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/raid1/www/Hosts/bankrupt/TCRLA_Public/060130.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Monday, January 30, 2006, Vol. 7, Issue 21 Headlines A R G E N T I N A BANCO HIPOTECARIO: Completes 9-3/4% US$100 Million Bond Issuance BANCO HIPOTECARIO: Investing US$1.4 Million for IT Revamp BANCO NACION: Issues US$47.7 Million in Loans METROGAS: Has Until March 15 to Solicit Creditors' Vote on APE MOLINOS RIO: Freezes Prices of Food Products to Fight Inflation TELMEX: No Ruling on TAR and TEO's Appeal on Contract Award VINTAGE PETROLEUM: Stockholders Okay Occidental Petroleum Merger B E R M U D A INTELSAT: IA-5 Contract with GlobeCast WorldTV Renewed NEW WORLD: Issues Chapter 15 Petition Summary B R A Z I L ALCOA ALUMINIO: Increasing Itapissuma Production by 30% AOL LATIN: Gets Court Approval for Client Transfer to Terra CAMARGO CORREA: Exploring Tapajos' Power Generation Potential CVRD: Court Heeds Privatization Complaints REPSOL: Wrapping Up Gas Field Development Talks with Petrobas SANTOS SEGURADORA: Susep Orders Company's Liquidation TELEMAR: Investing US$442 Million to Obtain Distribution Rights C A Y M A N I S L A N D S GULFSTREAM INT'L: Creditors Must File Proofs of Claim by Feb. 28 PORVENIR GLOBAL: Verification of Claims Ends on February 28 REFCO ADVANTAGE: Enters Voluntary Wind Up REFCO COMMODITY: Liquidating Assets Voluntarily C H I L E AES CORP: Investing $37MM Constructing Chilean Power Plant M E X I C O AHMSA: Pulls Subsidiary Out of Suspension Payment Status AXTEL: Buying Back Bonds Maturing 2013 to Cut Debt by US$87.5MM BALLY TOTAL: Holders Deliver Mandate for Change BALLY TOTAL: Pardus Nominees Likely to Get Director Position CFE: Inks US$63 Million Transmission Contract with Iberdrola TELMEX: Supreme Court Declares Share Buyback Tax Constitutional P A N A M A AES CORP: Building Hydroelectric Plant in Panama P U E R T O R I C O G+G RETAIL: Issues Case Summary, 20 Largest Unsecured Creditors G+G RETAIL: U.S. Trustee Meeting Creditors on February 2 MUSICLAND HOLDING: Honors Prepetition Debts on Interim Basis MUSICLAND HOLDING: Paying Prepetition Critical Vendor Claims V E N E Z U E L A EDC: To Work with Vargas State Against Electricity Theft PDVSA: Awaits Approval on Joint Venture with Private Oil Firms PDVSA: Inks Agreement for Geological Studies with Enarsa - - - - - - - - ================= A R G E N T I N A ================= BANCO HIPOTECARIO: Completes 9-3/4% US$100 Million Bond Issuance ---------------------------------------------------------------- Business News Americas relates that Banco Hipotecario S.A. has issued US$100 million worth of bonds on Argentina's local stock exchange on Thursday, the bank told securities regulator Comision National de Valores. The bond will mature in 2010 and yields 9.75% annually. The bonds are part of a larger US1.2 billion program. The bonds were priced at 100.5% of its nominal value. Deutsche Bank (NYSE: DB) and Citigroup Global Markets are handling the new issue, Business News relates. In November 2005, Banco Hipotecario raised US$150 million in the first bond issued by an Argentine firm since the federal government restructured most of its sovereign debt in mid-2004. Banco Hipotecario, a government-owned bank, offers home mortgages in Argentina. The Bank underwrites mortgage insurance and services its own and third parties' mortgage portfolios. Banco Hipotecario distributes its products through its own branch network and through commercial banks. * * * On Jan. 25, 2006, Standard & Poor's Ratings Services assigned 'B-' foreign currency senior unsecured debt rating to Banco Hipotecario S.A.'s $100 million issuance. The issuance constituted the second tranche of BH's Series IV notes due Nov. 16, 2010, issued under the $1.2 billion senior unsecured global MTN program. With this issuance, the series (whose first tranche was rated 'B-' on Nov. 16, 2005) will total US$250 million. At the same time, Standard & Poor's affirmed its ratings on the Argentine bank's outstanding debt and its 'B- /Stable/--' counterparty credit ratings. S&P said the outlook is stable. BANCO HIPOTECARIO: Investing US$1.4 Million for IT Revamp --------------------------------------------------------- Banco Hipotecario S.A. in Uruguay will invest US$1.4 million this year for the revamp of its technology processes and the integration of its platforms, Business News Americas reports. Banco Hipotecario's President Miguel Piperno revealed that Chilean systems integrator Sonda will begin implementing a software solution in February to upgrade the bank's 25-year old IT system. The whole process, according to him, will take eight months, Business News relates. The upgrade is part of an overall restructuring plan designed to allow BHU to resume the loan operations that were suspended in 2002, due to a financial crisis caused by spillover effects from Argentina's economic meltdown that year. Mr. Piperno told Business News that the bank has asked economy and housing ministries to form a commission to polish up BHU's restructuring plan that includes creating a new unit to manage the bank's past-due loans as well as revamping technology. Uruguay's powerful banking union AEBU, however, forcefully defied the plan, fearing that the cost-cutting program would result to employee layoffs. Banco Hipotecario, a government-owned bank, offers home mortgages in Argentina. The Bank underwrites mortgage insurance and services its own and third parties' mortgage portfolios. Banco Hipotecario distributes its products through its own branch network and through commercial banks. * * * On Jan. 25, 2006, Standard & Poor's Ratings Services assigned its 'B-' foreign currency senior unsecured debt rating to Banco Hipotecario S.A.'s $100 million issuance. The issuance constituted the second tranche of BH's Series IV notes due Nov. 16, 2010, issued under the $1.2 billion senior unsecured global MTN program. With this issuance, the series (whose first tranche was rated 'B-' on Nov. 16, 2005) will total US$250 million. At the same time, Standard & Poor's affirmed its ratings on the Argentine bank's outstanding debt and its 'B- /Stable/--' counterparty credit ratings. S&P said the outlook is stable. BANCO NACION: Issues US$47.7 Million in Loans --------------------------------------------- Banco Nacion has already loaned 145 million pesos (US$47.7 million) in the first two weeks of its 4.5 billion-peso lending program. The project is aimed to help local and foreign firms to finance their purchase of new or used capital goods, local daily La Nacion reports. Banco Nacion has already granted 141 loans and expects to make 500-600 loans per month to lend all the 4.5 billion pesos by October, said La Nacion, quoting Chief Executive Officer Juan Carlos Fabrega. Banco Nacion is Argentina's largest bank with assets and deposits of 46 billion pesos and 31.1 billion pesos respectively at November 30, 2005. * * * On Jan. 11, 2006, Fitch Ratings affirmed its long-term deposit rating of BB+ with a stable outlook and short-term deposit rating of N-3 on the Chilean unit of Argentine bank Banco Nacion. Fitch attributed the ratings to the unit's historical performance, the reduced size of its operations, adequate liquidity and debt levels as well as low asset risks. The unit's assets totaled CLP18.4 billion (US$35 million) at end-November and deposits amounted to CLP2.34 billion. * * * On Jan. 23, 2006, Credit ratings agency, Humphreys, withdrew its ratings on the Chilean unit of Argentina's largest bank Banco Nacion at its request. Humphreys had rated Banco Nacion's short and long-term deposits at level 4 and BB respectively with a stable outlook. The Chilean unit's assets totaled 18.4 billion pesos (US$35 million) at end-November and deposits amounted to 2.34 billion pesos. Humphreys is an affiliate of international ratings agency Moody's. METROGAS: Has Until March 15 to Solicit Creditors' Vote on APE -------------------------------------------------------------- MetroGAS SA extended, until March 15, the deadline for its creditors to suscribe to an out-of-court debt-restructuring proposal, known by its Spanish acronym APE. Under the APE, a two-thirds creditor agreement allows a company to submit its offer for legal approval, which then makes the repayment terms binding on all creditors. The company aims to restructure an outstanding US$437 million debt. As of January 25, MetroGAS already has a 90.6% subscription to the proposal. The company originally aimed for a 95% approval but lowered it to 92%. The new deadline gives MetroGAS more time to solicit restructuring acceptances from its Italian creditors. According to Business News Americas, MetroGAS representatives went to Italy to present the proposal to its creditors. MetroGAS has not previously been allowed to propose the plan in that country. Headquartered in Buenos Aires, Argentina, MetroGAS S.A. -- http://www.metrogas.com.ar/-- distributes gas to Buenos Aires and southern and eastern greater metropolitan Buenos Aires. The Company has a 35-year concession that began in 1992 to provide natural gas in this area. The concession is renewable for an additional 10 years. MetroGAS supplies some 2 million customers in Buenos Aires through 15,840 km of pipelines, representing about 26% of all gas retailed in Argentina. MOLINOS RIO: Freezes Prices of Food Products to Fight Inflation --------------------------------------------------------------- Molinos Rio de la Plata has agreed to freeze the prices of nine popular food products for up to a year to help Argentina's government fight rising inflation, according to Dow Jones Newswires. The company will keep prices of Vienna-style sausages, sunseed oil, mixed vegetable oil, two types of white rice, wheat flower, soup noodles, long noodles and breadcrumbs at the levels they were sold in November 2005, Dow Jones states. The accord was reached at a meeting among Molinos' Vice President Juan Forn, Argentina's Economy Minister and the country's President Nestor Kirchner, Dow Jones reports. The government has been pushing the private sector to lower or freeze prices at a time when inflation is lowering consumers' purchasing power and threatening to disrupt three years of economic growth. Molinos Rio de la Plata S.A. produces, markets, and exports foods including oil, margarine, flour, pasta, rice, meats, and cake mixes. The Company operates industrial facilities and distribution centers in Argentina, and exports its products to more than 20 countries. * * * Fitch Ratings rates the long-term foreign and local currency ratings of Molinos Rio de la Plata S.A. at 'B' with stable outlook. TELMEX: No Ruling on TAR and TEO's Appeal on Contract Award ----------------------------------------------------------- No resolution has been made regarding the appeal filed on the Argentina's decision to give the US$18 million contract to fixed line giant Telefonos de Mexico aka Telmex, Business News Americas reports. Mendoza's federal judge declared his court not competent to decide on the complaint raised by fixed line operators Telecom Argentina and Telefonica de Argentina. The court also postponed its decision on grounds that Telefonica's lawyers did not provide all the documentation needed. As reported in the Troubled Company Reporter on Jan. 25, 2006, the government chose Telmex to implement a communications system for the national police force -- a decision that Telecom Argentina and Telefonica de Argentina have questioned. The two telecoms do not believe in Telmex's ability to provide the service. Telmex is close to signing the contract with the central government. Two of the company's proposals are being analyzed by technicians at the security ministry in order to determine the best project. The government plans to start operating the new system in the province of Gran Mendoza this year. Telmex -- http://www.telmex.com.mx-- is Mexico's incumbent telco with control of about 95% of the country's fixed line infrastructure. The company and its subsidiaries offer a wide range of advanced telecommunications, data and video services, internet access as well as integrated telecom solutions for corporate customers. * * * As reported in Troubled Company Reporter on March 9, 2005, court No. 4 of Buenos Aires' civil and commercial tribunal declared Telmex bankrupt, appointing Ms. Maria Lilia Orazi as the trustee. VINTAGE PETROLEUM: Stockholders Okay Occidental Petroleum Merger ---------------------------------------------------------------- Vintage Petroleum, Inc., announced that its stockholders approved on Jan. 26, the merger agreement between Vintage and Occidental Petroleum Corporation. The proposed transaction was overwhelmingly approved with approximately 55.0 million shares, or 99.9% of the shares represented at the meeting, voting in favor of the merger. Vintage had approximately 67.2 million shares outstanding as of the Nov. 30, 2005, record date. Vintage and Occidental expect to complete the merger on January 30, 2006. Following completion of the merger, Vintage stockholders of record will receive instructions from Mellon Investor Services LLC pertaining to the exchange of Vintage shares for the merger consideration. Under the terms of the merger, Vintage will be merged into a subsidiary of Occidental and Vintage stockholders will gain the right to receive 0.42 shares of Occidental Petroleum Corporation common stock plus $20 in cash for each share of Vintage common stock they hold. Occidental Petroleum Corporation -- http://www.oxy.com/-- is an oil and natural gas exploration and production and chemical manufacturer. The company's Latin American operations include producing assets in Colombia and Ecuador. Vintage Petroleum, Inc. -- http://www.vintagepetroleum.com -- is an independent energy company engaged in the acquisition, exploitation, exploration, and development of oil and gas properties and the marketing of natural gas and crude oil. Company headquarters are in Tulsa, Oklahoma, and its common shares are traded on the New York Stock Exchange under the symbol VPI. * * * As reported by Troubled Company Reporter on Oct. 18, 2005, Standard & Poor's Ratings Services placed its 'BB-/B-2' corporate credit rating on Vintage Petroleum Inc. on CreditWatch with positive implications. ============= B E R M U D A ============= INTELSAT: IA-5 Contract with GlobeCast WorldTV Renewed ------------------------------------------------------ Intelsat announced Thursday that GlobeCast WorldTV has recommitted to a long-term, multi-transponder contract for Intelsat-Americas 5 aka IA-5 satellite capacity to support the substantial growth of its international television distribution platform over North America. IA-5 hosts one of the largest neighborhoods of international video programming in the US and has been home to GlobeCast WorldTV since 1998. GlobeCast WorldTV -- a subsidiary of GlobeCast -- is the leading aggregator and distributor of premium international television and radio channels in North America for delivery via direct-to- home, cable, IPTV, hotels, multiple dwelling units and commercial establishments. More than 161 WorldTV television and radio channels originate from Europe, the Middle East, Asia, Africa and the Americas, and represent 41 countries in over 33 languages, offering a unique line-up of native homeland programming as well as original in-language programming tailored for US audiences. "Through Intelsat and its IA-5 partners, a new channel entering the US market can access a full range of services that allows them to immediately start operation and access a significant and increasing North American viewer base," Intelsat media services president Jon Romm. "Our relationship with GlobeCast has remained strong because Intelsat allows them to directly access hundreds of thousands of US homes, and gives them the flexibility and room for continued growth as new channels are added to the WorldTV platform." GlobeCast WorldTV vice president Lisa Coelho stated, "GlobeCast WorldTV's renewal on IA-5 confirms our long-term growth outlook for international television distribution in America. Intelsat is extremely supportive of our development needs and the IA-5 satellite offers us the versatility we need to reach the broad audience and diverse outlets for our programming." About Intelsat, Ltd. Intelsat, Ltd., offers telephony, corporate network, video and Internet solutions around the globe via capacity on 25 geosynchronous satellites in prime orbital locations. Customers in approximately 200 countries rely on Intelsat's global satellite, teleport and fiber network for high-quality connections, global reach and reliability. * * * As reported in the Troubled Company Reporter on Nov. 16, 2005, Intelsat, Ltd.'s announcement of its results for the third quarter ended Sept. 30, 2005, does not affect the ratings of Intelsat, wholly owned subsidiary Intelsat (Bermuda), Ltd., and operating subsidiary Intelsat Subsidiary Holding Company Ltd. The company remains on Rating Watch Negative. * * * As reported in the Troubled Company Reporter on Sept. 1, 2005, Moody's Investors Service affirmed Intelsat, Ltd.'s ratings and changed the outlook for all ratings to developing from negative following the company's announcement that it was acquiring PanAmSat for $3.2 billion plus the assumption of PanAmSat's debt ($3.2 billion). The transaction, which Moody's expected to be largely, if not entirely, financed with new debt, would significantly increase Intelsat's pro forma leverage thereby increasing credit risk for Intelsat debt holders and pressuring the rating downwards. Therefore, Moody's anticipated placing all ratings on review for possible downgrade or lowering the ratings once the timing and structure of the transaction and resolution of regulatory review becomes more certain. Moody's affirmed these ratings: Intelsat: * Corporate family rating -- B2 * $400 Million 5.25% Global notes due in 2008 -- Caa1 * $600 Million 7.625% Sr. Notes due in 2012 -- Caa1 * $700 Million 6.5% Global Notes due in 2013 -- Caa1 Intelsat Subsidiary Holding Company Ltd.: * $300 Million Sr. Secured Revolver due in 2011 -- B1 * $350 Million Sr. Secured T/L B due in 2011 -- B1 * $1 Billion Sr. Floating Rate Notes due in 2012 -- B2 * $875 Million Sr. 8.25% Notes due in 2013 -- B2 * $675 Million Sr. 8.625% Notes due in 2015 -- B2 Intelsat (Bermuda) Ltd.: * $478.7 Mil. Sr. Unsecured Discount Notes due 2015 -- B3 Moody's changed the outlook to developing from negative. NEW WORLD: Issues Chapter 15 Petition Summary --------------------------------------------- New World Network International, Ltd. released the following Chapter 15 petition information: Petitioner: Mark W.R. Smith Provisional Liquidator Debtor: New World Network International, Ltd. Clarendon House 2 Church Street, Hamilton HM11 Bermuda Case No.: 06-10157 Type of Business: The Debtor is a holding company for the New World Group of companies, an independent, privately-held telecommunications group. Through a number of its direct and indirect subsidiaries, the New World Group owned and operated an optical fiber submarine cable system called the Americas Region Cable Ring System or ARCOS, as well as some other assets. ARCOS is an 8,600km high capacity undersea digital broadband fiber optic network that connects the United States with Puerto Rico and other countries in Central America, South America and the Caribbean. Chapter 15 Petition Date: January 26, 2006 Court: Southern District of New York (Manhattan) Petitioner's U.S. Counsel: Ingrid Bagby, Esq. Cadwalader, Wickersham & Taft LLP One World Financial Center New York, New York 10281 Tel: (212) 504-6000 Fax: (212) 993-2747 Petitioner's Counsel In Bermuda: Robin J. Mayor, Esq. Conyers, Dill & Pearman Estimate Assets: Less than $50,000 Estimate Debts: Less than $50,000 [The Chapter 15 Bankruptcy option is intended to create a way for cooperation with foreign courts in the oversight of U.S. assets of debtors in the process of overseas insolvency proceedings.] =========== B R A Z I L =========== ALCOA ALUMINIO: Increasing Itapissuma Production by 30% ------------------------------------------------------- Alcoa Aluminio S. A. decided to expand output at its rolling complex in the city of Itapissuma in Brazil's Pernambuco state due to the plant's efficiency and logistics, according to an article from the AE Setorial. Itapissuma exports 3,000t/y of aluminum. The company wants a boost in its rolling output at Itapissuma by 30% to 45,000 tons by 2007. "This facility has very good productivity compared to other Alcoa units around the world," Alcoa Latin America rolling director Michael Humpert told AE Setorial. "We have plans to increase exports at the facility by 50%, as the plant is near the Suape port." Alcoa's investment in Pernambuco is an additional investment to its US$1.6 billion plan for bauxite, alumina and aluminum operations. Alcoa Aluminio S. A. manufactures fabricated aluminum. The Company mainly produces primary aluminum, alumina, extrusions, foil, aluminum powder, automotive components, building products, plastic closures, and flexible packaging materials. * * * On Oct. 17, 2005, Fitch Ratings revised the rating outlook of the `BB+' long-term foreign currency rating Alcoa Aluminio S.A. to positive from stable. The action followed the recent change in the rating outlook to positive from stable of the 'BB-' foreign currency rating of the Federative Republic of Brazil. The Brazilian corporate foreign currency ratings continue to be linked to the 'BB-' foreign currency rating of the sovereign. AOL LATIN: Gets Court Approval for Client Transfer to Terra ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized America Online Latin America Inc. aka AOL Latin America Inc. to transfer its subscribers to ISP Terra, Business News Americas reports. AOL Latin sought bankruptcy protection in June 2005 and submitted in December 2005 a request for the transfer of its subscribers in Brazil to Terra, which is owned by Spain's Telefonica S.A. Terra is expected to pay AOL Latin up to US$2 million for the transfer, but the amount depends on the number of clients transferred to Terra's services, and on the number of active clients at the time when the deal was made between the companies, Business News relates. Transferring the subscribers to Terra means that AOL Latin would cease operations in Brazil. AOL Latin America offers AOL-branded Internet service in Argentina, Brazil, Mexico and Puerto Rico, as well as localized content and online shopping over its proprietary network. Main shareholders in AOL Latin are US internet provider America Online, Venezuela's Cisneros Group and Brazil's second largest private bank, Banco Itau. AOLA ended in late November 2005 its marketing alliance with Banco Itau, with the bank agreeing to pay US$3.7 million to AOLA and AOLA Brasil to escape potential liabilities under the marketing agreements. Headquartered in Fort Lauderdale, Florida, America Online Latin America, Inc. -- http://www.aola.com/-- offers AOL-branded Internet service in Argentina, Brazil, Mexico, and Puerto Rico, as well as localized content and online shopping over its proprietary network. Principal shareholders in AOLA are Cisneros Group, one of Latin America's largest media firms, Brazil's Banco Itau, and Time Warner, through America Online. The Company and its debtor-affiliates filed for Chapter 11 protection on June 24, 2005 (Bankr. D. Del. Case No. 05-11778). Pauline K. Morgan, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor, LLP and Douglas P. Bartner, Esq., at Shearman & Sterling LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $28,500,000 and total debts of $181,774,000. CAMARGO CORREA: Exploring Tapajos' Power Generation Potential ------------------------------------------------------------- Camargo Correa Cimentos S.A. together with engineering company Eletronorte will invest 13 million reais (US$5.8 million) in order to study the hydroelectric power generation potential of the Tapajos river basin in the Amazon region of Brazil. Eletronorte's preliminary studies identified up to 12,000 mega- watt potential on the Tapajos river, according to a statement issued by the company. The first project that has been identified is the 9,000 mega-watt Sao Luis do Tapajos hydroelectric generation project. The study is expected to be completed in two years. Once completed, the study will be handed over to the mines and energy ministry and power regulator, Agencia Nacional de Energia Eletrica, to prepare the projects to be tendered. Camargo Correa's 7.5 million reais and Eletronorte's 5.5 million reais investments will be paid back if they don't win the tender to build and operate the projects. About Camargo Correa Camargo Correa Cimentos S.A. -- http://www.camargocorrea.com.br/eng/index.htm-- is a Brazilian cement company that is directly owned by Camargo Correa S.A., one of the largest private sector conglomerates in Brazil with annual net revenues of about BRL 6 bln originated mainly from its engineering & construction, cement, textiles, footwear, energy, and transportation businesses. The Camargo Correa group regards cement as a core business, which represented approximately 11% and 25% of the group's 2004 total sales and EBITDA, respectively. Camargo Correa's long-term corporate family rating is rated Ba3 by Moody's. The company's long-term foreign and local issuer credit is rated BB by Standard & Poor's. CVRD: Court Heeds Privatization Complaints ------------------------------------------ Brazil's iron ore miner Companhia Vale do Rio Doce's 1997 privatization will be reviewed by a federal court in Brasilia, Business News Americas reports. According to the court ruling, the decision to revisit questions over the iron ore miner was made in response to the 100 lawsuits against decree no. 1.510 which included CVRD in the national privatization program aka PND. "The value at which CVRD was sold is ridiculous," company representative Clair da Flora Martins told Business News, "who have for years been calling for a review of the privatization process alongside state advisor Hasiel Pereira." The court decision could compel the government to reconsider the sale of CVRD in 1997, when the miner was auctioned off for about BRL3.3 billion (currently US$1.5 billion). The decision could also lead to the invalidation of the sale process. The iron ore miner, however, believes there is no reason to question its privatization, as stated by CEO Roger Agnelli. Agnelli explained that since the privatization, CVRD's iron ore production capacity has increased to an estimate of 270Mt from 82Mt. "The benefits that came with the privatization are clear," said Agnelli. "We are calm and CVRD will keep on working." * * * On Jan. 5, 2006, Fitch Ratings assigned a long-term foreign currency rating of 'BB' to Vale Overseas Limited's proposed US$300 million issuance due 2016. Vale Overseas is a wholly owned subsidiary of Companhia Vale do Rio Doce, a large diversified mining company located in Brazil. The notes are unsecured obligations of Vale Overseas and are unconditionally guaranteed by CVRD. The obligation to guarantee the notes rank pari passu with all of CVRD's other unsecured and unsubordinated debt obligations. Fitch expects the proceeds of this issuance to be used for general corporate purposes and primarily to pay down US$300 million of Vale Overseas' 9.0% guaranteed notes due 2013. Fitch also maintains these ratings for CVRD and CVRD Finance Ltd., a wholly owned subsidiary of CVRD: -- CVRD foreign currency rating: 'BB', Outlook Positive; -- CVRD local currency rating: 'BBB' Outlook Stable; -- CVRD national scale rating: 'AAA(bra)', Outlook Stable; -- CVRD Finance Ltd.: series 2000-1 and series 2000-3: 'BBB'; -- CVRD Finance Ltd., series 2000-2 and series 2003-1: 'AAA'. REPSOL: Wrapping Up Gas Field Development Talks with Petrobas ------------------------------------------------------------- The Agencia Estado reports that Brazil's federal energy company Petrobras (NYSE: PBR) will conclude talks with Spanish oil company Repsol YPF (NYSE: REP) by early March for the development of the offshore Mexilhao natural gas field in the Santos basin. Negotiations to develop the Mexilhao natural gas field between the two companies started in 2005. According to the Agencia Estado, the hiring of a fixed platform to explore the field are close to conclusion. Petrobras is preparing a tender to build a natural gas processing plant in the coastal town of Sao Sebastiao on the northern Sao Paulo state coast 140km from Mexilhao. Petrobras E&P Director Guilherme Estrella told the news agency that the parties are now analyzing the latest results of drilling in the field to estimate the reserves there and potential for production. Results of the initial estimates put Mexilhao reserves at some 419 billion cubic meters and production at up to 15 million cubic meters a day. Petrobras has budgeted US$18 billion to explore and develop the Santos basin through 2010 including Mexilhao's development as one of the five existing projects in the basin, Agencia Estado relates. * * * On June 20, 2005, Moody's Investors Service upgraded the ratings of Spanish oil company Repsol YPF's local subsidiary YPF S.A. Moody's upgraded YPF's senior unsecured rating to Ba3 from B1 and the unit's domestic currency issuer rating to Baa2 from Baa3. YPF's foreign currency issuer rating of Caa1 remained unchanged, as it is constrained by the sovereign ceiling of Argentina. YPF's Corporate Family Rating (formerly known as the senior implied rating) is aligned with the foreign currency issuer rating at Caa1. SANTOS SEGURADORA: Susep Orders Company's Liquidation ----------------------------------------------------- Insurance regulator Superintend�ncia de Seguros Privados -- Susep -- has issued an order for Brazilian insurer Santos Seguradora SA to be liquidated. Santos Seguradora is controlled by bankrupt company, Banco Santos SA, which was declared bankrupt in September 2005 following a year of intervention due to financial difficulties and alleged irregularities. Interests shown by some companies to purchase Banco Santos were called off by Susep because the offers lacked guarantees. Susep decreed the liquidation of Banco Santos' savings bond unit Valor Capitalizacao on January 6, Business News relates. According to Business News Americas, Santos Seguradora suffered liquidity problems as a result of Banco Santos' bankruptcy. Valder Viana de Carvalho has been appointed to head the liquidation process. TELEMAR: Investing US$442 Million to Obtain Distribution Rights --------------------------------------------------------------- Valor Economico relates that Brazil's largest phone operator Telemar aka Tele Norte Leste Participacoes SA plans to invest almost 1 billion reais (US$442 million) this year to enable distribution of audiovisual content. Telemar wants a distribution rights in order to meet its clients downloading of films or videos. The company has a total budget of 2.4 billion reais this year, Business News Americas relates. The company will test classes A and B in Rio de Janeiro, Belo Horizonte, Vitoria and Salvador. * * * On Nov. 8, 2005, Standard & Poor's Ratings Services assigned its 'BB' local and foreign currency ratings to Telemar Norte Leste S.A. A 'BB' rating was also assigned to Telemar NL's upcoming $150 million equivalent in Brazilian Real five-year bonds. Telemar NL is controlled by Tele Norte Leste Participacoes (TNL; BB/Stable) and is the sole cash contributor of the so-called Telemar Group, comprising all Telemar's telecom operations (fixed-line, wireless, and data services). Proceeds from the new issue are expected to be used in the refinancing of existing debts of the group and other corporate purposes. =========================== C A Y M A N I S L A N D S =========================== GULFSTREAM INT'L: Creditors Must File Proofs of Claim by Feb. 28 ---------------------------------------------------------------- Gulfstream International filed for voluntary liquidation on Dec. 29, 2005, at the Grand Court of the Cayman Islands. Bessemer Trust Company (Cayman) Limited, serves as the liquidator of Gulfstream's assets. All creditors must file proofs of claim by Feb. 28, 2006, to establish any title they may have under the Companies Law (2004 Revision). If a creditor is unable to file its proof of claim by the Feb. 24 deadline, it will be excluded from receiving any distribution from the estate or objecting to any distribution to other creditors. The Bessemer Trust Company (Cayman) Limited can be reached at: P.O. Box 694GT, Dr. Roy's Drive Grand Cayman, Cayman Islands Telephone: (345) 949-6674 Facsimile: (345) 945-2722 PORVENIR GLOBAL: Verification of Claims Ends on February 28 ----------------------------------------------------------- The Bessemer Trust Company (Cayman) Limited has been appointed as liquidator of Porvenir Global which filed for voluntary liquidation on Dec. 29, 2005, at the Grand Court of the Cayman Islands. All creditors must file proofs of claim by Feb. 28, 2006, to establish any title they may have under the Companies Law (2004 Revision). If a creditor is unable to file its proof of claim by the Feb. 28 deadline, it will be excluded from receiving any distribution from the estate or objecting to any distribution to other creditors. The Bessemer Trust Company (Cayman) Limited can be reached at: P.O. Box 694GT, Dr. Roy's Drive Grand Cayman, Cayman Islands Telephone: (345) 949-6674 Facsimile: (345) 945-2722 REFCO ADVANTAGE: Enters Voluntary Wind Up ----------------------------------------- Refco Advantage Multi-Manager Fund Futures Series I filed for voluntary liquidation on Dec. 29, 2005, at the Grand Court of the Cayman Islands. All creditors must file proofs of claim by Feb. 24, 2006, to establish any title they may have under the Companies Law (2004 Revision). If a creditor is unable to file its proof of claim by the Feb. 28 deadline, it will be excluded from receiving any distribution from the estate or objecting to any distribution to other creditors. The following written resolutions were passed by the sole voting shareholder of Refco Advantage on Dec. 20 2005: 1. That the company be placed in voluntary winding up with immediate effect. 2. That Messrs. G. James Cleaver and Gordon MacRae of Kroll (Cayman) Limited be appointed liquidators for the purposes thereof and that they have the power to act jointly and severally. 3. That the liquidators may divide amongst the company's members in specie or kind the whole or any part of the assets of the company, that they may for such purpose set such value as they deem fair upon any property to be so divided, that they may determine how such division shall be carried out as between the members or different classes of members, and that they may vest the whole or any part of such assets in trustees upon such trusts as they shall think fit. Gordon I. Macrae and G. James Cleaver, the joint liquidators, can be reached at: Hadley Chilton Kroll (Cayman) Limited, 4th Floor Bermuda House, Dr. Roy's Drive Grand Cayman Telephone: 1 (345) 946-0081 Fax: 1 (345) 946-0082 REFCO COMMODITY: Liquidating Assets Voluntarily ----------------------------------------------- Refco Commodity Futures Fund Ltd. filed for voluntary liquidation on Dec. 1, 2005, at the Grand Court of the Cayman Islands. All creditors must file proofs of claim by Feb. 24, 2006, to establish any title they may have under the Companies Law (2004 Revision). If a creditor is unable to file its proof of claim by the Feb. 24 deadline, it will be excluded from receiving any distribution from the estate or objecting to any distribution to other creditors. The following written resolutions were passed by the sole voting shareholder of Refco Commodity Futures Fund Ltd. on Dec. 1, 2005: 1. That the company be placed in voluntary winding up with immediate effect. 2. That Messrs G. James Cleaver and Gordon Mac: Rae of Kroll (Cayman) Limited be appointed liquidators for the purposes thereof and that they have the power to act jointly and severally. 3. That the liquidators may divide amongst the company's members in specie or kind the whole or any part of the assets of the company, that they may for such purpose set such value as they deem fair upon any property to be so divided, that they may determine how such division shall be carried out as between the members or different classes of members, and that they may vest the whole or any part of such assets in trustees upon such trusts as they shall think fit. Gordon I. Macrae and G. James Cleaver, the joint liquidators, can be reached at: Hadley Chilton Kroll (Cayman) Limited, 4th Floor Bermuda House, Dr. Roy's Drive Grand Cayman Telephone: 1 (345) 946-0081 Fax: 1 (345) 946-0082 ========= C H I L E ========= AES CORP: Investing $37MM Constructing Chilean Power Plant ---------------------------------------------------------- AES Corp., through its subsidiary, AES Gener S.A., is constructing a new thermal generation plant in Llay Llay, Chile. The $37 million investment will increase AES Gener's power generation capacity to 2,557 MW, or 21% of the country's total anticipated generation capacity in 2006. AES Gener is currently the second largest electricity generator in the country. AES has been in Chile since 2000 and is one of the largest foreign investors in the Chilean electricity sector. The 120 MW facility San Pedro will provide an additional source of power to help meet Chile's growing energy needs. The plant will be able to burn either diesel or natural gas as fuel, which will help diversify and stabilize the country's power sector. The plant will begin supplying electricity to Chile's central grid in May 2006. Bulgarian Plant Also, AES signed in December agreements to secure $965 million of non-recourse debt financing for the construction of a $1.4 billion power plant in Bulgaria. Through this investment, AES will become the single largest foreign investor in Bulgaria. The project will be the largest foreign greenfield investment in southeast Europe and the first large scale power plant to be built in Bulgaria in more than 20 years. AES Corporation -- http://www.aes.com/-- is a leading global power company, with 2004 revenues of $9.5 billion. The Company operates in South America, Europe, Africa, Asia and the Caribbean countries. AES generating 44,000 megawatts of electricity through 124 power facilities and delivers electricity through 15 distribution companies. AES Corp.'s 30,000 people are committed to operational excellence and meeting the world's growing power needs. * * * As reported in the Troubled Company Reporter on Jan. 11, 2006, Moody's affirmed the ratings of The AES Corporation, including its Ba3 Corporate Family Rating and the B1 rating on its senior unsecured debt. The rating outlook remains stable. * * * As reported in the Troubled Company Reporter on June 23, 2005, Fitch Ratings upgraded and removed the ratings of AES Corporation from Rating Watch Positive, where it was initially placed on Jan. 18, 2005, pending review of the company's yearend financial results. Fitch said the Rating Outlook is Stable. =========== M E X I C O =========== AHMSA: Pulls Subsidiary Out of Suspension Payment Status -------------------------------------------------------- Cerro de Mercado aka Cemesa -- subsidiary of Mexican steelmaker Ahmsa -- has been pulled out of the suspension payment status, Business News Americas reports. Ahmsa revealed that it had reached an agreement with 25 creditors to pay off the debts of Cemesa, which fell into suspension in 1999. It was in the same year when Ahmsa received legal protection and permission to continue operating after failing to pay US$1.8 billion of debt, Business News relates. Cemesa, which has 400 employees and produces some 40,000t a month of iron concentrates that supply Ahmsa's blast furnaces in Monclava, is the first Ahmsa subsidiary to resolve its payment suspension -- a sort of bankruptcy protection. Ahmsa also expects subsidiary Minera Carbonifera Rio Escondido -- Micare -- to be cleared of its suspension of payment status in a Feb. 14 court ruling. "Thanks to an upturn in the international steel and mining industry, a series of creditor agreements have been signed as part of a process aimed at normalizing the group's finances," Ahmsa's legal representative Jaime Guerra told Business News. AXTEL: Buying Back Bonds Maturing 2013 to Cut Debt by US$87.5MM --------------------------------------------------------------- Axtel, S.A. de C.V., is calling back 35% of the bonds it issued in 2003 and 2005 in order to reduce its debt by US$87.5 million. The company has an outstanding US$250 million debts, Business News Americas reports. The bonds will mature in 2013. In December last year, the company began trading on the Bolsa Mexicana de Valores, Mexico's securities exchange, and the US- based Over The Counter Bulletin Pink Sheet (OTCPK) in a bid to drum up resources to fund an expansion drive. Chief executive Tomas Milmo told investors that the company is interested in acquiring one of its competitors, Avantel or Alestra, Business News states. Axtel, S.A. de C.V. provides local and long distance telecommunications services, data transmission and internet services in Mexico, to both residential and business customers. Axtel posted net profits of 306 million pesos (US$29 million) for 2005 compared to a loss of 79.6 million pesos in 2004. Axtel's 11% $249,870,000 note due Dec. 15, 2013, is rated B1 by Moody's and B+ by Standard & Poor's. BALLY TOTAL: Holders Deliver Mandate for Change ----------------------------------------------- Liberation Investments welcomes the anticipated results of voting at Thursday's annual shareholder meeting of Bally Total Fitness Holding Corporation. According to proxy voting service ADP and other sources, Liberation initially estimates that its proposals to give shareholders a greater voice in corporate governance at Bally received at least 70% of the votes cast at the meeting, representing approximately 55% of the shares outstanding. Although Liberation's proposals required a 75% super-majority of all outstanding Bally shares to pass, the investment fund was pleased with the outcome of the voting. Liberation said that Bally's shareholders have delivered Bally's new Board a powerful message to meaningfully address shareholder concerns. Liberation also believes that Bally's shareholders approved by a wide margin the election of Charles J. Burdick, Barry R. Elson and Don R. Kornstein -- each of whom was nominated by dissident shareholder Pardus Capital Management -- as directors, rejecting Bally's own candidate. Liberation called on Bally's board to heed the recommendation of other large shareholders and immediately appoint Mr. Kornstein chairman of the special committee formed to guide Bally's consideration of strategic alternatives. Liberation believes that the shareholders also rejected the company's new proposed equity compensation plan, which would have made another 1.75 million shares of Bally stock available for award to Bally employees in addition to the substantial equity grants made in recent months to senior Bally executives. Liberation Investment Group LLC president Gregg Frankel commented, "For the first time since July of 2004, when Bally's last shareholder meeting was held, the voice of shareholders has been heard. This vote was a referendum on the responsiveness of Bally's board to shareholder concerns. The message to the board is loud and clear: Reform is needed now. We look forward to working together with the Board to achieve this important goal." Liberation Investments, L.P. and Liberation Investments Ltd. are private investment funds managed by Liberation Investment Group LLC. Emanuel R. Pearlman is the majority member and general manager of Liberation Investment Group LLC, and as such may be deemed to be the beneficial owner of the shares of Bally owned by the Liberation Funds. Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers in the U.S., with nearly 410 facilities located in 29 states -- Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness, Pinnacle Fitness, Bally Sports Clubs and Sports Clubs of Canada brands. Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on Dec. 6, 2005, Standard & Poor's Ratings Services revised its CreditWatch implications on Bally Total Fitness Holding Corp. to developing from negative. The corporate credit rating remained at 'CCC'. Bally's ratings were originally placed on CreditWatch on Aug. 8, 2005, following the commencement of a 10-day period after which an event of default would have occurred under the company's $275 million secured credit agreement's cross-default provision and the debt would have become immediately due and payable. Subsequently, Bally entered into a consent with lenders to extend the 10-day period until Aug. 31, 2005. Prior to Aug. 31, the company received consents from its bondholders extending its waiver of default to Nov. 30, 2005. Bally Total has assets amounting to US$1,453,300,000 and liabilities of US$1,611,500,000. BALLY TOTAL: Pardus Nominees Likely to Get Director Position ------------------------------------------------------------ Bally Total Fitness disclosed that based on preliminary results in its contested election, it appears that Messrs. Burdick, Elson and Kornstein have received sufficient votes to be elected to Bally's Board of Directors. The Company also reported that Liberation Investments' shareholder proposal seeking the removal of Bally's Chairman and CEO Paul Toback failed to receive the required vote for passage. Bally's board lead Director John W. Rogers, Jr., said, "While a number of forces and agendas appear to have been at work, it is clear from today's [Thursday] vote that Bally's investors intended to send a strong message about the importance of board leadership at the Company. We hear that message, and welcome our three new independent directors to constructively work with Bally's independent Board and management in helping lead the Company's operational turnaround and strategic alternative process to deliver enhanced value for shareholders." Mr. Rogers continued, "We continue to maintain unanimous support for and confidence in Paul Toback and his management team. Paul has been instrumental in transforming Bally's business model, while driving an operational and cultural turnaround that is achieving results. This management team has worked tirelessly to correct the mistakes of the past and rebuild confidence in the Company's financials, and has participated actively, along with the Board and outside financial advisors, in evaluating strategic alternatives to address the Company's long-term capital structure. We believe it is in the best interest of all shareholders to move forward under Bally's current leadership. The Board will carefully assess progress on each of these important initiatives over the next few months and continue holding management accountable for their ultimate success in enhancing value for all shareholders." Final results will be announced following completion in the next two weeks of the vote tabulation by IVS Associates, Inc., the independent inspectors of election. Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers in the U.S., with nearly 410 facilities located in 29 states -- Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness, Pinnacle Fitness, Bally Sports Clubs and Sports Clubs of Canada brands. Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on Dec. 6, 2005, Standard & Poor's Ratings Services revised its CreditWatch implications on Bally Total Fitness Holding Corp. to developing from negative. The corporate credit rating remained at 'CCC'. Bally's ratings were originally placed on CreditWatch on Aug. 8, 2005, following the commencement of a 10-day period after which an event of default would have occurred under the company's $275 million secured credit agreement's cross-default provision and the debt would have become immediately due and payable. Subsequently, Bally entered into a consent with lenders to extend the 10-day period until Aug. 31, 2005. Prior to Aug. 31, the company received consents from its bondholders extending its waiver of default to Nov. 30, 2005. Bally Total has assets amounting to US$1,453,300,000 and liabilities of US$1,611,500,000. CFE: Inks US$63 Million Transmission Contract with Iberdrola ------------------------------------------------------------ CFE aka Comision Federal de Electricidad, Mexico's state electric company signed a 668 million pesos (US$63 million) contract with Spanish firm Iberdrola. Under the agreement, which started January 18, Iberdrola is building and installing: * eight transmission lines totaling 86 km; * seven substations; and * 18 feeder stations in Tamaulipas and Coahuila states in northern Mexico. The project is expected to end in May 2007. According to Business News Americas, the construction and installation of new lines will meet rising demand in Valles, Tampico, Matamoros and Nuevo Laredo municipalities. CFE is a state-owned integrated power company that dominates generation, transmission and distribution in Mexico. It has 20.6 million clients, 39,182km of transmission infrastructure, 156,647MVA transformation capacity and 163 generation plants that at end-March 2003 had 40,350MW combined capacity. Seventy five per cent of sales are direct to the client, 24.5% are to Mexico City distributor Luz y Fuerza del Centro and the remaining 0.5% are exports. The industrial sector accounts for 61% of direct sales, followed by residential (23%), commercial (7%), agriculture (5%) and services (4%). The company suffered increasing losses for 2003 and 2004. CFE incurred MXN6.2 billion loss in 2003, and MXN119 billion loss in 2004. TELMEX: Supreme Court Declares Share Buyback Tax Constitutional --------------------------------------------------------------- Telefonos de Mexico S.A., aka Telmex, has lost a petition filed with Mexico's Supreme Court to have income tax on share buybacks declared unconstitutional. Telmex has been buying back its own shares since 1994. Telmex repurchased shares worth approximately 31.6 billion pesos between 2002 and 2004. After the government started taxing the transactions in 2002, the company took the matter into court. Telmex contended that the share buybacks shouldn't be taxed because the company has already made corresponding deductions. The Supreme Court's ruling saved the government from having to pay back about 9 billion pesos (US$860 million) in taxes. According to a statement released by the Court, the taxation of the share buybacks was deemed constitutional because the transactions were recorded as part of the company's accumulated profits. * * * As reported in Troubled Company Reporter on March 9, 2005, court No. 4 of Buenos Aires' civil and commercial tribunal declared Telmex bankrupt, appointing Ms. Maria Lilia Orazi as the trustee. =========== P A N A M A =========== AES CORP: Building Hydroelectric Plant in Panama ------------------------------------------------ AES Corporation announced plans to construct a $320 million hydroelectric power plant in Panama. The company disclosed that information during a meeting held Thursday with country's President Martin Torrijos. When completed, the 150 MW plant will increase AES's total generation capacity in Panama to 620 MW, making AES the largest producer of electricity in the country. The plant Changuinola 75 will be located in the Changuinola River Basin, about 220 miles northwest of Panama City in the Province of Bocas del Toro. The project includes a 10-year power purchase agreement with Panama's largest utility Union Fenosa SA. AES has begun the engineering and geo-technical work and plans to begin construction in 2007. The plant is scheduled to be operational by mid-2010. "This plant will provide a new, clean and low cost source of electricity for Panama at a time when the country is experiencing extremely high energy costs and high demand growth," said AES Latin America president Andres Gluski. "It will integrate the Province of Bocas del Toro into the national electric system of Panama, providing its people with a more reliable and affordable source of electricity. It will also reduce the nation's traditional dependence on imported oil." AES has been doing business in Panama since 1999. The company currently manages and operates four hydroelectric power plants in Panama. AES Corporation -- http://www.aes.com/-- is a leading global power company, with 2004 revenues of $9.5 billion. The Company operates in South America, Europe, Africa, Asia and the Caribbean countries. AES generating 44,000 megawatts of electricity through 124 power facilities and delivers electricity through 15 distribution companies. AES Corp.'s 30,000 people are committed to operational excellence and meeting the world's growing power needs. * * * As reported in the Troubled Company Reporter on Jan. 11, 2006, Moody's affirmed the ratings of The AES Corporation, including its Ba3 Corporate Family Rating and the B1 rating on its senior unsecured debt. The rating outlook remains stable. * * * As reported in the Troubled Company Reporter on June 23, 2005, Fitch Ratings upgraded and removed the ratings of AES Corporation from Rating Watch Positive, where it was initially placed on Jan. 18, 2005, pending review of the company's yearend financial results. Fitch said the Rating Outlook is Stable. ===================== P U E R T O R I C O ===================== G+G RETAIL: Issues Case Summary, 20 Largest Unsecured Creditors --------------------------------------------------------------- G+G Retail released this case summary and unsecured creditors list: Debtor: G+G Retail, Inc. aka G&G Retail Holdings, Inc. (former parent company, merged into G+G Retail, Inc. 3/12/04) aka G+G Retail, Inc. aka G+G aka G+G Retail of Puerto Rico (Inactive Corporation) aka G+G Retail of Virgin Islands (Inactive Corporation) aka Rave aka Rave Girl aka Authentika 520 Eighth Avenue New York, New York 10018 Bankruptcy Case No.: 06-10152 Type of Business: The Debtor sells ladies wear and operates 566 stores in the United States and Puerto Rico under the names Rave, Rave Girl and G+G. See http://gorave.com/and http://www.goravegirl.com/ Chapter 11 Petition Date: January 25, 2006 Court: Southern District of New York (Manhattan) Judge: Robert D. Drain Debtor's Counsel: William P. Weintraub, Esq. Laura Davis Jones, Esq. David M. Bertenthal, Esq. Curtis A. Hehn, Esq. Pachulski, Stang, Ziehl, Young & Jones P.C. 780 Third Avenue, 36th Floor New York, New York 10017 Tel: (212) 561-7700 Fax: (212) 561-7777 Debtor's Special Corporate Counsel: Davis & Gilbert LLP 1740 Broadway New York, NY 10019 Debtor's Crisis Managers and Financial Advisors: Corporate Revitalization Partners 13355 Noel Road, Suite 1825 Dallas, Texas Debtor's Investment Banker: Financo, Inc. DIP Agent: The CIT Group/Business Credit, Inc. Estimated Assets: More than $100 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The CIT Group/ Claim for $8,326,157 Business Credit, Inc. Inventory P.O. Box 1036 Charlotte, NC 28201 Attn: David Kotler Tel: (212) 382-7204 Fax: (212) 382-7120 Rosenthal and Rosenthal Claim for $2,049,298 P.O. Box 88926 Inventory Chicago, IL 60695 Attn: John Fallahee Tel: (212) 356-1435 Fax: (212) 356-0971 GMAC Claim for $1,725,700 P.O. Box 403058 Inventory Atlanta, GA 30384 Attn: Steven Pamm Tel: (212) 884-7366 Fax: (212) 884-7314 Estrada Clothing Inc. Claim for $1,230,773 1111 South San Julian Street Inventory Los Angeles, CA 90015 Tel: (213) 748-4391 Fax: (213) 748-0030 Capital Factors Claim for $1,064,614 P.O. Box 79 Inventory Memphis, TN 38101 Attn: Joseph Zayas First Capital Claim for $913,630 P.O. Box 643382 Inventory Cincinnati, OH 45264 Milberg Factors Claim for $874,279 99 Park Avenue Inventory New York, NY 10016 DHL Express (USA) Inc. Claim for $779,074 P.O. Box 4723 Services Houston, TX 77210 Wells Fargo Century Claim for $767,629 P.O. Box 360286 Inventory Pittsburgh, PA 15250 Newport Apparel Corp. Claim for $522,977 1215 Walnut Street Inventory Compton, CA 90224 Jade Apparel Inc. Claim for $426,725 4551 Loma Vista Avenue Inventory Vernon, CA 90058 Ganis Bros./Artistic Creation Claim for $316,557 P.O. Box 37985 Inventory Charlotte, NC 28237 Hana Financial Claim for $301,491 P.O. Box 92943 Inventory Los Angeles, CA 90009 General Business Credit Claim for $280,661 P.O. Box 92024 Inventory Los Angeles, CA 90009 Olivia Miller Inc. Claim for $272,124 16 Industrial Avenue Inventory Little Ferry, NJ 07643 J.C.S. Apparel Group Inc. Claim for $250,436 1407 Broadway Inventory New York, NY 10018 FC Meyer Packaging, LLC $249,028 Pretty Good Claim for $247,250 Inventory Worldcom Claim for Services $170,397 Vandale Industries Claim for $167,309 Inventory G+G RETAIL: U.S. Trustee Meeting Creditors on February 2 -------------------------------------------------------- The United States Trustee for Region 1 will convene a meeting of G+G Retail Inc.'s creditors at 10 a.m., on Feb. 2, 2006, at the 7th Floor, Marriott Marquis Hotel, Times Square in New York. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in New York, G+G Retail, Inc., aka G+G Retail of Puerto Rico -- http://gorave.com/and http://www.goravegirl.com -- sells ladies wear and operates 566 stores in the United States and Puerto Rico under the names Rave, Rave Girl and G+G. The Company filed for chapter 11 protection on Jan. 25, 2006 (Bankr. S.D.N.Y. Case No. 06-10152). When the company filed for protection from its creditors, it estimated more than $100 million in assets and estimated $10 million to $50 million in debts. MUSICLAND HOLDING: Honors Prepetition Debts on Interim Basis ------------------------------------------------------------ Musicland Holding Corp. and its debtor-affiliates maintain certain customer programs to market their products and services, enhance customer loyalty, and develop and sustain a positive reputation in the marketplace for their goods. The Debtors' Customer Programs have generated valuable goodwill, repeat business and have contributed to the Debtors' overall revenue. In this regard, the Debtors seek the U.S. Bankruptcy Court for the Southern District of New York's authority to pay prepetition obligations to their customers, continue certain customer programs, and honor other prepetition obligations necessary to maintain the existence of customer programs. Replay Program James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, in New York, relates that prior to the Petition Date, the Debtors offered customers the opportunity to join Replay, the Debtors' loyalty program. Replay has 3,000,000 members and is considered one of the most successful loyalty programs offered by an entertainment retailer. At a member's request, the Debtors refund the Replay membership fee. During the month prior to the bankruptcy filing, due to the closing of the Media Play stores, less than $60,000 was refunded. According to Mr. Sprayregen, many of the refunds were in the form of checks and may not have been cashed prior to the Petition Date. The Debtors want to honor the prepetition refund checks to Replay members. The Debtors estimate that the amount of the Debtors' liability for Replay Reward Points outstanding as of the Petition Date is $2,371,000. Furthermore, the approximate amount of the Debtors' liability for Replay Reward Certificates as of the Petition Date is $11,726,000. Mr. Sprayregen says that Replay members are among the Debtors' most valuable customers. During December 2005 alone, Replay members accounted for almost 40% of the Debtors' sales. Replay Extreme Rewards Credit Card Prior to the Petition Date, the Debtors launched a co-branded credit card with Providian National Bank -- the Replay Extreme Rewards Credit Card. The Debtors earn a fee for every new activated Replay Extreme Rewards Credit Card, annual renewal fees for each activated Replay Extreme Rewards Credit Card that renews annually, and fees based on a percentage of eligible charges to Replay Extreme Rewards Credit Card accounts in good standing. As of the Petition Date, 3,000 customers have been approved for a Replay Extreme Rewards Credit Card. During the month prior to the Petition Date, the approximate amount of outstanding obligations with respect to Replay Extreme Reward Points was $5,185. Gift Cards The Debtors sold pre-paid and reloadable gift cards for use in the Debtors' stores and Web sites prior to the Petition Date. The Debtors utilize CardFact, Ltd., to issue and sell the gift cards and pay CardFact a fee for their services. The gift cards have no expiration date. Mr. Sprayregen notes that as of December 31, 2005, the Debtors carry a liability on their balance sheet of $46,000,000, representing the unredeemed gift cards. The Debtors have sold gift cards totaling approximately $30,900,000 during the 12 months ended December 31, 2005. Of the gift cards sold during 12-month period ended December 31, 2005, a total of approximately $19,200,000, or 62%, have been redeemed. Historically, the Debtors have experienced a redemption rate of 85%, with the remaining cards never redeemed. The entire amount of unredeemed gift cards sold in the past 12 months is approximately $11,700,000. If the Debtors experience similar redemption rates for gift cards sold during the past 12 months, approximately $7,100,000 will be redeemed postpetition. Prior to the Petition Date, at a customer's request, the Debtors have refunded the gift cards for cash. However, the Debtors now seek the Court's authority to refuse to refund the gift cards for cash or credit. Holders of gift cards may redeem the gift cards for product at the Debtors' stores or Web sites. Graze Music Gift Cards and Graze Points The Debtors launched the Graze retail outlet as a store-within- a- store at certain Sam Goody stores and the GrazeMusic.com Web site prior to the Petition Date. GrazeMusic.com allows customers to download digital music by single track or album. Other Programs Prior to the Petition Date, the Debtors: -- operated a refund and exchange policy; -- permitted customers to purchase merchandise on layaway; -- sold warranties on small appliances to Customers on behalf of a third-party warranty provider, AIG/NEW; -- pre-sold or took deposits on goods that were new releases or had not yet been released; -- issued and honored unexpired coupons and discounts presented by customers when they purchased goods from the Debtors; and -- ran certain promotions including sweepstakes and giveaways as part of their advertising and promotional efforts. According to Mr. Sprayregen, the Debtors' business operations and the success of the Chapter 11 Cases depend on the maintenance of customer loyalty. In addition, the continuation of the Customer Programs is essential to attract new customers. * * * Judge Bernstein grants the Debtors' request on an interim basis. Judge Bernstein allows the Debtors to: * honor and perform certain prepetition obligations to customers; * continue, renew, replace, implement, modify or terminate some of their Customer Programs; and * honor certain other prepetition obligations necessary to maintain the existence of customer programs. Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Musicland Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) MUSICLAND HOLDING: Paying Prepetition Critical Vendor Claims ------------------------------------------------------------ Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code, Musicland Holding Corp. and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's permission to pay prepetition claims of certain vendors that are essential to the continuance of the Debtors' operations. According to James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, in New York, the Critical Vendors primarily consist of: (1) Product Vendors Much of the products sold in the Debtors' stores are available from a small number of vendors who would be difficult and expensive to replace. (2) Information Technology Vendors Disruption in the information technology vendors' services could result in complete shutdown, degraded or lost functionality or lack of support of the Debtors' mainframe services and non-mainframe based corporate and store facing systems. It could also result in the Debtors' inability to process credit card or gift card transactions and to place orders with and receive invoices from the Debtors' suppliers. (3) Key Marketing Vendors Certain marketing vendors provide marketing services, which are essential to the concepts that lay at the core of the Debtors' go-forward business model. It would be difficult, costly and time-consuming for the Debtors to obtain new marketing vendors. In certain instances, the Debtors owe prepetition claims to alternative suppliers. (4) Loss Prevention Vendors Certain loss prevention vendors provide security, alarm and inventory counting services which are essential to the Debtors' operations. The services provided are from a small number of vendors and would be difficult, costly and time-consuming to replace. Mr. Sprayregen says that the payment of the claims of Critical Vendors is vital to the Debtors' reorganization efforts because the Critical Vendors are often the only source for particular goods or services needed for their business. Failure to pay the Critical Vendor Claims would result in the Critical Vendor refusing to provide its goods and services to the Debtors, he adds. Furthermore, the Critical Vendors would themselves be irreparably damaged by the Debtors' failure to pay their prepetition claims. That would result in the Debtors being forced to obtain goods and services elsewhere that would either be at a higher price or of the wrong quantity required. Thus, the Debtors seek the Court's authority to pay up to $4,000,000 in Critical Vendor Claims. The Debtors reserve the right to seek Court authority at a later date to increase the Critical Vendor Cap. Mr. Sprayregen tells the Court that the Debtors have determined that up to 22 out of 1,165 vendors with prepetition amounts owing were considered to be Critical Vendors. The Debtors propose to condition the payment of Critical Vendor Claims on the agreement of the individual Critical Vendors to continue supplying goods and services to the Debtors on terms consistent with the historical trade terms between the parties. Mr. Sprayregen discloses that to ensure that the Critical Vendors deal on Customary Trade Terms, the Debtors propose that a letter be sent to the Critical Vendors along with a copy of the order granting the Motion. The letter, once accepted, will be the agreement between the parties that governs their trade relationship. However, if a Critical Vendor refuses to supply goods and services to the Debtors on Customary Trade Terms after the receipt of payment of its Claim or fails to comply with the Trade Agreement, the Debtors seek the Court's authority to terminate the Trade Agreement between the Debtors and that Critical Vendor and declare that the provisional payments made to Critical Vendors be in payment of then-outstanding postpetition claims. A Trade Agreement that is terminated as a result of a Critical Vendor's refusal to comply can be reinstated if, among others, the Debtors reach a favorable alternative agreement with the Critical Vendor. Mr. Sprayregen notes that the continued availability of trade credit in amounts and on terms consistent with those the Debtors enjoyed prepetition is vital because it allows the Debtors to maintain liquidity for operations and to maintain inventory levels consistent with operating profitability. Preserving working capital through the retention or reinstatement of traditional trade credit terms will enable the Debtors to maintain their competitiveness and to maximize the value of their businesses, Mr. Sprayregen says. Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Musicland Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) ================= V E N E Z U E L A ================= EDC: To Work with Vargas State Against Electricity Theft -------------------------------------------------------- Electricidad de Caracas aka EDC, a subsidiary of AES Corp., will work with the Vargas state government for the reduction of electricity theft, Business News Americas reports. The Venezuelan private electricity firm's President Julian Nebreda was able to talk about electricity theft with Vargas governor Antonio Rodriguez San Juan when they met Tuesday to discuss the impact of recent landslides and heavy rains in the state on electricity generation and distribution. Rodriguez had assured that his office would go after those that profit from the theft of wires and other materials used in the transmission and distribution of electricity and prosecute those who purchase the wires and other materials. EDC said this year that it would replace 12,000 unlawful connections with legal ones in the state as part of a nationwide strategy to reduce theft. "Last year we did so with some 9,000 clients, so the idea this year is to increase that 30%," Nebreda said. The company has over 1 million clients nationwide and 80,000 of those in Vargas state, representing 9% of total EDC power sales. Nebreda revealed that the total electricity losses for EDC in Vargas are 20% -- much higher than the national average -- while records of Caveinel, the chamber that groups electricity companies in Venezuela, show that typical losses due to theft are 10% in the Caracas metropolitan area. Vargas, a state that is semi-isolated from the rest of the country after a bridge on the main highway linking Caracas to the seaport of La Guaira crumbled in late December, is home to EDC's 1,786MW Zuloaga thermal plant, where 65% of all the power the company generates comes from. * * * As reported by Troubled Company Reporter on Nov. 21, 2005, Fitch Ratings upgraded the senior unsecured foreign currency rating of C.A. La Electricidad de Caracas aka EDC to 'BB-' from 'B+'. PDVSA: Awaits Approval on Joint Venture with Private Oil Firms -------------------------------------------------------------- Private oil companies operating in Venezuela expect state oil firm PDVSA aka Petroleos de Venezuela SA to continue its payments for the firms' investments and expenses under their old operating agreements until the new joint venture contract model is approved by the national assembly, Caracas daily El Universal reports. Private oil companies signed preliminary agreements last year to migrate all 32 existing operating agreements in the country to new joint ventures controlled by PDVSA, which will have an average 60% stake in all new joint venture contracts, Business News Americas relates. The 32 fields previously under operating agreements are now under a transition scheme controlled by special "transitional technical committees" to guarantee their normal operations and transition to the new contract model. The new contract is designed to substitute the old operating agreements that cost PDVSA US$4 billion last year. The contracts now under PDVSA control represent combined production of some 532,000 barrels a day. PDVSA hopes to save US$3 billion in operating costs in 2006 through the new contracts. Those savings though will be reduced depending on how long it takes the national assembly to approve the new contract model. PDVSA is Venezuela's state oil company in charge of the development of the petroleum, petrochemical and coal industry, as well as planning, coordinating, supervising and controlling the operational activities of its divisions, both in Venezuela and abroad. * * * On Jan. 23, 2005, Fitch Ratings upgraded the local and foreign currency ratings of Petroleos de Venezuela S.A. aka PDVSA to 'BB-' from 'B+'. The rating of PDVSA's export receivable future flow securitization, PDVSA Finance Ltd, was also upgraded to 'BB+' from 'BB'. In addition, Fitch has assigned PDVSA a 'AAA(ven)' national scale rating. The Rating Outlook is Stable. Both rating actions follow Fitch's November 2005 upgrade of Venezuela's sovereign rating. PDVSA: Inks Agreement for Geological Studies with Enarsa -------------------------------------------------------- State oil firm Petroleos de Venezuela aka PDVSA has entered into an agreement with Argentina's own state oil company Enarsa to conduct geological studies in certain areas in Venezuela and Argentina, Business News Americas reports. A letter of intent was signed between companies during a meeting between Venezuela's President Hugo Chavez, Brazil's President Luiz Inacio Lula Da Silva and Argentina's President Nestor Kirchner in Brazil's capital Brasilia last week. According to PDVSA, the study will touch on the potential, reserves and possibility of carrying out joint exploration in a block in Venezuela's Junin field in the Orinoco belt and in the offshore area in Argentina's San Jorge basin. It is probable that Petrobras, the Brazilian federal energy company, will take part in any exploration projects resulting from the studies. PDVSA is Venezuela's state oil company in charge of the development of the petroleum, petrochemical and coal industry, as well as planning, coordinating, supervising and controlling the operational activities of its divisions, both in Venezuela and abroad. * * * On Jan. 23, 2005, Fitch Ratings upgraded the local and foreign currency ratings of Petroleos de Venezuela S.A. aka PDVSA to 'BB-' from 'B+'. The rating of PDVSA's export receivable future flow securitization, PDVSA Finance Ltd, was also upgraded to 'BB+' from 'BB'. In addition, Fitch has assigned PDVSA a 'AAA(ven)' national scale rating. The Rating Outlook is Stable. Both rating actions follow Fitch's November 2005 upgrade of Venezuela's sovereign rating. *********** 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, Marjorie C. Sabijon and Sheryl Joy P. Olano, Editors. Copyright 2006. 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 * * *