/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/060202.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, February 2, 2006, Vol. 7, Issue 24 Headlines A R G E N T I N A COOPERATIVA PARA: Trustee Will Validate Claims Until February 3 DAGFA S.A.: Claims Authentication Ends Feb. 3 DONA PANCHA: Individual Reports Due February 3 OLABRUMA S.R.L.: Claims Verification Ends February 3 REPSOL YPF: Faces Misrepresentation Class Action in S.D. NY RIBO PETROL: Trustee Ceases Accepting Claims on February 3 TOMAGUS S.R.L.: Creditors Have Until Feb. 3 to Submit Claims B E R M U D A ALEA GROUP: A.M. Best Lowers, Withdraws Ratings of Subsidiaries ARCH CAPITAL: A.M. Best Assigns BB Rating on $200MM Pref. Shares B O L I V I A REPSOL YPF: Willing to Re-negotiate Contracts with New Gov't B R A Z I L AES CORP: Shuts Redondo Station's 480-Megawatt Unit 8 BANCO ITAU: Creating New Insurance Company with XL Capital CVRD: Plans Exchanging Caemi Preferred Shares for CVRD Shares CVRD: Investing US$482 Million in Logistics This Year USIMINAS: Credit Quality Prompts S&P's BB Rating C A Y M A N I S L A N D S ACACIA CDO: Creditors to Present Proofs of Claim by February 11 ATLANTICO FIN: Creditors Must File Proofs of Claim by Feb. 24 ELITE-ON CORPORATION: Liquidator Accepts Claims until Feb. 10 EQUILIBRIUM FUND: Creditors Have Until Feb. 10 to Present Claims HORIZON OFFSHORE: Creditors to Prove Claims by February 24 C O L O M B I A * Colombia Considers Sale of Peso Bonds Due in 2020 E C U A D O R * ECUADOR: Government Will Liquidate Seven Banks This Month M E X I C O BANCO MERCANTIL: S&P 'BB+' Rating Unaffected by INB Acquisition EMBRATEL: Providing Caixa Seguros with Telecom Services P U E R T O R I C O DORAL: Completes Consent Solicitation for Three Note Series DORAL FINANCIAL: Reviews Loan Sale with W Holding Company G+G RETAIL: Brings In Davis & Gilbert as Corporate Counsel G+G RETAIL: Turns to CRP for Crisis Management Advice MUSICLAND HOLDING: Asks Court to Set May 1 as Claims Bar Date MUSICLAND HOLDING: Gets Court OK to Pay Prepetition Taxes & Fees V E N E Z U E L A CITGO: Sells U.S. 45 Million Gallons of Discounted Natural Gas PDVSA: Gets US$1.07 Billion from Orinoco Projects PDVSA: Recovers 99% of Monagas Crude Spill - - - - - - - - ================= A R G E N T I N A ================= COOPERATIVA PARA: Trustee Will Validate Claims Until February 3 --------------------------------------------------------------- Mr. Hector Jorge Vigetii, the trustee appointed by the Buenos Aires court for the bankruptcy case of Cooperativa para el Personal de YPF Gral. Mosconi de Vivienda, Urbanismo, Consumo, Credito, Turismo y Servicios Sociales Limitada (V.U.C.C.T.S.S.), will stop accepting proofs of claim from creditors on Feb. 3, 2006. The trustee will present the validated claims in court as individual reports on March 17, 2006. The submission of a general report on the case will follow on May 3, 2006. Cooperativa para el Personal de YPF Gral. Mosconi de Vivienda, Urbanismo, Consumo, Credito, Turismo y Servicios Sociales Limitada (V.U.C.C.T.S.S.) can be reached at: Avda. Pedro Medrano 46 Buenos Aires Mr. Hector Jorge Vigetti, the trustee, can be reached at: Montevideo 711 Buenos Aires DAGFA S.A.: Claims Authentication Ends Feb. 3 --------------------------------------------- The authentication of creditors' claims against Dagfa S.A. will end on Feb. 3, 2006. The claims will be submitted in court for approval on March 3, 2006, by the court-appointed trustee, Marcelo Carlos Rodriguez. The trustee will also prepare the general report on the company's reorganization case on April 17, 2006. The Company will endorse the settlement proposal, drafted from the submitted claims, for approval by the creditors during the informative assembly scheduled on Oct. 26, 2006. Dagfa S.A. successfully petitioned for reorganization after Buenos Aires' civil and commercial court issued a resolution opening the Company's insolvency proceedings. Mr. Marcelo Carlos Rodriguez, the trustee, can be reached at: Cerrito 146 Buenos Aires DONA PANCHA: Individual Reports Due February 3 ---------------------------------------------- The deadline for the submission of the individual reports on creditors' validated claims against Dona Pancha Gas S.R.L. -- company under insolvency protection -- will be on Feb. 3, 2006. The verification of claims ended on Nov. 10, 2005. A general report is expected in court on March 20, 2006. Dona Pancha Gas successfully petitioned for reorganization after La Rioja's civil and commercial court issued a resolution opening the company's insolvency proceedings. The city's accountant, Hector Alejandro Lucero, was appointed as trustee. Dona Pancha Gas S.R.L. can be reached at: Pueyrredon 236 Ciudad Capital de la Rioja Mr. Hector Alejandro Lucero, the trustee, can be reached at: Calle Publica Casa NA 12 del Barrio Cooperativa Canal 9 Ciudad Capital de la Rioja OLABRUMA S.R.L.: Claims Verification Ends February 3 ---------------------------------------------------- The verification of creditors' claims against Olabruma S.R.L. will end on Feb. 3, 2006. The company began reorganization following the approval of its petition by Olavarria's civil and commercial court. Ms. Maria Isabel Geijo was selected as trustee. An informative assembly, the final stage of a reorganization where the settlement proposal is presented to the Company's creditors for approval, will be held on Oct. 18, 2006. Olabruma S.R.L. can be reached at: Moreno 2416 Olavarria REPSOL YPF: Faces Misrepresentation Class Action in S.D. NY ----------------------------------------------------------- A class action has been commenced in the United States District Court for the Southern District of New York on behalf of purchasers of Repsol YPF, S.A. American Depository Receipts between July 28, 2005, and Jan. 27, 2006. The complaint charges Repsol and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that, throughout the class period, defendants issued numerous materially false and misleading statements that, among other things, highlighted the company's proven reserves. Reserves are the estimates of oil and natural gas a company has in the ground and expects to eventually pump and sell. They also serve as a crucial metric for oil-company investors trying to gauge a company's growth prospects. As alleged in the complaint, these statements were materially false and misleading because defendants failed to disclose and/or misrepresented the following adverse facts, among others: a) that the company was materially overstating its proven reserves. The company has now admitted that it will downgrade its proven reserves by 25% and take an asset impairment charge of approximately EUR50 million; b) that the company was experiencing increasing political pressure in Bolivia which will have an adverse effect on the company's operations; c) that the company was experiencing difficulties in its production of gas in Bolivia; d) that contracts with the company's existing customers would likely not be extended due to complications in extracting gas from certain fields in Argentina; and e) as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the Company and its business prospects. On Jan. 26, 2006, the company filed its Form 6-K with the SEC in which it disclosed that it was cutting its oil and gas reserves estimate by 25% due mostly to problems that it had experienced in Bolivia and Argentina. On the same date, Repsol ADRs closed at $27.99 per ADR, a decline of $2.12 per ADR, or over 7%. The ADRs continued to decline on Jan. 27, falling another $1.34 per ADR, or approximately 5%. The plaintiff seeks to recover damages on behalf of all purchasers of Repsol ADRs during the class period. The plaintiff is represented by law firm Lerach Coughlin Stoia Geller Rudman & Robbins LLP, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud. Lerach Coughlin, a 160-lawyer firm with offices in San Diego, San Francisco, Los Angeles, New York, Boca Raton, Washington, D.C., Houston, Philadelphia and Seattle, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of human rights violations. Its lawyers have been responsible for more than $20 billion in aggregate recoveries. * * * 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. RIBO PETROL: Trustee Ceases Accepting Claims on February 3 ---------------------------------------------------------- Court-appointed trustee, Mr. Mario Sogari will stop accepting and verifying claims from creditors of Ribo Petrol S.A. on Feb. 3, 2006. Mr. Sogari will present the verified claims in court for approval on March 17, 2006. The trustee will also submit on May 3, 2006, a general report containing the audited accounting and business records as well as a summary of important events pertaining to the reorganization. An informative assembly, the final stage of a reorganization where the settlement proposal is presented to the Company's creditors for approval, is scheduled for Oct. 4, 2006. Ribo Petrol began reorganization following the approval of its petition by a Buenos Aires court. Mr. Mario Sogari, the trustee, can be reached at: Montevideo 708 Buenos Aires TOMAGUS S.R.L.: Creditors Have Until Feb. 3 to Submit Claims ------------------------------------------------------------ Creditors of bankrupt company Tomagus S.R.L. have until Feb. 3, 2006, to submit proofs of their claim to Mr. Miguel Adolfo Kupchik, the trustee appointed by the Buenos Aires court. Validated claims will be presented in court as individual reports on March 17, 2006. A general report on the case is expected in court on May 3, 2006. Mr. Miguel Adolfo Kupchik, the trustee, can be reached at: Alsina 1360 Buenos Aires ============= B E R M U D A ============= ALEA GROUP: A.M. Best Lowers, Withdraws Ratings of Subsidiaries --------------------------------------------------------------- A.M. Best Co. has downgraded the financial strength rating to B from B++ and the issuer credit rating to "bb" from "bbb" of the insurance and reinsurance operating subsidiaries of Alea Group Holdings (Bermuda) Ltd. (collectively referred to as Alea Group or Alea). The rating applies to Alea London Limited, Alea (Bermuda) Limited, Alea Europe Limited, Alea North America Insurance Company, Alea North America Specialty Insurance Company, Alea Global Risk Limited and Alea Jersey Limited. The outlook for all ratings remains negative. Subsequently, A.M. Best has withdrawn all ratings and has assigned an NR-4 (Company Request) to the Alea Group companies. The downgrade follows significant deterioration in the company's consolidated risk-adjusted capitalisation as a result of worse than anticipated performance in 2005 due to run-off charges, catastrophe losses and further adverse reserve development. A.M. Best believes that the company is likely to continue to be affected by high expenses related to the transition of Alea Group into run off and the continuing possibility of adverse reserve development. ARCH CAPITAL: A.M. Best Assigns BB Rating on $200MM Pref. Shares ---------------------------------------------------------------- A.M. Best Co. has assigned a debt rating of "bb" to Arch Capital Group Limited's [NASDAQ:ACGL] $200 million 8% non-cumulative Series A preferred shares. Arch's remaining debt ratings and the financial strength rating of A- of Arch Reinsurance Ltd. (Hamilton, Bermuda) and its affiliated companies are unchanged. The rating outlook is stable. The proceeds from the preferred share offering will be used for general corporate purposes. A.M. Best anticipates that these proceeds will be used to support additional opportunities in lines of business that experience rate increases and meet Arch's return expectations. Arch may also redeem the Series A preferred shares in whole or in part at a redemption price of $25 per share on or after February 1, 2011. Following the transaction, Arch's debt plus preferred-to-adjusted capital will be approximately 17%, and fixed charge coverage is expected to remain in excess of 15 times. The rating reflects Arch's excellent capitalization, solid operating performance and its well regarded operating franchise in both its primary and reinsurance business. The combination of Arch's solid historical profits, strong risk management capability and demonstrated financial flexibility has enabled it to withstand the heightened loss activity of the 2005 hurricane season. Partially offsetting these strengths is Arch's higher underwriting leverage position relative to its peer group, combined with the overall casualty orientation of its reinsurance and insurance lines of business. Despite Arch's loss reserve adequacy based on current actuarial studies, approximately 60% of its book of business is in long-tail casualty lines. Due to the company's relatively short operating history and long-tail nature of the casualty business, the pricing and reserve adequacy of these lines will not be fully apparent for several years. A.M. Best will continue to monitor Arch's loss reserve development, capitalization and operating performance. This debt rating has been assigned: Arch Capital Group Limited -- "bb" on $200 million 8% non-cumulative Series A preferred shares ============= B O L I V I A ============= REPSOL YPF: Willing to Re-negotiate Contracts with New Gov't ------------------------------------------------------------ The Associated Press reports that Spanish-Argentine Repsol YPF SA is willing to re-negotiate its natural gas extraction contracts with Bolivia's new leftist government despite the corporation's decision to freeze most new investment. Repsol YPF "wants to sign contracts within the framework we have established," Sustainable Development Minister Carlos Villegas said in reports. President Evo Morales has pledged enforcement of a Bolivian law enacted last year that raises oil and gas production taxes and royalties to 50% and, at least on paper, makes the state the sole owner of production, the AP states. President Morales has pledged to nationalize Bolivia's natural gas industry, which was taken over by foreign petroleum companies during a 1990s privatization wave. But he has also said he will respect private property rights. According to the AP, the company's shares fell more than 3% in Madrid Friday after sinking nearly 8% on Thursday, when the company announced it was cutting its oil and gas reserves estimate by 25% because of poor development prospects in Bolivia and Argentina. Repsol cited uncertainty about how the law will be applied and "greater knowledge" about the production capabilities for several of its Bolivia and Argentina gas fields. Company Chairman and Chief Executive Antonio Brufau told AP that Repsol wants to invest long-term in Bolivia, but added, "We need the rules of the game to be clear." The company froze euro400 million (US$480 million) that had been earmarked to boost gas production in Bolivia. Overall, foreign petroleum companies have invested about US$3.5 billion (euro2.88 billion) since 1996, the AP relates. Repsol executive Julio Gavito told reporters that the company is still interested in operating in Bolivia, which has the second largest natural gas reserves in South America after Venezuela, the AP reports. Bolivian Foreign Minister David Choquehuanca told reporters that foreign companies extracting gas should be become partners with the new government, acknowledging Bolivia's state-owned company lacks the money and expertise to do the job on its own. "We need the foreign investment, but we won't let the multinational companies take advantage of us," Minister Choquehuanca was quoted as saying. "We want to establish a relationship of equality, of respect." * * * 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. =========== B R A Z I L =========== AES CORP: Shuts Redondo Station's 480-Megawatt Unit 8 ----------------------------------------------------- Reuters reports that AES Corp. has shut down the 480-megawatt unit 8 at the Redondo natural gas-fired power station in California, according to a report from the California Independent System Operator said in a report. On Sunday, the unit was available for service. The 1,310 MW Redondo plant is located in Redondo in Los Angeles County, about 20 miles south of downtown Los Angeles. There are four units at Redondo, including two 175 MW units 5 and 6, and two 480 MW units 7 and 8. As previously reported, the company shut unit 7 for planned work by Jan. 17. All of the other units at the station were available for service. One MW powers about 800 homes, according to the North American average. Headquartered in Arlington, Virginia, AES Corporation -- http://www.aes.com/-- owns and operates power plants with a generating capacity of about 45,000 MW (primarily fossil-fueled) in the Americas, Europe, Asia, Africa and the Caribbean. The company's distribution subsidiaries sell power to 11 million customers around the world with most in Latin America. AES Corp. is the parent company of EDC aka Electricidad de Caracas. * * * 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. The rating affirmation follows AES's disclosure that it received notice from a trustee on Dec. 30, 2005 that it was not in compliance with the reporting covenant under various indentures due to failure to make a timely filing of its quarterly reports for the periods ending June 30, 2005 and Sept. 30, 2005. If AES fails to file such reports by February 28, the date that is 60 days after receipt of the notice, an Event of Default will occur under such indentures. BANCO ITAU: Creating New Insurance Company with XL Capital ---------------------------------------------------------- Banco Itau Holding Financeira S.A. and XL Capital, Ltd., through its subsidiary XL Insurance (Bermuda), Ltd., have signed on Monday a memorandum of understandings aiming to create a new insurance company in Brazil, which will operate in the commercial lines insurance market. The memorandum of understandings involves the contribution by Itau and XL of commercial lines insurance business in Brazil -- namely, property, casualty and specialty commercial books -- to a new insurance company. For Itau the memorandum of understandings means: -- Reinforcement of its position in the commercial lines insurance business; -- Taking advantage of the synergies existent between Itau and XL, that is, aggregate to Itau's knowledge and penetration in the Brazilian market, XL's expertise in the underwriting of commercial lines insurance business and its capacity of reinsurance, with advantages for Itau's customers and insurance brokers. About XL Capital XL Capital group of companies provide value for their customers by delivering solid and innovative risk management products and financial solutions backed by outstanding customer service. About Banco Itau Banco Itau is the third largest provider of commercial lines insurance in Brazil and had assets of US$65 billion at September 30, 2005. Banco Itau's 4-3/8% $125 Million notes due Jan. 31, 2008, carries Moody's Ba1 rating and Standard & Poor's BB- rating. CVRD: Plans Exchanging Caemi Preferred Shares for CVRD Shares ------------------------------------------------------------- CVRD's (Companhia Vale Do Rio Doce) board of directors approved the exchange of its subsidiary Caemi Mineracao e Metalurgica SA's 1.6 billion preferred shares owned by non-controlling shareholders for new CVRD preferred shares, Business News Americas reports. Non-controlling Caemi shareholders would receive 0.04115 preferred shares of CVRD for each Caemi preferred share. The proposal will be submitted during a general shareholders meeting. CVRD owns 100% of Caemi's common shares and 40.1% of Caemi's preferred shares, meaning it has 60.2% of its subsidiary's total capital. The exchange will give CVRD 100% ownership of Caemi shares. CVRD shares are traded on Sao Paulo's exchange, the New York Stock Exchange and Latibex, Spain's euro-denominated exchange for Latin American stocks. Caemi's preferred shares trade on the Sao Paulo stock exchange. Caemi Mineracao e Metalurgica SA is a holding company with direct and indirect interests in the industrial mining sector (iron ore and kaolin) and railroad transportation. Headquartered in Rio de Janeiro, Brazil, Companhia Vale do Rio Doce -- http://www.cvrd.com.br/-- engages primarily in mining and logistics businesses. It engages in iron ore mining, pellet production, manganese ore mining, and ferroalloy production, as well as in the production of nonferrous minerals, such as kaolin, potash, copper, and gold. * * * 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'. CVRD: Investing US$482 Million in Logistics This Year ----------------------------------------------------- Brazil's largest mining firm, Companhia Vale do Rio Doce, CVRD, will invest US$482 million in logistics infrastructure and services, according to a prepared statement released by the company. CVRD's 2006 logistics investments will consist primarily of the purchase of locomotives and wagons for iron ore and general cargo transport. The company estimates total cost of wagon and locomotive purchases at US$379 million. The company will acquire 1,426 railroad wagons -- including 1,276 wagons for haulage of iron ore and 150 for third parties' general cargo -- and 22 locomotives exclusively to haul iron ore. Last year CVRD invested US$465 million in the acquisition of rolling stock, including 5,414 wagons and 125 locomotives. The company expects to gradually reduce the total amount invested in rolling stock over the next few years. CRVD has allocated US$20 million to fund the installation of a new railway line in Espirito Santo state. The new line, run in conjunction with the railroad logistics company FCA, received approval from President Luiz Inacio Lula da Silva on January 24, Business News Americas relates. Construction of the 165km railway, which will link Flexal to Cachoeira do Itapemirim, will begin after the Brazil's environmental regulator issues an environmental license and the land transport authority approves the project. The main cargoes to be transported on the new railway are limestone, granite, timber and cement. CVRD's total capex budget for the year is US$4.6 billion, the highest in the company's history. Headquartered in Rio de Janeiro, Brazil, Companhia Vale do Rio Doce -- http://www.cvrd.com.br/-- engages primarily in mining and logistics businesses. It engages in iron ore mining, pellet production, manganese ore mining, and ferroalloy production, as well as in the production of nonferrous minerals, such as kaolin, potash, copper, and gold. * * * 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'. USIMINAS: Credit Quality Prompts S&P's BB Rating ------------------------------------------------ Standard and Poors' Rating Services has given a 'BB' rating on Brazil's largest flat-steel maker Usinas Siderurgicas de Minas Gerais S.A. aka Usiminas. The ratings on Usiminas reflects its exposure to the cyclical and volatile global steel sector; some reliance on the equally volatile economic and operating environment of its home market Brazil; and increasing competition within the Brazilian steel industry. These risks are tempered by Usiminas' sound financial profile, with total debt levels and liquidity currently at very conservative levels; a solid business profile, made evident by a very competitive cost structure; resilient operating profitability and robust free cash generation through economic cycles; and a favorable market position in the fairly concentrated flat carbon steel sector in Brazil, in particular in the higher-end, quality-products segments. The ratings on Usiminas reflect the consolidated credit quality of the so-called Usiminas System, consisting of the combined operating and financial profiles of Usiminas and its wholly owned subsidiary Companhia Siderurgica Paulista -- Cosipa and their respective subsidiaries altogether. The Usiminas System comprises the largest flat-steel production complex in Latin America, with a consolidated capacity for 9.5 million metric tons per year of crude steel and operations in the states of Minas Gerais and Sao Paulo. Usiminas' consolidated revenues and EBITDA amounted to $4.04 billion and $1.84 billion, respectively, in the nine months of 2005, equivalent to 5.37 million tons shipped. About 28% of its consolidated shipments in the period were destined to export markets. Usiminas' business fundamentals remain favorable despite the slowdown in second half 2005. A sound product portfolio, favorable logistics, modern facilities, streamlined operations, and low legacy costs are fundamentals that place Usiminas at an advantageous position when compared with its global peers, particularly in the US, Europe, and China. We believe this competitive edge is sustainable in the future despite some feedstock cost increases in the short term. Indeed, in the international comparison, we believe that higher iron ore and coal prices actually widen the lag between low-cost producers such as Usiminas and the industry's average, leaving the company in a more favorable competitive position to face a sector slowdown or a decline in steel prices any time in the future. In fact, despite the deep economic slowdown in Brazil and the full impact of higher iron ore, coal, and coke costs in third- quarter 2005, Usiminas continued reporting an EBITDA margin stronger than its historic performance, at 40.5% in the quarter, 46.1% in the past 12 months ended Sept. 30, 2005, also reflecting an optimized production and feedstock management -- with lower consumption of pellets and coke -- and an offsetting currency appreciation effect on imported costs. The company's sound business advantages are tempered by a relevant exposure to the Brazilian economy, as an average 75%- 80% of its production is destined to domestic clients. The steep decline in domestic demand in second-half 2005, already noticeable in the third-quarter 2005 results, led the company to increase export levels substantially in the period at comparatively lower margins (particularly considering that international steel prices have also moderated in the period). This trend intensified in fourth-quarter 2005 (the Brazilian Steel Institute-IBS-reported that national flat-steel consumption declined 8.7% in 2005 compared with 2004), putting some moderate pressure on Usiminas' margins. Despite the slowdown, medium-term prospects remain fair. Global steel prices are rebounding after some stock adjustments in the U.S. and have been holding in Europe, a trend that should gradually follow in the Brazilian domestic market as well. Usiminas' investments in a new coke plant, already under way, will make the company fully self-sufficient in coke in 2008, which should further reduce cost volatility in the long run. Usiminas' financial profile remained stable in the nine months of 2005, reflecting the company's ability to cope with the more unfavorable domestic market and cost increases. Cash generation remained very strong, allowing the company to distribute dividends and yet maintain strong liquidity and historically low gross debt levels, reflecting its more prudent financial stance. S&P regards Usiminas as the most conservative in our universe of rated Brazilian steel companies. As a result, not only have debt maturities been maintained at a level that is comfortably compatible with the company's cash generation (even if taken in a more "normalized" view, that is to say, assuming a through- the-cycle, lower EBITDA per ton), but interest cash expenses also continue to plummet, further improving coverage ratios. The company reported funds from operations to total debt, total debt to EBITDA, and EBITDA interest coverage of 74.2%, 0.99x, and 10.1x, respectively in the past 12 months ended Sept. 30, 2005, compared with 58.6%, 1.3x, and 7.2x in 2004. S&P believes current credit measure ratios are to be cautiously interpreted as outstandingly high due to the favorable moment in the steel cycle, but also reflect perennial improvements in the company's capital structure that should hold even under more stressful industry conditions. Usiminas announced in December 2005 that it will invest $1.5 billion in production improvements and expansions at its existing facilities throughout the next five years (including a new hot-stripping line at Cosipa and several capacity and quality improvements in Ipatinga). In a longer-term perspective, the company also stated its interest to build a brand-new five-million tpy steel mill at an estimated total cost of $3 billion, potentially teaming up with a global partner to reduce Usiminas' commitment to the project to about 50% of the project's total cost and secure long-term de0mand for the mill's slab output. S&P believes that the company's improved capital structure and sound cash flow fundamentals allow it to absorb expansion and efficiency improvements at its existing facilities without jeopardizing its credit profile. However, we have not fully incorporated the impact of a large new project in our rating assumptions, as key variables such as construction schedules, funding structure, ownership structure, and long-term commercial contracts have not been defined yet. However, that even if it decides to go ahead with this strategic move, Usiminas would seek to sustain its current moderate debt profile and sound liquidity in order to adequately address cyclical and volatile characteristics that should remain typical of the steel industry. Liquidity Usiminas' liquidity remains sound. The company reported cash reserves of $807.6 million as of Sept. 30, 2005, $334.9 million in excess of short-term debt maturities of $472.7 million through September 2006 (including accrued interest), already after the payment of dividends of approximately $247 million on Sept. 20, 2005, and $100 million in order to achieve a stake of approximately 16% of Ternium (the holding company controlled by Techint Group that owns three steel companies in Latin America: Sidor, Siderar, and Hylsamex). Besides those cash reserves, Usiminas also counts on a standby credit facility in the amount of $250 million, currently fully available through mid-2007, with a two-year repayment tenor. Debt concentration is now represented by only two bonds (one of $75 million coming due in November 2006 and its $175 million notes due 2009), with the rest of the debt consisting essentially of pre-export financing, BNDES loans, and other working capital loans. Apart from those, the debt maturity schedule is fairly smooth. Usiminas' debt maturities in 2006 amount to approximately $500 million. The company increased capital expenditures to approximately $177 million in the past 12 months ended Sept. 30, 2005 (compared with $125 million in 2004), but the bulk of investments in capacity expansion (new cokery in Ipatinga, a new continuous casting unit at Cosipa, and co-generation projects at both mills) remains to be performed. S&P expects some free operating cash flow (FOCF) to decline (but still remain fairly positive) in the next several quarters as the company ramps these investments up. Outlook The positive outlook on Usiminas' corporate credit ratings reflects the potential for rating improvement if some uncertainties are solved in the medium term. S&P believes that Usiminas' ratings could be raised if the company continues to report strong profitability in the next couple of quarters, confirming its ability to manage increased feedstock costs and the less favorable market environment. S&P sees the company's definition about its expansion projects (both at existing and brand-new projects) as a key medium- to long-term credit development because those will demand adequate financing in cost and particularly in tenor that has not been secured yet. Although the current rich cash flow streams and low indebtedness give room for the company to comfortably absorb the required debt to finance the expansions of its existing facilities, funding conditions for those are still to be fully incorporated into the rating analysis. Usiminas is well positioned to manage Brazil's country direct and indirect risks given its sound financial profile, but a potential upgrade would also depend on a scrutinized analysis of the company's vulnerabilities to such risks in a sovereign stress scenario. S&P's ratings and outlook are supported by two main medium-term assumptions: first, that current market conditions leave low- cost steel makers such as Usiminas in a privileged position to weather even reasonably stressful pricing environments should the global economy further decelerate; and second, that the company's improved balance sheet (reflected especially in low debt maturity concentration for the next several years) will prevail, allowing it to manage any decline in cash flows due to either a domestic slowdown or a decline in global steel prices (compressing current robust cash flows). Material changes in these two main assumptions could predicate an outlook revision to stable or even a negative action on the ratings. =========================== C A Y M A N I S L A N D S =========================== ACACIA CDO: Creditors to Present Proofs of Claim by February 11 --------------------------------------------------------------- The creditors of Acacia CDO 1, Ltd., which is being wound up voluntarily, are required within 30 days after Jan. 11, 2006, to send in their names, addresses, the particulars of their debts and claims and the names and addresses of their attorneys-at-law (if any) to the John Cullinane and Derrie Boggess, joint liquidators of the company. Creditors who fail to do so will be excluded from the benefit of any distribution made before such debts are proved. Acacia CDO 1, Ltd. was voluntarily wound up on Jan. 11, 2006. John Cullinane and Derrie Boggess, the joint voluntary liquidators, can be reached at: c/o Walkers SPV Limited Walker House, P.O. Box 908 George Town, Grand Cayman Telephone: (345) 914-6305 ATLANTICO FIN: Creditors Must File Proofs of Claim by Feb. 24 ------------------------------------------------------------- Creditors of Atlantico Finance, are required to send their names, addresses, the particulars of their debts or claims and the names and addresses of their attorneys-at-law (if any) to the attorneys-at-law for the liquidator of the company on or before Feb. 24, 2006. The liquidator may also require the creditors to prove the debts or claims personally or through their attorneys, at the time and place that the liquidator will specify. In default thereof they will be excluded from the benefit of any distribution made before such debts are proved. Atlantico Finance entered voluntary wind up on Dec. 29, 2006. Q&H Nominees Ltd. was appointed as liquidator. Q&H Nominees Ltd., the liquidator, can be reached at: Third Floor, Harbour Centre P.O. Box 1348 GT, Grand Cayman Cayman Islands Telephone: (+1) 345 949 4123 Facsimile: (+1) 345 949 4647 ELITE-ON CORPORATION: Liquidator Accepts Claims until Feb. 10 ------------------------------------------------------------- Mr. Hsing-Hseng Lin, liquidator of Elite-On Corporation, is giving creditors until Feb. 10, 2006 to have their claims validated by him. Creditors must establish any title they may have under the 2004 Revision of the Companies Law. Failure to do so would mean exclusion from the benefit of any distribution or payments that the company would make. Elite-On Corporation -- formerly called as Eliteondotcom Corp. - - entered voluntary liquidation on Jan. 6, 2006. Elite-On Corporation can be reached at: c/o P.O. Box 2804 GT Grand Cayman, Cayman Islands Mr. Lin, Hsing-Hseng, the voluntary liquidator, can be reached at: 6F., No. 6, Lane 153 Song-jiang Rd., Jhongshan District Taipei, Taiwan, R.O.C. EQUILIBRIUM FUND: Creditors Have Until Feb. 10 to Present Claims ---------------------------------------------------------------- Equilibrium Fund Ltd.'s creditors must present proofs of their claims to the liquidator within 30 days after Jan. 10, 2006. The liquidator requires them to send their names and addresses and the particulars of their debts and claims and the names and addresses of their attorneys-at-law (if any). In default thereof, they will be excluded from the benefit of any distribution made before such debts are proved. Equilibrium Fund began its voluntary wind up on Oct. 31, 2005, and appointed Mr. Robert Holt as liquidator. Equilibrium Fund Ltd. can be reached at: P.O. Box 908 GT, Grand Cayman Cayman Islands Mr. Robert Holt, the liquidator can be reached at: c/o Holt Capital Partners, L.P. 301 Commerce Street, Suite 1430 Fort Worth, Texas 76102 Telephone: (817) 877 1430 Facsimile: (817) 877 1431 HORIZON OFFSHORE: Creditors to Prove Claims by February 24 ---------------------------------------------------------- Creditors of Horizon Offshore Ltd. -- company in voluntary liquidation -- are to prove their debts or claims on or before Feb. 24, 2006, and establish any title they may have under the Companies Law 2004 Revision, or to be they shall be excluded from the benefit of any distribution made before the debts are proved or from objecting to the distribution. The company started liquidating its assets voluntarily on Jan. 6, 2006, and selected Messrs. Ian Wight and Stuart Sybersma of Deloitte as joint liquidators. Mr. Stuart Sybersma, the joint voluntary liquidator, can be reached at: Joshua Taylor, Deloitte P.O. Box 1787 GT, Grand Cayman Cayman Islands Telephone: (345) 949 7500 Facsimile: (345) 949 8258 =============== C O L O M B I A =============== * Colombia Considers Sale of Peso Bonds Due in 2020 --------------------------------------------------- According to Bloomberg, the Colombian government is considering selling peso bonds that will mature in 2020 or later to provide banks with a benchmark for long-term financing, including home loans. "Price formation at long maturities is fundamental to build long-term credit instruments such as mortgages," Finance Minister Alberto Carrasquilla was quoted as saying. "We will examine the possibility of issuing a paper of equal or longer maturity." Bloomberg relates that falling interest rates have encouraged consumers to take out loans to buy household goods and new homes, fueling the nation's biggest expansion in more than a decade. According to Colombia's central bank, its economy probably grew more than 5% in 2005. In the absence of a benchmark, the central bank currently sets a maximum lending rate used by banks to price long-term loans. "The mortgage market is well-developed in Colombia and even though a longer term benchmark would help, the lack of one isn't impeding its growth," Jose Ignacio Lopez, an economist at Banco Santander, a unit of Spain's Banco Santander Central Hispano SA, told Bloomberg's Andrea Jaramillo. "Since many of the loans now offered are fixed-rate loans, what is mostly needed is for Colombia to continue keeping inflation under control." However, a fixed-income trader said that Colombia's local bond market isn't ready for a new long-maturity bond. The government, experts say, must wait for the market to assimilate new levels of risk before issuing that type of bond. * * * On May 30, 2005, Fitch Ratings affirmed Colombia's ratings as: -- Long-term foreign currency 'BB'; -- Country ceiling 'BB'; -- Local currency 'BBB-'; -- Short-term 'B'. Fitch said the Rating Outlook is Stable. ============= E C U A D O R ============= * ECUADOR: Government Will Liquidate Seven Banks This Month ----------------------------------------------------------- Ecuador's government will liquidate in February seven banks intervened during the country's banking crisis from 1998-1999, the Business News Americas reports. The seven banks the government will liquidate are: -- Tungurahua, -- Progreso, -- Azuay, -- Solbanco, -- Credito, -- Union, and -- Finagro. The banks are controlled by Ecuador's deposit insurance agency AGD, which was set up to intervene insolvent banks and repay depositors, Business News. * * * Ecuador's foreign currency long-term debt is rated Caa1 by Moody's, CCC by Standard & Poor's and B- by Fitch. =========== M E X I C O =========== BANCO MERCANTIL: S&P 'BB+' Rating Unaffected by INB Acquisition --------------------------------------------------------------- Standard & Poor's Ratings Services said Tuesday that its BB+/Positive/B ratings on Banco Mercantil del Norte are not affected by the announced acquisition of 70% of INB Financial Corp., holding company of Inter National Bank, a banking institution based in Texas, United States. The acquisition is not expected to materially change Banorte's financial profile since it is relatively small in size and it carries low integration and execution risks. The acquisition would take place during fourth-quarter 2006, pending approval of U.S. and Mexican regulators. Although there will be a negative effect on capital ratios due to goodwill, it is not expected to be significant due to the bank's good and consistent trends in profitability and capital accretion exhibited in the past two years. Internal capital generation should support future capitalization levels, allowing the bank to continue exhibiting adequate capitalization ratios despite goodwill arising from the acquisition. EMBRATEL: Providing Caixa Seguros with Telecom Services ------------------------------------------------------- Embratel Participaciones SA (NYSE: EMT) will provide insurance provider Grupo Caixa Seguros with cost saving telecommunication services, the Business News Americas reports. Embratel, owned by Mexico's Telmex group (NYSE: TMX), expects to reduce Grupo Caixa Seguros' costs by 60,000 reais (US$27,000) a year and to boost customer relations as well as internal communications, Business News relates. Embratel will manage Caixa's network for local, domestic and international long distance calls, as well as services such as internet. Brasilia-based Caixa Seguros is made up of four companies: Caixa Seguradora, Caixa Consrcios, Caixa Capitalizao e Caixa Vida and Previdncia. The companies offer life, casualty, accident and injury insurances. Headquartered in Rio de Janeiro, Brazil, Embratel S.A., is the incumbent long-distance service provider in Brazil and offers a wide array of advanced communications services over its own network. * * * On Nov. 15, 2005, Moody's Investors Service placed the debt ratings of Empresa Brasileira de Telecomunicacoes S.A. on review for possible upgrade. The review followed Embratel's overall improved capital structure following a capital increase earlier this year of approximately BRL 1.8 billion to repay existing debt. Additionally, the rating review for possible upgrade recognized Telefonos de Mexico S.A. de C.V.'s, rated A2, increased ownership of 72.3% of Embratel following the recently announced organizational restructuring of Telmex's operations in Brazil. Ratings placed under review were: -- US$180 million senior unsecured global bonds due in 2008: B1 (Foreign Currency) -- Global Local Currency Issuer Rating -- B1 -- Brazilian National Scale Issuer Rating -- Baa1.br Embratel's holding company, Embratel Participacoes, will purchase 100% of Telmex do Brasil and 37.1% of Net Servicos de Comunicacao S.A. through issuance of 230.5 billion Embrapar ordinary shares to Telefonos de Mexico, S.A. de C.V. ===================== P U E R T O R I C O ===================== DORAL: Completes Consent Solicitation for Three Note Series ----------------------------------------------------------- Doral Financial Corporation announced Monday that it -- together with the trustee under the indenture relating to its $30,000,000 7.00% senior notes due 2012, its $40,000,000 7.10% senior notes due 2017 and its $30,000,000 7.15% senior notes due 2022 -- has executed a supplemental indenture in connection with those notes. The consent solicitation expired at 5:00 p.m., New York City time, on Jan. 27, 2006. As stated in the supplemental indenture, the company will have until April 27, 2006, to file with the trustee its quarterly reports on Form 10-Q for the quarterly periods ended March 31, 2005, June 30, 2005, and September 30, 2005. The company will also have until May 27, 2006, to file its annual report on Form 10-K for the fiscal year ended December 31, 2005. Failure to file those reports will be a default under the indenture that would allow holders to deliver a notice of default to the trustee or the company. After receipt of any notice of default, the company would have a 90-day grace period to cure the default before it becomes an event of default under the indenture. The company obtained the consent of holders of the three series of notes to the amendments to the indenture, which amendments are effected by the supplemental indenture. The company also obtained waivers of certain defaults that have occurred and that may occur under the indenture as to those notes. The amendments and waivers became effective as to the three series of notes upon execution of the supplemental indenture on Monday at 3:00 p.m., New York City time. According to the consent solicitation, the company will pay a consent payment of $2.50 per $1,000 principal amount of notes to holders of the three series of notes that consented prior to the expiration time. As previously reported, the company has extended the expiration date for its $100,000,000 7.65% senior notes due 2016 from 5:00 p.m., New York City time, on Jan. 27, 2006, to 5:00 p.m., New York City time, on Feb. 2, 2006, unless further extended. Doral Financial Corporation, a financial holding company, is the largest residential mortgage lender in Puerto Rico, and the parent company of Doral Bank, a Puerto Rico based commercial bank, Doral Securities, a Puerto Rico based investment banking and institutional brokerage firm, Doral Insurance Agency, Inc. and Doral Bank FSB, a federal savings bank based in New York City. * * * As reported by Troubled Company Reporter on Nov. 1, 2005, Moody's Investors Service downgraded to Ba3 from Ba1 the senior debt of Doral Financial Corporation. The ratings had been downgraded a number of times since Moody's initial review process began in April 2005. DORAL FINANCIAL: Reviews Loan Sale with W Holding Company --------------------------------------------------------- Doral Financial Corporation reported Tuesday that, as part of the restatement process, it had conducted a detailed review -- including consultation with external legal counsel -- of its mortgage loan sale transactions with Western Bank Puerto Rico. The company determined that, based on the information developed as part of this process, these transactions qualify for sale treatment under SFAS 140, except for certain pre-2000 transactions which will not have a material impact on the company's stockholders' equity as of December 31, 2004. The company also announced that it does not expect the announcement by W Holding Company, Inc. to significantly impact the company's previously announced timing for filing its restated financial statements. Doral Financial Corporation, a financial holding company, is the largest residential mortgage lender in Puerto Rico, and the parent company of Doral Bank, a Puerto Rico based commercial bank, Doral Securities, a Puerto Rico based investment banking and institutional brokerage firm, Doral Insurance Agency, Inc. and Doral Bank FSB, a federal savings bank based in New York City. * * * As reported by Troubled Company Reporter on Nov. 1, 2005, Moody's Investors Service downgraded to Ba3 from Ba1 the senior debt of Doral Financial Corporation. The ratings had been downgraded a number of times since Moody's initial review process began in April 2005. G+G RETAIL: Brings In Davis & Gilbert as Corporate Counsel ---------------------------------------------------------- G+G Retail, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York for authority to employ Davis & Gilbert, LLP, as its corporate counsel, nunc pro tunc to Jan. 25, 2006. Davis & Gilbert will provide the Debtor professional services pertaining to: a) corporate and contractual matters; b) employment matters; c) real estate matters; d) litigation matters; and e) intellectual property matters. Davis & Gilbert's professionals and their current hourly billing rates: Professional Rate ------------ ---- Brad J. Schwartzberg, Esq. $530 Joseph Cioffi, Esq. $430 Mary Luria, Esq. $530 Nancy Yanks, Esq. $395 Jason Abramson, Esq. $385 Dan Feinstein, Esq. $410 Alan Hahn, Esq. $395 Bruce Ginsberg, Esq. $510 Miles Baun, Esq. $475 Jesse Schneider, Esq. $395 Joanne Arnold $195 To the best of the Debtor's knowledge, Davis & Gilbert is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in New York, New York, G+G Retail Inc. retails ladies wear and operates 566 stores in the United States and Puerto Rico under the names Rave, Rave Girl and G+G. The Debtor filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. S.D.N.Y. Case No. 06-10152). William P. Weintraub, Esq., Laura Davis Jones, Esq., David M. Bertenthal, Esq., and Curtis A. Hehn, Esq., at Pachulski, Stang, Ziehl, Young & Jones P.C. represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets of more than $100 million and debts between $10 million to $50 million. G+G RETAIL: Turns to CRP for Crisis Management Advice ----------------------------------------------------- G+G Retail, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York for permission to employ: -- Corporate Revitalization Partners, LLC, as its crisis managers and financial advisors; and -- Charles F. Kuoni III as its chief restructuring officer. The Debtor tells the Court that because of the size and complexity of its case, it requires professionals who could assist it through a successful resolution of its chapter 11 case. Mr. Kuoni is a director at CRP. He assisted the Debtor in planning for its chapter 11 planning. As CRO during the Debtor's chapter 11 proceeding, Mr. Kuoni will assist the Debtor in its operations and the completion of the sale of substantially all of G+G's assets. Professional Services In particular, Mr. Kuoni will: a) serve as the interface between counsel and management to assist with the Debtor's duties in managing the bankruptcy estate; b) attend court hearings and provide testimony on those matters that the CRO is knowledgeable and is deemed to have expertise; c) assist in the development of a plan and negotiate with unsecured creditors; d) provide testimony on the feasibility of a plan and whether the plan provides for a recovery that is greater than the recovery of unsecured creditors under chapter 7; e) work with the Debtor's counsel in preparing a ddisclosure statement and a chapter 11 plan; f) assist management in complying with the monthly reporting requirement to the U.S. Trustee; g) assist with real estate lease negotiations; and h) do other duties as the Board of Directors and CRP may agree upon. CRP will: a) work with the Debtor and its counsel to gather information and data necessary to prepare bankruptcy schedules; b) work with prospective DIP lenders; c) work with management to identify additional overhead cost savings, including a review of distribution center and store operating overhead; d) work with management to prepare scripts for dealing with employee questions regarding bankruptcy; e) work with management on handling vendor calls regarding the collection of past due amounts and deposits for future goods; f) work to establish procedures for dealing with reclamation claims including the verification of inventory and validity of claims; g) work with management to evaluate the impact on cash flow of fewer stores and less merchandise inventory in 2007 projections as a result of the reduced level of merchandise purchased in January and February 2006; h) work on preparing the weekly cash flow projection for the DIP; i) join with management in negotiating regarding funding of current obligations; j) contact liquidators and arrange for liquidation of non- core stores; k) act as a repository for any legal notices received from landlords and distribute same to legal team and management; l) attend critical meetings and Board meetings when asked; and m) work with management preparing for and presenting all of the services enumerated to the Board of Directors. Compensation William K. Snyder disclosed his firm's professionals' current hourly billing rates: Designation Rate ----------- ---- Managing Partners $350-$475 Partners/Directors $225-$350 Associates $175-$225 Mr. Kuoni III's fees will be capped at $16,250 per week billed on an hourly basis. Furthermore, the firm will receive a $350,000 success fee if the Debtor will be sold as a going concern or emerge from chapter 11 as a going concern with at least 250 stores in accordance with a plan. To the best of the Debtor's knowledge, CRP and Mr. Kuoni are "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in New York, New York, G+G Retail Inc. retails ladies wear and operates 566 stores in the United States and Puerto Rico under the names Rave, Rave Girl and G+G. The Debtor filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. S.D.N.Y. Case No. 06-10152). William P. Weintraub, Esq., Laura Davis Jones, Esq., David M. Bertenthal, Esq., and Curtis A. Hehn, Esq., at Pachulski, Stang, Ziehl, Young & Jones P.C. represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets of more than $100 million and debts between $10 million to $50 million. MUSICLAND HOLDING: Asks Court to Set May 1 as Claims Bar Date ------------------------------------------------------------- Musicland Holding Corp. and its debtor-affiliates anticipate filing their Schedules of Assets and Liabilities 75 days after the Petition Date. Thus, it is essential to ascertain the full nature, extent and scope of the claims asserted against the Debtors and their estates as soon as possible. Further, to develop a comprehensive, viable reorganization plan, the Debtors must have complete and accurate information regarding the nature, amount and status of all claims against the Debtors that will be asserted in the Chapter 11 Cases. Bar Dates Pursuant to Rule 3003(c)(3) of the Federal Rules of Bankruptcy Procedure, the Debtors ask the U.S. Bankruptcy Court for the Southern District of New York to establish May 1, 2006, as the last day for all creditors, other than governmental units, to file prepetition claims. Pursuant to Section 502(b)(9) of the Bankruptcy Code, the Debtors ask the Court to establish July 12, 2006, as last day for all governmental units to file prepetition claims. The Debtors propose the later of the General Bar Date or 30 days after a claimant's notification of the Debtors' amendment to the Schedules -- reducing or deleting the undisputed, noncontingent and liquidated amounts or changing the classification of the claim -- as the amended schedule bar date. In addition, the Debtors propose that the Bar Date for rejection damage claims will be the later of the General Bar Date or 30 days after the date of the Rejection Order. The Debtors want to retain the right to: (a) dispute, assert offsets or defenses against, any claim filed, listed or reflected in the Schedules as to nature, amount, liability, or classification; or (b) subsequently designate any claim as disputed, contingent, or unliquidated. Filing Claims The Debtors require these persons or entities to file a Proof of Claim on or before the Bar Date: (a) any entity whose claim is listed as disputed, contingent, or unliquidated in the Debtors' Schedules and that desires to participate in any of the Debtors' Chapter 11 cases or share in any distribution in those chapter 11 cases; (b) any entity whose claim is improperly classified in the Debtors' Schedules or is listed in an incorrect amount and that desires to have its claim allowed in a classification or amount other than that listed in the Schedules; or (c) any entity whose claim against a Debtor is not listed in the applicable Debtors' Schedules. Entities holding these claims need not file a proof of claim: * claims listed in the Debtors' Schedules as contingent, unliquidated or disputed, and which are not disputed by the creditor holding that claim as to nature, amount, or classification; * claims on account of which a proof of claim has already been properly filed with the Court; * claims previously allowed by the Court; * claims allowable under Sections 503(b) and 507(a)(1) of the Bankruptcy Code as administrative expenses of the chapter 11 cases; * claims made by any of the Debtors or any direct or indirect subsidiary of any of the Debtors against one or more of the other Debtors; or * claims for which specific deadlines have previously been fixed by the Court. Entities asserting Claims against more than one Debtor are required to file a separate proof of claim form with respect to each Debtor. Each proof of claim must identify the particular Debtor against which the Claim is asserted. The Debtors propose to mail notice of the Bar Dates to their known creditors and rely on publication to give notice to their unknown creditors. The Debtors will publish the Bar Date Notice in USA Today (National Edition) and a trade publication in wide circulation. Pursuant to Bankruptcy Rule 3003(c)(2), any entity that is required to file a proof of claim but fails to timely do so by the applicable Bar Date will be: (a) forever barred, estopped and enjoined from asserting any claim that: * exceeds the amount identified in the Schedules as undisputed, non-contingent, and liquidated; or * is of a different nature, classification or priority than any claim identified in the Schedules; and (b) barred from participating in any distribution from any Debtor's estate with respect to that Unscheduled Claim. 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. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) MUSICLAND HOLDING: Gets Court OK to Pay Prepetition Taxes & Fees ---------------------------------------------------------------- In the ordinary course of business, Musicland Holding Corp. and its debtor-affiliates incur and collect various taxes, fees, and charges for payment to various taxing and licensing authorities. The taxes and fees are paid on a periodic basis. (a) Sales and Use Taxes Collectively, the Debtors estimate that they may owe $18,000,000 in sales taxes and the use taxes prior to the Petition Date. (b) Franchise Taxes The Debtors believe they are current in franchise taxes, 1but seek the U.S. Bankruptcy Court for the Southern District of New York's authority, out of caution, to pay amounts that may subsequently be determined to be owed prior to the Petition Date. (c) Business License Fees and Annual Report Taxes The Debtors estimate that the amounts owed with respect to business license fees and annual report or bi-annual report taxes prior to the Petition Date total $40,000. The Debtors seek the Court's permission to pay the Sales and Use Taxes, Franchise Taxes and Business License Fees and Annual Report Taxes to the Taxing Authorities. According to James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, in New York, the failure to pay the Taxes and Fees could have an adverse impact on their ability to operate. If the Taxes and Fees are not paid, the Debtors believe that the Taxing Authorities will cause the Debtors to be audited and may attempt to curtail or suspend the Debtors' operations and pursue other remedies that will harm the estates. Furthermore, Mr. Sprayregen notes that the amounts to be paid were held in trust for third parties to whom payment is owed. Those funds do not constitute property of the Debtors' estates within the meaning of Section 541 of the Bankruptcy Code. Court Authorization Judge Stuart M. Bernstein authorizes the Debtors to pay and remit to the Taxing Authorities the Taxes, Fees, and other charges in an aggregate amount not to exceed $18,000,000. Judge Bernstein also allows the Debtors to reissue any check or electronic payment that was drawn in payment of any prepetition amount that is not cleared by a depository. 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 ================= CITGO: Sells U.S. 45 Million Gallons of Discounted Natural Gas -------------------------------------------------------------- Citgo Petroleum Corp., has sold approximately 45 million gallons of fuel oil at discounted prices for poor families in the United States, the El Universal news daily reports. The company, according to a statement, intends to supply this winter about 55 million gallons of fuel oil at a 40% discount. Citgo is to deliver next month to poor residents in Philadelphia metropolitan area five million gallons of fuel oil. The Venezuelan Government has made similar shipments to underprivileged residents in New York neighborhood of Bronx, Vermont, Rhode Island, Massachusetts, and indigenous reservations in Maine, El Universal relates. According to Citgo Chief Executive Officer F�lix Rodr�guez, the Venezuelan Government intends to favor "over one million people" in the United States. * * * On Nov. 22, 2005, Fitch Ratings raised the rating of CITGO Petroleum Corporation's fixed-rate industrial revenue bonds and senior unsecured notes to 'BB+' from 'BB'. With the completion of the company's refinancing, the fixed-rate IRBs and remaining senior unsecured notes have become secured and rank pari passu with the new secured credit facility and term loan. Fitch has also lowered CITGO's issuer default rating to 'BB-' from 'BB'. Fitch rates the debt of CITGO: -- IDR 'BB-'; -- $1.15 billion senior secured revolving credit facility maturing in 2010 'BB+'; -- $700 million secured term-loan B maturing in 2012 'BB+'; -- Senior secured notes 'BB+'. The company's variable-rate IRBs are supported by letters of credit under the company's new credit facilities and are not rated by Fitch. The Rating Outlook for CITGO's debt is Stable. CITGO is one of the largest independent crude oil refiners in the U.S., with three modern, highly complex crude oil refineries and two asphalt refineries. With the expansion of the Lake Charles refinery to 425,000 bpd of capacity, CITGO now owns 970,000 bpd of crude refining capacity, including the company's 41.25% interest in LYONDELL-CITGO Refining L.P. LCR owns and operates a 265,000-bpd crude oil refinery in Houston, Texas. CITGO branded fuels are marketed through more than 13,000 independently owned and operated retail sites. CITGO is owned by PDV America, an indirect, wholly owned subsidiary of Petroleos de Venezuela S.A., the state-owned oil company of Venezuela. The Fitch long-term foreign currency rating of PDVSA is 'B+' and Venezuela is 'BB-', both with a Stable Outlook. PDVSA: Gets US$1.07 Billion from Orinoco Projects ------------------------------------------------- Venezuela's state oil firm Petroleos de Venezuela received about US$1.07 billion from its participation in four extra-heavy crude projects in the Orinoco oil belt last year, Business News Americas reports. The amount, according to Business News, was 56% higher than what was collected in 2004. The projects are: -- Petrozuata, where PDVSA has a 49.9% interest; -- Cerro Negro, where PDVSA has a 41.7%; -- Sincor, where it holds 38%; and -- Ameriven, where it has 30%. These projects produce a total 660,000 barrels a day (b/d) of crude -- then upgraded to about 600,000b/d of synthetic crude. The company expects to receive an additional US$471 million in early February. 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: Recovers 99% of Monagas Crude Spill ------------------------------------------ According to a prepared statement from the PDVSA aka Petroleos de Venezuela SA, 99% of an unspecified amount of crude spilled into the Guarpiche river in Monagas state of eastern Venezuela, has been recovered. The cleaning process however, caused in regular water service interruption. The spill originated in a 12-inch pipeline that goes from PDVSA's Jusepin storage tanks to the city of Orocual. The statement said that specialists from the environment ministry recommended opening the floodgates of the El Guamo reservoir so the floating crude could skim over the river banks. The service has been interrupted for almost a week now, but could resume in a matter of hours, according to PDVSA. The emergency also meant that a new filter and pump had to be installed at the plant. The spill is an indication of extensive oil activity at PDVSA's eastern division in Monagas state. The eastern division is the top producer of PDVSA's three exploration and production divisions (western, eastern and central) with about 1.2 million barrels a day of oil output, according to PDVSA figures. 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. 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. 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