, the industrial engineering and construction company jointly owned by Fluor Corporation (NYSE: FLR) and Empresas ICA Sociedad Controladora (NYSE: ICA), announced Friday the signing of a contract for the engineering, procurement, construction and start-up support services for a modular cryogenic plant and a fuel terminal for Pemex Gas y Petroquimica Basica. The total contract value is $134 million. Located in Reynosa, Tamaulipas, Mexico, the cryogenic plant, which will have a 200 million standard cubic feet-per-day capacity, 98 percent propane recovery, will cool feed gas so that liquid hydrocarbons can be separated and recovered. The consortium formed by ICA Fluor and Linde Process Plants Inc. will develop the project, which is scheduled to be completed in approximately 20 months. "This project offers to our client a design which minimizes gas consumption and the use of a compact Liquid Recovery Unit with low-pressure drops and energy conservation," said Jorge Borja, ICA Fluor general director. "The project confirms ICA Fluor's passion to provide its clients cost-effective solutions focused on efficiency and environmental protection." Pemex Gas y Petroquimica Basica is a subsidiary of Pemex, the Mexican state-owned petroleum company. ICA Fluor is the leading industrial engineering company in Mexico, dedicated to the engineering, procurement, construction and maintenance of industrial facilities in the oil and gas, chemical, petrochemical, automotive, electricity, mining and telecommunications industries. Founded in 1947, ICA has completed construction and engineering projects in 21 countries. ICA's principal business units include Civil Construction and Industrial Construction. Through its subsidiaries, ICA also manages airports and operates specialized port terminals, tunnels, highways and municipal services under government concession contracts and/or partial sale of long-term contract rights. Fluor Corporation (NYSE: FLR) provides services on a global basis in the fields of engineering, procurement, construction, operations, maintenance and project management. Headquartered in Aliso Viejo, Calif., Fluor is a FORTUNE 500 company with revenues of nearly $9 billion in 2003. CONTACTS: Empresas ICA Sociedad Controladora S.A. de C.V. Col. Escandon Del Migual Hidalgo Mexico City 11800 Mexico Phone: 525-272-9991 Website: http://www.ica.com.mx/ Fluor Corporation One Enterprise Drive Aliso Viejo, CA 92656-2606 Phone: 949.349.2000 Fax: 949.349.2585 Media relations: Mr. Jerry Holloway Phone: +1-949- 349-7411 Or Ms. Leann Vandergrift Phone: +1-949-349-7420 Or Investor relations Ms. Lila Churney Phone: +1-949-349-3909 Fax: +1-949-349-5375 Web Site: http://www.fluor.com/ GRUPO IUSACELL: Utilizing Lucent to Upgrade Network --------------------------------------------------- Grupo Iusacell, S.A. de C.V. (NYSE: CEL; BMV CEL) announces an agreement with Lucent Technologies (NYSE: LU) to expand its third generation network, 3G CDMA. With this expansion in coverage and capability, Iusacell will be able to handle the increased network traffic resulting from both the growth in its client base, as well as the increase in data transfer generated by the introduction of its new "3-G Iusacell" high-speed services, which were announced last month. This service includes: 1. Mobile Internet access 2. Download of ringtones and sophisticated games 3. Email account access 4. Cellular "Chat" 5. Sending and receiving of photos and videos Lucent Technologies will provide software and equipment for the expansion in coverage and capability in the majority of the regions where Iusacell operates its 3G CDMA network, which will support increased and improved voice and data communication services. In addition, this project includes network updates, a network security platform, and all related services. Lucent Worldwide Services (LWS) will be in charge of installing and maintaining the network. "We are very excited to be able to work with Iusacell on the new expansion of their 3G network after successfully completing the launch of the first phase of this advanced, high-velocity voice and data network," states Osvaldo di Campli, Lucent's Regional Vice President for Mexico, Central America, and the Caribbean. "This expansion will include the most advanced equipment for mobile networks, protecting Iusacell's investment by allowing the company to immediately offer CDMA2000 1X services, and supporting the future evolution of the most advanced CDMA2000 solutions, such as 1xEV-DO and 1xEV-DV." "With the expansion of our CDMA 2000 1X network, Iusacell will increase its advanced data services offerings," said Gustavo Guzman, General Director of Iusacell. "This expansion allows Iusacell to offer its users Third Generation services, positioning it as the leading technology cellular company in Mexico. Iusacell's wide range of 3G services creates value for our clients and improves their cellular experience, permitting us to continue as one of the best cellular deals in the market. We currently have entertainment applications, such as ringtone downloading, sophisticated games, images, news, and the reception of short videos. There are also new productivity tools such as e-mail, wireless Internet access, mobile sales devices, cellular "chat", and sending and receiving photos. This platform will also support voice over IP applications like PTT, the basis of the system that emulates trunking networks. With this project, Iusacell strengthens its leadership and client commitment by consistently offering the best leading edge cellular services." Iusacell is a wireless cellular and PCS service provider in Mexico encompassing a total of approximately 92 million POPs, representing approximately 90% of the country's total population. Independent of the negotiations toward the restructuring of its debt, Iusacell reinforces its commitment with customers, employees and suppliers and guarantees the highest quality standards in its daily operations offering more and better voice communication and data services through state-of-the-art technology, such as its new 3G network, throughout all of the regions in which it operate. Lucent Technologies designs and delivers the systems, services and software that drive next-generation communications networks. Backed by Bell Labs research and development, Lucent uses its strengths in mobility, optical, software, data and voice networking technologies, as well as services, to create new revenue-generating opportunities for its customers, while enabling them to quickly deploy and better manage their networks. Lucent's customer base includes communications service providers, governments and enterprises worldwide. CONTACT: Grupo Iusacell S.A de C.V. Prolongacion Paseo de la Reforma 1236 Colonia Santa Fe Delegacion Cuajimalpa Mexico Phone: 011-525-109-5754 Web Site: http://www.iusacell.com.mx/ VITRO: Unit Takes Out $230M Credit To Pay Down Debt --------------------------------------------------- Vitro Envases Norteamericana, the Glass Containers division of Mexican glass maker Vitro, took out a credit for US$230 million, reports Reuters. In a statement, Vitro said the unit will use the funds to pay liabilities of the holding company. Vitro S.A. de C.V. (BMV: VITROA; NYSE: VTO), which makes a range of glass for the auto, bottling and construction industries and also glassware, said the credit falls due in 2006. CONTACT: Investor Relations Ms. Beatriz Martinez Investor Relations Manager bemartinez@vitro.com Tel: +52 (81) 8863 1258 Corporate Office Av. Ricardo Margain 440 Col. Valle del Campestre, Garza Garc�a, Nuevo Le�n C.P.66265 M,xico Tel: (52) 8863-1200 Web Site: www.vitro.com ============= U R U G U A Y ============= PLUNA: British Fund Offers to Buy Varig's Stake ----------------------------------------------- The British investment fund Ashmore Funds has expressed an interest in acquiring Brazilian air transportation company Varig's stake in Uruguayan airline Pluna. According to an El Pais report, Ashmore made an offer for Varig's stake in Pluna even though Varig has not shown any interest in selling its ownership. Varig owns 49% of Pluna and the Uruguayan government holds the remaining 51%. *********** 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 * * *