/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/050314.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Monday, March 14, 2005, Vol. 6, Issue 51 Headlines A R G E N T I N A AGUAS ARGENTINAS: French Parent May Relenquish Concession AUSOL: Debt Restructuring Completion Leads to Profits BANCO FRANCES: Announces Details on Credilogros Sale BANCO HIPOTECARIO: Government Seeks Another Delay on BNL Buy CELRED S.R.L.: Court Designates Trustee for Bankruptcy COOPERATIVA DE TRABAJO: Court Approves Bankruptcy Motion GERIATRICO VIVENCIAS: Required Reports Deadline Approaches INGENIERIA DE SERVICIOS: Court Rules Liquidation Required MAKI S.A.: Court Approves Creditor's Bankruptcy Motion MEU BEN S.R.L.: Liquidates Assets to Pay Debts PETROBRAS ENERGIA: Reveals $180M Planned Investment for Neuquen TGS: S&P Releases Ratings Report TRANSPORTE CONTAINER SERVICE: Court Authorizes Plan B E R M U D A TRIMINGHAM: Closes Shop in Bermuda B R A Z I L BANCO BRADESCO: S&P Releases Ratings Report UNIBANCO: Board Endorses 2004 Financial Results C O L O M B I A * COLOMBIA: S&P Releases Report on Ratings E C U A D O R * ECUADOR: World Assists Growth Efforts With $100M Loan J A M A I C A DYOLL INSURANCE: Government Rules Out Bailout JPSCO: Scolded for Poor Service, Faces Ultimatum M E X I C O GRUPO MEXICO: Supports Public Hearing on Asarco Permit HAYES LEMMERZ: Moody's Assigns B2 Rating to Unit's Notes TV AZTECA: Unit Launches Fundacion Azteca America U R U G U A Y COFAC: Set to Reopen Monday V E N E Z U E L A CANTV: Counts on April Rate Increase to Improve Margins PDVSA: To Complete 2003 Financial Report By Month's End SINCOR: Total Gets Authorization to Carry Out Sincor 2 Project - - - - - - - - - - ================= A R G E N T I N A ================= AGUAS ARGENTINAS: French Parent May Relenquish Concession --------------------------------------------------------- Suez SA said Thursday it will pull out of Argentina if the government wants the French company to stop running the Buenos Aires water and sewage operations, relates Dow Jones Newswires. Suez controls Aguas Argentinas, which operates Buenos Aires waterworks under a 30-year contract. "If the Argentine government wants to nationalize (our affiliate), we will leave," Suez Chairman Gerard Mestrallet said at a press conference. Aguas Argentina has been at odds with Argentina's government over utility prices frozen in 2002 to protect consumers from an economic crash. The Suez chairman said his company is increasingly frustrated because the Argentine government hasn't responded to any of the compromises put forward. "We've been extremely patient," said Mr. Mestrallet. He said Suez is keen to enter constructive talks with the government and will stay in Argentina provided a compromise is found. AUSOL: Debt Restructuring Completion Leads to Profits ----------------------------------------------------- Argentine tollroad operator Autopistas del Sol (Ausol) reported positive results for the year 2004 following the completion of its debt restructuring process, reports Business News Americas. In a filing to the country's securities regulator (CNV), the company disclosed a net profit of ARS155 million (US$53.2 million) in 2004, a turnaround from the previous year's loss of ARS12.7 million. Revenues for the period grew 11.8% to ARS143 million while operating profit saw almost no change, closing at ARS40.9 million. Toll proceeds came to ARS143 million, up 12.1% from 2003. Ausol completed early last year an out-of-Court debt restructuring, known in Spanish as an APE. Of Ausol's US$490 million debt burden, creditors representing 99.66% signed onto the deal. The company, which operates 95km of Buenos Aires province's northern access road and 24km of the General Paz avenue, said its efforts are now concentrated on reaching an agreement with the government regarding its concession contract. Ausol is controlled by a private consortium headed by Sideco Americana S.A. (SDA.YY). BANCO FRANCES: Announces Details on Credilogros Sale ---------------------------------------------------- BBVA Banco Frances S.A., through a letter dated March 9, 2005, informed the Bolsa de Comercio de Buenos Aires, Comision Nacional de Valores and the Banco Central de la Republica Argentina that its Board of Director's approved on the said date the sale of the Bank's equity interest in Credilogros Compania Financiera S.A. - that is 69.52% of the capital stock - to "Banco de Servicios y Transacciones S.A." and " Grupo de Servicios y Transacciones S.A.". The aggregate price for the transaction is US$16.9 million; 69.52% of such amount corresponds BBVA Banco Frances' equity share. The price of the transaction is still subject to eventual adjustments resulting from the due diligence process. The bank adds that the transaction is subject to the approval from Central Bank of the Republic of Argentina. CONTACT: BBVA Banco Frances S.A. Reconquista 165-199 Buenos Aires, 1000 Argentina Phone: 54-11-346-4310 Web site: http://www.bancofrances.com.ar BANCO HIPOTECARIO: Government Seeks Another Delay on BNL Buy ------------------------------------------------------------ Argentine mortgage bank Banco Hipotecario said the government is asking its management to delay the acquisition of Banca Nazionale de Lavoro's local assets, relates Dow Jones Newswires. BNL is selling its entire BNL Inversiones Argentinas SA holding to Banco Hipotecario for US$207 million. It will also receive 3.7% of Banco Hipotecario's capital worth another US$25 million. In Thursday's filing with the stock exchange, Banco Hipotecario said that IRSA-Inversiones y Representaciones SA (IRS) received a note from Argentine Finance Secretary Guillermo Nielsen on Wednesday asking for a "new postponement" of the transaction. The government owns 54% of Banco Hipotecario, while IRSA has another 46% and manages the bank. In mid-February, Nielsen had sent a letter to IRSA asking it to push the date from Feb. 21 to no earlier than March 15 so the state would have more time to analyze the transaction. In the letter, Nielsen revealed the government's concerns with the acquisition. The government was concerned about the selection of a general director and a manager for mortgage- backed credit after the transaction; the future business plan; and guidelines for management during the transfer of the shares. The government said that if the state isn't allowed to make a "grounded opinion about the convenience of the operation," it could take some kind of action through its Class A shares of Banco Hipotecario. Nielsen urged Banco Hipotecario to engage in talks "on professional and constructive grounds to preserve the value of Banco Hipoteacrio's shares." Banco Hipotecario didn't specify what new deadline the government requested in its most recent letter. On that date, the bank will sign the final agreement with BNL and pay out 20% of the price. CONTACT: Banco Hipotecario S.A. 151 Reconquista Buenos Aires Argentina Phone: +54 11 4347 5546 Web site: http://www.hipotecario.com.ar CELRED S.R.L.: Court Designates Trustee for Bankruptcy ------------------------------------------------------ Buenos Aires accountant Miryam Lewenbaum was assigned trustee for the bankruptcy of local company Celred S.A., relates Infobae. The trustee closed the verification of creditors claims on March 7. The city's Court No. 6 holds jurisdiction over the Company's case. Clerk No. 12 assists the court with the proceedings. CONTACT: Mr. Miryam Lewenbaum, Trustee Montevideo 666 Buenos Aires COOPERATIVA DE TRABAJO: Court Approves Bankruptcy Motion -------------------------------------------------------- Credical Cooperativa Ltda. successfully sought a court order for the bankruptcy of Cooperativa de Trabajo Rango Ltda. after Court No. 1 of Buenos Aires' civil and commercial tribunal declared the Company "Quiebra," reports La Nacion. The creditor sought for the Company's bankruptcy after the latter failed to pay debts amounting to US$4,495. Clerk No. 1 assists the court on the case that will close with the liquidation of all of its assets. CONTACT: Cooperativa de Trabajo Rango Ltda. Avda. Jose Maria Moreno 1405 Buenos Aires GERIATRICO VIVENCIAS: Required Reports Deadline Approaches ---------------------------------------------------------- The verification of claims for the Geriatrico Vivencias S.R.L. bankruptcy case will end on April 29 according to Infobae. Creditors with claims against the bankrupt company must present proof of the liabilities to Mr. Mauricio Rosenblum, the court- appointed trustee, before the deadline. Court No. 6 of Buenos Aires' civil and commercial tribunal handles the company's case with the assistance of Clerk No. 12. The bankruptcy will conclude with the liquidation of the company's assets to pay its creditors. CONTACT: Mr. Mauricio Rosenblum, Trustee Bartolome Mitre 2296 Buenos Aires INGENIERIA DE SERVICIOS: Court Rules Liquidation Required --------------------------------------------------------- Court No. 14 of Rosario ordered the liquidation of Ingenieria de Servicios Civiles S.R.L. after the company defaulted on its debt obligations, Infobae reveals. Control of the company will be transferred to a court-appointed trustee during the course the liquidation process. CONTACT: Ingenieria de Servicios Civiles S.R.L. Rioja 949 Rosario (Santa Fe) MAKI S.A.: Court Approves Creditor's Bankruptcy Motion ------------------------------------------------------ Court No. 23 of Buenos Aires' civil and commercial tribunal declared Maki S.A. bankrupt, says Clarin. The ruling comes in approval of the bankruptcy petition filed by the Company's creditor, Mundo Seco S.A., for nonpayment of US$589.75 in debt. The city's Clerk No. 46 assists the court on the case that will conclude with the liquidation of the Company's assets. CONTACT: Maki S.A. Arenales 1140 Buenos Aires MEU BEN S.R.L.: Liquidates Assets to Pay Debts ---------------------------------------------- Buenos Aires-based Meu Ben S.R.L. will begin liquidating its assets following the bankruptcy pronouncement issued by Court No. 9 of the city's civil and commercial tribunal, reports Infobae. The ruling places the company under the supervision of court- appointed trustee Cesar Alejandro de Virgilis. The trustee will verify creditors' proofs of claims until June 2. The validated claims will be presented in court as individual reports on August 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 October 11. CONTACT: Mr. Cesar Alejandro de Virgilis, Trustee Avda Presidente Roque Saenz Pena 1119 Buenos Aires PETROBRAS ENERGIA: Reveals $180M Planned Investment for Neuquen --------------------------------------------------------------- Petrobras Energia SA, the main operating unit of Petrobras Energia Participaciones (PZE), plans to invest US$180 million this year in the country's western province of Neuquen, according to an executive of the company. Dow Jones Newswires suggests that the planned investment is bigger than last year's investment of US$130 million. In 2002, the company invested US$40 million amid Argentina's economic crisis. Neuquen "is one of the most important productive areas in Argentina in terms of oil and gas," said Petrobras Energia chief Alberto Guimaraes. TGS: S&P Releases Ratings Report -------------------------------- Rationale The ratings (raBB/Stable) assigned to Transportadora de Gas del Sur S.A. (TGS) reflect the following risks: high regulatory risk in Argentina and future cash-flow generation uncertainties since regulated tariffs have remained frozen in Argentine peso terms since January 2002; timing and final outcome of concession contract renegotiations remain uncertain; still-high leverage after restructuring; partial currency mismatch between revenues (partly in Argentine pesos) and debt service (in U.S. dollars); exposure to the swing of the international prices of liquids coming from natural gas processing; and limited financial flexibility. The above-mentioned risks are partially offset by the following strengths: TGS' unregulated activity has benefited from the devaluation of the Argentine peso, and a favorable maturity schedule after debt restructuring. Debt relief as a result of the conclusion of the restructuring is significant. Although there was no haircut on principal, maturities have been pushed out significantly and are amortizing in line with cash-flow generation capacity. The new debt carries a 5.3% coupon for the six-year series and 7% for the nine-year series, with step-up rates reaching 7.5% in the past year in the case of the six-year series and 10% in the case of the nine-year series. In addition, the nine-year debt bears additional interest rates subject to the company's cash generation. If the current level of capital expenditures is maintained, TGS should be able to face the first six years of resulting interest and amortization with its current generation of approximately $180 million of EBITDA after capital expenditures. In the longer term, the company will need to increase revenues or obtain other sources of refinancing to meet the requirements of a growing debt service profile. Nevertheless, assuming a relatively stable evolution of the U.S. dollar exchange rate, TGS should be able to reduce additional debt in the first years through the cash sweep mechanisms included in the conditions of the restructuring. Despite the expected more favorable maturity schedule, as long as the company does not increase revenues and cash generation, its repayment capacity could be affected, particularly in a potential devaluation scenario of the Argentine peso and high inflation scenario. We consider that the company's future cash- flow generation is somewhat unclear as long as the renegotiation of the concession contracts is not resolved and until a new tariff adjustment mechanism is agreed to reestablish the company's financial and economic balance. We also consider that potential mandated increases in capital expenditures are another form of regulatory risk. Given its current revenue base and capital structure, TGS' future financial performance will also depend on the performance of the international prices of liquids coming from natural gas processing. About 50% of TGS' revenues (50.9% for fiscal 2004) are unregulated and derived from the sale of liquids coming from natural gas processing at the Cerri Complex, located near the city of Bah�a Blanca. Although this U.S. dollar-linked revenue stream became more significant after the devaluation of the peso, TGS' financial profile severely weakened as a result of the government's emergency measures in early 2002. TGS' capital structure significantly improved, due to a reduction of the debt burden (considering the cash payment made as part of the restructuring, equivalent to 11% of the principal amount) and the positive results reported in the past two years. As a consequence, the total debt-to-total capitalization ratio decreased to 55.2% as of Dec. 31, 2004, from 61.2% in 2003. A continuing debt reduction is expected, given the amortization profile of the restructured debt and the limitations to incur additional indebtedness. Nevertheless, the foreign-exchange rate will remain critical for TGS, since the whole debt is still dollar denominated. The company will not face interest rate risk, since all the new debt after restructuring is at fixed step-up rates. TGS is Argentina's largest natural gas transportation company, delivering approximately 61% of the country's total gas consumption. It has a 35-year license to operate Argentina's Southern gas transportation system. Liquidity Although limited, TGS' liquidity position is adequate for the rating category, having significantly improved after the rescheduling of its debt maturities. As of Dec. 31, 2004, TGS had about $113 million in cash and short-term investments, abundantly exceeding its short-term debt. In addition, the new obligations issued contain certain cash-sweep mechanisms and various restrictive covenants, including limitations to issue additional debt, maximum capital expenditures and investments, and restrictions on dividend payments, among others. Nevertheless, these conditions should not jeopardize the company's current liquidity position. In the medium term, TGS' deleveraging should help improve the financial flexibility. Outlook The stable outlook reflects expectations of a strengthening repayment capacity after the improvement in TGS' maturity schedule, and a certain degree of stability in the exchange rate. In addition, the outlook also reflects Standard & Poor's Ratings Services' opinion that the debt restructuring now provides TGS with an adequate window for renegotiating the concession contract without significant financial pressures. In this context, ratings on TGS could benefit from perceived improvements in the country's institutional environment or a renegotiation of the concession contract favorable for the company's cash-flow generation. Nevertheless, ratings could come under pressure if the renegotiation of the concession contract negatively affects TGS' business or financial profile. Primary Credit Analyst: Luciano Gremone, Buenos Aires (54) 11- 4891-2143; luciano_gremone@standardandpoors.com Secondary Credit Analyst: Pablo Lutereau, Buenos Aires (54) 114- 891-2125; pablo_lutereau@standardandpoors.com TRANSPORTE CONTAINER SERVICE: Court Authorizes Plan --------------------------------------------------- Buenos Aires-based Transporte Container Service S.R.L. concluded its reorganization process, according to data released by Infobae on its Web site. The conclusion came after the city's Court No. 13, with assistance from Clerk No. 25, homologated the debt plan signed between the Company and its creditors. ============= B E R M U D A ============= TRIMINGHAM: Closes Shop in Bermuda ---------------------------------- Around 220 Bermudians face unemployment as 163-Year-Old Trimingham Brothers Ltd., the country's oldest retailer, closes its doors one last time at the end of July. The Royal Gazette reported Thursday that the decision to discontinue operations came after rising business costs and the decline in tourist spending made operations unprofitable. Trimingham took over rival HA&E Smith's only a year ago in an effort to expand its costumer base and turn-around its finances. The decision has since been blamed for the stores' slide. Government, however, has assured that it will extend help for the displaced workers. Trimingham's employees can avail of free training programs as well as avail of the dedicated job placement center especially set up at the Government's Training and Employment Services (TES). =========== B R A Z I L =========== BANCO BRADESCO: S&P Releases Ratings Report ------------------------------------------- Rationale The rating on Banco Bradesco S.A. incorporates its exposure to Brazil's economic risk, including its investments in Brazilian government securities through its marketable securities and open-market operations; the decline in the quality of the bank's capital; and the still-high operating expenses when compared to those of its major retail peers. The rating benefits from the bank's large scale and position as leader in several segments of the Brazilian banking sector-which helped the bank present a diversified business profile; its strong franchise; and its adequate earnings power. The rating on Bradesco considers the bank's exposure to Brazil's sovereign risk through its securities portfolio and open-market operations, altogether equivalent to approximately 3.7x (based on consolidated figures) its equity, as well as the challenging operating environment that all banks face in Brazil. Bradesco is the largest private bank in Brazil by total assets, deposits, and loans. The bank's strong business profile has benefited from good diversification and scale of its operations. In addition, the bank has been the leader in almost all its product lines, including universal banking, insurance, and pension plans. As per Standard & Poor's Ratings Services' criteria, there has been a decline in the quality of Bradesco's capital vis-a-vis its peers due to the higher amount of goodwill in its asset base and subordinated debt instruments, when compared to the bank's Tier I capital. Nevertheless, Bradesco's regulatory capital ratio is adequate by local standards, with a capital-to-risk- weighted assets ratio of 16.1% for its consolidated economic financial operations (above the local requirement of 11%). Bradesco's profitability remains at reasonably good levels, with an annualized ROA of 1.7% in 2004. The reduction of interest margins, mainly due to lower average interest rates in the market, was compensated by the bank's efforts to increase fee income generation, the lending growth to segments with higher spreads (individuals and small and midsize companies) and the lower provision needs for the year (helped by the better economic prospect). Nevertheless, the bank presents still-high operating expenses when compared to those of its major retail peers. Bradesco continues to devote its energy to reducing costs, which were delayed also because of its acquisitions. As long as the bank is successful in integrating acquired institutions and platforms, the efficiency ratio (measured by a noninterest expenses-to-revenues ratio of 70% as of December 2004) is expected to improve. The insurance, private pension, and capitalization portfolios' results continue to represent a significant portion of the group's consolidated results. In 2004, the bank increased its lending activities by 15.6% mainly to individuals and small and midsize companies. Recent agreements by Bradesco with midsize banks specialized in payroll discount and consumer finance loans and with retailers should help its strategy to grow lending to individuals by 30% this year. Despite higher growth in its lending portfolio in 2004, Bradesco benefits from adopting well-developed credit policies and procedures, having a diversified portfolio, and creating excess provision for its credit risks. Asset quality ratios have been improving in recent years with a reduction of the nonperforming asset (NPAs; credits classified from E to H)-to- total loans ratio to 5.0% in December 2004 from 6.0% in December 2003. In addition, the NPAs adjusted to charge-offs-to-total loans ratio was 7.3% in December 2004, reduced from 9.3% in December 2003. The bank also maintains an above-market coverage ratio of 131% (as of December 2004), given its strategy to maintain more provisions than required by the regulation. Primary Credit Analyst: Tamara Berenholc, Sao Paulo (55) 11- 5501-8950; tamara_berenholc@standardandpoors.com Secondary Credit Analyst: Milena Zaniboni, Sao Paulo (55) 11- 5501-8945; milena_zaniboni@standardandpoors.com UNIBANCO: Board Endorses 2004 Financial Results ----------------------------------------------- Address And Time: Av. Eusebio Matoso No. 891, 4th floor, in the city of Sao Paulo, State of Sao Paulo, February 16, 2005 at 2:00 p.m. Chairman: Mr. Pedro Sampaio Malan Quorum: More than a half of the elected members Resolution Taken Unanimously By Those Present 1. Analyzed and approved the Balance Sheet related to the year of 2004, as well as the destination of results according to the form proposed by the Board of Officers. 2. The Financial Statements regarding the fiscal year ended in 31st of December of 2004 were also approved, as well as the Management Report provided on this date by the Board of Officers, related to the above mentioned fiscal year, which shall be published jointly with the Independent Auditors' report, in the form provided by law. CONTACT: Uniao de Bancos Brasileiros S.A. & Unibanco Holdings Avenida Eusebio Matoso 891 Sao Paulo, 05423-901 Brazil Phone: 55-3789-8000 Website: http://www.unibanco.com.br =============== C O L O M B I A =============== * COLOMBIA: S&P Releases Report on Ratings ------------------------------------------ Rationale The rating on the Republic of Colombia is based on the country's improving external liquidity and debt position, which is offset by its continued fiscal limitations and ongoing internal conflict. Colombia's 2004-2005 gross financing gap (current account deficit plus amortization of long-term external debt plus stock of short-term external debt) has fallen to less than 80% from about 100% of reserves in 2003. The ratio of net external debt- both private and public-to current account receipts has improved because of an increase in international reserves as well as a substantial increase in exports and remittances, boosting current account receipts. The government faces significant challenges because of its high interest burden (nearly 16% of revenue), the need to increase military expenditure, and greater-than-expected deterioration in pension costs. The administration of President Alvaro Uribe has implemented a plan to contain and defeat the guerrilla and paramilitary groups that engage in drug trafficking, acts of terrorism, extortion, and kidnapping. However, domestic confidence and investment could falter as long as the guerrilla conflict continues. Outlook Improved economic prospects--coupled with stronger external indicators--will underpin the ratings on Colombia over the next two years. However, the government's underlying fiscal position remains highly inflexible because of large, legally mandated transfers to local governments and public pension systems in addition to the interest on its debt. Therefore, further reform in taxes, transfers, and pensions will be needed over the next three years to maintain fiscal discipline. If fiscal prospects improve and the debt and interest burdens decline, the ratings could improve. 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. Primary Credit Analyst: Richard Francis, New York (1) 212-438- 7348; richard_francis@standardandpoors.com ============= E C U A D O R ============= * ECUADOR: World Assists Growth Efforts With $100M Loan ------------------------------------------------------- The World Bank Board of Executive Directors approved Thursday a US$100 million loan to Ecuador to support the Government's reform program for fiscal consolidation, sustainable debt management, and higher economic growth and competitiveness. "This loan supports the Government of Ecuador's commitment to growth and poverty reduction through coordinated economic, social, and governance advances," said Marcelo Giugale, World Bank director for Bolivia, Ecuador, Peru and Venezuela. "Macroeconomic stability and competitive growth are essential to create the fiscal space to finance pro-poor social programs and to sustain Ecuador's economic recovery." The Second Fiscal Consolidation and Competitive Growth Structural Adjustment Loan will support Ecuador's poverty reduction efforts in two ways. First, the loan will help the country maintain its fiscal accounts on a sustainable path and bring its debt sustainability and creditworthiness to levels that should allow Ecuador to regain access to private creditors and international capital markets in 2005. Second, the loan will help Ecuador accelerate economic growth through structural changes aiming to increase productivity and deepen input and output markets, especially the labor market. Specifically, the loan will support the following objectives: - The establishment of a non-discretionary fiscal policy and improve tax administration; - Reverse expansionary spending and improve budget transparency; - Strengthen administration of the public sector expenses; - Improve public debt management and promote a simple and transparent management of the oil revenue fund (FEIREP); - Enable Ecuador to take advantage of trade opportunities through fighting corruption in Customs, promoting competitive pricing and regulatory policies and enhancing labor flexibility. "This operation supports a program that is significantly improving the country's debt management and should allow the country to re-enter the international capital markets in the near future," said Jose R. Lopez-Calix, Project Leader of the Structural Adjustment Loan. The $100 million fixed-spread loan is repayable in 17 years, and includes a five-year grace period. The first phase of the program, which was financed with a World Bank $50 million loan - approved in May 2003 - supported tax reform, budget transparency, development of a government-wide civil service system, and measures to make Ecuador's public debt obligations sustainable. CONTACT: Ms. Lee Morrison Phone:(202) 458-8741 E-mail: Lmorrison1@worldbank.org Ms. Patricia da Camara Phone:(202) 473-4019 E-mail: Pdacamara@worldbank.org Web site: http://www.worldbank.org/ec ============= J A M A I C A ============= DYOLL INSURANCE: Government Rules Out Bailout --------------------------------------------- The government will not bail out bankrupt Dyoll Insurance Company. Finance Minister Omar Davies made this clear on Tuesday, saying any state intervention would be limited to the regulatory obligations of the Financial Services Commission (FSC). The FSC assumed temporary management control of Dyoll on Monday, appointing Kenneth Tomlinson as temporary manager. The takeover came against the background of the devastation wreaked by Hurricane Ivan in the Cayman Islands, last September and the high level of property and motor vehicle insurance claims that have been levelled on companies securing properties in the country. It became clear that Dyoll's capital impairment was far deeper than had been previously thought and that there were no firms waiting to inject new capital into the insurer and its parent firm, Dyoll Group. The FSC said that it had accepted Tomlinson's recommendation that it go along with an offer from GraceKennedy for the purchase of Dyoll's insurance portfolio in Jamaica. GraceKennedy is using its insurance subsidiary, Jamaica International Insurance Company (JIIC), for the deal. "This covers policyholders without claims whose policies will be transferred to JIIC upon completion of this agreement and the required regulatory procedures," said a statement issued by the FSC on behalf of the parties. Tomlinson has indicated that the contracts should be finalized this week. Don Wehby, GraceKennedy's chief financial officer, said that JIIC was prepared to retain all existing Dyoll insurance staff for up to six months "under fixed-term contracts". JPSCO: Scolded for Poor Service, Faces Ultimatum ------------------------------------------------ The city of Kingston in Jamaica has placed a two-week ultimatum for local utilities operator Jamaica Public Service (JPS) to submit a comprehensive plan for repairing the city's public lighting system. City mayor Desmond McKenzie told the Jamaica Gleaner that the Kingston's Corporate Area is suffering from an upswing in criminality because JPS has failed to repair more than 10,000 malfunctioning streetlights. The mayor added that the city could not continue to spend almost $20 million monthly for its services if JPS refuses to address the lighting problem. JPS, for its part, has claimed that it continues with repairs on damaged streetlights in the area. Ms. Winsome Callum, the company's corporate manager, said that they are cooperating with parish councils to ensure effective service. She says that JPS has repaired around 1,000 streetlights in Kingston this year. =========== M E X I C O =========== GRUPO MEXICO: Supports Public Hearing on Asarco Permit ------------------------------------------------------ The ongoing debate about whether a public hearing should be held regarding the operating permit for Asarco's El Paso's smelter is a moot point, according to United Steelworkers of America. A hearing was ordered last year by the Texas Commission on Environmental Quality (TCEQ) but was delayed when Asarco sued the state to prevent the hearing. The company contended that the permit is a simple renewal with no increase in emission limits. The Union says that documents on file with the TCEQ suggest otherwise. "Our investigations of Asarco's air permit uncovered both increases in 'allowable' emission limits and conflicting lists of 'allowable' emission limits of regulated contaminants such as lead, nitrogen oxides and particulate matter. This discovery alone raises enough questions to warrant a hearing," stated Diane Heminway, USWA Environmental Projects Coordinator. The 1992 permit appears to have allowed releases of 117 tons per year of nitrogen oxides; the 2002 renewal will allow 230 tons per year. Furthermore, while federal regulators say that pollution limits in the state and federal permits must be the same, limits for nitrogen oxides in the smelter's 2001 federal air permit are higher than those in the 1992 state permit. State air permits in Texas are typically valid for ten years, while federal air permits, known as a Title V permits, expire in five years. "The fact is, the state permit cannot allow more pollution than the federal permit, yet the public has no way of knowing the real numbers without a full investigation and public disclosure. There are far too many unanswered questions here," said Manny Armenta, USWA Sub-2 Director. Lead emission limits were actually lower in the renewal (7.69 tons per year) than in the federal permit (13.67 tons per year); however, resolving conflicting permit limits will establish whether Asarco violated lead limits for several past consecutive years. USWA Director Terry Bonds noted, "If Asarco has nothing to hide, then why would they fear community involvement? A public hearing would certainly clear the air." CONTACT: United Steelworkers of America Ms. Diane Heminway Environmental Projects Coordinator Phone: 412-562-2519 HAYES LEMMERZ: Moody's Assigns B2 Rating to Unit's Notes -------------------------------------------------------- Moody's Investors Service assigned a B2 rating for the proposed new guaranteed senior unsecured notes of HLI Operating Company, Inc. ("HLI Opco"), an indirect subsidiary of Hayes Lemmerz International, Inc. Half of the net proceeds of the proposed notes will be applied to prepay existing senior secured term loans, with the other half to be used to either augment cash or repay outstanding revolver debt or accounts receivable securitization usage. Moody's additionally downgraded all of the existing ratings for HLI Opco in response to Hayes Lemmerz's weaker-than-anticipated consolidated free cash flow performance since its June 2003 reorganization out of Chapter 11 bankruptcy. Hayes Lemmerz will likely once again realize negative free cash flow generation during the fiscal year ending January 31, 2006 and will therefore have to rely on either its balance sheet cash or liquidity facilities in order to finance a portion of its cash interest obligations during this period. The outlook for HLI Opco's ratings is stable after incorporating Moody's actions above. The following specific rating actions were taken by Moody's: - Assignment of a B2 rating for HLI Operating Company, Inc.'s proposed Euro 120 million guaranteed senior unsecured notes maturing 2012, to be issued under Rule 144A with registration rights; - Downgrade to B2, from B1, of the rating for HLI Operating Company, Inc.'s $162.5 million remaining balance of 10.5% guaranteed senior unsecured notes maturing June 2010 (the original issue amount of $250 million was reduced as a result of an equity clawback executed in conjunction with Hayes Lemmerz's February 2004 initial public equity offering); - Downgrade to B1, from Ba3, of the ratings for HLI Operating Company, Inc.'s approximately $527 million of remaining guaranteed senior secured bank credit facilities, consisting of: - $100 million guaranteed senior secured bank revolving credit facility due June 2008; - $450 million ($427.3 million remaining) guaranteed senior secured bank term loan facility due June 2009 (which term loan will be prepaid by approximately $73 million through application of about half of the net proceeds from the proposed notes offering); - Downgrade to B1, from Ba3, of the senior implied rating; - Downgrade to B3, from B1, of the senior unsecured issuer rating, which rating does not presume the existence of subsidiary guarantees Hayes Lemmerz additionally entered into a three-year $75 million domestic accounts receivable securitization agreement during December 2004. The company is presently negotiating the terms of a $25 million foreign accounts receivable securitization agreement. These unrated off-balance sheet agreements will offset the impact of canceled OEM early pay arrangements (which discounted an average of approximately $35 million of accounts receivable) and also provide some incremental liquidity. A November 2004 amendment to the senior secured credit agreement was executed in order to permit these transactions. Usage under the securitization agreements is not captured as debt for financial covenant purposes. The new rating assignments and rating downgrades reflect Hayes Lemmerz's negligible debt reduction from operating cash flows to date, Moody's expectation that EBIT interest coverage will fall below 1.0x during the fiscal period ending January 2006, and the potential for total debt/EBITDAR leverage to gradually increase from above 3.5x pro forma for the transactions to more than 4.0x should performance fall short of management's base case projections. This leverage ratio captures off-balance sheet obligations for the present value of leases, letters of credit, and accounts receivable securitizations as debt. As a capital- intensive original equipment supplier with end customer exposure to the Big 3 manufacturers globally approximating 45%, Hayes Lemmerz is highly vulnerable to weakened production schedules. Hayes Lemmerz is additionally a major user of various grades of steel, iron, and gas. Moody's believes that the company will realize less-than-full recovery of commodity price increases despite various steps to negotiate customer price increases, maximize recovery from its own scrap, and reduce its cost structure. Hayes Lemmerz's North American operations including Mexico are undergoing an expansion program that is requiring substantial up-front capital investment in low pressure aluminum die casting equipment along with consolidation expenses to eliminate high-cost excess capacity. Hayes Lemmerz is also investing heavily in expansion within low- cost countries in order to reduce overall production costs and additionally take advantage of significant growth trends within these emerging regions. The success of these efforts is highly critical to the company's realization of future performance goals. Hayes Lemmerz was notably excluded from bidding on many new business opportunities during the period the company was in bankruptcy. Much of the new business being booked entails long lead times and is therefore back-end loaded. The company has a significant goal of realizing annual productivity improvements of 6% or more in order to offset customer price-downs, the impact of higher commodity costs, and other volume and mix factors. The ratings and stable outlook are supported by the series of steps recently taken by Hayes Lemmerz to improve its liquidity profile. These include the proposed notes offering to be denominated in Euros, the new accounts receivable securitization agreement, and the amendments to the senior secured credit agreement to permit these transactions and to materially loosen financial covenants and improve effective unused liquidity to about $200 million. In the event that Hayes Lemmerz follows through with the contemplated sales of its commercial highway hub and drum business and also closes a $25 million accounts receivable securitization, liquidity would be further improved. The additional liquidity, partially extended maturities, and creation of a natural currency hedge for a portion of the company's loans enhance Hayes Lemmerz's ability to pursue expansion into lower cost countries. Hayes Lemmerz also continues to maintain #1 or #2 market positions within its key segments globally. The company is additionally investing heavily in incremental low-pressure aluminum die cast capacity with the goal of aggressively seeking awards for higher-margin aluminum products such as larger wheels. These less commodity-oriented products face more limited competition from both traditional and new Chinese competitors. Management has indicated that most existing capacity outside of North America is already near full utilization and thereby generating proportionately stronger margins. Hayes Lemmerz's revenue base is split nearly equally between North America and the rest of the world. This diversification reduces the company's vulnerability to production trends within particular geographic markets. Hayes Lemmerz is also the only global supplier of both steel and aluminum wheels. The company launched more than $375 million of follow-on and conquest business during 2004, and was awarded more than $300 million of gross new business scheduled to launch between 2005 and 2009. Once capacity is further expanded and the company establishes an even more significant presence in lower-cost countries, its new business awards are expected to accelerate at an even faster pace, and its customer base is expected to be further broadened. Moody's would be likely to lower Hayes Lemmerz's ratings or outlook in the event that liquidity deteriorates meaningfully, the company fails to achieve a turnaround of its North American free cash flow performance, steel and other commodity costs continue to rise and cannot be offset through recovery from customers or other means, new business awards are not realized as necessary to fill incremental capacity, or investment in new capacity exceeds expected levels. Substantial improvement in Hayes Lemmerz's free cash flow generation driving net debt reduction in excess of $100 million and a reduction in total debt/EBITDAR leverage closer to 3.0x would be the most likely driver of a positive movement in the company's outlook or ratings. HLI Opco's proposed Euro 120 million of senior unsecured notes due 2012 will be pari passu with its existing 162.5 million of 10.5% guaranteed senior unsecured notes due 2010. These notes will be supported by guarantees from Hayes Lemmerz and from substantially all domestic subsidiaries. The notes will be non- call for four years with the exception of a 35% equity clawback, will contain a change of control provision permitting puts at 101% of principal plus accrued interest, and will have a 30-day grace period for non-payment of interest. Hayes Lemmerz is the largest worldwide producer of aluminum and steel wheels for the light vehicle market, with an approximately 20% market share in both North America and Europe. The company is also a leading provider of steel wheels for the commercial highway market and a leading supplier in the market for suspension, brake and powertrain components. Annual revenues approximate $2.2 billion. TV AZTECA: Unit Launches Fundacion Azteca America ------------------------------------------------- Azteca America, the fastest-growing Hispanic network in the United States and fully owned subsidiary of TV Azteca, S.A. de C.V. (NYSE: TZA; BMV: TVAZTCA; Latibex: XTZA) announced Thursday that it launched Fundacion Azteca America, after the network has reached substantial coverage expansion as has been previously announced. The new foundation is a non-profit organization that seeks to improve the quality of life of members of the US Hispanic community. "By means of our network's expanded coverage, we have an unparalleled vehicle to help on the needs and interests of the community we serve," said Luis J. Echarte, president and CEO of Azteca America. "US Hispanics face enormous educational, healthcare and legal challenges, and as a responsible broadcaster we are committed to give back to the dynamic community that propels Azteca America." Fundacion Azteca America will build on the success in Mexico of Grupo Salinas' Fundacion Azteca, one of the most widely recognized non-profit organizations in Latin America by means of its dedication to improving health, nutrition and education of Mexicans. The new foundation's primary goal is to serve as a bridge between donors and established foundations that support the Hispanic community in the United States. The foundation will replicate the philosophy of Fundacion Azteca of offering tools for self-improvement rather than charity. Consistent with it, Fundacion Azteca America launched yesterday its first media campaign "Vive sin Drogas," which carries a hard-hitting message about the harm that narcotics use can do to our communities. The launch of the foundation was attended by Mr. Echarte and Esteban Moctezuma, President of Fundacion Azteca. Prior to the launch event, Mr. Echarte and Mr. Moctezuma presented the foundation in the Capitol Building to a select group of US Representatives and Senators from both the Democratic and Republican Parties. The group included both Hispanic members of Congress and non-Hispanic members with a strong interest in the Hispanic community. About Azteca America Azteca America is the fastest-growing Hispanic network in the United States and a fully owned subsidiary of TV Azteca, S.A. de C.V. TV Azteca is one of the two largest producers of Spanish language television programming in the world, operating two national television networks in Mexico, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. TV Azteca affiliates also include Todito.com, an Internet portal for North American Spanish speakers. CONTACT: TV Azteca S.A. de C.V. Periferico Sur No. 4121 Col., Fuentes del Pedregal 14141 D.F. Mexico Phone: 52-5-420-1313 ============= U R U G U A Y ============= COFAC: Set to Reopen Monday --------------------------- Uruguay's Finance Minister Danilo Astori expects Cooperativa Nacional de Ahorro y Credito (COFAC) to reopen today, March 14, reports Business News Americas. Astori has presented a plan to the senate finance committee in charge of the case to lobby for parliamentary approval to allow COFAC to seek channels in which to boost its equity levels. COFAC, whose activities were suspended by the Central Bank of Uruguay (BCU) on March 7 due to its insufficient capital position, intends to boost its equity to at least US$30 million with the help of bank associates and the Inter-American Development Bank (IDB). ================= V E N E Z U E L A ================= CANTV: Counts on April Rate Increase to Improve Margins ------------------------------------------------------- Venezuelan communications giant CA Nacional Telefonos de Venezuela (CANTV) hopes to implement an 18 to 20 percent residential rate hike by the end of April if government decides to lift the standing rates freeze in effect since early 2003. CEO Vicente Llatas, however, assured Bloomberg that any impending increase would be pegged on economic indicators. Mr. Llatas added that CANTV would likely raise rates for its non- regulated services if government rejects their rates hike application. CANTV sustained a heavy blow from the rate freeze in the fourth quarter of 2004 when it reported net profit of US$19 million compared with US$42 million a year earlier. CONTACT: Gregorio Tomassi, CFA CANTV Investor Relations Centro Nacional de Telecommunicaciones Avenida Libertador Caracas, Venezuela Phone: 011-58-212-500-1831 Fax: 011-58-212-500-1828 E-mail: invest@cantv.com.ve PDVSA: To Complete 2003 Financial Report By Month's End ------------------------------------------------------- Petroleos de Venezuela (PDVSA) hopes to complete its delayed 2003 financial report for the U.S. Securities and Exchange Commission by the end of March, Dow Jones Newswires reports, citing Eudomario Carruyo, PDVSA's director of finance. The report was originally due nearly a year ago. The Company has blamed the delay to the December 2002-January 2003 oil strike that disrupted its finance department. PDVSA fired more than 18,000 employees in 2003 to break the strike, which was aimed at pushing President Hugo Chavez from office. Among those fired were employees from the Company's financial department. Carruyo said accounting firm KPMG is auditing PdVSA's results for 2003 and 2004. He said PdVSA hopes to deliver its 2004 report to the SEC by the June deadline, but didn't rule out an extension. PDVSA is required to present annual reports to the SEC due to its holdings in the US and outstanding debt. The last time PDVSA filed its results with the SEC was in October 2003, after asking for two extensions on its 2002 results. SINCOR: Total Gets Authorization to Carry Out Sincor 2 Project -------------------------------------------------------------- French oil giant Total has gained authorization from the Venezuelan President Hugo Chavez to proceed with a major project that will double its production in that country. Total is a partner with Petroleos de Venezuela (PDVSA) at the Sincor crude upgrading project in the Orinoco area. Sincor, which also includes Norway's Statoil (STO), processes more than 200,000 barrels a day of heavy crude into 160,000 b/d of marketable synthetic crude. The recent authorization is for Sincor-2, an estimated EUR5- billion (US$6.7 billion) project that's expected to boost Total's production in Venezuela to 400,000 barrels per day. Total invested US$5 billion in Venezuela from 1998 through 2004, mainly in the Sincor project. Total also produces natural gas at the Yucal Placer field. The company plans to invest US$150 million in Venezuela in 2005, mainly at Yucal Placer, but expects outlays to pick up in the coming years as new projects are approved. *********** 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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