/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/050620.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, June 20, 2005, Vol. 6, Issue 120 Headlines A R G E N T I N A ACEROS ZAPLA: Authorities Intervene in Dispute ACTION FANS: Court Orders Liquidation BERSA: Santa Fe Wins Auction, Awaits Central Bank Clearance ERBO S.A.: Debt Payments Halted, Moves to Reorganize NOVA DONNA: Court Appoints Trustee for Reorganization REPSOL YPF: Moody's Upgrades Local Unit's Ratings SAN SALVADOR: Court Designates Trustee for Liquidation B E R M U D A FOSTER WHEELER: Corporate Financing Week Lauds 2004 Debt Deal B O L I V I A AGUAS DEL ILLIMANI: Prepared to Give Up Concession B R A Z I L AES TIETE: Two Major Banks Complete Sale of Minority Stakes PRIMO SCHINCARIOL: Police Arrest Execs on Tax Evasion Charges USIMINAS: Latibex Listing Pending VARIG: Files For Creditor Protection in Brazil, U.S. D O M I N I C A N R E P U B L I C AES DOMINICANA: Andres, Lenders Extend Forbearance Agreement M E X I C O CIE: Concludes MXN1.1 Bln Capital Increase HYLSAMEX: Techint's Acquisition May Pressure Credit Quality INDUSTRIAS UNIDAS: S&P Lowers Ratings to 'B' P A N A M A WILLBROS GROUP: Baron & Budd Files Class Action Lawsuit P A R A G U A Y COPACO: Guarantees No Competition in Rural Areas P E R U * PERU: Paris Club Accepts Offer to Prepay Up to $2B of Debt V E N E Z U E L A PDVSA: Decision on Operative Agreements Saves Venezuela $300M PDVSA: To Increase Crude Output SIVENSA: Wraps Up First Phase of Capital Increase - - - - - - - - ================= A R G E N T I N A ================= ACEROS ZAPLA: Authorities Intervene in Dispute ---------------------------------------------- Officials from the government decided to step into the Aceros Zapla dispute after negotiations between the steel products maker and its striking workers reached an impasse, according to Business News Americas. The officials, including the country's Defense Minister Jose Pampurro and several other legislators, met with workers to offer a solution to their demands. Labor minister Carlos Tomada promised to mediate worker requests to the Company directly. The workers began a strike on June 2 demanding a salary hike of ARS300 (US$104) a month. The Company's offer of a ARS130-hike by June to be upped to ARSP160 by July and to ARS200 by August was rejected by the union. ACTION FANS: Court Orders Liquidation ------------------------------------- Action Fans S.R.L. prepares to wind-up its operations following the bankruptcy pronouncement issued by Court No. 24 of Buenos Aires' civil and commercial tribunal. The declaration effectively prohibits the Company from administering its assets, control of which will be transferred to a court-appointed trustee. Infobae reports that the court appointed Mr. Gabriel T Vulej as trustee. Mr. Vulej will be reviewing creditors' proofs of claim until Aug. 29, 2005. The verified claims will serve as basis for the individual reports to be presented for court approval on Oct. 10, 2005. The trustee will also submit a general report of the case on Nov. 22, 2005. Clerk No. 48 assists the court on this case that will end with the sale of the Company's assets. Proceeds from the sale will be used to repay the Company's debts. CONTACT: Mr. Gabriel T Vulej, Trustee Tucuman 1484 Buenos Aires BERSA: Santa Fe Wins Auction, Awaits Central Bank Clearance ----------------------------------------------------------- Federally-run Banco Nacion announced that the government has chosen local bank Nuevo Banco de Santa Fe to be Banco de Entre Rios' (BERSA) buyer, Business News Americas reports. The decision came despite rival bidder Banco de Santiago del Estero's challenge of the offers made Banco de Santa Fe and another local bank Comafi. Previously, local press reported that Banco de Santiago claimed its rivals' payment guarantees were reportedly made using checks instead of in cash or charged on a central bank account as the tender rules had stipulated. Nevertheless, Santa Fe's bid still needs approval from the central bank. BERSA is likely to remain as the Entre Rios province's financial agent after the sale. French banking giant Credit Agricole left Argentina in the midst of the country's economic and financial crisis in 2002 and left behind three subsidiaries, BERSA, Suquia and Bisel. Banco Nacion took over the banks for the purpose of selling them back to the private sector at a later stage. Suquia was auctioned last year and the Bisel auction could take place this year. In the recent auction for BERSA, Banco de Santa Fe offered ARS172 million (US$59.9mn), surpassing competitors Banco de Santiago del Estero and Comafi's ARS120 million and ARS98 million. ERBO S.A.: Debt Payments Halted, Moves to Reorganize ---------------------------------------------------- Court No. 21 of Buenos Aires' civil and commercial tribunal is studying the request for reorganization submitted by local company Erbo S.A., says Infobae. The report adds that that the Company filed a "Concurso Preventivo" petition after failing to pay its creditors for its debts. The city's Clerk No. 41 assists the court on this case. CONTACT: Erbo S.A. Tucuman 1538 Buenos Aires NOVA DONNA: Court Appoints Trustee for Reorganization ----------------------------------------------------- Nova Donna S.R.L., a company operating in Buenos Aires, is ready to start its reorganization after Court No. 10 appointed Mr. Jose Maria Colace to supervise the proceedings as trustee. Clerk No. 19 assists the court on this case. An Infobae report states that Mr. Colace will verify creditors' claims until Oct. 17, 2005. Afterwards, he will present these claims as individual reports for final review by the court on Nov. 28, 2005. Mr. Colace will also provide the court with a general report pertaining to Nova Donna's reorganization on Feb. 9, 2006. The court has scheduled the informative assembly on Sep. 4, 2006. CONTACT: Nova Donna S.R.L. Avda Libertador 6550 Buenos Aires Mr. Jose Maria Colace, Trustee Avda Cordoba 652 Buenos Aires REPSOL YPF: Moody's Upgrades Local Unit's Ratings ------------------------------------------------- Moody's Investors Service upgraded Thursday the ratings of Spanish oil company Repsol YPF's local subsidiary YPF S.A. Moody's upgraded YPF's senior unsecured rating to Ba3 from B1 and the unit's domestic currency issuer rating to Baa2 from Baa3. YPF's foreign currency issuer rating of Caa1 remained unchanged, as it is constrained by the sovereign ceiling of Argentina. YPF's Corporate Family Rating (formerly known as the senior implied rating) is aligned with the foreign currency issuer rating at Caa1. All ratings now have a stable outlook. Moody's upgrade follows Repsol's ongoing maintenance of a solid financial profile and supportive liquidity, management's stated strategy to broaden the group's asset diversification, sustained strong positions and cash generation from the group's Spanish refining and marketing business, and gradual improvements in Argentina's operating environment, despite ongoing macroeconomic challenges. At the same time, ratings remain constrained by the group's still high, albeit reducing, asset exposure to Argentina, which in 2004 represented 65% of Repsol's total production of 1.17 million barrels of oil equivalent (boe) per day, close to 50% of its 4.9 billion boe in reserves and 48% of the group's EUR 3.97 billion of operating profit. Ratings also remain constrained by Repsol's recently weak reserve replacement, largely the result of the mature nature of its Argentinean reserves, the group's wider exposure to South America, including approximately 25% of total reserves in politically tumultuous Bolivia, and the execution risk attached to some of its growth strategy, which contains a greater reliance on exploration activities. Moody's notes that Repsol's ratings incorporate the group's recently published five-year strategic plan to 2009, which is based on sustaining strong cash generation from its Argentinean operations, while at the same time investing predominantly in Trinidad & Tobago, Algeria, Libya and the Middle East to diversify its asset base. Although some of the group's future reserve growth is scheduled to be derived from higher-risk exploration activities, Moody's takes comfort from the good pipeline of especially LNG-related projects, which should help support Repsol's recently low reserve replacement ratios. Over the next five years, Repsol plans to invest over USD 1.9 billion into Algeria and Libya to increase its net production in the region. Repsol also plans to spend around USD 980 million developing the two-train 14bcm p.a. capacity Persian LNG project in Iran and expects the first train of the Gassi Touil LNG plant in Algeria to be operational by 2009. Train 4 of Repsol's flagship LNG liquefaction asset, Atlantic LNG, is due to come on stream by the end of 2005. Moody's adds that both Repsol YPF's and YPF's financial profiles have continued to improve, with management having further reduced consolidated debt at year-end 2004, and the group's Argentinean subsidiary is now virtually net debt free. This leaves them in a strong financial position to withstand further potential shocks in Argentina, generating sound cash flow to debt and interest coverage and cushioned by robust liquidity. Moody's also factors into its ratings management's aim to maintain solid financial ratios on an ex-Argentina basis in the unlikely event that it should lose access to cash flows from YPF. In Moody's view, both Repsol's financial and business risk profile on an ex-Argentina basis would still justify solid investment grade ratings, given Repsol's strong refining position in Spain, the business's solid cash flows and overall manageable debt levels. Nonetheless, Moody's adds that Repsol's access to YPF's cash flows has been unimpaired throughout the economic crisis in the region. The upgrade of YPF's ratings in particular are supported by the subsidiary's fully integrated profile, its low operating costs, which Moody's expects however to rise in line with sector-wide cost inflation and the appreciation of the peso, and its strong financial profile. Going forward, Moody's views Repsol's revised five year strategy as largely supportive of its ratings, given (1) the efforts to increase geographic diversification from presently high upstream concentration in Argentina, (2) initiatives aimed at improving historically weak reserve replacement and curbing declining production from its mature Argentinean assets, (3) increasing the level of integration, particularly via LNG projects, (4) moderate downstream investments aimed at preserving the cash generation strength of its domestic refining by further improving conversion capacity and (5) maintaining a prudent capital structure with ongoing efforts to reduce debt. Signs of successful execution of Repsol's strategy, together with a further stabilisation of the operating environment in Argentina, could further benefit ratings over the medium term. In addition, Moody's would anticipate Repsol to maintain its retained cash flow (RCF) to net adjusted debt ratio above 30% and funds from operations (FFO) to cover interest 9-10 times, while achieving group-wide through-cycle reserve replacement ratios of more than 100% to consider a further upgrade of Repsol's ratings into the 'A' category. Moody's also expects Repsol to maintain its leverage (including preference shares) within its 35-45% band at all times. Any material acquisitions, none of which are anticipated by Moody's, would likely require equity contributions, as Moody's will expect Repsol to sustain its currently strong debt protection ratios and liquidity in counterbalance of its higher risk business profile. Repsol YPF, headquartered in Madrid, Spain, is a major oil and gas company with a strong downstream presence in Spain and upstream concentration in Argentina through its wholly-owned subsidiary, YPF. In 2004, the group had 4.9 billion boe of proved reserves and produced 1.17 million boe per day of oil and gas and had revenues of EUR 36.16 billion. SAN SALVADOR: Court Designates Trustee for Liquidation ------------------------------------------------------ Buenos Aires accountant Norberto Bonesi was assigned as trustee for the liquidation of local San Salvador S.A.I.C.F. y A., relates Infobae. Mr. Bonesi will verify creditors' claims until Aug. 1, 2005, the source adds. After that, he will prepare the individual reports, which are to be submitted in court on Sep. 12, 2005. The submission of the general report should follow on Oct. 24, 2005. The city's civil and commercial Court No. 12 handles the Company's case. Clerk No. 24 assists the court with the wind-up proceedings. CONTACT: Mr. Norberto Bonesi, Trustee Avda Juan B. Justo 5096 Buenos Aires ============= B E R M U D A ============= FOSTER WHEELER: Corporate Financing Week Lauds 2004 Debt Deal ------------------------------------------------------------- Foster Wheeler Ltd. (Nasdaq:FWLT) announced that its equity-for- debt exchange, successfully completed in 2004, has been named runner-up as "best deal pitch" of the year in Corporate Financing Week's 2005 Rainmaker Awards. The annual Rainmaker Awards are given to the individuals, firms and deals that made the biggest impact on corporate finance in the last 12 months. Foster Wheeler engaged Rothschild, the investment bank, and King & Spalding LLP, a leading international law firm, as advisors for its planned equity-for-debt exchange, which involved negotiations with a number of separate entities, including banks and holders, both domestic and international, of the Company's securities. The deal was successfully concluded in September 2004. Corporate Financing Week lauded the ability of Raymond J. Milchovich, Foster Wheeler's chairman, president and chief executive officer, King & Spalding, and Rothschild, to settle such a variety of difficult issues, saying it "raises the bar for complex restructurings to come." Foster Wheeler Ltd. is a global Company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the refining, upstream oil and gas, LNG and gas-to-liquids, petrochemicals, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. The corporation is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, New Jersey, USA. CONTACT: Foster Wheeler Ltd. Media Contact: Maureen Bingert Phone: 908-730-4444 Investor Contact: John Doyle Phone: 908-730-4270 Other Inquiries: Phone: 908-730-4000 Web site: http://www.fwc.com ============= B O L I V I A ============= AGUAS DEL ILLIMANI: Prepared to Give Up Concession -------------------------------------------------- La Paz water concessionaire Aguas del Illimani (AISA) is not going to fight off an earlier decision by the government to rescind its contract, Business News Americas suggests. In fact, the Company, which is controlled by French water giant Suez, has asked the government to speed up an audit it had ordered to examine the Company's performance under the concession as well as contractual compliance issues in order get clearance to leave the country as soon as possible. Deputy minister for basic services, Eduardo Rojas, said AISA is looking to terminate the contract as soon as possible to avoid having to renew a guarantee bond worth US$20 million. AISA said it will be turning responsibility for water supplies in the city over to a state-owned Semapa, which earlier admitted it does not have the means to maintain the water supply services over anything more than the short term. Moreover, La Paz city and satellite town El Alto say they would not be able to afford to run the service given the high capital input costs required. La Paz and El Alto, together with central government officials, are studying the advantages of a public-private partnership as administrator of the service. The government moved to replace AISA after residents complained about lack of services in parts of the city and water bills tied to the US dollar. =========== B R A Z I L =========== AES TIETE: Two Major Banks Complete Sale of Minority Stakes ----------------------------------------------------------- Sao Paulo's government-owned bank Nossa Caixa and Banco do Estado de Sao Paulo SA (Banespa) have completely divested of their minority stakes in the Brazilian electric power utility AES Tiete. The power company - controlled by the Brasiliana holding company, which is a joint venture between U.S.-based AES Corp. (AES) and Brazil's National Development Bank (BNDES) - revealed in a statement that the banks offered 18.02 million preferred shares and 5.49 million voting shares. The preferred shares were sold at a price of BRL40.00 Brazilian ($1=BRL2.44) per lot of 1,000 shares while the voting shares at a price of BRL36.50 per lot of 1,000. The offer raised BRL921.6 million. The banks, which announced their intention to sell their holdings in AES-Tiete in May, together held a 28% stake in AES Tiete. Credit Suisse First Boston and Banco Santander Brasil coordinated the offer. The shares were sold in Brazil and also to qualified investors in the U.S. under 144A rules. PRIMO SCHINCARIOL: Police Arrest Execs on Tax Evasion Charges ------------------------------------------------------------- Federal Police arrested executives of Primo Schincariol Industria de Cervejas e Refrigerantes SA, the country's second largest brewery, for allegedly participating in a tax evasion scheme that defrauded authorities of BRL1 billion (US$411 million) over the last five years. Arrested were the Company's president, Adriano Schincariol, his brother Alexandre Schincariol and uncle Gilberto Schincariol, two other people from the Schincariol family and two directors of the company. Authorities said "Operation Barley," which mobilized hundreds of federal police and tax officials across 12 states, was their biggest crackdown ever on tax evasion. According to the findings of a 14-month investigation, Schincariol evaded federal and state taxes with the help of distributors by underreporting sales, buying goods illegally and falsifying information. The top executives will be charged with offenses including money laundering, tax evasion, corruption and participating in organized crime. "We believe this organization was very well thought out and very well put together to have committed all these crimes," Sao Paulo Federal Police Superintendent Jose Ivan Lobato said at a news conference. Schincariol issued a statement denying the accusations and saying its books had always been open to tax authorities. The Company claimed it paid BRL1.17 billion in taxes in 2004, compared with MXN688 million in the previous year. USIMINAS: Latibex Listing Pending --------------------------------- USIMINAS - Usinas Siderurgicas de Minas Gerais S/A [USIM3, USIM5, USIM6, USNZY], informs that its Preferred "A" shares, will be traded on Latibex, starting on July 5th. The company's shares will be traded under the XUSI code. Espirito Santo Investment will be the market maker. Currently, USIMINAS is the fourth most traded stock in the Brazilian Stock Market and represents 5.16% of the Ibovespa theoretical portfolio. According to its CEO, Mr. Rinaldo Campos Soares, the company's goal is to get closer to the European financial community. "Once more, USIMINAS confirms its commitment with the international capital market and consolidates itself as one of the biggest players in the world steel sector." On next July 5th, at 11:30 am, Mr. Rinaldo Campos Soares, will participate in the Latibex opening ceremony. Following, Mr. Rinaldo and executives of USIMINAS will give a presentation to investors, analysts and to the press at the Madrid Stock Exchange. On July 6th they will be presenting at Barcelona Stock Exchange. Latibex will reach a total of 34 listed companies from 7 different countries (Argentina, Brazil, Chile, Mexico, Panama, Peru and Porto Rico) thus consolidating itself as the third market for Latin American securities in terms of capitalization. CONTACT: Usinas Siderurgicas Minas Gerais SA Mr. Bruno Seno Phone: +55 (31) 3499-8710 E-mail: brunofusaro@usiminas.com.br VARIG: Files For Creditor Protection in Brazil, U.S. ---------------------------------------------------- Viacao Aerea Rio-Grandense SA (Varig), Brazil's debt-laden flagship airline, filed for bankruptcy protection from creditors in Brazil and the U.S. on Friday. According to Varig's lawyer, Sergio Bermudes, the airline filed for bankruptcy reorganization in the 8th district state business court of Rio de Janeiro, as well as in the Southern District of New York. The airline filed the petition to keep a restructuring plan on track and prevent 11 of its 82 jetliners from being seized by a division of American International Group Inc. (AIG). The ILFC, the aircraft leasing unit of AIG, had given Varig until Friday to return the 11 leased planes because of a lapsed leasing agreement. Due to the filing, the carrier can continue to use the jetliners while a judge mediates details of the airline's rescue plan with creditors, said Bermudes. The legal move came as Varig is trying to negotiate an alliance with Portugal's state-owned airline TAP aimed at preventing the South American carrier from collapsing under a mountain of debt. Varig now has two months to present a recovery plan to creditors under new Brazilian bankruptcy laws, Bermudes said, and will continue operating as usual. "It's not possible for a company of Varig's size to go out of business," he said. Varig, founded 78 years ago, is the first company to seek protection under Brazil's week-old bankruptcy law, said Charles Gruenberg, a bankruptcy lawyer in Sao Paulo. Under the new law, a distressed company is allowed to offer creditors alternative plans to stay in business and pay its debts in a process overseen by a judge. The plan could include restructuring obligations or selling assets to raise cash. The plan must win approval from Varig's creditors, which include the government, banks such as Banco do Brasil SA and Uniao de Bancos Brasileiros SA and other financial institutions including the leasing unit of the American International Group Inc. Varig has US$2.8 billion in balance sheet debt and US$2 billion in debt not included in its balance sheet, according to documents filed to the U.S. court. The carrier has no significant fixed assets, according to court papers in the U.S. All of its aircraft are leased. Varig sought protection in the U.S. to bar creditors there from interfering with restructuring in Brazil. The filing under Section 304 of the U.S. Bankruptcy Code, will enable Varig "to avoid a piecemeal distribution of its assets, prevent substantial litigation costs, and prevent creditors from attaching any assets in the U.S.," airline lawyer Vicente Cervo said in papers filed with the U.S. Bankruptcy Court in New York. The Sao Paulo stock exchange suspended trading on Varig's shares and asked the Company to comment on news reports saying the airline filed for bankruptcy protection. CONTACT: VARIG S.A. (Viacao Aerea Rio-Grandense) Avenida Almirante Silvio de Noronha, 365 Rio de Janeiro, RJ 20021-010 Brazil VICENTE CERVO - FOREIGN REPRESENTATIVE OF VARIG Attorneys for the Foreign Representative: PILLSBURY WINTHROP SHAW PITMAN LLP 1540 Broadway New York, New York 10036-4039 (212) 858-1000 (Phone) (212) 858-1500 (Fax) Rick B. Antonoff (RBA-4158) =================================== D O M I N I C A N R E P U B L I C =================================== AES DOMINICANA: Andres, Lenders Extend Forbearance Agreement ------------------------------------------------------------ As previously announced, Andres and Los Mina, two wholly-owned subsidiaries of AES located in the Dominican Republic, were in default under their US$112 million and US$24 million respective credit facilities. On December 15, 2004, both Andres and Los Mina entered into forbearance agreements with their respective lenders pursuant to which Andres and Los Mina agreed to pay interest when due under the facilities and the lenders agreed not to exercise any remedies under the respective credit agreements. These forbearance agreements expired on June 10, 2005. On June 16, 2005, Andres entered into an agreement with its lenders to extend its forbearance agreement until July 30, 2005. Andres is in negotiations with the lenders under its credit agreement to amend the facility. As of May 31, 2005, the unaudited net assets of Andres were US$311 million. While an extension of the forbearance agreement for Los Mina has not been executed, Los Mina is currently involved in discussions with its lenders. As of May 31, 2005 the unaudited net assets of Los Mina were US$92 million. =========== M E X I C O =========== CIE: Concludes MXN1.1 Bln Capital Increase ------------------------------------------ Entertainment company Corporacion Interamericana de Entretenimiento SA (CIE) completed Wednesday a MXN1.1 billion capital increase via a rights offering, reports Dow Jones Newswires. CIE issued 50 million class B shares at MXN22 a share, the Company revealed, adding, 37.5 million shares were subscribed to by existing shareholders. The Company has received requests for all of the remaining shares not purchased under the rights offering. CIE will use the proceeds to buy Grupo Finaciero Inbursa SA's 25% stake in its unit CIE Las Americas for MXN990 million. Las Americas operates the horse racetrack in Mexico City, as well as the Centro Banamex convention and exhibition center. CIE also revealed that it has completed the placement of US$200 million in 10-year bonds. The proceeds of the transaction will be used to refinance short-term debt and extend the Company's maturity profile. CONTACT: Corporacion Interamericana de Entretenimiento Paseo de las Palmas 1005 Colonia Lomas de Chapultepec 11000 Mexico, D.F., Mexico Phone: +52-55-5201-9000 Fax: +52-55-5201-9401 HYLSAMEX: Techint's Acquisition May Pressure Credit Quality ----------------------------------------------------------- Fitch Ratings believes that the proposed plan by Grupo Techint (Techint) to expand its operations in Latin America via the US$2.3 billion acquisition of the Mexican steel producer Hylsamex S.A. de C.V. (Hylsamex), holds the potential to pressure the credit quality of Techint's current and future operating subsidiaries, in particular, Siderar S.A. (Siderar) and Hylsamex. However, Fitch believes that the transaction could be structured in a way that would allow the operating subsidiaries involved to support moderate increases in their respective debt levels or their indirect debt servicing burden via required dividend payments, and still maintain their current ratings. Fitch expects the transaction will be financed with a combination of debt and equity. Incremental debt is expected to be raised at both the holding and operating company levels, which will likely have a direct or an indirect leveraging impact on Siderar and Hylsamex. Although the additional debt and the expected changes of shareholder structure may not have an immediate impact on the rated entities, Fitch will review the final financing structure to determine if each entity's free cash flow will adequately meet direct and indirect debt servicing requirements consistent with its respective rating level. Hylsa S.A. de C.V. (Hylsa), Hylsamex's operating subsidiary, is rated 'BB+' (mex) on the Mexican national rating scale, with a Positive Rating Outlook; Siderar is rated 'AA' (arg) on the Argentine national rating scale, with a Stable Rating Outlook. Techint will likely raise debt and equity primarily at a new holding company to be created to consolidate its current and future international investments in flat and long steel producers Siderar (Argentina), Hylsamex (Mexico) and Siderurgica del Orinoco S.A. Sidor (Venezuela). Fitch expects excess free cash flow from these operating companies to be used to make dividends payments to the holding company to service any debt obligations incurred at this level. Fitch estimates that each operating entity could potentially be expected to provide annually between US$75 million and US$100 million in funds to support debt service requirements at the holding company level. In April 2005, Siderar distributed US$100 million in dividends. Sidor's recent debt structuring agreement restricts the company's ability to incur additional debt and distribute dividends, except for payments of excess cash to shareholders and creditors according to a specified equation. Together these companies are expected to have an annual production capacity of 12 million tons, sales of US$5 billion and total debt of less than approximately US$1.7 billion. Although Fitch expects debt to be incurred at the holding company level, Fitch does not anticipate that Techint will raise new debt at the Hylsamex level as a result of the proposed acquisition. The total potential indirect debt servicing burden by Hylsamex should be manageable at the current rating level as the company has consolidated debt of approximately US$675 million, cash of US$220 million as of March 31, 2005 and is expected to generate EBITDA of about US$800 million in 2005. As Techint plans to have its Argentine flat steel subsidiary, Siderar, acquire up to 30% of Hylsamex by purchasing shares on the open market, up to approximately US$380 million of related debt may be raised at Siderar. Fitch also believes that since Siderar currently has very low leverage, the additional debt expected to be incurred by Siderar, should still allow the company to maintain a credit profile consistent with its rating. The incremental direct or indirect debt servicing burden by Siderar is viewed to be manageable as the company has essentially no debt, cash of about US$400 million as of March 31, 2005 and is forecasted to generate EBITDA of about US$500 million in 2005. In a separate transaction, Siderar plans to expand its position in Argentina by investing US$55 million of internal funds to purchase two plants from Acindar S.A. (Acindar) with a capacity to produce 140,000 tons of steel pipes. This smaller acquisition and that of Hylsamex, would allow Siderar to enhance its size and geographical diversification, broaden its mix of higher valued-added products and consolidate its position in the local market of Argentina. The proposed acquisition of Hylsamex by Techint should have a minimal effect on the credit profile of Tenaris, the entity that consolidates Techint's steel pipe businesses serving the oil and gas industries. The transaction involves only for Tenaris to exchange its 12.6% stake in Sidor, a Venezuelan steel producer, for shares of the new holding company to be created. In addition, Tenaris will likely buy a steel tube plant, from Acindar for US$28 million. Tenaris is rated 'BBB' on an international scale, with a Stable Rating Outlook. Techint plans to purchase the 42.5% stake in Hylsamex's total capital held by Grupo Alfa, Hylsamex's controlling shareholder. The acquisition will be carried out via Techint's subsidiary, Industrial Investments Inc., the controlling shareholder of Siderar. Techint also plans to acquire the remaining shares of Hylsamex traded on the Mexican stock exchange via public offering to minority shareholders. The price agreed upon with Grupo Alfa places the value for 100% of Hylsamex at US$2.3 billion, including a US$143 million dividend to be paid by Hylsamex. The acquisition is subject to approval by the Mexican regulatory authorities as well as the result of the public offering, which must result in Techint obtaining more than 50% of the Hylsamex's capital. Another separate agreement between Techint and Grupo Alfa involves the acquisition of Grupo Alfa's 10.5% stake in Sidor for US$107 million, which would bring Techint's direct and indirect holdings in Sidor to 47.7%. Grupo Techint, headquartered in Milan and Buenos Aries, operates through more than 30 companies worldwide in the steel, energy, engineering and construction sectors and had consolidated revenues of US$8.5 billion for the financial year ending June 30, 2004. Grupo Alfa holds a 42.5% stake in Hylsamex, a Mexican manufacturer of flat and long steel with an annual production capacity of 3.7 million tons of liquid steel. Siderar, with an annual production capacity of 2.6 million tons of crude steel, is the major producer of flat steel products in the Argentine market. Tenaris is majority-owned by Techint and holds the group's seamless and welded pipe manufacturing companies with combined capacity of 4.1 million tons of tubular steel products primarily for the oil and gas drilling and pipelines. Sidor, with an annual production capacity of 4.4 million tons of crude steel, is the largest producer of flat and long steel products in Venezuela. Acindar has an annual production capacity of 1.4 million tons of crude steel and is the largest producer of long steel products in Argentina. INDUSTRIAS UNIDAS: S&P Lowers Ratings to 'B' -------------------------------------------- Standard & Poor's Ratings Services lowered its long-term local and foreign currency corporate credit ratings on Industrias Unidas S.A. de C.V. (IUSA) to 'B' from 'B+'. The issuer's corporate credit national scale rating was lowered to 'mxBBB-' from 'mxBBB'. The outlook is stable. "The rating action follows IUSA's announcement that it has postponed the syndication of its proposed $300 million senior secured credit facility and reflects our concerns regarding IUSA's liquidity, particularly refinancing risk," said Standard & Poor's credit analyst Jose Coballasi. "The rating action also reflects the weakness of IUSA's financial performance during first-quarter 2005 and expectations of continued weakness during the second quarter." The ratings assigned to IUSA reflect the inherent cyclicality of the construction industry, the company's high leverage, competitive pressure on core products and markets, tight liquidity, and low operational margins. These factors are partially offset by the company's leading market positions in Mexico and the U.S., product mix, and some geographic diversification in the manufacturing and distribution of copper tubing, copper-alloy products, valves, controls, watt-hour meters, wire and cable, and electrical devices. IUSA is one of Mexico's largest diversified industrial companies, offering a large variety of products through integrated manufacturing and distribution operations located principally in Mexico and the U.S. The company's operations are conducted by seven principal business groups: copper tubing, wire and cable, copper alloys, electrical products, watt-hour meters, valves and controls, and diversified assets group. The stable outlook reflects our expectation that IUSA's financial performance will improve modestly at best during the second half of the year. Further weakness in the issuer's financial performance and liquidity could lead to a negative rating action. The successful refinancing of its short-term debt maturities coupled with a sustained recovery in operating margins and key financial ratios could lead to a positive rating action. Primary Credit Analyst(s): Jose Coballasi, Mexico City (52) 55-5081-4414; jose_coballasi@standardandpoors.com =========== P A N A M A =========== WILLBROS GROUP: Baron & Budd Files Class Action Lawsuit ------------------------------------------------------- The law firm of Baron & Budd, P.C. announces that a class action lawsuit has been filed on behalf of purchasers of Willbros Group, Inc. (NYSE:WG)("Willbros" or the "Company") securities during the period between May 6, 2002 and May 16, 2005, inclusive (the "Class Period"). The complaint alleges that Willbros Group, Inc. has violated federal securities laws by issuing false or misleading information and that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them. Specifically, the complaint alleges: (a) that the Company was violating the Foreign Corrupt Practices Act by bribing foreign officials in order to obtain business in Bolivia, Nigeria, and Ecuador; (b) Willbros filed false tax returns, failed to file required tax returns, and failed to pay certain taxes in locations outside of the United States which materially overstated the Company's financial results and exposed the Company to potential fines and penalties; (c) that the Company was participating in undisclosed related party transactions; (d) that the Company lacked adequate internal controls; and (e) that as a result of the above, the Company's reported financial results were materially overstated at all relevant times and were not prepared in conformity with Generally Accepted Accounting Principles ("GAAP") and were materially false when issued. After the market closed on May 16, 2005, Willbros announced the results of the Audit Committee's internal investigation into the circumstances behind the Company's tax assessment and other illegal activities, stating that the Company will restate its previously issued financial statements for the fiscal years 2002, 2003, and the first nine months of 2004. The restatement is expected to reduce net income between a range of $7.2 and $9.2 million. This news shocked the market and the Company's stock plummeted $4.92 per share, more than 30%, from its May 16, 2005 closing price of $15.92 to its close on May 17, 2005 at $11.00. If you acquired the securities of Willbros Group, Inc. during the Class Period and meet certain legal requirements, you may, no later than July 17, 2005, move for appointment as lead plaintiff on behalf of the proposed class. About Baron & Budd, P.C. Since 1977, the law firm of Baron & Budd, P.C. has championed the rights of people and communities harmed by corporate misconduct. With over 70 attorneys and offices in Texas, Illinois, Ohio, Louisiana, and New York, Baron & Budd enjoys a national reputation as a leader of the plaintiff's bar. The firm represents individuals with mesothelioma and other diseases caused by asbestos; leukemia and lymphoma caused by benzene; injuries caused by other toxic substances and unsafe pharmaceuticals; water authorities seeking clean-up costs for drinking water contamination; securities investors defrauded by corporate wrongdoing; and consumers in class actions. For more information on the firm, call 1-800-222-2766 or visit www.baronandbudd.com CONTACT: Baron & Budd, P.C. Randall K. Pulliam, Esq. Max Jodry (800) 222-2766 E-mail: info@baronbudd.com URL: http://www.securitiesactions.com =============== P A R A G U A Y =============== COPACO: Guarantees No Competition in Rural Areas ------------------------------------------------ State-run fixed line operator Copaco moved to alleviate incumbent mobile operators' fears, saying its new service won't compete with theirs in rural areas. Business News Americas reports that private operators have expressed some opposition to Copaco's plans to launch a mobile unit. But Copaco commercial manager Osmar Lopez told mobile operators they have nothing to fear from its new service as it plans to use its GSM network only to bring coverage to low density sectors. The Company plans to use a spectrum license that it is now buying from Paraguayan telecoms regulator Conatel. "No company is using cable systems [in low density areas] these days, because it is all replaced by wireless solutions and that is what Copaco plans to do. We do not plan to compete with mobile operators in those markets they cover but we plan to reach rural areas," Lopez added. Lopez revealed Copaco is preparing a tender to purchase mobile handsets and will respect Conatel's decision not to subsidize the mobile service with revenues from its fixed line services. ======= P E R U ======= * PERU: Paris Club Accepts Offer to Prepay Up to $2B of Debt ------------------------------------------------------------ The representatives of the Paris Club creditor countries met on Wednesday to agree on the offer made by the Republic of Peru to prepay up to US$ 2 billion principal maturities of its debt falling due between August 2005 and December 2009. The prepayment will be made at par and offered to all creditors. The debt covered by this offer is the debt not granted under Official Development Assistance conditions. The interest savings achieved through this prepayment will support the Republic of Peru in the implementation of a cautious and balanced debt management strategy. Participation in the prepayment programme is voluntary. The majority of Peru's creditors have indicated that they are likely to participate. Payments to creditors will be made on August 15, 2005. The Paris Club was formed in 1956. It is an informal group of creditor governments from major industrialized countries. It meets on a monthly basis in Paris with debtor countries in order to agree with them on restructuring their debts. The members of the Paris Club who are creditors of the Republic of Peru are Austria, Belgium, Canada, Finland, France, Germany, Italy, Japan, the Netherlands, Norway, Spain, Sweden, the United Kingdom and the United States of America. The Republic of Peru's debt not granted under Official Development Aid conditions and owed to Paris Club creditors will be, prior to any prepayment, US$ 4.2 billion as of July 1, 2005. ================= V E N E Z U E L A ================= PDVSA: Decision on Operative Agreements Saves Venezuela $300M ------------------------------------------------------------- Minister of Energy and Petroleum and President of PDVSA, Rafael Ramirez, pointed out that the decision of limiting payments of operative agreements helps Venezuela save over US$300 million dollars. During the ceremony held to celebrate the beginning of works for the construction of La Raisa Thermal Power Plant, in Santa Teresa del Tuy, Miranda State, Minister Ramirez reported that PDVSA's operation costs rose due to the way Operative Agreements were conceived. "We have already explained that costs resulting from operative agreements were indexed to oil prices. Therefore, with the gradual increase of oil prices, PDVSA has seen a rise in its operational costs, contrary to what it is expected," Ramirez indicated. He remind the audience that producing an oil barrel out of these operative agreements costs $18, while a barrel produced directly by PDVSA costs $4. This is the reason why last April 12th the Ministry of Energy and Petroleum released a statement whereby payments under these terms were restricted. This new provision, as explained by Minister Ramirez, will be in force to pay operative agreements corresponding to the first quarter of the current year. "This measure will contribute to our new costs structure as, like any other corporation, we have been forced to apply it to the best interest of the country," he added. Ramirez insisted that PDVSA maintains relations in good terms with the shareholders of Operative Agreements, and made clear that the issue to focus on is related to a deviation of the exchange agreement. As a consequence, PDVSA has asked Venezuelan Central Bank to release a statement where it is established how many of these payments must be issued in US currency and how many in bolivars. "The Venezuelan Central Bank has already determined some of the activities and elements to be paid in dollars, such as drills. Other activities, however, must be paid in bolivars," Ramirez said. He also pointed out that the Ministry of Energy and Petroleum and the National Tax and Tributary Administration Service (Seniat) work jointly on a proposal to reform the Income Tax Law. Ramirez informed that immediately after having a real project, this will be subject to the National Assembly discussion. "In any part of world, the main economic activity is subject to special regulations", Ministry of Energy and Petroleum said. In this sense, he mentioned that in the `70s the Income Tax Law had a specific article regarding oil activities; but later on, 70 successive reforms made disappear details concerning this sector. Production During the ceremony held in Valles del Tuy, Miranda State, Minister Ramirez indicated that in Monagas State, according to volumetric measurements planning for this year, PDVSA Northern District produces 25,000 crude oil barrels more than what it was expected, contributing, like this, to establishing a balance of commitments set up in the Corporation's budget. He also informed that in a few months, PDVSA will be able to show better results in Western Venezuela, where measures have been taken to reactivate some wells which, due to structural problems such as vapor and gas injection deficiencies, were totally inactive. Minister Ramirez emphasized that PDVSA will not grant Orimulsion patents to Sinovensa as it was speculated about by the national press. "We do not intent to or are able to grant patents," he assured. "As everybody knows, all over the world patents are protected by an intellectual property right; we apply it, and anybody who wants to enjoy such a right must pay royalty. This a regular provision stated in the whole planet, and we see no reason to change it here in Venezuela." 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: To Increase Crude Output ------------------------------- PDVSA president and energy and oil minister Rafael Ramirez announced that oil firm PDVSA will raise its oil production this year. The decision, according to Business News Americas, follows an announcement from OPEC that it will raise production quotas for members of the cartel for the second time this year. Although Venezuela has always favored slashing OPEC production to raise prices, Ramirez said PDVSA would abide by the decision. Venezuela's production quota was increased earlier this year to 3.17 million barrels of oil a day (Mb/d), but the new quota has not yet been announced. "There will have to be an [OPEC] meeting in September to see what decision we take regarding our production volume," Ramirez told the radio station, adding that an increase in PDVSA's output is expected in 4Q05. PDVSA says national production is currently around 3.3Mb/d, which is above its OPEC quota but below its goal for 2005 fiscal budget purposes of 3.4Mb/d. SIVENSA: Wraps Up First Phase of Capital Increase ------------------------------------------------- Steelmaker Sivensa concluded the first stage of a capital increase on June 15, reports Business News Americas. In a filing with the Caracas stock exchange, the Company disclosed that the amount of VEB32.3 billion (US$12.3 million) was oversubscribed by some VEB5 billion. Sivensa suggested that the second stage of the capital increase will take place if by June 30 the amount equivalent to US$15 million at the official exchange rate of VEB2,150 to the US dollar has not been raised, focusing on shares not taken up in the first stage. Sivensa split the share offer in two stages to raise funds and pay part of the US$15 million bank debt held by the Company and its subsidiary Sidetur. The capital increase is part of a March 31 debt accord reached between the Company and creditor banks, allowing Sivensa to extend the debt's maturity date from September 30, 2007, to December 31, 2009, among other things. The Company's creditor banks include local institutions Industrial, Provincial, Mercantil and Corp Banca; the Andean Development Corporation (CAF) and foreign banks BNP Paribas, ING Bank, ABN Amro Bank and Citibank. *********** 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 Sheryl Joy P. Olano, 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. 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