/raid1/www/Hosts/bankrupt/TCRLA_Public/060206.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, February 6, 2006, Vol. 7, Issue 26
Headlines
A R G E N T I N A
CONO SUR: Files for Bankruptcy After Defaulting on Payments
FLEJHIL S.R.L.: Verification of Creditors Claims Ends on Feb. 14
FRANCISCO REBOREDO: Wants to Reorganize After Missing Payments
GANADEROS Y PRODUCTOS: Claims Verification Ends on March 6
LEONOR DUCLER: Trustee Ceases Validating Claims on March 23
L.V. 23: Creditors Have Until Feb. 20 to File Claims
PETROBRAS ENERGIA: S&P's B Rating Unchanged by Fin'l Restatement
B E R M U D A
ANNUITY & LIFE: Files Form 15 to Deregister Common Shares
INTELSAT: Aids Connexion in Launching Maritime Service
LORAL SPACE: Begins Skynet's Telstar 11N Satellite Construction
LORAL SPACE: Bernard Schwartz Retires as Chairman and CEO
B O L I V I A
COEUR D'ALENE: Reviews Alternatives for Silver Valley Assets
COMIBOL: Restructuring Could Take Time, Says Former Company Head
B R A Z I L
AES CORP.: Calls for Senior Subordinated Debentures Redemption
BANCO BRADESCO: Plans to Pay February Capital Interest
BRASKEM: Exploring Investment Potentials of Venezuela & Bolivia
CFLCL: Alliant Sells 38% Stake to Sobrapar to Pay for Debts
CVRD: Gets First Chinese JV Coal Shipment
EL PASO: Petrobras to Buy Macae Power Plant for $358 Million
JBS S.A.: S&P Explains B+ Local & Foreign Currency Credit Rating
NET SERVICOS: Posts US$192.4 Mln Net Revenue in 4Q05
SADIA: Board Authorizes Complementary Payment of Dividends
C A Y M A N I S L A N D S
CAYMAN ASSET: Liquidators to Stop Accepting Claims on Feb. 24
CAYMAN PARTNERS: Verification Phase for Claims Ends on Feb. 24
COLUMBIA INVESTORS: Claims to be Verified Until February 24
IMAGI INVESTMENTS: Creditors to Present Proofs of Claim Feb. 24
C O L O M B I A
BANCOLOMBIA: Discloses Partial Figures for 2005
M E X I C O
CFE: Installing Fiber Optic Transmission Lines in 24 States
GRUPO POSADAS: S&P Affirms BB- Long-Term Corporate Debt Rating
P U E R T O R I C O
G+G RETAIL: Brings In Financo as Investment Banker
MUSICLAND HOLDING: Wants to Pay Warehousing & Shipping Claims
MUSICLAND HOLDING: Wants to Return Goods and Obtain Trade Credit
T R I N I D A D & T O B A G O
DIGICEL: Engages in Co-Location Talks with Laqtel Limited
U R U G U A Y
COFAC: Liquidity Issues Lead to Suspension of Operations
* URUGUAY: S&P Assigns B Credit Rating with Positive Outlook
V E N E Z U E L A
CITGO PETROLEUM: U.S. Religious Group Wants Company Boycotted
PETROBRAS ENERGIA: Discloses Effects from Operating Accords
PDVSA: Commencing Colombia-Venezuela Gas Pipeline Construction
- - - - - - - -
=================
A R G E N T I N A
=================
CONO SUR: Files for Bankruptcy After Defaulting on Payments
-----------------------------------------------------------
Cono Sur Salud S.A. has filed for bankruptcy before Court No. 25
of Buenos Aires' civil and commercial tribunal, Argentine daily
La Nacion reports. The company filed the request after
defaulting on its debt payments since Jan. 16, 2006.
Clerk No. 49 assists the court on the case.
Cono Sur Salud S.A. can be reached at:
Cerrito 484
Buenos Aires
FLEJHIL S.R.L.: Verification of Creditors Claims Ends on Feb. 14
----------------------------------------------------------------
Creditors with claims against Flejhil S.R.L. must present proofs
of the company's indebtedness to Ms. Ana M. Blugerman -- the
court-appointed trustee for the company's reorganization --
before Feb. 14, 2006, according to Argentine news source
Infobae. The claims will constitute the individual reports to
be submitted in court on March 28, 2006.
The court also requires the trustee to present an audit of the
company's accounting and business records through a general
report due on May 12, 2006.
An informative assembly, where the company will present a
settlement plan to its creditors, is set for Nov. 9, 2006.
Flejhil S.R.L., a company operating in Buenos Aires, began
reorganization proceedings after the city's court granted its
petition for reorganization.
Ms. Ana M. Blugerman, the trustee, can be reached at:
Parana 774
Buenos Aires
FRANCISCO REBOREDO: Wants to Reorganize After Missing Payments
--------------------------------------------------------------
Francisco Reboredo y Maria Graciela Gomez Sociedad de Hecho, a
company operating in Buenos Aires, has requested for
reorganization after failing to pay its liabilities since June
2004.
The reorganization petition, once approved by the court, will
allow the Company to negotiate a settlement with its creditors
in order to avoid a straight liquidation.
The case is pending before the city's civil and commercial Court
No. 4. Clerk No. 7 assists on this case.
Francisco Reboredo y Maria Graciela Gomez Sociedad de Hecho can
be reached at:
Araujo 2054
Buenos Aires
GANADEROS Y PRODUCTOS: Claims Verification Ends on March 6
----------------------------------------------------------
Court-appointed trustee Fernando Aquilino will stop accepting
claims against bankrupt company Ganaderos y Productos
Agropecuarios S.A. on March 6, 2006.
Argentine daily La Nacion reports that Buenos Aires' civil and
commercial Court No. 1, with the assistance of Clerk No. 2,
assigned Mr. Aquilino to supervise the liquidation process of
the company as trustee.
The company was declared bankrupt after the court endorsed the
petition of Mr. Ignacio Mercuri for the company's liquidation.
Mr. Mercuri has claims totaling $1,732 against the company.
Ganaderos y Productos Agropecuarios S.A. can be reached at:
Talcahuano 750
Buenos Aires
Mr. Fernando Aquilino, the trustee, can be reached at:
Lavalle 1459
Buenos Aires
LEONOR DUCLER: Trustee Ceases Validating Claims on March 23
-----------------------------------------------------------
Ms. Gloria Kremer -- the trustee for the Leonor Ducler S.A.
insolvency case -- will examine and authenticate creditors'
claims until March 23, 2006, according to La Nacion. This is
done to determine the nature and amount of the company's debts.
Creditors must have their claims authenticated by the trustee by
the said date in order to qualify for the payments that will be
made after the company's assets are liquidated.
La Nacion relates that Court No. 8 of Buenos Aires' civil and
commercial tribunal declared Leonor Ducler S.A. bankrupt. The
ruling comes in approval of the petition filed by the Company's
creditor, Mr. Rene Altamirano, for nonpayment of $35,260.60 in
debt.
Clerk No. 15 assists the court on the case, which will conclude
with the liquidation of the Company's assets.
Leonor Ducler S.A. can be reached at:
Abraham J. Luppi 1521
Buenos Aires
Ms. Gloria Kremer, the trustee, can be reached at:
Lavalle 1672
Buenos Aires
L.V. 23: Creditors Have Until Feb. 20 to File Claims
----------------------------------------------------
The verification of claims of creditors of L.V. 23 Radio Rio
Atuel S.R.L. -- company under reorganization -- will end on Feb.
20, 2006, reports Infobae. The validated claims will be
presented in court as individual reports on April 3, 2006.
A general report is also expected in court on May 18, 2006.
This report will contain the company's 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 on Nov. 2, 2006.
L.V. 23 Radio Rio Atuel S.R.L. enters reorganization following
the approval of its petition by General Alvear's civil and
commercial court.
L.V. 23 Radio Rio Atuel S.R.L. can be reached at:
Mitre 271
General Alvear (Mendoza)
PETROBRAS ENERGIA: S&P's B Rating Unchanged by Fin'l Restatement
----------------------------------------------------------------
Standard & Poor's Ratings Services said today that its ratings
on Petrobras Energia S.A. (PESA; B/Watch Neg/--) would not be
affected by the company's announced accounting adjustment that
will be reflected in the financial statements as of Dec. 31,
2005. Net worth will decrease by approximately $60 million as a
result of a provision of $140 million against its Venezuelan
assets to adjust their expected recovery value, and the reversal
of certain allowances for tax credits for about $83 million.
Since the above-mentioned accounting adjustments do not imply
cash movements, they do not have an impact on the ratings on
PESA at this point. Nevertheless, in line with our concerns,
the adjustments reflect lower than previously expected future
cash generation due to changing business conditions in
Venezuela. The ratings will remain on CreditWatch Negative,
reflecting the uncertainties of oil and gas concessions'
renegotiation in Venezuela (for further information, please
refer to "Petrobras Energia S.A. 'B' Ratings Placed On
CreditWatch Negative," published on RatingsDirect on Oct. 3,
2005).
=============
B E R M U D A
=============
ANNUITY & LIFE: Files Form 15 to Deregister Common Shares
---------------------------------------------------------
Annuity and Life Re (Holdings), Ltd., announced Thursday that it
has filed a Form 15 with the Securities and Exchange Commission
to voluntarily deregister its common shares under the Securities
and Exchange Act of 1934 and to suspend its reporting
obligations under the Act.
Upon filing of the Form 15, the company's obligation to file
certain reports with the SEC under the Act, including Forms 10-
K, 10-Q and 8-K, was immediately suspended.
The deregistration of the common shares will become effective
within 90 days of the filing of the Form 15 with the SEC. Upon
the effectiveness of the Form 15, the Company will no longer be
required to make public disclosures pursuant to the Act.
Annuity & Life does, however, plan to continue to provide
stockholders with quarterly financial information through its
website. Marcum & Kliegman LLP will continue to serve as the
company's independent registered public accounting firm.
Following the Form 15 filing, the company's common shares are no
longer eligible for quotation on the OTC Bulletin Board. The
company anticipates that its common shares will be quoted on the
Pink Sheets Electronic Quotation Service, to the extent a market
maker commits to make a market in the company's common shares.
However, the company can provide no assurance that trading in
its common shares will continue.
Martin A. Berkowitz, chairman of the board of directors,
commented, "Following careful consideration of the advantages
and disadvantages of continuing public registration, the Board
of Directors unanimously decided to take this action.
Deregistration will result in significant cost reductions and
preserve value for our shareholders."
Annuity and Life Re (Holdings), Ltd. -- http://www.alre.bmor
http://www.annuityandlifere.com-- provides annuity and life
reinsurance to insurers through its wholly owned subsidiaries,
Annuity and Life Reassurance, Ltd., and Annuity and Life
Reassurance America, Inc.
Going Concern Doubt
Chartered Accountants of Hamilton, Bermuda raised substantial
doubt about the company's ability to continue as a going concern
after it audited the company's annual report for 2004. The
auditor pointed to the company's significant losses from
operations and experience of liquidity demands.
INTELSAT: Aids Connexion in Launching Maritime Service
------------------------------------------------------
Intelsat announced Thursday that Connexion by Boeing -- a
leading provider of high-speed Internet services to the
aeronautical market -- has signed two multi-year service
contracts with Intelsat to support the launch of its new
maritime service. Connexion by Boeing will use Ku-band capacity
on two Intelsat satellites with coverage across the mid-Atlantic
and Indian Ocean regions to offer maritime vessels mobile
information services beginning in the first quarter of this
year.
Intelsat has been a key supplier of capacity to Connexion by
Boeing since its inception, providing service coverage across
North America, the North East Atlantic and North Pacific
regions.
The new contracts will use Intelsat's 705 and 706 satellites,
and will ensure the company connectivity in extended areas. The
high-bandwidth approach of Connexion by Boeing permits
applications to link aircraft or maritime vessel data systems
with operations, thereby enhancing operations across networks.
Jeff Flagel, director of Supply Chain & Production at Connexion
by Boeing, stated, "We've been using the Intelsat system to
deliver our high-speed Internet access to airline passengers
since the launch of our services. As we launch our maritime
initiative, the Intelsat system was the right choice because of
its flexibility in moving capacity to accommodate our needs.
Intelsat represents a reliable partner that can efficiently
support a growing part of our business and can help us take
communications services to the next level of sophistication."
"The versatility, diversity and strength of the Intelsat fleet
are important competitive advantages for customers seeking to
deploy and provide mobile information services around the world,
whether on land, sea or air," said Steve Spengler, Vice
President of Sales at Intelsat. "The signing of these two new
contracts demonstrates Connexion by Boeing's commitment to
providing its customers with high-quality connectivity wherever
they are and enables Intelsat to play a major role in supporting
the successful expansion of this valuable service worldwide."
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 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.
LORAL SPACE: Begins Skynet's Telstar 11N Satellite Construction
---------------------------------------------------------------
Loral Skynet, a subsidiary of Loral Space & Communications,
announced Wednesday that construction of Telstar 11N, a powerful
new multi-region Ku-band communications satellite, has begun at
Space Systems/Loral in Palo Alto, Calif.
"With Telstar 11N, Loral Skynet is expanding its fleet to take
advantage of opportunities in four key growth areas, in addition
to providing connectivity to the North American FSS market,"
said Patrick Brant, Loral Skynet president. "Consistent with
this growth strategy, Telstar 11N presents Skynet with a unique
opportunity to capitalize on the needs of commercial and
governmental customers to move video and data around the key
American, European and African regions."
When it enters service in the second quarter of 2008, Telstar
11N will provide service from 39 high-power Ku-band transponders
spread across four different geographic beams in each of North
and Central America, Europe, Africa and the maritime Atlantic
Ocean Region. At 37.5 degrees West longitude, Telstar 11N will
complement the coverage of Skynet's Telstar 12 satellite at 15
degrees West longitude, which provides Ku-band trans-Atlantic
coverage to an array of commercial and governmental users.
"In addition to adding service in North America, Telstar 11N is
a key, strategic piece of Loral Skynet's FSS expansion plans in
the high-growth data and IP service markets of Europe and
Africa," continued Brant. "The design and power of Telstar 11N
will enable Skynet to provide service from the Americas to
Europe, where it can inter-connect with our Asian satellites and
offer customers around the world connectivity."
Telstar 11N is based on SS/L's flight-proven 1300 geostationary
satellite platform, which has a long and proven record of
reliable operation. There are 52 SS/L 1300 satellites on orbit,
performing a variety of critical communications functions for
virtually every major satellite operator in the world.
Loral Skynet's satellite fleet currently includes Telstar 10 and
Telstar 18 over Asia; the trans-Atlantic Telstar 12, which
covers North and South America, Europe the Middle East and South
Africa; and Telstar 14/Estrela do Sul, which covers North and
South America and Brazil.
A pioneer in the satellite industry, Loral Skynet --
http://www.loralskynet.com-- delivers the superior service
quality and range of satellite solutions that have made it an
industry leader for more than 40 years. Through the broad
coverage of the Telstar satellite fleet -- in combination with
its hybrid VSAT/fiber global network infrastructure -- Skynet
meets the needs of companies around the world for broadcast and
data network services, Internet access, IP and systems
integration.
Space Systems/Loral -- http://www.ssloral.com-- is also a
subsidiary of Loral Space & Communications. A premier designer,
manufacturer, and integrator of powerful satellites and
satellite systems, it also provides a range of related services
that include mission control operations and procurement of
launch services.
Loral Space & Communications is a high technology company that
concentrates primarily on satellite manufacturing and satellite-
based services.
About Loral Space
Loral Space & Communications -- http://www.loral.com/-- is a
satellite communications company. It owns and operates a fleet
of telecommunications satellites used to broadcast video
entertainment programming, distribute broadband data, and
provide access to Internet services and other value-added
communications services. Loral also is a world-class leader in
the design and manufacture of satellites and satellite systems
for commercial and government applications including direct-to-
home television, broadband communications, wireless telephony,
weather monitoring and air traffic management.
The Company and various affiliates filed for Chapter 11
protection (Bankr. S.D.N.Y. Case No. 03-41710) on July 15,
2003. Stephen Karotkin, Esq., and Lori R. Fife, Esq., at Weil,
Gotshal & Manges LLP, represent the Debtors in their successful
restructuring. As of Dec. 31, 2004, the Company listed assets
totaling approximately $1.2 billion and liabilities totaling
approximately $2.3 billion. The Court confirmed the Debtors'
chapter 11 Plan on Aug. 1, 2005.
LORAL SPACE: Bernard Schwartz Retires as Chairman and CEO
---------------------------------------------------------
Mr. Bernard L. Schwartz, chairman and chief executive officer of
Loral Space & Communications Inc. announced that he plans to
retire from the company on March 1, 2006, and will relinquish
all of his positions and directorships held at Loral and any of
its subsidiaries and affiliates at that time.
Mr. Schwartz has been the company's chairman and chief executive
officer since it was created in 1996 and, prior to that, served
as chairman and chief executive officer of its predecessor
company, Loral Corporation, since 1972.
Mr. Schwartz wrote to the board of directors, saying, "For some
time, I have been considering at what point it would appropriate
for me to step down as chairman and chief executive officer of
Loral. With the start of the New Year and the intersection of
several significant achievements - Loral successful emergence
from chapter 11, our re-listing on a major stock exchange and my
attainment of a milestone birthday - I have concluded that now
is the right time to activate our succession plans and pass the
reins of the company on to our extremely talented team of
executives. Thanks to their efforts, both of our businesses are
on very solid footing and our employees are enthused about our
future."
For the last 34 years, under Mr. Schwartz's leadership, the
company has played a central role in shaping and defining its
industries. Since 1996, Mr. Schwartz has guided Loral Space &
Communications to a leadership position in the satellite
industry. It is in the unique position of being both a major
commercial satellite manufacturer and a satellite services
provider and has benefited substantially from Loral
Corporation's strong heritage of technological innovation.
Mr. Schwartz led Loral, a Fortune 200 designer and manufacturer
of advanced, state-of-the-art defense systems and hardware, from
1972 to 1996. Under his guidance, that company posted 96
consecutive quarters of increased earnings through its
successful strategy of acquisition and internal development.
Loral's market value rose from $7.5 million to $15 billion
between 1972 and 1996, when the defense businesses were
divested.
Mr. Schwartz also has been recognized for his views and counsel
on matters ranging from economic policy and the effects of
globalization, to technology and national security. He works
with private research institutions, educators and congressional
committees to support the development of public policy that
promotes the maintenance of the United States' economic and
technological preeminence.
Loral Space & Communications is a high technology company that
concentrates primarily on satellite manufacturing and satellite-
based services.
About Loral Space
Loral Space & Communications -- http://www.loral.com/-- is a
satellite communications company. It owns and operates a fleet
of telecommunications satellites used to broadcast video
entertainment programming, distribute broadband data, and
provide access to Internet services and other value-added
communications services. Loral also is a world-class leader in
the design and manufacture of satellites and satellite systems
for commercial and government applications including direct-to-
home television, broadband communications, wireless telephony,
weather monitoring and air traffic management.
The Company and various affiliates filed for chapter 11
protection (Bankr. S.D.N.Y. Case No. 03-41710) on July 15,
2003. Stephen Karotkin, Esq., and Lori R. Fife, Esq., at Weil,
Gotshal & Manges LLP, represent the Debtors in their successful
restructuring. As of Dec. 31, 2004, the Company listed assets
totaling approximately $1.2 billion and liabilities totaling
approximately $2.3 billion. The Court confirmed the Debtors'
Chapter 11 Plan on Aug. 1, 2005.
=============
B O L I V I A
=============
COEUR D'ALENE: Reviews Alternatives for Silver Valley Assets
------------------------------------------------------------
Coeur d'Alene Mines Corporation announced that it is reviewing
strategic alternatives for its Coeur Silver Valley assets in
Idaho.
CSV includes the Galena silver mine and related properties.
Strategic alternatives under consideration include a possible
sale of the subsidiary.
Coeur's decision to explore strategic alternatives for CSV
resulted from the previously disclosed review of Galena's mine
plan, which was originally undertaken to identify ways to
improve operating performance.
"We continue to believe that there is value in Galena and the
related assets that form Coeur Silver Valley in Idaho," said
Dennis E. Wheeler, Coeur chairman, president, and chief
executive officer. "Our task is to find the best way to realize
that value for the benefit of employees, investors, and the
local community. At the same time, we see opportunities to
deploy our capital much more efficiently in connection with
high-growth silver opportunities in other areas, such as our
South American properties."
The company expects to complete the review during the first
quarter of 2006.
Coeur d'Alene Mines Corporation is the world's largest primary
silver producer and a growing gold producer. The Company has
mining interests in Alaska, Argentina, Australia, Bolivia,
Chile, Nevada, and Idaho.
Coeur d'Alene Mines Corporation's $180 Million notes due Jan.
15, 2024 carries Standar &Poors' B- rating.
COMIBOL: Restructuring Could Take Time, Says Former Company Head
----------------------------------------------------------------
The restructuring of Bolivia's state mining company Comibol
could take a long time, Business News Americas reports.
Bolivian President Evo Morales' initiative for the company's
restructuring will take time as currently Comibol mines are
under joint venture contracts or leasing agreements, former
Comibol president Juan Cabrera told Business News.
"When they talk about Comibol's restructuring they mean
developing mining deposits - but which ones? And as you know in
this sector things take a long time," he said, adding that he
had left JV and leasing contracts in good shape.
The former Comibol president also said that the company
recovered a series of deposits held by people who won the
concessions from Comibol but did not develop them and used them
for speculation.
However, Cabrera admitted that during his term, he was unable to
get Comibol assets reorganized. He reasoned that Comibol is a
very large company and has very significant assets, which would
require very specialized work.
Comibol has US$85 million in assets including equipment and
machinery, which cannot be used by small and medium-scale miners
and cooperatives. According to Cabrera, only some of that
equipment can be employed in the restructuring; the rest is too
old or is unsuitable.
===========
B R A Z I L
===========
AES CORP.: Calls for Senior Subordinated Debentures Redemption
--------------------------------------------------------------
The AES Corporation called for redemption of its entire
outstanding 8.875% senior subordinated debentures due 2027,
approximately $115.2 million aggregate principal amount, on Feb.
2, 2006.
The redemption of the debentures is being made pursuant to the
optional redemption provisions of the indenture governing the
debentures. The redemption date will be March 3, 2006. The
debentures will be redeemed at a redemption price equal to 100%
of the principal amount, plus a make-whole premium determined in
accordance with the terms of the indenture, plus accrued and
unpaid interest up to the redemption date. The total estimated
pretax charge associated with redeeming the debentures is
expected to be approximately $40 million.
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 year-
end financial results. Fitch said the Rating Outlook is Stable.
BANCO BRADESCO: Plans to Pay February Capital Interest
------------------------------------------------------
Banco Bradesco S.A. will pay on March 1, 2006, interest on its
capital related to the month of February 2006, in the amount of
BRL0.0285000 per common stock and BRL0.0313500 per preferred
stock to the stockholders registered in the company's records on
Feb. 1, 2006.
The payment, net of the withholding income tax of 15%, except
for legal entity stockholders exempted from the referred
taxation, which will receive for the stated amount, will be made
through the net amount of BRL0.0242250 per common stock and
BRL0.0266475 per preferred stock, as follows:
-- Credit in the current account informed by the stockholder to
Banco Bradesco S.A., the Depository Financial Institution of
the Stocks.
-- The stockholders who did not inform their banking data or do
not hold a current account in a Financial Institution must go
to a Bradesco branch on their preference having the notice
for receipt of earnings from book-entry stocks, sent by mail
to those having their address updated in the company's
records, and having the following documents:
-- Individuals: Identity Card and Individual Taxpayer's
Register (CPF);
-- Legal entities: Corporate Taxpayer's ID (CNPJ),
consolidated and updated Articles of Incorporation or
the Bylaws. The bylaws must be updated with the
minutes of the meeting that elected the current board
of executive officers. The partners/managers or
officers empowered to represent the company must
present their Identity Card and CPF.
Note: When represented by mandate, the presentation of the
respective power of attorney, Identity Card and CPF of the
mandatory will be necessary.
For holders of stocks held on custody with the CBLC - Brazilian
Clearing and Depository Corporation, the payment will be made to
CBLC, which will transfer them to the respective stockholders
through the Depository Agents.
* * *
Banco Bradesco's $100 Million notes due Sept. 2, 2006, is rated
Ba3e by Moody's and BB- by Composite.
BRASKEM: Exploring Investment Potentials of Venezuela & Bolivia
---------------------------------------------------------------
Braskem S.A. is looking at substantial investments in Bolivia
and Venezuela while foreign investors are being cautious with
Latin America's change in political leaderships, relates Geraldo
Samor, writing for the Wall Street Journal.
"Latin America's current geopolitics gives us the chance to grow
by looking for raw materials in neighboring countries," the
Journal quotes Jos‚ Carlos Grubisich, Braskem's chief executive,
who figures competitors from outside the region may be
frightened off. "What people from a distance see as
inconsistencies, we see as opportunities."
According to the Journal, Braskem has become a heavyweight
player in Brazil's chemical industry. The company was created
three years ago from the merger of six smaller companies. The
merger allowed Braskem to lower its tax bill, reduced overhead
costs and made the plants' operations more efficient.
Currently, the company is looking to grow by focusing on
technology and the expanding Brazilian market, which accounts
for 80% of its sales, while starting to dabble in Latin American
investments.
According to analysts, Braskem's profit margins derived mainly
from naphtha, a petroleum byproduct, could suffer heavily this
year if the price of oil continues to trade high.
Expanding outside Brazil could prove disastrous for the company
if other Latin American governments decide to squeeze profits
earned by foreign corporations, Mr. Samor states.
The company had sales of 11.6 billion reals, and said it
expected net earnings "in line" with 2004, when it earned 691
million reals. Braskem will report its financial results for
2005 on Feb. 8.
Mr. Grubisich has set an ambitious goal: he wants Braskem to
become one of the world's largest chemical companies, with most
of the growth coming in Brazil.
Mr. Samor relates that to boost domestic demand for plastic,
Braskem set up a technology center where 170 researchers work to
develop plastic products in alliance with universities and
private and government research centers. Cream cheese is
traditionally sold in glass jars with metal lids in Brazil.
Braskem came up with a plastic jar for cream cheese in the same
format. Companies such as Nestl‚ SA and Danone SA have since
shifted their cream cheese brands to the new, lighter packaging.
Braskem has also developed a fiber that replaces the asbestos
fibers still used in roof tiles here, which is a growth product
in Brazilian states that are just now outlawing asbestos.
The company's growth is also dependent on whether Brazil's
state-owned oil company, Petroleo Brasileiro SA, known as
Petrobras, will decide to boost its stake in Braskem to 30% of
the company's voting shares from the 10% it owns now.
* * *
On Oct. 17, 2005, Fitch Ratings revised the Rating Outlook of
the `BB-' long-term foreign currency rating of Braskem S.A. and
Braskem International Ltd. 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.
Braskem -- http://www.braskem.com.br/--, a Brazilian
petrochemical company, is a thermoplastic resins producer in
Latin American, and is among the three largest Brazilian-owned
private industrial companies. The company operates 13
manufacturing plants located throughout Brazil, and has an
annual production capacity of 5.8 million tons of resins and
other petrochemical products.
CFLCL: Alliant Sells 38% Stake to Sobrapar to Pay for Debts
-----------------------------------------------------------
Brazilian investment company Sobrapar will take over US power
company Alliant Energy's 38% stake in electric distribution
utility Companhia Forca e Luz Cataguazes-Leopoldina aka CFLCL,
Business News Americas reports.
When Alliant sold its Brazilian assets to Sobrapar for US$152
million, it has also sold its stake in CFLCL, along with the 50%
stake in the gas-fired Juiz de Fora power plant.
Alliant said that it expects to use the net proceeds for further
debt reduction.
A CFLCL spokesperson told Business News that Sobrapar will take
Alliant's two seats on CFLCL's board. The Botelhos will keep
their four seats -- chairmanship included -- while US investment
fund Fondelec will keep its single seat.
CFLCL's board and shareholders are yet to approve the new
shareholder structure. So far the board has not met with Antonio
Jose Carneiro -- local businessman who controls Sobrapar -- to
discuss investments or management of the company, the
spokesperson said.
Sobrapar will take over Alliant's 38% stake in local power
company CFLCL, which is controlled by the local Botelho family.
The new shareholder will also own a 50% stake in the gas-fired
Juiz de Fora power plant.
* * *
As reported by Troubled Company Reporter on Nov. 9, 2005,
Standard & Poor's Ratings Services assigned its 'B+' foreign and
local currency corporate credit rating to Brazil-based electric
distribution company Companhia Forca e Luz Cataguazes-Leopoldina
in its global scale. The company's rating in Brazil national
scale is 'brBBB+'. The outlook is negative.
CVRD: Gets First Chinese JV Coal Shipment
-----------------------------------------
Companhia Vale do Rio Doce, an iron ore miner in Brazil,
received its first coal shipment from its Chinese joint venture,
Business News Americas reports.
CVRD announced that the 40,000t anthracite coal shipment from
Henan Longyu Energy Resources JV, where it holds 25% stake since
June 2005, has arrived in Espirito Santo state's Paraia Mole
port, Business News relates.
The coal will go to a Brazilian customer and to CVRD-owned and
JV pellet plants in the state.
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'.
EL PASO: Petrobras to Buy Macae Power Plant for $358 Million
------------------------------------------------------------
El Paso Corporation (NYSE: EP) disclosed that it has entered
into a memorandum of understanding with Petroleo Brasileiro S.A.
(NYSE: PBR) for the sale of El Paso's interest in the Macae
power plant in Brazil and the settlement of their dispute over
that plant.
Petrobras, which helped El Paso build the 940 megawatt power
plant 130 kilometers (81 miles) north east of Rio de Janeiro
under an emergency power expansion program, has been making
contingency payments of as much as $240 million a year to cover
the plant's losses.
Under the terms of the MOU, El Paso would sell its interest in
the entities that own the Macae power plant project to Petrobras
for approximately $358 million. The Macae plant currently
carries approximately $225 million of project financing that
would be repaid from a portion of the proceeds. The Macae debt
is currently consolidated in El Paso's financial statements. In
connection with the sale, El Paso expects to report a fourth
quarter 2005 pre-tax charge of approximately $60 million.
Under the terms of the MOU, the parties will attempt to complete
and sign definitive documentation no later than mid-March. El
Paso hopes to complete the sale in the first half of the year.
The sale would be subject to customary conditions including the
requisite corporate and regulatory approvals. The MOU provides
that the arbitration proceedings will be temporarily suspended
while the parties attempt to complete and sign definitive
documentation.
"Today's announcement represents a significant step toward
putting El Paso and Petrobras' issues concerning the Macae plant
behind us," said Doug Foshee, El Paso's president and chief
executive officer. "Going forward, El Paso will be better able
to focus on our exploration and production program in Brazil,
which we view as a source of long-term growth. We look forward
to the opportunity to work cooperatively with Petrobras toward
ensuring Brazil's future energy security."
El Paso Corporation -- http://www.elpaso.com/-- provides
natural gas and related energy products in a safe, efficient,
and dependable manner. The company owns North America's largest
natural gas pipeline system and one of North America's largest
independent natural gas producers.
* * *
Moody's Investors Services assigns these ratings to El Paso
Corp.:
-- long-term corporate family rating, B3;
-- bank loan debt, B3;
-- senior unsecured debt, Caa1;
-- subordinated debt, Caa3.
JBS S.A.: S&P Explains B+ Local & Foreign Currency Credit Rating
----------------------------------------------------------------
Strengths:
* Low cost position and significant production scale
supporting a strong competitive position;
* Significant contribution from exports (about 50% of
sales), supported by Brazil's increasing relevance in
global beef trading;
* Diversified global and domestic customer base with
increasing contribution from processed meat products.
Weaknesses:
* Volatile operating environment, partly mitigated by JBS'
strong cost position;
* High dependence on commodity-type products with more
exposure to tariff barriers and sanitary risks;
* Highly leveraged capital structure and relevant short-term
debt related to export activities;
Rationale
On Jan. 10, 2006, Standard & Poor's Ratings Services assigned
its 'B+' long-term corporate credit rating to Brazil-based JBS
S.A. At the same time, a 'B+' rating was assigned to the
company's new $200 million 9.375% guaranteed senior unsecured
notes due 2011. The outlook is stable. The company's total debt
amounted to $634 million at September 2005.
The guaranteed notes issued by JBS are irrevocably and
unconditionally guaranteed by Friboi Ltda., Agropecu ria Friboi
Ltda., J&F Participa‡oes Ltda., and JBS Agropecu ria Ltda.,
which jointly comprise the so-called Grupo Friboi (referred as
JBS in this report). JBS directly controls Argentina-based meat
processor Swift-Armour, acquired in September 2005. The total
amount issued has been increased by $50 million from the initial
$150 million offer, as the company benefited from the current
high liquidity of international bond markets. The proceeds from
the issuance, including the additional amount, will be used
mostly for the repayment of short-term debt maturities, with
resources also applied for capital expenditures and general
corporate purposes.
The ratings on JBS reflect its exposure to the volatile and very
competitive global fresh and processed meat industries; the
company's high dependence on commodity-type products, which are
typified by relevant exposure to risks of sanitary and trade
restrictions; a highly leveraged capital structure and
aggressive growth strategy; and the company's high involvement
with derivatives instruments. These negative factors are
tempered by JBS' leading position in the Brazilian beef industry
and strong global competitive position, which is supported by a
low cost position compared to its international peers; a
diversified geographic mix of exports, resulting in less
dependence on sales in Brazil (where the company's competitive
advantages are not as apparent as in international markets); and
a diversified global and domestic customer base, with increasing
contribution from processed meat products.
The company is currently reorganizing its corporate structure
with the goal of streamlining its operations and improving
transparency and corporate governance. Our view on JBS' credit
profile is based on the combined operations and financial
statements of Friboi Ltda. and Agropecu ria Friboi Ltda., which
currently own the bulk of the group's assets and operations,
including all of its slaughterhouses and industrial plants.
After the restructuring is completed, JBS and JBS Agropecu ria
Ltda. will concentrate all of the group's assets (farms,
slaughterhouses, and plants) directly or indirectly through 100%
owned subsidiaries.
JBS is exposed to a number of risks and challenges associated
with meat and other food commodity industries, including
relatively low margins, volatile prices, sanitary and tariff
barriers, limited product differentiation, and high levels of
working capital demand. Conversely, the global protein industry
continues to present very positive prospects, with increasing
per-capita consumption and above-GDP growth rates. In addition,
Brazil has consolidated its leading position in the global trade
of beef-based products, with about 50% export volumes growth
since 2003.
Major Brazilian meat producers, such as JBS, benefit from an
advantageous cost position on exports in relation to major meat-
exporting companies based in other countries, such as Australia,
Canada, and the U.S. This position is supported by the large
availability of grazing land at relatively low costs in Brazil;
the lower costs associated with grass-fed cattle; and relatively
lower labor costs. In addition, Brazilian meat exports have
been fuelled by the "mad-cow disease" events in the U.S. and
Europe, particularly helped by the fact that the grass-feeding
cattle systems used in Brazil are widely seen as less
susceptible to BSE disease outbreaks than confined breeding and
feeding systems (widely used in the U.S., Canada, and the EU).
Despite the positive outlook for the beef industry, a sanitary
issue that directly or indirectly affected the company could
have a material effect on its results, in particular because of
the tight operating margins presented by meat-processing
companies in general. While JBS has maintained very strict
quality controls with no history of major disease issues, a
global disease outbreak could well affect global demand for beef
products and make room for the growth of substitute products
such as poultry and pork meat. The initial concerns related to
the foot-and-mouth disease outbreak reported in the Brazilian
state of Mato Grosso do Sul in October 2005 have been partly
eased in the case of JBS, due to its significant capacity to
rearrange production among its 16 slaughterhouses distributed in
eight Brazilian states to meet its export demand. Nevertheless,
all Brazilian exporters experienced a decline in export volumes
since October (JBS reported a 14% volume decline in October and
November 2005, compared to the same period in 2004), which has
been partly offset by an increase in international meat prices
in the period. In fact, meat prices have increased in part
because of lower supply from Brazil, which currently represents
about 25% of global beef exports.
The apparent control and isolation of the FMD cases in the areas
initially affected (the state of Mato Grosso do Sul and a
related case in the state of Paran ), coupled with the
significant demand for Brazilian beef products, indicate that
the remaining embargos should be resolved within the next six
months. Nevertheless, the recent FMD event will certainly delay
further the opening of important fresh beef importing markets
(e.g., the U.S., Japan, Korea, Mexico, and Canada) for Brazilian
products, as they require the entire Brazilian territory to be
free of FMD risk. Other major fresh beef-importing countries
such as Russia and the EU recognize the FMD eradication in
Brazil on a regional basis, with sanitary embargos generally
limited to the states affected and border states.
Export barriers have forced local producers to allocate higher
volumes to the domestic market, which has put pressure on
domestic beef prices and should affect JBS' operating margins
generated in Brazil in the short term. The domestic meat market
is characterized by very low margins and high competition and is
mainly focused on low-value commodity-type products, with
relatively low penetration of processed beef products. Given
the number of small and midsize companies in the sector and the
low product differentiation, brand awareness is not significant
and price differentiation is meaningless.
JBS' market position is strengthened by its leading position in
beef products in Brazil and its very significant position in
Argentina (leader on exports) since the acquisition of Swift-
Armour in September 2005. Despite the fragmentation of the
Brazilian meat-processing industry, JBS' market relevance,
nationwide presence, and some product diversification (fresh and
processed food, leather and hygiene, and cleaning segments)
provide the company with relevant commercial advantages in
contrast with smaller and midsize players, especially in
negotiations with large retailers.
Despite JBS' efforts to improve its product mix, the company's
business model is still mostly concentrated in commodity-type
products (fresh meat cuts-about 65% of total sales in 2004).
While the acquisition of Swift-Armour (whose sales are 70%
originated from processed products) coupled with the company's
new product lines in its Brazilian hygiene and cleaning division
help the company to diversify its product mix, a major shift in
the product mix balance is not anticipated in the medium term.
Swift-Armour also increases the geographic mix of JBS' exports,
particularly increasing the contribution of strong beef-
importing countries such as the U.S. and Italy. In addition,
Argentine beef producers retain better chances of regaining
access to the large U.S. fresh beef meat market in the medium
term than do Brazilian producers, with Swift-Armour working as a
"sanitary hedge" for JBS.
We expect JBS to maintain a solid operating performance during
the next few years, benefiting from the increasing economies of
scale from ongoing investments and favorable industry
fundamentals. The company's consolidated EBITDA margins are
expected to remain at about 10%, as reported on average in the
past three years. JBS' operations in Argentina currently
present lower operating margins, which the company intends to
improve in the next couple of years through benefits of
integration and gains of scale. JBS' relatively tight operating
margins (as is usual in the meat sector) and exposure to
volatile market environments indicate the company's cash flow
adequacy is significantly exposed to economic downcycles. In
addition, capital expenditures and working capital requirements
projected for the next few years should continue to prevent JBS
from generating free operating cash flows. On the other hand,
we expect JBS to sustain a funds from operations-to-debt ratio
of about 20% in the next two years under current market
fundamentals. Growing EBITDA generation has allowed for
maintenance of EBITDA-to-interest cover in excess of 2.0x in the
past couple of years, which is expected to improve toward the
2.5x level in 2006 due to growing cash flows and lower average
cost of debt.
JBS carries a highly leveraged capital structure, reflected by a
total debt-to-capitalization ratio of 65% at September 2005 and
a total debt-to-EBITDA ratio of about 4.0x. The strong growth
pace experienced by JBS in the past couple of years has resulted
in higher debt levels, which have been only partly offset by
growing cash flows. JBS is expected to maintain a high total
debt position increased to $634 million at September 2005 from
$440 million in December 2004 and $268 million in 2003. JBS has
made strong efforts to improve its capital structure in 2005,
with short-term debt representing 55% of its total debt at
September 2005, substantially lower than the 80% reported in
September 2004.
JBS uses derivative instruments to hedge its assets,
liabilities, and cash flows against volatility risks related to
foreign exchange and interest rates and commodity price
volatility. While we understand that the nonspeculative use of
these instruments with the sole purpose of protecting results
and balance sheet against indirect financial risks is positive
for the ratings, the lack of information on the size of JBS'
hedging position is a concern. JBS' hedging policy aims at a
95% protection of financial and operating risks connected to
foreign exchange, interest rate, and commodity price risks. The
company's hedging activities involve the use of swaps and
futures for hedges of interest rates denominated in U.S.
dollars, foreign exchange rates, and commodity prices for cattle
and calf. All hedging operations are done on a per-transaction
basis, targeting the perfect hedge.
We see risks associated with JBS' initiative to create its own
financial arm to administer its financial trading activities.
Although the company's primary aim is to reduce trading expenses
and bank fees of its hedging operations, banking activities
involve several risks that a food company is not used to
handling. In addition, it is not clear whether JBS' operations
will be restricted to its own trading activities in the long
term. JBS has indicated its intention to create a financial
company, JBS Participa‡oes Financeira Ltda, whose creation is
still subject to prior approval from the Brazilian Central Bank.
We will monitor the company's steps toward the creation of JBS
Financeira and will opportunely incorporate the implications of
such initiative as the group's strategy becomes clearer.
Liquidity
JBS' liquidity position is adequate, but refinancing risk is a
concern. JBS maintained about $175 million in cash holdings and
short-term investments at September 2005, compared to short-term
debt maturities of $360 million. While most of its short-term
debt related to revolving preexport financing credit lines
supported by its strong levels of exports, JBS could be
significantly exposed under a stressed economic situation that
reduces credit-line availability (although trade-related lines
tend to be the last credit source to disappear during
downcycles). JBS has historically maintained good access to
domestic capital markets and trade-related credit lines.
Proceeds from the new $200 million bonds should be largely used
to refinance short-term debt, improving the company's liquidity
position through a better alignment of short-term debt and cash
position.
Outlook
The stable outlook reflects our expectations that JBS will
maintain its leading position in the Brazilian beef sector and a
satisfactory balance of exports and domestic sales to mitigate
the risks associated with its operations, with export volumes
supported by the current strong long-term fundamentals of the
global beef industry, especially for low-cost Brazilian
producers.
The ratings could be revised downward under a negative scenario
for both the local economy and the international markets that
results in lower meat consumption levels and depressed prices.
A beef-related disease outbreak in Brazil, or in another major
beef-producing country, could hinder the company's ability to
export its products, or simply affect global demand for beef-
based products, permitting the expansion of substitute proteins
such as poultry and pork meat. The ratings on JBS could also be
negatively affected if the company were to adopt a more
aggressive growth strategy that involved a major debt-financed
acquisition, as the company does not retain significant headroom
for further debt incurrence within the current ratings.
A positive change in the ratings or outlook would depend on a
significant reduction of the company's debt leverage position,
reflected, for instance, in total debt-to-EBITDA ratios
consistently below 3.0x. The ratings could also be raised
should the company achieve higher operating margins and a more
diversified and value-added product mix.
NET SERVICOS: Posts US$192.4 Mln Net Revenue in 4Q05
----------------------------------------------------
Net Servicos de Comunicacao S.A. announced Thursday its 4Q05
financial results.
The financial and operating information, except where otherwise
stated, is presented in US GAAP on a consolidated basis:
Net revenue totaled US$192.4 million in the quarter, a 54.0%
increase in comparison to US$124.9 million in 4Q04.
-- The company recorded consolidated EBITDA of US$49.5
million the quarter, 38.9% higher than the US$35.6 million
recorded in 4Q04. In 2005, Consolidated EBITDA reached
US$185.7 million, a 45.6% jump in comparison to the
US$127.5 million recorded in 2004. This growth in EBITDA
is a result of the organic growth recorded in both, pay-TV
and broadband bases, which is being accomplished without
losing focus on profitability.
-- The company's net debt ended the quarter at US$187.3
million, a 18.7% drop in comparison to US$230.4 million
net debt recorded in 4Q04. The net debt to EBITDA ratio
at the end of the year was 1.0x.
-- Client ARPU went from US$37.17 in 4Q04 to US$52.16 in this
quarter, a 40.3% increase.
-- The company recorded net loss of US$2.1 million this last
quarter of 2005, versus a US$49.0 million a net loss
recorded in the same period of the previous year. The
improvement in the company's operating income, measured by
BIT, together with the improvement in the company's
capital structure had an important contribution to this
result and its solidity will be the base for the
continuity of positive results in the future.
* * *
As reported by Troubled Company Reporter on Nov. 15, 2005,
Moody's Investors Service placed on Friday Net Servicos de
Comunicacoes S.A's global local currency corporate family rating
of B3 on review for possible upgrade.
SADIA: Board Authorizes Complementary Payment of Dividends
----------------------------------------------------------
SADIA S.A., announced that on Jan. 31, 2006, the board
authorized the complementary payment of dividends related to
2005 earnings, being BRL0,03912 per common share and per
preferred. The dividend will be calculated according to the
minimum dividend required by Brazilian securities law, to be
approved at the next general shareholders' meeting.
The payment will be made on March 16, 2006, based on the record
date at Feb. 10, 2006. Shares shall be traded on the Sao Paulo,
New York and Madrid Stock Exchanges, without the right to such
dividends, as of Feb. 13, 2006, including that date.
Shareholders possessing bank accounts will have the amount
automatically credited on the payment date. All other investors
will receive a dividend credit notice by mail at the addresses
on file with Banco Bradesco.
Headquartered in Sao Paulo, Brazil, Sadia S.A. --
http://www.sadia.com-- operates in the agro industrial and food
processing sectors in Brazil and primarily produces a range of
processed products, poultry, and pork. The company distributes
around 1,000 different products through distribution and sales
centers located in Brazil, Latin America, the Middle East, Asia,
and Europe.
* * *
As reported by Troubled Company Reporter on Feb. 1, 2006,
Standard & Poor's Ratings Services affirmed its 'BB' foreign and
local currency corporate credit rating on Sadia S.A. The
ratings affirmation followed Sadia's announcement of a Brazilian
reais 1.5 billion (about $650 million) capital investment for
the construction of a new production plant in the Brazilian
state of Mato Grosso. The outlook on the ratings is stable.
===========================
C A Y M A N I S L A N D S
===========================
CAYMAN ASSET: Liquidators to Stop Accepting Claims on Feb. 24
-------------------------------------------------------------
S.L.C. Whicker and K.D. Blake, the joint voluntary liquidators
of Cayman Asset Finance Limited, will stop verifying claims from
the company's creditors on Feb. 24, 2006. Creditors are
therefore required to submit their claims to the liquidator on
or before the said date and establish any title they may have
under the 2004 Revision of Companies Law.
Creditors who fail to present proofs of claim will be excluded
from accepting any distribution or payment that the company
would make.
S.L.C. Whicker and K.D. Blake started voluntary liquidation on
Jan. 12, 2006.
Cayman Asset Finance Limited can be reached at:
P.O. Box 493 GT, Grand Cayman
Cayman Islands
Telephone: 345-949-4800
Facsimile: 345-949-7164
K.D. Blake, one of the joint voluntary liquidator, can be
reached at:
PO Box 493 GT, Grand Cayman
Cayman Islands
Michael Schulz
Telephone: 345-914-4335
Facsimile: 345-949-7164
CAYMAN PARTNERS: Verification Phase for Claims Ends on Feb. 24
--------------------------------------------------------------
The verification of claims of Cayman Partners Ltd.'s creditors
will end on Feb. 24, 2006. Q&H Nominees, the company's
liquidator, requires the creditors to submit 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 Q&H Nominees. Creditors may be required to
prove their claims personally or by their attorneys the time and
place that the trustee will specify. Failure to do so would
mean exclusion from the benefit of any distribution made before
the debts are proved.
Cayman Partners Ltd. started winding up operations on Jan. 4,
2006.
Q&H Nominees Ltd., the voluntary liquidator, may be reached at:
c/o P.O. Box 1348GT
Grand Cayman, Cayman Islands
Telephone: (+1) 345 949 4123
Facsimile: (+1) 345 949 4647
COLUMBIA INVESTORS: Claims to be Verified Until February 24
-----------------------------------------------------------
Creditors of Columbia Investors Ltd. must present proofs of
claim on or before Feb. 24, 2006, to Q&H Nominees, the company's
liquidator, or be excluded from accepting any distribution or
payment that the company will make.
Creditors must submit 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, and if so required by the liquidator, the creditor
will either prove personally or through their attorneys their
debts or claims at the time and place that the liquidator shall
specify.
Columbia Investors Ltd. started liquidating its assets on Jan.
4, 2006.
Q&H Nominees Ltd., the voluntary liquidator, can be reached at:
c/o P.O. Box 1348GT
Grand Cayman, Cayman Islands
Telephone: (+1) 345 949 4123
Facsimile: (+1) 345 949 4647
IMAGI INVESTMENTS: Creditors to Present Proofs of Claim Feb. 24
---------------------------------------------------------------
Imagi Investments Limited's creditors 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 liquidator on or before Feb. 24, 2006, and if so required by
notice in writing from the said liquidator either by their
attorneys-at-law or personally to come in and prove the said
debts or claims at such time and place as shall be specified in
such notice or, in default thereof, they will be excluded from
the benefit of any distribution made before such debts are
proved.
Imagi Investments Limited entered voluntary liquidation on Jan.
12, 2006 and appointed Buchanan Limited as liquidator.
Buchanan Limited, the voluntary liquidator, can be reached at:
P.O. Box 1170 GT, Grand Cayman
Timothy Haddleton
Telephone: (345) 949-0355
Facsimile: (345) 949-0360
===============
C O L O M B I A
===============
BANCOLOMBIA: Discloses Partial Figures for 2005
-----------------------------------------------
Bancolombia's unconsolidated net income rise to 737 billion
pesos (US$325 million) at December 31, 2005, up 60.3% compared
to the previous month, according to a statement released by the
bank.
The figure implies an unconsolidated net income of 183 billion
pesos for 4Q05, or 229 billion to 244 billion pesos on a
consolidated basis, Deutsche Ixe analyst Mario Pierry said in a
report. This represents a 4% to 10% shortfall from the bank's
253 billion-peso consolidated forecast for the quarter.
Assets totaled 23.9 trillion pesos at year-end and deposits
reached 14.2 trillion pesos. Bancolombia's total shareholder
equity amounted to 3.22 trillion pesos, while the unconsolidated
past due loan percentage was 2.94% at Dec. 31, 2005.
"We'd rather wait until detailed financials are released during
the first week of March before making a full assessment of the
results. We believe that 4Q05 results will be 'noisy',
reflecting further extraordinary items related to the merger
with Conavi and Corfinsura," according to Mr. Pierry's report.
"The economy grew very dynamically in 2005 and the bank reaped
the benefits of that growth. We managed to close the first part
of the merger without affecting the bank's growth and
maintaining our market share. All of this makes us look
optimistically on 2006," Chief Executive Officer Jorge Londono
told Business News Americas.
Mr. Londono told Business News that growth in the mortgage loan
segment would likely speed up over the next few years to
represent 20-25% of the banking system's total assets compared
to the current 15%. The Bank expects loan growth this year as a
result of a free trade agreement between Colombia and the United
States.
Bancolombia's board has proposed a quarterly dividend of 127
pesos per share payable on April 3, July 4 and October 2, 2006,
and on January 2, 2007, a 35% increase from the previous year,
Business News relates.
* * *
On Dec. 22, 2005, Fitch Ratings affirmed the ratings
assigned to Bancolombia, as:
-- Long-term/short-term foreign currency at 'BB/B';
-- Long-term/short-term local currency at 'BBB-/F3';
-- Individual at 'C';
-- Support at '3'.
The ratings assigned to Bancolombia and subsidiaries reflect its
dominant Colombian franchise, sound asset quality, and solid
performance, which should be further strengthened by the recent
merger with Conavi and Corfinsura and, in turn, boost capital,
which weakened with the merger. The ratings also factor in the
challenges posed by operational integration, its high exposure
to the Colombian government, and the risks inherent in its
operating environment.
===========
M E X I C O
===========
CFE: Installing Fiber Optic Transmission Lines in 24 States
-----------------------------------------------------------
Mexican state power company Comision Federal de Electricidad aka
CFE will supply and install 1,955km of fiber optic transmission
lines and 24 optical links in 24 states, Business News Americas
reports.
CFE, represented by Carlos Ortiz, its financed investment
projects deputy director, signed on Tuesday a contract worth 480
million pesos (US$45.7 million) with a consortium of Spain's
Isoluz, Argentina's Techint and local firm Energia Huasteca --
all of which were represented by Jose Vargas Tabernero and
Maximo Roberto Pepe Lombardi.
The lines will be installed in Aguascalientes, Colima, Estado de
Mexico, Guanajuato, Guerrero, Hidalgo, Jalisco, Michoacan,
Morelos, Nayarit, Puebla, San Luis Potosi and Queretaro as well
as in the federal district.
CFE, according to Business News, expects to increase fiber optic
lines to 21,400km by the end of 2006. The company currently has
13,900km.
The fiber optic network of CFE will allow the company to provide
high quality, reliable high-speed communications over its
transmission network.
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.
GRUPO POSADAS: S&P Affirms BB- Long-Term Corporate Debt Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services said Friday that it affirmed
its 'BB-' long-term corporate credit rating and its 'BB-' senior
unsecured debt rating on Grupo Posadas S.A. de C.V. At the same
time, Standard & Poor's affirmed its 'mxA-' national scale
rating on the company. All ratings have been removed from
CreditWatch where they were placed with negative implications on
Dec. 1, 2005, following the announcement that Posadas' bid for
the acquisition of Compania Mexicana de Aviacion, S.A. de C.V.,
was successful. The outlook is stable.
The rating affirmation is based on Posadas' ability to offset
the impact on its financial profile, since the company's total
investment for the acquisition will eventually be around 30%,
out of a total of $165.5 million acquisition cost, because an
important part of the balance was obtained by adding several
equity investors as partners in Mexicana. These investors are
not related to Grupo Posadas nor to its main stockholder, but
they have interest in the hotel, tourism, airport, and financial
industries, so we believe that the relation between Posadas and
Mexicana will be at commercial arms' length. Posadas is also
considering placing a 20% share of the capital stock of the
airline in the Mexican Stock Exchange (Bolsa Mexicana de
Valores) during the first half of 2006. In the unlikely case
that this placement does not take place it is our opinion that
Posadas' financial risk profile would not change if a similar
operation is pursued instead.
"According to Posadas and its financial auditors, it will not
need to consolidate Mexicana into its books since not even the
49.7% of Mexicana's shares that it company currently owns gives
it control of the airline; thus, its position in Mexicana will
be reflected as an investment in an associated company in its
financial statements," said Standard & Poor's credit analyst
Fabiola Ortiz.
The 'BB-' rating on Posadas reflects its somewhat high financial
leverage, challenges linked to its ability to successfully
realize meaningful synergies, the cyclicality of the hotel
industry, geographic concentration within Mexico, and a higher
business risk, as Posadas is investing in areas other than its
traditional hotel sector. These factors are offset by the
company's adequate liquidity, its position as the largest hotel
operator in Mexico, a diversified hotel portfolio with well-
recognized brands, the development of competitive advantage
through technology, and an experienced management team.
As of the end of 2005, Posadas operated 92 hotels with a total
of 17,268 rooms. The company's operations are concentrated in
Mexico, where it runs 76 hotels (83% of total rooms). It also
operates 10 hotels in Brazil, five in the US, and one in
Argentina. Posadas also has 26 hotels under development to be
opened within the next three years. Nevertheless, Posadas will
only contribute 5% of the total required investment for these
new hotels, as most of them will be under management and lease
agreements. Nevertheless, its owned hotels still contribute the
highest portion of the company's revenues (50% of the total
revenues during 2005), followed by leased hotels (17%),
management hotels (19%), and Vacation Club and others (14%).
During the last quarter of 2005, the revenue per available room
decreased 6% compared with 2004 due to the impact of hurricane
Wilma in Cozumel and Cancun, which caused a temporary shutdown
of operation of the five hotels that the company has in that
area. Three of them are already reopened, and we expect the
remaining two to be opened during the first half of 2006.
Posadas incurred additional costs related to deductibles and
coinsurance of approximately Mexican pesos 60 million --
approximately $5 million -- that only affected 1% of the total
costs. Even though the company's operation could be affected by
natural events (hurricanes), Posadas has been able to minimize
the impact by having insurance to cover those damages. The five
hotels represented 12% of the consolidated revenues and 9% of
the EBITDA.
The stable outlook reflects our expectation that Posadas will
continue to improve its operating performance gradually, and
that it will be able to generate stable cash flows even under
adverse economic conditions. The rating could be pressured
downward if Mexicana demands more resources from Posadas, and if
further acquisitions other than its core business take place.
=====================
P U E R T O R I C O
=====================
G+G RETAIL: Brings In Financo as Investment Banker
--------------------------------------------------
G+G Retail, Inc., seeks the U.S. Bankruptcy Court for the
Southern District of New York's authority to retain Financo,
Inc., as its investment banker, nunc pro tunc to Jan. 25, 2006.
Financo is expected to:
a) meet with the Debtor's management and familiarize itself
with the business, operations, properties, asssets,
liabilities, financial condition and prospects of the
Debtor;
b) evaluate the Debtor's short-term and long-term borrowing
capacity;
c) consult with, advise and assist the Debtor in identifying
and evaluating various potential financing and strategic
alternatives that may be available to the Debtor including
potential improvements to agreements with existing
lenders, landlords, and credit card program operators;
d) advise the Debtor as to the timing, structure and pricing
of a potential transaction;
e) assist the Debtor, its management and advisors in the
preparation of a written memorandum describing the Debtor,
its business, financial condition, results of operations,
prospects and other material matters concerning the Debtor
for the purpose of soliciting interest from third parties
to engage in potential capital investment;
f) assist the Debtor, its management and advisors in the
preparation of a written memorandum and other materials
that will be useful in soliciting offers for the sale of
the company's PR Division;
g) identify, update, review and approach on an ongoing basis
a list of parties that might be interested in acquiring
the PR Division;
h) assist in arranging for a DIP financing;
i) meet with the Debtor's Board of Directors to discuss the
financial implications of a transaction; and
j) provide expert testimony when necessary.
Under an engagement agreement, the Debtor proposes to pay
Financo:
a) an engagement fee of $50,000 for services connected with
the sale of the PR Division;
b) capital engagement fee of $50,000 for services connected
with obtaining a capital investment;
c) a success fee in the event that the Debtor's Puerto Rico
business and assets are sold;
d) a success fee in the event that Financo arranges a capital
investment; and
e) a success fee upon the consummation of a sale of the
company.
To the best of the Debtor's knowledge, Financo is
"disinterested" as that term is defined in Section 101(14) of
the Bankruptcy Code.
Financo Inc. -- http://www.financo.com/-- is an investment
banking firm that provides investment banking services to retail
and consumer businesses on a wide variety of corporate matters,
including merger and acquisition transactions, debt
restructurings, private placements of debt and equity securities
and corporate valuation. The company can be reached at its New
York office:
535 Madison Avenue
New York, NY 10022
Tel: 212-593-9000
Fax: 212-593-0309
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: Wants to Pay Warehousing & Shipping Claims
-------------------------------------------------------------
Musicland Holding Corp. and its debtor-affiliates seek the U.S.
Bankruptcy Court for the Southern District of New York's
authority to pay prepetition claims relating to shipping and
other potential lien claimants in amounts determined by the
Debtor as necessary and appropriate.
Shippers and Warehousemen
According to James H.M. Sprayregen, Esq., at Kirkland & Ellis
LLP, the Debtors hire shippers and warehousemen to assure the
timely shipping and delivery of goods sold in the ordinary
course of the Debtors' businesses. The Debtors believe that,
unless paid, Shippers and Warehousemen may withhold delivery of,
or access to, the goods in their possession, which have a value
well in excess of the amount of Warehousing Claims. Moreover,
under the laws of many states, Shippers and Warehousemen may
have a possessory lien on goods in their possession.
Mr. Sprayregen says that in connection with the normal operation
of their businesses, the Debtors purchase music, movies and
entertainment-related products from numerous vendors and
suppliers. The Debtors' ability to timely receive, distribute
and return those Retail Goods depends on the maintenance of a
successful and efficient supply and delivery network.
Thus, Mr. Sprayregen notes that the Debtors' business operations
and their reorganization's success depends on the maintenance of
reliable and efficient transportation and sale processing
systems for Retail Goods. Those systems involve the use of the
Shippers and Warehousemen.
Mr. Sprayregen discloses that the Debtors have historically paid
$50 million annually to the Shippers and Warehousemen, a portion
of which is outstanding at any time. The Debtors expect that,
as of the Petition Date, some of the Shippers and Warehousemen
will have $10 million in outstanding invoices prior to the
Petition Date. Some of the Shippers and Warehousemen may refuse
to continue to carry goods and make timely delivery.
Based on the Debtors' belief that majority of the Shippers and
Warehousemen do not have the right to refuse performance or
assert liens under their contracts, and considering that the
Shippers and Warehousemen currently are holding $73 million of
goods, the Debtors seek the Court's permission to pay up to $10
million.
Further, the Debtors ask the Court's permission to make non-
disputed prepetition payments to the Shippers and Warehousemen
relating to the $10 million Shipping Charges to:
(a) obtain release of critical or valuable goods or equipment
that may be subject to liens;
(b) maintain a reliable, efficient and smooth distribution
system; and
(c) induce critical shippers, warehousemen and other
creditors with potential liens to continue to carry goods
and equipment and make timely delivery.
Lien Claimants
In addition, the Debtors routinely transact business with a
number of other third parties who have the potential to assert
mechanics' or artisans' liens against the Debtors and their
property if the Debtors fail to pay for the goods or services
rendered. Those Lien Claimants perform various services for the
Debtors, including new store build-outs, store remodeling and
repairs.
Mr. Sprayregen explains that although the Debtors have generally
made timely payments to the Lien Claimants as of the Petition
Date, a substantial number of the Lien Claimants may have been
unpaid for certain prepetition goods and services.
Mr. Sprayregen argues that the existence and perfection of the
Mechanics' Liens could possibly place the Debtors out of
compliance under their various leases. Moreover, certain Lien
Claimants may refuse to perform their ongoing obligations under
those agreements with the Debtors, including installation,
servicing and warranty obligations.
To avoid undue delay and to facilitate the continued operation
of the Debtors' businesses, the Debtors seek the Court's
immediate authority to pay the claims of Lien Claimants that
have given or could give rise to a lien against the Debtors'
assets, provided that the Debtors will not be authorized to pay
a Lien Claimant unless the Lien Claimant has perfected or is
capable of perfecting one or more liens in respect of that
claim.
Court Order
Judge Bernstein grants the Debtors' request on an interim basis.
Judge Bernstein authorizes the Debtors to pay prepetition
Shipping Charges of up to $10 million subject to having the
ability to do so under the Debtors' proposed DIP financing.
Further, Judge Bernstein allows the Debtors to pay prepetition
Lien Claims of up to $2 million.
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: Wants to Return Goods and Obtain Trade Credit
----------------------------------------------------------------
To satisfy their customers' requests, Musicland Holding Corp.
and its debtor-affiliates strive to ensure that their stores are
well-stocked with the most popular and recently released movies,
music and other entertainment products. However, the demand for
a particular movie or album is difficult to predict.
Return rights permit a retailer to return inventory at any time
to its vendors for credit against the amounts owed for past
purchases or for credit against future purchases. Those return
rights enable a retailer to ensure a sufficient supply of new
products as they are released and before the demand can be fully
ascertained, shift the risk of obsolete and undesired product
from the retailer to the vendor, and enable the Debtors to
maintain a broader selection of inventory without significant
risk of loss if the products cannot be sold.
According to James H.M. Sprayregen, Esq., at Kirkland & Ellis
LLP, the Debtors customarily purchase movies, music and
entertainment products from vendors with return rights. The
Debtors rely on return rights in purchasing Inventory and
establishing Inventory levels. On a monthly basis, the Debtors
designate some of their unsalable or slow-moving Inventory for
return to vendors.
Mr. Sprayregen discloses that the Debtors, excluding MediaPlay
stores, had $297 million of Inventory held for sale as of
January 4, 2006.
Mr. Sprayregen notes that to manage the Debtors' inventory
effectively and efficiently, the Debtors must have the ability
(i) to return Inventory existing on the Petition Date; and
(ii) to order entertainment products postpetition on credit
with the ability to return unsold Inventory.
The Debtors entered into security agreements with a number of
the Debtors' major music and video suppliers in November 2003.
In those Trade Lien Agreements, the Debtors granted those
vendors second liens on all the Debtors' inventory held for
sale, junior in priority to the liens securing the Debtors'
obligations to Wachovia Bank, National Association, the Debtors'
prepetition lender. Mr. Sprayregen relates that the Debtors'
books showed that the Trade Lien Creditors were owed more than
$180 million as of the Petition Date.
Mr. Sprayregen tells the U.S. Bankruptcy Court for the Southern
District of New York that the Debtors have worked closely with
an Informal Committee of Trade Lien Vendors to develop an
acceptable returns program for the Trade Lien Creditors during
the Chapter 11 Cases. Subsequently, the parties agreed to two
standard forms of agreements that will serve as basis for the
Debtors' negotiations with the Trade Lien Creditors and with the
unsecured vendors.
Mr. Sprayregen, however, notes that no vendor is obligated to
accept an Agreement and the Debtors are not obligated to enter
into an Agreement with any vendor.
The Trade Committee is composed of:
* Buena Vista Home Entertainment, Inc.,
* EMI Recorded Music,
* North America,
* Paramount Pictures,
* Home Video Division,
* Sony BMG Music Distribution,
* Sony Pictures Home Entertainment Inc.,
* Twentieth Century Fox Home Entertainment LLC,
* Universal Music and Video Distribution,
* V.P.D. IV, Inc.,
* Warner/Elektra/Atlantic Corporation, and
* Warner Home Video Inc.
Each of the original signatories to the Trade Lien Agreements --
Columbia Tristar Home Entertainment, Inc., and V.P.D. IV, Inc.
-- currently are represented on the Trade Committee.
Mr. Sprayregen relates that the Agreements reflect the fact that
bankruptcy disrupts the normal inventory return process.
Moreover, the Agreements establish terms for the return of
prepetition goods to the Debtors' vendors for credit against the
vendor's prepetition claims and for open account credit based on
the prepetition inventory returned.
The salient terms of the Agreements are:
a. Postpetition Line of Credit. The vendor will provide the
Debtors with an open ongoing line of credit equal to 100%
of each dollar of prepetition merchandise returned by the
Debtors. That line of credit will remain open and
available until the earlier of 30 days after the effective
date of an Agreement, or the occurrence of a termination
event. The full amount of the postpetition account will
be immediately due upon termination.
b. Priority and Security for Postpetition Account
-- Trade Lien Creditors. If the vendor also is a Trade
Lien Creditor, the Postpetition Account will be secured
pursuant to the terms of a Trade Lien Agreement. The
liens securing a Postpetition Account owed to a Trade
Lien Creditor will be subordinate to:
* all liens in favor of Wachovia;
* any valid, perfected and non-avoidable liens as of
the Petition Date, and
* any carve-outs for the fees and expenses of
Chapter 11 professionals stated in any cash
collateral order or DIP Financing approved by the
Court.
-- Superpriority Administrative Claim. Any Postpetition
Account will be granted an allowed superpriority
administrative claim pursuant to Section 364(c)(1) of
the Bankruptcy Code with priority over all
administrative expenses or other claims under Section
503(b) or 507(b) and with recourse to all property of
the Debtors' Estates.
However, that superpriority administrative claim will
be:
* subject and subordinate to any valid, perfected
and non-avoidable liens;
* subordinate to any administrative priority granted
to Wachovia and the lenders party to any DIP
Financing approved by the Court;
* subject and subordinate to the fees of the U.S.
Trustee and the fees payable to the Clerk of the
Court pursuant to 28 U.S.C. Section 1930(a); and
* subject and subordinate to any carve-outs for fees
and expenses for Chapter 11 professionals
specified in any Court-approved cash collateral
order or DIP Financing.
c. Liens, Diminution of Value. The liens granted to secure
the Postpetition Account of a Trade Lien Creditor will be,
at all times, ranked pari passu with the liens granted to
the Trade Lien Creditors pursuant the terms of the
security agreements among the Debtors and those Trade Lien
Creditors in effect immediately after the Petition Date
and any replacement liens granted to the Trade Lien
Creditors for adequate protection pursuant to the Court
orders approving the DIP Financing or any further order
authorizing the continued use of the Trade Lien Creditors'
cash collateral.
Upon the return of Prepetition Merchandise, there will be
a diminution in the value of the collateral securing the
Trade Lien Creditors in an amount equal to the fair market
value of those returned merchandise and, in accordance
with the terms of the Order authorizing the DIP Financing,
the Trade Lien Creditors will automatically receive
adequate protection replacement liens.
d. Returns of Prepetition Merchandise. The vendor will
accept from the Debtors the return of any and all
Prepetition Merchandise in accordance with the vendor's
standard return policy and practice for so long as the
Agreement remains in effect. All returns of Prepetition
Merchandise will first be credited dollar-for-dollar
against the vendor's claims for goods sold and delivered
to the Debtors prior to the Petition Date; and second,
will be credited dollar-for-dollar against the
Postpetition Account.
That Prepetition Merchandise returned to a vendor will be
free and clear of all claims and liens and will be valued,
authorized and verified pursuant to the standard return
practice and policy for the vendor's merchandise.
e. Vendors' Claims. The Trade Lien Creditor and unsecured
vendor's Prepetition Claims are enforceable against the
Debtors and admitted and allowed as a secured claim or
claim in an amount at least equal to the vendor's
Prepetition Claim. Nothing will preclude the Debtors or
any other party-in-interest from asserting any objection,
claim or cause of action against the vendor; provided
that, the terms of the Order approving the DIP Financing
will govern the rights of the Debtors or any other party-
in-interest as against the Trade Lien Creditors. The
Trade Lien Creditor and unsecured vendor's Postpetition
Account will constitute a Secured Postpetition Vendor
Claim or a Postpetition Vendor Claim.
Mr. Sprayregen asserts that the Agreements will enhance the
Debtors' financial performance, the value of the Debtors'
business and the prospects for a successful reorganization.
Those Agreements are critically important to the Debtors and are
in the best interests of the estates.
Therefore, pursuant to Sections 364 and 546(h), the Debtors seek
the Court's authority to return prepetition inventory of
prepackaged media including CDs, DVDs and games to the Debtors'
vendors, and to incur and obtain from those vendors an open
Postpetition line of credit equal to one dollar for every dollar
of prepetition Inventory returned.
The Debtors propose to provide these parties-in-interest with
written notice within five business days upon execution of an
Agreement:
a. U.S. Trustee,
b. counsel to Wachovia, and
c. counsel to the Trade Committee, Michael A. Bloom, Esq., at
Morgan, Lewis & Bockius LLP, in Philadelphia,
Pennsylvania.
A Notice Party is entitled to object to the Debtors' execution
of the Agreement within 10 days of the date of written notice,
if:
a. executed Agreement contains terms and conditions that
differ in some material respect from the original form;
b. the different terms and conditions adversely affect the
objecting Notice Party's interests.
A full-text copy of the Trade Lien Creditors Agreement is
available for free at http://ResearchArchives.com/t/s?4de
A full-text copy of the Unsecured Vendors Agreement is available
for free at http://ResearchArchives.com/t/s?4df
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)
=================================
T R I N I D A D & T O B A G O
=================================
DIGICEL: Engages in Co-Location Talks with Laqtel Limited
---------------------------------------------------------
The Trinidad Guardian reports that Digicel Limited is in talks
with Laqtel Limited for a cell site sharing agreement.
Digicel stated that a co-location agreement will potentially
minimize the extent to which efforts by the new providers
duplicate the work of existing structures, the Trinidad Guardian
relates.
As previously reported, Digicel claimed that its infrastructure
network is ready to start operating as soon as the
interconnection delay will be hammered out.
"As a consequence, all three service providers have been in
discussion with each other on the question of co-location
agreements," Stephen Brewer, Digicel's chief executive said in a
prepared statement. "We are confident that current discussions
on deepening relations among the country's three
telecommunications providers will yield positive results as we
seek to deliver all that is expected and more."
In December, TSTT and Laqtel signed a lease agreement for co-
location with 16 of its cellular towers for five years, with an
option to renew when that period ends.
"Locations have been carefully selected to ensure comprehensive
coverage while careful attention is paid to issues of aesthetics
and health and safety concerns," Digicel said in its statement.
About Laqtel
Founded in 2002, Laqtel Limited, a division of Telcom Holdings
Ltd., is a privately held up-start mobile phone and wireless
service provider, of Trinidad and Tobago.
About Digicel
Digicel is the largest provider of wireless telecommunications
in the Caribbean with over 1.7 million subscribers and LTM
revenues of $477 million.
Digicel's $300 million 9-1/4% senior notes due Sept. 1, 2012, is
rated B3 by Moody's and B by Fitch.
=============
U R U G U A Y
=============
COFAC: Liquidity Issues Lead to Suspension of Operations
--------------------------------------------------------
Uruguay's central bank has suspended local banking cooperative
Cofac, aka Cooperativa Nacional de Ahorro Credito, due to
insufficient liquidity, Business News Americas reports.
The suspension resulted from an influx of withdrawals that made
the cooperative unable to honor its obligations to its
depositors. Additionally, Cofac failed to implement measures
that the central bank requires to maintain the viability of its
operations.
As previously reported, Cofac had failed to seal an US$8 million
financing agreement with Venezuelan development bank Bandes.
The fund would have helped boost the cooperative's finances.
A Cofac source told Business News that after the suspension was
announced, Bandes said it would come to the rescue with an US$10
million financing.
Cofac was due to submit its new capitalization plan to the
central bank on Tuesday but failed to do so as the Bandes money
came in too late, the unidentified source told Business News.
The central bank might not lift the suspension right away as
Cofac is fine-tuning a deeper restructuring plan that includes
adding new partners.
* * *
On Jan. 27, 2006, Fitch Ratings placed Uruguayan banking
cooperative Cofac's B- long-term national scale rating on rating
watch negative due to fears the cooperative might fail to
achieve a capitalization program before month-end.
Cofac is fine-tuning a three-year business plan aimed at
securing a minimum US$5mn capitalization and regaining the
business volume it had before it was suspended in March 2005 due
to insufficient equity. Fitch believes Cofac will fail to
present the plan before Uruguay's central bank by the end of the
month as stipulated.
Fitch Ratings said it would consider withdrawing the rating
watch negative if the central bank extends the deadline.
Cofac has said it hopes to attract investments from three or
four banks through an upcoming capital increase and is already
in talks to give Venezuelan development bank Banco de Desarrollo
Economico y Social a 25% stake in exchange for fresh capital.
Fitch also affirmed Cofac's international rating at CC with a
stable outlook and its support rating at 5.
Cofac provides retail and commercial banking services and is one
of Uruguay's leading financial institutions in the micro-credit
segment with 200,000 clients. The cooperative posted a 324
million-peso (US$13.5 million) loss in 2005 and had assets of
4.54 billion pesos at year-end.
* URUGUAY: S&P Assigns B Credit Rating with Positive Outlook
----------------------------------------------------------
Standard and Poor's Ratings Services assigned 'B' Credit Ratings
to the Oriental Republic of Uruguay with a positive outlook.
Strengths
-- A stable, democratic political system with an orderly
transfer of power, which is in sharp contrast with most 'B'
rated peers; and
-- High level of economic development and social indicators
compared with peers.
Weaknesses
-- A high government debt burden that is extremely vulnerable
to shocks;
-- High external debt and financing needs; and
-- A narrow economy dependent upon commodities and regional
economies.
Rationale
The ratings on the Oriental Republic of Uruguay are supported by
a stable, democratic political system superior to that of many
sovereigns in the 'B' category. Income and wealth are more
evenly distributed in Uruguay than in most Latin American
countries and, despite periodic economic crises, there is no
widespread disdain for the political class. Also supporting the
ratings is a higher level of economic development than in most
'B' sovereign credits, high literacy rates, and a skilled labor
force-all of which would bode well for a better growth
performance in a less-regulated economy. A tradition of
consensus building and some vested interests, however, often
undermine quick, preemptive policy action: the government was
unable to forestall default on its debt in 2003.
Uruguay's creditworthiness is constrained by high government and
external debt burdens that are more vulnerable to shocks than is
the case in most similarly rated credits. A significant 95% of
the government's debt is denominated in foreign currencies and
about 75% is owed to nonresidents, straining fiscal flexibility
and posing a key risk to debt dynamics. The government's debt
burden has declined significantly over the last two years, but
is just converging to a level comparable with that of its 'B'
rated peers. Net general government debt is projected at 56% of
GDP in 2006, down from an estimated 59% of GDP in 2005 and a
peak of 91% of GDP in 2003. Interest payments, almost
completely denominated in foreign currency, account for 16% of
general government revenue, higher than in most peer credits.
Even after having dropped sharply, net public sector external
debt projected at almost 140% of current account receipts (CAR)
in 2006 is significantly higher than the 'B' median's 90%.
Despite improvement in the government's amortization profile
following the 2003 distressed-debt exchange, government
borrowing needs and the country's very high external financing
needs are demanding. External financing needs -- or debt service
needs as a share of available international reserves or CAR --
range between 3x-5x greater than in Uruguay's peers. A
significant portion of the government's debt is owed to official
creditors. Hence, maintaining a strong relationship with the
International Monetary Fund is key to ensuring continued access
to multilateral financing over the medium term. Progress under
the Stand-by Arrangement negotiated in 2005 has been solid.
Recourse to local and international capital markets is also
needed to cover financing needs. Investor confidence will
depend upon policies to improve the competitiveness of the
Uruguayan economy and to raise the primary (noninterest) fiscal
surplus of the nonfinancial public sector to 4% of GDP over the
medium term -- the latter implies a fiscal commitment beyond
that attained in Uruguay's recent past.
Continued economic recovery in 2005, with estimated real GDP
growth of 6.5%, returned peso-denominated GDP to its precrisis
level. Projected real GDP growth of 4.7% in 2006 reflects
continued export growth (favorable global and regional economic
conditions), key foreign direct investment in the pulp and paper
sector, and ongoing recovery in domestic demand. The pace of
sustainable growth over the medium term is somewhat uncertain
given the economy's dependence upon commodities, regional
economies, and retrenchment in the banking sector. Robust
growth depends upon improved competitiveness, which requires
deregulation and continued diversification.
Outlook
The positive outlook reflects prospects for an upgrade if
continued fiscal consolidation, diversification, and/or monetary
management reduce the country's external vulnerabilities.
Progress in ongoing efforts to strengthen the country's fiscal
and monetary institutions, reduce the high level of
dollarization in the economy, and/or move ahead with a pro-
growth reform agenda-all of which have the support of
multilateral creditors-will continue to enhance Uruguay's
creditworthiness. Slippage in these efforts likely would move
the outlook to stable.
=================
V E N E Z U E L A
=================
CITGO PETROLEUM: U.S. Religious Group Wants Company Boycotted
-------------------------------------------------------------
According to Reuters, the American Family Association, a
conservative religious group in the United States, staged a
protest against Citgo Petroleum Corp., the subsidiary of
Venezuelan state-oil company, PDVSA. The group asked motorists
to stop buying fuel from Citgo in an attempt to cut cash flow to
the government of President Hugo Chavez, an opponent of the U.S.
President George W. Bush.
"It makes no sense to buy fuel from a country that is trying to
overturn the U.S. administration," AFA President Donald Wildmon
told Reuters in a phone interview from AFA headquarters in
Tupelo, Mississippi. "I think this man wants to be the next
Fidel Castro."
A Citgo spokesman declined making comments on the boycott.
Sources at the company headquarters in Houston said Citgo have
received over 37,000 e-mails from people vowing not to buy Citgo
fuel at the 14,000 gas stations the company owns in the United
States, Reuters reports.
President Ch vez has repeatedly accused the United States of
trying to overthrow his government and claims the U.S,
participated in a coup that briefly removed him from power in
2002.
AFA claims to have 2.97 million followers. Mr. Wildmon, a
Methodist minister, founded the group in 1977 as the National
Federation of Decency, Reuters relates.
* * *
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.
PETROBRAS ENERGIA: Discloses Effects from Operating Accords
-----------------------------------------------------------
Petrobras Energia Participaciones S.A., controlling company of
Petrobras Energia S.A., reports the estimated effects derived
from conversion of operating contracts in Venezuela and the
recovery of tax gains.
These are the relevant facts relating to the financial
statements as of Dec. 31, 2005:
* Estimated effects derived from conversion of operating
contracts in Venezuela
Within the framework of the new legislation that regulates the
exploitation of hydrocarbons in Venezuela, in September 2005 our
subsidiary Petrobras Energia Venezuela, S.A. subscribed
provisional agreements with Petroleos de Venezuela, S.A.
Petrobras Energia undertakes to negotiate the terms and
conditions for the conversion of the operating contracts
corresponding to Oritupano Leona, La Concepcion, Acema and Mata
areas into a partially state-owned company modality -- where the
Venezuelan state, through PDVSA, will have a majority
shareholding.
The migration of the operating contracts will signify a change
in the development of current businesses in Venezuela. Although
the final terms for the conversion of the operating contracts
are not yet defined, the company's board of directors considers
that this process will have an adverse effect in the value of
its assets in Venezuela.
Accordingly, the company plans to make a provision in the
financial statements as of Dec. 31, 2005, of approximately 420
million pesos in order to adjust the book value of Venezuela's
assets to their recoverable value. In order to determine the
recoverable value, the company has made cash flow projections
taking into account different assumptions, according to the
information available at present under the current state of
negotiations in progress with PDVSA.
Projections made are highly sensitive to any changes in the
assumptions considered. As a result, in spite of the fact that
said projections show the best estimation available, the final
result of the contracts conversion process mentioned above could
differ from the estimated figure.
* Recovery of tax gains
Considering the profitability expectations in connection with
Petrobras Energia's business plan, as of December 31, 2005, the
company estimates to partially reverse the allowance provided
for tax gains resulting from tax loss carry forwards and the
allowance for payments made for the minimum presumed income tax,
in an amount of approximately 250 million pesos. After taking
into consideration these effects, the company will maintain an
allowance for tax loss carry forwards in an amount of
approximately 800 million pesos, which may be primarily used
until fiscal year ending Dec. 31, 2007.
* * *
As reported by Troubled Company Reporter on Dec. 30, 2005, Fitch
Ratings affirmed the following ratings of Petrobras Energia:
-- International local currency rating at 'B';
-- Foreign currency rating at 'BB-';
-- Argentine national scale rating at ' AA-(arg)'.
All ratings had a Stable Outlook.
PDVSA: Commencing Colombia-Venezuela Gas Pipeline Construction
--------------------------------------------------------------
State oil firm Petroleos de Venezuela aka PDVSA will begin
construction of a 312km long gas pipeline connecting Venezuela
and Colombia this July 1, Business News Americas reports. The
announcement was made by Jorge Luis Sanchez, president of
Venezulea's national gas regulator Enagas.
Sanchez told Business News that there would be a period of 18-24
months for construction.
The US$350 million pipeline, which would have a capacity to
transport 150-450 million cubic feet a day (Mf3/d), will connect
US oil company Chevron's gas fields in Colombia's La Guajira
department with PDVSA's CRP refinery, Business News relates.
According to PDVSA officials, the pipeline will be built and
operated by PDVSA and completed within the next two years.
The contract will have a minimum duration of 20-25 years.
Colombia will transport about 150Mf3/d to Venezuela for the
first 4-7 years. From Venezuela, the gas will be shipped to
Colombia.
Sanchez is positive that the pipeline could even be expanded
into Central America or Ecuador.
"With the reserves we have, we can sustain a much bigger project
[than Colombia]," said Sanchez.
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
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Copyright 2006. All rights reserved. ISSN 1529-2746.
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