/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/050506.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Friday, May 6, 2005, Vol. 6, Issue 89 Headlines A R G E N T I N A ABARCAL S.A.: Court Mandated Liquidation Set AGEA: Fitch Rates Bonds Below Investment Grade ATLANTICA REPUESTOS: Asset Liquidation Required BANCO GALICIA: $345M Bond Program Awaits Board Approval BATERPLAC S.R.L.: Reorganization Concluded BON GOUT: Reorganization Proceeds To Bankruptcy CENTRO DE COMERCIANTES: Court Grants Reorganization Plea CAMUZZI GAS: Bonds Get 'BBB' rating from Fitch DROGUERIA MAGNA: Moody's Reiterates 'C' Rating on $5M of Bonds EAGLE MESSENGER: Claims Verification Deadline Approaches EDITORIAL PERFIL: $25M of Bonds Remain in Default FIRME SEGURIDAD: Court Sets Claims Submission Cut-off IMPSA: Wins $122M Contract to Supply Turbines for Borneo Dam METROGAS: Government Expects Contract Decision Next Month VINTAGE PETROLEUM: Details $64.3M 1Q05 Capex Allocation B R A Z I L BANCO SANTOS: Central Bank to Oversee Liquidation BRASKEM: Net Income, EBITDA Up 1Q05; Net Debt Decreases SADIA: Net Income Falls 22.2% in 1Q05; CEO Steps Down VARIG: In Talks With Portuguese Airline Over Proposal C O S T A R I C A ICE: Awards $113M Garabito Contract to Hitachi H O N D U R A S * HONDURAS: Gets $35M Loan From IDB J A M A I C A AIR JAMAICA: Prime Minister Calls for Renewed Union Talks DYOLL GROUP: Liquidators Question Jamaican Portfolio Sale M E X I C O GRUPO SIMEC: Acquisition, Better Pricing Jumps 2004 Net Sales UNEFON: Shareholders Vote Against Stock Delisting P A R A G U A Y ESSAP: Minister Adamant on Restructuring Without Privitization V E N E Z U E L A PDVSA: Cutting 3,500 Jobs; Unions Forecast Crisis PDVSA: Denies Mass Firings at PDVSA Zulia SIDOR: Changes Structure to Enhance International Presence - - - - - - - - - - ================= A R G E N T I N A ================= ABARCAL S.A.: Court Mandated Liquidation Set -------------------------------------------- Buenos Aires accountant Luis Gabriel Plizzo was assigned trustee for the liquidation of local company Abarcal S.A., relates Infobae. Mr. Plizzo will verify creditors' claims until June 3, the source adds. After that, he will prepare individual reports, which are to be submitted in court on July 15. The submission of the general report should follow on September 9. The city's civil and commercial Court No. 9 holds jurisdiction over the Company's case. Clerk No. 18 assists the court with the wind-up proceedings. CONTACT: Abarcal S.A. Azara 514 Buenos Aires Mr. Luis Gabriel Plizzo, Trustee Roque Saenz Pena 651 Buenos Aires AGEA: Fitch Rates Bonds Below Investment Grade ---------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A., the Argentine arm of international ratings agency Fitch Ratings, assigned below investment grade ratings to certain corporate bonds issued by Arte Grafico Editorial Argentino S.A. (AGEA). The Comision Nacional de Valores, Argentina's securities regulator, listed these bonds at its website along with their corresponding ratings: - US$30.6 million worth of bonds described as "Serie C -ON a Tasa Fija creciente" were rated `BB(arg)'. This particular issue, whose final maturity date is not revealed, is classified as `Series and/or Class'; - US$83.72 million worth of bonds described as "Obligaciones Negociable SERIE B por hasta U$S 83.72 MM (2011)" were rated `BB(arg)'. This particular issue, whose final maturity date is not revealed, is classified as `Series and/or Class'; - US$600 million worth of bonds described as "obligaciones negociables" were rated `CCC(arg)'. These bonds, the maturity of which is unknown, were classified `Program'. All these ratings were given based on the Company's financial standing on December 31, 2004. ATLANTICA REPUESTOS: Asset Liquidation Required ----------------------------------------------- Court No. 6 of Mar del Plata's civil and commercial tribunal has modified the ongoing reorganization of Atlantica Repuestos S.R.L. to a straight liquidation. Infobae reports that local accountant Guillermo Jose Haddad will oversee the "Quiebra" proceedings as the court-appointed trustee. CONTACT: Atlantica Repuestos S.R.L. Avda Colon 5186 Mar del Plata Mr. Guillermo Jose Haddad, Trustee Rawson 2272 Mar del Plata BANCO GALICIA: $345M Bond Program Awaits Board Approval ------------------------------------------------------- Banco de Galicia y Buenos Aires is looking to its board of directors now for authorization to launch a ARS1-billion (US$345 million) bond program. According to Business News Americas, the program, which has a five-year duration, has been approved by shareholders at a recently held meeting. The board may decide to make a first bond issue this year. Proceeds from the upcoming issues will be used to invest in physical assets in Argentina, working capital, refinance liabilities, and to inject capital in subsidiaries or related firms. Galicia is one of the largest private banks in Argentina and the main asset of local financial group Grupo Financiero Galicia. CONTACT: Banco de Galicia y Buenos Aires S.A. Phone: (54-11) 6329-6430 Fax: (54-11) 6329-6494 Web site: www.e-galicia.com BATERPLAC S.R.L.: Reorganization Concluded ------------------------------------------ The settlement plan proposed by Baterplac S.R.L. for its creditors acquired the number of votes necessary for confirmation. As such, the plan has been endorsed by Court No. 2 of Salta's civil and commercial tribunal and will now be implemented by the company. CONTACT: Baterplac S.R.L. Pellegrini 840 Phone: 0387-4234520 BON GOUT: Reorganization Proceeds To Bankruptcy ----------------------------------------------- The reorganization of Bon Gout S.R.L. has progressed into bankruptcy. Argentine news source Infobae relates that Court No. 14 of Lomas de Zamora's civil and commercial tribunal ruled that the Company is "Quiebra Decretada". The report adds that Ms. Mirta C. Ramos serves as trustee in the proceedings. She is scheduled to submit a general report of the case on July 1, 2005. CONTACT: Bon Gout S.R.L. Nuestras Malvinas 192 Monte Grande (Partido de Esteban Echeverria) Ms. Mirta C. Ramos, Trustee Hipolito Irigoyen 7800 Esquina Grijera Banfield CENTRO DE COMERCIANTES: Court Grants Reorganization Plea -------------------------------------------------------- Centro de Comerciantes Minoristas de Salta, a company operating in Salta, begins reorganization proceedings after Court No. 1 of the city's civil and commercial tribunal granted its petition for "concurso preventivo". During the reorganization, the company will be able to negotiate a settlement proposal for its creditors so as to avoid a straight liquidation. According to Argentine news source Infobae, the reorganization will be conducted under the direction of Ms. Maria Dolores Lorente Vigueras, the court-appointed trustee. Ms. Vigueras is scheduled to submit a general report of this case on June 21. CONTACT: Centro de Comerciantes Minoristas de Salta General Guemes 220 Salta CAMUZZI GAS: Bonds Get 'BBB' rating from Fitch ---------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. assigned a 'BBB(arg)' rating to ARP400 million worth of bonds issued by Camuzzi Gas Pampeana S.A. Local securities regulator, Comision Nacional de Valores (CNV), reports that the affected bonds are: - ARP100 million worth of bonds described as "Obligaciones Negociables Clase 2 por hasta $ 100" with undated maturity; and - ARP300 million worth of bonds described as "Programa de ONs por hasta $" with undated maturity. The ratings are based on the Company's financial status as of December 31, 2004. DROGUERIA MAGNA: Moody's Reiterates 'C' Rating on $5M of Bonds -------------------------------------------------------------- Moody's Latin America Calificadora de Riesgo S.A. maintains a 'C' rating on a total of US$5 million of corporate bonds issued by Argentine Company Drogueria Magna S.A. The rating denotes that the bonds possess a risk of nonpayment. The Comision Nacional de Valores (CNV), Argentina's securities regulator, described the affected bonds as "Obligaciones Negociables Simples". The bonds matured in April last year and are classified under "Simple Issue". The issued rating was based on the Company's financial status as of January 31, 2005. EAGLE MESSENGER: Claims Verification Deadline Approaches -------------------------------------------------------- The official submission process of creditor claims for the Eagle Messenger Express S.R.L. bankruptcy case will end on May 24 according to Infobae. Creditors with claims against the bankrupt company must present proof of the liabilities to Mr. Alberto E. Scravaglieri, the court-appointed trustee, before the said deadline. Court No. 4 of Buenos Aires' civil and commercial tribunal handles the company's case with the assistance of Clerk No. 7. The bankruptcy will conclude with the sale of the company's assets. CONTACT: Mr. Alberto E Scravaglieri, Trustee Roque Saenz Pena 651 Buenos Aires EDITORIAL PERFIL: $25M of Bonds Remain in Default ------------------------------------------------- Moody's Latin America Calificadora de Riesgo S.A. maintains a 'D' rating on US$25 million worth of corporate bonds issued by Argentine Company Editorial Perfil S.A., the CNV reveals in its Web site. The Company's finances as of December 31, 2004 led to the action taken by Moody's. The rating, given to bonds that are in payment default, applies to bonds called "Primera serie de Obligaciones Negociables" and were classified under "Series and/or Class." The maturity of the bonds was not disclosed. FIRME SEGURIDAD: Court Sets Claims Submission Cut-off ----------------------------------------------------- Proof of claims from the Firme Seguridad S.A. bankruptcy case must be submitted to trustee Alberto Jose Rotenberg for verifications by July 7. Failure to comply with the submission deadline will mean disqualification from any post-liquidation distributions. Court No. 15 of Buenos Aires' civil and commercial tribunal has jurisdiction over this case. The city's Clerk No. 30 assists the court with the proceedings. CONTACT: Mr. Alberto Jose Rotenberg, Trustee Avda Cordoba 1336 Buenos Aires IMPSA: Wins $122M Contract to Supply Turbines for Borneo Dam ------------------------------------------------------------ Argentine power-plant builder Industrias Metalurgicas Pescarmona S.A.I.C.& F (IMPSA) has secured a US$122 million contract to supply turbines for the huge Bakun hydroelectric dam in Borneo, according to a Wall Street Journal report. Citing people familiar with the operation, the Journal reveals that the contract for four turbines was signed last month after IMPSA and its Malaysian partner, Muhibbah Engineering Bhd, defeated Alstom SA of France in bidding for the deal. IMPSA is one of the largest worldwide providers of integrated energy solutions for hydropower and wind energy projects through the production of capital goods and by investing in power generation projects. The Company's success and reputation is based on its vast international experience in infrastructure projects, especially for power generation. CONTACT: Industrias Metalurgicas Pescarmona S.A. Latin America Mr. Hernan Guinazu Carril Rodriguez Pena 2451 (M5503AHY) Godoy Cruz, Mendoza Argentina. Phone: (+54-261) 4131374 Fax:(+54-261) 4131429 - 4131423 E-mail: guinazu@impsa.com.ar Web site: http://www.impsa.com.ar METROGAS: Government Expects Contract Decision Next Month --------------------------------------------------------- Uniren, the agency for contract negotiations, revealed Wednesday that the government will issue a final decision about a new contract with natural gas distributor Metrogas (MGS) in June, relates Dow Jones Newswires. "Uniren authorities will adopt a final resolution about the (contract) on June 22, 2005," Uniren said in a brief item published in the Official Bulletin The announcement follows the rejection by Metrogas of a utility contract first offered by the Argentine government during a public hearing held late last month. The Company wants a higher rate increase as one of the basic requirements for a sustainable accord. U.K. energy company BG Group PLC (BRG) and Spain's Repsol-YPF (REP) together control a 70% stake in Metrogas through a consortium called Gas Argentino. Metrogas' employees own 10% of the company's shares and the rest float on the stock exchange. CONTACT: MetroGAS S.A. Gregorio Araoz de Lamadrid 1360 C 1267 AAB Buenos Aires, Argentina Phone: 5411-4309-1000 VINTAGE PETROLEUM: Details $64.3M 1Q05 Capex Allocation ------------------------------------------------------- Vintage Petroleum, Inc. (NYSE:VPI) announced Thursday the results and status of its first quarter operational activities and plans for 2005. In the first three months of 2005, the company made capital expenditures totaling $64.3 million, with $54.3 million going to a variety of lower-risk exploitation projects and $10 million spent on potentially higher-impact exploration programs in the United States and Yemen. United States - Exploitation For 2005, a capital budget of $40 million was allocated to U.S. exploitation activities encompassing 20 net exploitation wells to be drilled and approximately 45 well workovers, principally in California, Louisiana and Texas. Activity in the first quarter of 2005 included the continuation of an infill drilling program at the South Gilmer field of East Texas, where three wells were completed in the first quarter and four are currently targeted for completion by the end of June. Three wells are also planned in the field for the third quarter. Expanded drilling programs and workover activity in the Luling, Darst Creek and West Ranch fields in South Central Texas continue, where six wells were completed at the end of the first quarter with work underway to drill six additional wells. Two workovers are in progress with 16 more planned for 2005. In addition, eight new drilling locations have been approved with another ten to fifteen locations under evaluation. In South Louisiana, two workovers have been completed at South Pass 24 with one in progress. At the company's Main Pass 116 complex in the federal waters in the Gulf of Mexico, the company has increased net daily production to 14.5 MMcf from 1.6 MMcf over the past year. Two workovers are also planned to further increase production and the company is evaluating four prospects in the field for 2005. First quarter results from all of the aforementioned efforts have brought over 1,800 net barrels of oil per day and over 7.2 net MMcf of gas per day on to production, making a substantial contribution toward the increased volumes supporting a revised production target for 2005. At the end of the first quarter of 2005, the company had returned to production 4,500 net BOE per day of the total 6,100 net BOE per day of production which was temporarily shut-in due to the mudslides experienced in California during January. To date, a total of 5,500 net BOE per day has been brought back on- line, with the remaining 600 daily BOE expected to be returned to production by the end of June. The company currently estimates that it will complete the repair of mudslide damage for a total cost of approximately $7.5 million, nearly $1 million less than previous estimates. Of this amount, approximately $3.5 million was expensed in the first quarter. United States - Exploration Vintage began 2005 with an inventory of 13 domestic exploration prospects and a capital budget of $64 million. The focus of domestic exploration activity is split between conventional exploration targeting the Texas Gulf Coast and onshore unconventional gas resource plays. Twenty-six million dollars has been allocated to the unconventional gas resource exploration program to drill ten wells during 2005 to test a minimum of four play concepts identified during 2004. In one of these unconventional plays, located in the Palo Duro Basin of Texas, the company has secured a substantial leased and optioned position in excess of 130,000 net acres. One exploratory well was drilled and cored in the first quarter, with a second well following early in the second quarter. Cores from these wells have been sent to a third party lab for analysis and testing that will aid in the formulation of the completion and stimulation program for these wells. Vintage owns working interests in this venture which range between 65 and 75 percent. To date, in excess of 70,000 net acres have been acquired in four other areas of the country with the intention of accumulating additional acreage and drilling test wells later in the year. An additional $38 million has been allocated to conventional exploration activities primarily targeting natural gas that can be brought to production quickly. This endeavor anticipates drilling 11 exploration wells to test prospects primarily located in the onshore and offshore Texas Gulf Coast. Two Miocene prospects were drilled at Matagorda Island 639 and 640 during the second half of 2004 with both encountering apparent pay sands. Vintage holds a 25 percent working interest in this offshore Texas gas prospect and expects these wells to be brought online with the installation of production facilities late in the third quarter. Vintage also controls a 53 percent working interest in acreage in the Nueces Bay on the Texas Gulf Coast, where 3-D seismic covering a 55 square mile area has been acquired and is currently being processed. In this play, Vintage is targeting gas in underdeveloped Frio and Vicksburg sands. Argentina The company's forecasted production growth in 2005 is supported by an increase in Argentina capital spending of 21 percent to $113 million, which targets the drilling of 110 wells. First quarter activity included the drilling of 28 wells, with 13 in progress, and the completion of 25 workovers. Currently there are six drilling rigs and ten workover rigs active on the company's concessions in the San Jorge and Cuyo Basins. Further, a portion of 2005 capital spending is budgeted for the implementation of four waterflood projects which could enhance production in 2006. Two of these projects have been approved and implementation will begin in the second quarter. The company recently drilled and completed three wells on the south flank of the San Jorge Basin with initial net production rates between 880 and 1,950 BOPD, ranking them in the top five percent of the more than 450 wells drilled by the company to date in Argentina. One of the wells was drilled on a new 3-D seismic survey acquired during 2004, thus reconfirming the continuing benefit of using this technology in the selection of drilling locations. Yemen The recently completed An Nagyah #15 is one of three horizontal wells planned for this year in order to complete development of the field. Work began in late 2004 on the construction of a permanent pipeline and central processing facility that is slated to have initial gross daily capacity of 10,000 to 12,000 barrels of oil (5,200 to 6,250 net). The pipeline is scheduled for completion by the end of June and will begin transporting oil at that time, with the central processing facility scheduled for third quarter completion. International Exploration The company is continuing to pursue its exploration program in Block S-1 in Yemen. Approximately $8 million has been allocated to international exploration in 2005, with the majority dedicated to the effort in Yemen. The company drilled one exploration prospect in the Malaki area during the first quarter, but the well was non-productive and plugged. A new exploration well on the company's Wadi Markhah prospect, 31 miles (50 km) to the southeast of An Nagyah, is currently being drilled and should be completed during the second quarter. Also in Yemen, the company has installed two pumping units as part of a long-term test to assess the economic feasibility for further development of the reservoirs at our Harmel discovery. Vintage to Webcast First-Quarter 2005 Conference Call The company's teleconference call to review first quarter 2005 results will be broadcast live on a listen-only basis over the internet on Thursday, May 5, 2005, at 3 p.m. Central time. Interested parties may access the webcast by visiting the Vintage Petroleum, Inc. website at www.vintagepetroleum.com and selecting the microphone icon, or at www.fulldisclosure.com and typing VPI in the ticker search box and selecting "Go". The teleconference may be accessed by dialing 800/362-0571 and providing the call identifier "Vintage" to the operator. The webcast and the accompanying slide presentation will be available for replay at the company's website. An audio replay will be available until May 10, 2005, by dialing 402/220-1123. Forward-Looking Statements This release includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this release, other than statements of historical facts, that address future production, exploitation activities, exploration, operating costs, capital spending, planned drilling levels, proved undeveloped, probable and possible locations, and events or developments that the company expects or believes are forward-looking statements. Although Vintage believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward- looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include oil and gas prices, company realizations, exploitation and exploration successes, actions taken and to be taken by foreign governments as a result of political and economic conditions or other factors, changes in foreign exchange rates and inflation rates, continued availability of capital and financing, and general economic, market or business conditions as well as other risk factors described from time to time in the company's filings with the SEC. The company assumes no obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise. Vintage Petroleum, Inc. is an independent energy company engaged in the acquisition, exploitation and exploration of oil and gas properties and the marketing of natural gas and crude oil. Company headquarters are in Tulsa, Oklahoma, and its common shares are traded on the New York Stock Exchange under the symbol VPI. CONTACT: Vintage Petroleum, Inc. Tulsa Mr. Robert E. Phaneuf Phone: 918-592-0101 Web site: www.vintagepetroleum.com =========== B R A Z I L =========== BANCO SANTOS: Central Bank to Oversee Liquidation ------------------------------------------------- Sao Paulo regional bank, Banco Santos, will be liquidated, the Central Bank announced Wednesday, adding that the bank may file for bankruptcy. Banco Santos, the 20th-largest Brazilian bank by assets, was the first to be taken over by the government since 1999. The bank failed after running short BRL2.2 billion (US$892 million) to cover BRL2.98 billion in liabilities, according to Sergio Cavalheiro, Auditing Director of the central bank. Vanio Aguiar, the head of the central bank's supervision department who has run Banco Santos since its seizure, will be in charge of conducting sales of assets to try to pay back debt. Meanwhile, the central bank will ask prosecutors to investigate irregularities in loans made by Banco Santos. Cavalheiro said central bank authorities found the bank lent some money to companies that had outstanding credit with non-financial units of the Santos group. "We were surprised by these types of operations," Mr. Cavalheiro said. BRASKEM: Net Income, EBITDA Up 1Q05; Net Debt Decreases ------------------------------------------------------- Braskem S.A., leader in the thermoplastic resins segment in Latin America and one of the largest Brazilian privately owned industrial companies, announced today its results for the first quarter of 2005. QUARTER HIGHLIGHTS The capacity increases implemented since 2004, together with higher capacity utilization rates, as well as higher levels of operating efficiency and reliability in the first quarter of 2005, were the principal factors in Braskem recording substantial increases in its production volumes. Polyethylene production (PE) exhibited considerable growth of 19% in the first three months of 2005 compared to the same period in 2004, reflecting adequate operational continuity. In March 2005, a new record for polypropylene (PP) production was achieved, with 45,300 tons produced during that month. At the PVC Unit in the State of Bahia, the highlight was the monthly production of 19.6 thousand tons, a record for the past 28 months. Total sales volumes of PE and PP grew by 23% in the first quarter of 2005. Total sales volumes of PE and PP increased by 24% and 22%, respectively. From 2004 to 2005, international prices charged by producers of thermoplastic resins increased substantially. These price increases were primarily caused by a scenario in which there was reduced supply throughout the world, while at the same time demand continued to increase in different regions globally. Braskem, in turn, was again very successful in the first quarter of 2005 in applying its sales policy and strategy of aligning its prices in the domestic market with international prices. In this manner, the Company achieved substantial increases in the prices of its resins PE, PP and PVC during the first three months of 2005 compared to the same period in 2004. In regards to PVC, the increase in domestic prices more than offset (in terms of revenue) a decrease in total sales volumes during the first quarter of 2005. As a result of its strategic flexibility between the domestic and export markets, high capacity utilization rates during the first quarter of 2005 and higher profitability from exports, Braskem achieved record results in the export markets. Net export revenue reached US$ 261 million in the first three months of 2005, a 96% increase compared to the US$ 133 million recorded during the same period in 2004, corresponding to 23% of the Company's total revenue in the quarter. In addition, Braskem made significant progress in its operational excellence program called "Braskem +". In the first three months of 2005, the Company obtained R$120 million in productivity gains on an annual and recurring basis, out of the R$170 million estimated for all of 2005. This is a good measure of the success and significant acceleration in the implementation of this program, as the target scheduled for the period was R$64 million, also on an annual and recurring basis. Braskem's net revenue was R$ 3,075 million in the first quarter of 2005, a 44% increase compared to net revenue of R$ 2,141 million recorded during the first quarter of 2004. The average price of Naphtha in the ARA region (Amsterdam - Rotterdam - Antwerp) in the first quarter of 2005 was US$ 429/ton. This represented a 33% increase compared to the same period in 2004, when the average price was US$ 323/ ton. It is worth noting that the price of Naphtha reached its highest level historically in mid-March 2005, when it was priced at US$ 498/ton. Nevertheless, Braskem's EBITDA reached R$ 688 million in the first quarter of 2005, a 30% increase compared to EBITDA of R$ 529 million recorded in the first quarter of 2004. This result reflects the excellence of Braskem's business model, as well as the Company's management strategy aimed at creating value through returns that are consistently higher than its cost of capital - and the maximization of the utilization of its operating assets. Net Amortization (amortized debt minus new contacted debt) during the first quarter of 2005 reached a total of R$500 million. Braskem's net debt by the end of the first quarter of 2005 was R$ 3,448 million, an 11% decrease when compared to year-end 2004 (R$ 3,868 million). When expressed in U.S. dollars, Braskem's net debt decreased by 13%, from US$ 1.5 billion during the first three months of 2005 to U.S.$ 1.3 billion. Braskem's level of financial leverage, measured by the Net Debt/EBITDA ratio, decreased by 16% during the first quarter of 2005, from 1.52 on December 31, 2004, to 1.27 on March 31, 2005. The new financings incurred by Braskem in the first quarter of 2005 were contracted at a substantially reduced cost of capital, positively affecting financial expenses during the quarter as well as reducing financial expenses through the end of 2005. Braskem's net income reached R$ 206 million in the first quarter of 2005, increasing by 1,960% compared to the R$ 10 million recorded during the same period in 2004. To view financial statements: http://bankrupt.com/misc/Braskem.pdf CONTACT: Investor Relations Mr. Jose Marcos Treiger Phone: +55-(11)-3443-9529 E-mail: jm.treiger@braskem.com.br Mr. Luiz Henrique Valverde Phone: +55-(11)-3443-9744 E-mail: luiz.valverde@braskem.com.br SADIA: Net Income Falls 22.2% in 1Q05; CEO Steps Down ----------------------------------------------------- SADIA S.A. (BOVESPA: SDIA4; NYSE: SDA; LATIBEX: XSDI), the Brazilian leader in processed foods, poultry and pork, announced Thursday its results for the first quarter of 2005 (1Q05). Operating and financial information on the Company were approved by the Audit Committee, comments are expressed in thousands of Brazilian reais unless stated otherwise, and based on consolidated figures, in accordance with Brazilian corporate law. All comparisons made in this release are related to the same period in 2004 (1Q04). CEO's Letter to Shareholders "Sadia closed out the first quarter of 2005 with operating results within expectations. Export volumes and revenues rose, despite the export-favorable exchange rate in 1Q04. In the domestic market, there was an improvement in processed product sales and a recovery of market share in all categories. Our margins remained affected by the increased costs of certain raw materials at the end of 2004, despite the fact that grain prices have fallen since the first quarter of last year. Operating margins improved since the last quarter of 2004, due to better use of production scale, a greater dilution of fixed costs and the optimization of sales in different channels. Investments are moving forward as planned: construction work at the Uberlandia complex is underway and the company "So Frango", whose upstream merger was approved at the Ordinary General Shareholders' Meeting on April 29, 2005, is already operating at nearly full capacity. After eleven years as Sadia's CEO, I am stepping down to assume the position of Chairman of the Board of Directors. My successor, Gilberto Tomazoni has been with Sadia for 22 years and has ample experience in the industrial and commercial areas, enabling the Company to successfully overcome the challenges ahead." - Walter Fontana Filho - CEO - Sadia S.A. GROSS OPERATING REVENUE Gross operating revenue reached R$ 1,902.6 million, increasing 16.1% over 1Q04. During the period, the balance between domestic sales and exports remained steady at 52% and 48%, respectively. The volume was 22.3% higher, representing around 5 times the expected growth for the Brazilian and world GDP in 2005. Domestic demand continued to rise, slowly but consistently, especially within traditional items. The recovery of economic activity in the country has not yet begun to significantly affect consumption of non-durable goods. The 18.4% increase in revenue and the 16.2% increase in volumes is the result of 96.1% higher poultry sales and 10.6% higher processed product sales. Export revenues in 1Q05 rose 13.6% and volumes grew 28.1%, due to increased foreign demand and the recovery of international prices. Foreign sales of all product lines increased, despite the fact that the 1Q04 results were particularly, positively influenced by an exchange rate favorable to exports. DOMESTIC MARKET Sadia posted revenues of R$ 995.2 million - 18.4% higher than in 1Q04. This growth was the result of greater pulverization of distribution channels and an increase in the sale of products more accessible to different income profiles. The processed products line grew 10.6% in terms of sales volumes, and 13.2% in terms of revenues. The optimization of sales in different channels permitted a broadening of the market share of traditional products and an improvement in average prices. Poultry sales were 96.1% higher in terms of volume, and 64.3% higher in revenues. The largest part of poultry production continues to be directed to the export market. The growth of domestic sales in this segment is related to the strategic focus on meeting demand for Sadia-brand fresh poultry cuts and whole birds. Changes in the supply of poultry to the domestic market resulted in a 16.1% drop in average prices, forcing a return to pre-2004 levels. Revenues from the pork segment increased 3.7%. Renewed exports resulted in a 36% drop in domestic pork sales volumes. Reduced domestic supply and an improvement in the mix led to a 61.6% increase in average prices. During the first quarter, Sadia launched nine new products, including chocolate truffle ice cream with almonds and yogurt-crust pot pies with chicken and heart of palm fillings. EXPORT MARKET Export revenues reached R$ 907.4 million - 13.6% higher than 1Q04, with volumes 28.1% higher. This result is justified by declining international prices of processed products and poultry during 2004 and was partially offset by higher pork prices. The poultry line, which represented 74.0% of total exports, recorded volumes 24.8% higher, and revenues 8.6% higher, than in 1Q04. International prices recovered due to a reduction in supply - without exchange rate incentives, non-traditional Brazilian suppliers ceased exporting. Sadia took advantage of this opportunity and occupied part of the market for the supply of whole birds and poultry cuts. The pork segment recorded a 45.2% increase in volumes sold, with revenues rising by 83.9%. An end to Russian restrictions permitted the quick resumption of sales to pre-embargo levels, with average prices 26.6% above those recorded for the same period in 2004, thanks to low supply of the product in that country. Exports of processed products rose 41.6% in 1Q05. Revenues increased 10.7%, due to new customers and the opening of new international channels. The higher level of sales in relation to revenues is due to a change in the mix of this segment during 2004. OPERATING RESULT The net operating result of R$ 1,641.9 million was 15.6% higher than the same period in 2004. It should be pointed out that, in an effort to better reflect the accounting classification of variable, an amount of R$ 21.6 million (R$ 17.4 million in 1Q04) where reclassified from sales expenses to sales deductions. Drought affected crops in the south of Brazil and put pressure on grain prices in 1Q05. Positive signs related to forecasts for the American soy and corn crop continue, thus maintaining international prices at this quarter's levels for the coming quarters. However, the quotes for corn in domestic market are not so optimistic, since there are signs of a reduction in production for the next winter harvest in Brazil. Expectations for 2Q05 are for corn prices to be 10% higher than in 1Q05. The gross margin in 1Q05 was 25.6%, versus 33.7% in 1Q04. After adjustments from the reclassification of net revenues in 4Q04, the gross margin rose 1.7 percentage points in relation to the 23.9% recorded in that quarter. An EBIT figure of R$ 110.9 million was 58.6% higher than in 4Q04 and 49.8% less than in 1Q04. Sales expenses represented 17.5% of net revenues, with a 1.6 points increase over 1Q04. Despite this increase, which resulted from greater expenditures related to storage and shipping, this ratio decreased 0.9 points when compared to 4Q04. The falling trend, however, should continue because of the optimization of logistical operations and the realignment of marketing expenses. FINANCIAL RESULT The reduction in the volatility of financial investments, together with better financing conditions and higher Domestic interest rates paid, permitted a reduction in financial expenses. The financial strategy made it possible for hedge operations to offset negative exchange effects on the operating result, leading the net financial result to be booked as a negative balance of R$ 8.2 million in 1Q05, versus a negative result of R$ 51.7 million in 1Q04. EQUITY PICK-UP An equity pick-up of R$ 4.1 million in 1Q05 was the result of the recognition of gains related to exchange variations over shareholders' equity in foreign subsidiaries. FINAL RESULT Net income was R$ 100.6 million, falling 22.2% in relation to 1Q04. EBITDA reached R$ 144.7 million - 46.1% less than in 1Q04. Compared to last quarter, however, there was an increase of 22.4%. The EBITDA margin also rose, from 6.9% (4Q04), to 8.8% (1Q05). From January to March of 2004, this indicator represented 18.9% of net revenues. CAPITAL STRUCTURE At the close of 1Q05, Sadia's net financial debt was R$ 560.3 million - 32.5% higher than the R$ 422.9 million posted in 1Q04. This is the result of directing R$ 110 million in 1Q05 to the investment program and an increase in activities, which required a corresponding increase in working capital. Net debt reached 29.8% of shareholders' equity (26.2% in 1Q04). In the same period, the ratio of net debt to EBITDA (last twelve months) went from 0.5 to 0.8. CAPITAL EXPENDITURES The Company's investments totaled R$ 110.2 million, versus R$ 47.2 million in 1Q04. Of this amount, 43.1% was allocated to the processed products segment; 44.5% to the poultry segment; 6.8% to the pork segment; and the remaining 5.6% primarily to information technology. For 2005, investments of R$ 500 million are planned. CAPITAL MARKETS AND GENERAL INFORMATION THE SAO PAULO STOCK EXCHANGE (BOVESPA) In the last 12 months, the Company's shares appreciated 6.0%. The average daily trading volume tripled, from R$ 5.5 million to R$ 14.9 million, comparing 1Q04 to 1Q05. Sadia continues to account for the largest share of trading in the Brazilian food sector - 62.6%. Sadia's preferred shares remained evenly distributed among various categories of investors on Bovespa, including those of foreign investors, which help increase liquidity, and individuals and investment clubs. THE NEW YORK STOCK EXCHANGE (NYSE) In the last 12 months, Sadia's Level II ADR's appreciated 10.7%. The daily, average trading volume of Sadia ADR's on the NYSE during 1Q05 was US$ 544.1 thousand, versus US$ 265.2 thousand in 1Q04. This amount represented 8.9% of all Sadia preferred shared traded during the period. HIGHLIGHTS Always concerned with the health of its customers and the quality of its products, Sadia has been making adjustments to its manufacturing processes since 2004 to reduce the amount of saturated fat in its products. Excessive consumption of foods rich in saturated fat can lead to higher cholesterol, especially LDL, a bad type of cholesterol which actually lowers levels of good cholesterol (HDL), thereby increasing the risks of heart disease. Today, the entire Qualy line of margarines, together with vegetal cream Sadia Vita, contain zero saturated fat. With this change, Qualy, the most sold margarine in Brazil, has become even healthier without sacrificing its great taste. The Company has been developing a series of social responsibility projects, many of which focus on education and encouraging participation in sports. That's why Sadia is an official sponsor of the Pan-American Games to be held in Rio de Janeiro in 2007, in conjunction with the Brazilian Olympic Committee. With the creation of the Sadia Institute of Sustainability, in 2004, the Company intends to expand its activities related to health and education. Its partnership with the Brazilian Olympic Committee is not just a way to support Brazilian sports, but a means to more fully encourage involvement in sports, education and a healthy diet. In addition to the 2007 Pan-American Games in Rio, Sadia also supports the Brazilian Delegations for the current Olympic qualifying rounds, which end in 2008. Support for the Brazilian Delegations include the 2007 Pan-American Games, the 2006 Winter Olympics in Turin, the South American Games in La Paz, and the 2008 Olympics in Beijing. To view financial statements: http://bankrupt.com/misc/Sadia.pdf About Sadia Sadia S.A. is concentrated in the agro industrial and food processing segments. The Company is a slaughterer and distributor of poultry and pork products, as well as a domestic exporter of poultry. CONTACT: Sadia S.A. Rua Fortunato Ferraz, 659 Vila Anastacio, SP Sao Paulo 05093 Phone: (212) 815-2153 Fax: (212) 571-3050 Web Site: http://www.sadia.com.br VARIG: In Talks With Portuguese Airline Over Proposal ----------------------------------------------------- Debt-ridden Brazilian carrier Varig is reviewing options with Portuguese airline TAP and discussing a formal proposal TAP made two weeks ago. "TAP has delivered a proposal to the Brazilians of Varig, but would not be a buyer of (Varig) capital and this also would not be a merger," said a source in Lisbon, Portugal, who declined to be named. The proposal calls for an operating accord, the source said. Portuguese Prime Minister Jose Socrates confirmed the state- owned Portuguese carrier is negotiating with Varig, but said no deal is imminent for a combination that would join two airlines with overlapping routes between South America and Europe. Talks between Varig and TAP "are still just talks and the negotiations are at an early stage, far from a final deal," Socrates told reporters in Lisbon. Varig has negative book value of about BRL6.5 billion (USD$2.6 billion), but healthy revenue. The government wants it to settle on a restructuring plan as soon as this week, but Varig's complicated shareholder structure has so far impeded its sale. The nonprofit Rubem Berta Foundation representing employees has an 87% stake in the airline and has repeatedly rejected efforts in recent years to force it to relinquish control. But Brazilian government officials, after floating the idea of a state takeover of Varig in December to save the airline from going out of business, now say they firmly support a market solution for its troubles. CONTACT: VARIG (Viacao Aerea Rio-Grandense, S.A.) Rua 18 de Novembro No. 800, Sao Joao 90240-040 Porto Alegre, Rio Grande do Sul, Brazil Phone: (51) 358-7039/7040 (51) 358-7010/7042 Fax: +55-51-358-7001 Home Page: www.varig.com.br/english/ Contacts: Dorival Ramos Schultz, EVP Finance and CFO E-mail: dorival.schultz@varig.com.br Investor Relations: Av. Almirante Silvio de Noronha, n 365-Bloco "B" - s/458 / Centro Rio de Janeiro, Brazil =================== C O S T A R I C A =================== ICE: Awards $113M Garabito Contract to Hitachi ---------------------------------------------- ICE's Garabito thermo project is finally underway after the state power company awarded the controversial project to Japanese company Hitachi. Hitachi will design and build the 190MW diesel-fired combined cycle plant in Puntarenas province for a contract price of US$113 million, says Business News Americas. The Garabito plant is expected to begin operations by mid 2008. Spanish engineering company Abengoa initially won the tender last year with its US$160 million bid. However, the process ground to halt after Abengoa subsidiary Inabensa Abengoa figured in an alleged payment scandal with former president Miguel Angel Rodriguez. =============== H O N D U R A S =============== * HONDURAS: Gets $35M Loan From IDB ----------------------------------- The Inter-American Development Bank announced Thursday the approval of a $35 million soft loan to Honduras for a national sustainable tourism program designed to promote an industry with strong potential for boosting hard currency inflows, economic growth and employment. The Honduran Tourism Institute will carry out the program, which will finance public sector investments in order to foster a socially and environmentally responsible model of tourism that raises living standards in local communities. Private sector investments will also be encouraged in large projects as well as in microenterprises and small- and medium-size businesses involved with tourism. The program will strengthen and diversify the range of tourism services and products in Honduras, improving its position as a destination for the regional and international markets. The investments will be targeted at the areas with the highest potential for tourism, with the goal of achieving a spillover effect in the rest of the country. The Honduran region of Copan has Mayan archaeological sites comparable to Tikal in Guatemala, Palenque in Chiapas or Chichen Itza in Yucatan. However, due to its limited transportation and hotel infrastructure, Copan receives fewer visitors than the other sites. The program will finance the construction of an airfield in Rio Amarillo, 17 kilometers from Copan, giving tourists an alternative to traveling several hours overland from San Pedro Sula or Guatemala to see its pyramids and temples. An archaeological site at Rio Amarillo will be restored. Administrative buildings and infrastructure for visitors will be erected, as well as a fence around the site's perimeter and a watchtower for sighting forest fires. An access road to Rio Amarillo and the nearby community of La Castellona will be built and the banks of a gully will be strengthened to prevent further erosion of the Mayan site. An electricity network will be installed and the supply of drinking water for local families and untreated water for a coffee washing plant will be improved and expanded. In the Coastal zone, a sun and sand destination that mainly attracts tourists from Honduras and neighboring countries, the program will support the design of a regional plan for public use and environmental improvement of 100 kilometers of beaches on the Caribbean, between the city of Trujillo and the area of Omoa, where a historical fort will be restored. Under the plan, the coast will be zoned to establish areas for public use or restricted access. The environmental conditions and access to 13 kilometers of beaches around the city of Tela and the Garifuna communities of Tornabe and San Juan will be improved. A center for scientific, academic, volunteering and educational tourism will be built near the Pico Bonito national park. The facility, which will be managed by a specialized foundation, will have rooms to board researchers, students and volunteers who come to Honduras to support various projects. The program will also invest in infrastructure for visitors in three protected areas of Tela Bay: the Jeannette Kawas and Punta Izopo national parks and the Lancetilla botanical gardens. In order to encourage private investment in the tourism industry, the program will finance basic infrastructure for the Los Micos development project, which will include two hotels with a total of 400 rooms, 130 villas and an 18-hole golf course. The Honduran state will have a stake in this public-private venture by capitalizing its investments in roads and in drinking water, electricity, sewerage, drainage and refuse disposal systems. The infrastructure will also benefit the nearby communities of Tornabe and Miami. The first phase of Los Micos has an estimated cost of $105 million. More than 80 percent of the total corresponds to hotels and recreation facilities, which will be financed by private sector investors. The program will also establish a fund to promote nationwide participation of small businesses in the tourism industry, in order to build a vital network of suppliers for the sector. The fund will offer matching grants as well as technical assistance. The sustainable tourism program's strategy was broadly consulted with entrepreneurs and local organizations, while surveys were conducted to seek consensus among indigenous and Afro-descendent peoples in the program's areas of influence. The loan is for a 40-year term, with a 10-year grace period. The annual interest rate will be 1 percent during the first decade and 2 percent thereafter. Local counterpart funds will total $5,850,000. ============= J A M A I C A ============= AIR JAMAICA: Prime Minister Calls for Renewed Union Talks --------------------------------------------------------- Jamaica's Prime Minister P J Patterson asked the management of Air Jamaica and its pilots to resume negotiations and work toward concluding an agreement by Thursday, according to the Jamaica Observer. Patterson made the proposal after contract negotiations between both parties collapsed Monday. Talks broke down after the pilots' union learned that Air Jamaica's government-appointed board had decided to lay off its remaining 180 pilots as part of a restructuring plan. Patterson warned that failure of the Air Jamaica management and the union to arrive at the agreement would entail very serious consequences for the future viability of the airline. Air Jamaica is yet to recover from massive financial losses stemming from higher security costs and a slump in passengers in the aftermath of the Sept. 11, 2001, terror attacks in the United States. CONTACT: AIR JAMAICA Corporate Communications Tel: 876-922-3460 ext 4060-5 URL: www.airjamaica.com DYOLL GROUP: Liquidators Question Jamaican Portfolio Sale --------------------------------------------------------- Kenneth Krys and Christopher Stride, the liquidators appointed by a Caymanian court to sell off the assets of Dyoll Insurance Company, have raised doubts about the legality of the sale by Jamaican regulators of Dyoll's Jamaican portfolio. The Jamaica Observer recalls that Jamaica's Financial Services Commission (FSC) appointed forensic auditor Kenneth Tomlinson to manage Dyoll after the Company collapsed earlier this year and subsequently accepted his recommendation to sell the Jamaican portfolio to the Grace, Kennedy subsidiary, Jamaica International Insurance Company (JIIC). Grace, Kennedy, which backed away from an initial plan to buy Dyoll as a going concern, is to pay J$112.3 million in cash for the portfolio and J$472.7 million of unearned premium liabilities. In their latest report, Mssrs. Krys and Stride said they were "exploring whether the temporary manager has acted outside the terms of his appointment in affecting the sales". The basis of their argument was that relevant regulations in the FSC law covering temporary management did not appear to offer such authority. "They (the powers) are limited and there does not appear to be the power of sale," they said. They suggested that under the provision, temporary managers, unless the court extended their stay, could go into a company for a limited duration of 60 days, before either restoring it to its directors, presenting a petition, or proposing a compromise. Besides questioning the legality of the sale, the liquidators are also questioning Tomlinson's proposal to liquidate Dyoll. Mssrs. Krys and Stride said that if such a course of action was followed, representatives from both Jamaica and the Cayman Islands ought to be appointed. "Despite numerous attempts by the JPLs (joint provisional liquidators) to communicate with the JFSC and to offer to establish a cooperative approach to this matter, the only response from the JFSC has been to advise that they are seeking advice from their attorneys and cannot cooperate until legal advice is received," said the liquidators. =========== M E X I C O =========== GRUPO SIMEC: Acquisition, Better Pricing Jumps 2004 Net Sales ------------------------------------------------------------- Grupo Simec, S.A. de C.V. (Amex: SIM) ("Simec") announced Thursday its final audited results of operations for the year ended December 31, 2004. Net sales increased 94% to Ps. 5,683 million in 2004 (including the net sales recorded since August 1, 2004 generated by the newly acquired plants in Apizaco and Cholula of Ps. 1,193 million), compared to Ps. 2,930 million in 2003, primarily due to higher finished product prices and also resulting from higher production levels. Primarily as a result of the foregoing, Simec recorded net income of Ps. 1,406 million in 2004 versus net income of Ps. 308 million in 2003. On September 10, 2004, Simec completed the acquisition of the property, plant and equipment and the inventories, and assumed liabilities associated with seniority premiums of employees of the Mexican steel-making facilities of Industrias Ferricas del Norte, S.A. (Corporacion Sidenor of Spain) located in Apizaco, Tlaxcala and Cholula, Puebla. Simec's total investment in this transaction was approximately U.S. $135 million, funded with internally generated resources of Simec and capital contributions from its parent company Industrias CH, S.A. de C.V. ("ICH") of U.S. $19 million for capital stock to be issued in the second quarter of 2005. Simec began to operate the plants in Apizaco, Tlaxcala and Cholula, Puebla on August 1, 2004, and, as a result, the operations of both plants are reflected in Simec's financial results as of such date. Simec sold 773,297 metric tons of basic steel products during 2004 (including 155,614 tons produced by the newly acquired plants in Apizaco and Cholula), an increase of 23% as compared to 628,243 metric tons in 2003. Exports of basic steel products were 97,126 metric tons in 2004 (including 12,394 tons produced by the newly acquired plants in Apizaco and Cholula) versus 80,744 metric tons in 2003. Additionally, Simec sold 41,832 tons of billet in 2004 as compared to 63,616 tons of billet in 2003. Prices of finished products sold in 2004 increased 63% in real terms versus 2003. Simec's direct cost of sales was Ps. 3,303 million in 2004 (including Ps. 834 million relating to the newly acquired plants in Apizaco and Cholula), or 58% of net sales, versus Ps. 1,925 million, or 66% of net sales, for 2003. The average cost of raw materials used to produce steel products increased 45% in real terms in 2004 versus 2003, primarily as a result of significant increases in the price of scrap and certain other raw materials. Indirect manufacturing, selling, general and administrative expenses (including depreciation) were Ps. 571 million during 2004 (including Ps. 73 million relating to the newly acquired plants in Apizaco and Cholula), compared to Ps. 488 million in 2003. Simec's operating income increased 250% to Ps. 1,809 million during 2004 (including Ps. 286 million relating to the newly acquired plants in Apizaco and Cholula) from Ps. 517 million in 2003. Operating income was 32% of net sales in 2004 compared to 18% of net sales in 2003. Simec recorded other expense, net, of Ps. 37 million in 2004 compared to other expense, net, of Ps. 31 million in 2003. In addition, Simec recorded a provision for income tax and employee profit sharing of Ps. 330 million in 2004 versus a provision of Ps. 152 million in 2003. Simec recorded financial expense of Ps. 36 million in 2004 compared to financial expense of Ps. 26 million in 2003 as a result of (i) net interest income of Ps. 6 million in 2004 compared to net interest expense of Ps. 13 million in 2003, (ii) an exchange gain of Ps. 4 million in 2004 compared to an exchange loss of Ps. 3 million in 2003, reflecting lower debt levels during 2004 and a decrease of 0.3% in the value of the peso versus the dollar in 2004 compared to a decrease of 9% in the value of the peso versus the dollar in 2003 and (iii) a loss from monetary position of Ps. 46 million in 2004 compared to a loss from monetary position of Ps. 10 million in 2003, reflecting the domestic inflation rate of 5.2% in 2004 compared to the domestic inflation rate of 4% in 2003 and lower debt levels during the 2004 period. At December 31, 2004, Simec's total consolidated debt consisted of approximately $13.9 million of U.S. dollar denominated debt, including indebtedness in respect of a letter of credit of $13.6 million. At December 31, 2003, Simec had outstanding approximately $2 million of U.S. dollar- denominated debt. In March 2004, Simec prepaid the remainder of its outstanding bank debt. At December 31, 2004 Simec owed no debt to ICH. All figures were prepared in accordance with Mexican generally accepted accounting principles and are stated in constant Pesos at December 31, 2004. Simec is a mini-mill steel producer in Mexico and manufactures a broad range of non-flat structural steel products. CONTACT: Grupo Simec, S.A. de C.V. Mr. Adolfo Luna Luna Mr. Jose Flores Flores Phone: +011-52-33-1057-5740 Web site: http://www.prnewswire.com UNEFON: Shareholders Vote Against Stock Delisting ------------------------------------------------- The board of Unefon's decision to delist the mobile operator's shares from the Mexican stock market BMV failed to get the backing of the shareholders, says Reuters. The board moved to delist the Company from the BMV on April 7, citing the stock's poor liquidity. However, the motion was struck down by shareholders at a meeting held April 29. As such, "shares of Unefon will continue to be listed and the purchase and sale of these shares will continue as it has up to now," Unefon said late on Monday. Unefon, which is 46.5%-owned by the country's No. 2 broadcaster TV Azteca (NYSE: TZA), has faced stiff competition from market leader Telcel, owned by America Movil (NYSE: AMX), and the market has become even more competitive since Spain's Telefonica (NYSE: TEM) arrived, now branded Movistar. CONTACT: Unefon Press Relations Mr. Tristan Canales E-mail: tcanales@tvazteca.com.mx Phone: (011-5255) 3099 5786 Unefon Investor Relations Mr. Alan Infante E-mail: ainfante@unefon.com.mx Phone: (011-5255) 8582 5134 VeriSign Media Relations Mr. Leslie Rubin E-mail: lrubin@verisign.com Phone: 650-426-5363 VeriSign Investor Relations Mr. Tom McCallum E-mail: tmccallum@verisign.com Phone: 650-426-3744 =============== P A R A G U A Y =============== ESSAP: Minister Adamant on Restructuring Without Privitization -------------------------------------------------------------- Paraguay's efforts to restructure state water utility Essap to prevent an operative and financial collapse do not include a privatization, Business News Americas reports, citing minister Jose Alberto Alderete. Alderete did say that the utility's transformation and modernization is "irreversible," and seemed to welcome the idea of a public-private setup where the state would maintain control. "The transformation and modernization does not involve privatization. That is categorical. What will be applied? The gamut of alternatives will be given to us by an audit that will come from a consultancy company financed by the World Bank," he said. Essap's current financial obligations, which were taken on by previous administrations, have curtailed needed investment. Alderete warned that the utility must be restructured to assure future sustainability, or else it will collapse. ================= V E N E Z U E L A ================= PDVSA: Cutting 3,500 Jobs; Unions Forecast Crisis ------------------------------------------------- State oil company Petroleos de Venezuela S.A. (PDVSA) has denied rumors that it is cutting around 8,000 to 9,000 workers from its payroll. Energy minister and company president Rafael Ramirez said in a report from Dow Jones Newswires that only about 3,500 workers will lose their jobs when their contract ends. Some 4,000 workers in the Zulia region will see their contracts renewed. PDVSA's decision to retrench workers has sparked condemnation from Maracaibo Oil Trade Union. The union claims that the firing could lead to a crisis in Venezuela's oil industry. CONTACT: Petroleos de Venezuela S.A. Edificio Petroleos de Venezuela Avenida Libertador, La Campina, Apartado 169 Caracas, 1010-A, Venezuela Phone: +58-212-708-4111 Fax: +58-212-708-4661 Web site: http://www.pdvsa.com.ve PDVSA: Denies Mass Firings at PDVSA Zulia ----------------------------------------- Within the framework of an intensive agenda covering meetings with Houston business leaders and media representatives, Venezuelan Energy and Petroleum Minister and President and CEO of PDVSA, Rafael Ramirez Carreno, categorically refuted the information published Tuesday by the Caracas daily El Nacional, to the effect that mass firings had taken place in oil industry operations in the Zulia state (west production area Venezuela). He said that it was "only a case of work contracts expiring' adding that "among these there were some that will be renewed". He also denied that PDVSA was under military control. "Our Armed forces are permanently involved in safeguarding our strategic installations. This is nothing new in PDVSA, and no situation has arisen that should cause alarm regarding the integrity of our oil operations", Minister Ramirez emphasized. US companies confirm their interest in investing in the Venezuelan energy sector: A numerous group of US energy companies confirmed their interest in investing in Venezuelan oil operations during a dinner in Houston held in honor of Minister Ramirez, hosted by ChevronTexaco and ConocoPhillips. The guest of honor, in his address to the distinguished audience pointed out that "we have a considerably strengthened PDVSA, with world revenues in the order of $63 billion and a net income of more that $6 billion". Mr. Ramirez added that the PDVSA 2005-2010 Business Plan contemplated investments for more that $43 billion, and had the aim of reaching a 5 million barrels per day production capacity by the end of the period. He also said that the era of cheap oil was over, and that a hemispheric energy policy that attempted to ignore the participation of Venezuela in the oil equation would simply be unrealistic. The companies hosting the event were represented by David J. O'Reilly, President of ChevronTexaco and Jim Mulva, President of ConocoPhillips, who expressed their pride and satisfaction at their broad and successful participation in the Venezuelan oil industry. Also present on the occasion were James Hackett, President of Anadarko; Steve Farris, President of Apache; Robert Shackouls, President of Burlington Resources; C.P. Cazalot, President of Marathon; David Trice, President of Newfield Exploration; Christopher Ball, President of OXY Business Development; John Hess, President of Amerada Hess; Stacy Schusterman, President of Samsom Investment Company; and Don Evans, former US Commerce Secretary. Among the member of the Venezuelan delegation present were: Bernardo Alvarez, Ambassador of the Bolivarian Republic of Venezuela to the United States ; Luis Vierma, PDVSA Exploration and Production vice-president; PDVSA director and President of CVP Eulogio Del Pino; Felix Rodriguez, president of PDVSA subsidiary CITGO, and Antonio Vincentelli, President of the Venezuelan Petroleum Chamber. The Energy and Petroleum Minister and President and CEO of PDVSA also held a press conference at the PDVSA booth, during the OffShore Technology Conference (OTC), in which he said that "the oil sabotage which took place at the end of 2002 and beginning of 2003 brought about an earthquake and, with it, the genesis of a new company aligned with the Nation's development plans and committed to the government's social programs. These have enabled 1.4 million Venezuelans to learn how to read and write, brought back 700,000 students to high-school education, and attended to the needs of more than 90 million health cases, besides investing in infrastructure and in the promotion of cooperative enterprises". Minister Ramirez availed himself of the occasion to describe a major projects portfolio which includes macro-developments such as offshore oil-field development, the Mariscal Sucre, Deltana Plataforma and Rafael Urdaneta projects, together with the construction of new export refineries in Venezuela, the expansion of refining capacity in the Caribbean Basin and the design of an extended development scheme for the Orinoco Oil Belt through the use of upstream and downstream integrated projects. Ramirez underlined the need for joint efforts and the alignment of interests of producing countries, private oil companies and customers, with the aim of contributing to an international energy balance. In this sense, he said that Venezuela is carrying out important efforts in helping achieve Latin American and Caribbean energy integration within the framework of the Petroamerica initiative, while at the same time promoting the creation of a multi-polar world based on the principles of fairness in trading, mutual cooperation, solidarity and complementarity. Finally, Ramirez held private meetings with local businessmen and CITGO senior management. He also chatted with visitors to the PDVSA booth, which featured Venezuela 's international racing driver Milka Duno and her car, which is sponsored by PDVSA through its CITGO subsidiary. SIDOR: Changes Structure to Enhance International Presence ---------------------------------------------------------- Sidor, Venezuela's largest steelmaker Sidor, has modified its statutes to become a corporation, reports Business News Americas. The move is aimed at strengthening the Company's presence in the country and in other international markets. Based in Puerto Ordaz in the eastern state of Bolivar, Sidor is 60%-owned by the Amazonia consortium made up of Mexico's Hylsamex, the Techint group, Brazil's Usiminas and Venezuela's Sivensa. *********** 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. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *