/raid1/www/Hosts/bankrupt/TCRLA_Public/060216.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Thursday, February 16, 2006, Vol. 7, Issue 34
Headlines
A R G E N T I N A
AGRAMAR S.A.: Concludes Reorganization
LAGEOS S.A.: Verification of Claims Ends on April 5
MADERAS GUZMAN: Trustee Begins Validating Creditors' Claims
RIBRAS S.A.: Trustee to Cease Verification of Claims on March 24
ROLEPLAY S.A.: Creditors' Claims to be Verified until March 20
ROULANT S.A.: Creditors Have until March 29 to Submit Claims
US CAN: To Divest its U.S. and Argentine Operations to Ball Corp
TELECOM ARGENTINA: S&P's B- Rating Will Not Change
TELECOM PERSONAL: S&P Maintains B- Rating
TRANSENER: Reports US$200 Million Profit in 2005
B E R M U D A
ESG REINSURANCE: Fitch Downgrades IFS Ratings to CCC+
INTELSAT LTD: Exchanging Senior Notes with Registered Bonds
B R A Z I L
AES CORP: Opens Redondo Station's 480-Megawatt Unit 8
BANCO DA AMAZONIA: Fitch Affirms Low B Currency Ratings
COMPANHIA ENERGETICA: S&P Assigns 'CCC' Corporate Credit Rating
EMBRATEL: Narrows Net Loss to US$7.78 Million in 4Q 2005
GERDAU: Announcing New Company Head in Second Half of 2006
C A Y M A N I S L A N D S
HENCHY LIMITED: Final General Meeting Scheduled on February 24
HOURGLASS FUND: Liquidator to Explain on Wind Up Process
IMAGI INVESTMENTS: Wind Up Process to be Reported on February 24
MINOT CAPITAL: Shareholders' Final Meeting Set on February 27
NEOMAGIC INTERNATIONAL: Wind Up Process to be Reported
QUADIX VOLATILITY: Wind Up Process to be Reported on February 27
SOLECTRON GLOBAL: Fitch Rates Proposed US$150MM Sr. Notes at B+
C O L O M B I A
BANCOLOMBIA: Discloses 93% Lower Profits in January
ECOPETROL: 2006 Daily Oil Output Expected to Fall by 1.4%
D O M I N I C A N R E P U B L I C
FALCONBRIDGE: Presents Development Projects Update
E L S A L V A D O R
AES CORP.: Building US$450 Million Coal-Fueled Power Plant
G U A T E M A L A
BANCO INDUSTRIAL: Achieves 28% Increase in 2005 Earnings
J A M A I C A
NCB JAMAICA: Fitch Initiates Low B Ratings with Stable Outlook
M E X I C O
ALESTRA: Discloses 2005 Fourth Quarter Results
CFE: Receiving Bids for Durango Gas-Fired Project on April 20
P U E R T O R I C O
SUNCOM WIRELESS: Inks Napster Mobile Service Pact with Ericsson
V E N E Z U E L A
CITGO PETROLEUM: S&P Assigns BB Corporate Rating
PDVSA: Acquires 50% of Ancap Stake in Petrolera
PDVSA: Looking at Fresh Drilling Locations
- - - - - - - -
=================
A R G E N T I N A
=================
AGRAMAR S.A.: Concludes Reorganization
--------------------------------------
The reorganization of Buenos Aires-based Agramar S.A. has ended.
Data revealed by Infobae on its Web site indicated that the
process was concluded after the city's court homologated the
debt agreement signed between the company and its creditors.
Agramar S.A. entered insolvency after the court approved its
petition to reorganize after failing to pay its creditors.
LAGEOS S.A.: Verification of Claims Ends on April 5
---------------------------------------------------
The verification of creditor's claims against bankrupt company
Lageos S.A. will stop end on April 5, 2006, reports Argentine
daily La Nacion.
Lageos began wind up operations after Buenos Aires' Court No. 8
-- with the assistance of Clerk No. 15 -- declared the company
bankrupt in favor of creditor Banco Rio de la Plata S.A., which
has claims amounting to $15,050.13. Mr. Osvaldo Luis Weiss was
appointed as trustee.
Lageos S.A. can be reached at:
Avenida Forest 348
Buenos Aires
Mr. Osvaldo Luis Weiss, the trustee, can be reached at:
Avenida Presidente Roque Saenz Pena 651
Buenos Aires
MADERAS GUZMAN: Trustee Begins Validating Creditors' Claims
-----------------------------------------------------------
Ms. Sandra Claudio D. Ambrossio, the trustee appointed for the
Maderas Guzman S.A. bankruptcy case, began validating claims
forwarded by the company's creditors, reports Infobae.
Buenos Aires-based Maderas Guzman S.A. started liquidating
assets after the city's court declared its bankruptcy.
Ms. Sandra Claudio D. Ambrossio, the trustee, can be reached at:
Sarmiento 1574
Buenos Aires
RIBRAS S.A.: Trustee to Cease Verification of Claims on March 24
----------------------------------------------------------------
Mr. Ernesto Puerta, the trustee appointed by the Buenos Aires'
court for the bankruptcy of Ribras S.A., will stop verifying
creditors' claims on March 24, 2006. Infobae relates that
individual reports will be prepared out of the verified claims.
These reports will be presented in court for approval on May 5,
2006.
Mr. Puerta will also submit to court a general report on the
case on June 16, 2006. The report will contains the company's
audited business records as well as the summary of events
pertaining to the case.
Mr. Ernesto Puerta, the trustee, can be reached at:
Fragata Pte. Sarmiento 72
Buenos Aires
ROLEPLAY S.A.: Creditors' Claims to be Verified until March 20
--------------------------------------------------------------
The claims of creditors against Buenos Aires-based bankrupt
company Roleplay S.A. will be verified until March 20, 2006,
reports Infobae.
Validated claims will be presented in court as individual
reports on May 4, 2006.
A general report on the case is also expected on June 16, 2006.
Roleplay S.A. was declared bankrupt by the city's court. It is
now under the supervision of Ms. Beatriz del Carmen Muruaga, the
trustee appointed by the court.
Ms. Beatriz del Carmen Muruaga, the trustee, can be reached at:
Aguero 1290
Buenos Aires
ROULANT S.A.: Creditors Have until March 29 to Submit Claims
------------------------------------------------------------
Creditors of Roulant S.A. have until March 29, 2006, to submit
their claims to court-appointed trustee, Ms. Norma Fistzen.
Argentine daily La Nacion relates that the company started
winding up operations after the Buenos Aires court ruled the
company's bankruptcy in favor of its creditor, Ms. Lila del
Valle Ferrari.
Roulant S.A. can be reached at:
Rodriguez Pena 411
Buenos Aires
Ms. Norma Fistzen, the trustee, can be reached at:
Viamonte 1446
Buenos Aires
US CAN: To Divest its U.S. and Argentine Operations to Ball Corp
----------------------------------------------------------------
U.S. Can Corporation entered into a definitive agreement to sell
its U.S. and Argentine operations to Ball Corporation (NYSE:
BLL) for approximately 1.1 million shares of Ball common stock
and the repayment of approximately $550 million of U.S. Can's
debt. The current shareholders of U.S. Can will retain its
European businesses. The transaction is expected to close by
the end of the first quarter, subject to customary closing
conditions.
"Ball Corporation is one of the most influential and competitive
players in the packaging industry," stated Carl Ferenbach, U.S.
Can Chairman and Managing Director of Berkshire Partners, LLC, a
private equity firm in Boston. "The sale of these operations
from U.S. Can to Ball puts them in very strong hands and assures
their continued support and development."
U.S. Can shareholders will retain the company's European
businesses and will continue to focus on developing the
company's European markets. U.S. Can is a leading manufacturer
of steel containers for personal care, household, automotive,
paint and industrial products in the U.S. and Europe, as well as
plastic containers in the U.S. and food cans in Europe.
About Ball Corporation
Headquartered in Broomfield, Colorado, Ball Corporation --
http://www.ball.com/-- is a supplier of high-quality metal and
plastic packaging products and owns Ball Aerospace &
Technologies Corp., which develops sensors, spacecraft, systems
and components for government and commercial customers. Ball
reported 2005 sales of $5.7 billion and the company employs
13,100 people worldwide.
About U.S. Can Corporation
Headquartered in Lombard, Illinois, U.S. Can Corporation --
http://www.uscanco.com-- manufactures steel containers for
personal care, household, automotive, paint and industrial
products in the United States and Europe, as well as plastic
containers in the United States and food cans in Europe.
As of Oct. 2, 2005, U.S. Can's balance sheet showed a
$426,657,000 equity deficit, compared to a $398,429,000 deficit
at Dec. 31, 2004.
TELECOM ARGENTINA: S&P's B- Rating Will Not Change
--------------------------------------------------
Standard and Poor's Ratings Services announced that the 'B-
/Stable/--' rating it assigned to Telecom Argentina S.A. aka
TELCO (B-/Stable/--), an Argentine-based integrated telecom
provider, will not be affected by the company's potential
changes in debt conditions.
TELCO announced that it planned to modify certain clauses of its
existing bonds. Changes consist of the elimination of the
limitation on capital expenditures of its mobile subsidiary
Telecom Personal S.A. aka TP (B-/Stable/--) and the obligation
of TECO to reinvest in TP any distributions received from TP.
The increased flexibility in capital expenditure and
distributions at TP were already factored in Standard & Poor's
Ratings Services' analysis and do not affect the credit quality
of TECO or TP.
The ratings on TP reflect the close linkage with the credit
quality of its parent based on the existence of cross-default
clauses between TP and TECO and the importance of TP as a growth
vehicle for TECO.
TELECOM PERSONAL: S&P Maintains B- Rating
-----------------------------------------
Standard and Poor's Ratings Services reports that the increased
flexibility in capital expenditure and distributions at Telecom
Personal S.A. do not affect the credit quality of Telecom
Personal. The company's rating remains 'B-/Stable/--'.
Rationale
The ratings on Telecom Personal S.A. aka TP reflect the close
linkage of TP's credit quality to that of its parent, Telecom
Argentina S.A. aka TECO (B-/Stable/--), due to the fact that TP
constitutes the growth vehicle for TECO. Coupled with the
economic incentives for the parent to support the company,
TECO's financial debt presents cross-default clauses with TP.
The ratings on TP also reflect the challenges of operating in
the Argentine environment after the crisis in 2002 and the high
competition in the mobile segment. TP faces currency mismatch
risks, as most of its cash generation is in Argentine pesos,
while financial debt and some operational costs are foreign
currency-denominated. In contrast, the company's relatively
good competitive position, as one of three mobile players in
Argentina, and the financial improvements after the closing of
the restructuring of its financial debt -- in November 2004 --
partially mitigate the negative factors.
TP's financial situation and business conditions significantly
deteriorated during the Argentine crisis, due to the weakening
of the company's debt-servicing ability as a result of the
domestic currency devaluation, resulting in the restructuring of
its financial debt. The reduction in debt levels after the
restructuring and the improvement in business fundamentals
allowed TP to mitigate the competitive pressures in the mobile
market and gradually improve its financial condition.
TP's nonconsolidated sales increased by about 53% in fiscal 2004
and 66% in the first nine months of 2005 -- compared to fiscal
2003 and the first half of 2004 -- as a result of the client-
base growth of 47% and 57%, respectively. Nevertheless, EBITDA
generation declined by about 3% in fiscal 2004 and 19% in the
first nine months of 2005, as a result of the significant margin
erosion caused by higher acquisition costs and some cost
adjustments after the crisis, such as in wages.
Margin pressures are expected to continue in the short term as a
result of intense competition, until markets reach a higher
degree of maturity and operators start to privilege
profitability over the growth of their client base. In addition,
TP's cash-flow generation and financial profile is and will
continue to be strongly dependent on stability in Argentine
macroeconomics.
The decline in debt levels after the restructuring allowed TP to
partially offset the reduction in EBITDA generation. As a
result, EBITDA interest coverage and funds from operation-to-
debt ratios in the 12 months ended September 2005 amounted to
2.9x and 13.3%, respectively -- compared to 3.6x and 26% in
fiscal 2004.
Despite the improvements after the debt restructuring, TP's
capital structure remains quite aggressive, with a debt-to-
capitalization ratio of 59.5% as of September 2005 and debt-to-
EBITDA levels of 3.5x in the 12 months ended September 2005.
The future performance of these measures depends strongly on the
inflation and exchange rate in Argentina. Under a scenario of
relatively stable US dollar exchange rates and inflation levels
in Argentina, TP should be able to cover its interest payments
and fund the increasing investment needs to upgrade its network,
and in the medium term, to gradually reduce debt and consolidate
financial measures.
Liquidity
TP's liquidity position after its debt restructure has remained
relatively tight, given the mandatory prepayment provisions and
conditions included under the restructured debt. As of
September 2005, cash levels amounted to $64 million, compared to
a short-term debt of about $28 million.
To have more flexibility to complete its investment plans to
update the network and benefit from the current liquidity in
financial markets, TP is seeking to refinance most of its
current financial debt. Although this would reduce the
company's exposure to foreign-currency debt to about 75% of
total debt from almost 100%, the company will continue to face
currency mismatch risks, as all its cash generation is in
Argentine pesos.
In February 2006, TECO announced its intention to eliminate the
limitation on capital expenditures of TP and the obligation of
TECO to reinvest in TP any distributions received from TP. The
increased flexibility in capital expenditure and distributions
at TP were already factored in Standard & Poor's Ratings
Services' analysis and do not affect the credit quality of TECO
or TP.
Outlook
The stable outlook on TP reflects the close link with TECO's
credit quality. The stable outlook reflects our expectation
that the company's good competitive position and the relatively
stable economic scenario will allow TECO to further reduce debt
and to consolidate financial improvements after the
restructuring. The rating upside is limited, given the current
business environment in Argentina and the persistence of
currency mismatch risks (between the company's foreign-currency
debt and peso-denominated cash generation). The ratings could
be pressured by higher competition in the mobile segment, the
persistence of fixed-tariff inflexibility under a higher-than-
expected inflationary and exchange-rate scenario, an increase in
government intervention in the fixed segment, or deterioration
in its financial flexibility.
TRANSENER: Reports US$200 Million Profit in 2005
------------------------------------------------
Transener S.A. posted 2005 consolidated net profits of 612
million pesos (US$200 million) turning around a 122 million
pesos net loss the previous year.
The company attributed the dramatic increase to financial gains
from its debt restructuring, which allowed the company partially
to offset the negative impact of the devaluation of the
Argentine peso in January 2002, Transener said in a statement.
Transener's net profits fell to 612 million pesos at year-end
from 630 million pesos at the end of the third quarter in 2005.
This decrease can be attributed primarily to the variation in
the exchange rate, as the U.S. dollar traded for 2.91 Argentine
pesos at the end of September, whereas at year-end it was going
for 3.03 pesos, Transener accounting supervisor Silvia Pujol
told Business News Americas.
Sales revenues increased 23.1% year-on-year to 376 million pesos
due largely to a 36 million pesos increase in sales to regulated
clients and a 30 million pesos increase in sales to non-
regulated clients.
Operating costs through 2005 were up 14.7% to 313 million pesos
due to social contributions and an increase in investments to
meet the non-regulated demand.
Administrative costs also rose 12% to 36.5 million pesos in
2005.
Transener's Ebitda increased to 151 million pesos in 2005, a 25%
gain with respect to the previous year.
Transener owns the national network of high-voltage power
transmission lines, which consist of nearly 8,800km of lines
together with the approximately 5,500km in its Transba
subsidiary's network.
* * *
As previously reported on Dec. 16, 2005, the Argentine arm of
Fitch Ratings upgraded to BB(arg) from B(arg) its rating on the
country's largest power transmission company, Compania de
Transporte de Energia Electrica en Alta Tension aka Transener
S.A.
=============
B E R M U D A
=============
ESG REINSURANCE: Fitch Downgrades IFS Ratings to CCC+
-----------------------------------------------------
Fitch Ratings has downgraded the Insurer Financial Strength
ratings of ESG Reinsurance Bermuda Limited, ESG Reinsurance
Ireland Limited and European Specialty Ruckversicherung AG - the
principal reinsurance subsidiaries of ESG Re Limited, Bermuda to
'CCC+' from 'B-'. The Outlook is Negative.
The rating is based on Fitch's analysis of the company's six-
month results to June 2005 and reflects ESG's poor historical
operating performance, weak capital position, constrained
liquidity and limited financial flexibility.
Fitch views ESG's capital position as very weak according to
Fitch's own assessment. The capital position weakened in 2004
and H105 as ESG's shareholders funds were reduced to USD17.6
million at H105 from USD28.3 million at H104. Failure to
address the continual erosion in the group capital could result
in difficulties in ESG continuing to trade.
ESG's poor historical operating performance is highlighted by
the low return on equity achieved by the company. Over the
2000-2004 period the company's average ROE was minus 33% based
on Fitch's estimates. Since 2004, the company has not recorded
major adverse claims reserve developments, although high
expenses and commission ratios have weighed on ESG's operating
profitability. The expense ratio, including commissions, was 72%
in 2004 and Fitch expects only moderate improvement in this
ratio for 2005.
In common with other non-US reinsurers, ESG is required to
establish trust funds or issue letters of credit in favour of US
cedants. A large part of the non-US reserves are also secured
in trust. In total, 95% of current insurance liabilities are
secured. Although this provides protection at 102% of
liabilities for the secured policyholders, it results in 78% of
the company's total investments being pledged through these
collateral mechanisms at end-June 2005, thus limiting liquid
assets available to meet the company's unsecured non-US
liabilities and other cash needs. Fitch is concerned that any
unexpected losses could adversely affect the company's ability
to respond to short-term cash calls.
Fitch considers that ESG's financial flexibility is constrained
as a result of the company's poor operating track record.
Consequently, the company may have difficulty in accessing
additional short-term financing from current shareholders or
third parties should the need arise.
The agency acknowledges the expertise of ESG in the direct
marketing business where the company has developed cutting-edge
marketing skills and customer relationship management platforms.
This know-how has enabled ESG to set up profitable partnerships
with well-rated insurers in Asia. The company's direct
marketing business has built up in-force value, the majority of
which is expected to crystallise over the next five years. This
off-balance sheet asset has been factored into Fitch's current
rating.
INTELSAT LTD: Exchanging Senior Notes with Registered Bonds
-----------------------------------------------------------
Intelsat, Ltd., is offering to exchange its:
-- Floating Rate Senior Notes due 2012
-- 8-1/4% Senior Notes due 2013; and
-- 8-5/8% Senior Notes due 2015;
in exchange for new notes with materially identical terms that
have been registered under the Securities Act of 1933, and are
generally freely tradable.
The offer will expire at 5:00 p.m. New York City time on March
13, 2006, unless extended.
The original notes were issued by Intelsat (Bermuda), Ltd.
Since that time, Intelsat (Bermuda), Ltd. transferred
substantially all its assets to its wholly owned subsidiary,
Intelsat Subsidiary Holding Company, Ltd., and Intelsat
Subsidiary Holding Company, Ltd. at that time assumed
substantially all of Intelsat (Bermuda), Ltd.'s obligations,
including its obligations in respect of the original notes.
Accordingly, Intelsat Subsidiary Holding Company, Ltd. is
currently the obligor on the original notes and will be issuing
any new notes issued in exchange therefore pursuant to this
exchange offer.
Each series of the notes will be unsecured senior obligations of
the Issuer. The notes will not be entitled to the benefit of
any mandatory sinking fund.
Floating Rate Notes
The floating rate notes mature on January 15, 2012. The
floating rate notes will bear interest at a rate per annum,
reset
semi-annually, equal to LIBOR plus 4-7/8%, as determined by the
calculation agent, which will initially be the indenture
trustee. Interest on the floating rate notes will be payable
semi-annually in arrears on January 15 and July 15, commencing,
in the case of the exchange notes, on July 15, 2006. The
Company will make each interest payment to the holders of record
of the floating rate notes on the immediately preceding January
1 and July 1. Interest on the floating rate notes that are
exchange notes will accrue from the most recent date to which
interest has been paid on the original notes. Interest on the
floating rate notes will be computed on the basis of a 360-day
year for the actual number of days elapsed.
2013 Notes
The 2013 notes mature on January 15, 2013. Interest on the 2013
notes will accrue at 8-1/4% per annum and will be payable semi-
annually in arrears on January 15 and July 15, commencing, in
the case of the exchange notes, on July 15, 2006. The Company
will make each interest payment to the holders of record of the
2013 notes on the immediately preceding January 1 and July 1.
Interest on the 2013 notes that are exchange notes will accrue
from the most recent date to which interest has been paid on the
original notes and will be computed on the basis of a 360-day
year comprised of twelve 30-day months.
2015 Notes
The 2015 notes mature on January 15, 2015. Interest on the
2015 notes will accrue at 8-5/8% per annum and will be payable
semi-annually in arrears on January 15 and July 15, commencing,
in the case of the exchange notes, on July 15, 2006. The
Company will make each interest payment to the holders of record
of the 2015 notes on the immediately preceding January 1 and
July 1. Interest on the 2015 notes that are exchange notes
will accrue from the most recent date to which interest has been
paid on the original notes and will be computed on the basis of
a 360-day year comprised of twelve 30-day months.
A full-text copy of the Prospectus is available for free at
http://ResearchArchives.com/t/s?56b
Intelsat, Ltd., offers telephony, corporate network, video and
Internet solutions around the globe via capacity on 25
geosynchronous satellites in prime orbital locations. Customers
in approximately 200 countries rely on Intelsat's global
satellite, teleport and fiber network for high-quality
connections, global reach and reliability.
* * *
As reported in the Troubled Company Reporter on Nov. 16, 2005,
Intelsat, Ltd.'s announcement of its results for the third
quarter ended Sept. 30, 2005, does not affect the ratings of
Intelsat, wholly owned subsidiary Intelsat (Bermuda), Ltd., and
operating subsidiary Intelsat Subsidiary Holding Company Ltd.
The company remains on Rating Watch Negative.
As reported in the Troubled Company Reporter on Sept. 1, 2005,
Moody's Investors Service has affirmed Intelsat, Ltd.'s ratings
and changed the outlook for all ratings to developing from
negative following the company's announcement that it is
acquiring PanAmSat for $3.2 billion plus the assumption of
PanAmSat's debt ($3.2 billion). The transaction, which Moody's
expects 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 anticipates
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 has 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 Million Sr. Unsecured Discount Notes due 2015 --
B3
Moody's has changed the outlook to developing from negative.
===========
B R A Z I L
===========
AES CORP: Opens Redondo Station's 480-Megawatt Unit 8
-----------------------------------------------------
Reuters reports that AES Corp.'s 480-megawatt unit 8 at the
Redondo natural gas-fired power station in California returned
to service as planned.
The company shut the unit by Jan. 31 for the work.
The 1,310 MW Redondo plant is located in Redondo in Los Angeles
County, about 20 miles south of downtown Los Angeles. There are
four units at Redondo, including two 175 MW units 5 and 6, and
two 480 MW units 7 and 8. One MW powers about 800 homes.
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 DA AMAZONIA: Fitch Affirms Low B Currency Ratings
-------------------------------------------------------
Fitch Ratings has affirmed Banco da Amazonia S.A.'s Long-Term
Local and Foreign Currency ratings at 'BB-'. At the same time,
Fitch has affirmed the bank's Local and Foreign Currency Short-
Term ratings of 'B', and the National Long- and Short-Term
ratings of 'A+ (bra)' and 'F1(bra)', respectively. The bank's
individual rating of 'D' and its Support rating of '4' were also
affirmed. The outlook for all Long-Term ratings is Stable.
The foreign and local currency ratings of Basa are derived from
the support it has and which Fitch expects it would continue to
receive from its primary shareholder, Brazil's Federal
government. This support also reflects the bank's importance to
Brazil's North Region. The Individual rating considers its high
dependence on fees generated by the Constitutional Financing
Fund of the North; its slight deterioration in asset quality;
the fall in its time deposits; and Basa's ambitious strategy of
growth and cultural changes in the bank, which is positive but
may only have concrete effects in the medium to long term.
Despite the support the federal government showed in 2001
through the Federal Financial Institution Revitalization
Program, the probability of support is limited by the potential
restrictions on its capacity to do so, given Brazil's relatively
low sovereign rating. Considering Basa's size and number of
clients and the potential impact its failure would have on
Brazilian society, the economy, and the financial system as a
whole, Fitch believes sovereign support for Basa in the event of
systemic risk or turmoil would be forthcoming only after other,
larger government-owned banks have been assisted.
Basa's long-term ratings would suffer from deterioration of
sovereign ratings. Its Individual ratings could benefit from a
diversified revenue stream, and strong economic performance,
while potential downside to the individual rating is limited due
to the bank's strong capital base.
Basa, founded in 1942, is 96.92% controlled by the federal
government. It acts as the development bank for Brazil's North
Region, focusing on rural producers and mainly on micro and
small companies. It has 108 service points (94 branches).
Fitch's National Ratings provide a relative measure of
creditworthiness for rated entities in countries where the
sovereign's foreign and local currency ratings are below 'AAA'.
National ratings are not internationally comparable since the
best relative risk within a country is rated 'AAA' and other
credits are rated only relative to this risk. They are
signified by the addition of an identifier, for the country
concerned, such as 'AAA (bra)' for national ratings in Brazil.
COMPANHIA ENERGETICA: S&P Assigns 'CCC' Corporate Credit Rating
---------------------------------------------------------------
Standard and Poor's Ratings Agency assigned 'CCC' rating on
Companhia Energetica de Sao Paulo's corporate credit with a
stable outlook.
Major Rating Factors
Strengths:
-- Tight liquidity and limited financial flexibility to deal
with obligations;
-- High leverage and significant refinancing needs;
-- Still-significant exposure to currency mismatch, no
hedging nstruments are in place, even though the
participation of foreign currency debt has decreased
substantially; and
-- Exposure to the new and evolving regulatory environment.
Weaknesses:
-- Low-cost production, demonstrated by its estimated
marginal production cost of approximately BRL20 (US$9) per
megawatt-hour -- significantly lower than the current
contract price average, about BRL70 (US$32) per
MWh -- and its strong EBITDA margin (60%);
-- Operating efficiency of its plants, which have a long
track record of 93% average availability;
-- Proven capacity to operate its six power plants, located
in the state of Sao Paulo; and
-- Proximity to main consumer centers.
Rationale
The ratings on Companhia Energetica de Sao Paulo aka CESP
reflect the company's vulnerability to significant maturities in
the medium to long term, lack of capacity to produce free cash
flow to amortize debt, and consequent high refinancing risk.
CESP also has a highly leveraged capital structure and
significant exposure to currency volatility -- as some 46% of
total debt is denominated in US dollars.
These weaknesses are partially mitigated by CESP's competitive
low-cost production of electricity -- approximately BRL20-30 per
megawatt-hour, compared with the average contract price of about
BRL70/MWh -- and consequent strong EBITDA margins, operating
efficiency, and favorable long-term contracts.
During 2005, 25% of the total energy volume sold by CESP --
about 900MW -- was negotiated in the spot market at lower prices
(BRL20/MWh) than for its long-term contracts (BRL70-80/MWh).
According to S&P's expectations for 2005, such exposure will
negatively affect CESP's EBITDA, which is projected to reach
BRL1.4 billion, compared with the BRL1.5 billion posted in 2004.
In addition to the weaker cash generation, the company has a
significant amount of total debt -- with unfavorable terms and
conditions -- and interest, and thus is expected to post very
poor annual debt service coverage ratios: EBITDA to total debt
and EBITDA interest coverage are expected to reach 14% and 1.6x,
respectively -- as in 2004, because total debt and the interest
burden have decreased somewhat with the appreciation of the
local currency.
CESP has already closed new long-term energy contracts from 2006
in the energy auctions, with industrial clients and the
distribution companies. Even though the company has a favorable
contract position, revenues and EBITDA are expected to be stable
due to the lower energy prices negotiated for 2006.
Consequently, financial ratios will be more stable in 2006 than
in 2005.
Although CESP will have more predictable cash generation from
2006, its future receivables are tied in part to debt
instruments, and this automatically reduces the company's cash
generation available to deal with its interest and debt
maturities. Although these instruments are not considered debt,
the company still has a high volume of annual maturities to
manage.
CESP took several actions during 2005 to deal with its BRL2.3
billion debt, including refinancing with Banco Nacional de
Desenvolvimento Economico e Social and the new debt instruments
secured by the company's receivables. These receivable-backed
securities -- receivables investment funds and bank loans --
trap CESP's revenue flow, directly affecting the company's
available cash to meet debt requirements. These commitments are
BRL550 million in 2006, BRL400 million in 2007, and BRL300
million in 2008.
From 2006, CESP will continue to face the challenge of
renegotiating its huge debt maturities with creditors. From the
state government side, Standard & Poor's Ratings Services
expects a capitalization of BRL1 billion to BRL1.5 billion from
the sale of state-owned transmission company Companhia de
Transmissao de Energia Eletrica Paulista aka CTEEP, as well as
willingness to help the company find options for facing debts
with public entities -- Centrais Eletricas Brasileiras S.A.,
BNDES and National Treasure -- which represent 50% of CESP's
total debt. However, S&P does not expect financial support from
the state government for any bank and capital market debts.
CESP is Brazil's and Latin America's third-largest electricity
generation company, with 7,456MW of installed capacity and
3,794MW of assured energy. The company operates six
hydroelectric power plants and is responsible for 52% of the
total installed capacity of the state of Sao Paulo. CESP is a
public company whose primary shareholder is the state government
of Sao Paulo, with 74% of the voting common shares.
Short-term credit factors
Lack of liquidity and limited financial flexibility to meet
interest and amortization requirements in the short term are the
main rating factors for CESP. Even though the company
refinanced the entire amount of its 2005 maturities, it faces
the challenge of dealing with about BRL2.8 billion (US$1.3
billion) of debt due in 2006.
To deal with its maturities, CESP will rely on the BRL1 billion
to BRL1.5 billion -- US$450 million to US$675 million -- in
proceeds from the CTEEP sale, which is expected to conclude by
mid-2006. Doubts still remain, however, as to whether these
initiatives will provide a timely solution.
The company will also try to return to the international capital
markets, with a bond issue of up to US$300 million -- it already
has a firm commitment for about US$150 million -- but it is
still uncertain of how the market will perceive its risk.
Additional sources of funding to meet maturities are not
completely defined, and further negotiations with existing
creditors might be necessary. However, S&P expects CESP to
manage its debt maturities in the short term.
On the other hand, CESP's significant amortization schedule will
be highly vulnerable in the medium to long term because of high
refinancing risk.
Capital requirements are expected to be very low, about BRL100
million per year. From now on, investments will basically go
toward maintenance of power plants and are expected to come from
the company's internal cash generation.
Liquidity
CESP's main rating factors are its lack of liquidity and its
limited financial flexibility to meet interest and amortization
requirements. The company entirely refinanced its 2005
maturities, but continues to face about BRL2.8 billion of debt
due in 2006.
To deal with its maturities, CESP will rely on the BRL1 billion
to BRL1.5 billion in proceeds from the CTEEP sale, which should
conclude by mid-2006. Doubts still remain, however, as to
whether these initiatives will provide a timely solution for
CESP.
The company will also try to return to the international capital
markets with a bond issue of up to $300 million -- it already
has a firm commitment for about $150 million -- but it is still
uncertain of how the market will perceive its risk. Additional
sources of funding to meet maturities are not completely
defined, and further negotiations with existing creditors might
be necessary. However, S&P expects CESP to manage its debt
maturities in the short term.
On the other hand, there is a high degree of vulnerability with
CESP's significant amortization schedule in the medium to long
term, because of high refinancing risk.
Capital requirements are expected to be very low, about BRL100
million per year. From now on, investments will be basically
for maintenance of power plants.
In Standard & Poor's view, CESP's funds from operations will
decrease, reaching about BRL500 million in 2005 -- compared with
BrR580 million in 2004 -- basically because of the higher volume
of interest paid during the year and the expected decline in
revenues due to lower prices at Camara de Comercializacao de
Energia Eletrica, where 25% of CESP's energy was commercialized.
FFO to total debt and FFO to interest will reach about 5% and
1.6x, respectively, as in 2004. Financial ratios will be more
stable in 2006 than in 2005.
Outlook
The stable outlook reflects CESP's increased volume of formal
energy contracts, which eliminates its exposure to the spot
market and thus allows Standard & Poor's to more accurately
predict the company's revenues and cash flow. A deterioration
of cash flow protection measures is no longer expected.
Some improvement in these indicators is expected from 2007, with
FFO to total debt and FFO interest coverage possibly reaching
about 7% and 1.8x, respectively. Moreover, S&P believes that
the state of Sao Paulo is somewhat willing to help CESP resolve
its debt profile for a future privatization.
The outlook could be revised to positive depending on the
success of the company's debt restructuring over coming years.
On the other hand, the outlook could be revised to negative or
the company downgraded if it fails to renegotiate its debt.
EMBRATEL: Narrows Net Loss to US$7.78 Million in 4Q 2005
--------------------------------------------------------
Reuters reports that Embratel Participacoes incurred 16.9
million reais ($7.78 million) of net loss for the fourth quarter
in 2005 after a one-time provision hit its bottom line. The
result compared with a loss of 213.1 million reais in the same
period in 2004 and was worse than market expectations. Most
analysts were expecting Embratel to post a quarterly profit.
Embratel, a unit of Mexican telecoms giant Telefonos de Mexico
said its earnings were affected by a 66 million reais provision
for back payments to a government fund for interconnection
costs.
For the whole of 2005, Embratel posted a net profit of 174.3
million reais, reversing a loss of 339.3 million reais in 2004.
In the fourth quarter, net revenue rose 4.2% from a year earlier
to 1.94 billion reais, helped by the consolidation of Telmex do
Brasil into Embratel's earnings. Telmex do Brasil is a data
transfer company formerly known as AT&T Latin America.
Revenue from data transfer services increased by 16% in the
quarter from the same period in 2004, to 70 million reais, while
revenue from long-distance services slipped 4% to 49 million
reais.
On the operating level, earnings before interest, taxes,
depreciation and amortization, a measure of cash flow, climbed
5.2% to 354.2 million reais from 336.9 million reais in the
fourth quarter of 2004.
Embratel Participacoes is Brazil's leading long-distance
carrier.
Embratel Participacoes is rated by Moodys:
* local currency issuer rating -- B1; and
* senior unsecured debt -- B2.
GERDAU: Announcing New Company Head in Second Half of 2006
----------------------------------------------------------
Gerdau S.A.'s Chief Executive Jorge Gerdau Johannpeter, as
previously disclosed, will be stepping down this year as the
company's head but will remain as the chairman of the board of
directors.
In a conference call held last week, Frederico Gerdau
Johannpeter, Gerdau's Senior Vice President, said that the
company will announce in the second half of 2006 the selection
of its new president and vice president.
"No names have been finalized," Frederico Johannpeter said.
"Gerdau president Jorge Gerdau Johannpeter and I will leave the
company's management although we will remain on Gerdau's board."
Headquartered in Porto Alegre, Brazil, Gerdau S.A. --
http://www.gerdau.com.br-- produces and distributes crude
steel and related long rolled products, drawn products, and long
specialty products. In addition to Brazil, Gerdau operates in
Argentina, Canada, Chile, Colombia, Uruguay and the United
States.
Gerdau SA's $600 million 8-7/8% perpetual bond is rated Ba1 by
Moody's, BB+ by S&P, and BB- by Fitch.
===========================
C A Y M A N I S L A N D S
===========================
HENCHY LIMITED: Final General Meeting Scheduled on February 24
--------------------------------------------------------------
Henchy Limited's final general meeting will be held on Feb. 24,
2006, at the offices of Maples Finance Limited, Queensgate
House, George Town, Grand Cayman, Cayman Islands. The
liquidator will present during the meeting accounts on the
company's wind up process.
Messrs. Hugh Thompson and Richard Gordon, the joint voluntary
liquidators, can be reached at:
Maples Finance Limited
P.O. Box 1093GT, Grand Cayman
Cayman Islands
HOURGLASS FUND: Liquidator to Explain on Wind Up Process
--------------------------------------------------------
Hourglass Fund (Cayman), Ltd.'s liquidator -- Q&H Nominees --
will explain the company's wind up process during the final
meeting of the company's shareholders on Feb. 27, 2006, at the
registered office of the company, at 10:00 a.m.
The liquidator will be authorized to retain the records of the
company for a period of six years from the company's
dissolution.
Any person who is entitled to attend and vote at this meeting
may appoint a proxy to attend and vote in his stead. A proxy
need not be a member or creditor.
As reported by Troubled Company Reporter on Feb. 1, 2006, Q&H
Nominees Ltd. will stop accepting and verifying claims of the
company's creditors on Feb. 24, 2006.
Hourglass Fund started liquidating its assets on Dec. 27, 2006
and selected Q&H Nominees as its voluntary liquidator.
Q&H Nominees Ltd. can be reached at:
P.O. Box 1348, George Town
Grand Cayman, Cayman Islands
Greg Link
Telephone: 949 4123
Facsimile: 949 4647
IMAGI INVESTMENTS: Wind Up Process to be Reported on February 24
----------------------------------------------------------------
The wind up process of Imagi Investments Limited will be
reported on Feb. 24, 2006, during the final general meeting.
The meeting will be held at the offices of Smith Barney Private
Trust Company (Cayman) Limited, CIBC Financial Centre, George
Town, Grand Cayman.
As reported by Troubled Company Reporter on Feb. 6, 2006, Imagi
Investments Limited entered voluntary liquidation on Jan. 12,
2006. Creditors have until Feb. 24, 2006, to present their
claims to the liquidator.
Buchanan Limited, the voluntary liquidator, can be reached at:
P.O. Box 1170, George Town
Grand Cayman, Cayman Islands
MINOT CAPITAL: Shareholders' Final Meeting Set on February 27
-------------------------------------------------------------
The final meeting of the shareholders of Minot Capital Fund
(Offshore)Ltd. -- company in voluntary liquidation -- will be
held on Feb. 27, 2006, at 10:00 a.m., at the registered office
of the company.
During the meeting, Q&H Nominees Ltd. -- the liquidator -- will
show the manner of liquidation process. The liquidator will
then be authorized to retain the company's records for about six
years, starting from the dissolution of the company.
Any person who is entitled to attend and vote at this meeting
may appoint a proxy to attend and vote in his stead. A proxy
need not be a member or creditor.
As reported by Troubled Company Reporter on Feb. 1, 2006, the
company began liquidating assets on Dec. 12, 2005, and appointed
Q&H as liquidators. Claims verification will end on Feb. 24,
2006.
Q&H Nominees Ltd., the voluntary liquidator, can be reached at:
P.O. Box 1348, George Town
Grand Cayman, Cayman Islands
Greg Link
Telephone: 949 4123
Facsimile: 949 4647
NEOMAGIC INTERNATIONAL: Wind Up Process to be Reported
------------------------------------------------------
The wind up process of Neomagic International will be reported
on March 13, 2006, during the final general meeting of the
company's shareholder. The meeting is scheduled at 10:00 a.m.,
at the offices of Deloitte, Fourth Floor, Citrus Grove, P.O. Box
1787, George Town, Grand Cayman.
During the meeting, the liquidators will be authorized to keep
the records of the company for about five years, starting from
the dissolution of the company.
Any person who is entitled to attend and vote at this meeting
may appoint a proxy to attend and vote in his stead. A proxy
need not be a member or creditor.
As reported by Troubled Company Reporter on Dec. 19, 2005,
Neomagic International entered voluntary liquidation on Nov. 11,
2005. Messrs. Ian Wight and Stuart Sybersma of Deloitte were
appointed as liquidators. Verification of claims lasted until
Jan. 12, 2006.
Mr. Stuart Sybersma, the joint voluntary liquidator, can be
reached at:
P.O. Box 1787 GT, Grand Cayman
Cayman Islands
Joshua Taylor, Deloitte
Telephone: (345) 949-7500
Facsimile: (345) 949-8258
QUADIX VOLATILITY: Wind Up Process to be Reported on February 27
----------------------------------------------------------------
The wind up process of Quadix Volatility Fund -- company in
voluntary liquidation -- will be reported on Feb. 27, 2006,
during the final meeting set for the company's shareholder. The
meeting will be held at Finaltis, 30 rue d'Astorg, 75008 Paris,
France, at 10:00 a.m.
During the meeting, the liquidator will also be authorized to
retain the records of the company for a period of three years
Any person who is entitled to attend and vote at this meeting
may appoint a proxy to attend and vote in his stead. A proxy
need not be a member or creditor.
As reported by Troubled Company Reporter on Feb. 7, 2006, Quadix
Volatility Fund's creditors are given until Feb. 24, 2006, to
prove their debts and claims to the liquidator.
Quadix Volatility Fund entered voluntary liquidation on Dec. 22,
2005, and appointed Ms. Muriel Bonnet as the company's
liquidator.
Ms. Muriel Bonnet, voluntary liquidator, can be reached at:
Finaltis, 30 rue d'Astorg
75008 Paris, France
SOLECTRON GLOBAL: Fitch Rates Proposed US$150MM Sr. Notes at B+
---------------------------------------------------------------
Fitch Ratings has assigned a 'B+' rating to Solectron Corp.'s
proposed $150 million of senior subordinated notes due 2016.
The proposed private placement notes offering under Rule 144A
will be issued by Solectron Global Finance LTD's (Cayman), an
indirect, wholly-owned finance subsidiary of Solectron formed
for the sole purpose of issuing debt securities. Solectron will
guarantee the proposed notes on a senior subordinated basis.
Net proceeds from the offering, together with available cash,
are expected to be used to repay approximately $150 million of
7.375% senior unsecured notes due March 1, 2006. Pro forma for
this refinancing, Solectron's total debt is expected to be
approximately $705 million, comprised primarily of the
aforementioned proposed note offering; $450 million 0.5%
convertible senior notes due February 2034; and $63 million
7.97% subordinated notes due November 2006.
===============
C O L O M B I A
===============
BANCOLOMBIA: Discloses 93% Lower Profits in January
---------------------------------------------------
Bancolombia, Colombia's largest bank, said in a prepared
statement that its unconsolidated net income decreased 93.4% to
49 billion pesos (US$21.8 million) in January compared to
December 2005.
Assets totaled 23.8 trillion pesos at the end of the month and
deposits were 14.3 trillion pesos. Total shareholders' equity
amounted to 3.28 trillion pesos.
Bancolombia's unconsolidated past due loan ratio was 3.22% at
January 31.
* * *
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.
ECOPETROL: 2006 Daily Oil Output Expected to Fall by 1.4%
---------------------------------------------------------
Ecopetrol S.A. told Business News Americas that the company
expects the country's oil production to fall 1.4% to 519,000
barrels of oil a day this year compared to 526,162 barrels per
day in 2005 due to lower production from association contracts.
Colombia's production has been dropping since 1999, initially at
a rate of 6-9% a year as a result of lack of exploration in the
1990s, Business News relates. Since 2003, the country has
succeeded in slowing the production decline largely as a result
of the increased exploration requirements in association
contracts.
Colombia's oil production fell 0.4% in 2005 from the previous
year. Still, exploration activities helped the country exceed
its 2005 production goal of 510,000b/d by more than 16,000b/d,
Business News states.
Last year 35 wells were completed, the most in Colombia's
history compared to 21 wells in 2004, 28 wells in 2003 and 10
wells in 2002, Business News states.
Ecopetrol estimates that 40 wells will be drilled through 2006.
An Ecopetrol spokesperson explained to Business News that the
fall in associated production stems from the fact that the
largest most productive fields are those covered by association
contracts. They are also the country's oldest fields and are
entering their declination stage.
Ecopetrol's own production is increasing because the fields are
younger and the company is making significant investments in new
wells including horizontal wells, the spokesperson told Business
News.
The spokesperson pointed to the Llanos basin's Castilla field,
wholly operated by Ecopetrol, which had increased production to
58,000b/d by end-2005 from 40,000b/d in 2004 as a result of
horizontal drilling. Ecopetrol's direct production would
continue to rise in 2006, while production under association
contracts will fall once more.
Ecopetrol is an integrated oil Company majority-owned by the
Colombian government. The Company's activities include
exploration for and production of crude oil and natural gas and
refining, transportation, distribution, and marketing of refined
products. Ecopetrol is Latin America's fourth-largest integrated
oil concern.
* * *
Fitch assigns a BB rating on Ecopetrol's foreign currency long-
term debt.
===================================
D O M I N I C A N R E P U B L I C
===================================
FALCONBRIDGE: Presents Development Projects Update
--------------------------------------------------
In a regulatory filing with the U.S. Securities Exchange
Commission, Falconbridge Limited gave updates on its development
projects:
Copper Projects
Collahuasi
Construction of a $36 million molybdenum recovery circuit was
completed in the fourth quarter of 2005, ahead of schedule and
under budget. Production of molybdenum in concentrate is
expected to be approximately 3,800 tonnes in 2006. Production
will increase over time as a result of the increase in
molybdenum grades at depth in the Rosario orebody.
A debottlenecking project that could potentially increase the
nominal design capacity of the sulphide circuit is currently
underway. The objective is to maximize production from the
present asset base with minimum deployment of capital.
Lomas Bayas Expansion
The Fortuna de Cobre deposit, adjacent to Lomas Bayas, could
expand production or extend the mine life by five years to 2020.
A pre-feasibility study was initiated during the year and
development of an exploration tunnel began in March 2005.
Construction of the pilot plant was completed in August 2005.
The metallurgical test program was initiated in the fourth
quarter of 2005. Fortuna de Cobre is an attractive growth
opportunity because of its low stripping ratio, proximity to
existing infrastructure and favourable mineralogy and leaching
kinetics. Falconbridge has the option to purchase Fortuna de
Cobre by mid-2006.
Kidd Mine D Project
Production from block 2 began in the fourth quarter of 2005 and
production from block 3 is expected to begin in the third
quarter of 2006. The capital investment is now expected to
total Cdn$684 million. The CAPEX associated with this project
increased following the approval of a new target schedule and
budget that became the project baseline in April 2005, as well
as escalation associated with delineation drilling that will
take place in 2006. At the end of 2005, overall project
progress was 90% based on this new target schedule and budget.
El Morro
Favourably situated close to two copper smelters, the deposit is
a large copper porphyry with high gold co-product credits that
would result in low net copper cash costs. El Morro also
features a high-grade resource core and a low pre-stripping
ratio, as well as further exploration potential. In 2005,
Falconbridge paid $10 million to earn a 70% interest in the El
Morro property from Metallica Resources Inc. In 2006,
Falconbridge expects to begin feasibility-level work, including
a 30,000 metre drilling program for in-fill drill and
metallurgical test work.
El Pachon
El Pachon is an attractive copper mine development project
situated less than five kilometres from the Chilean border and
the Las Pelambres copper mine. It features a high grade core,
unusually low strip ratio and favourable metallurgical
recoveries which will substantially reduce mining and capital
costs. The orebody has the potential to produce over 200,000
tonnes of copper-in-concentrate per year over a life of more
than 20 years. During 2005, a conceptual study of the El Pachon
project was completed. Two bulk samples were extracted from an
existing exploration tunnel and processed, engineering studies
were completed and environmental information was compiled to add
to the environmental base line. In addition, important advances
were realized on El Pachon's specific protocol within the Mining
Integration Treaty between Chile and Argentina. In 2006, work
is expected to progress in road re-opening, field studies,
engineering studies and environmental data collection.
Nickel Projects
Koniambo Project
In December 2005, Falconbridge, along with its 51% partner
Societe Miniere du Sud Pacifique S.A. fulfilled the requirements
of the Bercy Accord, including completion of a positive
technical feasibility study and placement of firm orders of at
least $100 million for equipment and services relating to the
project. This will result in the transfer of the ownership of
the Koniambo property to Koniambo Nickel SAS, a company owned
49% by Falconbridge and 51% by SMSP. In addition, Falconbridge
and SMSP reached an agreement on the financing framework for the
project. Under the terms of the financing agreement, the common
equity ownership of Koniambo remains at 51% and 49%
(Falconbridge); Falconbridge has agreed to assume responsibility
for financing of up to 100% of the project; cash generated by
the project will be exclusively dedicated to debt retirement
prior to shareholder distributions; and, the capital cost to be
financed is $2.2 billion (in 2004 dollars). This excludes
working capital and interest during construction.
Next steps for Koniambo include advancing detailed engineering
in 2006. Once the necessary permits are in place and the
details of the financing are finalized, Falconbridge expects the
start of the construction phase in 2007. Based on the
foregoing, start-up of the operation is expected to occur in
2009/2010.
Raglan Mine Optimization Project
The conversion of the mill from autogenous to semi-autogenous
grinding was completed in October 2005. This conversion will
increase the level of annual throughput to approximately one
million tonnes of ore per year and increase the mill's ability
to process harder ore. This project was completed on schedule
and on budget with total project investment of Cdn$33 million.
Phase two, expected to be completed in early 2008, will focus on
utilizing increased mill capacity by expanding site
infrastructure and ore production to allow for the mining,
milling and processing of 1.3 million tonnes of ore annually,
resulting in approximately 30,500 tonnes of annual contained
nickel production.
Nickel Rim South Project
Vent shaft sinking, which began in February 2005, was at 1,092
metres at the end of 2005. Main shaft sinking began in April
2005 and was at 467 metres at the end of 2005.
Kabanga Project
In April 2005, Falconbridge announced a joint-venture agreement
with Barrick Gold Corporation on the Kabanga nickel deposit,
located in northwestern Tanzania. Under the terms of the
agreement, Falconbridge acquired a 50% indirect joint-venture
interest in respect of the Kabanga Project for $15 million and
will be the operator of the joint venture. Over the next
several years, Falconbridge expects to fund and conduct a
further $50-million work plan. Current work, including
exploration and infill diamond drilling, metallurgical testing
and engineering study work will lead to the completion of a
scoping study in the first quarter of 2006.
Exploration Update
Since the end of the previous quarter, Falconbridge has provided
an exploration update on Collahuasi's Rosario Oeste zone, which
contains an Inferred Mineral Resource estimated at 248 million
tonnes grading 1.54% copper at a 0.4% copper cut-off. These
exploration results demonstrate the potential of developing
further resources at Collahuasi. The mineral resource is
located only 300 metres from the projected edge of the Rosario
open pit.
Headquartered in Toronto, Ontario, Falconbridge Limited --
http://www.falconbridge.com/-- produces nickel products. It
owns nickel mines in Canada and the Dominican Republic; it
operates a refinery and sulfuric acid (used in refining) plant
in Norway. It is also a major producer of copper (38% of sales)
through its Kidd mine in Canada and its stake in Chile's
Collahuasi mine and Lomas Bayas mine. Its other products
include cobalt, platinum group metals, and zinc.
* * *
Falconbridge's CDN$150 million 5% convertible and callable bond
due April 30, 2007, carries Standard & Poor's BB+ rating.
=====================
E L S A L V A D O R
=====================
AES CORP.: Building US$450 Million Coal-Fueled Power Plant
----------------------------------------------------------
The AES Corporation disclosed that it will invest US$450,000,000
to construct a coal-fueled power plant in El Salvador, Reuters
reports.
Silvia Salazar told Reuters that construction of the plant will
begin this year and is expected to be completed by 2009.
The 250-megawatt plant will be the first in El Salvador to rely
on coal, Ms. Salazar told Reuters.
AES has a 78% share in El Salvador's market and owns the
country's five electricity distribution companies.
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.
=================
G U A T E M A L A
=================
BANCO INDUSTRIAL: Achieves 28% Increase in 2005 Earnings
--------------------------------------------------------
Business News Americas reports Banco Industrial's 2005 financial
results.
Being Guatemala's largest bank, Banco Industrial reported a 28%
increase in 2005 earnings on the back of strong lending
revenues.
Earnings were 247 million quetzales (US$32.4 million) compared
with 193 million quetzales in the year-ago period.
Net interest income grew 17% to 544 million quetzales, while net
fee revenues fell 8% to 62.1 million quetzales.
Revenues from dividends and equity investments rose 7% to 91.6
million quetzales.
Assets increased 18% to 17.9 billion quetzales, with performing
loans up a similar amount to 7.88 billion quetzales. Deposits
expanded 14% to 12.4 billion quetzales.
Industrial has moved into consumer banking in recent years in
order to diversify its loan book, which has traditionally been
heavily weighted toward commercial lending. The bank had a 20%
market share by assets at year-end.
Parent company Corporacion BI also controls Guatemala's second
largest insurance company Seguros El Roble.
* * *
As previously reported on Nov. 10, 2005, Standard & Poor's
Ratings Services affirmed its 'BB-/B' counterparty credit and CD
ratings on Banco Industrial S.A. The outlook is stable. At the
same time, it affirmed its 'BBB-' bank survivability assessment.
The ratings assigned to Banco Industrial S.A. are limited by
the bank's relatively low adjusted capitalization levels, the
moderate real growth of the Guatemalan economy, and a
regulatory framework for the Guatemalan financial system that
is relatively weaker than those of other Central American
countries where Standard & Poor's rates banks. "The ratings
consider the bank's leading market position and its financial
profile that leverages on adequate profitability levels and
good asset quality indicators," said Standard & Poor's credit
analyst Francisco Suarez.
The 'BBB-' bank survivability assessment takes into
consideration Banco Industrial's relevance to Guatemala's
banking system, and its good liquidity levels. Standard &
Poor's bank survivability assessment is a current opinion on
the likelihood that over the medium term, a bank will continue
to operate either directly or through a successor organization
regardless of whether it is solvent or insolvent or is paying
all of its obligations on a timely basis or not. The
survivability assessment, however, does not itself comment on
which particular functions the bank might continue to perform
and which it may cease in a stress situation.
As the largest bank in Guatemala, with a 20% market share,
Banco Industrial benefits from a large, well-diversified, and
stable deposit base, strong brand-name recognition, and the
largest branch network throughout Guatemala. Concentration in
the Guatemalan banking industry is high, as the seven largest
banks concentrate 71% of total assets. The importance of Banco
Industrial to Guatemala's payment system is high, as 24% of
total transactions in the country are done through its network,
and tax payments account for 34% of the total. As of June 2005,
Banco Industrial and subsidiaries had assets of Q.20,921
million ($2,699 million at Q.7.755 to $1), of which gross loans
accounted for 45% of total assets.
=============
J A M A I C A
=============
NCB JAMAICA: Fitch Initiates Low B Ratings with Stable Outlook
--------------------------------------------------------------
Fitch Ratings has initiated rating coverage on Jamaica's
National Commercial Bank Jamaica Ltd. and assigned a stable
rating outlook.
Long-term foreign currency was given a 'B+' rating; long-term
local currency a 'B+'; and short-term foreign currency was given
a 'B'. For short-term local currency the result was a 'B';
individual creditworthiness was assigned a 'D' and support was
assigned a level of '4'.
These ratings reflect NCBJ's dominant domestic franchise,
adequate profitability and capital levels, which are tempered by
the bank's high exposure to the sovereign (65% of assets at the
end of September 2005) and lack of revenue diversification, as
well as a constraining operating environment.
Fitch offers an international credit rating service. The long-
and short-term ratings, along with the Stable Rating Outlook,
are in line with Fitch's view of the creditworthiness of the
Jamaican government. Future rating movements will be highly
contingent upon a change in this view given NCBJ's sizeable
sovereign exposure and the low level of current ratings.
Improvements in the individual rating will be contingent upon
further diversification of NCBJ's balance sheet while sustaining
current profitability, asset quality and capital levels.
Established in 1837, NCBJ is the second largest bank in the
system with market shares of loans and deposits of 29.1 per cent
and 35.1%, respectively, at the end of September 2005. NCBJ
boasts the largest network in Jamaica with 47 branches and 130
ATMs at the end of September 2005 and offers banking services to
all market segments, as well as an array of specialized
financial services through subsidiaries.
===========
M E X I C O
===========
ALESTRA: Discloses 2005 Fourth Quarter Results
----------------------------------------------
Alestra SA posted US$27 million of Ebitda in the fourth quarter
of 2005 compared to US$26 million. Total Ebitda for the year
amounted to US$101 million. Net profit for 2005 was 48 million
pesos (US$4.6 million).
Revenues in fourth quarter totaled US$101 million, 5% higher
than the US$96 million reported in third quarter and 25% more
than US$81 million in fourth quarter of 2004. The company
attributed the rise to an increase in traffic, particularly in
non-long distance services.
Revenue from data, Internet and local telephony services reached
US$45 million in fourth quarter, slightly up from third quarter
and 18% higher than US$38 million in fourth quarter of 2004.
Internet and local telephony services represented 45% of total
revenues.
Alestra's long distance network handled a total of 1.14 billion
minutes in fourth quarter, a 6% increase over the 1.08 billion
minutes in the third quarter and up 39% over the 823 million
minutes in fourth quarter of 2004.
Alestra reduced its net debt at end-fourth quarter of 2005 to
US$302 million compared to US$311 million at end-third quarter
due to the US$6 million principal amortization of 8% senior
notes.
As part of the merger of AT&T and South Western Bell in 2005,
AT&T said it would retain its 49% ownership of Alestra.
Alestra SA is a Mexican broadband, data and voice services
provider Alestra that operates under the AT&T brand.
* * *
As previously reported on Nov. 14, 2005, Fitch Ratings affirmed
Alestra's, S. de R.L. de C.V. foreign and local currency ratings
at 'B-' and revised the Rating Outlook to Negative from Stable.
The rating action applies to approximately $387 million of debt,
including $304 million senior notes due 2010, $46 million senior
notes due 2009, and $37 million senior notes due 2006.
CFE: Receiving Bids for Durango Gas-Fired Project on April 20
-------------------------------------------------------------
CFE aka Comision Federal de Electricidad will receive bids on
April 20 for the construction and operation of the 29 CCC Norte
333MW-450MW natural gas-fired generation project in Durango,
Mexico, a company spokesperson told Business News America.
The contract will be awarded on June 19, 2006, and construction
will start on January 2, 2007, with operations starting up in
2009.
Among those interested in bidding for the contract are:
-- Mitsubishi Corp.,
-- Hitachi,
-- Sumitomo Corporation,
-- Union Fenosa,
-- Andrade Gutierrez,
-- Petrobras; and
-- Transalta .
* * *
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.
=====================
P U E R T O R I C O
=====================
SUNCOM WIRELESS: Inks Napster Mobile Service Pact with Ericsson
---------------------------------------------------------------
SunCom Wireless Holdings signs an agreement with Ericsson to
offer the equipment supplier's Napster Mobile hosted music
service.
Napster Mobile's integrated software application will allow
SunCom customers to search and browse Napster's catalog of
artist images, ringtones and full-length songs via their
wireless handsets and an integrated mobile music player will let
them listen to 30-second previews of songs as well as play music
they purchase, Business News relates.
SunCom Wireless, a unit of U.S. mobile firm Triton PCS, operates
in Puerto Rico and the U.S. Virgin Islands. The company saw a
third quarter net loss of US$117 million compared to a loss of
US$22 million in the same period 2004 as a result of integration
of the recently acquired AT&T Wireless networks.
The company is currently investing US$12.5 million in Puerto
Rico to optimize its voice and data coverage, Business News
states.
* * *
As previously reported on Jan. 25, 2006, Standard & Poor's
Ratings Services placed its ratings on Berwyn, Pennsylvania-
based SunCom Wireless Holdings Inc., including the 'CCC+'
corporate credit rating, on CreditWatch with negative
implications. The 'B-' bank loan rating of Suncom Wireless Inc.
was also placed on CreditWatch with negative implications, but
the bank loan recovery rating of '1' was affirmed and not placed
on CreditWatch, indicating high expectations for full recovery
of principal in the event of bankruptcy or default.
=================
V E N E Z U E L A
=================
CITGO PETROLEUM: S&P Assigns BB Corporate Rating
------------------------------------------------
Standard and Poor's Ratings Services has assigned a 'BB' rating
on CITGO Petroleum Corp.
Rationale
The ratings on CITGO Petroleum Corp. reflect a satisfactory
business risk profile and an aggressive financial risk profile,
limited by the ratings of the company's parent, Petroleos de
Venezuela S.A. aka PDVSA.
CITGO's credit strength as a stand-alone entity is based on the
scale and complexity of its refining operations, which have net
crude processing capacity of 970,000 barrels per day through
three wholly owned fuel refineries, two asphalt refineries, and
-- in a nonoperating position -- a 41% interest in the Lyondell-
CITGO Refining L.P. joint venture.
The company's throughput places it among the largest refiners in
the US CITGO gains substantial competitive advantage from its
ability to process large volumes of heavy, sour crude oils --
which trade at sharp discounts to better-quality crude oil --
into high-margin products, and large average unit sizes that
translate into economies of scale.
The refiner's profitability is limited by the concentration of
its operations in the highly competitive Gulf Coast market,
which usually has the lowest margins in the US Geographic
concentration also exposes the company to the risk of regional
disruption, as demonstrated by recent hurricanes. The credit
effect of interrupted operations at the Lake Charles refinery
was offset somewhat by strong refining margins realized at
CITGO's other facilities.
Standard & Poor's 'BB' rating on CITGO is higher than the 'B+'
corporate credit rating on PDVSA, because of the relative
strength of the refiner's financial profile and the asset
protection afforded to CITGO creditors, if CITGO defaults for
PDVSA-specific reasons -- for example, a Venezuela sovereign
default. Nevertheless, CITGO could be challenged by events
surrounding PDVSA.
CITGO remains highly dependent on PDVSA, due to ownership ties
and also because PDVSA is CITGO's largest crude supplier. The
refiner benefits from the terms of the supply agreements, which
limit margin volatility. Changes in crude deliveries can have
consequences for CITGO's financial performance, depending on the
point in the market cycle. CITGO's liquidity could also be
affected in the event of a supply interruption, because much of
the refiner's crude is delivered under very favorable trade
credit terms, 30 days. As such, Standard & Poor's incorporates
the risk of the refiner suffering from PDVSA's potential
operating and financial difficulties into CITGO's ratings.
Although the intermediate-term outlook for refining margins is
generally favorable, CITGO still faces significant challenges,
primarily the funding of about $800 million, through 2010, of
required investments to meet clean-fuel standards. CITGO's funds
from operations aka FFO should average about $600 million per
year -- translating into about 50% FFO to total debt and about
10% free operating cash flow to total debt -- but volatile
margins and working-capital requirements can cause actual cash
available for capital investment and debt service to vary
widely.
Annual FFO since 2002 has ranged from about $200 million to
about $1 billion.
Standard & Poor's expects CITGO to generate substantial
operating cash flow relative to planned capital expenditures in
2005. However, Standard & Poor's also expects much free cash
flow to be returned to PDVSA through dividends.
Liquidity
CITGO currently has strong liquidity, mainly due to favorable
refining margins, and is supported by a $1.15 billion revolver
that expires in 2010. Access to the revolver is expected to be
limited to about $700 million after considering LOCs issued
under the facility. CITGO has no significant debt maturities
until 2012.
CITGO should be self-financing during most phases of the
refining cycle, assuming that the crude supply from Venezuela is
not interrupted. Under average cyclical margins, CITGO's FFO
should be sufficient to fund its capital expenditures, which the
company estimates will average about $500 million per year
through 2007. However, the volatile and cyclical nature of
refining margins may cause CITGO to periodically draw on its
bank credit facilities to fund ongoing working capital and
capital-investment requirements. In a severe cyclical downturn,
CITGO's annual cash needs -- assuming the refinancing of debt
maturities -- are unlikely to exceed $300 million.
Outlook
The outlook on CITGO is stable. Presently, PDVSA's ratings
limit CITGO's rating, despite a credit profile that would be
commensurate with a higher rating level, and ratings improvement
is unlikely under existing ownership. Factors that could result
in lower ratings include an extended period of reduced refining
margins, unscheduled equipment outages, and overspending
operating cash flow, each of which would negatively affect the
company's business and financial profiles.
PDVSA: Acquires 50% of Ancap Stake in Petrolera
-----------------------------------------------
State-owned firm Petroleos de Venezuela, PDVSA, has purchased
half of Argentine fuel distributor Petrolera del Cono Sur -- a
subsidiary of Uruguay's state oil company Ancap -- for US$15
million, Business News Americas reports. Ancap's 92% stake in
Petrolera was slashed into 46%.
Daniel Martinez, Ancap president, informed that a signing
ceremony should be held within two weeks in Montevideo,
Newswires relates.
Martinez disclosed the planned transaction in a news conference
in Montevideo. According to Business News, Ancap decided the
sale of its shares in Petrolera last year after having tried
various methods to reestablish the company's profitability.
Petrolera posted a US$26 million loss in 2004, while losses in
2005 could be higher due to various liabilities.
Business News reports that Ancap paid some $155 million in 1998
for the Petolera, which had 250 stations at that time. However,
the network was down to 178 this year.
In January, Ancap's CEO Sergio Lattanzio revealed to Business
News that the sale could take 4-6 months. However, Ancap's
development planning department manager -- Alvaro Suarez --
believed that PDVSA's offer was in good timing.
"PDVSA studied the Petrolera assets for eight months, did the
analysis and the paperwork until it all came together, it's not
that Ancap was hurried or PDVSA was hurried," explained Suarez.
"We were given an opportunity and the company that made the
offer was PDVSA: it seemed to us correct to accept it."
Newswires states that the deal with PDVSA came after Ancap
announced in January that it had received 10 separate bids for
Ancap's 178 money-losing service stations operating under Sol
Petroleo.
Martinez told Business News that while the service station chain
had losses in both 2004 and 2005, the Venezuelan stake could
infuse fresh capital and allow greater profitability.
Petrolera lacks oil reserves and refining capacity, which forces
the company to purchase naphtha and diesel from third parties,
reports Business News. It received a US$29 million cash
injection from Ancap in December to pay debts to certain lenders
including Standard Bank London Limited.
Petrolera del Cono Sur is the fifth largest service station
chain in Argentina, with a 4% market share, according to PDVSA.
It also owns one ISO 14001-certified distribution plant and 52
offices. PDVSA expects to sell 145,000 barrels of fuel a month
in Argentina through Petrolera del Cono Sur's 155 gas stations.
Argentine state energy firm Enarsa -- a partner of PDVSA in two
fuel stations in Buenos Airse -- is considering another
partnership with PDVSA in Petrolera.
Business news states that Rafael Ramirez -- Venezuela's energy
and oil minister and PDVSA president -- said that the
acquisition is a decisive step towards energy integration in
South America in a sovereign and independent manner, with total
control over resources, at the same time strengthening PDVSA's
presence on Argentine soil.
Ancap's development planning department manager, Alvaro Suarez,
said the company has yet no plans to sell its remaining 46%
share in Petrolera.
* * *
As previously reported on Feb. 10, 2006, Standard & Poor's
Ratings Services today placed its 'B+' corporate credit rating
for Petroleos de Venezuela S.A. on CreditWatch with developing
implications.
The rating action follows the upgrade of the long-term sovereign
credit rating on the Bolivarian Republic of Venezuela to 'BB-'
from 'B+'. The CreditWatch Developing means that a rating may
be raised, lowered, or affirmed.
"In addition to our ongoing concerns regarding PDVSA's ability
to finance both sustaining capital expenditures and growth
initiatives, the CreditWatch listing reflects the absence of
timely financial and operating information for PDVSA," said
Standard & Poor's credit analyst Jose Coballasi.
"Standard & Poor's expects to resolve PDVSA's CreditWatch
listing in the next couple of months upon a full review of the
issuer's operating & financial prospects."
Through its subsidiaries, PDVSA is engaged in the exploration
and production of crude oil and natural gas (upstream) and the
refining, marketing, and distribution of crude oil, refined
products, and petrochemicals.
PDVSA: Looking at Fresh Drilling Locations
------------------------------------------
PDVSA, aka Petroleos de Venezuela S.A., seeks fresh drilling
points to restart idled rigs in order to compensate for
declining production at some of Venezuela's privately-run
fields, according to Dow Jones Newswires.
Dow Jones says that Venezuelan fields also have an average
annual depletion rate of about 25%, requiring billions of
dollars of investment a year just to keep output stable.
PDVSA's output has declined as a result of political turmoil and
populist spending policies that have limited the amount of oil
revenue going back to into the company's coffers, Dow Jones
relates.
Some drillers are optimistic that operation could increase in
2006.
"I've got four rigs drilling, and two more being repaired to
drill," an executive at Cliff's Drilling told Dow Jones, which
plans to move the repaired rigs to oil fields in Barinas state
by the end of March.
PDVSA claims Venezuela is producing well over 3 million barrels
per day, but industry sources say the company inflates its
numbers by including the production of natural gas and natural
gas liquids in its oil production figures, Dow Jones states.
PDVSA is Venezuela's state oil company in charge of the
development of the petroleum, petrochemical and coal industry,
as well as planning, coordinating, supervising and controlling
the operational activities of its divisions, both in Venezuela
and abroad.
* * *
On Jan. 23, 2005, Fitch Ratings upgraded the local and
foreign currency ratings of Petroleos de Venezuela S.A. aka
PDVSA to 'BB-' from 'B+'. The rating of PDVSA's export
receivable future flow securitization, PDVSA Finance Ltd, was
also upgraded to 'BB+' from 'BB'. In addition, Fitch has
assigned PDVSA a 'AAA(ven)' national scale rating. The Rating
Outlook is Stable. Both rating actions follow Fitch's November
2005 upgrade of Venezuela's sovereign rating.
***********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter - Latin America is a daily newsletter
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Copyright 2006. All rights reserved. ISSN 1529-2746.
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