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/raid1/www/Hosts/bankrupt/TCRLA_Public/050114.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 Friday, January 14, 2005, Vol. 6, Issue 10 Headlines A R G E N T I N A AEROLINEAS ARGENTINAS: Starting Share Float in June AEROLINEAS ARGENTINAS: Austral to Discontinue Six Routes AHOLD: Reports 3.1% Decline in Net Sales ALIMENTOS FARGO: Fitch Retains `D(arg)' Rating on $120M of Bonds OBRAS SOCIALES: To Undergo Reorganization PALULE TRADING: Declared Bankrupt by Court PARMALAT ARGENTINA: Government Mulls Savings Compensation Plan PITRIZZA S.A.: Court Grants Reorganization Plea TELECOM ARGENTINA: $3.2B Worth of Bonds Remain in Default WINES S.R.L.: Verification Deadline Fixed * ARGENTINA: Launches Global Roadshow of Debt Exchange Offer B R A Z I L BANCO BRADESCO: Moody's Revises Ratings Outlook to Positive BANCO DO BRASIL: Moody's Assigns Positive Outlook on Ratings BANCO VOTORANTIM: S&P Assigns Rating To Notes COMPANHIA PETROLIFERA: Moody's Changes Rating Outlook to Pos BANCO ITAU: Moody's Changes Outlook on B2 FC Deposit Ratings ELETROPAULO METROPOLITANA: Gets Last Installment of BNDES Loan * BRAZIL: Moody's Changes Outlook on Ratings to Positive E L S A L V A D O R MILLICOM INTERNATIONAL: Boasts of 7.7Mln Subscribers in 2004 J A M A I C A AIR JAMAICA: Begins Restructuring Exercise C&W JAMAICA: Names New Corporate Communications VP M E X I C O AHMSA: Reports 3.9% Increase in 2004 Steel Output ALESTRA: To Take Over Terra Networks' ISP Operations GRUPO TMM: Boards Approve Amended Acquisition Agreement SATMEX: Moving to Restructure Debts T R I N I D A D & T O B A G O BWIA: Presents Preliminary Plan to Government V E N E Z U E L A PDVSA: Negotiation With Union Proceeds Smoothly - - - - - - - - ================= A R G E N T I N A ================= AEROLINEAS ARGENTINAS: Starting Share Float in June --------------------------------------------------- Argentine national carrier Aerolineas Argentinas, which recently completed its bankruptcy proceedings and paid creditors, plans to float some of its shares between June and September this year, reports Dow Jones Newswires. Chairman Antonio Mata revealed Wednesday the Company will sell 45% of its share capital in two tranches. The first, comprising 15%, will be offered to certain companies and institutional investors that will form a "stable nucleus" committed to the development of the airline, Mata explained. The second offering for the remaining amount will be public. Aerolineas Argentinas filed for Chapter 11 status in June 2001. In late 2002, it reached an ARS3.5 billion agreement with creditors. The airline began making its third and final debt payment of ARS245.7 million in late December, the last hurdle before it can request permission for the share offering from national securities regulators. Aerolineas Argentinas is controlled by a consortium that is run by Spanish travel group Marsans (GMSN.YY). CONTACT: AEROLINEAS ARGENTINAS Torre Bouchard 547, 1106 Buenos Aires, ARGENTINA Phone: (54-11) 4310-3000 Fax: (54-11) 4310-3585 E-mail: volar@aerolineas.com.ar Home Page: www.aerolineas.com.ar AEROLINEAS ARGENTINAS: Austral to Discontinue Six Routes -------------------------------------------------------- Aerolineas Argentinas announced Wednesday that its subsidiary, Austral, will suspend beginning Feb. 1 six national routes, which the government refused to renew in late December, reports Dow Jones Newswires. The airline's decision came despite an earlier announcement from Argentina's Transport Secretariat that it will allow Austral to continue servicing those routes. The Transport Secretariat had refused to renew the routes because the Company had requested the concession rollover too late. Aerolineas acknowledged it didn't file for renewal until June 2001, six months after the government deadline, but also said that revised regulations had shortened the deadline from one year in advance to just 72 days. The Transport Secretariat said Wednesday that the airline had violated regulations, but added Austral will have three months to meet the "previous requirements." Company officials said this means there will be a public tender of the six routes, something that it opposes. Chairman Antonio Mata said the Company deems the public tender process an effective violation of property rights because "the routes are ours." Mata also said Aerolineas will not take over the six routes, which include the popular tourist destinations of Atlantic coastal city Mar del Plata and the northern city of Iguazu. The executive also declined to quantify the losses Austral and Aerolineas will book without those flights. AHOLD: Reports 3.1% Decline in Net Sales ---------------------------------------- HIGHLIGHTS: - Consolidated fourth quarter 2004 (13 weeks) net sales amounted to EUR 12.3 billion, a decline of 3.1% compared to the fourth quarter 2003 (12 weeks) - Net sales impacted by lower currency exchange rates and divestments; consolidated fourth quarter net sales growth excluding currency impact and the impact of divestments was 7.9% - Consolidated 2004 (53 weeks) net sales amounted to EUR 52.0 billion, a decline of 7.3% compared to 2003 (52 weeks) - Consolidated 2004 net sales growth excluding currency impact and the impact of divestments was 3.1% Ahold announced yesterday consolidated net sales (excluding VAT) of EUR 12.3 billion for the fourth quarter of 2004, a decline of 3.1% compared to the same period last year (Q4 2003: EUR 12.7 billion). Net sales were significantly impacted by lower currency exchange rates, in particular that of the U.S. dollar. Net sales excluding currency impact increased by 3.2% in the fourth quarter of 2004. Additionally, net sales were impacted by divestments. Net sales growth excluding currency impact and the impact of divestments was 7.9% in the fourth quarter of 2004. Consolidated net sales in 2004 amounted to EUR 52.0 billion, a decline of 7.3% compared to 2003 (2003: EUR 56.1 billion). Net sales excluding currency impact declined by 0.7% in 2004. Net sales growth excluding currency impact and the impact of divestments was 3.1% in 2004. The fourth quarter of 2004 consisted of 13 weeks (October 4, 2004 - January 2, 2005), while the fourth quarter of 2003 consisted of 12 weeks. Fiscal year 2004 consisted of 53 weeks (December 29, 2003 - January 2, 2005), while fiscal year 2003 consisted of 52 weeks. Consolidated net sales in the fourth quarter of 2004 and the full-year 2004 were positively affected by the inclusion of the additional week period compared to the comparable periods of 2003. In this press release, we include comparisons of the 13-week fourth quarter of 2004 to a 13-week period consisting of the 12-week fourth quarter of 2003 plus the first week of 2004 (referred to as the adjusted 2003 fourth quarter). We also include comparisons of the 53 weeks of 2004 with a 53-week period consisting of the 52 weeks of 2003 plus the first week of 2004 (referred to as adjusted 2003). This is not applicable for our operations in Central Europe and South America and the unconsolidated joint ventures. The fiscal quarter and fiscal year for these entities corresponds to the calendar quarter and year, respectively, and ended on December 31, 2004. The net sales numbers presented in this press release are preliminary and unaudited. U.S. Retail Net sales at our U.S. retail operations in U.S. dollars in the fourth quarter of 2004 increased by 10.2% to USD 6.9 billion (Q4 2003: USD 6.3 billion). Net sales in the fourth quarter of 2004 would have increased by 1.7%, compared to the adjusted 2003 fourth quarter. Identical sales in U.S. dollars would have declined by 1.2% and comparable sales in U.S. dollars would have decreased by 0.7%, in each case comparing the fourth quarter of 2004 to the adjusted 2003 fourth quarter. Food price inflation decreased slightly in the fourth quarter of 2004 compared to the third quarter of 2004. Our Stop & Shop/Giant-Landover Arena 2004 fourth quarter net sales increased by 10.8% to USD 4.1 billion (Q4 2003: USD 3.7 billion). Net sales in the fourth quarter of 2004 would have increased by 2.2% compared to the adjusted 2003 fourth quarter. Although continued competitive pressure resulted in a decline in identical sales, the fourth quarter of 2004 improved versus the third quarter of 2004. This was mainly a result of strong holiday net sales. During the fourth quarter the Arena resolved most of the supply chain integration and transitional difficulties that had impacted net sales. Peapod continued to report strong net sales growth. At our Giant-Carlisle/Tops Arena, the fourth quarter 2004 net sales increased by 15.4% to USD 1.7 billion (Q4 2003: USD 1.5 billion). Net sales in the 2004 fourth quarter would have increased by 6.5% compared to the adjusted 2003 fourth quarter. The positive net sales growth in the fourth quarter of 2004 reflected higher net sales per customer driven by the impact of promotional activities, especially during the holidays. At our BI-LO/Bruno's Arena, the fourth quarter 2004 net sales increased by 1.5% to USD 1.2 billion (Q4 2003: USD 1.2 billion). Net sales in the 2004 fourth quarter would have decreased by 6.3% compared to the adjusted 2003 fourth quarter. This decrease was mainly driven by the increase in competitive square meters and the effect of store closings earlier in the year. On December 23, 2004, we announced a definitive agreement to divest the BI-LO/Bruno's Arena. We expect to close the transaction in the first quarter of 2005. Full-year 2004 net sales in U.S. dollars at our U.S. retail operations amounted to USD 27.4 billion, an increase of 1.6% compared to last year (2003: USD 27.0 billion). Net sales in U.S. dollars in 2004 would have decreased by 0.4% compared to adjusted 2003. Net sales growth in U.S. dollars, excluding the impact of the divestment of Golden Gallon in 2003, amounted to approximately 2.8%. Identical sales in U.S. dollars for 2004 decreased by 1.1% compared to adjusted 2003. Comparable sales in U.S. dollars for 2004 declined by 0.5% compared to adjusted 2003. Europe Retail In Europe, net sales in the fourth quarter of 2004 amounted to EUR 3.3 billion (Q4 2003: EUR 3.2 billion). Net sales growth excluding currency impact was 1.2% compared to the fourth quarter of last year. The fourth quarter net sales were negatively impacted by the sale of our Spanish retail activities, which was completed as of December 2, 2004. The Spanish retail activities are reported as part of our Other Europe retail operations. Net sales growth for Europe retail excluding currency impact and the impact from divestments was 7.7% in the fourth quarter of 2004. Net sales in the 2004 fourth quarter would have decreased by 4.2% compared to the adjusted 2003 fourth quarter. In the fourth quarter of 2004, Albert Heijn net sales increased by 9.9% to EUR 1.5 billion (Q4 2003: EUR 1.3 billion). Net sales in the 2004 fourth quarter would have increased by 1.0% compared to the adjusted 2003 fourth quarter. Albert Heijn successfully continued its repositioning program in the Dutch retail market with a further reduction of food prices in the fourth quarter of 2004. Identical sales in the fourth quarter of 2004 would have increased by 0.7% compared to the adjusted 2003 fourth quarter, primarily as a result of a higher number of transactions combined with an accelerated volume growth in a deflationary market. Albert Heijn experienced a successful Christmas season. A record number of visitors visited our Albert Heijn stores in the week preceding the Christmas weekend. Our Central Europe operations in the fourth quarter of 2004, showed net sales growth excluding currency impact of 6.4% compared to the fourth quarter of 2003. This growth was primarily due to store openings. Net sales in 2004 for our Europe retail operations amounted to EUR 13.0 billion (2003: EUR 13.0 billion). Excluding currency impact, net sales increased by 0.5% compared to 2003. Net sales in 2004 would have decreased by 1.1% compared to adjusted 2003. Net sales at Albert Heijn in 2004 increased by 3.2% to EUR 5.8 billion (2003: EUR 5.6 billion). Net sales at Albert Heijn in 2004 would have increased by 1.1% compared to adjusted 2003 in a deflationary market. Identical sales at Albert Heijn in 2004 would have increased by 1.1% compared to adjusted 2003. Our Central Europe operations in 2004, showed net sales growth excluding currency impact of 6.4% compared to 2003. Foodservice In the fourth quarter of 2004 U.S. Foodservice net sales in U.S. dollars increased by 7.8% to USD 4.5 billion (Q4 2003: USD 4.2 billion). Net sales in the 2004 fourth quarter would have increased by 0.6% compared to the adjusted 2003 fourth quarter. Furthermore, net sales in the fourth quarter of 2004 were negatively impacted by approximately 3% as a result of our national account customer rationalization program. Food inflation in the fourth quarter of 2004 was lower than in the previous quarter. Net sales in 2004 at U.S. Foodservice increased in U.S. dollars by 5.6% to USD 18.8 billion (2003: USD 17.8 billion). This rise was primarily attributable to the effect of the 53rd week in 2004 and food price inflation. Net sales in U.S. dollars in 2004 would have increased by 3.9% compared to adjusted 2003. South America In South America, net sales in the fourth quarter of 2004, amounted to EUR 122 million (Q4 2003: EUR 519 million), a decline of 76.4% compared to the same period last year, mainly due to the divestment of Bompre㎜ in Brazil in the first quarter of 2004, Santa Isabel in Chile, Paraguay and Peru in the second half of 2003 and the deconsolidation of Disco as of November 1, 2004. Net sales in 2004, decreased by 59.8% to EUR 893 million (2003: EUR 2.2 billion) primarily as a result of the divestments referred to above. Unconsolidated joint ventures The net sales of our unconsolidated joint ventures in the fourth quarter of 2004, increased by 1.9% to EUR 3.1 billion (Q4 2003: EUR 3.0 billion). At ICA net sales growth excluding currency effect was 2.0% compared to the fourth quarter of 2003. Net sales at Jer｢nimo Martins Retail increased by 3.5% in the fourth quarter of 2004. In Central America net sales excluding currency effect increased by 11.9% in the fourth quarter of 2004. Net sales of our unconsolidated joint ventures in 2004, amounted to EUR 11.2 billion (2003: EUR 11.1 billion). Consolidated 2004 results are expected to be presented on March 29, 2005. Definitions and notes - Identical sales compare sales from exactly the same stores. The fourth quarter of 2004 consisted of 13 weeks, compared to 12 weeks in 2003. The identical sales numbers for the fourth quarter have been calculated by comparing the fourth quarter of 2004 (13 weeks) with the fourth quarter of 2003 (12 weeks) plus week 1 of 2004. The identical sales numbers for the year have been calculated by comparing 53 weeks in 2004 with 52 weeks in 2003 plus week 1 of 2004. - Comparable sales are identical sales plus sales from replacement stores and have the same adjustments regarding the number of weeks in 2003 and the fourth quarter of 2003 as were made for identical sales. - Adjusted 2003 fourth quarter: the adjusted fourth quarter of 2003 consists of the 12-week fourth quarter of 2003 plus the first week of 2004. - Adjusted 2003: adjusted 2003 consists of the 52 weeks of 2003 plus the first week of 2004. - Currency impact: the impact of using different exchange rates to translate the financial figures of our subsidiaries to Euros. The financial figures of the previous year are recalculated using the actual exchange rates in order to understand the currency impact. - Impact of divestments: the impact on net sales of divested operations. Net sales of the divested operations are excluded from the relevant periods in prior year net sales. CONTACT: Ahold Corporate Communications Royal Ahold N.V. P.O. Box 3050 1500 HB Zaandam Netherlands Phone: +31.75.659.5720 Fax: +31 (0)75 659 83 02 Website : http://www.ahold.com ALIMENTOS FARGO: Fitch Retains `D(arg)' Rating on $120M of Bonds ---------------------------------------------------------------- Fitch Argentina Calificadora de Reisgo S.A. maintains a `D(arg)' rating on some US$120 million of corporate bonds issued by local Company Compania de Alimentos Fargo S.A., the CNV reports. The rating, which is assigned to financial commitments that are currently in default, was given based on the Company's finances as of September 30, 2004. The bonds, described as "Obligaciones Negociables Simples," will mature on July 24, 2008. OBRAS SOCIALES: To Undergo Reorganization ----------------------------------------- Asociacion de Obras Sociales de San Juan (Ados San Juan) proceeds with reorganization after a Buenos Aires Court converted the Company's ongoing bankruptcy case into a "concurso preventivo," says Infobae. Under Insolvency protection, the Company will be able to draft a proposal designed to settle its debts with creditors. The reorganization also prevents an outright liquidation. Accounting firm "Estudio Landa Zavalla y Asociados," serving as trustee, will verify creditors' proofs of claims until February 4. Creditors with unverified claims cannot participate in the Company's settlement plan. Further, the trustee is also required to submit individual reports on April 4 and a general report on May 11. CONTACT: "Estudio Landa Zavalla y Asociados" Mendoza 666 Sur (San Juan) PALULE TRADING: Declared Bankrupt by Court ------------------------------------------ Palule Trading S.R.L. is now "Quiebra" - meaning bankrupt, says Infobae. Court No. 1 of Corodoba's civil and commercial tribunal decreed the Company's bankruptcy and appointed Mr. Gustavo Fidel Rubin as trustee for the case. CONTACT: Mr. Gustavo Fidel Rubin, Trustee Coronel Olmedo 51 Cordoba PARMALAT ARGENTINA: Government Mulls Savings Compensation Plan -------------------------------------------------------------- Deep losses suffered by shareholders in the aftermath of Parmalat's multi-billion euro accounting scandal have roused the public to lobby for wider safety nets within Italy's financial markets. The Italian government is currently drawing up plans to ensure protection in cases where banks and other institutions have failed to give investors detailed information on the investments they are making. FT.com reports that the plan being outlined by finance minister Domenico Siniscalco still does not include details regarding the amount of compensation to be offered or how financial institutions are expected to repay savers. Specific provisions will be provided and enacted before the national election on May next year, the report adds. Post-Parmalat regulatory reforms have been in the government's drawing board since January last year. However, disagreements over provisions like a fixed-term limit on the governor of the Bank of Italy, one of the main regulators, have stalled the progress of the legislation. PITRIZZA S.A.: Court Grants Reorganization Plea ----------------------------------------------- Pitrizza S.A., a Company operating in Buenos Aires, begins reorganization proceedings after Court No. 9 of the city's civil and commercial tribunal, with assistance from Clerk No. 18, granted its petition for "concurso preventivo". During the reorganization, the Company will be able to negotiate a settlement proposal for its creditors so as to avoid a straight liquidation. According to Argentine news source Infobae, the reorganization will be conducted under the direction of Mr. Juan Alberto Krimerman, the court-appointed trustee. Creditors with claims against the Company must present proofs of the debts to the trustee before March 28. These claims will constitute the individual reports to be submitted in court on May 9. The court also requires the trustee to present an audit of the Company's accounting and business records through a general report due on June 21, 2005. After these reports are completed, the Company will hold the informative assembly on December 12. CONTACT: Mr. Juan Alberto Krimerman, Trustee Uruguay 594 Buenos Aires TELECOM ARGENTINA: $3.2B Worth of Bonds Remain in Default --------------------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. maintains a `D(Arg)' rating on a total of US$3.2 billion worth of corporate bonds issued by Telecom Argentina S.A. (formerly Telecom Argentina STET-France Telecom S.A.), the Comision Nacional de Valores (CNV) reports. The bonds in default are: -- US$200 million worth of "Programa de ON simples." Maturity date was not indicated; -- US$1.5 billion worth of "Programa Global de ONs autorizado por Asamblea de fecha 16.3.99", due on August 2, 2004; and -- US$1.5 billion of "Programa de obligaciones negociables", with undisclosed maturity date. The rating action was taken based on the Company's finances as of September 30, 2004. CONTACT: TELECOM ARGENTINA S.A. Alicia Moreau de Justo 50, 10th Floor Capital Federal (1107) Republica Argentina Phone: +54 11 4968 4000 Web Site: http://www.telecom.com.ar Mr. Alberto J. Ricciardi, Chief Financial Officer Ms. Elvira Lazzati, Finance Director Mr. Pedro Insussarry, Investor Relations Manager Phone: (5411) 4968-3626/3627 Fax: (5411) 4313-5842/3109 e-mail: inversores@intersrv.telecom.com.ar WINES S.R.L.: Verification Deadline Fixed ----------------------------------------- Ms. Elina Marisa Romero, the trustee tasked with examining the claims pertaining to the Wines S.R.L. reorganization case, will submit individual reports on March 3. Ms. Romero will also present a general report in court on April 18. On September 2, the Company's creditors will vote on the settlement proposal prepared by the Company. Infobae reports that the Company's reorganization is under the jurisdiction of San Juan's civil and commercial Court No. 2. CONTACT: Wines S.R.L. G‘mes 183 Sur (San Juan) Ms. Elina Marisa Romero, Trustee Mitre 169 Este (San Juan) * ARGENTINA: Launches Global Roadshow of Debt Exchange Offer ------------------------------------------------------------ Argentina launched Wednesday the global roadshow of its US$103 billion debt restructuring, reports Dow Jones Newswires. In a presentation to financial professionals in a room in the Economy Ministry, Finance Secretary Guillermo Nielsen said the debt exchange offering to open Friday "guarantees fair treatment for all bondholders." Argentina will issue between US$38.5 and US$41.8 billion in new restructured debt with lower interest rates and longer maturities - the size will increase if there is more than 70% acceptance of the offering - in exchange for US$81.8 billion in defaulted bonds. The bonds on offer, in four currencies, are: a 35-year par bond, with no principal reduction, with a coupon rising to 5.25% over time; a discount bond with a 66.3% principal haircut; and, specially for institutional Argentine investors, a quasi-par bond in pesos with 30.1% haircut. Meanwhile, bondholders who own more than a third of the defaulted debt said they plan to reject the restructuring offer. "The offer is unacceptable," said Elio Lannutti, who heads the Italian consumer association Adusbef, representing 14,000 Italian bondholders with EUR420 million ($551 million) of Argentine bonds. "We will carry on our battles relentlessly." Piercarlo Padoan, the International Monetary Fund's executive director for Italy, said Argentina needs at least 75% of bondholders to accept the offer for the nation's debt problem to be solved. Lavagna said Wednesday that he believes acceptance of the offer by 50% of creditors would end the country's default. =========== B R A Z I L =========== BANCO BRADESCO: Moody's Revises Ratings Outlook to Positive ----------------------------------------------------------- Moody's Investors Service changed the outlook on the ratings of Brazilian bank Banco Bradesco S.A. to positive from stable. The action affected the bank's B2 long-term foreign currency deposit and Ba2 long- term foreign currency debt ratings. This action follows the positive outlook that Moody's has placed on Brazil's B1 foreign currency country ceiling for bond and notes as well as on the B2 foreign currency country ceiling for bank deposits. Banco Bradesco is the largest private bank in Brazil in terms of assets. BANCO DO BRASIL: Moody's Assigns Positive Outlook on Ratings ------------------------------------------------------------ Moody's Investors Service changed the outlook on the ratings of Brazilian bank Banco do Brasil S.A. to positive from stable. The action affected the bank's B2 long-term foreign currency deposit and Ba2 long- term foreign currency debt ratings. This action follows the positive outlook that Moody's has placed on Brazil's B1 foreign currency country ceiling for bond and notes as well as on the B2 foreign currency country ceiling for bank deposits. Brasilia-based Banco do Brasil is Brazil's largest commercial bank. BANCO VOTORANTIM: S&P Assigns Rating To Notes --------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' foreign- currency senior unsecured debt rating to Banco Votorantim S.A.'s $100 million medium-term, fixed-rate note, to be issued in January 2005 and maturing in two years. "The counterparty credit ratings on Banco Votorantim S.A. (LC: BB/Stable/B; FC: BB-/Stable/B) incorporate the potential risks associated with the bank's treasury business; its exposure to sovereign risk through its securities portfolio, a common issue for Brazilian banks; and the risks associated with the volatile economic environment in Brazil," said Standard & Poor's credit analyst Daniel Araujo. The ratings benefit from the implicit support of the Votorantim Group (FC: BB-/Stable/--; LC: BBB- /Stable/--); the group's strong brand-name recognition; and the bank's good profitability, experienced management team, and efficient decision-making processes. Banco Votorantim's treasury is very active in providing hedge instruments to its clients. For this reason, the bank carries exposure to Brazil's sovereign risk through its securities portfolio and open-market operations equivalent to approximately 4.3x its equity (based on consolidated figures) as of September 2004. The Votorantim Group is one of the largest and most influential industrial conglomerates in Brazil. Its brand-name recognition has helped the bank to leverage on its business, and the images of both organizations are closely linked. The conglomerate supervises the bank's activities and operations, and its conservatism permeates the bank's activities. Banco Votorantim's management is made up of professionals with vast experience in the financial markets and the Group's companies. Banco Votorantim has been maintaining good profitability. Results remain in line with the bank's profile and benefit from the good margins from its vehicle-finance activities, good Treasury gains, and the results from corporate clients. Its lean structure with low operating expenses is also a benefit for the bank. Primary Credit Analyst: Daniel Araujo, Sao Paulo (55) 11-5501-8939; daniel_araujo@standardandpoors.com Secondary Credit Analyst: Tamara Berenholc, Sao Paulo (55) 11-5501-8950; tamara_berenholc@standardandpoors.com COMPANHIA PETROLIFERA: Moody's Changes Rating Outlook to Pos ------------------------------------------------------------ Moody's Investor's Service changed the rating outlook for the B1 medium term notes of Rio de Janeiro-based firm Companhia Petrolifera Marlim (Marlim) to positive from stable. The revision follows Moody's decision to assign a positive outlook on Brazil's B1 long-term foreign currency ceiling for bonds and notes, which constrains the ratings of Marlim. BANCO ITAU: Moody's Changes Outlook on B2 FC Deposit Ratings ------------------------------------------------------------ Moody's Investors Service changed the outlook on the B2 long- term foreign currency deposit ratings of Brazilian bank Banco Itau S.A. The action follows the positive outlook that Moody's has placed on Brazil's B1 foreign currency country ceiling for bond and notes as well as on the B2 foreign currency country ceiling for bank deposits. ELETROPAULO METROPOLITANA: Gets Last Installment of BNDES Loan -------------------------------------------------------------- Brazilian power distributor Eletropaulo Metropolitana Eletricidade de Sao Paulo SA received Wednesday BRL243.2 million (US$90 million) from Brazil's National Development Bank (BNDES). The amount represents the last part of a total loan of BRL1.25 billion the Company signed with BNDES in 2002. Eletropaulo, which is jointly owned by AES Corp. (51%) and BNDES (49%), said it will use BRL142 million and US$15 million to pay down debts with Brazilian and foreign creditors following an agreement signed in March 2004. Eletropaulo ended the third quarter of 2004 with debts totaling some BRL5.5 billion, of which 22% were due in the short term. About 20% of the total debt was denominated in U.S. dollars. The Company is still waiting for the disbursement of some BRL770 million in new financing from BNDES that has already been preliminarily approved by the bank. CONTACT: ELETROPAULO METROPOLITANA Avenida Alfredo Egidio de Souza Aranha 100-B, 13 andar 04726-270 San Paulo Brazil Phone: +55-11-548-9461, +55 11 5696 3595 Fax: +55-11-546-1933 URL: http://www.eletropaulo.com.br Contacts: Luiz D. Travesso, Chairman and President Orestes Gonzalves Jr., VP Finance/Investor Relations * BRAZIL: Moody's Changes Outlook on Ratings to Positive -------------------------------------------------------- Moody's Investors Service changed its ratings outlook for Brazil's key foreign-currency ratings to positive from stable, citing a significant reduction in the ratio of external debt to current account earnings. The action affects the following ratings: - B1 foreign-currency country ceiling for bonds and notes; - B2 foreign-currency bank deposit ceiling; - B1 foreign-currency bonds; and - Ba3 local-currency government bond rating. Moody's noted that the external-debt-to-current-account-earnings ratio has steadily declined to nearly half of the 1999 ratio. Other factors, which prompted Moody's to change the outlook, include the strong fiscal results and the change in the composition of the local-currency debt with a continued reduction in the share of dollar-indexed debt. ===================== E L S A L V A D O R ===================== MILLICOM INTERNATIONAL: Boasts of 7.7Mln Subscribers in 2004 ------------------------------------------------------------ Millicom International Cellular S.A. ("Millicom") (NasdaqNM: MICC) (Stockholmsborsen and Luxembourg Stock Exchange: MIC), announces that it has added 859,968 net new subscribers in the fourth quarter to reach 7.7 million total cellular subscribers by year-end. Proportional subscribers reached 5.3 million. Subscriber growth has continued to accelerate in 2004 with record underlying net subscribers additions in the last three quarters. At the end of December 2004 Millicom saw a 12.6% increase in total subscribers from the previous quarter and a 36% increase from December 2003. Marc Beuls, President and CEO of Millicom International Cellular S.A. said: "Subscriber growth was particularly strong in Vietnam following the price reductions earlier in the year which have stimulated demand for mobile services. The launch of GSM services in Latin America and Pakistan have added to the attractions of Millicom's offering in these markets and this roll out has been backed by increased marketing initiatives, by way of re-branding to Tigo in Latin America, and an attractive offering for Paktel GSM customers in Pakistan. Millicom's operations in Pakistan passed the 1 million-subscriber mark in December 2004. In Africa we continue to see the benefit of investment in the network where our coverage increased substantially in 2004 and the 1 million subscriber mark was exceeded in the fourth quarter." Millicom International Cellular S.A. is a global telecommunications investor with cellular operations in Asia, Latin America and Africa. It currently has a total of 16 cellular operations and licenses in 15 countries. The Group's cellular operations have a combined population under license of approximately 387 million people. CONTACTS: Mr. Marc Beuls President and Chief Executive Officer Millicom International Cellular S.A. Luxembourg Phone: +352 27 759 327 Mr. Andrew Best Investor Relations Phone: +44 20 7321 5022 Web site at: http://www.millicom.com ============= J A M A I C A ============= AIR JAMAICA: Begins Restructuring Exercise ------------------------------------------ Air Jamaica began making the positions of one hundred Flight Attendants redundant on Wednesday. This is 20% of the airline's complement of Flight Attendants. Executive Chairman of Air Jamaica, Dr. the Hon. Vincent Lawrence told flight attendants and Bustamante Industrial Trade Union, (BITU) representatives Wednesday afternoon that the changes are necessary and have to be done quickly in order to save the airline. He said those affected will receive immediately, their notice pay, all salaries due to them and payment for outstanding vacation leave. According to Dr. Lawrence, funds are being sought to pay redundancy packages as quickly as possible within the twelve-month period allowed by the law for such settlements. As part of the restructuring effort to bring the airline into financial stability and viability, the Manchester, Antigua and London to Havana routes are being cut. In addition, the frequency of flights on other routes has been reduced, three aircraft are being returned and the restructuring team is working overtime to find other ways of reducing the Company's expenses. According to Dr. Lawrence, the adjustment in the number of Flight Attendants is in line with the reduction in the number of aircraft and routes. Staff levels in other areas including Pilots and Management will be adjusted by next week. The Executive Chairman has been meeting with staff and trade unions since last week to explain the state of the Company's finances and the efforts being made to restructure its operations. He has assured everyone that the excellent service and high safety standards to which the airline's passengers have become accustomed will be maintained in this period of transition. He says the national airline is important to the country's economy and is a source of pride for the Jamaican people and everything will be done to ensure that it survives and become viable. On December 23, 2004, after accumulated losses of over US$600 million and mounting debts, the Government of Jamaica resumed full responsibility for the national airline. Dr. Lawrence was appointed Executive Chairman in charge of the restructuring process and Banker, Mr. Aubyn Hill, Chief Restructuring Officer. CONTACT: Corporate Communications Tel: 876-922-3460 ext 4060-5 URL: www.airjamaica.com C&W JAMAICA: Names New Corporate Communications VP -------------------------------------------------- Cable & Wireless Jamaica announced Tuesday the promotion of Mr. Errol K. Miller to the position of vice-president for corporate communications. Mr. Miller had previously served as Manager under the same department. Jamaica Observer Reporter disclosed that the vice-president for corporate communications is expected to: - Provide counsel to management concerning public relations issues. - Enhance the image of the Company through media relations and publicity. - Handle Community Relations functions. - Maintain brand standards and handle corporate giving outside the remit of the Cable & Wireless Jamaica Foundation. - Oversee Crisis Management, Marketing Communications support and advertising "consultancy". =========== M E X I C O =========== AHMSA: Reports 3.9% Increase in 2004 Steel Output ------------------------------------------------- Mexican steel producer Altos Hornos de Mexico SA (AHMSA) reported Wednesday a 3.9% increase of steel output in 2004 compared to the previous year's output. The Monclova-based company produced 3 million metric tons of liquid steel in 2004. The output translated into 2.6 million metric tons of finished products. It has set a production target of 3.5Mt of crude steel for 2005. "Constant maintenance has been a key tool to keep the installations in optimum conditions and has allowed us to take advantage of the recovery of the global steel market, and to work at full capacity," CEO Luis Zamudio said in a statement. In 1999, at the height of a global steel glut and low prices, AHMSA suspended payments on US$1.8 billion in debt and has since failed to negotiate terms with creditor banks. Its shares have been suspended since the default. AHMSA said it expected a stable steel market for demand and prices in 2005. CONTACT: Altos Hornos de Mexico (AHMSA) Prol. Juarez s/n, Col. La Loma Edificio GAN Modulo II Monclova, Coahuila Phone: (866) 6493400 Fax: (866) 6332390 Web site: http://www.ahmsa.com.mx ALESTRA: To Take Over Terra Networks' ISP Operations ---------------------------------------------------- Mexican telco Alestra is poised to become the country's second largest dial-up provider after it takes over the local Internet access services operation of Spanish ISP Terra Networks. Citing a statement from the companies, Business News Americas reports that Alestra will run the customer service and billing aspects of the ISP and share the revenues with Terra. Terra will still continue business development and sales activities on its Mexican Internet portal. "The internet has become an invaluable resource and our users will be able to take advantage of Terra's services and value- added content provided through Alestra's network," said Terra Network's executive president Kim Faura Batlle. CONTACT: Mr. Jorge Escribano Alestra - Mexico Phone: +52 8 503 5011 E-mail: jescriba@alestra.com.mx GRUPO TMM: Boards Approve Amended Acquisition Agreement ------------------------------------------------------- Kansas City Southern and Grupo TMM, S.A. announced Wednesday that the companies have entered into an amended acquisition agreement whereby TMM will sell its 51 percent voting interest in Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V. ("Grupo TFM") to KCS for $200 million in cash, 18 million shares of KCS common stock, $47 million in a two-year promissory note, and up to $110 million payable in a combination of cash and KCS common stock upon successful resolution of the current proceedings related to the VAT Claim and the Put with the Mexican Government. The $47 million promissory note and a portion of the $110 million contingent payment will be subject to certain escrow arrangements to cover potential indemnification claims. The boards of directors of both companies have approved the transaction. As part of the transaction, KCS will also enter into a three- year consulting contract with a consulting firm controlled by Jose Serrano Segovia. KCS and TMM have also agreed that upon completion of the transaction all litigation between the two companies will be dismissed. Consummation of the transaction remains subject to the satisfaction of certain conditions, including KCS shareholder approval. TMM's controlling shareholders have entered into a voting trust providing for approval of the transaction. Both the Mexican Foreign Investment Commission and the Mexican Federal Competition Commission have approved acquisition of the controlling interest in TFM by KCS. Although KCS and TMM previously satisfied the requirements of the U.S. Hart-Scott- Rodino Antitrust Improvements Act of 1976, that authorization has expired and the parties have agreed to file the required information promptly with the U.S. Department of Justice. This authorization is required prior to consummation of the transaction. "We are very pleased to have entered into this amended agreement with TMM, and believe it will enhance rail competition and give shippers in the NAFTA trade corridor a strong transportation alternative in this important and growing trade corridor," said Michael R. Haverty, chairman, president and chief executive officer of KCS. "This transaction, along with our recently approved control of The Texas Mexican Railway Company, offers our shareholders greater value through operating efficiencies and opportunities that will come from common ownership and control. Our customers, both north and south of the border, will benefit from these efficiencies as well." Jose Serrano, chairman and CEO of TMM said, "We're very pleased with the outcome of the transaction. It creates significant value for all shareholders. The combination of KCS and TFM creates an efficient shipping route between the U.S. and Mexico. TMM shareholders will continue to benefit from significant ownership in this valuable franchise. The net cash proceeds of this transaction will be used by TMM to reduce its debt obligations. This transaction is truly in the best interests of TMM shareholders and will ensure long term growth and flexibility at TMM." Javier Segovia, president of TMM said, "We are extremely pleased to become a significant shareholder in KCS, a strong rail alternative between the U.S. and Mexico. TMM and TFM will continue to work closely, and they have entered into a marketing agreement to further our shared goals of providing end-to-end transportation for our customers. In addition, the sale of TFM to KCS puts TMM on a superior financial footing". TFM, S.A. de C.V., the operating subsidiary of Grupo TFM, and KCSR will continue as separate corporations, all under the common control of KCS. Following consummation of the transaction, KCS will continue to operate under the KCS name and will maintain its headquarters in Kansas City, Missouri. Grupo TFM and TFM will remain Mexican corporations, with their corporate headquarters located in Mexico City. TFM holds the concession to operate Mexico's Northeast Rail Lines through June 2047, and has the option to extend the concession for an additional 50 years. The TFM rail network consists of more than 2,600 miles of mainline track. The combined system will exceed 5,300 miles of mainline track. Morgan Stanley acted as exclusive financial advisor to KCS on the transaction. J.P. Morgan Securities Inc. and Elek Moreno Valle y Asociados S.A. acted as exclusive financial advisors to TMM on the transaction. Headquartered in Mexico City, TMM is a Latin American multimodal transportation company. Through its branch offices and network of subsidiary companies, TMM provides a dynamic combination of ocean and land transportation services. KCS is a transportation holding company that has railroad investments in the United States, Mexico and Panama. Its primary holding in the United States is The Kansas City Southern Railway Company. KCS owns 51% of The Texas Mexican Railway Company, which connects The Kansas City Southern Railway Company and TFM. Headquartered in Kansas City, Missouri, KCS serves customers in the central and south central regions of the United States. KCS' rail holdings and investments are primary components of a NAFTA Railway system that links the commercial and industrial centers of the United States and Mexico. CONTACT: Grupo TMM S.A. Av. de la Cuspide # 4755 Colonia Parquer del Pedregal Tlalpan, 14010 Mexico Phone: 525-629-8866 Web site: http://www.grupotmm.com SATMEX: Moving to Restructure Debts ----------------------------------- Ailing Mexican satellite telecommunications provider, Satelites Mexicanos (Satmex), may restructure around US$988 million of its debt in the next few weeks if ongoing negotiations with creditors prove successful. Cronica reports that the Company's new debt repayment plan is gaining ground among creditors and the federal government. Jitters among shareholders sparked by problems with Satmex 5 had held off a restructuring agreement in 2003. The investors had balked at sharing the risks involved in the business plan. The failure of the Solidaridad I satellite in 1999 precipitated the Company's steady decline. The incident cost the Company an estimated US$20 million in losses and resulted in a default of its debt payments. Meanwhile, Satmex 6, built using the US$235 million recovered from insurance on Solidaridad 1, remains on the ground due to lack of funds. The Company also took out a US$150 million loan from Eximbank and another US$72 million loan from Coface for Satmex 6. ================================= T R I N I D A D & T O B A G O ================================= BWIA: Presents Preliminary Plan to Government --------------------------------------------- BWIA delivered to Trinidad's Trade and Industry Minister Kenneth Valley on Tuesday a rough plan for the management of the beleaguered airline. However, the plan, which Chairman Anthony Jacelon and general manager Nelson Tom Yew submitted a day after a Jan. 10 deadline, didn't have approval from the airline's board of directors just yet. Jacelon said though that he would take full responsibility for it. Nevertheless, Valley told Jacelon that he could not take the plan to Cabinet since it did not have the blessings of the BWIA board. Jacelon appeared agreeable to the idea. According to him, the plan was a preliminary one and was not yet ready for Cabinet's eyes. A more self-sufficient plan should be ready and approved by the board by the end of the month for Valley to take to Cabinet, Jacelon said. Valley, who has responsibility for the state-controlled airline, said while BWIA was viewed as critical infrastructure, he had not written off the idea of grounding it permanently. "Air service is critical infrastructure for T&T, but it may not be BWIA. What is important to T&T is air transport. BWIA is just an airline," he said. "Perhaps it is time we look at activating the regional airline and allow BWIA and Liat to go their way." CONTACT: BRITISH WEST INDIES AIRWAYS Phone: + 868 627 2942 E-mail: mailto:mail@bwee.com Home Page: http://www.bwee.com/ Contacts: Conrad Aleong, President and CEO (Trinidad) Beatrix Carrington, VP Marketing and Sales (Barbados) Paul Schutz, CFO (Trinidad) ================= V E N E Z U E L A ================= PDVSA: Negotiation With Union Proceeds Smoothly ----------------------------------------------- Fedepetrol spokesman Rafael Barrios said that the union would likely sign a wage contract with Petroleos de Venezuela (PDVSA) within the week. In a report from Petrolworld, Mr. Barrios said that labor and management had ironed out disagreement over hiring practices included in the present contract. The union had battled over a clause allowing PDVSA to select the workers that would be outsourced for jobs with private oil firms. *********** 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 2005. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. 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