/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/050922.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 Thursday, September 22, 2005, Vol. 6, Issue 188 Headlines A R G E N T I N A AGUAS ARGENTINAS: Creditors Must Take Action Ahead of Suez Exit ALTO PALERMO: Directors Subject to Sumario Initiated by CNV BERGIL S.A.: General Report to be Submitted Sept. 23 BLANQUITA S.A.: Deadline for Gen. Report Submission Approaches DYT COMUNICACIONES: Trustee to Present General Report in Court IRSA: CNV Initiates Sumario to Company's Shareholders * BUENOS AIRES: To Unveil Details of $2.9B Debt Plan This Week B E R M U D A TYCO INTERNATIONAL: SEC Likely to File Fraud Suit Vs. Company B R A Z I L AES CORP.: Appoints New Execs at Brazilian Units BANCO BRADESCO: Board OKs Proposal on Monthly Payment System CAMARGO CORREA: Ratings Reflect Fierce Competition CERVEJARIAS KAISER: Parent Exploring Options for Struggling Unit * BRAZIL: Fitch Rates Local Currency Global Bond Issue 'BB-' C O L O M B I A AVIANCA: Coffee Growers Federation to Divest of 25% Stake TELECOM: Govt. to Award WiMax License to Boost Attraction C O S T A R I C A ROYAL AHOLD: To Sell Stake in Central American JV to Wal-Mart M E X I C O ASARCO: Wants to Employ Ordinary Course Professionals LUZ Y FUERZA: Four Firms Bid for 14 Gas-Fired Projects UNITED RENTALS: Completes Consent Solicitations From Bondholders P E R U TELEFONICA DEL PERU: Fitch Rates $200M Proposed Sr. Notes 'BB' V E N E Z U E L A ALIMENTOS POLAR: President Supports Expropriation of Assets CADAFE: Subsidiaries Suffer Power Outage EDC: S&P Affirms 'B' Rating; Assigns Stable Outlook - - - - - - - - ================= A R G E N T I N A ================= AGUAS ARGENTINAS: Creditors Must Take Action Ahead of Suez Exit --------------------------------------------------------------- Argentina's planning ministry advised creditors of Buenos Aires water company Aguas Argentinas to take the necessary actions ahead of the imminent withdrawal of French group Suez, which owns 39.9% of the concessionaire, reveals Business News Americas. There is a possibility that creditors of Aguas Argentinas could call for the immediate repayment of debts, which would trigger the automatic cancellation of the concession under the contract. Some observers, however, have discarded this possibility because of the unwelcome publicity this would attract for Suez, given that the Buenos Aires utility is its main international concession. In any case, it would be a last resort for creditors assuming negotiations go badly. ALTO PALERMO: Directors Subject to Sumario Initiated by CNV ----------------------------------------------------------- Alto Palermo S.A. (APSA) informs that some of its directors who are also directors of Banco Hipotecario are subject to two proceedings (a "sumario") initiated by the CNV to them on July 22 and on August 25, 2005 in connection with certain payments made in 2005 to the members of Banco Hipotecario executive committee under their Management Compensation Plan. The Banco Hipotecario Shareholders' Meeting held last August 31 ratify and approved such payments and all the measures taken by the directors in connection with the payments. Notwithstanding the foregoing, the Company believes that such proceedings would not have a material adverse effect on its directors or impact in the Company results and operations. CONTACT: Alto Palermo S.A. (APSA) 2/F 476 Hipolito Yrigoyen Buenos Aires Argentina Phone: +54 11 4344 4600 Web site: http://www.altopalermo.com.ar BERGIL S.A.: General Report to be Submitted Sept. 23 ---------------------------------------------------- The general report on the bankruptcy case of Bergil S.A. will be submitted tomorrow, Sep. 23, 2005. Ms. Marta Susana Polistina, the court-appointed trustee, will include in the report an audit of the Company's accounting and business records. Ms. Polistina validated creditors' proofs of claims until June 15, 2005 and prepared individual reports out of the verified claims. The reports were submitted in court on Aug. 11, 2005. Bergil S.A. entered bankruptcy protection after Court No. 26 of Buenos' Aires' civil and commercial tribunal, with the assistance of Clerk No. 52, ordered the Company's liquidation. CONTACT: Ms. Marta Susana Polistina, Trustee Avda Corrientes 745 Buenos Aires BLANQUITA S.A.: Deadline for Gen. Report Submission Approaches -------------------------------------------------------------- The deadline for the submission of the general report on the Blanquita S.A. bankruptcy case will be tomorrow, Sept. 23, 2005. On Aug. 12, the individual reports were presented in court for approval. These reports were based on creditors' claims, which underwent verification phase until July 1, 2005. The Company entered bankruptcy protection after Court No. 6 of Buenos Aires' civil and commercial tribunal, with the assistance of Clerk No. 12, ordered the Company's liquidation and appointed Mr. Marcelo Horacio Liderman as trustee. CONTACT: Mr. Marcelo Horacio Liderman, Trustee Pinzon 1555 Buenos Aires DYT COMUNICACIONES: Trustee to Present General Report in Court -------------------------------------------------------------- Mr. Jorge Podhorzer, the trustee appointed by the court for the DYT Comunicaciones S.R.L. liquidation, will present the general report on the case tomorrow, Sept. 23, 2005. The presentation followed the submission of the reports on creditors' individual claims against the Company on Aug. 11, 2005. The claims were verified until June 16, 2005. Court No. 12 of Buenos Aires' civil and commercial tribunal ordered the liquidation of DYT Comunicaciones S.R.L. after the Company defaulted on its debt obligations. Clerk No. 24 assists the court on this case that will end with sale of the Company's assets. CONTACT: Mr. Jorge Podhorzer, Trustee Pasaje del Carmen 716 Buenos Aires IRSA: CNV Initiates Sumario to Company's Shareholders ----------------------------------------------------- IRSA Inversiones Y Representaciones Sociedad Anonima announced that CNV initiated to some of the Company's directors, who are also directors of Banco Hipotecario, on July 22 and on August 25, 2005 two proceedings (a "sumario") in connection with certain payments made in 2005 to the members of Banco Hipotecario executive committee under their Management Compensation Plan. The directors are subject to the sumario. The Banco Hipotecario Shareholders' Meeting held last August 31 ratify and approved such payments and all the measures taken by the directors in connection with the payments. The Company believes that such proceedings would not have a material adverse effect on its directors or impact in the Company results and operations. CONTACT: IRSA Inversiones y Representaciones S. A. Alejandro Elsztain, Director Gabriel Blasi, CFO Tel: +011-5411 4323-7449 E-mail: finanzas@irsa.com.ar * BUENOS AIRES: To Unveil Details of $2.9B Debt Plan This Week -------------------------------------------------------------- Argentine province Buenos Aires will reveal details of its US$2.9 billion debt-restructuring plan this week, Dow Jones Newswires reports. A technical presentation is expected in the next few days after Italian securities regulator Consob approves the documents for the global offering, said spokesman for provincial economy ministry, Enrique Velazquez. After that it should take around 20 days for the launch of the offering. Velazquez gave no details but hinted that a report by local daily El Cronista earlier Monday, which stated that the proposed cut or estimated loss to holders of the province's debt will be between 65% and 70%, was more or less correct. The report also mentioned that a long-term par bond, a medium- term par bond and a discount bond of shorter duration would be offered with each bond dominated in dollars or euros. These bonds would replace some 16 outstanding defaulted bonds. Accuracy in the report would mean that the main elements of a draft document disclosed in July have not changed. The document would highlight the same structure for the three bonds. While the draft document gave no sign of maturities or interest rates, it cited a 65% face value reduction for the discount bond and limitations on the amount of discount bonds and medium-term par bonds to be issued. The draft also said that a portion of the past-due interest accumulated before and after the January 2002 default would be capitalized into bondholders' claims. Velazquez and other ministry officials have been emphasizing that Buenos Aires' offering will use the debt swap done by the national government as a standard to follow and that restructuring carried an estimated slash of 70%, though the subsequent strong upturn in the value of the bonds has boosted the return to anyone who participated in it. ============= B E R M U D A ============= TYCO INTERNATIONAL: SEC Likely to File Fraud Suit Vs. Company ------------------------------------------------------------- New York State Prosecutor Owen Heimer revealed Monday that the U.S. Securities and Exchange Commission may have decided to bring charges of accounting fraud against Tyco International Inc., reports Reuters. Mr. Heimer disclosed the potential suit following the sentencing hearing for ex-Tyco chief executive L. Dennis Kozlowski, who along with finance chief Mark Swartz was convicted in June of 22 felonies, including a dozen counts each of grand larceny. Kozlowski and Swartz were both sentenced to 8.3 to 25 years in jail for fraud. Bloomberg said in a report that the prosecutor's comments signal that Tyco may be close to resolving an SEC investigation of acquisition accounting that has dogged the Company for at least three years. The SEC often files a civil suit spelling out its factual allegations and legal claims against a company at the same time that the agency announces a settlement. The SEC also usually postpones its cases during related criminal prosecutions. =========== B R A Z I L =========== AES CORP.: Appoints New Execs at Brazilian Units ------------------------------------------------ US power company AES Corp. (NYSE: AES) has changed personnel at its Brazilian holding company Brasiliana and distributor Eletropaulo Metropolitana SA to boost their financial management and relations with national development bank BNDES. According to Business News Americas, the Company named Britaldo Soares as CFO, replacing Adrea Ruschmann, who was named executive treasury officer and investor relations officer. Jeff Safford was appointed as executive officer for relations between AES and Brasiliana. He will answer to AES' Brazil country manager Eduardo Bernini and mediate relations between AES and BNDES. Brasiliana is a joint venture between AES Corp. and BNDES. The holding company controls AES' assets in Brazil including Eletropaulo and generators AES Tiete and AES Uruguaiana. According to an Eletropaulo spokesperson, the new appointments will not affect the long-term management of Eletropaulo's finances, which includes an agreement with creditors for repaying its debt with local cash flow generation. CONTACT: Eletropaulo Metropolitana Eletricidade de Sao Paulo S/A Investor Relations Manager Ms. Clarice Silva Assis E-mail: clarice.assis@aes.com Phone:(55 11) 2195-2229 Fax:(55 11) 2195-2503 BANCO BRADESCO: Board OKs Proposal on Monthly Payment System ------------------------------------------------------------ The Board of Directors of Banco Bradesco S.A. approved in a meeting held Tuesday the proposal submitted by the Board of Executive Officers to set the system for monthly payment to shareholders of Interest on Own Capital, to be complied with by the Company. Banco Bradesco S.A. Executive Vice President and Investor Relations Director Jose Luiz Acar Pedro in a letter sent to the Securities and Exchange Commission on September 20, 2005 informed: a) Record Date - For the purposes provided for by the Article 205 of the Law 6,404/76, the Monthly Interest on Own Capital shall benefit shareholders who are registered in the Company's records on the first business day of each month; b) Payment Date - The Payments shall be made on the first business day of the subsequent month, by monthly advance of the mandatory dividend, by means of credit in the account informed by the shareholder or made available in the Company; c) Monthly Amount - R$0.057000 per common share and R$0.062700 per preferred share, to be paid by the net amount of R$0.048450 per common share and R$0.053295 per preferred share, minus Withholding Income Tax of fifteen percent (15%), except for legal entity shareholders which are exempt from the referred taxation, which shall receive by the declared value. The respective Interests will be computed, net of Withholding Income Tax, in the calculation of the mandatory dividends for the year as provided in the Corporate By-Laws. The Interests relating to the stocks under custody at CBLC - Brazilian Company and Depository Corporation will be paid to CBLC that will transfer to the stockholders through the depository Brokers. Following, the Chairman stated that: 1. The system approved will come into force from the Interest on Own Capital related to the month of October 2005, having as record date shareholding position as of October 3, 2005, to be paid on November 1, 2005; 2. The Board of Executive Officers was authorized to take all the necessary steps in order to credit the respective interest in an individualized manner, as from this date, to the stock account of the Company's stockholders; and 3. For the stockholders with inactive accounts, the interest amount will be maintained available in the Company, the same occurring in respect to those with no CPF (Individual Taxpayer Identification Number) or CNPJ (Corporate Taxpayer Identification Number) registered in the records, until they satisfy the legal requirement. CONTACT: Banco Bradesco S.A. Investor Relations Jean Philippe Leroy Phone: 55 11 3684.9229 Luiz Osorio Leao Filho Phone: 55 11 3684.9302 URL: www.bradesco.com.br/ir CAMARGO CORREA: Ratings Reflect Fierce Competition -------------------------------------------------- ISSUER CREDIT RATING Corporate Credit Rating Local currency: BB/Stable/-- Corporate Credit Rating Foreign currency: BB-/Stable/-- AFFIRMED RATINGS Camargo Correa Cimentos S.A. Sr unsecd debt Foreign currency: BB- Major Rating Factors Strengths: - Favorable location of CCC's plants in Southeast Brazil (close to the largest consumption centers in the country) - Competitive cost position in cement production and distribution - Moderate financial policy - Implicit parental support from Camargo Correa Group Weaknesses: - Exposure to the swings in cement demand in Brazil, which has been sluggish in the past few years and is only now gradually recovering - Fierce competitive environment, reducing cement prices in the Southeast of the country - Relative small size in a competitive industry where larger national and international players also participate - Potential risks deriving from its expansion strategy, which is primarily acquisition driven Rationale The ratings on Camargo Correa Cimentos (CCC) reflect the following risks: exposure to the swings in cement demand in Brazil, which has been sluggish in the past few years and is only now gradually recovering; a fierce competitive environment, reducing cement prices in the Southeast of the country; the relative small size in a competitive industry where larger national and international players also participate; and potential risks deriving from its expansion strategy, which is primarily acquisition driven. These risks are partially offset by the following strengths: the favorable location of CCC's plants in Southeast Brazil (close to the largest consumption centers in the country); competitive cost position in cement production and distribution; moderate financial policy; and implicit parental support from Camargo Correa Group. CCC is the third-largest Brazilian cement company in terms of installed capacity and fourth largest in terms of production, with a total installed capacity of six million tons/year, producing cement under the Caue brand name in Brazil. The company has broad portfolio products, such as grey cement, white cement, concrete, silica, and mortar. Even though CCC has 70% of the total Brazilian white cement market, gray cement represents 90% of its total revenues. The company produces its products in five plants located in the states of Sao Paulo, Minas Gerais, and Mato Grosso do Sul. In first-half 2005, the Camargo Correa Group acquired control of the holding company that controls Loma Negra C.I.A.S.A. (Loma Negra), whose operations are expected to eventually be combined with those of CCC. After this has been done, CCC will also become a leading cement producer in Argentina. The further consolidation of Loma Negra, the largest cement producer in Argentina, producing 3.1 million tons, will strength CCC's business position in the cement industry, increasing its geographic diversification and its total production to about 5.7 million tons per year. Nowadays, the cement market in Argentina is strong, presenting increasing demand and steady prices. On the other hand, the acquisition will add some volatility to CCC's business portfolio due to economic vulnerabilities in the country. CCC has reported a moderate financial policy, given the fact that it is aligned to those of the group, and we expect that CCC will receive any necessary financial support to help it maintain financial leverage limited to CCSA's targets (net debt to EBITDA of less than 3x), as has already happened in the past. Parental financial support for CCC has already been demonstrated in August 2004 through a capital increase provided by the group. In addition, a further capital injection is expected as a result of Loma Negra's acquisition, as soon as the antitrust body approves the acquisition. After the consolidation of Loma Negra into CCC, we expect credit metrics to gradually but consistently improve within the next several quarters, not only due to the strengthening cash flow in Brazil but also to possible debt reductions in Argentina. We also believe that additional capital investments that could potentially cause leverage limits to be surpassed will be funded by the rest of CCSA, either in the form of intercompany loans or capital infusions. The demand for cement in Brazil remains weak, combined with the fact that a fierce competitive environment in the past couple of months has affected cement prices in general, but particularly in southeast Brazil, directly affecting CCC's and other players' profitability since last year. Some cost pressures, especially energy and raw materials, also contributed to the 30.4% annualized margin in June 2005, compared to 36.5% by fiscal year-end 2004. Standard & Poor's believes that infrastructure and housing investments in the country will gradually recover in the next couple of years, helping CCC to recover and sustain EBITDA margins at about 40% in the future. On the other hand, despite the negative impact on operating margins, cash flow remains relatively adequate. Funds from operations (FFO) and free operating cash flow (FOCF) over the past three years averaged $71 million and $39 million, respectively ($20 million and $17 million in June 2005). Liquidity CCC has been reporting low debt vis-�-vis cash generation and strong financial flexibility through its liquidity position and its access to the national and international capital markets. Parental support is also an integral part of the analysis, and we believe that CCC will count on financial support to finance acquisitions or to provide support under any difficult conditions. In June 2005, CCC's total debt reached about $340 million; a small portion of 3% of the total is concentrated in the short term. The remaining debts are spread out over the next several years, including the semi-annual amortization of its BrR360- million debentures. Its $150 million MTNs, recently issued to refinance its US$150 million notes, will mature over the next 10 years. In addition to its comfortable schedule amortization, CCC counts on a projected low maintenance capital expenditure with a relatively adequate FOCF, adding comfort to the company's liquidity position. Financial ratios by year-end 2005 will continue to be affected by lower profitability and cost pressures when compared with 2004's results, which is also due to a moderate increase in additional debt (subordinated debenture issuance in the Brazilian capital markets of BrR360 million), as a consequence of Loma Negra's acquisition. While debt is added to CCC's balance sheet, Loma Negra will also bring approximately $140 million in EBITDA generation to the consolidated results (after antitrust approval). The acquisition also reduced liquidity as cash reserves ($62 million in June 2005) were consumed; we expect the company's liquidity position to gradually build up again, as free cash flow will also be increased. Outlook The stable outlook on CCC's local currency rating reflects our expectation that the company's financial profile will remain conservative despite programmed capital expenditures and potential acquisitions in the future. At present, the company counts on enough liquidity and low levels of indebtedness to fund these expenditures. Parental support is also an integral part of the analysis, and we believe that CCC will not only remain one of the most important operations for the Camargo Correa Group, but that it will also count on financial support to finance acquisitions or to provide support under any difficult conditions. Therefore, a negative action on the ratings and outlook may come from an increase in leverage and deterioration of credit measures under a scenario of relaxed financial policy targets for the company or the whole group. A positive action on the ratings would depend on structural and permanent improvements in Camargo Correa Group's financial and business profiles, surpassing scale, market, and synergy gains deriving from its current growth strategy already under implementation (which includes the improvement in the business fundamentals not only for its cement operation but also for its textile and footwear divisions). The stable outlook on the foreign currency rating reflects that of the sovereign foreign currency rating on the Federative Republic of Brazil. Primary Credit Analyst: Juliana Gallo, Sao Paulo (55) 11-5501-8948; juliana_gallo@standardandpoors.com Secondary Credit Analyst: Reginaldo Takara, Sao Paulo (55) 11-5501-8932; reginaldo_takara@standardandpoors.com CERVEJARIAS KAISER: Parent Exploring Options for Struggling Unit ---------------------------------------------------------------- Molson Coors Brewing Company, the world's fifth-largest global brewer, reiterated Tuesday that it is continuing to explore a full range of options for its Brazilian business unit, Cervejarias Kaiser, which includes discussions with third parties regarding the business. In May, Molson Coors CEO Leo Kiely said the parent company would not put additional money into the Brazilian unit until it stopped losing money. Many believe Molson Coors would be better off if it sold the unit. "The expectation is that they are looking to sell it clearly," said analyst Bill Chisholm who tracks Molson Coors for Dundee Securities. "They're not putting any more money into it, and it seems to be at very best stagnant, if not still deteriorating, so it needs someone who is more committed to it to get it turned around," he said. Legg Mason analyst Mark Swartzberg also suggested last week that a sale of Brazil's third-largest brewer by parent Molson Coors may be "near at hand." Swartzberg pegged the sale price at US$150 million. According to a research report by Merrill Lynch, Cervejarias Kaiser could make an attractive takeover target for such international brewing rivals as Femsa, SABMiller and Modelo. * BRAZIL: Fitch Rates Local Currency Global Bond Issue 'BB-' ------------------------------------------------------------ Fitch Ratings, the international rating agency, assigned Tuesday a 'BB-' rating to the local currency (Brazilian Real) denominated global bonds valued at BRL3.4 billion (approximately US$1.5 billion) issued Monday with a coupon of 12.5% per year. The Outlook on the rating is Stable. Brazil's sovereign ratings reflect a balance between the favorable trends in Brazil's external finances and the risk that political gridlock could hamper improvements in public debt dynamics and constrain economic growth. Officials of the PT party have been accused of bribing congressman for key votes and of campaign finance irregularities stemming from President Lula's 2002 election campaign. Corruption investigations could prevent the passage of reforms and stymie the budgetary process, though Fitch does not expect any major fiscal or monetary policy slippage as a result. Of note was the passage in August (albeit late) of the budget guidelines law (the LDO), with its spending and tax ceilings intact. A downside political scenario cannot be ruled out, however, in which key economic policy officials are implicated and forced to resign, policy slippage ensues, and even impeachment proceedings against President Lula are initiated. Uncertainty about the outcome of the October 2006 national elections has increased as well. Brazilian balance of payments performance continues to be favorable, with exports expanding 22.7% in the year to the second week of September to total US$79 billion, versus an increase of 19.4% in imports to US$49 billion over the same period. Performance on one of Fitch's key external solvency indicators has improved as a result, with net external debt (NXD) to current external receipts (CXR) expected to fall to below 100% by year-end from 233% in 2002. It is true that import growth has accelerated in recent months, buoyed by a strong Real, and export volume growth has begun to explain somewhat less of Brazil's export performance in recent weeks. Furthermore, with the cycle of monetary easing under way since mid-September and global growth expected to slow, improvements in balance of payments and external debt indicators should begin to taper off. On public finances, last year the Lula government outperformed its original primary budget surplus target of 4.25% of GDP, achieving 4.6% on strong tax revenue growth. Nevertheless, given how robust 2004 GDP growth was (4.9%) and how high 2004 general government debt was (75% of GDP), perhaps more of the windfall could have been saved. Public finance performance this year is on target to producing a primary surplus of at least 4.4% of GDP, also in excess of the target. CONTACT: Roger M. Scher +1-212-908-0240, New York Morgan Harting +1-212-908-0820, New York MEDIA RELATIONS: Kenneth Reed +1-212-908-0540, New York =============== C O L O M B I A =============== AVIANCA: Coffee Growers Federation to Divest of 25% Stake --------------------------------------------------------- Colombia's Coffee Growers Federation revealed Monday it has reached an understanding with Brazil's Synergy group to sell its 25% percent stake in Avianca for about US$23 million, reports Reuters. "We have not signed any documents but we are in conversations and we have a pre-agreement," Federation chief Gabriel Silva told local radio. Synergy, a group of companies owned by Brazilian businessman German Efromovich, acquired 75% of Avianca late last year. A source close to Synergy said a deal to buy the remaining 25% of Avianca could be reached in October. Avianca exited bankruptcy earlier this year after having filed for bankruptcy protection in March 2003. Founded in 1919, Avianca is considered the second oldest airline in the world. The Company has 35 planes, more than 5,000 employees and operates 290 daily flights to 18 Colombian and 17 international destinations. TELECOM: Govt. to Award WiMax License to Boost Attraction --------------------------------------------------------- The communications ministry plans to sign a resolution to award nationwide WiMax licenses for free to three national long distance operators, including state-run Colombia Telecomunicaciones (Telecom). The move, according to Business News Americas, is seen by some analysts as the government's way of adding value to Telecom in order to proceed with its partial privatization. "This is a government move to raise the stakes in the middle of Telecom's negotiations [for a strategic partner]. The government is giving Telecom something that adds value such as the license, which is obviously going to raise the strategic attractiveness of Telecom," Business News Americas quoted Yankee Group senior analyst Wally Swain as saying. Telecom has been in talks with Mexico's Telmex (NYSE: TMX) and Spain's Telefonica (NYSE: TEF) to sell part of its operations. The government has not made any final decision on the matter, although Telmex has presented the best offer so far. =================== C O S T A R I C A =================== ROYAL AHOLD: To Sell Stake in Central American JV to Wal-Mart ------------------------------------------------------------- Royal Ahold announced Tuesday that it has agreed to sell its indirectly owned 33.3% stake in CARHCO NV, its Central American joint venture, to U.S. retail giant Wal-Mart Stores Inc.. The move is part of the Company's strategy to optimize its portfolio and to strengthen its financial position by reducing net debt. Royal Ahold will book a " substantial book gain" on the sale of the stake, a spokesman said, adding that the Dutch retailer will book the gain immediately after the deal is signed. CARHCO owns an 85.6% stake in La Fragua S.A. ("La Fragua"), a discount store, supermarket and hypermarket company in Guatemala, with a presence in El Salvador and Honduras. CARHCO also fully owns Corporacion de Supermercados Unidos S.A. ("CSU"), a discount store, supermarket and hypermarket operator in Costa Rica, Nicaragua and Honduras. In addition, CSU fully owns Corporaci�n de Compa�ias Agroindustriales, S.A., a company that sources all of the fresh products for CSU and La Fragua and which also develops private label articles. As of August 2005, CARHCO operated in total 363 stores in Guatemala (120), El Salvador (57), Honduras (32), Costa Rica (124) and Nicaragua (30). =========== M E X I C O =========== ASARCO: Wants to Employ Ordinary Course Professionals ----------------------------------------------------- Before the Petition Date, ASARCO LLC and its debtor-affiliates employed various professionals in the ordinary course of business to render services relating to the numerous issues that arose in their normal business affairs unrelated to the Reorganization Cases. The Debtors continue to require the services of the Ordinary Course Professionals after the Petition Date. Accordingly, the Debtors seek authority from the U.S. Bankruptcy Court for the Southern District of Texas to employ the Ordinary Course Professionals to provide services on terms substantially similar to those in effect before the Debtors' bankruptcy filings, without the need to file individual retention applications for each professional. James R. Prince, Esq., at Baker Botts, LLP, Dallas, Texas, tells the Court that it would severely hinder the administration of the Debtors' estates if they were required to: (1) submit to the Court an application, affidavit and proposed retention order for each Ordinary Course Professional; (2) wait until the order is approved before the Ordinary Course Professional continues to render services; and (3) withhold payment of the normal fees and expenses of the Ordinary Course Professionals until the Professionals comply with the compensation and reimbursement procedures applicable to Chapter 11 professionals. Mr. Prince further informs the Court that requiring the Ordinary Course Professionals to file employment pleadings and participate in the fee application process would unnecessarily burden the Clerk's office, the Court, and the U.S. Trustee, while adding to the administrative costs of the case. Moreover, the Debtors seek authorization to supplement their list of professionals from time to time as necessary. The Debtors propose to file the supplemental lists with the Court and to serve the lists on the Office of the U.S. Trustee and to counsel for any statutory creditors' committee appointed in the Debtors' cases. If no objections are filed to a supplemental list within 10 days after service of the list, then the retention of the professionals set forth thereon will be deemed approved. The filing of the Debtors' voluntary petitions stayed the commencement or continuation of any action or proceeding against the Debtors. Many of the Ordinary Course Professionals include attorneys previously retained to represent the Debtors in the stayed litigation. In the event that the automatic stay is lifted with regard to any or all of these actions, the Debtors seek authority to employ these professionals in the ordinary course of business. The Debtors also propose to pay the Ordinary Course Professionals without the need for formal application to the Court, provided that the fees and disbursements do not exceed an average of $20,000, per month per professional. The Debtors propose to pay each professional 100% of its interim fees and disbursements upon the submission of an appropriate invoice detailing the services rendered. The Debtors further propose that the monthly allowances for fees be done on a "rolling" basis. Specifically, when any fees are less than the monthly allowance in any month, the remainder of the monthly allowance will be made available for compensation in the following month, in addition to the $20,000 allowance for that month. Conversely, if any professional's fees exceed the monthly allowance, the remaining balance will be added to the fees for the following month. Thus, if a professional's fees in the first month total $15,000, the professional would be paid 100% of its fees, and the additional $5,000 would be "rolled over" to the second month, for a potential payment of $25,000, in the second month. If, during the second month, the fees total $30,000, the professional would be paid $25,000, and the remaining $5,000 balance would be "rolled over" and added to the professional's fees tier the third month. To become entitled to receive compensation and reimbursement amounts in excess of such monthly allowance, the Ordinary Course Professionals need to submit monthly statements and file interim and final fee applications, although no additional retention applications will be needed to obtain compensation and reimbursement. The statements and applications would apply to the entire amount of fees and expenses, not simply to the amount that exceeds the dollar limitations. The Debtors also ask the Court to authorize the Ordinary Course Professionals that have prepetition retainers to apply the retainer to their outstanding prepetition fees and expenses, upon the Debtors' approval. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors,it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05- 20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000). LUZ Y FUERZA: Four Firms Bid for 14 Gas-Fired Projects ------------------------------------------------------ Four companies have submitted bids for Mexican state-owned electric power company Luz y Fuerza del Centro's (LFC) fourteen 32MW natural gas-fired power generation projects in the Federal District (DF) and Mexico state (Edomex), reports Business News Americas. The companies that submitted bids by the September 7 deadline were Grupo Sentir (Rolls Royce Energy), Pratt and Whitney Power Systems, GE International Mexico and Turbinas Solar. LFC could award contracts to more than one company in October. Winning bidders must submit an environmental impact study (EIS) for each project. Total investment in the project is estimated at US$500 million. The projects will help ease LFC's distribution bottlenecks and reduce its dependence on state power firm CFE for generation. UNITED RENTALS: Completes Consent Solicitations From Bondholders ---------------------------------------------------------------- United Rentals, Inc. (NYSE: URI) announced Tuesday the successful completion of its previously announced consent solicitations from bondholders. As of 5:00 p.m. EST, on September 19, 2005, the required majority of holders of each issue of the outstanding bonds and QUIPs securities had consented to the amendments and waivers that the company was seeking pursuant to the consent solicitations. Wayland Hicks, chief executive officer, said, "We are pleased to have obtained amendments that are reasonable for all parties involved. We remain focused on addressing outstanding issues with the SEC inquiry as we work toward finalizing our results for 2004 and subsequent periods." About United Rentals United Rentals, Inc. is the largest equipment rental company in the world, with an integrated network of more than 730 rental locations in 48 states, 10 Canadian provinces and Mexico. The company's 13,200 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers for rent over 600 different types of equipment with a total original cost of $3.9 billion. United Rentals is a member of the Standard & Poor's MidCap 400 Index and the Russell 2000 Index(R) and is headquartered in Greenwich, Conn. CONTACT: United Rentals, Inc. Chuck Wessendorf Tel: 203-618-7318 E-mail: cwessendorf@ur.com Alfred Colangelo Tel: 203-618-7141 E-mail: acolangelo@ur.com URL: http://unitedrentals.com ======= P E R U ======= TELEFONICA DEL PERU: Fitch Rates $200M Proposed Sr. Notes 'BB' -------------------------------------------------------------- Fitch Ratings has affirmed Telefonica del Peru S.A.A.'s (TDP) international scale local currency unsecured debt rating at 'BBB+' and foreign currency unsecured debt rating at 'BB', and has assigned a 'BB' rating to its proposed US$200 million senior unsecured notes to be issued in PEN currency and paid in USD currency. The Rating Outlook is Stable. Fitch also maintains an international scale rating of 'BBB' for TDP's Grantor Trust, a securitization of international settlement rates receivables. Fitch's Peruvian affiliate Apoyo & Asociados has a national rating of 'AAA(pe)' for TDP. Use of proceeds for the proposed notes is expected to be for general corporate purposes, including working capital and capital expenditures. The ratings reflect TDP's solid business position as the largest Peruvian telecommunications company, the diversified revenue stream from its various business segments, healthy cash flow generation, relatively low capital expenditure needs and a strong financial profile. The ratings incorporate regulatory risks, continued pressure on local service tariffs, heightened competition, as well as moderately higher financial leverage following the completion of the debt offering and over the medium term. Fitch expects that TDP will continue to maintain a financial profile consistent with the rating category. The 'BB' rating of the proposed notes incorporates transfer and convertibility risks associated to the settlement of the notes, as they will be issued in PEN but paid in USD at market exchange rates; however, the new issuance will not add foreign exchange risk to the company's financial risk profile. TDP's local-service business, which accounts for about 37% of consolidated revenues as of June 30, 2005, provides the company with a relatively stable source of cash flow. TDP currently has a 97% market share in the local service business. Going forward, the company should maintain a leading market position due to its economies of scale, extensive network and established brand name. TDP also benefits from a diversified revenue stream that helps reduce cash flow volatility. Over the past year and despite the appreciation of the local currency, growth in the cable television and broadband segments partially offset revenue declines in more mature segments such as local service, long distance and public telephony. The broadband segment holds significant future growth opportunities due to the low penetration of these services. For the next few years, consolidated revenues are expected to remain relatively stable as revenue growth from broadband services, and to a lesser extent cable television, are expected to fully compensate for declining revenues in other business segments such as local, public telephony and long distance. The ratings incorporate regulatory risk and heightened competition in the Peruvian telecom market that have driven rates downward, particularly in the local and long distance segments. Local-service tariffs have declined due to the establishment in September 2001 of a productivity factor that reduced real tariffs every three months by an annual rate of 6%. The productivity factor is revised and adjusted every three years. The new productivity factors, which became effective September 2004, further reduce tariffs by an annual rate of 10.07% less inflation for connection fees, monthly fees, and local measured service, and 7.8% less inflation for long distance. Tariff pressures and increased competition have pressured TDP's profitability, with revenues and EBITDA declining both on average by 4% in local currency per year over the past three years. However, EBITDA for first-half 2005 has increased 10.5% due to the cost and expense controls implemented by the company. The company, as in the past few years, may be able to partially offset the impact of the new tariffs if it can successfully grow its other businesses and reduce its cost structure. Notwithstanding the potential impact of the local service tariffs, TDP's financial profile is expected to remain consistent with the rating category considering an expected annual free cash flow generation before capex of around US$400 million, which provides the company with financial flexibility for a potential leverage increase over levels of June 30, 2005 of debt/EBITDA of around 1.1x. TDP's credit metrics are expected to remain consistent with the rating category. Despite an expected moderate increase in leverage, the company's financial profile should remain strong. Debt refinancing risk is low due to TDP's annual EBITDA generation of US$550-$600 million combined with access to capital markets financing. TDP has put in place an authorized capital reduction program up to PEN$1.3 billion, of which PEN$775 million has been used. The rating incorporates the possibility that additional capital reductions may occur under the outstanding program. TDP is the leading telecommunications provider in Peru through its leading shares of the fixed local and long-distance sectors, as well as public telephone, Internet, broadband services, company communications, and cable television services with revenues and EBITDA of US$1.1 billion and US$561 million, respectively, during 2004. The company participates in several segments, including fixed local services (43% of 2004 revenues), public and rural phone services (20%), cable television (10%), broadband and business communications (9%), and long distance (9%). For year-end 2004, the company had approximately 2.1 million lines in service, 129 thousand public phones, 389 thousand cable television subscribers, and 205 thousand broadband customers. The company is 98% owned by Telefonica S.A of Spain (TEF), which controls various fixed line and wireless operations throughout Latin America. CONTACT: Sergio Rodriguez, CFA +52(81) 8335-7179, Monterrey Dan Kastholm, CFA +1-312-368-2070, Chicago MEDIA RELATIONS: Chris Kimble +1-212-908-0226, New York ================= V E N E Z U E L A ================= ALIMENTOS POLAR: President Supports Expropriation of Assets ----------------------------------------------------------- Venezuelan President Hugo Chavez has signaled his support to the expropriation of the recently seized grain storage facilities of Alimentos Polar, Venezuela's largest food company, reports Dow Jones Newswires. "Now the state governor has the ability to expropriate" those assets, Chavez said. "Polar bought (the silos)...they stripped the plant and took the equipment to another country," he said. Polar's assets include grain-storage silos and two buildings that housed former flour and cooking oil processing plants. The Company reportedly shut those operations, but continues to operate the grain-storage facilities. "Owners usually close down companies, they take the money and leave behind debts. That's an abuse of the law and of the Venezuelan people," Chavez said. Chavez's comments contradict earlier reports that suggested Alimentos Polar has reached an agreement with the government in a deal that would see an end to the expropriation of the Company's grain storage facilities. According to these reports, the Company signed the agreement with Agriculture and Land Minister Antonio Albarran, who ordered the military on Aug. 28 to seize Polar's silos in the southwestern state of Barinas, saying that the installations were practically inactive. CADAFE: Subsidiaries Suffer Power Outage ---------------------------------------- A transmission line fault caused power outage to subsidiaries of Venezuelan state power company Cadafe on Monday afternoon, Business News Americas reports. The malfunction in the 400kV transmission line that links Cadafe's Centro thermoelectric plant to the city of Yaracuy affected Cadafe subsidiaries Enelven, Enelco, Enelbar and Eleoccidente and caused a blackout in the western part of the country. According to a Cadafe source, only one out of the two transformers is in service in the Yaracuy substation. One was disabled by a fire a few days ago. The replacement unit is still on its way. The country's national grid suffered 62 major failures of over 100MW this year compared to the 31 incidents recorded for the same period last year, grid operator Opsis noted in its latest daily report. Cadafe is the country's largest transmission and distribution company with over 15,000km of lines and more than 100 substations in operation. EDC: S&P Affirms 'B' Rating; Assigns Stable Outlook --------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' long-term corporate credit rating on C.A. La Electricidad de Caracas (EDC), and its 'B' rating on Electricidad de Caracas Finance B.V.'s $260 million senior unsecured notes. The outlook is stable. Entities in the Bolivarian Republic of Venezuela (B+/Stable/B) continue to face high risk, even as the credit quality of the sovereign itself has improved. Pervasive country risk factors endemic to Venezuela heighten the operating and financial risk facing industrial and financial corporations. Country risk is a significant credit rating factor for industrial companies rated by Standard & Poor's. On Aug. 12, 2005, we raised our long-term local and foreign currency sovereign credit ratings on Venezuela to 'B+' from 'B'. Our decision to raise our ratings on Venezuela was supported by the continued sharp improvements in Venezuela's external indicators, which are attributable to a large current account surplus, a high level of international reserves, and lower external debt. Country risk is responsible for the growing differential between the sovereign rating and the ratings on industrial corporations. The key elements of Venezuelan country risk (i.e., the risk faced by companies operating in the country, as opposed to the default risk of the Bolivarian Republic of Venezuela) include high political risk, politically motivated application of foreign exchange controls (through the Comision de dministracion de Divisas; CADIVI), domestic price controls, and currency devaluation risk. Combined with Venezuela's huge government bureaucracies, these key elements result in heavy administrative burdens on business. The lack of an independent judiciary, apparently widespread corruption, a concentrated economic structure that is highly dependent on the oil and gas sector, and a weak domestic banking system are other problematic features of the Venezuelan landscape. With the sharp improvements in Venezuela's external indicators boosting its credit quality, the gap between sovereign and corporate credit ratings in Venezuela has increased in recent times. "Additionally, the ratings on EDC and its related entities are constrained by a still incomplete and untested regulatory regime with historical resistance to rate adjustments, as well as EDC's reliance on a single natural gas and fuel oil supplier, government-owned Petroleos de Venezuela S.A., to meet the fuel needs of its generation assets," said Standard & Poor's credit analyst Federico Mora. These factors are partially mitigated by EDC's strong operations in its service area, with a customer mix basically composed of residential and commercial clients (together representing about 70% of sales); high coverage ratios and low leverage for its rating category; EDC's operations being the most efficient among electric utilities in Venezuela; recent efforts by the government to reduce its accounts payable to EDC; and the group's integration and synergy among distribution, generation, and commercialization. Additionally, since CADIVI's inception, EDC has not faced any serious delay in accessing resources, as it as effectively managed the formal procedures required by CADIVI to have access to foreign currency. EDC is a vertically integrated utility in Venezuela, operating in electricity distribution, transmission, and generation in the capital city of Caracas and its metropolitan area. It is the largest private electric utility in the country and is owned by U.S.-based AES Corp. (B+/Positive/--). We do not expect support from the parent company to be a meaningful credit factor for EDC. The stable outlook reflects our expectation that EDC will continue to avoid delays in the CADIVI's formal procedures to have timely access to foreign currency and perform scheduled debt repayments. The ratings could be pressured downward if the company's financial profile considerably deteriorates and if its current business strength suffers from potential changes in the economic and political situation of Venezuela. In contrast, a sharp improvement in the political and regulatory environment would be needed for an upgrade. Primary Credit Analyst: Federico Mora, Mexico City (52) 55-5081-4436; federico_mora@standardandpoors.com Secondary Credit Analyst: Fabiola Ortiz, Mexico City (52) 55-5081-4449; fabiola_ortiz@standardandpoors.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. 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