/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/050802.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, August 2, 2005, Vol. 6, Issue 151 Headlines A R G E N T I N A AGUAS PROVINCIALES: Emgasud's Offer Fails to Attract Workers BAVIPE S.A.: Claims Review, Verification Deadline Set C.E.S.A. CONSTRUCCIONES: To Present Final Reorganization Plan CIA AGRICOLA: Court Authorizes Plan, Concludes Reorganization FARMORE S.R.L.: Liquidates Assets to Pay Debts INDUSTRIAS METALURGICAS: Bankruptcy Converted to Reorganization MAQUIRENTAL S.A.: Bankruptcy Initiated After Court Order SALUD SERVICIOS: Individual Reports to be Submitted August 10 SANATORIAL EXPRESS: Court Mandates Liquidation Necessary TELEFONICA DE ARGENTINA: Board Approves June 30 Financial Data TRANSPORTES SAN MARTIN: Trustee to Submit Individual Reports B A R B A D O S OLYMPUS UNITED: Central Bank Takes Over Management, Control B O L I V I A AGUAS DEL ILLIMANI: To Continue Running Water Concession B R A Z I L BANCO DO BRASIL: Fitch Affirms Existing Ratings BANCO RURAL: Fitch Downgrades Ratings; Issues Negative Watch CSN: Moody's Upgrades Certain Ratings; Rating Outlook Positive EMBRATEL PARTICIPACOES: Announces Results of Shareholder Meeting LIGHT SERVICOS: French Parent Plans Partner Search TCP: Board Approves Capital Increase M E X I C O AHMSA: Coal, Iron Ore Mines Boost 2Q Bottom Line CYDSA: Ends 1H05 With MXN18 Million Net Profit EMPRESAS ICA: S&P Ups Ratings to 'B', Off Watch; Outlook Stable EMPRESAS ICA: Considers Exercising Option to Buy GACN Stake GRUPO ELEKTRA: BNY to Terminate GDSs Program August 1 SATMEX: Settles Conflict With Creditors Regarding Ch. 11 Filing T R I N I D A D & T O B A G O BWIA: Airline's Future Awaits Cabinet Decisions V E N E Z U E L A CANTV: Responds to Social Chamber's Pension Adjustment Decision CANTV: Morgan Stanley Reduces Stock Recommendation - - - - - - - - - - ================= A R G E N T I N A ================= AGUAS PROVINCIALES: Emgasud's Offer Fails to Attract Workers ------------------------------------------------------------ Gas distributor Emgasud's offer to buy French firm Suez's stake in Aguas Provinciales de Santa Fe has been met with resistance from two groups. According to Business News Americas, the Aguas Provinciales workers' union, which has a 10% stake in the Santa Fe water utility, went on strike last week to prevent Emgasud from taking over Suez's local unit. Meanwhile, provincial authorities are not pleased with Emgasud's offer. Emgasud recently submitted to the Santa Fe provincial government documentation confirming its purchase of Suez's interest in Aguas Provinciales. But according to reports, authorities are asking Emgasud to provide more information partly because Fides Environment - the purchase vehicle for the Suez stake in Aguas Provinciales - was formed with equity of just ARS20,000 (US$7,000) despite the ARS1.75 billion promised in investments by Emgasud. "Various things are still being discussed," said sources at Suez, confirming that no deal has yet been sealed with Emgasud. Whatever happens, any new contract will have to be approved by Santa Fe government. BAVIPE S.A.: Claims Review, Verification Deadline Set ----------------------------------------------------- Court No. 4 of Buenos Aires' civil and commercial tribunal declared Bavipe S.A. "Quiebra," reports Infobae. Clerk No. 7 assists the court on the case, which will close with the liquidation of the Company's assets to repay creditors. Beatriz Mazzaferri, who has been appointed as trustee, will verify creditors' claims until Aug. 24, 2005 and then prepare the individual reports based on the results of the verification process. CONTACT: Ms. Beatriz Mazzaferri, Trustee Lavalle 1459 Buenos Aires C.E.S.A. CONSTRUCCIONES: To Present Final Reorganization Plan ------------------------------------------------------------- C.E.S.A. Construcciones Electricas S.A. will propose its settlement plan before its creditors in a general assembly set on Feb. 7, 2006 after the court-appointed trustee submitted the general report on June 24, 2005, Infobae reports. Court No. 4 of Tucuman's civil and commercial tribunal approved the Company's petition for reorganization. CIA AGRICOLA: Court Authorizes Plan, Concludes Reorganization ------------------------------------------------------------- Buenos Aires-based company Cia Agricola Nobili S.A. concluded its reorganization process, according to data released by Infobae on its Web site. The conclusion came after the city's civil and commercial Court No. 2, with assistance from Clerk No. 3, homologated the debt plan signed between the Company and its creditors. FARMORE S.R.L.: Liquidates Assets to Pay Debts ---------------------------------------------- Farmore S.R.L. will begin liquidating its assets following the pronouncement of Buenos Aires' civil and commercial Court No. 16 that the Company is bankrupt, Infobae reports. The bankruptcy ruling places the Company under the supervision of court-appointed trustee, Berta Liliana Kraves. The trustee will verify creditors' proofs of claim until Sep. 14, 2005. The validated claims will be presented in court as individual reports on Oct. 27, 2005. Ms. Kraves will also submit a general report, containing a summary of the Company's financial status as well as relevant events pertaining to the bankruptcy, Dec. 9, 2005. The bankruptcy process will end with the disposal of the Company's assets in favor of its creditors. CONTACT: Farmore S.R.L. Paso 667 Buenos Aires Ms. Berta Liliana Kraves Tucuman 1438 Buenos Aires INDUSTRIAS METALURGICAS: Bankruptcy Converted to Reorganization --------------------------------------------------------------- Industrias Metalurgicas de Cuyo S.A. will proceed with reorganization after a Buenos Aires Court converted the Company's ongoing bankruptcy case into a "concurso preventivo", states Infobae. Under Insolvency protection, the Company will be able to draft a proposal designed to settle its debts with creditors. The reorganization also prevents an outright liquidation. Ms. Claudia Alicia Raso, the court-appointed trustee, will verify creditors' proofs of claim until Aug. 9, 2005. Creditors with unverified claims cannot participate in the Company's settlement plan. Ms. Raso is will prepare the individual and general reports as required by the court. The individual reports will be submitted on Oct. 11, 2005, to be followed by the general report on March 7, 2006. An informative assembly, the last phase of the reorganization, is set on June 27, 2006. During the assembly the Company will present the completed settlement proposal for the creditors' approval. CONTACT: Ms. Claudia Alicia Raso, Trustee Alberdi 158 Mendoza MAQUIRENTAL S.A.: Bankruptcy Initiated After Court Order -------------------------------------------------------- Maquirental S.A. enters bankruptcy protection after Court No. 4 of Buenos Aires' civil and commercial tribunal, with the assistance of Clerk No. 7, ordered the Company's liquidation. The order effectively transfers control of the Company's assets to a court-appointed trustee who will supervise the liquidation proceedings. Infobae reports that the court selected Roberto O. Hermida as trustee. Mr. Hermida will be verifying creditors' proofs of claim until the end of the verification phase on Aug. 23, 2005. Argentine bankruptcy law requires the trustee to provide the court with individual reports on the forwarded claims and a general report containing an audit of the Company's accounting and business records. Dates for the submission of these reports are yet to be disclosed. CONTACT: Mr. Roberto O. Hermida, Trustee Tucuman 1668 Buenos Aires SALUD SERVICIOS: Individual Reports to be Submitted August 10 ------------------------------------------------------------- The individual reports on the creditors' validated claims against Salud Servicios Sociales S.R.L. will be on Aug. 10, 2005, Infobae reports. Ms. Monica Cristina Di Iorio, the trustee selected by the court, had stopped accepting claims on June 30, 2005. After submitting the individual reports, the trustee will work on the general report, containing a summary of the Company's financial status as well as relevant events pertaining to the bankruptcy, and submit it to court on Sep. 26, 2005. Fosario-based Salud Servicios Sociales S.R.L. will begin liquidating its assets following the pronouncement of the city's civil and commercial Court No. 12 that the Company is bankrupt. The bankruptcy process will end with the disposal of the Company's assets in favor of its creditors. CONTACT: Ms. Monica Cristina Di Iorio, Trustee Corrientes 931 Rosario (Santa Fe) SANATORIAL EXPRESS: Court Mandates Liquidation Necessary -------------------------------------------------------- Court No. 2 of Buenos Aires' civil and commercial tribunal ordered the liquidation of Sanatorial Express S.A. after the Company defaulted on its obligations, Infobae reveals. The liquidation pronouncement will effectively place the Company's affairs as well as its assets under the control of Miryam Lewenbaum, the court-appointed trustee. Ms. Lewenbaum will verify creditors' proofs of claim until Sep. 19, 2005. The verified claims will serve as basis for the individual reports to be submitted in court on Nov. 1, 2005. The submission of the general report follows on Dec. 14, 2005. Clerk No. 3 assists the court on this case, which will end with the disposal of the Company's assets in favor of its creditors. CONTACT: Sanatorial Express S.A. Viamonte 1336 Buenos Aires Ms. Miryam Lewenbaum, Trustee Montevideo 666 Buenos Aires TELEFONICA DE ARGENTINA: Board Approves June 30 Financial Data -------------------------------------------------------------- Telefonica de Argentina S.A. announced that in the relevant meeting held on July 26 the Company's Board of Directors approved in advance certain non-consolidated and non-audited summarized accounting data included in the following brief descriptions of the statement of assets and liabilities, statement of income, and statement of changes in shareholders' equity at June 30, 2005, and corresponding to the 6-month period immediately before, in order to be added to the accounting records of the Spanish indirect controlling company of the Company, Telefonica S.A., organized in Spain. Amounts are denominated in million pesos in accordance with the rules approved by the Comision Nacional de Valores (National Securities and Exchange Commission). By August 10, 2005, the Company's Board of Directors will approve the full Financial Statements at June 30, 2005, and corresponding to the 6-month period immediately before, in accordance with section 63 of the Buenos Aires Stock Exchange Regulations and section 1, chapter XXIII of Resolution No. 368/01 of the National Securities and Exchange Commission. Therefore, the final consolidated and non-consolidated results and the Company's balance sheet will include the relevant subsequent events until the date of approval of such full statements. The Company undertakes no liability whatsoever to update the data contained in this notice due to any event taking place after the date hereof and before the approval of the accounting data as per the provisions set forth in the preceding paragraph. To see non-consolidated and non-audited summarized statement of assets & liabilities and income: http://bankrupt.com/misc/TELEFONICA_ARGENTINA.htm CONTACT: TELEFONICA DE ARGENTINA Tucuman 1, 18th Floor, 1049 Buenos Aires, Argentina Phone: (212) 688-6840 Home Page: http://www.telefonica.com.ar TRANSPORTES SAN MARTIN: Trustee to Submit Individual Reports ------------------------------------------------------------ Ms. Doris Marina Calla, the trustee for the Transportes San Martin S.R.L. bankruptcy case, will submit the individual reports on to court on Sep. 2, 2005. These reports, according to Infobae, contain the forwarded claims of creditors of the Company. Submission of the claims ended on July 21, 2005. Transportes San Martin S.R.L. was declared bankrupt after the Company defaulted on its debt payments. CONTACT: Transportes San Martin S.R.L. Chaco 970 Ciudad de Cordoba (Cordoba) Ms. Doris Marina Calla, Trustee 9 de Julio 883 Torre III Ciudad de Cordoba (Cordoba) =============== B A R B A D O S =============== OLYMPUS UNITED: Central Bank Takes Over Management, Control ----------------------------------------------------------- The Central Bank of Barbados seized the management and control of an Olympus United Bank and Trust SCC on July 19 with a view to closing the offshore bank down. Confirming the seizure on July 28, Central Bank Governor Dr. Marion Williams said the action emanated from the failure of the licensee to comply with provisions of the International Financial Services Act. Olympus is a subsidiary of the Canadian hedge fund company, Norshield Financial Group, which was placed in receivership in June on the orders of the Ontario Securities Commission. The Canadian parent is currently under investigation over the disappearance of US$130 million. Observers have suggested that the incident is an isolated one, and is unlikely to harm Barbados' reputation internationally. ============= B O L I V I A ============= AGUAS DEL ILLIMANI: To Continue Running Water Concession -------------------------------------------------------- Aguas del Illimani (AISA), a subsidiary of French group Suez, agreed not to give up its concession to operate the Bolivian capital La Paz water services. At least, not until the government secures the funds to buy out 100% of the shareholding, Business News Americas reports, citing AISA spokesperson Tania Jaldin. Basic services deputy minister Eduardo Rojas said the state will be making a request to the World Bank and the Andean Development Corporation (CAF) for a loan to buy out AISA. AISA has been in handover talks with sector regulator Sisab and basic services ministry (VSB) officials after the government rescinded its 30-year concession due to resident protests over AISA's supposed poor service. The deadline for AISA to hand back the concession was July 29. However, AISA paid a US$3 million guarantee bond last week and US$5 million bond on July 29, keeping it within the terms of its concession. Meanwhile, the stumbling block of a government-ordered audit going back to 1997 to determine the levels of investment actually carried out by the concessionaire under the terms of its contract is still being negotiated, Jaldin said. A three-man transition team will be appointed to audit AISA's books and inspect the condition of the potable water and sanitation infrastructure and service to determine levels of investment. "It cannot be overlooked that in the seven years of the concession AISA introduced technology, as well as commercial and inventory systems which we will have to learn how to operate in the shortest time possible," Sisab director Alvaro Camacho said. The government has been insisting that the audit cover the whole period of the concession because it is important to establish the source of funds used in infrastructure investment to ensure they did not come from water charges revenues. =========== B R A Z I L =========== BANCO DO BRASIL: Fitch Affirms Existing Ratings ----------------------------------------------- Fitch Ratings, the international rating agency, affirmed Friday Banco do Brasil S.A.'s (Banco do Brasil) long-term foreign and local currency ratings at 'BB-' and 'BB', respectively; the short-term foreign and local currency ratings at 'B'; the individual rating at 'C/D'; and the support rating at '4'. At the same time, Fitch affirms the long and short-term national ratings of, respectively, 'AA(bra)' and 'F1+(bra)'. The Outlook of the long-term ratings remains Stable. Banco do Brasil's foreign currency ratings are at the sovereign ceiling, while the long-term local currency rating is above the sovereign, reflecting the bank's status in the Brazilian financial system, its increasing commercial and administrative independence of the federal government in recent years, and the market's perception of Banco do Brasil as a safe heaven in times of stress. The national ratings on Banco do Brasil also reflect the bank's ownership structure, while the individual rating mirrors its market leadership in several sectors and the continuous improvement of its financial profile since June 2001, with the bank becoming more competitive, even in comparison with large private banks. The rating also reflects the low quality of its capital due to the high (though declining) level of tax credits, its increased volume of subordinated debt, and the consequent low volume of Tier I capital. In addition, it reflects Fitch's expectations regarding the deferred assets reduction and the effect of this on future profits. Fitch will publish a full analytical report on Banco do Brasil shortly. BANCO RURAL: Fitch Downgrades Ratings; Issues Negative Watch ------------------------------------------------------------ Fitch Ratings, the international rating agency, downgraded Friday the long- and short-term national ratings of Banco Rural S.A. (Rural) to 'BB-(bra)' from 'BBB- (bra)' and 'B(bra)' from 'F3(bra)', respectively. At the same time, all ratings remain on Negative Watch, and Fitch has affirmed the support rating of '5'. This rating action reflects changes in the risk profile of Rural, given the impact on its funding and operations, due to its image deterioration. Founded in 1948, Rural is a multiple bank controlled by five members of the Rabello family (84.7% of the voting stock), with a tradition in lending to small- and medium-sized companies. Headquartered in Minas Gerais, it had 97 domestic outlets (75 branches) at March 2005 and a solid overseas presence, consisting of seven banking entities, mostly focused on foreign trade finance. CSN: Moody's Upgrades Certain Ratings; Rating Outlook Positive -------------------------------------------------------------- Approximately USD 1.6 billion in Debt Securities Affected Moody's Investors Service upgraded the foreign currency note ratings of Companhia Siderurgica Nacional (CSN) and CSN backed foreign currency notes to Ba3 from B1 and affirmed CSN Iron S.A.'s corporate family rating (previously known as the senior implied) at B1. The rating outlook is positive. In related rating actions, Moody's upgraded the global local currency rating of CSN to Ba2 from Ba3, and the National Scale Rating to Aa3.br from A3.br. The outlook for the global local currency and National Scale ratings is stable. The upgrade in the global local currency rating reflects CSN's strengthened operating profile as evidenced by improved debt coverage ratios, moderation in leverage and ability to generate free cash flow (operating cash flow less dividends less capital expenditures) through the steel cycle. Favorable considerations in the rating are CSN's efficient and modern operations and market diversity as well as its captive raw material sources for key materials other than coal. However, the rating reflects the company's high payout level to shareholders relative to its earnings, cash flow generation and strategic investment requirements. The Ba3 foreign currency note ratings, a function of CSN's Ba2 global local currency rating, reflect the company's operating strengths and competitive position in the Brazilian steel market, but also incorporates the element of convertibility risk, or the likelihood that the Brazilian government might declare a general debt moratorium to counter a foreign currency crisis. The foreign currency bond rating considers the probability of a sovereign foreign currency default implied by the government's B1 foreign currency bond rating and the likelihood that, in the event of such a default, the government would impose a general foreign currency payments moratorium. Considered in CSN's Ba3 foreign currency bond rating is the possibility that CSN, as a key steel producer in Brazil's markets, with a good position in the export markets, might be exempt from a debt moratorium, if such were to be imposed. The stable outlook reflects Moody's expectation that CSN will continue to evidence solid earnings and cash flow generation representative of its position within the Brazilian steel sector, the diversity of its end market sales and its ability to move product in the export markets. The outlook also acknowledges CSN's substantive cash position and anticipates that the company will continue to maintain a liquidity position through its cash and liquid investment position that together with cash flow generation will allow the company to meet short- term obligations and weather volatility in its local markets. The outlook also anticipates that despite softening in the steel industry globally and price contraction, the overall market fundamentals remain acceptable and prices will continue to provide for reasonable results for low cost producers such as CSN. The outlook or rating could improve should CSN reduce debt in absolute terms in order to be better positioned for a cyclical downturn in the steel industry. A resumption of debt increases to fund major acquisitions or capital investments, or a sustained increase in the cost base, which would lead to margin strain in a cyclical downturn could negatively impact the outlook. The positive outlook for the foreign currency note ratings and for the corporate family rating at CSN Iron S.A. is a reflection of the positive outlook on Brazil's B1 long term currency ceiling for bonds and notes. Improvement in metrics and leverage are earnings driven, reflective of stronger world steel prices in 2004 and continued good performance in 2005 despite softening in global steel prices. In 2004, CSN reduced its export sales to focus on the higher profit domestic market and in 2005 plans to have approximately 75% of shipments sold in the domestic market. While the company remains self sufficient in a number of key raw materials such as iron ore, increased coke and coal prices have impacted margins, although the gross profit margin remained healthy at 48% for the quarter ended March 31, 2005 and the magnitude of year on year changes is not expected to be repeated in 2005. Moody's views current metrics as more representative of the peak of the cycle and we would expect some contraction in the level of earnings generated as prices retreat and costs continue at higher than historical levels. Free cash flow generated in the first quarter of 2005 and net debt increases of approximately BRL 1.0 billion contributed to a cash and cash equivalent position of BRL 6.1 billion. Moody's notes however that subsequent to quarter end, CSN paid a total of BRL 2.2 billion in dividends and interest on shareholders equity. Ratings upgraded are: - Companhia Siderugica Nacional: Global Local Currency rating to Ba2 from Ba3, National Scale Rating to Aa3.br from A3.br on Brazilian debentures, foreign currency rating to Ba3 from B1 on USD 200 million notes due 2008 - CSN Iron S.A.: Foreign Currency rating on 9.125% guaranteed bonds due June 2007 to Ba3 from B1. - CSN Islands VIII Corp.: Foreign currency rating on 9.750% guaranteed notes due December 2013 to Ba3 from B1. - CSN Islands IX Corp.: Foreign currency rating on 10% guaranteed notes due January 2015 to Ba3 from B1. Ratings affirmed are: - CSN Iron S.A.: B1 Corporate Family Rating (previously called the Senior Implied Rating). Headquartered in Rio de Janeiro, Brazil, CSN had consolidated net revenues of BRL 9.8 billion in 2004 EMBRATEL PARTICIPACOES: Announces Results of Shareholder Meeting ---------------------------------------------------------------- The shareholders of Embratel Participacoes S.A. approved the amendment of the Company's Article 5 of By-Laws in an extraordinary general meeting held on July 14, 2005. SUMMARY MINUTES OF THE EXTRAORDINARY GENERAL MEETING HELD ON JULY 14, 2005, AT 3 P.M. 1. DATE, TIME AND PLACE: July 14, 2005, at 3 p.m., in the Company's Registered Offices, located at Rua Regente Feijo, No. 166, suite 1687-B, in the downtown (Centro) district, City and State of Rio de Janeiro. 2. CALL TO MEETING: Notices published in the manner provided for in Article 124 of Brazilian Corporation Law (No. 6404/76), in Gazeta Mercantil and Rio de Janeiro Official State Gazette editions dated on days 28, 29 and 30 of June 2005. The cited notices were made available to interested parties on the table, with reading and transcription thereof having been waived. 3. ATTENDANCE: Shareholders of EMBRATEL PARTICIPACOES S.A. representing more than 90% (ninety per cent) of the voting capital were present, according to the registrations and signatures contained in the Company's Shareholders Attendance Book. Mr. Isaac Berensztejn was also present in his capacity of representative of the Company's administration. 4. TABLE: In the manner provided for in Article 13 of the Company's By-Laws, the proceedings were presided over by the Chairman of the Board of Directors, Mr. Carlos Henrique Moreira, who called upon Dr. Antonio Oscar de Carvalho Petersen Filho to serve as Secretary. 5. RESOLUTIONS: 5.1. Unanimous approval was granted by the shareholders present for these Minutes to be drawn up in summary form and that publication hereof be made with omission of the signatures of the shareholders present, as allowed, respectively, by paragraphs SS 1 and 2 of Art. 130 of Brazilian Corporation Law (No. 6404/76). 5.2. Formal reading of call notice was waived by shareholders present, and such shareholders resolve upon the items of the Agenda as follows: (i) Approve by majority of shareholders present the amendment of Company By-Laws aiming the following: (I) Amend the Article 5 of Company By-Laws, reflecting the increase of Company's capital approved by Board of Directors within the authorized capital limit on May 23, 2005, which shall be effective with the following wording: "Art. 5 - The subscribed corporate capital, fully paid in, is R$4,096,713,387.00 (four billion, ninety-six million, seven hundred and thirteen thousand, three hundred and eighty-seven reais), represented by 758,306,004,336 (seven hundred and fifty- eight billion, three hundred and six million, four thousand, three hundred and thirty-six) shares, 282,027,681,973 (two hundred and eighty-two billion, twenty- seven million, six hundred and eighty-one thousand, nine hundred and seventy-three) being nominative common shares and 476,278,322,363 (four hundred and seventy-six billion, two hundred and seventy-eight million, three hundred and twenty-two thousand, three hundred and sixty- three) being nominative preferred shares, all with no nominal value." (II) Cause the Fiscal Council to act as Company's Audit Committee for the purposes of provisions provided for in Sarbanes-Oxley Act of 2002: amend the item XV of Article 17, add a Sole Paragraph of Article 30 and Article 31 and respective items; amend the 3 of Article 31; change caput, 1 and 2 of Article 32, provisions of which shall be effective with the following wording: "Art. 17 - Apart from the tasks assigned to it under the law, and those provided for in Article 6 of these By-Laws, it is incumbent on the Board of Directors XV - to elect and remove the Company's independent auditors; regarding for such purpose, among others, under the recommendation of Fiscal Council; "Art. 30 - The Fiscal Council will act on a permanent basis. Sole Paragraph. For the full performance of their responsibilities, notably the Audit Committee duty, the requirements provided for in applicable law shall be fulfilled, the provision of these By-Laws and Fiscal Council Internal Ruling approved by the Annual Ordinary General Meeting." "Art. 31 - Without prejudice to other responsibilities provided for in Brazilian law, the Fiscal Council shall have the following responsibilities: I. Inspect actions of managers and examine the performance of their legal and statutory responsibilities; II. Consider upon the management annual report, and include in their own opinion the additional information deemed as required or useful to resolve on general meeting; III. Recommend and assist the Board of Directors in proceedings of hiring, assessment of compensation and removal of independent auditors for the Company; IV. Oversee and evaluate the proceeds of such independent auditors and assist on the solution of possible controversies between the management and an independent auditor as regard of financial statements of Company; V. Review from time to time Company policies concerning the provision of audit and non-audit services provided by independent auditors and the respective compensation; VI. Consider upon proposals of management bodies to be submitted to General Meeting, in respect of any change on the capital stock, issuance of debentures or subscription bonus, investment plans or capital budgets, dividend payment, conversion, amalgamation, merger or split-off; VII. Review from time to time the success of risk management processes and internal controls of Company in order to monitor the performance of, among others, (i) legal provisions affecting the submittal of financial reports; and (ii) statutory dispositions; VIII. Prescribe proceedings in order to hear, process and assess reports of fraud, anonymously or not, related to accounting matters, internal controls and audit of the Company; IX. Report to management bodies and, if such bodies do not take required needs for the protection of Company interests, to the general meeting, errors, frauds or crimes found and suggest useful actions to the Company; X. Call the Annual General Meeting, if management bodies elapse for more than a month of such call, and call the Extraordinary General Meeting, upon the occurrence of serious or expedient matters, including the agenda of matters deemed required on such meetings; XI. Analyze at least on a third-month basis, the balance sheet and other financial statements prepared from time to time by the Company; XII. Review the financial statements as of year ended and place comments on them; XIII. Perform such duties, during winding-up, considering special provisions regulating thereof. Sole Paragraph. For the performance of their duties, Fiscal Council may request to Company management the hiring of auditors, attorneys, consultants and accountants, and such respective fees shall be fixed in reasonable conditions and within the limits of a specific budget, which shall be fixed as proposed by Company management in accordance with terms of Art. 43 herein." "Art. 31 - The Fiscal Council shall meet whenever necessary, however, not less than 04 (four) times a year, and such meetings shall meet the cycle of submittal of financial reports of Company. S 1 - Apart from the forms legally provided for, the meetings of Fiscal Council shall be called, at any time, by the Chairman of Fiscal Council or by 02 (two) members, by the Chairman of Board of Directors, by the Chairman of the Company, or always when required by independent and internal auditors. "Art. 32 - The Fiscal Council will be formed by at least 3 (three) and at most 5 (five) members, and an equal number of alternates, elected and removed at any time by the General Meeting, with due observance of the rules of Paragraph 4, in Article 161 of Law No. 6404/76. S 3 - The members of the Fiscal Council, in their first meeting, shall elect their Chairman and Secretary." (III) In order to ensure the hiring of advisors and consultants who might be requested by Fiscal Council, in the performance of their duties, and the approval of a specific budget for that purpose: add the item II of Article 17; add the item (v) on 1 of Article 29; and add Article 43, and such provisions shall be effective with the following wording: "Art. 17 - Apart from the tasks assigned to it under the law, and those provided for in Article 6 of these By-Laws, it is incumbent on the Board of Directors: II. to approve an annual budget for funds required to pay independent auditors, lawyers third parties, accountants or any other consultant whose hiring might be requested by Fiscal Council of Company; "Art. 29 - It is incumbent on the members of the Executive Board of Officers, observing the need for prior authorization of the Board of Directors in the cases stipulated in these By-Laws, to represent the Company as described in the following paragraphs. S 1 - It is incumbent on the President: v. - to hire services provided for in Sole Paragraph of Article 31, upon the request of Fiscal Council." "Art. 43 - In every fiscal year, the management of Company, shall submit to Board of Directors a annual budget proposal including the forecast of funds required to pay independent auditors, lawyers third parties, accountants or any other consultant whose hiring might be requested by Fiscal Council of Company." (IV) As a result of proposed amendments, shareholders approved the reorganization of articles, respective items and the amendment of references of By-Laws of Company. (ii) Shareholders have approved, by majority of presents, the restatement of By-Laws of Company attached as APPENDIX I. (iii) Shareholders have approved, by unanimous vote of presents, the Fiscal Council Internal Ruling of Company attached as APPENDIX II, and (iv) Thus, the adjustment on compensation of members of Fiscal Council of Company was approved by unanimous vote of presents, as approved on the Annual General Meeting held on April 29, 2005, and the monthly individual amount was fixed on R$8,000.00 (eight thousand reais), and the compulsory refund of transport and accommodation expenses required to the performance of their duties, all of which in accordance with 3 of Article 162 of Law No. 6404/76. 6. CLARIFICATIONS: Upon the request of shareholder Jos� de Oliveira Teixeira, it is drawn up his commended reference to the performance of actual management of Company, and his unrestricted approval of all amendments and changes proposed by management. In the absence of any other matters to be discussed, the proceedings were adjourned for the time required to transcribe these minutes. When the session was reopened, minutes were read, agreed upon and signed by all present members. SIGNATURES: Carlos Henrique Moreira -Chairman, Antonio Oscar de Carvalho Petersen Filho - Secretary, Isaac Berensztejn -Economic- Financial Director (Chief Financial Officer - CFO) and Investor Relations Officer. Shareholders: Startel Participacoes Ltda., New Startel Participacoes Ltda., Telmex Solutions Telecomunicacoes Ltda., The Master Trust Bank of Japan Ltd RE: MTBC400035147, The California State Teachers Retirement System, State Street Emerging Markets, Norges Bank, Jose Teixeira de Oliveira, Gilberto Souza Esmeraldo and Paulo Andre Bodin de Moraes. CONTACT: EMT - Embratel Participacoes S.A. Rua Regenta Feijo 166 Sala 1687-B Centro Rio de Janeiro, 20060-060 Brazil Phone: 5521-519-6474 URL: http://www.embratel.net.br LIGHT SERVICOS: French Parent Plans Partner Search -------------------------------------------------- French power company EdF may take in a partner who will invest in its Brazilian electricity distributor Light Servicos de Electricidade SA, reports Business News Americas. "We have restructured the debt and started improving operations, now we want a partner that will put money into the company and take part in the company's management," Light CEO Jean-Pierre Bel said. "We haven't started this process yet and could even sell control, everything is possible." EdF, which holds 95% of Light, prefers to have a local partner that knows the Brazilian market, the executive said. Light recently signed a US$742-million debt restructuring agreement with 12 creditor banks and obtained a US$400-million capital injection from EDF. EDF's capital injection paves the way for a BRL727-million (US$300 million) loan from national development bank BNDES to help Light pay down BRL320 million in debts with federal power holding company Eletrobras and bolster its cash flow. Besides the capitalization from EdF, BNDES' conditions for the loan are an investment program to reduce losses and the listing of Light shares on the Novo Mercado, the highest corporate responsibility level of the Sao Paulo stock exchange Bovespa. This happened on Thursday. Meanwhile, Light plans to invest some US$136 million by the end of the year, a significant increase from 2004's US$105 million and US$91 million in 2003. Through the end of 2007 Light plans to invest a total of BRL1 billion (US$414 million), CFO Paulo Pinto said. A third of the investment will go to reducing commercial losses and fighting power theft, another third in maintenance and improvements to the network and the rest into expansion. The objective is to increase the number of clients by 50,000-80,000 a day. CONTACT: LIGHT SERVICOS DE ELETRICIDADE S.A. Avenida Marechal Floriano, 168 20080-002 Rio de Janeiro, Brazil Phone: +55-21-2211-2794 Fax: +55-21-2211-2993 Home Page: http://www.lightrio.com.br Contact: Bo Gosta Kallstrand, Chairman Michel Gaillard, President and CEO Joel Nicolas, Executive Director, Operation Paulo Roberto Ribeiro Pinto, Executive Director, Investor Relations and CFO TCP: Board Approves Capital Increase ------------------------------------ Telesp Celular Participacoes S.A. ("TCP"), (BOVESPA: TSPP3 (Common), TSPP4 (Preferred), NYSE: TCP), announced Friday that, at a meeting of the Board of Directors held on this date, an increase of capital by private subscription was assimilated for capitalization of the premium in the amount of R$242,595,157.06, upon issue of 29,298,932 new registered, book-entry common shares, with no face value, subscribed by the shareholders during the period for exercise of the preemptive right which started on June 29, 2005 and ended on July 28, 2005. To see table, click http://bankrupt.com/misc/TCP.htm CONTACT: Telesp Celular Participacoes S.A. VIVO - Investor Relations Phone: 55 11 5105-1172 Email: ri@vivo.com.br URL: www.vivo.com.br/ri =========== M E X I C O =========== AHMSA: Coal, Iron Ore Mines Boost 2Q Bottom Line ------------------------------------------------ Steelmaker AHMSA's (Altos Hornos de Mexico) iron ore and coal mining operations pushed the Company's net profit 8.7% higher year-on-year to MXN325 million (US$31 million) in the second quarter of 2005. Citing an AHMSA filing with the Mexico City's bourse, Business News Americas reports that operating profit during the quarter grew 19% to MXN1.04 billion. EBITDA soared 15.9% to US$146 million and sales jumped 18.6% to MXN5.78 billion. According to Business News Americas, AHMSA's coal and iron ore mines helped company margins as the cost of steel inputs grew and steel prices dropped on average 18% compared to past quarters. AHMSA, based in the northern city of Monclova, is Mexico's largest integrated steel maker with its own iron and coal mining operations. CONTACT: AHMSA International Operations Prolongacion Juarez s/n Monclova, Coah., 25770 Phone: + 52 (866) 649 34 00 Fax: + 52 (866) 649 23 10 E-mail: sales@ahmsa.com Web site: http://www.ahmsa.com.mx CYDSA: Ends 1H05 With MXN18 Million Net Profit ---------------------------------------------- Industrial group Cydsa moved back into profitable territory in the first half of the year, posting an MXN18-million (US$1.7 million) net profit, reports Business News Americas. Comparably, the Company ended the first half of 2004 with a net loss of MXN939 million. Total sales in the Jan-June 2005 period climbed 1.5% year-on- year to MXN3.45 billion. Gross profits reached MXN611 million in the period, down 6.9% compared to the first half of 2004. Cydsa attributed this dip to the high price of petrochemical materials and increases in energy prices, which have affected some areas of business. EBITDA was MXN228 million in the first half of 2005, a year-on- year increase of 3.9%. Operating profit rose 129% to MXN48 million in the same period. Operating costs were reduced by 11.3% to MXN563 million in 2Q05, a result of the firm's continued cost-cutting measures. Cydsa produces textiles, industrial packaging, chemicals, petrochemicals and plastics, and offers wastewater and environmental management services. CONTACT: GRUPO CELULOSA Y DERIVADOS S.A Jose de Jesus Montemayor Castillo Chief Financial Officer +011-52-81-8152-4585 URL: http://cydsa.com/Ingles/index.htm EMPRESAS ICA: S&P Ups Ratings to 'B', Off Watch; Outlook Stable --------------------------------------------------------------- Standard & Poor's Ratings Services has revised its long-term corporate credit rating on Empresas ICA S.A. de C.V. (ICA) to 'B' from 'B-'. The ratings have been removed from CreditWatch, where they were placed with positive implications on July 22, 2005. Standard & Poor's also raised its long-term national scale rating on ICA to 'mxBBB-' from 'mxBB+'. The outlook for all ratings is stable. The rating action follows a review of ICA's operating and financial prospects by Standard & Poor's. The rating action also follows the recent approval by ICA's shareholders of a $230 million capital increase and the payment of the group's corporate debt, which totaled around $44 million, in May 2005. "The ratings assigned to ICA consider the company's position as the largest engineering, construction, and procurement concern in Mexico," said Standard & Poor's credit analyst Jose Coballasi. The ratings also reflect a more favorable operating and financial performance and the improvements in ICA's capital structure and maturity schedule. We expect that key financial measures and liquidity will remain relatively weak as a result of the group's investment program and working capital needs, particularly in El Cajon. The ratings are also constrained by the risk of operating losses and swings in working capital associated with cost overruns that have hurt the company's financial performance and liquidity in the past. The ratings also reflect the inherent cyclicality of the construction industry and the company's dependence on government spending in infrastructure to sustain its backlog. ICA is the largest engineering, procurement, and construction company in Mexico. The company is engaged in a full range of construction and related activities, involving the construction of infrastructure facilities, as well as industrial, urban, and housing construction. In addition, the company is engaged in the development and marketing of affordable housing and real estate; the construction, maintenance, and operation of airports, highways, bridges, and tunnels; and the management and operation of water supply systems and solid waste disposal systems under concessions granted by the governmental authorities. We believe that, in addition to the presence of larger projects that allow the group to take advantage of economies of scale, the steady improvement in ICA's financial performance also reflects its efforts to improve profitability through significant workforce reductions, more advanced risk management systems, and investments in IT. Nevertheless, competition, mainly from foreign firms; the increased use of fixed price contracts, which represent the bulk of ICA's backlog; and thin margins, relative to other issuers, continue to pose important challenges for the company. Cost overruns, write-offs, provisions, and a number of extraordinary charges underscore the difficulties experienced by ICA in the past. The risks associated with the inherent cyclicality of the construction business and the dependence on government spending are evident in the backlog for Mexico's electric utilities and national oil company. The ratings and stable outlook are predicated on the expectation that ICA will complete the proposed equity issuance and will move forward with its investment program. The ratings also anticipate that the group's investment program will be paired down if the equity issuance falls short of the proposed amount. The stable outlook also reflects our expectations that ICA's leverage will remain relatively high until 2007, when the El Cajon project will be delivered. A positive rating action would have to be preceded by continued improvement in ICA's financial and operating performance. We anticipate that during the next two years, ICA's key financial measures will be comparable to those posted by other issuers in the same rating category. Primary Credit Analyst: Jose Coballasi, Mexico City (52)55-5081- 4414; jose_coballasi@standardandpoors.com Secondary Credit Analyst: Raul Marquez, Mexico City (52) 55- 5081-4437; raul_marquez@standardandpoors.com EMPRESAS ICA: Considers Exercising Option to Buy GACN Stake ----------------------------------------------------------- Engineering and construction concern Empresas ICA SA plans to exercise an option to buy a 36% stake in airport operator Grupo Aeroportuario Centro Norte (GACN) valued at US$203 million, reports Reuters. "The option for 36% of GACN for $203 million will be financed with debt -- we already have letters of commitment -- and we are also negotiating with several investors," said Chief financial officer Jose Luis Guerrero. "It will be (financed with) 50% equity and 50% debt," he added. ICA hopes to complete the deal before the end of the year. GACN, which operates 13 airports across northern and central Mexico, is majority controlled by the government. ICA is a partner with French firms Vinci and Aeropuertos de Paris in Servicios de Tecnologia Aeroportuaria (SETA), a consortium which already has a 15% stake in GACN. ICA is also looking to buy the 37.25% that Vinci has in SETA for US$38 million. CONTACT: Empresas ICA Sociedad Controladora S.A. de C.V. Col. Escandon Del Migual Hidalgo Mexico City, 11800 Mexico Phone: 525-272-9991 URL: http://www.ica.com.mx GRUPO ELEKTRA: BNY to Terminate GDSs Program August 1 ----------------------------------------------------- Grupo Elektra S.A. de C.V. (BMV: ELEKTRA*; NYSE: EKT; Latibex: XEKT), Latin America's leading specialty retailer, consumer finance and banking and financial services company announced Friday that as it was previously informed, on August 1, the Bank of New York (BoNY), at the Company's instruction, will terminate the Company's Global Depositary Shares (GDSs) program and, as a result, the New York Stock Exchange (NYSE) will suspend trading of its GDS. As of such date, the Company's GDSs will no longer trade on the NYSE. As it was previously announced, at an extraordinary shareholders' meeting held on June 1, 2005, 91.23% of Grupo Elektra's shareholders approved the termination of the GDS program, after an analysis and discussion of the costs and benefits of continuing to be listed in the U.S. capital markets. As it has been detailed, GDS holders will have 60 days to exchange their GDSs for common shares traded on the Mexican Stock Market (BMV). Upon the expiration of the 60-day period, BoNY will be allowed to sell the common shares underlying the GDSs that were not surrendered and distribute the proceeds of such sale to holders. CONTACTS: Esteban Galindez, CFA, Director of Finance and I.R. Grupo Elektra S.A. de C.V. Tel. +52 (55) 1720-7819 Fax. +52 (55) 1720-7822 egalindez@elektra.com.mx Bruno Rangel Director of Investor Relations Grupo Salinas Tel. +52 (55) 1720 9167 Fax +52 (55) 1720 0831 jrangelk@tvazteca.com.mx SATMEX: Settles Conflict With Creditors Regarding Ch. 11 Filing --------------------------------------------------------------- The ad hoc committees of holders of, respectively, the Senior Secured Floating Rate Notes due 2004 and the 10 - 1/8% Senior Notes due 2004, which are made up of U.S.-based creditors (the "Creditors") holding collectively in excess of US$385 million of the outstanding debt of Satelites Mexicanos, S.A. de C.V. ("Satmex" or the "Company") announced Friday at a hearing held before the U.S. Bankruptcy Court for the Southern District of New York that they have reached a settlement with the Company regarding the Creditors' involuntary Chapter 11 petition and Satmex's motion to dismiss the petition on jurisdictional grounds. As part of the settlement that was reached, Satmex has committed to present a restructuring proposal to the Creditors by October 31, 2005. On May 25, 2005, the Creditors filed an involuntary Chapter 11 petition against Satmex with the hopes of implementing a proposed restructuring agreement that had the support of creditors holding nearly three-quarters of the outstanding debt of Satmex and that included sufficient debtor-in-possession (DIP) financing to fund the launch of the Satmex 6 satellite. The Creditors believed that a debt restructuring through a Chapter 11 plan of reorganization could be achieved within 90 days and would substantially improve the Company's capital structure, allowing it to better serve the needs of its customers in Mexico, the United States, and throughout Latin America On June 29, 2005, Satmex filed a Mexican bankruptcy proceeding, known as a Concurso Mercantil, under the laws of Mexico, and later moved to dismiss the involuntary Chapter 11 petition in the U.S. Under the agreement in principle reached between the parties, Satmex will file a petition under section 304 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. Upon the commencement of a 304 proceeding, the Creditors will withdraw their involuntary petition. Section 304 of the Bankruptcy Code allows a foreign debtor (such as Satmex) to commence a proceeding that is ancillary (or related) to a foreign proceeding (such as Satmex's Concurso Mercantil). Section 304 also allows a U.S. Bankruptcy Court to protect assets or property of a debtor that are in the U.S. by issuing an injunction preventing any action against that property. Under the terms of the agreement in principle announced Friday, the Creditors have reserved the right to make a motion to the U.S. Bankruptcy Court seeking the dismissal of the 304 petition or the termination of any injunction ordered by the Court upon the occurrence of certain conditions. These conditions include any attempt to revoke or terminate Satmex's concessions, and any failure of Satmex to present a restructuring proposal to the Creditors by October 31, 2005. The Creditors also have the right to come back to the U.S. Bankruptcy Court seeking relief if Satmex 6 is not launched by June 30, 2006. The Creditors are pleased that the parties reached this consensual resolution of the involuntary Chapter 11 petition. They are also pleased that the U.S. Bankruptcy Court will have a role in the restructuring of Satmex, providing a forum for the Creditors to seek relief if there is any misconduct or other improper activities in connection with the Concurso Mercantil proceedings. Among other things, section 304 provides that U.S. Bankruptcy Courts should be "guided by what will best assure an economical and expeditious administration of [the debtor's] estate, consistent with ... protection of claim holders in the United States against prejudice and inconvenience in the processing of claims in such foreign proceeding." 11 U.S.C. section 304 (c)(2). Nevertheless, the Creditors echo the sentiments of presiding U.S. Bankruptcy Court Judge Robert Drain, who said at the hearing Friday, "It is my hope, that I hold very strongly, that it will proceed smoothly now and all of the key parties will be able to work together to facilitate Satmex's restructuring." By removing procedural question-marks, the Creditors are hopeful that Satmex, its equity holders, and especially the Mexican Government are now willing to engage in good faith restructuring talks, which were terminated by the Company after an agreement- in-principle had been reached with the Creditors in December 2004. While the Creditors continue to believe that a Chapter 11 restructuring in the U.S. would have been the best process for restructuring the Company's debt, the Creditors are prepared to engage in a Mexican proceeding if that is what is required to achieve a restructuring of Satmex in a timely manner. At the conclusion of the hearing Friday, Judge Drain commented on the Creditors' concerns about the Mexican restructuring process and the potential for misconduct or inappropriate behavior, "I recognize the fears the bondholders have. But I have confidence and hope those fears will be unfounded." The Creditors also echo these sentiments from Judge Drain. The ad hoc committees of holders of, respectively, the Senior Secured Floating Rate Notes due 2004 and the 10 - 1/8% Senior Notes due 2004, are represented, respectively, by Wilmer Cutler Pickering Hale and Dorr LLP and Akin Gump Strauss Hauer & Feld LLP. Evercore Partners is the financial advisor to the Senior Secured Floating Rate Noteholders. Chanin Capital Partners is the financial advisor to the 10 - 1/8% Senior Noteholders. CONTACT: SITRICK AND COMPANY Mike Sitrick, +1-310-788-2850 Tom Vogel +1-212-573-6100 Steven Goldberg, +1-212-573-6100 Jeff Lloyd, +1-212-573-6100 ================================= T R I N I D A D & T O B A G O ================================= BWIA: Airline's Future Awaits Cabinet Decisions ----------------------------------------------- Trade & Industry Minister Kenneth Valley informed that the Cabinet sub-committee on BWIA met on Friday as scheduled to discuss the final report prepared by a private sector team led by Arthur Lok Jack. Mr. Valley also said that the Cabinet subcommittee, chaired by Public Administration Minister Dr Lenny Saith, met with Lok Jack's team on Friday. However, Mr. Valley could not say exactly when the Cabinet will make its final decision. "As soon as Cabinet takes a decision... I mean I'm sure we're going to have, there's going to be a press conference." Lok Jack's team reviewed three specific options: a new structure for BWIA, establishing an entirely new state-controlled or majority-controlled airline, and the airline's possible closure at a cost of US$350 million (US$2.2 billion). CONTACT: BRITISH WEST INDIES AIRWAYS (BWIA) Phone: + 868 627 2942 E-mail: mail@bwee.com Home Page: http://www.bwee.com ================= V E N E Z U E L A ================= CANTV: Responds to Social Chamber's Pension Adjustment Decision --------------------------------------------------------------- Compania Anonima Nacional Telefonos de Venezuela (CANTV) (NYSE: VNT) commented Friday on the recent decision of the Social Chamber of the Supreme Court of Venezuela in the lawsuit brought by Federacion Nacional de Jubilados y Pensionados de Telefonos de Venezuela (FETRAJUPTEL) (the Venezuelan National Telephone Association of Retirees and Pensioners) regarding the adjustment of pensions of retirees of CANTV. In its comments, CANTV stated as follows: Last Tuesday, July 26, the Social Chamber issued an adverse decision to CANTV requiring the adjustment of pensions of retirees, retroactive to January 1, 1993. The pensions will be adjusted proportionally to the salary increases that resulted from the collective bargaining process. This decision applies to current and future retirees and their eligible survivors. In addition, and pursuant to the new Constitution enacted on December 30, 1999, adjusted pensions that have not reached the minimum urban wage as of that date should then be increased to that minimum. A lower court will perform the calculations necessary to determine the amounts due to each retiree or its eligible survivors. The additional pension amounts are not subject to interest or adjustment for inflation charges. The Company believes that this decision goes far beyond the specific guidelines issued by the Constitutional Chamber in January 25, 2005, to be strictly followed by the Social Chamber. The Company also believes that the decision is in violation of the Venezuelan Constitution and it is on this ground that CANTV will request a revision from the Constitutional Chamber. Currently the Company is assessing the potential economic impact that the Social Chamber's decision may have. This assessment requires time and the involvement of actuarial consultants experts in these matters. However, based on very preliminary internal calculations, the range of additional liabilities associated with this decision results in a very significant impact to the Company's balance sheet. As a matter of reference, should the decision become firm, the low value of the range would exceed retained earnings and the high value of the range would materially affect the Company's total equity. In addition, the payment of retroactive adjustments of pensions earned since 1993 to date, ordered in the decision, would significantly affect the Company's current cash position. CANTV indicated that it will be communicating future developments of this matter at the appropriate time. Finally, CANTV stated that despite the relevance of the issue just explained, the Company continues to be committed to its customers and all other relevant stakeholders, and will maintain its focus on executing its strategic plan. CANTV, a Venezuelan corporation, is the leading Venezuelan telecommunications services provider with approximately 3.1 million access lines in service, 3.1 million cellular subscribers and 363 thousand Internet subscribers as of December 31, 2004. The Company's principal strategic shareholder is a wholly owned subsidiary of Verizon Communications Inc. with 28.5% of the capital stock. Other major shareholders include the Venezuelan Government with 6.6% of the capital stock (Class B Shares), employees, retirees and employee trusts which own 7.1% (Class C Shares) and Telefonica de Espana, S.A. with 6.9%. Public shareholders hold the remaining 50.9 % of the capital stock. CONTACT: Cantv Investor Relations Phone: +011 58 212 500-1831 (Master) +011 58 212 500-1828 (Fax) E-mail: invest@Cantv.com.ve The Global Consulting Group Ms. Lauren Puffer Phone: 646 284-9426 (US) E-mail: lpuffer@hfgcg.com CANTV: Morgan Stanley Reduces Stock Recommendation -------------------------------------------------- Investment house Morgan Stanley cut Compania Anonima Nacional Telefonos de Venezuela (CANTV) (NYSE:VNT) to underweight from overweight after the Supreme Court ordered the telecommunications firm to adjust its pensions to meet the new minimum wage level, reports Dow Jones Newswires. "The company's estimate of the size of the pension hole puts dividends and valuation at risk," Morgan Stanley said. At the low end, CANTV will be adding US$700 million to its enterprise value, and this would "seriously curtail their ability to pay dividends as it wipes out the company's retained earnings," Morgan Stanley said. CANTV has said that it will look to appeal the court's ruling. However, Morgan Stanley believes that a court reversal is unlikely, as decisions in favor of labor complaints appear to be gaining momentum. CANTV will trade at the lower end of its historical range, or a stock price below US$15, the investment house forecast. CONTACT: Cantv Investor Relations Phone: +011 58 212 500-1831 (Master) +011 58 212 500-1828 (Fax) E-mail: invest@Cantv.com.ve The Global Consulting Group Ms. Lauren Puffer Phone: 646 284-9426 (US) E-mail: lpuffer@hfgcg.com *********** 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. 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 * * *