/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/050215.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, February 15, 2005, Vol. 6, Issue 32 Headlines A N T I G U A & B A R B U D A LIAT: Gets Additional $11M Shareholder Capital A R G E N T I N A AGUAS ARGENTINAS: Makes ARS3.68 Million Payment Friday BOSTON MEDICAL: Seeks Court Authorization to Reorganize CIENTIFICA MOVI: Reorganization Successfully Finalized CRESUD: 2Q05 Results Show Huge Gain In Net Profit ELECTROTECNICA VAQUER: Reorganization Proceeds With Court OK EPIRO S.A.: Court Designates Trustee for Bankruptcy IMPSAT FIBER: Forms Special Committee to Seek Recap. Options IRSA: Reports 6-Month Net Income of Ps.56.8 Mln KRISCALDIS S.C.S.: Court Orders Liquidation HISPAPEL S.R.L.: Court Converts Bankruptcy to Reorganization SARSIS S.A.: Court OKs Voluntary Bankruptcy Plea TAIPEI S.A.: Initiates Bankruptcy Proceedings TELEFONICA DE ARGENTINA: Issues ARS250 Mln Worth of New Notes TSBC SOCIEDAD ANONIMA: Liquidates Assets to Pay Debts B R A Z I L BANCO VOTORANTIM: S&P Assigns 'BB-' to $100M MTN C H I L E COCA COLA EMBONOR: S&P Releases Report on Ratings CRT: Parent Teeters on Edge of Bankruptcy C O L O M B I A * REPUBLIC OF COLOMBIA: S&P Affirms Ratings; Outlook Stable J A M A I C A KAISER ALUMINUM: Court Approves $200M DIP Credit Facility M E X I C O BALLY TOTAL: S&P Downgrades Ratings, Lowers Outlook CINTRA: ASPA Reiterates Approval for New Sale Scheme GRUPO MEXICO: Bear Stearns Cuts Equity Recommendation TFM: Fitch Affirms Ratings At 'B+' P A R A G U A Y * PARAGUAY: Posts Highest GDP Growth in 10 Years - IMF U R U G U A Y YACYRETA: Argentina, Paraguay Ministers to Meet With Residents V E N E Z U E L A PDVSA: Meets With Russia, US Heads to Ratify Investment Interest PDVSA: US Expansion Plans Delayed Pending Negotiations - - - - - - - - - - ================================= A N T I G U A & B A R B U D A ================================= LIAT: Gets Additional $11M Shareholder Capital ---------------------------------------------- Caribbean carrier LIAT will have more room to restructure its operations after shareholders injected US$11 million to boost the ailing airline. The Barbados Advocate says that the Company's Chairman of the Board, Mr. Jean Holder, announced this development during a press briefing in St. Vincent. At the same time, Mr. Holder downplayed rumors of an impending merger between LIAT and BWIA, another troubled Caribbean carrier. He explained that combining two cash-strapped companies may not result in a stronger unit and that each company is opting to iron-out its finances before considering a merger. Mr. Holder however did not close the door on the possibility of cooperation between LIAT and BWIA. CONTACTS: ANTIGUA (ANU) City Ticket Office Woods Center, St. John's BARBADOS (BGI) Oliver Haywood E-mail: haywoodo@liatairline.com Tel.: 246 428 8888 246-436-9753 246-426-7140 ST.LUCIA (SLU) Josse Mesmin E-mail: mesminj@liatairline.com Tel: 758 452 3051/2 ST.VINCENT (SVD) Dominique Patterson E-mail: pattersond@liatairline.com Tel: 784 457 1821 ================= A R G E N T I N A ================= AGUAS ARGENTINAS: Makes ARS3.68 Million Payment Friday ------------------------------------------------------ Water provider Aguas Argentinas met Friday's deadline of a ARS3.68 million installment payment for a trust fund between ARS42 million and ARS44 million, reports Dow Jones Newswires. Aguas Argentinas, which is controlled by French utility Suez, deposited the funds into an account at state-owned Banco de la Provincia, a company official said, adding that the company made the payment as "a symbol of goodwill to keep negotiating." In a letter delivered to Argentine water regulator ETOSS Thursday, the company called the payment "a voluntary contribution...within the framework of the contract negotiation, in which case it should be taken as a deposit for any trust fund that the parties will agree on in the future." The trust fund, which was first established in a January 2001 agreement, calls for Aguas Argentinas to kick in 7.9% of what it collects from each water bill. Argentine President Nestor Kirchner has repeatedly blasted the company in public remarks for failure to meet investment commitments, while Suez says it is still smarting from the 2002 "pesification" of contracts and subsequent rate freeze. BOSTON MEDICAL: Seeks Court Authorization to Reorganize ------------------------------------------------------- Boston Medical Group S.A., a clinic operating in Buenos Aires, requested for reorganization after failing to pay its liabilities. The reorganization petition, once approved by the court, will allow the company to negotiate a settlement with its creditors in order to avoid a straight liquidation. The case is pending before Court No. 17 of the city's civil and commercial tribunal. Clerk No. 33 assists the court on this case. CONTACT: Boston Medical Group S.A. Rivadavia 954 Buenos Aires CIENTIFICA MOVI: Reorganization Successfully Finalized ------------------------------------------------------ The reorganization of Corrientes-based Cientifica Movi S.R.L. has ended. Data revealed by Infobae indicated that the process was concluded after Court No. 9 of the city's civil and commercial tribunal homologated the debt agreement signed between the Company and its creditors. CONTACT: Cientifica Movi S.R.L. Cordoba 1491 Corriente Phone: 03783-432869 E-mail: movi@arnet.com.ar CRESUD: 2Q05 Results Show Huge Gain In Net Profit ------------------------------------------------- Cresud S.A.C.I.F. y A. (Nasdaq: CRESY) (BCBA: CRES), a leading Argentine producer of agricultural products, announced Friday results for Second Quarter Fiscal Year 2005 ended December 31, 2004. Results for the first semester of fiscal year 2005 showed a net profit of Ps. 9.5 million as compared to a Ps. 4.8 million profit registered during the same period of the previous Fiscal Year, denoting a 100.2% increase. The increase in the net result is mainly a consequence of: (i) the higher results registered in our cattle stock holdings (generated by a stronger market value), which went from Ps. 1.3 million during the same period of fiscal year 2004 to Ps. 6.3 million for the current semester, (ii) and the performance of our share in IRSA Inversiones y Representaciones S. A. (NYSE: IRS) (BASE: IRSA), which went from Ps. 1.8 million for December 2003 to Ps. 14.0 million at December 31, 2004; mainly offset by lower results from exchange differences generated by assets and liabilities, which decreased from a Ps. 1.9 million profit during the first semester of fiscal year 2004 to a Ps. 1.0 million loss for the current semester. HIGHLIGHTS -- Net profit corresponding to the first semester of FY 2005 amounted to Ps. 9.5 million, 100% above that registered for the same period of the previous fiscal year. -- Sunflower, corn and soybean farming are having satisfactory developments and higher yields are expected to offset lower prices expected for the fiscal year. -- At December 31, 2004, 87% of the area destined to wheat was harvested, obtaining a 3.98 tons per hectare yield, surpassing Company's forecasts. -- We are close to the inauguration of dairy farm facilities with state-of-the-art technology, which will allow us to increase our production to 36,000 liters of milk per day. -- We have signed bills of sale for two farms that will generate earnings of US$ 7.0 million, which will be reflected in the next quarters of the current fiscal year. -- We expect the development of the additional 6,000 Has. in Los Pozos to be finished in the short term, in order to exploit them during the next fiscal year. Cresud S.A.C.I.F. y A. Financial Highlights Expressed in Argentine Pesos IIQ FY 2005 IIQ FY 2004 Total Sales 35,242,675 29,398,444 Gross Income (Loss) 6,443,402 8,210,240 Operating income 7,058,416 5,486,663 Financial results, net (2,194,831) 602,205 Net Income (Loss) 9,533,737 4,762,156 Earnings per share 0.06 0.04 Earnings per share diluted 0.04 0.04 Current Assets 94,272,433 71,651,858 Non-current Assets 604,353,092 523,600,188 Total Assets 698,625,525 595,252,046 Current Liabilities 66,430,787 12,520,393 Non-current Liabilities 152,099,365 151,890,701 Total Liabilities 218,530,152 164,411,094 Minority Interest 5,366 104,178 Shareholder's Equity 480,090,007 430,736,774 Cresud is a leading Argentine producer of basic agricultural products and the only such company with shares listed on the Buenos Aires Stock Exchange and Nasdaq. The Company is currently involved in various operations and activities, including crop production, cattle raising and fattening, milk production and certain forestry activities. Most of its farms are located in Argentina's pampas, one of the largest temperate prairie zones in the world and one of the richest areas of the world for agricultural production. CONTACT: Gabriel Blasi -- CFO +011-54-11-4323-7449 E-mail: finanzas@cresud.com.ar Web site: http://www.cresud.com.ar ELECTROTECNICA VAQUER: Reorganization Proceeds With Court OK ------------------------------------------------------------ Electrotecnica Vaquer S.A. will begin reorganization following the approval of its petition by Court No. 22 of Buenos Aires' civil and commercial tribunal. The opening of the reorganization will allow the company to negotiate a settlement with its creditors in order to avoid a straight liquidation. Mr. Alberto D. del Castillo will oversee the reorganization proceedings as the court-appointed trustee. He will verify creditors' claims until March 29. The validated claims will be presented in court as individual reports on May 10. The trustee is also required by the court to submit a general report essentially auditing the company's accounting and business records as well as summarizing important events pertaining to the reorganization. This report will be presented in court on June 21. The Informative Assembly, the final stage of a reorganization where the settlement proposal is presented to the company's creditors for approval, is scheduled on October 18. CONTACT: Electrotecnica Vaquer S.A. Avda General Hornos 1300 Buenos Aires Mr. Alberto D. del Castillo, Trustee Presidente Peron 1558 Buenos Aires EPIRO S.A.: Court Designates Trustee for Bankruptcy --------------------------------------------------- Buenos Aires accountant Maximo Conrado Piccinelli was assigned trustee for the bankruptcy of local company Epiro S.A., relates Infobae. Mr. Piccinelli will verify creditors' claims until March 14 next year, the source adds. The city's Court No. 13 holds jurisdiction over the Company's case. Clerk No. 26 assists the court with the proceedings. CONTACT: Mr. Maximo Conrado Piccinelli, Trustee Montevideo 666 Buenos Aires IMPSAT FIBER: Forms Special Committee to Seek Recap. Options ------------------------------------------------------------ Impsat Fiber Networks, Inc. (the "Company"), a leading provider of integrated broadband data, Internet and voice telecommunications services in Latin America, announced the formation of a Special Committee of the Company's Board of Directors (the "Special Committee") constituted by Mr. Ricardo Verdaguer (Chairman and Chief Executive Officer) and Mr. Ignacio Troncoso, acting in their capacity as disinterested directors. The remaining board members are affiliated with Morgan Stanley & Co. Incorporated ("Morgan Stanley") or WRH Partners Global Securities L.P. and its affiliates ("WR Huff"), two of the Company's principal securityholders. The formation of the Special Committee follows the November 23, 2004 filing by the Company with the U.S. Securities and Exchange Commission ("SEC") reporting that the Company had been informed that pursuant to a bidding procedure, Morgan Stanley and WR Huff (via participation) had acquired from Nortel Networks Limited ("Nortel") all of the debt securities originally issued to Nortel by the Company or its operating subsidiaries as part of the Company's Chapter 11 plan of reorganization which was consummated in the first quarter of 2003. The Special Committee will explore recapitalization alternatives for the Company. These alternatives may take the form of a repurchase, refinancing or rescheduling of payment terms of indebtedness of the Company and/or its operating subsidiaries, a potential capital infusion, or other types of transactions. There can be no assurance, however, that any such transaction will be successfully negotiated or consummated. The Special Committee has retained Lehman Brothers Inc. as its exclusive financial advisor. About Impsat Impsat Fiber Networks, Inc. is a leading provider of private telecommunications network and Internet services in Latin America. The Company offers integrated data, voice, data center and Internet solutions, with an emphasis on broadband transmission, including IP/ATM switching, DWDM, and non-zero dispersion fiber optics. Impsat provide telecommunications, data center and Internet services through its networks, which consist of owned fiber optic and wireless links, teleports, earth stations and leased satellite links. The Company owns and operates 15 metropolitan area networks in some of the largest cities in Latin America, including Buenos Aires, Bogota, Caracas, Quito, Guayaquil, Rio de Janeiro and Sao Paulo. It has also deployed fifteen facilities to provide hosting services. Impsat currently provides services to nearly 3.000 national and multinational companies, financial institutions, governmental agencies, carriers, ISPs and other service providers throughout the region. Impsat operates in Argentina, Colombia, Brazil, Venezuela, Ecuador, Chile, Peru and the United States and also provide services in other countries in Latin America. CONTACT: Impsat Fiber Networks, Inc. Mr. Hector Alonso Chief Financial Officer Mr. Santiago F. Rossi Investor Relations Phone: 54.11.5170.6000 Web site: www.impsat.com or Citigate Financial Intelligence Mr. Robin Weinberg Mr. John McInerney Phone: 201.499.3500 IRSA: Reports 6-Month Net Income of Ps.56.8 Mln ----------------------------------------------- IRSA Inversiones y Representaciones Sociedad Anonima (NYSE: IRS) (BCBA: IRSA), the largest real estate company in Argentina, announced second quarter fiscal year 2005 results. Net income for the six-month period ending December 31, 2004, was Ps.56.8 million, or Ps.0.224 per share, while earnings per diluted share totaled Ps.0.121, compared with a gain of Ps.32.4 million, or Ps.0.152 per share (Ps.0.101 per diluted share) for the same period in the previous year. Consolidated net sales for the six-month period totaled Ps.185.2 million, compared with Ps.124.1 million in the same period the previous year. The various segments' share in net sales was the following: Sales and Development, Ps.27.5 million; Office and Other Rental Properties, Ps.8.9 million; Shopping Centers, Ps.103.6 million; and Hotels, Ps.45.3 million. Operating income recorded significant growth of 142.4%, from Ps.24.5 million in the second quarter of FY 2004 to Ps.59.3 million in the second quarter of FY 2005. HIGHLIGHTS -- Net income for the second quarter of FY 2005 was Ps.56.8 million, compared to Ps.32.4 million for the second quarter FY 2004. Operating income grew 142.4% from Ps.24.5 million to Ps.59.3 million. EBITDA was Ps.93.6 million, 55.7% higher than the same quarter of the previous fiscal year. -- In view of the great opportunity presented by the attractive market prices and the boom and great potential the shopping center industry is experiencing, the company decided to increase its stake in APSA, reaching 60.7%. -- In December, the exercise of IRSA warrants generated US$1.1 million. Furthermore, during the six-month period, financial debt was reduced by US$0.9 million as a result of the conversion of IRSA Convertible Notes. -- Average occupancy of offices continues to recover, reaching 85% for the first six months of FY 2005, compared with 73% for the second quarter of the previous fiscal year. -- The hotel industry showed a highly positive performance. Average occupancy rates grew significantly, reaching 77% in the second quarter of FY 2005, compared to 67% for the second quarter of FY 2004. Average prices increased from Ps.265 to Ps.314. -- Boosted by the ABC1 segment boom, we are evaluating several projects. Furthermore, we continue developing San Martin de Tours, Cruceros Dique 2, Edificios Dique 3 and Emprendimiento El Encuentro. -- APSA's operating income grew 97.6% over the same quarter a year ago, reaching Ps.42.4 million. EBITDA grew 42%, reaching 72.5 million during the semester. -- Tenants sales increased 32%; shopping center occupancy was 98.5%. -- APSA acquired 49.9% of Perez Cuesta S.A.C.I., controlling company of Mendoza Plaza Shopping, increasing its ownership in the corporation to 68.8%. -- On November 9, we opened the first stage of Alto Rosario Shopping, with the occupancy rate at 99.1%. Financial Highlights (In thousands of Argentine Pesos) 12-31-04 12-31-03 Total Sales 185,245 124,081 Operating Income 59,323 24,470 Financial Results, Net -9,744 33,970 Net Income 56,760 32,413 Net Income per GDS 2.24 1.52 Net Income per GDS Diluted 1.21 1.01 12-31-04 06-30-04 Total Current Assets 303,105 261,651 Total Non Current Assets 2,042,997 1,941,293 Total Assets 2,346,102 2,202,944 Short-Term Debt 174,362 135,127 Total Current Liabilities 331,753 256,022 Long-Term Debt 458,796 468,807 Total Non Current Liabilities 543,767 516,831 Total Liabilities 875,520 772,853 Minority Interest 430,009 470,237 Shareholders' Equity 1,040,573 959,854 IRSA is Argentina's largest, most well-diversified real estate company, and it is the only company in the industry whose shares are listed on the Bolsa de Comercio de Buenos Aires and The New York Stock Exchange. Through its subsidiaries, IRSA manages an expanding top portfolio of shopping centers and office buildings, primarily in Buenos Aires. The company also develops residential subdivisions and apartments (specializing in high- rises and loft- style conversions) and owns three luxury hotels. Its solid, diversified portfolio of properties has established the Company as the leader in the sector in which it participates, making it the best vehicle to access the Argentine real estate market. CONTACT: Alejandro Elsztain - Director Gabriel Blasi - CFO +(5411) 4323 7449 E-mail: finanzas@irsa.com.ar URL: http://www.irsa.com.ar KRISCALDIS S.C.S.: Court Orders Liquidation ------------------------------------------- Kriscaldis S.C.S. prepares to wind-up its operations following the bankruptcy pronouncement issued by Court No. 6 of Buenos Aires' civil and commercial tribunal. The declaration effectively prohibits the company from administering its assets, control of which will be transferred to a court-appointed trustee. Infobae reports that the court appointed Mr. Juan Gerchkovich as trustee. He will be reviewing creditors' proofs of claims until April 13. Clerk No. 12 assists the court on this case that will end with the disposal of the company's assets to repay its liabilities. CONTACT: Mr. Juan Gerchkovich, Trustee Lavalle 1882 Buenos Aires HISPAPEL S.R.L.: Court Converts Bankruptcy to Reorganization ------------------------------------------------------------ Hispapel S.R.L. of Buenos Aires proceeds with reorganization after Court No. 6 of the city's civil and commercial tribunal converted the Company's ongoing bankruptcy case into a "concurso preventivo," states 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. Mr. Mauricio Rosemblum, the court-appointed trustee, will verify creditors' proofs of claims until April 13. Creditors with unverified claims cannot participate in the Company's settlement plan. CONTACT: Mr. Mauricio Rosemblum, Trustee Bartolome Mitre 2296 Buenos Aires SARSIS S.A.: Court OKs Voluntary Bankruptcy Plea ------------------------------------------------ Court No. 6 of Buenos Aires' civil and commercial tribunal declared Sarsis S.A. bankrupt, says La Nacion. Court-appointed trustee Reinaldo Pireni will examine and authenticate creditors' claims until April 8. 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. The city's Clerk No. 11 assists the court on the case that will conclude with the liquidation of the Company's assets. CONTACT: Sarsis S.A. Culpina 178 Buenos Aires Mr. Reinaldo Pireni, Trustee Avenida Callao 930 Buenos Aires TAIPEI S.A.: Initiates Bankruptcy Proceedings --------------------------------------------- Court No. 6 of Buenos Aires' civil and commercial tribunal declared Taipei S.A. "Quiebra," reports Infobae. Mr. Roberto Boffa, who has been appointed as trustee, will verify creditors' claims until April 26 and then prepare the individual reports based on the results of the verification process. The city's Clerk No. 12 assists the court on the case that will close with the liquidation of the Company's assets to repay creditors. CONTACT: Mr. Roberto Boffa, Trustee Uruguay 390 Buenos Aires TELEFONICA DE ARGENTINA: Issues ARS250 Mln Worth of New Notes ------------------------------------------------------------- Telefonica de Argentina (NYSE: TAR) issued Friday two tranches of new notes worth ARS250 million (US$85.6 million), completing the third placement under a ARS1.5-billion program approved last year. According to a Business News Americas report, the first class series is for ARS200 million with an annual interest rate of 8% due February 11 2006. The second series for ARS50 million is due one year later with a variable interest rate of 2.5%. The company, which is a unit of Spain's Telefonica (TEF), received offers worth ARS371 million, more than doubling the ARS150 million initially considered for this issue. The company finally accepted a total of 250mn pesos. Main investors include pension funds administrators that acquired 47% of the notes, followed by financing institutions (19%), insurance companies (18%) and minor investors (13%). CONTACT: TELEFONICA DE ARGENTINA Tucuman 1, 18th Floor, 1049 Buenos Aires, Argentina Phone: (212) 688-6840 Home Page: http://www.telefonica.com.ar TSBC SOCIEDAD ANONIMA: Liquidates Assets to Pay Debts ----------------------------------------------------- TSBC Sociedad Anonima de Comunicacion will begin liquidating its assets following the bankruptcy pronouncement issued by Court No. 6 of Buenos Aires' civil and commercial tribunal. Infobae reports that the ruling places the company under the supervision of court-appointed trustee Luis Aristides Traverso. The trustee will verify creditors' proofs of claims until March 28. Afterwards, the validated claims will be presented in court as individual reports on May 9. The trustee 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 June 22. The bankruptcy process will end with the disposal company assets in favor of its creditors. CONTACT: Mr. Luis Aristides Traverso, Trustee Reconquista 642 Buenos Aires =========== B R A Z I L =========== BANCO VOTORANTIM: S&P Assigns 'BB-' to $100M MTN ------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB-' foreign- currency long-term credit rating to Banco Votorantim S.A.'s $100 million MTN, which will be converted into Brazilian reais upon payment of interest and principal, to be issued in February 2005 and maturing in three years. "Even though the transaction notional amount and the interest rate are calculated based on the nominal amount converted in Brazilian reais, this is an international issue and the payment of interest and principal will be done offshore in hard currency, and therefore the issue was assigned the same foreign currency rating as that on the bank," said Standard & Poor's credit analyst Tamara Berenholc. 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. 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. The stable outlook on Banco Votorantim's local-currency counterparty credit rating incorporates the economic risks of the Brazilian banking industry and the balance between its good business profile, good management, high profitability, and the potential risks related to the quality of its growing private loan portfolio, especially its consumer loans segment and its government securities. The stable outlook on the foreign currency counterparty credit rating on Banco Votorantim reflects the outlook on the sovereign credit rating on the Federative Republic of Brazil. At current levels, a change in the foreign currency sovereign credit rating would lead to a similar action on the foreign currency rating on Banco Votorantim. Primary Credit Analysts: Daniel Araujo, Sao Paulo (55) 11-5501- 8939; daniel_araujo@standardandpoors.com; Tamara Berenholc, Sao Paulo (55) 11-5501-8950; tamara_berenholc@standardandpoors.com ========= C H I L E ========= COCA COLA EMBONOR: S&P Releases Report on Ratings ------------------------------------------------- ISSUER CREDIT RATING Corporate Credit Rating: BB+/Stable/-- AFFIRMED RATING Senior unsecured debt Local currency NR Senior unsecured debt Foreign currency BB+ Major Rating Factors Strengths: - Leading competitive position in served territories in Chile and Bolivia - Adequate operating performance - Positive industry growth trends in the region - Some degree of expected parent support Weaknesses: - Geographic concentration - Intense competition from lower-priced brands and substitutes - Improving yet somewhat weak financial measures - Relatively high financial leverage Rationale The ratings on Coca Cola Embonor S.A. (Embonor) reflect moderately high leverage for the rating, a low degree of diversification, a significantly diminished critical size, and the challenge of improving its financial performance in spite of the highly competitive nature of the carbonated soft drink market, price-sensitive consumption habits, and a moderate inflexibility to increase final prices to consumers. These factors are offset by the leading position of this Chilean Coca- Cola bottler within its franchised territories in Chile and Bolivia, Coca-Cola Co.'s (KO) 45.5% ownership level (and inclusion of the Coca-Cola name in the bottler's name), and corresponding ongoing (but to a lesser extent) credit enhancement derived from some degree of implied support by KO. Compared to all other Latin American Coca-Cola bottlers, Embonor and the Mexican bottler, Coca-Cola Femsa S.A. de C.V., were the two bottlers whose ratings benefited the most from expected support from KO. Nevertheless, with the significant decline in its volume relative to the overall Coca-Cola system after the sale of the Peruvian operations and lessened strategic importance to the Coca-Cola system, Embonor no longer fulfills Standard & Poor's Ratings Services' criteria for maintaining such high credit enhancement. Nevertheless, the ratings will continue to factor in some lower degree of parent support (comparable to that of Embotelladora Andina S.A.) based on the continued operating importance of Embonor to the Coca-Cola system, given its positioning within the Chilean and Bolivian territories, the remaining high-equity participation of KO in the company's equity, and the fact that it shows the Coca-Cola label on its own corporate name. During the first nine months of 2004, both Embonor's sales and EBITDA generation declined by about 25% as a result of the sale of the Peruvian operations in early 2004. However, excluding the Peruvian operations, EBITDA increased by about 8.9%, compared to the first nine months of 2003 as a result of volume increases in the served areas of about 8% and the higher dollar realized prices in Chile, due to the domestic currency appreciation (that helped offset the exchange rate volatility in Bolivia). Overall, profitability is expected to improve moderately over the medium term based on positive long-term soft drink consumption growth fundamentals in the region, particularly in Chile. Given relatively stable current price levels, the EBITDA margin is expected to move in the range of the 21%-23% level during the next two years (versus 18.3% in the first nine months of 2004), making the bottler more comparable to its industry peers in the region. In addition, lower debt and interest levels, moderate investment plans, and modestly improving cash generation projected for the next two years are expected to translate into more adequate coverage measures of EBITDA interest coverage of 3.5x or funds from operations-to-debt ratio of about 20% by 2006. Stronger cash flows derived from the more consolidated and stable Chilean operations should provide enhanced strength to overcome the potential for unfavorable macroeconomic conditions in Embonor's Bolivian territories, should they develop. Given that the Bolivian operation is very small in terms of contribution to the consolidated entity, we do not factor Bolivian sovereign risks into our rating on Embonor. This approach would be reassessed if growth in more volatile territories is much greater in the future (which seems unlikely at this point) or cash flow from Chilean operations covers less than 1x consolidated interest. Furthermore, excluding EBITDA from Bolivia, we estimate EBITDA from Chile alone would provide a manageable more-than-2x interest coverage under severe stress, in the event that unfavorable volatility temporarily limited cash generation in its Bolivian franchise. Embonor is the second-largest Coca-Cola bottler in Chile, where after selling its Peruvian bottling franchise, it generated about 85% of its cash flow in the first nine months of 2004 (measured as a percentage over consolidated EBITDA), and the largest Coca-Cola bottler in Bolivia, where it has a leading market share of 57.8%. Liquidity We consider Embonor's liquidity position to be somewhat weak. The company's cash reserves as of September 2004 were only $4 million, as the proceeds from the sale of the Peruvian subsidiary were mostly used for the repayment of debt. Nevertheless, because of its adequate position within the Chilean market and its unique relationship with KO, Embonor enjoys very good access to the domestic and global financial markets. In this sense, in December 2004, Embonor obtained a syndicated credit facility for up to $180 million (to be drawn through March 2006) to pay, prepay, and/or refinance most of its existing debt. This new line would result in significant interest savings from 2006 (as the interest rate is based on LIBOR plus a margin compared to the 9.875% rate for the existing bonds) and would improve the debt maturity profile. In addition, Embonor benefits from access to additional committed credit lines totaling approximately $29 million with banks in Chile and Bolivia (which tends to be relatively unusual within Latin American countries). Before the divestiture of the Peruvian operations, we were concerned that negative free operating cash flows would require the reliance on additional debt; however, pro forma for the sale and debt repayment, free cash flow turned positive and is expected to strengthen in the course of the following two years. After the repayment of a substantial portion of the debt denominated in local currency (with the proceeds of the sale of the Peruvian operations), Embonor's exposure to foreign- denominated debt increased to 95% of its total debt, increasing currency mismatch risks, which is partially mitigated by hedges applied by the company. Outlook The stable outlook on Embonor reflects our view that, while challenged by intense competition (in a still volatile but gradually improving macroeconomic environment in most of its territories), Embonor is well positioned to progressively strengthen its positioning within its franchised territories. Rating stability still relies on continued implied operational support by KO, and incorporates expectations for improved financial performance through the strengthening of its internal cash-flow generation during the next two fiscal years. Rating stability also assumes that Embonor will be able to maintain positive free operating cash and a conservative investment plan during that period. Business Description Established in 1962, Embonor is the oldest Coca-Cola bottler in Chile with a single continuous majority ownership structure, which is held by the Vicu�a family. The company's activities consist of the production, commercialization, and distribution of Coca-Cola products under a bottling license agreement, as well as of other non-Coca-Cola brand products, such as mineral and table water, noncarbonated fruit juices, and carbonated soft drinks. Primary Credit Analyst: Ivana Recalde, Buenos Aires (54) 114- 891-2127; ivana_recalde@standardandpoors.com Secondary Credit Analyst: Marta Castelli, Buenos Aires (54) 114- 891-2128; marta_castelli@standardandpoors.com CRT: Parent Teeters on Edge of Bankruptcy ----------------------------------------- Ailing network-equipment vendor SR Telecom Inc. must secure early this week a waiver for breaching the covenants governing the debt of its Chilean subsidiary. Otherwise, it will have to seek bankruptcy protection, says a Dow Jones report. The subsidiary, Communicacion y Telefonia Rural SA (CTR), owed Export Development Canada and Inter-American Development Bank a total principal amount of US$31-million as of Sept. 30. SR Telecom's financial statements for the third quarter stated that EDC and Inter-American have full recourse against SR Telecom for the full amount of the loans if the covenants governing the debt aren't met. The financial report added that SR Telecom and CTR were in breach of some of the covenants, but the lenders had provided a waiver for a one-year period that ended Monday. Without the waiver, all amounts owed by CTR could be declared due and immediately payable. In addition, an acceleration of the loan would trigger a default under SR Telecom's public debentures. SR Telecom is hopeful the lenders would continue to waive the covenants on an annual basis until the balance of the CTR loan outstanding is either repaid or refinanced. =============== C O L O M B I A =============== * REPUBLIC OF COLOMBIA: S&P Affirms Ratings; Outlook Stable ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' long-term foreign currency sovereign credit rating on the Republic of Colombia. At the same time, Standard & Poor's affirmed its 'B' short-term foreign, 'BBB' long-term local, and 'A-3' short-term term local currency sovereign credit ratings on Colombia. The outlook remains stable. "Improved economic prospects, coupled with stronger external indicators, underpin Colombia's ratings," said Standard & Poor's Ratings Services credit analyst Richard Francis. "However, the government's underlying fiscal position remains highly inflexible due to large, legally mandated transfers to local governments and public pension systems, and to the interest on its general government debt. Therefore, further reform in the areas of taxes, transfers, and pensions will likely be needed over the next three years in order to maintain fiscal discipline," he added. Mr. Francis explained that Colombia's general government deficit improved modestly in 2004, to 3.5% of GDP from 3.8% in 2003, mainly as a result of higher-than-expected tax collections, lower-than-expected interest costs (as a result of the appreciation of the Colombian peso), and higher-than-expected local government surpluses. Despite the improvement, the deficit is expected to increase to 3.9% in 2005 as some of these positive trends reverse themselves. As noted, Colombia's fiscal position remains highly inflexible due to a large percentage of fixed expenditure. Furthermore, the outlook for tax reform has diminished as the country enters an electoral cycle with both presidential and legislative elections in 2006. However, improved economic prospects and external indicators will underpin Colombia's rating despite the expected modest fiscal deterioration. Colombia's economy grew by an estimated 3.9% in 2004, and is expected to grow by the same amount in 2005. The country's gross financing gap (current account deficit plus amortization of long-term external debt plus stock of short-term external debt) fell to below 80% of reserves in 2004 from around 100% in 2003, and is expected to remain below 80% in 2005. Net external debt (both private and public) to current account receipts (CAR) has improved due to an increase in international reserves and to a substantial increase in exports and remittances, which has boosted CAR. "If fiscal prospects improve and the debt and interest burdens decline, the ratings could improve," noted Mr. Francis. "On the other hand, significant fiscal slippage or a sharp deterioration in national security could result in renewed downward pressure on the government's creditworthiness," he concluded. Primary Credit Analyst: Richard Francis, New York (1) 212-438- 7348; richard_francis@standardandpoors.com ============= J A M A I C A ============= KAISER ALUMINUM: Court Approves $200M DIP Credit Facility --------------------------------------------------------- Kaiser Aluminum announced that the U.S. Bankruptcy Court for the District of Delaware has approved the company's previously announced new financing arrangement. The new financing arrangement is an agreement with JPMorgan Chase Bank, National Association, J.P. Morgan Securities Inc., and The CIT Group/Business Credit, Inc., under which Kaiser will be provided with a new $200 million Debtor-in-Possession (DIP) credit facility intended to remain in place until the company's emergence from Chapter 11. The new financing arrangement also provides a commitment to Kaiser for a multi-year exit financing in the form of a $200 million revolving credit facility and a fully drawn term loan of up to $50 million upon the company's emergence from Chapter 11. The company closed on the new DIP credit facility Friday. Kaiser President and Chief Executive Officer Jack A. Hockema said, "Approval of the new financing arrangement demonstrates Kaiser's continuing financial stability, and it is another important step as we prepare to file our formal Plan of Reorganization and Disclosure Statement within the next few months." Kaiser Aluminum (OTCBB: KLUCQ) is a leading producer of fabricated aluminum products and owns interests in alumina and primary aluminum. CONTACT: Kaiser Aluminum Corp. 5847 San Felipe Suite 2500 P.O. Box 572887 Houston, TX 77257-2887 USA Phone: 713-267-3777 Web site: http://www.kaiseral.com =========== M E X I C O =========== BALLY TOTAL: S&P Downgrades Ratings, Lowers Outlook --------------------------------------------------- Standard & Poor's Rating Services lowered its ratings on Bally Total Fitness Holding Corp., including lowering the corporate credit rating to 'CCC+' from 'B-'. At the same time, Standard & Poor's changed its outlook on the ratings to negative from developing. Total debt outstanding at Sept. 30, 2004, was $747.7 million. "The rating actions are based on the potential for further delays in the filing of financial statements and on related uncertainties, in light of Bally's Audit Committee's recent findings," said Standard & Poor's credit analyst Andy Liu. The findings included material weaknesses in the company's internal control over financial reporting, and certain accounting errors. Bally's accounting issues create transparency concerns with respect to the company's operating performance and could further complicate an ongoing SEC investigation. Moreover, Standard & Poor's believes that the company may be facing a narrower cushion of compliance with bank covenants. The Audit Committee investigation discovered several accounting errors, and that two former and two current finance executives had engaged in improper conduct. As a result, Bally has terminated its controller and its treasurer and ceased severance payments to the former CEO and the former CFO. The investigation also concluded that the former CEO and CFO were responsible for multiple accounting errors and for creating a culture of aggressive accounting. Bally has reported the investigation results and its actions to the SEC. The current management team seems committed to correct past financial issues. Recently, Bally retained The Blackstone Group to assist in its turnaround efforts. Blackstone will work with Bally on evaluating and refining its business plan, and on developing a long-term financial strategy to improve the company's capital structure and maximize cash flow. Possible actions include the divestiture of noncore assets. The company must still complete its re-audit and file its financial statements by July 2005 to cure indenture violations and avoid possible default. The outlook may be revised if Bally resolves all outstanding accounting issues and allegations, resumes making timely financial filings, and still retains a sufficient covenant cushion to accommodate higher professional fees and a moderate drop in operating performance. Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and nearly 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. Primary Credit Analyst: Andy Liu, New York (1) 212-438-1717; andy_liu@standardandpoors.com CINTRA: ASPA Reiterates Approval for New Sale Scheme ---------------------------------------------------- Reaffirming its support to the planned sale of airline operator Cintra, the Pilots Union (ASPA) said it is quite willing to take part in the process, relates Notimex. ASPA spokesman Jorge Sutherland said that the new sales scheme was a frank and open decision on the part of the board of Cintra. "We are confident that the directives will make the sector more viable and give it more security. We are pleased that the Transportation and Communications Secretariat is finally becoming involved in this process as it should be a fundamental axis in the development of these proposals," stated Mr. Sutherland. "We pilots declare ourselves ready to participate in the decision-making process," added Mr. Sutherland. The board of Cintra recently approved the reorganization and sale of the company's assets in three packages, scratching previous plans to merge the country's two biggest carriers. Under the new scheme, Cintra it will sell leading domestic carrier Aeromexico together with regional unit Aerolitoral. The country's top international carrier, Mexicana, will be sold together with a new low-cost carrier that will offer flights at a 30% discount to normal fares. Mexicana unit AeroCaribe's assets will be included in that sale. Ground services unit Servicios de Apoyo en Tierra will be sold independently. Cintra said it will soon decide how to sell off other assets and what stake, if any, it will retain in them. The new privatization plan is a departure from Cintra's previous intention to merge Aeromexico and Mexicana into one carrier for sale and to combine AeroCaribe and Aerolitoral into another to compete with the larger entity. GRUPO MEXICO: Bear Stearns Cuts Equity Recommendation ----------------------------------------------------- Investment house Bear Stearns downgraded its recommendation on the shares of Mexican mining company Grupo Mexico SA (GMEXICO.MX) to "peer perform" from "outperform," says Dow Jones Newswires. Bear Stearns noted in a research report Friday that Grupo Mexico's turnaround in 2004 "has been huge," with the company tripling its earnings before interest, taxes, depreciation and amortization, or EBITDA, and lowering debt by US$700 million. "The huge improvement in the company has not been missed by the market, with the shares up nearly 100% in 2004 and 400% in two years," the investment bank said. Bear Stearns said it expects the company's performance to remain positive this year, particularly with the planned merger of its Mexican mining operations with Southern Peru Copper Corp. (PCU), of which its owns 54%. However, the bank said the planned merger already appears to be included in the share price, and that the catalyst from rising copper prices may be running out. Grupo Mexico is the world's third largest copper company with operations in Mexico, Peru and the U.S. CONTACT: GRUPO MEXICO S.A. DE C.V. Avenida Baja California 200, Colonia Roma Sur 06760 Mexico, D.F., Mexico Phone: +52-55-5264-7775 Fax: +52-55-5264-7769 Home Page: http://www.gmexico.com TFM: Fitch Affirms Ratings At 'B+' ---------------------------------- Fitch Ratings has affirmed the 'B+' foreign and local currency senior unsecured ratings of TFM, S.A. de C.V. (TFM). The Rating Outlook is Stable. The foreign currency rating applies to the following debt: --US$150 million senior notes due 2007; --US$443.5 million senior notes due 2009; --US$180 million senior notes due 2012. TFM's 'B+' ratings reflect the company's challenging operating environment, high leverage, flat earnings, and tight liquidity. Over the last two years, TFM has operated in a challenging environment characterized by higher fuel costs, a depreciating Mexican peso versus the U.S. dollar and a general shift in manufacturing to China from several countries, including Mexico. This latter factor has resulted in a decline in the shipment of cargo from some sectors served by the company, including automotive. Through the first nine months of 2004, TFM's revenues were flat vis-a-vis those of 2003. TFM remains highly levered. As of Sept. 30, 2004, TFM had about US$1.4 billion in total debt, consisting of US$773 million in unsecured bonds, a US$133 million term loan and an estimated US$495 million of off-balance debt associated with lease obligations. TFM's EBITDAR, which is defined as EBITDA plus the company's annual locomotive and railcar lease payments, is expected to be about US$280 million in 2004 or essentially the same level as in 2003. The ratio of total debt-to-EBITDAR has remained at about 5.0 times (x) throughout the last several years. EBITDAR covered fixed expenses, defined as interest expense plus lease payments, by about 1.6x as of Sept. 30, 2004, and in 2003. TFM's liquidity is poor with only US$11.8 million of cash as Sept. 30, 2004. Fitch believes, that neither the expected transaction to sell Grupo TMM's indirect stake in TFM to Kansas City Southern (KCS) nor the resolution of TFM's value added tax (VAT) claim is likely to provide any cash for debt reduction at TFM. Despite the continued favorable court rulings for TFM's claim to an estimated US$1 billion value added tax refund from the Mexican government, a considerable amount of doubt exists as to whether any portion of TFM's VAT refund will be in the form of cash. The Mexican government holds a PUT option for its 20% equity interest in TFM. Grupo TFM's shareholders, Grupo TMM and KCS, are obligated to acquire the shares that the government holds in TFM if they are not purchased by the public. In one scenario, the government could put its 20% of TFM's shares to Grupo TFM, and Grupo TFM could acquire the Mexican government's 20% stake in TFM. Because the government has lost most of the steps in TFM's VAT negotiation process, it could effectively offset the VAT refund it owes to TFM with the proceeds of the sale of TFM in a cashless transaction as proposed by Grupo TFM's shareholders. Fitch views the proposed transaction in which Grupo TMM would sell its 51% voting interest in Grupo TFM to Kansas City Southern (KCS) as being mildly positive for TFM. The transaction would replace TFM's financially distressed controlling shareholder, Grupo TMM, with KCS, a U.S. entity that has a stronger financial profile but one that is also highly leveraged. In addition, TFM may be able to refinance and borrow at a lower cost in the future under the control of KCS which is a somewhat stronger financially vis-a-vis Grupo TMM. Nevertheless, on a pro forma basis, KCS would continue to be a small railway and about two-thirds of its operating earnings would be generated by the Mexican operations. Fitch's 'B+' ratings incorporate an expectation that the transaction with KCS will be completed as both parties, Grupo TMM and KCS, negotiated an amended acquisition agreement announced in December 2004. The new agreement is similar to the original one, but also includes US$157 million of contingency payments tied to the resolution of the VAT and PUT matters. The amended terms for the sale of Grupo TFM to KCS also include a US$200 million cash payment, much of which is required to be used to reduce debt at the Grupo TMM holding company level; cash available for debt reduction at the TFM operating company level is unlikely to result from the transaction with KCS. If the acquisition does not occur by Oct. 5, 2005, the expiration date of the approval of the transaction by Mexico's Foreign Investment Commission (FIC), nor does the Mexican Federal Competition Commission (FCC) extend its approval of the transaction before April 2005, TFM's ratings would likely be lowered. TFM holds the concession to operate Mexico's northeastern rail lines and is Mexico's largest railroad by volume. The company transports more than 40% of Mexican rail volume and owns more than 2,600 miles of rail track. TFM is the only Mexican carrier to Laredo, Texas, the largest freight exchange point between the United States and Mexico. TFM also serves three of Mexico's four primary seaports and approximately 80% of the company's revenue is related to international freight. In 2003, TFM's revenues were generated from the following main industries: agro- industrial (22%), automotive (19%), chemical (18%) manufacturing and mining (31%) and intermodal (8%). TFM is an operating company 80% owned by Grupo TFM and 20% owned by the Mexican government. Grupo TFM, a holding company, is currently 51% owned by Grupo TMM and 49% owned by Kansas City Southern (KCS). CONTACT: Anita Saha, CFA, +1-312-368-3179, Chicago Joe Bormann CFA, +1-312-368-3349, Chicago Alberto Moreno, +52 81 8335-7179, Mexico MEDIA RELATIONS: Brian Bertsch +1-212-908-0549, New York =============== P A R A G U A Y =============== * PARAGUAY: Posts Highest GDP Growth in 10 Years - IMF ------------------------------------------------------ The following statement was issued Friday in Asuncion by an International Monetary Fund (IMF) staff mission: "A mission from the International Monetary Fund (IMF) visited Asuncion during February 1-11, 2004 to conduct discussions for the fourth review under the Stand-By Arrangement (SBA). The mission was headed by Mr. Alejandro Santos and met with Finance Minister Borda, Central Bank President Gonzalez, senior officials, as well as business and legislative representatives. Considerable progress was made towards completing the review and discussions are expected to continue in the following weeks. "The mission will conduct the final assessment of this review in Washington in coming weeks. Some technical issues on the budget and aspects of the public banking reform agenda are to be resolved. "The main findings of the mission were: Macroeconomic performance was significantly better than anticipated in 2004. Real GDP grew by almost 3 percent in 2004, the highest in almost a decade. Inflation fell below 3 percent in 2004, one of the lowest in the region, and the lowest in Paraguay in more than two decades. The fiscal accounts were in surplus for the first time in a decade and international reserves are at record highs. "The program is broadly on track. The majority of the program targets for end-December 2004 were observed. An important target ahead is the approval of the second-tier public banking law by at least one chamber of Congress. "Progress was made on all elements of the structural reform agenda. In particular, several important banking bills were submitted to Congress, a commission was created to design a restructuring plan for the first-tier public banks, additional external audits for public enterprises were completed, the civil service reform was advanced, and preparations continue to finalize the domestic bond exchange. "The main challenges for 2005 will be to consolidate the macroeconomic gains of the recent past and to continue implementation of the structural reform agenda. An important objective for 2005 will be to maintain fiscal discipline while paying due regard to social spending. On the structural side, while there are many challenges ahead, efforts should be concentrated on implementing the public banking reform agenda. The agreements reached with civil society in designing a development plan with equity are important steps towards the consolidation of a medium-term policy framework. "The mission would like to take this opportunity to thank the authorities and the citizens of Paraguay for their hospitality. We would like to encourage the general public to read the IMF documents related to Paraguay's economic program, which can be found at our website: http://www.imf.org/external/country/pry/index.htm." 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 ============= U R U G U A Y ============= YACYRETA: Argentina, Paraguay Ministers to Meet With Residents -------------------------------------------------------------- In an effort to stop protests that have slowed down upgrades to the Yacyreta hydroelectric project on the border of Argentina and Paraguay, planning ministers from both countries have agreed to meet with the protestors. According to Dow Jones Newswires, the ministers will meet in Buenos Aires on Feb. 25 with the leaders from rural areas that will be affected by upgrades. These leaders include governors of Itapua, Paraguay, and Misiones, Argentina, as well the mayors from the towns of Encarnacion, Cambyreta, Posadas and Garupa. Rural leaders are seeking dislocation compensation and public works projects for their constituents who live in poverty near the dam. Representatives from the World Bank and the Inter- American Development Bank are also slated to attend the meeting. ================= V E N E Z U E L A ================= PDVSA: Meets With Russia, US Heads to Ratify Investment Interest ---------------------------------------------------------------- The CEOs of multinational oil companies - Lukoil, from Russia and ConocoPhillips, from the United States - met with the President of the Bolivarian Republic of Venezuela, Hugo Chavez Frias and the Minister of Energy and Petroleum and CEO of PDVSA, Rafael Ramirez Carreno, to ratify their interest in investing over than $10 billion in oil and gas development projects in Venezuelan for the next five years. This same week the Vice President of the Bolivarian Republic of Venezuela, Jose Vicente Rangel, met with the Chairman and CEO of the French Company Total. In this sense, the Corocoro Development Plan - Corocoro is an oil field operated by ConocoPhillips in the Eastern region of the country- was approved at Miraflores Palace. The production goal of such field for year 2007 is 75,000 crude barrels a day. "Undoubtedly, this project is going to be successful. The 2009 production goal is expected to reach 120,000 barrels a day. This field will be operated in synergy with the Plataforma Deltana Project and the Gran Mariscal de Ayacucho Complex, and consistently with the guidelines providing for the participation of domestic capital and social development plans devised for the region under adjustment of royalty at 16 2/3 percent", said Minister Ramirez Carreno. "We are going to continue with this Project. We are very pleased for the progress recorded by our investments in Venezuela, such as Hamaca and Petrozuata, and feel very enthusiastic about our perspectives with regard to Corocoro field and Plataforma Deltana Project. We likewise ratify our interest in future investment opportunities in Venezuela", said James Mulva, Chairman and CEO of ConocoPhillips, knowing that the expansions and additional volumes produced within the Orinoco Belt are governed by the new Hydrocarbons Organic Law. In addition to the Corocoro field development and Block 2 of Plataforma Deltana, ConocoPhillips also takes part in Petrozuata and Ameriven strategic associations for the development of the Orinoco Heavy-Oil Belt. Likewise, Vaguit Alekperov, Lukoil's President and CEO, said that the company he represents is willing to make great investments in projects dealing with exploration and production, refining and rehabilitation of wells and the development of the Orinoco Oil Belt. All these investments are assessed within the framework of Memorandum of Understanding signed between Lukoil and PDVSA at the Kremlin, as part of President Chavez's visit to the Russian Federation in November 2004. At last, Thierry Desmarest, President and CEO of Total, made known his interest in investing $5 billion in a new development project set for the Orinoco Oil Belt (a matter of discussion with the Venezuelan Minister of Energy and Petroleum) Total participates in the Sincor Strategic Association, the exploitation of the Jusepin oil field and the development of the non-associated gas field Yucal-Placer. CONTACT: Petroleos de Venezuela S.A. Centro Corporativo Torre Este, La Campina Caracas, Venezuela Fax: +58 - 212 - 7084460 Web site: http://www.pdvsa.pdv.com/en/index.html PDVSA: US Expansion Plans Delayed Pending Negotiations ------------------------------------------------------ CITGO's expansion plans, as well as the acquisition of a refinery on behalf of CITGO Asphalt, have been put on hold until certain issues have been fully resolved, Minister of Energy & Petroleum, Rafael Ramirez, told Venezuelan daily El Universal in an interview. Ramirez, who is also the president of Petroleos de Venezuela SA (PDVSA), the parent of U.S.-based CITGO, revealed issues include PDVSA discounts on crude sold to CITGO, tax payments on US soil, dividend repatriation, Venezuelan personnel, etc. Venezuelan energy officials, who are currently scrutinizing PDVSA's International operations, are having conversations with US government officials in order to activate double taxation mechanisms, so CITGO will also declare income tax in Venezuela. Regarding repatriation of dividends, Ramirez said that during 2003, that profit was used to pay off PDVSA's debt, which, at the time, was decreased to US$3,000 million, while in 2004, US$400 million in dividends were repatriated. It was agreed that a local firm would be incorporated into CITGO's audit processes, as well as the transfer of Venezuelan personnel to the United States. Future actions will include investment in the refineries abroad, so that they can process more Venezuelan crude. *********** 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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