/raid1/www/Hosts/bankrupt/TCRLA_Public/060515.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, May 15, 2006, Vol. 7, Issue 95
Headlines
A R G E N T I N A
100 MILLAS: Reorganization Proceeds to Bankruptcy
AGUAS ARGENTINAS: Seeking Compensation for Damage by Government
BANCO FRANCES: Expects Loan Portfolio to Grow Up to 42% in 2006
DEVECO SA: Court Approves Reorganization Petition
ELECTRICIDAD ARGENTINA: S&P Puts CCC- Rating on Notes Due 2017
EDUCATIVO PRIVADO: Trustees Submit Individual Reports on June 21
EDWIN GRUNSTEIN: Individual Reports Due in Court on June 23
INDUSTRIA PLASTICA: Proofs of Claim Must be Filed by May 17
LINTEK S.A.: Last Day to File Proofs of Claim Is June 14
MEDIC SALUD: Seeks Court Approval to Reorganize
PETROLGE S.A.: Sets July 26 Deadline for Proofs of Claim Filing
PROSCIUTTO S.A.: Creditors Must Submit Proofs of Claim by May 22
REPSOL YPF: Earns EUR862 Million During First Quarter 2006
TELECOM ARGENTINA: Reports Ps3M of Net Income in First Quarter
B A H A M A S
WINN-DIXIE: Court Allows Deloitte to Render Accounting Services
B E R M U D A
GLOBAL CROSSING: 1Q Invest & Grow Revenue Up 6% to US$286 Mil.
B O L I V I A
REPSOL YPF: Court Cancels Arrest Warrants Against Executives
* BOLIVIA: China Provides US$23-Mil Credit to Mining Sector
* BOLIVIA: State Oil Firm Partnering with Venezuela's PDVSA
B R A Z I L
AES CORPORATION: Unit Reverses Loss in First Quarter 2006
BANCO BMC: Fitch Assigns B- LT Rating on 8.75% US$35 Mil. Issue
BANCO BRASCAN: Fitch Affirms Low B Currency Issuer Ratings
COMPANHIA VALE: Gives Up Voting Rights in MRS Logistica
EMBRATEL PARTICIPACOES: Telmex Launches Public Offer on Shares
GERDAU S.A.: Will Issue 10-Year Bonds on International Markets
GERDAU SA: Fitch Assigns BB+ Rating on Proposed Senior Bonds
GERDAU SA: S&P Assigns BB+ Rating on Proposed US$400-Mil Bonds
UNIBANCO: Registers 30% Increase in First Quarter Profit
C A Y M A N I S L A N D S
ANTIRO CONVERTIBLE (MASTER): Proofs of Claim Filing Ends May 18
ANTIRO FIXED: Last Day for Proofs of Claim Filing Is on May 18
DOUBLE SUCCESS: Holds Final Shareholders Meeting on May 18
JEMKA HOLDINGS: Liquidator Stops Accepting Claims After May 18
MAINSTAY HOLDINGS: Sets Final Shareholders Meeting on May 18
C U B A
* CUBA: Starts Negotiations for Trade Agreement with Mercosur
D O M I N I C A N R E P U B L I C
TAG-IT PACIFIC: Singer Lewak Raises Going Concern Doubt
TAG-IT PACIFIC: Restates 2005 Second & Third Quarter Financials
E C U A D O R
PETROECUADOR: Will Decide on Occidental's Proposal on May 15
G U A T E M A L A
* GUATEMALA: Groups Rally to Support Anti-Free Trade Bill
* GUATEMALA: Transport Group Threatens Fare Hike
H A I T I
* HAITI: Awaits Arrival of 100,000 Barrels of Oil from Venezuela
H O N D U R A S
* HONDURAS: Japanese Study Confirms Oil Find in La Mosquitia
* HONDURAS: Plans to Revitalize Construction Industry
J A M A I C A
KAISER ALUMINUM: Earns US$21.7 Mil. for the Month of March 2006
* JAMAICA: Inks Long-Term Oil Agreement with Trinidad & Tobago
* JAMAICA: Inks Pact With Coimex in Ethanol Plant Construction
M E X I C O
U.S. ANTIMONY: DeCoria Maichel Raises Going Concern Doubt
ZAPOTLAN EL GRANDE: Moody's Assigns Ba2 Rating on Ps65M Loan
N I C A R A G U A
* NICARAGUA: Has Plans to Explore Honduran Oil Fields
P A R A G U A Y
* PARAGUAY: Investors Will Attend Business Round in Venezuela
P E R U
SIDERPERU: ProInversion Will Disclose Auction Winner on June 28
* PERU: Opens Market to All US Beef Products
P U E R T O R I C O
* PUERTO RICO: Officials Agree on US$740 Mil. Loan for Wage
U R U G U A Y
* URUGUAY: Electricity Shortage Won't Affect Supply & Rates
V E N E Z U E L A
CERRO NEGRO: Fitch Downgrades Senior Secured Debt Rating to B+
PETROLEOS DE VENEZUELA: Forms Petroandina Partnership with YPFB
PETROLEOS DE VENEZUELA: Wants to Hold Oil Trade with Italy
PETROLERA HAMACA: Fitch Lowers Senior Secured Debt Ratings to B+
PETROZUATA FINANCE: Fitch Downgrades Senior Debt Ratings to B+
SINCRUDOS DE ORIENTE: Fitch Lowers Senior Debt Ratings to B+
* VENEZUELA: Sends 100,000 Barrels of Oil to Haiti
* VENEZUELA: Will Host Business Round with Paraguayan Investors
- - - - -
=================
A R G E N T I N A
=================
100 MILLAS: Reorganization Proceeds to Bankruptcy
-------------------------------------------------
The reorganization of 100 Millas S.R.L. has progressed into
bankruptcy. Argentine news source Infobae relates that a court
based in Gualeguaychu in Entre Rios ruled that 100 Millas is
bankrupt -- which means the company's assets will be liquidated
and sale proceeds distributed to creditors.
The report adds that the court appointed Liliana Susana Martinet
as trustee.
The debtor can be reached at:
100 Millas S.R.L.
Ruta Nacional 14, Kilometro 53
Gualeguaychu
Entre Rios, Argentina
The trustee can be reached at:
Liliana Susana Martinet
Espana 294 Gualeguaychu
Entre Rios, Argentina
AGUAS ARGENTINAS: Seeking Compensation for Damage by Government
---------------------------------------------------------------
Aguas Argentinas, the former water utility of Buenos Aires,
plans to seek compensation for damage that it claims the
Argentine authorities caused to the firm, according to local
press.
Business News Americas reports that Aguas Argentinas will also
demand the repayment of its ARS144 million concession contract
guarantee.
BNamericas relates that Aguas Argentinas said the government
confiscated its assets when its concession contract was
cancelled in March. Details on the company's claims are
included in files provided to a Buenos Aires court for creditors
proceedings on its heavy debts.
According to the files, Aguas Argentinas' previous controller
-- French company Suez -- decided during a shareholders' meeting
in Paris in April to take legal measures.
La Nacion relates that the documents say, "To Aguas Argentinas,
the procedure [to cancel the concession] did not recognize the
payments outlined in the case of conclusion of the concession
and this constitutes an illegal procedure to confiscate assets."
These actions prevented the orderly transfer of the services and
assets affected in accordance with the guidelines of the
contract, Aguas Argentinas said in the documents.
Since April, Buenos Aires' Court 14 has been processing the
bankruptcy proceedings of Aguas Argentinas, according to
BNamericas.
Aguas Argentinas sought for reorganization before Buenos Aires'
Court No. 17, as reported in the Troubled Company Reporter on
May 12, 2006.
As previously reported, Aguas Argentinas stopped being Buenos
Aires' water and sewerage utility when its contract with Buenos
Aires was revoked on March 21, 2006. It was replaced by AySA, a
state-run company. The concessionaire's contract was rescinded
after negotiations to sell the company collapsed.
BANCO FRANCES: Expects Loan Portfolio to Grow Up to 42% in 2006
---------------------------------------------------------------
Argentina's BBVA Banco Frances sees growth in its loan portfolio
of up to 42% this year, Business News Americas reports.
According to BNamericas, the bank's Investor Relations manager
-- Maria Elena Siburu de Lopez Oliva -- told analysts during a
conference call on Thursday that loans could grow 40-42% by
focusing more on the retail segment.
Ms. Oliva told BNamericas that despite higher interest rates in
Argentina, the company expects the negative real interest rate
environment to be less negative than in the past, so spreads
could suffer a little.
In the first quarter, the bank's lending to the private sector
rose 66.5% to ARS4.336 billion, BNamericas relates. This is due
to stronger lending in both the commercial and consumer
segments.
BNamericas recalls that the loan portfolio of Banco Frances last
year was ARS3.772 billion -- a 65% increase.
Banco Frances' profits increased 26.2% to ARS40.5 million in the
first quarter this year due to higher net financial income and
commission revenues as well as the sale of government bonds,
BNamericas states.
BNamericas reports that net financial income was ARS288 million
-- a 53% boost. Net service income rose 19.7% to ARS100
million.
Operating profit grew 62.7% to ARS206 million while
administrative expenses increased 21.7% to ARS164 million,
according to BNamericas.
The bank posted a 15.4% boost in its deposits, which reached
ARS11.356 billion. Shareholder equity also rose 7.3% to
ARS1.842 billion, BNamericas relates.
BNamericas reveals that the bank decreased its public sector
exposure by 35.5% to ARS4.6 billion in the quarter -- 31% of the
bank's ARS14.908 billion total assets by selling guaranteed
loans and government bonds. The bank said it expects to further
reduce its exposure by 10 percentage points this year to 25% of
total assets by the end of the year.
* * *
BBVA Banco Frances long-term bank deposits carries Moody's
Investor Service' Caa1 rating.
DEVECO SA: Court Approves Reorganization Petition
-------------------------------------------------
A court in Neuquen approved a petition for reorganization filed
by Deveco S.A., according to a report from Argentine daily
Infobae. Gladys Ondicol y Analia Amartino was appointed as
trustee.
Infobae did not state the deadlines for the submission of the
verification claims, the individual and general reports.
The debtor can be reached at:
Deveco S.A.
Buenos Aires 101 Ciudad de Neuquen
Neuquen, Argentina
The trustee can be reached at:
Gladys Ondicol y Analia Amartino
Sargento Cabral 10
Neuquen, Argentina
ELECTRICIDAD ARGENTINA: S&P Puts CCC- Rating on Notes Due 2017
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC-' rating to
the notes to be issued by Argentine holding company Electricidad
Argentina S.A. or EASA, 51% owner of the largest Argentine
electric distributor, Empresa Distribuidora y Comercializadora
Norte S.A. (Edenor) (CCC+/Stable/--), after 99.94% of its
creditors accepted its restructuring proposal for its US$98.2
million defaulted debt. Notes to be issued are par bonds for up
to US$15 million with final maturity in 2017 and discount bonds
for up to US$75 million with final maturity in 2016.
In addition, upon formal completion of EASA's debt restructuring
through the exchange of the defaulted debt for the
aforementioned new bonds, Standard & Poor's plans to assign a
'CCC+' corporate credit rating to EASA.
"EASA depends on fees and dividends from Edenor to honor its
financial debt, so its ratings are inextricably linked to
Edenor's credit quality," said Standard & Poor's credit analyst
Sergio Fuentes. "However, the ratings on the upcoming bonds are
rated two notches below the company's expected corporate credit
rating, reflecting structural subordination of creditors at the
holding company level with regard to debt recovery in a
liquidation scenario," said Mr. Fuentes.
After the exchange, Standard & Poor's expects to assign a stable
outlook to EASA, mainly reflecting the significant reduction of
its consolidated debt and significant extension of debt
maturities. The outlook does not incorporate the potential
tariff increase for Edenor incorporated in the preliminary
agreement with Unidad de Renegociaci¢n y An lisis de Contratos
de Servicios Publicos, the entity created by the government to
renegotiate the concessions for public service companies. This
increase would significantly improve Edenor's profitability and
cash flow as well as result in dividend payments to EASA by
2008.
Ratings could be lowered, however, if Edenor's financial
performance is weaker than projected or if there is no
significant progress with regard to tariffs and the global
renegotiation of its concession contract by mid-2007.
EDUCATIVO PRIVADO: Trustees Submit Individual Reports on June 21
----------------------------------------------------------------
Court-appointed trustees Estudio Contable Eduardo R. Perez and
Jose Omar Abujall will submit in court individual reports on the
validated claims of Instituto Educativo Privado S.R.L.'s
creditors on June 21, 2006, Infobae relates.
Claims of creditors were verified until May 8, 2006.
A general report is expected in court on Aug. 11, 2006.
A court in Resistencia, Chaco, declared the company bankrupt.
The debtor can be reached at:
Instituto Educativo Privado S.R.L.
Ameghino 260 Resistencia
Chaco, Argentina
The trustee can be reached at:
Estudio Contable Eduardo R. Perez
Jose Omar Abujall
Ayacucho 712 Resistencia
Chaco, Argentina
EDWIN GRUNSTEIN: Individual Reports Due in Court on June 23
-----------------------------------------------------------
Court-appointed trustee Ruben Jose Piris will present the
validated claims from Edwin Grunstein S.A.C.I.'s creditors as
individual reports in court on June 23, 2006, Infobae reports.
Mr. Piris stopped verifying claims on May 10, 2006. Creditors
whose claims have not been verified will be excluded from
receiving any distribution that the company will make.
A general report is expected in court on Aug. 21, 2006.
Edwin Grunstein was declared bankrupt by a San Carlos de
Bariloche court in Rio Negro.
The debtor can be reached at:
Edwin Grunstein S.A.C.I.
Avenida 12 de Octubre 2020
San Carlos de Bariloche
Rio Negro, Argentina
The trustee can be reached at:
Ruben Jose Piris
Frey 246
Rio Negro, Argentina
INDUSTRIA PLASTICA: Proofs of Claim Must be Filed by May 17
-----------------------------------------------------------
Court-appointed trustee Mirta Noemi Andrada will stop
validating claims against bankrupt company Industria Plastica
Baires S.R.L. by May 17, 2006, Infobae reports.
A Buenos Aires court handles the company's bankruptcy case.
The trustee can be reached at:
Mirta Noemi Andrada
Malabia 187
Buenos Aires, Argentina
LINTEK S.A.: Last Day to File Proofs of Claim Is June 14
--------------------------------------------------------
Court-appointed trustee Israelson-Kohan will stop
validating claims against Lintek S.A., a company under
reorganization, after June 14, 2006, Infobae reports.
As reported in the Troubled Company Reporter on March 28, 2006,
Lintek S.A. filed a request for reorganization after defaulting
on its debt payments.
A Buenos Aires court handles the company's insolvency case.
The debtor can be reached at:
Lintek S.A.
Hipolito Irigoyen 1544
Buenos Aires, Argentina
The trustee can be reached at:
Israelson - Kohan
Ortiz de Zarate 6450 Mar del Plata
Buenos Aires, Argentina
MEDIC SALUD: Seeks Court Approval to Reorganize
-----------------------------------------------
Medic Salud S.A., a company operating in Buenos Aires, has
requested for reorganization after failing to pay its
liabilities.
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 debtor can be reached at:
Medic Salud S.A.
Avenida Santa Fe 1845
Buenos Aires, Argentina
PETROLGE S.A.: Sets July 26 Deadline for Proofs of Claim Filing
---------------------------------------------------------------
The verification of creditors' claims for the Petrolge S.A.
insolvency case is set to end on July 26, 2007, states Infobae.
Marcos Urwicz is the court-appointed trustee who will examine
the claims.
As reported in the Troubled Company Reporter on March 7, 2006,
Petrolge filed a petition to reorganize after defaulting on its
payments on Feb. 1, 2006. Buenos Aires Court No. 24, with the
assistance of Clerk No. 47, handled the case.
The debtor can be reached at:
Petrolge S.A.
Uriburu 1010
Buenos Aires, Argentina
The trustee can be reached at:
Marcos Urwicz
Avenida Corrientes 1250
Buenos Aires, Argentina
PROSCIUTTO S.A.: Creditors Must Submit Proofs of Claim by May 22
----------------------------------------------------------------
Court-appointed trustee Mauricio Leon Zafran will stop
validating claims against bankrupt company Prosciutto S.A. after
May 22, 2006, Infobae reports.
A Buenos Aires court handles the company's bankruptcy case.
The debtor can be reached at:
Prosciutto S.A.
Cerrito 520
Buenos Aires, Argentina
The trustee can be reached at:
Mauricio Leon Zafran
Avenida Callao 420
Buenos Aires, Argentina
REPSOL YPF: Earns EUR862 Million During First Quarter 2006
----------------------------------------------------------
Repsol YPF reported an 8.2% increase to EUR862 million in net
income during the first quarter of 2006.
Income from operations rose 9.4%, to EUR1.6 billion. EBITDA was
EUR2.4 billion, up 15% from the same quarter last year, and
earnings per share was EUR0.71 versus EUR0.65 for the same
period in 2005
By areas of activity, there was higher income from the
exploration & production and gas & power businesses, which
showed 44.6% and 19.5% growth respectively. The refining &
marketing and chemical business areas suffered the effect of
lower international margins.
Repsol YPF's earnings in the first quarter of 2006 were
registered in a scenario of a considerable narrowing of
international refining margins and higher crude oil prices than
in first quarter 2005.
Repsol YPF net debt at March 2006 was EUR4.9 billion,
representing an increase of EUR380 million from the same date
2005. The net debt to capitalisation ratio was 18.6%.
Investments in first quarter 2006 were EUR759 million, and went
mostly to exploration & production (EUR475 million) and refining
& marketing (EUR134 million).
Performance by Business Areas
Exploration & Production
At EUR916 million, income from exploration & production
operations in first quarter 2006 was 44.6% higher than the
EUR633 million posted a year earlier. This growth was basically
driven by the increase in higher gas sales prices registered in
Trinidad & Tobago and Argentina.
The company's liquids realisation price averaged US$42.87 per
barrel this quarter versus the 2005 equivalent of US$31.52 per
barrel. The average price of gas was US$2.07 per thousand
standard cubic feet (tscf), 39.9% up on that for first quarter
2005.
The company's average oil and gas production from January to
March 2006 was 2.6% down year-on-year, at 1,102,300 boepd. This
decrease was mainly the result of strikes in the south of
Argentina, the effect of Production Share Contracts and high
crude oil prices.
Repsol YPF's gas production increased 0.6% overall, to 593,300
boepd, with enhanced production coming mostly from Trinidad &
Tobago (117,000 boepd) following the start up of Atlantic LNG
train 4.
First quarter 2006 investments in the exploration & production
business area were EUR475 million, up 107.4% from the same
period a year ago. This increase relates to the purchase of a
stake in West Siberian Resources, and the greater investments in
evelopment, which represent 58.5% of the quarter's total
investment. Investments in development were realized primarily
in:
* Argentina (53.2%),
* Trinidad & Tobago (13.2%),
* Venezuela (11.1%),
* Algeria (4.2%),
* Libya (3.4%),
* Ecuador (3.1%),
* Brazil (2.7%) and
* the United States (2.6%).
Refining & Marketing
First quarter income from operations in the refining & marketing
area was EUR603 million, falling 7.7% against the EUR653 million
posted in 2005.
Lower performance here was mainly attributable to a narrowing of
refining margins and a decrease in the marketing margin in
Argentina. The company's refining margin index in first quarter
2006 was US$5.70 per barrel versus US$7.32 per barrel in the
same period 2005. Marketing margins were slightly higher year-
on-year in Spain. Total oil product sales increased 2.4% on
first quarter 2006 levels to 14.4 million tons. Sales in Spain
were 4.3% up year-on-year, and in Argentina, Brazil and Bolivia
dropped 1.9%. In the rest of the world, oil product sales
showed 3.0% growth, reaching 1.98 million tons. Sales to our
own marketing network were higher in ABB (11.6%) and the rest of
the world (3%).
Total LPG sales worldwide rose 4.8% in first quarter 2006. By
countries, in Spain sales fell 11%, whereas in Latin America
they rose 26.6% year-on-year, shored up by strong growth in Peru
(38.9%), Argentina (41.8%) and Ecuador (4.9%).
First quarter 2006 investments in refining & marketing were
EUR134 million, mainly allotted to current refining projects.
Chemicals
In Chemicals, income from operations in first quarter 2006 was
75.7% less year-on-year, at EUR39 million, versus EUR161 million
a year earlier. The reasons for this reduction were lower
international margins on base chemicals and derivatives in
Europe, higher energy costs, and the fact that first quarter
2005 figures included capital gains on the sale of our 28% stake
in PBB Polisur.
Total petrochemical product sales this quarter reached 1,168
thousand tons, 15% more than the year before. First quarter
2006 investments in Chemicals totalled EUR31 million, 72.2%
higher than the same period a year ago and reflecting the
revamping of the Tarragona propylene oxide/styrene complex.
Gas & Power
Income from Gas & Power operations in first quarter 2006 rose
19.5% to EUR141 million, versus the EUR118 million equivalent
posted in 2005.
There was improvement in natural gas commercialisation in Spain
and growth in Latin America, where performance was boosted by
organic operating growth in Mexico, Colombia, and Brazil. There
was also enhanced income from power activities in Spain.
First quarter 2006 investment in gas & power amounted to EUR83,
rising 3.8% year-on-year, and was mainly spent on power
generation in Spain and expansion of the distribution grid.
First Quarter Highlights
-- 20% Dividend Growth
The Repsol YPF Board of Directors agreed in March to propose to
the next Annual General Shareholders Meeting a final dividend of
EUR0.30 per share against the 2005 financial year, equivalent to
a 20% rise year-on-year.
The total gross dividend payout against the 2005 financial year
will be EUR732 million, EUR0.60 per share, equivalent again to a
20% rise over the gross dividend for 2004, and in line with the
company's policy of ensuring sustained double-digit growth in
annual dividends from 2005-9, as announced in the Strategic Plan
for that period.
-- Greater activity in North Africa and the Caribbean
Repsol YPF has increased its activities in high profitability
areas during this first quarter 2006:
In Libya, where the company is the the largest operator, second
only to the national company, NOC, there was a new discovery of
light crude in the Murzuq basin, testing at a preliminary
production level of 2,300 barrels of oil equivalent per day
(boepd).
Located near the latest discoveries made in this same block
towards the end of last year (which gave a preliminary
production figure of 2,060 and 4,650 boepd, respectively), this
discovery is operated by Repsol YPF with a 32% stake, in
partnership with the Libyan National Oil Company and three
European companies: OMV (Austria), Hydro (Norway), and Total
(France).
In Trinidad & Tobago, a Caribbean country housing 10% of Repsol
YPF's total oil and gas reserves and of strategic importance
because of its magnificent location for supplying gas to the
Atlantic coast, gas production rose considerably to 117,000
boepd with the start up of the fourth Atlantic LNG train.
-- Development of new areas and businesses
As announced in its Strategic Plan, Repsol YPF has developed new
integrated LNG products during this quarter, and taken advantage
of the business opportunities presented by new areas of interest
such as Russia.
In Peru, the Peru LNG project started up in January. This
venture, in which Repsol YPF has a 20% share, contemplates the
construction of an LNG plant in Pampa Melchorita, due to go into
operation by 2009, with a nominal production capacity of 4
million tons per annum of liquefied natural gas, to be marketed
on the West Coast of the USA and Mexico.
The Peru LNG project will be fed with natural gas from the
Camisea field, in which Repsol YPF holds a 10% stake. It is
also a partner in Transportadora de Gas del Peru, S.A., the
company that transmits natural gas produced at Camisea.
In Algeria, Repsol YPF, Gas Natural and Sonatrach signed last
March the constitution of a joint venture called Sociedad de
Licuefaccion, which will construct and operate the natural gas
liquefaction plant for the Gassi Touil project, the most
important undertaking ever carried out in Algeria by an
international consortium. This project includes the
exploration, development and production of gas from the areas
under concession in the east-Algerian region of Gassi Touil
Rhourde Nouss-Hamra; its subsequent liquefaction at the new
plant, and the marketing of liquefied natural gas.
In line with the company's policy of developing operations in
new high potential areas, in February Repsol YPF and West
Siberian Resources signed a strategic agreement whereby Repsol
YPF acquired a 10% stake in the latter, and will be able to take
an active part in developing projects for the exploration and
production of oil and gas in Russia, where WSR owns exploration
assets. This deal strengthens Repsol YPF's exploration &
production (Upstream) business and represents an excellent
opportunity to develop new projects in the region.
Also in this first quarter, Repsol YPF and Gas Natural, through
their joint venture in the international liquefied natural gas
business, signed a memorandum of understanding with the
government of Nigeria for the future development of an important
LNG project in that country, establishing the terms for the
possible construction and operation of an LNG plant, which could
have an initial capacity of some 7 million tons per annum
(equivalent to approximately 10 Bcm of natural gas), and for the
acquisition and development of gas reserves to feed the plant.
-- Strategy for the production of bio-fuels
In March, Repsol YPF and ACCIONA entered a protocol agreement
for the construction and development in Spain of bio-diesel
plants able to produce over one million tons of bio-diesel per
annum, employing first-use vegetable oils as feedstock.
Involving an investment estimated at EUR300 million, this is one
of the largest scale projects for bio-diesel undertaken anywhere
in the world to date.
The bio-diesel produced will prevent the emission to air of
approximately 3 million tons of carbon by 2010. This project
contemplates the installation of bio-diesel production plants in
the proximity of Repsol YPF group refineries in Spain, with a
unitary capacity of more than 200,000 tons per annum, and
includes the participation of ACCIONA in building another plant
in Leon, Spain, which is already underway.
-- Corporate Responsibility
In March, Repsol YPF joined the World Business Council for
Sustainable Development, one of the largest international
business associations, having the mission of advancing towards
sustainable development through innovation, eco-efficiency and
corporate social responsibility. In that same month, we became
a member of the group of companies collaborating with the
Fundaci¢n Entorno-Business Council for Sustainable Development
Spain, in order to jointly conduct activities in the sphere of
sustainable development and corporate social responsibility.
During the first quarter 2006, Repsol YPF has received several
international awards for the information and services provided
by its website, amongst which it should be mentioned that Repsol
YPF was selected as being the energy company with the best
corporate website, according to the Best IR Websites in the
Energy Sector. The company considers that its Internet portal
is a fundamental tool in achieving the communications and
transparency on which the company's relations with its
stakeholders are based.
* * *
On June 20, 2005, Moody's Investors Service upgraded the ratings
of Spanish-Argentine oil company Repsol YPF's local subsidiary
YPF S.A. Moody's upgraded YPF's senior unsecured rating to Ba3
from B1 and the unit's domestic currency issuer rating to Baa2
from Baa3.
YPF's foreign currency issuer rating of Caa1 remained unchanged,
as it is constrained by the sovereign ceiling of Argentina.
YPF's Corporate Family Rating (formerly known as the senior
implied rating) is aligned with the foreign currency issuer
rating at Caa1.
TELECOM ARGENTINA: Reports Ps3M of Net Income in First Quarter
--------------------------------------------------------------
Telecom Argentina, one of Argentina's telecommunications groups,
disclosed Consolidated Net Income of 3 million pesos for the
first quarter of fiscal year 2006.
Summary of major events and developments:
-- Net Revenues reached Ps1,612 million fueled by the
expansion of the cellular business, which registered an
increase of 48% in its customer base, and by the 79%
growth in broadband clients.
-- Operating Profit before Depreciation and Amortization
reached Ps543 million. In the context of a strong
expansion of the cellular business, higher commercial
costs were registered, which were associated to the
acquisition of new customers. In addition, the
general cost structure of the Company was affected by
inflation.
-- Net Income reached Ps3 million, which was affected by
foreign exchange fluctuations.
-- Shareholders' Equity as of March 31, 2006, amounted to
Ps1.9 billion. Retained Earnings continued to be
negative by Ps2.466 million, prior to the partial
absorption approved by the Shareholders' Meeting.
-- Mainly as a consequence of the financial restructuring
and a strong cash flow generation, the nominal value of
Net Financial Debt as of March 31, 2006, dropped to
Ps4,224 million (-Ps2,176 million vs. 1Q05 or
-Ps235 million vs. 4Q05). The Ratio of Net Financial
Debt to OPBDA for the last 12 months decreased from 3.1
as of March 31, 2005, to 2.1.
During 1Q06, Consolidated Net Revenues increased by 30% (Ps375
million) when compared to the first quarter of fiscal year 2005,
fueled by the expansion of the cellular and broadband
businesses. OPBDA increased by 7% or Ps35 million, although
decreasing as a percentage of Net Revenues from 41% to 34%. In
the context of the important expansion of cellular business,
higher subscriber acquisition costs were registered. This
effect, together with an inflationary macroeconomic scenario,
negatively affected consolidated margins.
Net Income (Ps3 million) was affected by a loss in Financial
Results of Ps182 million (as compared to earnings of Ps175
million in 1Q05). The reversion of financial results is mainly
due to Foreign Exchange fluctuations, partially offset by lower
financial expenses.
Consolidated Net Revenues
Fixed Telephony
Monthly Charges increased by Ps11 million, or 7%, as compared to
1Q05, reaching Ps176 million, mainly due to the increase in
lines in service of 4%, which reached approximately 3,966,000.
This was reached without registering any increase in regulated
tariffs.
Local Measured Service revenues totaled Ps124 million, meanwhile
Domestic Long Distance revenues decreased to Ps107 million,
despite the fact that overall traffic volume in minutes
increased by approximately 1% since 1Q05.
Revenues generated by International Telephony reached Ps60
million (+Ps5 million or 9% higher than 1Q05) due to an increase
in outgoing traffic and sales of other services, partially
offset by lower prices.
Interconnection revenues increased by Ps13 million, or 23%, to
Ps69 million. The most dynamic item was the mobile traffic
transported and/or terminated in Telecom's fixed line network.
Internet and Data Transmission
Revenues generated by Data transmission and Internet amounted to
Ps130 million, increasing by Ps21 million, or 19%, as a
consequence of more ADSL access connections. This was driven by
active commercial policies and larger service coverage.
As of March 31, 2006, total lines with ADSL connection amounted
to 244,000, 6.2% of lines in service. Broadband ISP subscribers
totaled approximately 186,000, where most of them are connected
to Telecom Argentina fixed lines. Dial-up customers decreased to
111,000 as a consequence of migrations toward broadband
services.
Cellular Telephony
The cellular market in Argentina maintained its expansion during
1Q06, where an increase in penetration was achieved and the
offer of value-added services and handsets was improved.
In this context, the subscriber base of Telecom Personal in
Argentina reached approximately 6,351,000 as of March 31, 2006,
2,128,000 customers more than those registered as of March 31,
2005. This increase was fueled by a significant growth in
subscribers operating with GSM technology, which at the end of
1Q06, represented 73% of the customer base.
As of March 31, 2006, approximately 64% of the overall
subscriber base was prepaid and 36% were postpaid customers
(including clients of "Cuentas Claras," a hybrid
prepaid/postpaid product). As of March 31, 2005, these
percentages were 72% and 28%, respectively. This change in the
subscriber mix was a result of the commercial strategy of
Telecom Personal to focus on high- value customers following
current market conditions.
Total traffic measured in minutes increased 39% vs. 1Q05. SMS
traffic (outgoing messages) increased from an average of 135
million per month during 1Q05 to an average of 440 million per
month during 1Q06.
In this context, Telecom Personal's revenues in Argentina
reached Ps815 million, increasing Ps306 million as compared to
the same period last year. This variation is mainly due to an
increase in the subscriber base, and higher traffic and handset
sales.
In spite of the prevailing strong competition, the average
monthly revenue per customer in Argentina increased to Ps37, or
+7% vs. 1Q05, driven by consumption and higher use of value-
added services, especially SMS.
Ncleo, Telecom Personal's subsidiary, leader in cellular
business in Paraguay, generated revenues of Ps68 million during
1Q06. This represents an increase of 55% when compared to 1Q05.
As of March 31, 2006, Ncleo had approximately 690,000 customers,
an increase of 6% from December 31, 2005, or 29% from 1Q05.
Prepaid and Postpaid customers (including mixed products)
represented 82% and 18%, respectively. Fifty percent of those
subscribers were already GSM.
Directories
Publicom sales reached P$1 million in 1Q06, evidencing the
seasonality of the business. Nonwithstanding, advertising
contracts as of March 31, 2006, were 3% higher than those of the
same period in fiscal year 2005.
Consolidated Operating Costs
The Cost of Services Provided, Administrative Expenses and
Selling Expenses totaled Ps1.4 billion in 1Q06, an increase of
Ps323 million or 29%. The main driver for this increase is the
expansion of the mobile business.
Salaries and Social Security Contributions increased by Ps32
million, or 20%, to Ps191 million, reflecting wage increases
that were agreed on with unions at the end of 2005 and those
granted to non-unionized employees in March 2006. Employee
headcount totaled 14,666 as of March 31, 2006, up from 14,267 at
the end of 1Q05. This increase in headcount is mainly related
to the expansion of the cellular businesses in Argentina and
Paraguay.
Taxes reached Ps115 million, with an increase of Ps30 million
when compared to 1Q05. The most significant increase was that
registered in direct taxes on revenues, mainly in the cellular
business.
Sales Commissions increased by Ps61 million, or 111%, to Ps116
million. This evolution is mainly explained by increased
customer acquisition costs and higher sales of prepaid cards.
Advertising costs increased by Ps15 million, or 68%, to Ps37
million in 1Q06, mainly in the mobile business and Internet.
The cost of cellular handsets increased by Ps98 million to Ps179
million mainly due to the increase in handset sales related to
market growth.
TLRD and Roaming costs increased by Ps43 million, reaching Ps129
million due to the increase in traffic delivered among cellular
operators.
Allowance for Doubtful Accounts was Ps18 million, equivalent to
1% of net revenues.
Depreciation of Fixed and Intangible Assets decreased by Ps17
million to Ps349 million as a consequence of the applicable
amortization schedule.
Consolidated Financial and Holding Results
Financial and Holding Results resulted in a loss of Ps182
million, compared with earnings of Ps175 million in 1Q05. This
variation is mainly a consequence of foreign exchange
fluctuation, partially offset by lower net financial expenses.
1Q05 and 1Q06 showed a different evolution in the exchange rate
of domestic to foreign currencies.
Consolidated Other Expenses (net)
Other expenses (net) increased by Ps5 million, or 14%, compared
to 1Q05 to Ps42 million mainly due to higher reserves for
obsolescence of materials.
Net Financial Debt (Nominal Value)
As of March 31, 2006, the nominal value of Net Debt amounted to
Ps4,224 million, a reduction of Ps235 million as compared to
December 31, 2005. In April 2006, Telecom Argentina prepaid an
amount equivalent to approximately US$215 million of its
financial debt.
Consolidated Capital Expenditures
The total amount of Ps138 million invested in fixed assets
during 1Q06 was evenly shared among the fixed line business and
the cellular business.
At the Shareholders' Meeting held on April 27, 2006,
shareholders approved the allocation to the absorption of losses
accumulated as of December 31, 2005, the aggregate Legal Reserve
(in an amount of Ps277 million) and the amount of Ps356 million
from the Adjustment of Common Stock Account, thus transferring
the negative balance of Ps1.8 billion to fiscal year 2006.
In addition, shareholders at this Meeting granted to the Board
of Directors the power to convert up to 41,339,464 ordinary
Class "C" Shares into the same amount of Class "B" Shares. This
conversion can be made in one or more times following the
procedure defined at the Meeting.
Telecom Argentina implemented certain modifications to the
Indenture governing Series A and B Notes after obtaining the
approval of Noteholders at the Extraordinary Meeting held on
March 27, 2006. Modifications referred to the elimination of
restrictions on Capital Expenditures for Telecom Personal, as
well as the elimination of Telecom Argentina's obligation to
reinvest in Telecom Personal any dividend or distribution
payment received from that subsidiary.
Telecom is the parent company of a leading telecommunications
group in Argentina, where it offers directly or through its
controlled subsidiaries local and long distance fixed-line
telephony, cellular, data transmission and Internet services,
among other services. Additionally, through a controlled
subsidiary, the Telecom Group offers cellular services in
Paraguay. The Company commenced operations on November 8, 1990,
upon the Argentine government's transfer of the
telecommunications system in the northern region of Argentina.
Nortel Inversora S.A., which acquired a majority of the Company
from the Argentine government, holds 54.74% of Telecom's common
stock. Nortel is a holding company where the common stock
(approximately 68% of capital stock) is owned by Sofora
Telecomunicaciones S.A. Additionally, Nortel capital stock is
comprised of preferred shares that are held by minority
shareholders.
As of March 31, 2006, Telecom had 984,380,978 shares
outstanding.
Headquartered in Buenos Aires, Telecom Argentina S.A. --
http://www.telecom.com.ar/index-flash.html-- is the fixed-line
operator for local and long-distance services in northern and
southern Argentina. It also provides cellular and PCS phone
services in Argentina, as well as in Paraguay through a 68%
stake in Nocleo. France Telecom formerly controlled the company
through its Nortel Inversora venture with Telecom Italia.
France Telecom sold most of its stake in 2003 to the Werthein
Group, an Argentine agricultural concern owned in part by vice
chairman Gerardo Werthein. Nortel continues to be Telecom
Argentina's largest shareholder with a 55% stake. Nortel is
owned by Sofora, a consortium owned by Telecom Italia (50%), the
Werthein Group (48%), and France Telecom (2%).
* * *
Telecom Argentina's US$64,128,000 and US$54,124,000 notes due
Oct. 15, 2014, carry Standard & Poor's and Fitch's B- ratings.
* * *
As reported in the Troubled Company Reporter on April 27, 2006,
Fitch Ratings made these changes on Telecom Argentina's ratings:
Foreign Currency
-- Previous Rating: 'B-'
-- New RR: 'B', Rating Outlook Stable
Local Currency
-- Previous Rating: 'B-'
-- New RR: 'B', Rating Outlook Stable
US$1.5 billion, Senior Unsecured Notes due 2011 and 2014
-- Previous Rating: 'B-'
-- New IDR: 'B/RR4'
* * *
As reported in the Troubled Company Reporter on April 26, 2006,
Standard & Poor's Ratings Services raised its foreign and local
currency corporate credit ratings on several Argentine entities
and removed them from CreditWatch, where they were placed with
positive implications on March 23, 2006. Telecom Argentina
S.A.'s rating was upgraded to B from B-.
The rating actions followed the upgrade on the global foreign
and local currency ratings on the Republic of Argentina to 'B'
from 'B-' and the ratings on Argentina's national scale to
'raAA-' from 'raA'.
=============
B A H A M A S
=============
WINN-DIXIE: Court Allows Deloitte to Render Accounting Services
---------------------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates obtained
permission from the U.S. Bankruptcy Court for the Middle
District of Florida to employ Deloitte Financial Advisory
Services LLP and Deloitte Consulting LLP, nunc pro tunc to
March 14, 2006, to provide fresh-start accounting services in
connection with the implementation of a plan of reorganization
and emergence from Chapter 11.
D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP,
in New York, relates that upon emerging from Chapter 11, the
Debtors must comply with SOP 90-7, Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code issued by
the Accounting Standards Board of the American Institute of
Certified Public Accountants, which requires, among other
things, that the Debtors:
(a) record the effects of their plan of reorganization;
(b) revalue their assets and liabilities in their books of
entry; and
(c) develop an emergence balance sheet.
Deloitte FAS and Deloitte Consulting's services will include:
1) Fresh-Start Accounting
(a) Assistance with disclosure statement and financial
projections:
* Assist management in applying Fresh-Start adjustments
to and disclosures for the projected financial
information;
(b) Preparation and substantiation of Fresh-Start Balance
Sheet under SOP 90-7:
* Assist management in the development of an
implementation approach for Fresh-Start Accounting,
culminating in a strategy and work plan for the
project;
* Assist management in connection with its recording of
adjustments to reflect the impact of the discharge of
debt and other plan of reorganization requirements,
including the related tax implications;
* Assist management in connection with its recording of
adjustments to assets and liabilities in accordance
with SFAS 141 as required by SOP 90-7;
* Assist management with its preparation of analyses
supporting adjustments; and
* Assist management with responses to requests from the
Debtors' external auditors with respect to Fresh-Start
Accounting;
(c) Posting of Fresh-Start entries back to books of entry:
* Assist management in connection with its determination
of a plan of reorganization-related and re-valuation
adjustments necessary to record these items to the
books of entry of the appropriate legal entities,
including, if necessary, preparation of supporting
materials;
* Work with accounting, legal, and tax advisors to
assist management in determining the allocation of the
earnings impact to separate legal entities within the
Debtors' structure in accordance with statutory
requirements;
* Assist management in connection with its estimation of
recoveries to claimants for accrual accounting
purposes, including comparisons with the Debtors'
claims database to estimate liabilities related to
contingent, unliquidated and disputed claims; and
* Assist management in its allocation of reorganization
value to the Debtors' legal entities; and
(d) Application Support:
* Assist management in its preparation and
implementation of the accounting treatments and
systems updates required for Fresh-Start Accounting
implementation as of the Fresh-Start reporting date.
Commonly, the financial systems impacted by the
process included the General Ledger, Accounts Payable,
and Fixed Assets. Other applications may be impacted
based on the impact of the bankruptcy and valuation
efforts. Application support includes these items as
required:
-- Definition of specific processing requirements
-- Programming specification
-- Application configuration and set-up
-- Interface development
-- Data cleansing and reconciliation
-- Project management and administration
2) Valuation Services
(a) Assistance and valuation work per Fresh-Start under SOP
90-7:
* Assist management with the identification of tangible
and intangible assets;
* Assist management with its estimate of the fair value
of specific assets and liabilities, including
performing valuation of certain assets and
liabilities, as agreed with management;
* Assist with assignment of values to reporting units,
as required;
* Discuss valuation methodology and results with the
Debtors' external auditors;
* Assist the Debtors and their advisors with asset and
liability valuation adjustments; and
* Assist management with the coordination of Fresh-Start
valuation with tax values and tax attribute planning;
and
3) Financial Reporting
(a) Assist with Financial Reporting:
* Assist management in preparing supporting accounting
information for timely record keeping matters and
reporting requirements;
* Assist management in preparing accounting information
and disclosures in support of public financial
filings;
* Assist management with regard to valuation matters
that impact financial reporting; and
* Assist management with memoranda supporting accounting
positions.
Although Deloitte FAS will provide most of the services related
to Fresh-Start Accounting, the Debtors wish to employ Deloitte
Consulting to assist Deloitte FAS with the services, as
necessary. Mr. Baker explains that in providing services to its
clients, Deloitte FAS is routinely assisted by Deloitte
Consulting with respect to services for which Deloitte
Consulting has specialized knowledge.
Mr. Baker notes that the Debtors have previously retained
Deloitte Consulting and Deloitte & Touche LLP to provide
services during their Chapter 11 cases pursuant to separate
engagements. Although they are affiliates of Deloitte FAS,
their services provided to the Debtors do not involve Fresh-
Start Accounting.
Deloitte Consulting has provided in-store consulting services to
assist the Debtors in developing and initiating in-store
operational initiatives. Deloitte & Touche has provided the
Debtors with internal audit risk assessment, quality assessment,
and journal entry testing services unrelated to Fresh-Start
Accounting.
Accordingly, the Fresh-Start Accounting services proposed to be
provided by Deloitte FAS and Deloitte Consulting are not
duplicative of the services already being provided by Deloitte
Consulting, Deloitte & Touche, or any of the Debtors' other
professionals.
To the best of the Debtors' knowledge:
(a) Deloitte FAS and Deloitte Consulting neither hold nor
represent any interest adverse to their estates;
(b) neither Deloitte FAS nor Deloitte Consulting have had
any affiliation with the Debtors, their creditors or any
party-in-interest, or to the Debtors' attorneys that are
known to Deloitte FAS and Deloitte Consulting to be
assisting the Debtors in their Chapter 11 cases. The
personnel expected to provide services to the Debtors on
behalf of Deloitte FAS and Deloitte Consulting pursuant
to the Engagement Letter are not related to the United
States Trustee assigned to the Debtors, cases, any
person employed in the office of the United States
Trustee, or Judge Funk; and
(c) each of Deloitte FAS and Deloitte Consulting is a
"disinterested person" within the meaning of Sections
101(14) and 327(a) of the Bankruptcy Code.
The firms' professionals' hourly rates are:
Professional Hourly Rate
------------ -----------
Partners/Principals/Directors $600 - $750
Senior Managers $480 - $580
Managers $380 - $500
Senior Staff $275 - $375
Staff $190 - $250
Paraprofessionals $75
Deloitte FAS' fee applications will include and separately
designate amounts due on account of work performed, from
Deloitte Consulting.
Additionally, because the Fresh Start Accounting Services are
unrelated to Deloitte Consulting's in-store consulting services,
the amounts due for services performed by Deloitte will not
count toward the $3,375,000 fee cap of the DC Order.
The Engagement Letter also provides for:
(a) a limitation on any damages that may be recoverable by
the Debtors against Deloitte FAS, except to the extent
any damages resulting from gross negligence, willful
misconduct, bad faith, or self-dealing by Deloitte FAS
or its subcontractors; and
(b) an indemnification from the Debtors in favor of Deloitte
FAS against claims of third parties, except to the
extent any claims result from gross negligence, willful
misconduct, bad faith, or self-dealing by Deloitte FAS
or its subcontractors.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14,
2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840).
D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and
Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King
& Spalding LLP, represent the Debtors in their restructuring
efforts. Paul P. Huffard at The Blackstone Group, LP, gives
financial advisory services to the Debtors. Dennis F. Dunne,
Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B.
Macdonald, Esq., at Akerman Senterfitt give legal advice to the
Official Committee of Unsecured Creditors. Houlihan Lokey &
Zukin Capital gives financial advisory services to the
Committee. When the Debtors filed for protection from their
creditors, they listed US$2,235,557,000 in total assets and
US$1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News,
Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-
7000).
=============
B E R M U D A
=============
GLOBAL CROSSING: 1Q Invest & Grow Revenue Up 6% to US$286 Mil.
--------------------------------------------------------------
Global Crossing reported financial and operational results for
the first quarter 2006.
Highlights
Highlights of first quarter performance include strong results
in the "invest and grow" segment, which is that part of the
business focused on serving global enterprises, collaboration
and carrier data customers. "Invest and grow" revenue grew 6
percent or US$17 million sequentially, to a record high of
US$286 million for the first quarter of 2006. The "invest and
grow" segment outside of the company's Global Crossing UK
subsidiary accounted for all the sequential growth, generating
US$19 million of incremental revenue during this period. The
company said that it will begin generating positive adjusted
EBITDA in June 2006, in line with management's guidance.
"The performance of our 'invest and grow' revenue strongly
supports the wisdom of focusing on our core business to deliver
IP services to enterprise and carrier data customers and proves
that our business is gaining momentum," said John Legere, Global
Crossing's chief executive officer. "To top off the good news,
in March our order volume for the 'invest and grow' segment
reached a new peak of almost US$3million. In the second quarter
we expect to grow consolidated revenue for the first time in
three years, and we're on plan to begin generating positive
Adjusted EBITDA in June and positive cash flow at some point in
the second half of the year."
On the product front, Global Crossing recently expanded its
enterprise Voice over Internet Protocol services offering to
Europe, furthering its robust offer for global businesses. VoIP
backbone traffic totaled almost eight billion minutes during the
first quarter, accounting for 74 percent of the company's total
voice traffic. IP traffic growth on Global Crossing's global IP
backbone increased 65 percent in 2005 and grew 26 percent in the
first quarter of 2006. The company continued to focus its
capital resources on IP specific requirements, including
upgrades to its IP backbone and additions to its European
terrestrial transport and conference bridging networks.
Revenue and Margin
"Invest and grow" revenue increased by US$17 million or 6
percent sequentially to US$286 million in the first quarter of
2006, entirely driven by data and conferencing revenue, which
comprises 72 percent of the company's total "invest and grow"
revenue. During the same period, adjusted gross margin for the
overall "invest and grow" segment grew by US$1 million. In the
fourth quarter of 2005, the company recognized an access dispute
accrual release of US$10 million. When excluding the impact of
the release, "invest and grow" gross margins would have
increased by US$4 million sequentially. For the business
outside of GCUK, "invest and grow" revenue was US$188 million in
the first quarter of 2006, a US$19 million increase over the
fourth quarter of 2005 that was entirely driven by data and
conferencing revenue, which now comprises 83 percent of the
"invest and grow" business outside of GCUK. "Invest and grow"
adjusted gross margin excluding GCUK grew by US$4 million to
US$81 million in the first quarter of 2006, compared to US$77
million in the fourth quarter of 2005. When excluding the
impact of the release mentioned above, adjusted gross margin for
"invest and grow" outside of GCUK would have increased by US$7
million.
The company's wholesale voice segment performed as planned, with
revenue of US$168 million for the first quarter of 2006. This
was down slightly from US$172 million in the fourth quarter of
2005. Adjusted gross margin for this segment was US$19 million
in the first quarter of 2006, compared to US$22 million in the
fourth quarter of 2005. When excluding the impact of the access
dispute accrual release in the fourth quarter, adjusted gross
margin would have increased by US$4 million.
"We won significant new enterprise and carrier data contracts
around the world during the first quarter, including agreements
with the UK's Crown Prosecution Services and Domino Printing, as
well as with Odebrecht in Latin America and Telstra in
Australia," commented Mr. Legere. "These successes reinforce
our position as a global provider of choice."
Cost of revenue -- which includes cost of access; technical real
estate, network and operations; third party maintenance and cost
of equipment sales -- was US$401 million in the first quarter of
2006, compared to US$394 million in the fourth quarter of 2005.
The slight increase in cost of revenue is primarily due to a
one-time US$10 million access accrual release and a one-time
rates rebate of US$8 million at GCUK, both of which benefited
the fourth quarter of 2005 and which were offset by one-time
items in the fourth quarter and the elimination of the SBG
business. Sales, general and administrative expenses were
US$100 million in the first quarter of 2006, flat compared to
the fourth quarter of 2005.
Earnings
Adjusted EBITDA was a loss of US$45 million in the first quarter
of 2006, compared to a loss of US$32 million in the fourth
quarter of 2005. The sequential variance was primarily driven
by the US$10 million access accrual release, disposition of the
Small Business Group and US$8 million for a rates rebate at GCUK
in the fourth quarter. These were partially offset by a number
of one-time items, including a US$13 million increase in
incentive compensation accrual in the fourth quarter of 2005
when compared to the first quarter of 2006, due to performance
above the company's targets in 2005.
Adjusted EBITDA excluding non-cash stock compensation was a loss
of US$33 million in the first quarter of 2006, compared to a
loss of US$15 million in the fourth quarter of 2005.
Global Crossing expects to begin generating positive Adjusted
EBITDA in June. Improvements in Adjusted EBITDA are expected
from growth in the "invest and grow" segment and a change in the
company's product mix as evidenced by the growth of data and
conferencing revenue in the first quarter, plus reductions in
cost of access due to initiatives that are already underway and
other operational efficiencies. Initiatives to improve cost of
access are on track for the year and are expected to meet the
company's full-year targets.
Consolidated loss applicable to common shareholders was US$109
million, compared to a loss of US$80 million in the fourth
quarter of 2005. The sequential variance is attributable to
US$13 million less in Adjusted EBITDA, US$13 million less in
"other" income driven by the gain on the SBG sale, US$9 million
less in pre-confirmation contingencies gains, and US$1 million
more in depreciation expense. These items were partially offset
by US$7 million less in income tax provisions.
Cash and Liquidity
As of March 31, 2006, unrestricted cash and cash equivalents
were US$154 million. Restricted cash was US$21 million. Global
Crossing used US$70 million of cash in the first quarter,
reflecting US$17 million of cash used for capital expenditures
and principal on capital leases, US$24 million used for 2005
annual bonus payments, and US$6 million in sales proceeds for
indefeasible rights of use.
In accordance with the terms of its indenture, GCUK recently
announced an offer to tender its sterling- and dollar-
denominated senior secured notes including accrued and unpaid
interest with approximately 15 million pounds sterling (US$26
million) in cash. As of May 9, 2006, both the sterling- and
dollar-denominated notes were trading above par value. The
offer will expire on May 17, 2006.
Based on its business projections, the company expects that
unrestricted cash on hand, together with proceeds from sales of
IRUs and marketable securities, will provide the liquidity
needed to fund operations until the point in time during the
second half of 2006 when the company will start generating
positive cash flow.
To further enhance liquidity, Global Crossing has signed a
revolving credit facility with Bank of America in the face
amount of US$55 million, with an initial maximum availability of
US$35 million. The facility is secured by Global Crossing's
North American accounts receivable and other North American
assets and is designed to help support the company's working
capital needs. Initial advances under the facility are subject
to certain state regulatory approvals, which are expected over
the next four to five months, and to customary closing
conditions.
Pursuant to the Securities and Exchange Commission's Regulation
G, the attached schedules include definitions of Global
Crossing's Adjusted EBITDA and adjusted gross margin measures,
as well as reconciliation of such measures to the most directly
comparable financial measures calculated and presented in
accordance with U.S. Generally Accepted Accounting Principles.
Headquartered in Florham Park, New Jersey, Global Crossing
Ltd. -- http://www.globalcrossing.com/-- provides
telecommunication solutions over the world's first integrated
global IP-based network, which reaches 27 countries and more
than 200 major cities around the globe including Bermuda,
Argentina, Brazil, Chile, Mexico, Panama, Peru and Venezuela.
Global Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services. The company filed for chapter 11 protection on Jan.
28, 2002 (Bankr. S.D.N.Y. Case No. 02-40188). When the Debtors
filed for protection from their creditors, they listed
US$25,511,000,000 in total assets and US$15,467,000,000 in total
debts. Global Crossing emerged from chapter 11 on Dec. 9, 2003.
As of Dec. 31, 2005, Global Crossing's balance sheet reflected a
US$173 million equity deficit compared to a US$51 million of
positive equity at Dec. 31, 2004.
=============
B O L I V I A
=============
REPSOL YPF: Court Cancels Arrest Warrants Against Executives
------------------------------------------------------------
Bolivia's constitutional court has cancelled the arrest arrants
in place since March 9 against two directors of Repsol YPF SA
-- Julio Gavito, who has now resigned, and Pedro Sanchez --
judicial sources were cited by the AFX News Limited.
As previously reported, the Bolivian government accused the
Spanish-Argentine company of having smuggled crude valued at
US$9.22 million between the 2004-2005 period. The government
added document falsification and tax evasion to its charges
against the company.
Despite a formal response from Repsol denying the charges, the
government issued a warrant for the arrest of Mr. Gavito. That
warrant was cancelled after Spanish officials expressed concerns
over the matter. However, a new arrest warrant was issued
against the company's Bolivian executives resulting to the
detention on Mar. 15 of Mr. Gavito and Pedro Sanchez -- Andina's
chief operating officer. They were later released on bail.
* * *
On June 20, 2005, Moody's Investors Service upgraded the ratings
of Spanish-Argentine oil company Repsol YPF's local subsidiary
YPF S.A. Moody's upgraded YPF's senior unsecured rating to Ba3
from B1 and the unit's domestic currency issuer rating to Baa2
from Baa3.
YPF's foreign currency issuer rating of Caa1 remained unchanged,
as it is constrained by the sovereign ceiling of Argentina.
YPF's Corporate Family Rating (formerly known as the senior
implied rating) is aligned with the foreign currency issuer
rating at Caa1.
* BOLIVIA: China Provides US$23-Mil Credit to Mining Sector
-----------------------------------------------------------
Bolivia has received a US$23 million credit from Chinese
government for the revitalization of its mining sector, a press
official in the mining and metallurgy ministry was quoted by
Business News Americas as saying.
The official told BNamericas that the amount will also be used
to fund projects at Comibol, Bolivia's state-run mining company.
It will also fund cooperative miners.
The unnamed official, however, did not specify what projects
would be financed, BNamericas relates.
"The credit was established because of the need to reactivate
mining and to generate more job sources," the official informed
BNamericas.
* * *
Fitch Ratings assigned these ratings on Bolivia:
Rating Rating Date
------ -----------
Country Ceiling B- Jun. 17, 2004
Long Term IDR B- Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating B- Dec. 14, 2005
* BOLIVIA: State Oil Firm Partnering with Venezuela's PDVSA
-----------------------------------------------------------
Petroleos de Venezuela SA and Yacimientos Petroliferos Fiscales
Bolivianos will sign this week a joint venture agreement.
The PDVSA-YPFB partnership will be called Petroandina. The new
company will open gas stations that will offer special services
such as car wash, mechanic workshops and restaurants, El
Universal reports.
The partnership has been confirmed by Bolivia's hydrocarbons
minister Andres Soliz Rada in a news conference.
Under the agreement, PDVSA will hold 10% stakes in some projects
while YPFB will hold 90%.
One of the projects that will be undertaken by the partnership
will be the installaton of a plant for for separating ethanol,
propane and methanol.
PDVSA will also help in the installation of a petrochemical
plant for production of plastics.
Venezuela's Financial Aid
Meanwhile, to help strengthen Bolivia's hydrocarbons sector,
Venezuela has promised to donate asphalt valued at US$2 million
for the construction of a road in Chapare. Additionally,
Venezuela will grant a US$8 million loan to Bolivia to upgrade
an existing hydrocarbons refining and storage firm.
Venezuela has also pledged sending 200,000 barrels of oil per
day to Bolivia to cover a shortage in the Andean nation's
eastern region.
Furthermore, Bolivia will be sending 200 engineers for training
in Venezuela.
"The intention (of Venezuela) is achieving an alternative to the
dominating presence of the United States through the Free Trade
Agreements," Minister Soliz Rada was quoted by El Universal as
saying.
Petroleos de Venezuela SA aka 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, 2006, 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
pgrade of Venezuela's sovereign rating.
* * *
Fitch Ratings assigned these ratings on Bolivia:
Rating Rating Date
------ -----------
Country Ceiling B- Jun. 17, 2004
Long Term IDR B- Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating B- Dec. 14, 2005
===========
B R A Z I L
===========
AES CORPORATION: Unit Reverses Loss in First Quarter 2006
---------------------------------------------------------
Eletropaulo Metropolitana Eletricidade Sao Paulo SA, a Brazilian
unit of AES Corporation and Brazil's largest power distributor,
reversed the BRL16.7 million loss incurred in the first quarter
2005 with this year's BRL25.1 million net profit, Dow Jones
Newswires reports.
Dow Jones relates that this is due to lower energy purchase
costs and a tariff hike.
According to Dow Jones, first quarter net revenue remained at
BRL1.98 billion. EBITDA -- earnings before interest taxes,
depreciation and amortization -- was BRL423.8 million in the
first quarter, a 50% increase compared with the same period in
the year before.
Profits, however, came in below market expectations, according
to Dow Jones. Estado newswire earlier conducted a survey of
four analysts produced an average profit forecast of BRL49.5
million.
AES Corporation -- http://www.aes.com/-- is a global power
company. The Company operates in South America, Europe, Africa,
Asia and the Caribbean countries. Generating 44,000 megawatts
of electricity through 124 power facilities, the Company
delivers electricity through 15 distribution companies.
AES's Latin America business group is comprised of generation
plants and electric utilities in Argentina, Brazil, Chile,
Colombia, Dominican Republic, El Salvador, Panama and Venezuela.
Fuels include biomass, diesel, coal, gas and hydro. The group
also pursues business development activities in the region. AES
has been in the region since May 1993, when it acquired the CTSN
power plant in Argentina.
* * *
As reported in the Troubled Company Reporter on March 31,
Standard & Poor's Ratings Services raised its corporate credit
rating on diversified energy company The AES Corp. to 'BB-' from
'B+'. S&P said the outlook is stable.
As reported in the Troubled Company Reporter on Jan. 11, Moody's
affirmed the ratings of The AES Corporation, including its Ba3
Corporate Family Rating and the B1 rating on its senior
unsecured debt. Moody's said the rating outlook remains stable.
BANCO BMC: Fitch Assigns B- LT Rating on 8.75% US$35 Mil. Issue
---------------------------------------------------------------
Fitch Ratings assigned Banco BMC S.A's 8.75% US$35 million issue
maturing May 12, 2008, a long-term rating of 'B-'. The notes
are issued under the bank's unsecured and unsubordinated second
fixed-rate notes program.
The rating reflects BMC's Issuer Default 'B-' rating. The
Issuer Default rating considers the expertise of senior
management and the bank's success in adjusting its operations
after the market liquidity crisis in November 2004, as a result
of the intervention of the Brazilian Central Bank in Banco
Santos S.A. This adjustment led to a reduction in BMC's
leverage, which is now in line with other small and medium-sized
Brazilian banks. On the other hand, the rating also reflects
BMC's small size and hence its susceptibility to the volatile
Brazilian environment. It also takes into account the bank's
revenue concentration in a few products and weaker, albeit
improving, profitability and asset quality indicators when
compared to peers.
Controlled by Jaime Pinheiro, BMC primarily focuses on
consignment loan agreements, as well as direct consumer vehicle
financing and loans to medium-sized companies, secured by
receivables.
BANCO BRASCAN: Fitch Affirms Low B Currency Issuer Ratings
----------------------------------------------------------
Fitch Ratings affirmed Banco Brascan S.A's foreign and local
currency issuer default ratings at 'B+' and short-term foreign
and local currency ratings at 'B'. The bank's other ratings are
affirmed at national short- and long-term 'F2' and 'A-' and
Support '4'. The Rating Outlook is Stable.
The ratings of Brascan reflect the experience of its executives
and the quality of its team of professionals. The ratings also
reflect the support from Brascan's shareholders. Although
Fitch's Support rating translates into a limited probability of
support, Fitch takes a positive view of the change in Brascan's
current ownership structure and the improved operational focus
it will bring. Brookfield Asset Management Inc. raised its
direct and indirect stake to 60% in June 2005 from 40%. The
stake increase is pending final approval by the Brazilian
Central Bank. In Fitch's opinion, the approval will allow the
bank to implement its plan to progressively expand activities,
principally the origination of loans backed by receivables as
well as to pursue more aggressively capital market transactions.
Despite growing competition, the steady increase in capital
market activities in Brazil since 2004, is expected to provide
more stable and diversified revenues in the medium and long
term. However, their revenue contribution would not be as
significant as that from Brascan's trading activities, which
historically account for more than 60% of the bank's earnings.
On the other hand, the ratings also incorporate the decision in
2001 to re-size and reduce activities, which has resulted in a
greater dependence on treasury income. The ratings also factor
in the bank's decision not to reserve for the fines levied by
the Federal Revenue Service and the central bank, in an amount
equivalent to 51% of the bank's December 2005 equity. Brascan
appealed against the fine and in January 2006 it received a
favorable decision from the Taxpayers Board of the SRF.
Although the SRF can still appeal against this decision,
prospects for Brascan have improved. Fitch notes that a
decision is unlikely to be forthcoming in the short term and
that the outcome is still uncertain. However, given the bank's
current volume of operations, Fitch considers that Brascan's
capital would be sufficient to absorb the BRL146million of
fines. Should there be changes in these factors and/or in the
liquidity and financial flexibility of Brascan, Fitch would
review and could alter the bank's ratings.
Brascan and its affiliates are majority controlled by the Mellon
Brookfield groups, focusing its operations on treasury,
financial consulting services and structuring business in the
local capital markets. The bank's earnings and business volume
continue to fall short of their potential, despite a greater
volume of activity in the bank since 2004. At December 2005,
Brascan's assets and equity totaled BRL775.9 million and
BRL253.1 million, respectively, with credit assets, including
bonds and guarantees, representing only 14.6% of the bank's
assets.
COMPANHIA VALE: Gives Up Voting Rights in MRS Logistica
-------------------------------------------------------
Companhia Vale do Rio Doce aka CVRD informed Agencia Nacional de
Transportes Terresteres aka ANTT, Brazil's regulatory agency for
transportation, that it renounced the voting rights related to
common shares regarding MRS Logistica S.A. Shareholders
Agreement originally held by Ferteco Mineracao S.A. aka Ferteco,
a company acquired by CVRD in 2001.
Business News Americas reports that CVRD made the announcement
in compliance with an order by ANTT, who declared that CVRD was
in violation of a regulation that prohibits a single shareholder
in any of Brazil's privatized railroads from holding more than
20% of the railroad's shares in a direct vote.
CVRD holds -- directly and indirectly -- 40.5% of the total
capital and 37.2% of the voting capital of MRS. According to
BNamericas, CVRD acquired 38% of MRS' direct voting shares after
its acquisition of iron ore miner Ferteco in 2001.
CVRD will retain its shares in MRS. The company will however
lose voting rights on the extraneous 18%, BNamericas relates.
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 maintained 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'.
EMBRATEL PARTICIPACOES: Telmex Launches Public Offer on Shares
--------------------------------------------------------------
Telefonos de Mexico aka Telmex has disclosed plans of launching
a public offer to buy more stock on its Brazilian subsidiary --
Embratel Participacoes, Reuters reports.
Telmex has offered 6.95 reals in cash per 1,000 shares in
Embratel Holdings, Reuters says.
Telmex presently owns 72.4% percent in Embratel. The company's
offer includes an additional payment or price adjustment that is
based on a fixed rate by the Brazilian central bank, Reuters
relates.
The company also includes U.S.-based shareholders and Embratel's
ADS holders in its offer but did not disclose the number of
shares it plans to buy, Reuters says.
Telmex -- http://www.telmex.com.mx-- is Mexico's incumbent
telco with control of about 95% of the country's fixed line
infrastructure. The company and its subsidiaries offer a wide
range of advanced telecommunications, data and video services,
internet access as well as integrated telecom solutions for
corporate customers.
* * *
Embratel Participacoes is rated by Moody's:
* local currency issuer rating -- B1; and
* senior unsecured debt -- B2.
GERDAU S.A.: Will Issue 10-Year Bonds on International Markets
--------------------------------------------------------------
Gerdau S.A., Brazil's long steel producer, told the Bovespa
stock exchange that it has plans to offer 10-year bonds on
international capital markets.
According to the document, the net proceeds from the bonds sales
would be used for liability management purposes of Gerdau and
its units.
The issuance will be made through GTL Trade Finance, its wholly
owned subsidiary.
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.
GERDAU SA: Fitch Assigns BB+ Rating on Proposed Senior Bonds
-------------------------------------------------------------
Fitch Ratings has assigned a 'BB+' foreign currency rating to
the proposed senior unsecured bond issuance by GTL Trade Finance
Inc., a wholly owned subsidiary of Gerdau S.A. incorporated in
the British Virgin Islands. The bonds, due in 2016, will be
unsecured obligations of GTL and will be unconditionally and
irrevocably, jointly and severally guaranteed by Gerdau and its
four majority-owned Brazilian operating subsidiaries:
-- Gerdau Acominas S.A.,
-- Gerdau Acos Longos S.A.,
-- Gerdau Acos Especiais S.A. and
-- Gerdau Comercial de Acos S.A.
Proceeds of the offering are expected to be used for general
corporate purposes including primarily the repayment of
outstanding debt obligations.
In addition, Fitch maintains a 'BB+' foreign currency issuer
default rating for Gerdau. The Rating Outlook is Stable. The
rating reflects the favorable business positions of Gerdau's
main steel production subsidiaries,
-- Acominas,
-- Acos Longos and
-- Gerdau Ameristeel Corporation,
as well as the group's strong consolidated financial profile
characterized by low leverage and healthy liquidity. In 2005,
Gerdau continued its strong performance, generating consolidated
net revenues of US$8.9 billion and operating EBITDA of US$2.0
billion. Compared with the prior year, revenues and operating
EBITDA increased by 28% and 3%, respectively mainly due to the
continuing high spread between steel prices and scrap prices as
well as the inclusion in consolidated 2005 results of acquired
assets such as North Star Steel, Diaco and Sipar. With total
consolidated debt of about US$3.4 billion (including an
adjustment of about US$200 million for operating leases and
guaranteed debt) and cash of US$2.3 billion at Dec. 31, 2005,
Gerdau's leverage, as measured by net debt to operating EBITDA,
decreased to 0.6 timesx from 1.0x in 2004, and the ratio of
total debt to operating EBITDA increased to 1.7x from 1.3x.
Liquidity remains manageable, as cash and marketable securities
cover short-term debt by 4.1x.
Although Gerdau is geographically well diversified, with 54% of
its total production capacity outside Brazil, approximately 64%
of the company's consolidated operating EBITDA was generated by
its aforementioned Brazilian operating subsidiaries. This
exposure, as well as the overall risk of the cyclical steel
industry, is factored into Gerdau's ratings and the credit
assessment of its operating subsidiaries.
Gerdau's 'BB+' foreign currency IDR exceeds Brazil's country
ceiling rating of 'BB-' due to:
-- the benefits of owning 65.2% of Ameristeel, the second
largest producer of long-steel products in North America;
-- significant exports by its Brazilian subsidiaries; and
-- substantial cash balances both in Brazil and outside of
the country.
The combination of these three factors, plus management's long-
term commitment to maintaining a conservative credit profile,
should allow the company to make payment on its foreign currency
obligations in a timely manner in the event of capital and
exchange controls being imposed by the Brazilian government
during a sovereign crisis.
Headquartered in Porto Alegre, Brazil, Gerdau is a holding
company for the group's steel production facilities in North and
South America and Europe. The Gerdau companies operate mini-
mill and integrated-steel facilities in:
-- Brazil,
-- Argentina,
-- Chile,
-- Colombia,
-- Uruguay,
-- the United States,
-- Canada, and
-- Spain
and have a crude steel production capacity of 18.7 million tons
in 2006. Gerdau owns 89.3% of its Brazilian operating
companies, which consist primarily of the Acominas and Acos
Longos and have a combined production capacity of about 9.0
million tons of crude steel. In North America, Gerdau owns
65.2% of Ameristeel that ranks as the second-largest producer of
long-steel products with an annual production capacity of 8.3
million tons, including the Gallatin Steel joint-venture.
GERDAU SA: S&P Assigns BB+ Rating on Proposed US$400-Mil Bonds
--------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB+' corporate
credit rating on Brazil-based steelmaker Gerdau S.A. At the
same time, Standard & Poor's assigned its 'BB+' rating to the
forthcoming US$400 million bonds due 2016 to be issued by GTL
Trade Finance Inc., a wholly-owned indirect subsidiary of
Gerdau. The outlook on the corporate credit rating is stable.
The bonds will be unconditionally and irrevocably guaranteed by
Gerdau, as well as by its main operating subsidiaries in Brazil:
-- Gerdau A?ominas S.A.,
-- Gerdau A?os Longos S.A.,
-- Gerdau A?os Especiais S.A., and
-- Gerdau Comercial de Acos S.A.
Gerdau expects to use the proceeds partly for the repayment of
existing debts.
"The ratings on Gerdau reflect the company's exposure to the
volatile and cyclical commodity long steel industry, which is
peculiarly vulnerable to import competition in North America and
to demand swings in Brazil; an acquisitive growth strategy that
may cause some peaks of financial leverage in the future (even
under disciplined target levels and despite the currently
comfortable liquidity and debt profiles); and a heavy capital
budget during the next three years to be invested in both
brownfield and greenfield capacity expansions," said Standard &
Poor's credit analyst Reginaldo Takara.
These negatives are partly mitigated by Gerdau's adequate
geographic diversification through the Americas, with very
strong and growing market shares in Brazil and North America,
respectively; an improving financial profile and the increasing
profitability of its North American operation; and the
expectation that the company will follow a prudent acquisition
policy in the long term that should not jeopardize capital
structure improvements accomplished in the past couple of years.
Gerdau is the largest long steel producer in Brazil and the
second-largest minimill steel maker in North America. The
company also controls operations in:
-- Chile,
-- Uruguay,
-- Colombia, and
-- Argentina.
Net sales, EBITDA, and total debt amounted to US$9.1 billion,
US$2.0 billion, and US$3.7 billion (adjusted for operating
leases and pension liabilities in North America), respectively,
in the 12 months ended March 31, 2006.
The stable outlook on the corporate credit rating reflects our
expectations of prudent debt management and acquisition policy
in the future. Gerdau's credit measures are strong today as a
result of the still favorable conditions for the steel industry,
but we see fundamental improvement in both Gerdau's business and
financial profiles that is expected to be preserved even under a
less positive environment. We expect market conditions in
Brazil to continue to recover from last year's weak performance,
boding well for cash flows in the short term. In the medium
term, while we believe Gerdau's credit ratios may well decline
from current levels, we still expect them to remain adequate for
the rating. As such, we see Gerdau's through-the-cycle FFO-to-
total debt, total debt-to-EBITDA, and EBITDA interest coverage
ratios hovering in the range of about 30%-40%, 1.5x-2.0x, and
5.0x-10x, respectively.
In a severe downcycle either in Brazil or worldwide, we would
not expect these ratios to be any weaker than 20%, 3.0x, and
4.0x, respectively.
Aggressive merger and acquisition activity or expansion of
Gerdau's current capital expenditures plans could put downward
pressure on the ratings and trigger a lowering of the ratings or
an outlook revision to negative. While upside potential is
somewhat limited in the near term given the company's growth
strategy, a positive ratings action or outlook revision could be
predicated on larger synergetic gains in North America,
performance enhancements in Brazil, and evidence of commitment
with target financial ratios that are more conservative than the
current ones.
UNIBANCO: Registers 30% Increase in First Quarter Profit
--------------------------------------------------------
Uniao de Bancos Brasileiros SA or Unibanco, Brazil's third
largest bank, said first-quarter profit rose 30% on increased
lending and higher revenue from service fees.
Net income rose to 520 million reals (US$251 million), or 37
centavos a share, compared with 401 million reals, or 29
centavos, a year ago.
Unibanco's profits has been spurred by Brazil's economic growth,
an average of 3.5% for the last two years.
The bank's loans and services fees surged in the first quarter
as faster economic growth, rising incomes and falling interest
rates fueled demand from consumers and companies.
"Lending as a percentage of gross domestic product in Brazil is
still very low, especially when compared with other countries in
the region, so there is a lot of room for Unibanco and other
banks to grow," Jose Francisco Cataldo, an equity analyst at ABN
Amro NV's Brazilian unit in Sao Paulo, told Bloomberg News.
Revenue from fees climbed to 863 million reals from 751 million
reals a year earlier, Unibanco said in the statement on its Web
site. Revenue fell from 891 million reals in the previous
quarter.
Unibanco increased outstanding loans to 39.7 billion reals, up
from 33.2 billion reals at the end of March 2005. Personal
loans climbed 26% from the year-earlier period, led by a 52%
jump in credit card lending.
The bank booked 642 million reals in costs to set aside money to
cover bad loans, more than twice the 310 million reals in the
previous quarter.
Unibanco posted an annualized return on equity, a measure of
profitability, of 24%, up from 21% in the year- earlier quarter
and down from 24.2% in the previous quarter.
Bloomberg says that Unibanco's shares, fell 51 centavos, or
1.5%, to 34.50 reals in Sao Paulo trading, on a day when the
benchmark stock index fell 2.2%. The shares have gained 96% in
the past 12 months, compared with a 65% gain for the Bovespa
stock index.
* * *
As reported in the Troubled Company Reporter on March 3, 2006,
Standard & Poor's Ratings Services raised its foreign currency
counterparty credit rating on Unibanco -- Uniao de Bancos
Brasileiros, S.A. -- to 'BB/Stable/B' from 'BB-/Positive/B'.
The company's local currency counterparty credit rating
remains at 'BB/Stable/B'.
===========================
C A Y M A N I S L A N D S
===========================
ANTIRO CONVERTIBLE (MASTER): Proofs of Claim Filing Ends May 18
---------------------------------------------------------------
Creditors of Antiro Convertible Bond Master Fund Ltd. are
required to prove their claims to Geoffrey Varga and Brian
Forrester, the company's liquidators, on or before May 18, 2006,
or be excluded from receiving any distribution or payment that
the company will make.
Creditors are required to send by May 18 their full names,
addresses, descriptions, the full particulars of their debts or
claims, and the names and addresses of their lawyers, if any, to
the liquidators.
The liquidators can be reached at:
Geoffrey Varga
Brian Forrester
Kinetic Partners Cayman LLP, Strathvale House
P.O. Box 10387 APO
Grand Cayman, Cayman Islands
Tel: (345) 623-9901
Fax: (345) 623-0007
ANTIRO FIXED: Last Day for Proofs of Claim Filing Is on May 18
--------------------------------------------------------------
Creditors of Antiro Fixed Income Opportunities Fund Ltd., which
is being voluntarily wound up, are required to present proofs of
claim on or before May 18, 2006, to Geoffrey Varga and Brian
Forrester, the company's liquidators.
Creditors are required to present proofs of claim personally or
through their solicitors at the time and place that the
liquidator specified. Failure to present claims would mean
exclusion from the benefit of any distribution that the company
will make.
The liquidators can be reached at:
Geoffrey Varga
Brian Foirrester
Kinetic Partners Cayman LLP, Strathvale House
P.O. Box 10387 APO
Grand Cayman, Cayman Islands
Tel: (345) 623-9901
Fax: (345) 623-0007
DOUBLE SUCCESS: Holds Final Shareholders Meeting on May 18
----------------------------------------------------------
Shareholders of Double Success Company Limited will gather for a
final meeting on May 18, 2006, at:
Cititrust (Cayman) Limited
CIBC Financial Centre, George Town
Grand Cayman, Cayman Islands
Accounts on the company's liquidation process will be presented
during the meeting.
As reported in the Troubled Company Reporter on March 12, 2006,
Double Success started liquidating assets on April 7, 2006.
Creditors of the company are given until May 18, 2006, to
present proofs of claim to Buchanan Limited, the company's
appointed liquidator.
Parties-in-interest may contact the liquidator at:
Buchanan Limited
P.O. Box 1170, George Town
Grand Cayman, Cayman Islands
JEMKA HOLDINGS: Liquidator Stops Accepting Claims After May 18
--------------------------------------------------------------
Buchanan Limited -- liquidator of Jemka Holdings Limited, which
is being voluntarily wound up -- will stop accepting claims from
the company's creditors after May 18, 2006.
Creditors are required to send by May 18 their full names,
addresses, descriptions, the full particulars of their debts or
claims, and the names and addresses of their lawyers, if any, to
the liquidators. Those who fail to submit their proofs of claim
will be excluded from receiving any distribution or payment that
the company will make.
The liquidator can be reached at:
Buchanan Limited
Attention: Francine Jennings
P.O. Box 1170, George Town
Grand Cayman, Cayman Islands
Tel: (345) 949-0355
Fax: (345) 949-0360
MAINSTAY HOLDINGS: Sets Final Shareholders Meeting on May 18
------------------------------------------------------------
Mainstay Holdings Limited will hold a final shareholders meeting
on May 18, 2006, at:
Cititrust (Cayman) Limited
CIBC Financial Centre, George Town
Grand Cayman, Cayman Islands
Buchanan Limited, the Mainstay Holdings' liquidator, will
present accounts on the company's liquidation process during the
meeting.
As reported in the Troubled Company Reporter on May 12, 2006,
the company started liquidating assets on April 7, 2006.
Creditors were required to present proofs of claim by May 18,
2006 to the company's liquidator.
The liquidator can be reached at:
Buchanan Limited
P.O. Box 1170, George Town
Grand Cayman, Cayman Islands
=======
C U B A
=======
* CUBA: Starts Negotiations for Trade Agreement with Mercosur
-------------------------------------------------------------
The government of Cuba has began negotiating with Mercosur --
the Common Market of the South -- for a trade pact, according to
a statement by the foreign ministry of Argentina.
The Mercosur trade bloc is comprised of Argentina, Brazil,
Paraguay and Uruguay.
Discussions had started last week, Xinhua relates. Among issues
tackled are:
-- tariffs,
-- security,
-- trade regimes, regulations and norms, and
-- technical procedures for animal hygiene.
Xinhua reveals that Eduardo Sigal, Argentina's minister of
economic integration, and Podro Pablo San Jorge -- the minister
of foreign trade in Cuba -- presided over the talks.
"These talks will lead to a qualitative jump in the trade
relationship with Cuba. We plan to create benefits for all
concerned," Minister Sigal told Xinhua.
* * *
Moody's assigned these ratings on Cuba:
-- CC LT Foreign Bank Depst, Caa2
-- CC LT Foreign Curr Debt, Caa1
-- CC ST Foreign Bank Depst, NP
-- CC ST Foreign Curr Debt, NP
-- Issuer Rating, Caa1
===================================
D O M I N I C A N R E P U B L I C
===================================
TAG-IT PACIFIC: Singer Lewak Raises Going Concern Doubt
-------------------------------------------------------
Singer Lewak Greenbaum & Goldstein LLP expressed substantial
doubt about Tag It Pacific Inc.'s ability to continue as a going
concern after auditing the Company's financial statements for
the year ended Dec. 31, 2005. The auditing firm pointed to the
Company's net loss in 2005 and its $50,434,042 accumulated
deficit at Dec. 31, 2005.
Tag-It incurred a $29,537,709 net loss on $47,331,176 of revenue
during the year ended Dec. 31, 2005, compared to a $17,608,968
net loss on $55,109,481 of revenue in the prior year. The
Company has experienced recurring losses from operations and
declining revenues since 2003.
At Dec. 31, 2005, the Company's balance sheet showed $30,320,794
in total assets and $29,408,717 in total liabilities. The
Company's operating cash position has declined from $14.4
million at Dec. 31, 2003 to $2.3 million at Dec. 31, 2005.
In response to declining sales and recurring losses, during 2005
Tag-It adopted a restructuring plan designed to better align the
its organizational and cost structures with its future growth
opportunities. The Company's operating plan for 2006 includes
increased sales, higher margins on certain products, reduced
expenses as a percentage of revenues and improved cash flows
sufficient to cover the Company's operating needs.
A full-text copy of the Company's 2005 annual report on Form 10-
K is available for free at http://researcharchives.com/t/s?8e8
Amex Delisting
The American Stock Exchange informed Tag-It on April 13, 2006,
that it failed to meet certain continued listing standards
outlined in the AMEX Company Guide.
AMEX said the Company failed to comply with:
a) Section 802(a) of the Company Guide, which requires that
at least a majority of directors on the Board of
Directors of a listed company be "independent directors"
as defined in Section 121A of the Company Guide; and
b) Section 121(B)(2)(a) of the Company Guide, which
requires that a listed company have, and certify that
it has and will continue to have, an Audit Committee of
at least three members, each of whom is independent.
The notification of noncompliance was a direct result of the
resignation, on March 27, 2006, of Michael Katz, an independent
director, and appointment to the Board of Directors on
March 28, 2006, of Stephen Forte, the Company's Chief Executive
Officer.
Currently, only four of nine members serving on the Company's
Board of Directors qualify as independent, and the Audit
Committee is comprised of only two members. The Company has
until July 28, 2006, to regain compliance with these AMEX
requirements.
About Tag-It
Headquartered in Woodland Hills, California, Tag-It Pacific,
Inc. (AMEX:TAG) -- http://www.tagitpacific.com/-- distributes a
range of trim items to manufacturers of fashion apparel,
retailers, and mass merchandisers worldwide. Its trim items
include thread, zippers, stretch waistbands, labels, buttons,
rivets, printed marketing material, polybags, packing cartons,
and hangers. The company also provides printed marketing
materials, such as hang tags, bar-coded hang tags, pocket
flashers, waistband tickets, and size stickers in its trim
packages. In addition, Tag-It Pacific produces customized
woven, leather, synthetic, embroidered, and novelty labels and
tapes. Further, the company offers its MANAGED TRIM SOLUTION,
which is an Internet-based supply-chain management system
covering the management of ordering, production, inventory
management, and just-in-time distribution of trim and packaging
requirements. Its TekFit division develops and sells apparel
components. The company sells its products primarily in North
America, South America, Mexico, Asia, and the Dominican
Republic.
TAG-IT PACIFIC: Restates 2005 Second & Third Quarter Financials
---------------------------------------------------------------
Tag-It Pacific, Inc., restated its financial statements for the
second and third quarters of 2005 to correct an error in the
application of generally accepted accounting principles
identified in the Company's revenue recognition on selected
transactions occurring during these periods.
The restatement corrects the recording of revenues and
corresponding net loss figures for the second and third quarters
of 2005 as a result of a sale and inventory storage agreement
that was effective in the second quarter. Management discovered
the error during the preparation of its fiscal year 2005 results
and concluded that the revenue from this transaction should not
have been recognized at the time of the agreement, but rather
will be recognized as the inventory is delivered to the
customer, its designee, or is destroyed at the direction of the
customer.
In an April 3, 2006 filing with the Securities and Exchange
Commission, Tag-it disclosed that the restatement will result
in:
-- a reduction of revenues for the three and six-months
ended June 30, 2005 of $2.8 million;
-- an increase in the net loss for the three and six-months
ended June 30, 2005 of $1.3 million;
-- an increase in the revenues for the three months ended
Sept. 30, 2005 of $400,000, and a reduction of revenues
for the nine-months ended Sept. 30, 2005 of $2.4
million; and
-- a reduction in the net loss for the three months ended
Sept. 30, 2005 of $50,000, and an increase in the net
Loss for the nine-months ended Sept. 30, 2005 of $1.2
million.
A full-text copy of the Company's restated quarterly report for
the period ended Sept. 30, 2005, is available for free at:
http://researcharchives.com/t/s?8ea
A full-text copy of the Company's restated quarterly report for
the period ended June 30, 2005, is available for free at:
http://researcharchives.com/t/s?8ec
About Tag-It
Headquartered in Woodland Hills, California, Tag-It Pacific,
Inc. (AMEX:TAG) -- http://www.tagitpacific.com/-- distributes a
range of trim items to manufacturers of fashion apparel,
retailers, and mass merchandisers worldwide. Its trim items
include thread, zippers, stretch waistbands, labels, buttons,
rivets, printed marketing material, polybags, packing cartons,
and hangers. The company also provides printed marketing
materials, such as hang tags, bar-coded hang tags, pocket
flashers, waistband tickets, and size stickers in its trim
packages. In addition, Tag-It Pacific produces customized
woven, leather, synthetic, embroidered, and novelty labels and
tapes. Further, the company offers its MANAGED TRIM SOLUTION,
which is an Internet-based supply-chain management system
covering the management of ordering, production, inventory
management, and just-in-time distribution of trim and packaging
requirements. Its TekFit division develops and sells apparel
components. The company sells its products primarily in North
America, South America, Mexico, Asia, and the Dominican
Republic.
=============
E C U A D O R
=============
PETROECUADOR: Will Decide on Occidental's Proposal on May 15
------------------------------------------------------------
Fernando Gonzalez -- the head of Petroecuador, the state-run oil
firm of Ecuador -- said in a statement that the company will
decide whether it has the legal faculty to review a contract
renegotiation proposal by Occidental Petroleum Corporation aka
Oxy, a US oil company, on May 15, 2006.
According to Business News Americas, Petroecuador has set up a
commission in case it would be allowed to review the proposal.
BNamericas recalls that Petroecuador rejected in March Oxy's
offer to pay US$1 billion to end a legal dispute between the two
companies. Oxy allegedly transferred a 40% stake in block 15 to
Canadian oil firm EnCana in 2000 without government permission.
It was also reported that Oxy overproduced on some wells and was
not complying with its investment plan in the block.
* * *
The Troubled Company Reporter - Latin America reported on
May 8, 2006, that Petroecuador's employees are threatening to
launch a strike if the government won't provide funding
necessary for the company's operations. Reports said that
Petroecuador has no funds for maintenance and no funds to repair
pumps in diesel, gasoline and natural gas refineries.
Ecuador's Economy Minister Diego Borja demanded more efficiency
from the state oil company as well as transparency in its
accounts.
Petroecuador has asked the government for US$279 million to pay
debts to suppliers, outsourcing firms and other creditors
threatening to halt services.
=================
G U A T E M A L A
=================
* GUATEMALA: Groups Rally to Support Anti-Free Trade Bill
---------------------------------------------------------
Guatemalan organizations gathered in front of the Guatemalan
Constitutional Court to support a bill against the US free trade
agreement aka FTA, Inside Costa Rica reports.
According to Inside Costa Rica, those who participated in the
demonstration were:
-- Frente Nacional de Lucha aka FNL
-- Mesa Global coalition,
-- the Anti-imperialist Bloc,
-- National Health Union, and
-- farmers from eastern Jalapa Province.
Inside Costa Rica reveals that the court held a hearing on
Thursday to listen to arguments from state representatives in
favor of the FTA and those of at least 30 organizations that are
against it.
The rally in front of the court is to buttress the anti-FTA
unconstitutionality recourse presented Feb. 24, Jose Callejas --
the leader of FNL -- was quoted by Prensa Latina as saying.
* * *
Fitch Ratings assigned these ratings on Guatemala:
Rating Rating Date
------ -----------
Country Ceiling BB+ Feb. 22, 2006
Long Term IDR BB+ Feb. 22, 2006
Short Term IDR B Feb. 22, 2006
Local Currency
Long Term Issuer
Default Rating BB+ Feb. 22, 2006
* * *
Fitch also rated Guatemala's senior unsecured bonds:
Maturity Date Amount Rate Ratings
------------- ------ ---- -------
Aug. 3, 2007 $150,000,000 8.5% BB+
Nov. 8, 2011 $325,000,000 10.25% BB+
Aug. 1, 2013 $300,000,000 9.25% BB+
Oct. 6, 2034 $330,000,000 8.125% BB+
* GUATEMALA: Transport Group Threatens Fare Hike
------------------------------------------------
The Guatemalan transport group threatened a 100% fare hike if
the government does not pay a subsidy to cope with rising oil
prices, Prensa Latina reports.
The government owes transportation US$8 million, Luis Gomex --
vice president of the Association of Urban Transportation
Companies -- informed Prensa Libre.
Prensa Latina relates that posters in terminals announce the
increase in fare starting Saturday. The increase will be:
-- from GTQ1 to GTQ2 on weekdays, and
-- GTQ2.50 on weekends.
Mr. Gomez told Prensa Latina, "If things continue like this,
each company will begin to manage its own fares."
* * *
Fitch Ratings assigned these ratings on Guatemala:
Rating Rating Date
------ -----------
Country Ceiling BB+ Feb. 22, 2006
Long Term IDR BB+ Feb. 22, 2006
Short Term IDR B Feb. 22, 2006
Local Currency
Long Term Issuer
Default Rating BB+ Feb. 22, 2006
* * *
Fitch also rated Guatemala's senior unsecured bonds:
Maturity Date Amount Rate Ratings
------------- ------ ---- -------
Aug. 3, 2007 US$150,000,000 8.5% BB+
Nov. 8, 2011 US$325,000,000 10.25% BB+
Aug. 1, 2013 US$300,000,000 9.25% BB+
Oct. 6, 2034 US$330,000,000 8.125% BB+
=========
H A I T I
=========
* HAITI: Awaits Arrival of 100,000 Barrels of Oil from Venezuela
----------------------------------------------------------------
About 100,000 barrels of diesel fuel and gasoline from Venezuela
would arrive in Haiti as part of a preferential fuel pact
between the two countries, the Associated Press reports.
Venezuela's Vice President Jose Vicente Rangel told AP on Friday
that the shipment would reach Haitian shores on May 13.
AP recalls that President Hugo Chavez of Venezuela offered to
Haitian President-elect Rene Preval in April:
-- free diesel fuel for hospitals and schools,
-- low-interest loans, and
-- generously financed oil sales under Venezuela's
Petrocaribe accord, allowing for deferred payment and
long-term financing for fuel shipments.
Petrocaribe allows other countries to initially pay a portion of
the oil bill. The remainder will be financed through low-
interest loans over 25 years. Some are also allowed to pay
partly in agricultural goods.
AP states that Haiti will become a member of the pact today, May
15, after Mr. Preval's inauguration as the president of Haiti.
* * *
As reported in the Troubled Company Reporter on April 12, 2006,
president-elect Preval appealed for urgent international help to
spur development in the Western Hemisphere's poorest country and
called on all Haitians to join in a national dialogue to promote
peace, democracy and stability.
"Poverty, widespread unemployment, the state of dilapidation of
basic infrastructures that are necessary for development,
chronic insecurity - these are all the major challenges to be
faced by the next government," President Preval was quoted by
the Associated Press as saying.
President Preval explained that increased international
assistance is "indispensable" to Haiti's economic recovery, to
create conditions for investment and job creation, to improve
social services, and to reform democratic institutions including
parliament, municipalities, the judicial system, and the
national police, the AP relates.
===============
H O N D U R A S
===============
* HONDURAS: Japanese Study Confirms Oil Find in La Mosquitia
------------------------------------------------------------
Honduran President Manuel Zelaya confirmed an oil finding off
the coast of La Mosquitia as stated in a study carried out by
Japanese experts, Honduras This Week reports.
The government is reportedly preparing an international bidding
in order to exploit the deposit.
Minister of Natural Resources and Environment, Mayra Mejia, told
the online journal, that it is not certain that there are
profitable amounts of oil but it looks very promising.
* * *
Moody's Investor Service assigned these ratings on Honduras:
Rating Rating Date
------ -----------
Senior Unsecured B2 Sept. 29, 1998
Long Term IDR B2 Sept. 29, 1998
* HONDURAS: Plans to Revitalize Construction Industry
-----------------------------------------------------
Honduras is looking at the possibility of revitalizing its
construction industry, according to the El Heraldo.
El Heraldo states that the Honduran Chamber of construction aka
Chico believes the repairs of road as well as the execution of
new housing projects would mean the resuscitating of the
industry.
Jose Leon Alvarez, the vice-president of Chico, told El Heraldo
that the approval of the national budget will permit the
development of infrastructural and building projects that will
generate jobs. About 250,000 workers are directly employed in
the construction industry while 125,000 others are employed
indirectly.
* * *
Moody's Investor Service assigned these ratings on Honduras:
Rating Rating Date
------ -----------
Senior Unsecured B2 Sept. 29, 1998
Long Term IDR B2 Sept. 29, 1998
=============
J A M A I C A
=============
KAISER ALUMINUM: Earns US$21.7 Mil. for the Month of March 2006
---------------------------------------------------------------
Kaiser Aluminum Corporation -- All Debtors
Unaudited Balance Sheet
As of March 31, 2006
(In Thousands)
ASSETS
Cash US$36,270
Receivables:
Trade 113,552
Other 15,242
----------
Total Receivables 128,794
Inventories 137,557
Prepaid expenses and other current assets 24,119
----------
Total current assets 326,740
Investments in and advances to subsidiaries 19,320
Intercompany receivables/payables, net
(2,608)
Property, plant, and equipment - net 233,767
Deferred income taxes -
Restricted proceeds from sale of commodity interests -
Other assets 1,017,977
----------
Total Assets US$1,595,196
===========
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities not subject to compromise:
Accounts Payable 72,890
Accrued interest 1,101
Accrued salaries, wages and related expenses 36,408
Accrued post retirement benefit - current -
Other accrued liabilities 65,063
Payable to affiliates 15,512
Long term debt - current portion 1,142
----------
Total current liabilities 192,116
Long-term liabilities 43,900
Accrued postretirement benefit obligation 1
Long-term debt 1,212
Liabilities subject to compromise 4,460,672
Minority interests 655
Stockholders' equity:
Preference stock
Common stock 789
Additional capital 538,008
Accumulated deficit - As of filing date (932,025)
Accumulated deficit - Post filing date (2,701,364)
Accumulated other comprehensive income (loss) (8,768)
Note receivable from parent -
----------
Total Liabilities & Stockholders' Equity US$1,595,196
===========
Kaiser Aluminum Corporation -- All Debtors
Unaudited Statement of Operations
For the Month Ending March 31, 2006
(In Thousands)
Net Sales US$116,275
Costs and expenses:
Cost of products sold 90,954
Depreciation & amortization 1,559
Selling, administrative, R&D and general 3,204
Other operating charges (benefits), net -
----------
Total costs and expenses 95,717
----------
Operating income (loss) 20,558
Other income (expense):
Interest expenses, net
(62)
Reorganization items
(2,252)
Other-net 8,994
----------
Income (loss) before
income taxes and minority interest 27,238
(Provision) benefit for income taxes
(5,562)
Minority interests -
Equity in income (loss) of subsidiaries 50
----------
Net income (loss) US$21,726
==========
Kaiser Aluminum Corporation -- All Debtors
Schedule of Consolidated Cash Receipts and Disbursements
For the Month Ending March 31, 2006
(In Thousands)
Receipts:
Trade Receivables
KACC Receivables US$70,780
KAII Receivables 46,451
----------
Total Trade Receivables 117,231
Proceeds from Insurance Settlements 7,460
COBRA Receipts 578
Proceeds from Hedging Settlements 802
----------
Total Receipts 126,071
Disbursements:
Inventory/Raw Materials 69,556
Capital Expenditures 6,010
Maintenance, Materials, etc. 3,733
Freight 6,873
Utilities/Energy 5,576
Hourly Payroll 9,443
Salaried Payroll 7,558
Hedging Activities 645
Pension Contributions 674
VEBA Advances 1,900
Medical - Current Employees 2,518
Annual Insurance Premiums -
Workmen's Compensation 471
Corporate General and Administrative 7,031
JV Fundings - Primary, Net of Reimbursements 10,708
Other Disbursements 5,685
----------
Total Operating and G&A Disbursements 138,381
Reorganization Items 862
----------
Total Disbursements 139,243
----------
Net Cash Flow
(13,172)
Beginning Bank Cash Balances 48,607
----------
Ending Bank Cash Balances US$35,435
Reconciling Items 835
----------
Ending Book Cash Balances US$36,270
==========
Headquartered in Foothill Ranch, California, Kaiser Aluminum
Corporation -- http://www.kaiseraluminum.com/-- is a leading
producer of fabricated aluminum products for aerospace and high-
strength, general engineering, automotive, and custom industrial
applications. The Company, along with its Jamaican subsidiaries
-- Alpart Jamaica Inc. and Kaiser Jamaica Corporation -- filed
for chapter 11 protection on February 12, 2002 (Bankr. Del. Case
No. 02-10429), and has sold off a number of its commodity
businesses during course of its cases. Corinne Ball, Esq., at
Jones Day, represents the Debtors in their restructuring
efforts. On June 30, 2004, the Debtors listed US$1.619 billion
in assets and US$3.396 billion in debts.
* JAMAICA: Inks Long-Term Oil Agreement with Trinidad & Tobago
--------------------------------------------------------------
The supply of natural gas to Jamaica from Trinidad and Tobago
starting 2009 will be made long-term, Prime Ministers Portia
Simpson Miller of Jamaica and Patrick Manning of Trinidad &
Tobago disclosed at a joint news conference.
As reported in the Troubled Company Reporter on April 27, 2006,
the two leaders inked a natural gas supply agreement that would
allow Jamaica to receive 158 million cubic feet of natural gas
from Trinidad daily. The first delivery is scheduled to begin
around 2009 at a fair price.
Minister Manning was quoted by the Express as saying that with
respect to price, "Trinidad and Tobago has committed itself to
use its best efforts to bring about some kind of pricing
arrangement that is mutually acceptable."
Minister Manning enumerated three options available for the
supply of natural gas to Jamaica:
-- One option was compressed natural gas utilizing a new
technology that is now demonstrating the potential for an
economic arrangement between the two countries.
-- The second option was for a debottlenecking of LNG Train
IV, which should give additional quantities of gas.
-- The third option was for the proposed Train X (the next
Train), which will give Trinidad enough gas to be able to
commit to a long-term supply to Jamaica.
"The price arrangements will call for some will, and one of the
things that would be important here would be collaboration
between Trinidad and Tobago and Jamaica to ensure that third
parties do not benefit at the expense of us both," Minister
Manning told The Nassau Guardian.
* * *
Moody's assigned on Feb. 23, 2006, its B rating on Jamaica.
"The outlook for all ratings is stable, reflecting a balance
between ongoing efforts at fiscal consolidation and the
vulnerability of the country to external shocks," Moody's said.
The agency points to Jamaica's strengths as a commitment to
fiscal discipline, proven ability to face severe shocks and
comparatively low external Government debt ratios.
Among the challenges which Jamaica faces, according to the
rating agency, is a closely managed exchange rate that is
subject to severe recurrent pressures and a large public sector
debt burden with growing exposure to international capital
markets.
The agency notes that the economy as well as the fiscal and
external positions remain sensitive to external and domestic
shocks. It further observes that, "they remain supported by the
Government's commitment to return to a balanced budget position
and by a constitutional provision mandating debt-service
payments as the first expenditure priority."
Moody's, which influences the behaviour of international
institutional investors, says despite Jamaica's recent adverse
external developments and a downturn in the local business
sentiment, "confidence in the medium-term programme and in the
ability of the policymakers has remained somewhat intact, as
evidenced by the relative stability of the foreign exchange
market, notwithstanding some bouts of pressure."
* JAMAICA: Inks Pact With Coimex in Ethanol Plant Construction
--------------------------------------------------------------
The Jamaican government has signed a deal with Brazil's Coimex,
for the establishment of a 60-million gallon ethanol plant this
year, Camilo Thame at the Jamaica Observer reports.
Technology Minister Philip Paulwell confirmed in an interview
with the Observer the government's decision to push through with
the deal.
The Observer reports that Coimex was also a partner in a
previous project with Petrojam, a state-owned oil refinery. The
project was the construction of a 40-million gallon ethanol
plant in Kingston. It was completed in August 2005 with a total
cost of US$10 million.
The plant started operating in September 2005. It recorded a
net profit of US$246.6 million from US$2.26 billion revenue, the
Observer relates.
According to Bloomberg, Brazilian ethanol sells cheaper at
US$1.40 per gallon than the US$2.09 per gallon average price in
America.
Although the United States imposes a 59-cent tax on imported
ethanol, the Coimex/Petrojam plant enjoys duty-free exports
under the Caribbean Economic Recovery Initiative, the Observer
says. The plant has a current production of 40 million gallons
per year.
For the fiscal year 2006/2007, the plant is forecasted to earn
US$382 million in net profit from US$3.76 billion revenue, the
Observer reports.
The Observer relates that the site for the 60-million gallon
project was already in negotiations in November of 2005.
Mr. Paulwell told the Observer that the new plant would have
started construction in March but it was delayed due to the
search of a location for the facility, since the existing plant
would have to be expanded by another 10 million gallons if
Coimex was not able to find a suitably priced location.
The name of the joint venture company is Petrojam Ethanol
Limited. According to a source, PEL bought from Exxon at the
start of the year, a land situated next to the Petrojam plant in
Marcus Garvey Drive in Kingston, the Jamaica Observer says.
However Sunday Finance did not conclude if the land was the
established expansion site.
* * *
On Feb. 23, 2006, Moody's put its B rating on Jamaica.
"The outlook for all ratings is stable, reflecting a balance
between ongoing efforts at fiscal consolidation and the
vulnerability of the country to external shocks," Moody's said.
The agency points to Jamaica's strengths as a commitment to
fiscal discipline, proven ability to face severe shocks and
comparatively low external Government debt ratios.
Among the challenges which Jamaica faces, according to the
rating agency, is a closely managed exchange rate that is
subject to severe recurrent pressures and a large public sector
debt burden with growing exposure to international capital
markets.
The agency notes that the economy as well as the fiscal and
external positions remain sensitive to external and domestic
shocks. It further observes that, "they remain supported by the
Government's commitment to return to a balanced budget position
and by a constitutional provision mandating debt-service
payments as the first expenditure priority."
Moody's, which influences the behaviour of international
institutional investors, says despite Jamaica's recent adverse
external developments and a downturn in the local business
sentiment, "confidence in the medium-term programme and in the
ability of the policymakers has remained somewhat intact, as
evidenced by the relative stability of the foreign exchange
market, notwithstanding some bouts of pressure."
===========
M E X I C O
===========
U.S. ANTIMONY: DeCoria Maichel Raises Going Concern Doubt
---------------------------------------------------------
DeCoria, Maichel & Teague P.S. in Spokane, Washington,
raiseraised substantial doubt about United States Antimony
Corporation's ability to continue as a going concern after
auditing the Company's consolidated financial statements for the
years ended Dec. 31, 2005, and 2004. The auditor pointed to the
Company's accumulated and stockholders' equity deficiencies.
The Company reported a US$575,766 net loss on US$3,564,030 of
total revenues for the year ended Dec. 31, 2005.
At Dec. 31, 2005, the Company's balance sheet showed
US$1,619,370 in total assets and US$2,337,203 in total
liabilities, resulting in a US$717,833 stockholders' equity
deficit.
The Company's Dec.December 31 balance sheet also showed strained
liquidity with US$586,898 in total current assets available to
pay US$1,411,200 in total current liabilities coming due within
the next 12 months.
A full-text copy of the Company's 2005 Annual Report is
available for free at http://ResearchArchives.com/t/s?8e2
United States Antimony Corporation produces and sells antimony
and zeolite products. Antimonio de Mexico, S. A. de C. V., was
formed in Aug. 19, 2005, to explore and develop antimony and
silver deposits in Mexico. Bear River Zeolite Company was
incorporated in 2000, and mines and produces zeolite in
southeastern Idaho.
ZAPOTLAN EL GRANDE: Moody's Assigns Ba2 Rating on Ps65M Loan
------------------------------------------------------------
Moody's Investors Service has assigned ratings provisional
ratings of (P) A2.mx and (P) Ba2 to the Ps65 million bank loan
to be contracted by the Municipality of Zapotlan el Grande
(Jalisco) with Banco del Bajio. Approximately Ps40 million of
the loan proceeds will be used to pay off the municipality's
debt with banks and the state of Jalisco, with the remainder to
be spent on capital projects. The loan will be payable under a
paying trust agreement signed by the municipality, with JP
Morgan as trustee, on March 9, 2006. Two other municipalities
in the state of Jalisco participated in the aforementioned trust
agreement, but each municipality has separate accounts to
receive the corresponding pledged funds and individual
principal, interest and reserve accounts to pay its loans. The
municipality of Zapotlan committed 100% of its federal
participation revenues to this trust. The state of Jalisco is
also party to the trust agreement, as the instruction for the
state to transfer participation revenues to the trust instead of
the municipalities is included in the trust contract. The loan
being rated herein for the municipality of Zapotlan is payable
under a distinct contract with Banco del Bajio.
Principal and interest on the loan will be payable on a monthly
basis at a variable rate expected to be TIIE + 2.5%, beginning
the month after the funds are disbursed and over the 10-year
amortization period. Although current draft documentation does
not provide a reserve provision, Moody's expects that a 6-month
debt service reserve fund will be included in the final credit
contract.
The provisional ratings assigned herein are based on
documentation received by Moody's as of the rating assignment
date, some of which is still subject to finalization. Moody's
will review all of the definitive documents governing the loans
payable under the trust agreement. In the event that the final
documentation differs significantly from the drafts submitted to
us, Moody's will assess what effects these differences may have
on the rating and act accordingly.
Because the bank loan is a direct obligation of the
municipality, payment of which is also governed by the trust
agreement, the ratings rely on both the municipality's credit
position and the enhancement to that credit provided by the
governing documents. Pertinent factors include:
1. The municipality's issuer ratings of Baa3.mx and B2.
The ratings reflect the municipality's persistently weak
financial performance, driven mainly by high operating
costs. The fiscal deterioration has caused liabilities
to grow and liquidity to come under strain. Zapotlan's
efforts to reform its finances appear to have had some
positive effect in 2005, but the results over the medium
term remain inconclusive, and the prospects for ultimate
success could be hindered by political and economic
factors.
2. The governing legal authorization by the Zapotlan city
council allows for the municipality to contract the loan
for a 10 year period, to become party to the trust
agreement and pledge the municipality's federal
participation revenues, and use the funds for productive
public investment. The approvals by city council and the
transaction comply with the State of Jalisco Debt Law
and its Fiscal Coordination Law.
An existing limitation to the trust agreement is that
the municipality has pledged 100% of its participation
revenues to the trust despite already having pledged 11%
of its participation revenues to an outstanding loan.
At present, this issue does not affect the payment on
either the outstanding loan or the Banco del Bajio loan,
given that no funds have been disbursed on the latter
agreement. To remedy this situation, the municipality
is to receive a bridge loan from Banco del Bajio, for a
period of a about one day, in order to pay off the debt
to which participaciones are committed. Once that loan
is paid off, the municipality will instruct the State of
Jalisco to transfer 100% of its participaciones to the
JP Morgan trust.
3. Participaction revenues represent a stable and predictable
revenue source. In the State of Jalisco, municipalities
receive 22% of the federal participation revenues
distributed to the state, compared to the 20% required by
the Federal Fiscal Coordination Law. In the case of
Zapotlan these have represented approximately 35% of total
revenues. Participation revenues for Zapotlan have
demonstrated good growth, averaging 8.5% annually over
the last five years.
4. Coverage on the loan provided by 100% of participaciones
is good, with minimum monthly debt service coverage of
3.9x (occurring in 2006) and an average monthly coverage
of 6x over the first five years of the loan. In addition,
the loan contract is expected to provide a 6 month
interest and principal reserve fund, which is above
average for transactions with monthly debt service
payments. This feature provides a relatively reasonable
workout period for the issuer and bank to deal with issues
which may arise.
However, by committing 100% of its participaciones to
this one loan, the municipality is effectively limiting
its access to the market for the next 10 years. Given
that Zapotlan has relied heavily on financing since at
least 2000, this limitation could pressure municipal
finances in the future when additional resources for
capital projects are needed. Some flexibility for future
financing opportunities could be garnered from the fact
that over the life of the loan approximately 86% of the
participaciones going through the trust should be returned
to the municipality after the payment of debt service on
the loan. This allows the possibility to contract
additional loan obligations which would be subordinate
to the present loan, and which could be paid through
the same (or another) trust with a pledge of remaining
participaciones.
5. Under the loan contract, the designation of certain
obligations of the issuer that might adversely affect
loan payments as "Causes for Early Amortization." These
events comprise two administrative obligations (including
providing financial reports to the bank by a certain date)
and four obligations of a more serious matter. We believe
that the possible penalty associated with the
non-compliance of any of these obligations -- the ability
of the bank to declare the loans due and payable --
appropriately protect the interests of the creditor when
these events are those of a serious nature (such as not
registering the loan in the trust), as they serve to deter
the issuer from taking an action that may threaten loan
payments. However, the ability to declare an early
amortization of the loans in response to a lack of
compliance with obligations of merely an administrative
nature could introduce volatility, given the relatively
harsh consequences. In the case of these two instances,
the bank has agreed to grant a 6 month cure period in
which to comply, which somewhat minimizes the potential
for volatility. Moody's notes, however, that
the six-month cure period is not yet reflected in the
draft documentation provided at the time of the rating
assignment and press release.
=================
N I C A R A G U A
=================
* NICARAGUA: Has Plans to Explore Honduran Oil Fields
-----------------------------------------------------
Nicaragua is planning to explore the oil fields in Honduras,
according to Honduras This Week Online.
A study conducted by Japanese experts off the coast of La
Mosquitia indicated the presence of oil on Honduran territory.
Mayra Mejia -- the minister of natural resources and environment
-- told Honduras This Week that it is not certain there are
profitable amounts of oil. The minister, however, admitted that
it is very promising.
There will be other studies looking for oil in the future,
Honduras' President Mel Zelaya was quoted by Honduras This Week
saying.
President Zelaya told Honduras This Week that the government is
preparing an international bidding for the exploration for oil
in the country.
* * *
Moody's Investor Service assigned these ratings on Honduras:
Rating Rating Date
------ -----------
Senior Unsecured B2 Sept. 29, 1998
Long Term IDR B2 Sept. 29, 1998
===============
P A R A G U A Y
===============
* PARAGUAY: Investors Will Attend Business Round in Venezuela
-------------------------------------------------------------
Paraguayan companies will be in Caracas from May 15 to 18 to
discuss business with Venezuelan firms.
Alejandro Uzcategui, head of Empresarios por Venezuela, told El
Universal that during the business rounds, about US$40 million
in deals will be reached with Paraguayan businessmen.
Other participants of the event include:
* the Venezuelan-Paraguayan Chamber of Trade;
* the Venezuelan Chapter of Mercosur International Chamber;
* the Paraguayan embassy to Caracas; and
* the Venezuelan Ministry of Basic Industries and Mining.
* * *
Moody's assigned these ratings on Paraguay:
-- CC LT Foreign Bank Deposit, Caa2
-- CC LT Foreign Curr Debt, Caa1
-- CC ST Foreign Bank Deposit, NP
-- CC ST Foreign Currency Debt, NP
-- LC Currency Issuer Rating, Caa1
-- FC Curr Issuer Rating, Caa1
-- Local Currency LT Debt, WR
* * *
Standard & Poor's assigned these ratings on Paraguay:
-- Foreign Currency LT Debt B-
-- Local Currency LT Debt B-
-- Foreign Currency ST Debt C
-- Local Currency ST Debt C
=======
P E R U
=======
SIDERPERU: ProInversion Will Disclose Auction Winner on June 28
---------------------------------------------------------------
The winning bidder in the auction of a 56.04% stake in Siderperu
will be announced by ProInversion on June 28, the day of the
auction, Business News Americas reports.
BNamericas says that the auction will be held on the Lima stock
exchange from 10:00 a.m. to 12:00 noon.
Danilo Munarriz, the investment promotion coordinator for the
Siderperu deal, told BNamericas that the rules have already been
published and are available for interested parties on the
ProInversion Web site and at its offices.
Mr. Munarriz informed BNamericas that there are more than three
firms interested in participating.
Potential bidders can make consultations about the rules of the
auction starting May 18 until May 26, BNamericas relates. The
reserve price will be disclosed on June 22. The presentation of
the proposals will be on June 28 and then the concession will be
awarded.
Mr. Munerriz was quoted by BNamericas saying, "Once the auction
has opened, we will post the base price and bidders can make
their offers and, in turn, make more offers in such a way that
at the stroke of noon, the offers will be organized from largest
to smallest and the highest will be the winner."
BNamericas recalls that ProInversion disclosed to local
newspapers on April 29, plans for the public auction of its
participation in Siderperu on July 14. ProInversion acquired in
an auction in March about 553 million ordinary shares of
Siderperu, equivalent to 56.04% of the company's capital stock,
after SiderPeru defaulted on its credit obligations.
Headquartered in Chimbote, Peru, Siderperu SA has steel
production capacity of 400,000 tons per year. The company
reported a net loss of 5.99 million soles (US$1.82 million) in
2005, compared to a net profit of 28.8 million soles in 2004.
* * *
As reported on Oct. 6, 2005, Siderperu failed to meet
commitments to pay on September 30, 2005, three quarterly
payments already postponed from 2003, prompting Lima-based risk
agency Equilibrium to downgrade its rating on the steelmaker's
first corporate bond program to category D from C.
Siderperu, which has struggled to meet payments for its first
bond issues, secured creditors approval on a global refinancing
agreement in April 2002 to reprogram the payments from
2003-2012.
Since then, however, creditors have agreed to three addendums to
reprogram the commitments made in the AGR. A payment of US$7.9
million was due on September 30, 2005.
On September 30, 2005, Siderperu made a US$1.75-million payment
that corresponded to the regular quarterly quota of the
principal amount.
* PERU: Opens Market to All US Beef Products
--------------------------------------------
Peru will open its market to all beef products from the United
States, Cattle Network reports.
Cattle Network relates that as part of the US-Peru Free Trade
Agreement, all beef -- boneless, bone-in and offal -- and beef
products with export certification dated May 31, 2006, or later
will be welcomed in Peru.
Cattle Network states that Peru has immediately began accepting:
-- fresh and frozen boneless beef and beef stomachs,
-- kidneys, and
-- livers.
According to the United States Department of Agriculture aka
USDA Food Safety and Inspection Service, these products are
eligible:
-- Fresh or frozen pork,
-- Fresh or frozen ovine meat of Australian origin,
-- Fresh or frozen bovine meat of Australian origin,
-- Fresh or frozen poultry and poultry products.
-- Fresh or frozen boneless beef and beef stomachs, kidneys,
and livers.
Products that are ineligible include:
-- Fresh or frozen sheep, and
-- lamb and sheep or lamb products, with the exception of
product of Australian origin.
* * *
Fitch Ratings assigned these ratings on Peru:
Rating Rating Date
------ -----------
Country Ceiling BB Nov. 18, 2004
Long Term IDR BB Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB+ Dec. 14, 2005
=====================
P U E R T O R I C O
=====================
* PUERTO RICO: Officials Agree on US$740 Mil. Loan for Wage
-----------------------------------------------------------
The government officials of Puerto Rico agreed on a US$740
million emergency loan to pay for workers' salaries until
June 30, 2006, ending a financial crisis that shutdown
government offices and left several Puerto Ricans without jobs.
San Juan Roman Catholic Archbishop Roberto Gonzalez Nieves had
brokered the agreement. Archbishop Nieves had called on
lawmakers to create a bipartisan committee, which would have
four members. The committee would formulate a budget plan as
the country's head, Gov. Anibal Acevedo Vila, and the
legislature dominated by the opposition never agreed on a
proposal.
Earlier last week, the special commission was created with two
economists, a professor and a former judge as members.
Gov. Vila, House Speaker Jose Aponte, Senate President Kenneth
McClintock met with the committee at the governor's mansion to
discuss proposals. The three men had agreed to abide by the
committee's final recommendations.
After a three-hour meeting with the bishop, House Speaker Aponte
and Senate President McClintock, Gov. Vila announced to the
public that an agreement on a budget plan was reached.
Public sector employees would be able to start working on May
15, Gov. Vila said.
The governor said that the detail of the plan is yet to be
finalized in a Thursday meeting with Archbishop Nieves and the
legislative leaders. Proposals were yet to be voted but House
Speaker Aponte is positive that the plan would be approved.
Gov. Avila and other members of the commission did not disclose
how the conflict over the repayment of the loan was resolved.
The Puerto Rican leader did not say whether the loan would be
paid by a first sales tax.
Gov. Avila however hinted that the repayment would come through
a series of measures. The governor also said that there would
also be tax reforms and possible downsizing of the commonwealth
government.
The legislature will consider a bill that will reduce public
employees by 3.5%. Gov. Avila will be obliged to freeze jobs
and advertising accords and cut other costs that could save up
to US$300 million every year.
According to Gov. Avila's advocates, the governor has cancelled
about 5,000 temporary employment contracts and frozen another
7,000 jobs.
Gov. Vila, House Speaker Aponte and Senate President McClintock
also agreed to meet weekly for discussions to bridge
differences. The governor said that they need better
communication.
Despite the agreement, union leaders who postponed a general
strike on Tuesday still planned a large march across San Juan.
Federico Torres Montalvo, the head of one of the main labor
unions, said that the groups are pleased that the two opposing
parties finally agreed on a budget plan but they are wary on
what would happen after June 30.
Truckers, electricians, others from the private sector, mayors,
municipal employees and teacher will be joining the march,
Ricardo Santos -- the head of the Electrical and Irrigation
Industry Workers Union -- revealed, and urged public employees
to join.
Standard & Poor's and Moody's Investors Service placed Puerto
Rico's economic outlook at negative. The rating agencies have
also put Puerto Rico on a special watch status, with the
possibility of downgrading the government's credit rating.
=============
U R U G U A Y
=============
* URUGUAY: Electricity Shortage Won't Affect Supply & Rates
-----------------------------------------------------------
Uruguay's problem on hydroelectric generation due to lack of
rainfall will not affect power supply and rates for now, Beno
Ruchansky -- head of the state-run power firm UTE -- told
Business News Americas.
Uruguay's presidential Web site quoted Mr. Ruchansky saying that
even though a price increase is not planned, the government is
following closely the evolution of variables, particularly if
the barrel price of oil consolidates at US$70.
Mr. Ruchansky told BNamericas that UTE is considering increasing
power exchanges with neighboring countries. He is positive that
the Punta de Tigre plant would start operations in the coming
months.
As reported in the Troubled Company Reporter on May 12, 2006,
Uruguay is being threatened by a possible shortage in
electricity. The lack of rainfall as well as lesser regional
solidarity has forced Uruguay to save electricity and come up
with an emergency alternative, according to a report by the
government-run energy company UTE. Emergency alternative could
include blackouts.
Merco Press recalls that Argentina, who is in conflict with
Uruguay on the construction of pulp mills in the Uruguay River,
reduced the electricity provision to Uruguay from 360 MWh to 150
MWh due shortages in its own territory.
Brazil is also suffering the consequences of a prolonged
drought, says Merco Press. As a result, the country has also
reduced the surplus to Uruguay to 70 MWh.
Merco Press reveals that Uruguay is forced to turn on a fossil
fueled plant that cost US$1 million daily.
Merco Press says that the first of two fossil fueled 100 MWh
plants is scheduled to start operating by the end of July.
Another one will follow in August.
The country is hoping for more rainfall to help fill the several
dams that are out of service or working at a minimum due to
insufficient water supply, Merco Press states.
According to Merco Press, Uruguay has three main dams that
jointly generate 500 MWh plus a dam shared with Argentina, which
has one out of fourteen turbines in production. Without
rainfall, the three dams have 50 days production.
Jorge Lepra, the country's industry minister, told Merco Press
that the energy situation with no rainfall is quite delicate
until the end of August or early September.
Merco Press states that the country has a contingency plan with
an immediate goal to convince home users, who absorb 50% of
Uruguay's total electricity production, to lessen the
consumption of electricity by 5% plus 10% savings in government
offices and dependencies.
Merco Press reveals that the government hired a private firm to
organize a massive media savings campaign among home consumers.
The shortage of electricity would force Uruguay to impose
rotational blackouts from three to four hours in Montevideo and
the main cities, according to Merco Press.
Uruguay has not adopted the measure since 1989, Merco Press
recalls.
* * *
Fitch Ratings assigned these ratings on Uruguay:
Rating Rating Date
------ -----------
Country Ceiling BB- Mar. 7, 2005
Long Term IDR B+ Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB- Mar. 7, 2005
=================
V E N E Z U E L A
=================
CERRO NEGRO: Fitch Downgrades Senior Secured Debt Rating to B+
--------------------------------------------------------------
Fitch has downgraded to 'B+' from 'BB' the ratings that apply to
the senior secured debt obligations of the four Venezuelan heavy
oil strategic associations:
-- Petrozuata Finance Inc.,
-- Cerro Negro Finance Ltd.,
-- Sincrudos de Oriente Sincor, C.A., and
-- Petrolera Hamaca, S.A..
The ratings are placed on Rating Watch Negative.
The rating action applies to these debt obligations of Cerro
Negro:
-- US$200 million 7.33% bonds due 2009;
-- US$350 million 7.90% bonds due 2020; and
-- US$50 million 8.03% bonds due 2028.
The National Assembly amended the organic hydrocarbons law to
impose a new oil extraction tax of 33.33%. The tax is
calculated on the same basis as the oil royalty, and the royalty
of 16.66% that applies to the strategic associations is deducted
from the tax. Effectively, remittances payable to the government
on the value of crude at the well head are doubled. Royalties
were previously raised ahead of expectations in 2004 from a
preferential rate of 1% to 16.66% in 2004. The agreed 1% rate
was adopted in the 1990s to incentivize private development of
the Orinoco Basin reserves at a time of prolonged weakness in
oil prices and in recognition of Venezuela's need to improve its
oil-producing infrastructure.
The government has also announced its intention of increasing
from 34% to 50% the corporate income tax applicable to the
strategic associations. Fitch anticipates that the much heavier
royalty and tax burdens combined with the deleterious effect of
persistent double-digit inflation in Venezuela will
substantially diminish cash flows available for debt service.
In its oil price deck, Fitch expects a gradual return to the
long-term historical average in the mid-US$20s per barrel for
West Texas Intermediate by 2009, which combined with imposed
limits by the government on production, could result in net
revenue falls of as much as 60%. Despite the operational success
of the projects and the benefit of unexpectedly high oil prices,
royalty and tax remittances reduced project revenue in 2005 by
an average of 40% from 2004. Fitch considers it likely that
with the most recent revisions of the fiscal regime applicable
to the projects and a decline in oil prices to historical
averages, the ability of the projects to service debt
obligations in full could be impaired by 2011 or earlier.
The Rating Watch Negative status indicates there is a reasonable
probability of additional rating downgrades in coming months.
In addition to the oil extraction tax, the law amendment created
a new levy of 0.1% on hydrocarbon export registrations that will
be computed on the product's sales price to customers.
Additional taxes and royalty increases cannot be ruled out.
The Rating Watch also portends the uncertainty associated with a
restructuring of the strategic associations as 'mixed
enterprises'. It remains unclear whether the government will in
fact pursue such a restructuring and whether the foreign
partners in the associations will accept or reject the terms of
the Chavez administration. However, using the government's
treatment of the operating agreements between Petroleos de
Venezuela SA and foreign producers as a guide, in essence, the
private partners in the associations might relinquish majority
ownership in the existing associations such that PDVSA will hold
at least 51% of the equity as well as operating control of the
projects. A restructuring raises serious concerns regarding
compliance with the terms of the Common Security Agreements and
the Transfer Restriction Agreements that govern the debt
financing of the projects as well as the Charters that underpin
the project's legal existence.
Petrozuata, Cerro Negro, Sincor, and Hamaca are all domiciled in
Venezuela and are key to the development of the Orinoco Basin's
extra heavy crude oil reserves. Debtholders rely solely on the
ability of each project to generate sufficient cash flow from
operations to meet scheduled debt service. Revenues are largely
derived from the sale of syncrude exports.
Cerro Negro is owned 41.67% by an ExxonMobil subsidiary, 41.67%
by a PDVSA subsidiary, and 16.67% by a Veba Oel subsidiary.
PETROLEOS DE VENEZUELA: Forms Petroandina Partnership with YPFB
---------------------------------------------------------------
Petroleos de Venezuela SA and Yacimientos Petroliferos Fiscales
Bolivianos will sign next week a joint venture agreement.
The PDVSA-YPFB partnership will be called Petroandina. The new
company will open gas stations that will offer special services
such as car wash, mechanic workshops and restaurants, El
Universal reports.
The partnership has been confirmed by Bolivia's hydrocarbons
minister Andres Soliz Rada in a news conference.
Under the agreement, PDVSA will hold 10% stakes in some projects
while YPFB will hold 90%.
One of the projects that will be undertaken by the partnership
will be the installaton of a plant for for separating ethanol,
propane and methanol.
PDVSA will also help in the installation of a petrochemical
plant for production of plastics.
Venezuela's Financial Aid
Meanwhile, to help strengthen Bolivia's hydrocarbons sector,
Venezuela has promised to donate asphalt valued at US$2 million
for the construction of a road in Chapare. Additionally,
Venezuela will grant a US$8 million loan to Bolivia to upgrade
an existing hydrocarbons refining and storage firm.
Venezuela has also pledged sending 200,000 barrels of oil per
day to Bolivia to cover a shortage in the Andean nation's
eastern region.
Furthermore, Bolivia will be sending 200 engineers for training
in Venezuela.
"The intention (of Venezuela) is achieving an alternative to the
dominating presence of the United States through the Free Trade
Agreements," Minister Soliz Rada was quoted by El Universal as
saying.
Petroleos de Venezuela SA aka 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, 2006, 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
pgrade of Venezuela's sovereign rating.
PETROLEOS DE VENEZUELA: Wants to Hold Oil Trade with Italy
----------------------------------------------------------
Venezuelan President Hugo Chavez invited Italian firms to invest
in his country's oil and gas industry.
During Pres. Chavez's visit to Italy, he made a trade proposal
over the phone to Italian Prime Minister elect Romano Prodi, El
Universal says.
Venezuela expects to become a supplier of oil and gas to Italy
through the state-owned company, Petroleos de Venezuela SA.
Petroleos de Venezuela SA aka 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, 2006, 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
pgrade of Venezuela's sovereign rating.
PETROLERA HAMACA: Fitch Lowers Senior Secured Debt Ratings to B+
----------------------------------------------------------------
Fitch has downgraded to 'B+' from 'BB' the ratings that apply to
the senior secured debt obligations of the four Venezuelan heavy
oil strategic associations:
-- Petrozuata Finance Inc.,
-- Cerro Negro Finance Ltd.,
-- Sincrudos de Oriente Sincor, C.A., and
-- Petrolera Hamaca, S.A.
The ratings are placed on Rating Watch Negative.
The rating action applies to these debt obligations of Petrolera
Hamaca:
-- Senior project loans of US$1.1 billion, consisting of:
-- US$627.8 million senior agency loan due 2018; and
-- US$470 million senior bank loan due 2015, borrowed
on a several (not joint) basis 30% by Corpoguanipa,
S.A., a subsidiary of PDVSA, and 70% by Hamaca
Holdings L.L.C.
The National Assembly amended the organic hydrocarbons law to
impose a new oil extraction tax of 33.33%. The tax is
calculated on the same basis as the oil royalty, and the royalty
of 16.66% that applies to the strategic associations is deducted
from the tax. Effectively, remittances payable to the
government on the value of crude at the well head are doubled.
Royalties were previously raised ahead of expectations in 2004
from a preferential rate of 1% to 16.66% in 2004. The agreed 1%
rate was adopted in the 1990s to incentivize private development
of the Orinoco Basin reserves at a time of prolonged weakness in
oil prices and in recognition of Venezuela's need to improve its
oil-producing infrastructure.
The government has also announced its intention of increasing
from 34% to 50% the corporate income tax applicable to the
strategic associations. Fitch anticipates that the much heavier
royalty and tax burdens combined with the deleterious effect of
persistent double-digit inflation in Venezuela will
substantially diminish cash flows available for debt service.
In its oil price deck, Fitch expects a gradual return to the
long-term historical average in the mid-US$20s per barrel for
West Texas Intermediate by 2009, which combined with imposed
limits by the government on production, could result in net
revenue falls of as much as 60%. Despite the operational success
of the projects and the benefit of unexpectedly high oil prices,
royalty and tax remittances reduced project revenue in 2005 by
an average of 40% from 2004. Fitch considers it likely that
with the most recent revisions of the fiscal regime applicable
to the projects and a decline in oil prices to historical
averages, the ability of the projects to service debt
obligations in full could be impaired by 2011 or earlier.
The Rating Watch Negative status indicates there is a reasonable
probability of additional rating downgrades in coming months.
In addition to the oil extraction tax, the law amendment created
a new levy of 0.1% on hydrocarbon export registrations that will
be computed on the product's sales price to customers.
Additional taxes and royalty increases cannot be ruled out.
The Rating Watch also portends the uncertainty associated with a
restructuring of the strategic associations as 'mixed
enterprises'. It remains unclear whether the government will in
fact pursue such a restructuring and whether the foreign
partners in the associations will accept or reject the terms of
the Chavez administration. However, using the government's
treatment of the operating agreements between Petroleos de
Venezuela SA and foreign producers as a guide, in essence, the
private partners in the associations might relinquish majority
ownership in the existing associations such that PDVSA will hold
at least 51% of the equity as well as operating control of the
projects. A restructuring raises serious concerns regarding
compliance with the terms of the Common Security Agreements and
the Transfer Restriction Agreements that govern the debt
financing of the projects as well as the Charters that underpin
the project's legal existence.
Petrozuata, Cerro Negro, Sincor, and Hamaca are all domiciled in
Venezuela and are key to the development of the Orinoco Basin's
extra heavy crude oil reserves. Debtholders rely solely on the
ability of each project to generate sufficient cash flow from
operations to meet scheduled debt service. Revenues are largely
derived from the sale of syncrude exports.
Hamaca is owned 40% by a ConocoPhillips subsidiary, 30% by a
ChevronTexaco subsidiary, and 30% by a PDVSA subsidiary.
PETROZUATA FINANCE: Fitch Downgrades Senior Debt Ratings to B+
--------------------------------------------------------------
Fitch has downgraded to 'B+' from 'BB' the ratings that apply to
the senior secured debt obligations of the four Venezuelan heavy
oil strategic associations:
-- Petrozuata Finance Inc.,
-- Cerro Negro Finance Ltd.,
-- Sincrudos de Oriente Sincor, C.A., and
-- Petrolera Hamaca, S.A.
The ratings are placed on Rating Watch Negative.
The rating action applies to these debt obligations of
Petrozuata:
-- US$300 million 7.63% series A bonds due 2009;
-- US$625 million 8.22% series B bonds due 2017; and
-- US$75 million 8.37% series C bonds due 2022.
The National Assembly amended the organic hydrocarbons law to
impose a new oil extraction tax of 33.33%. The tax is
calculated on the same basis as the oil royalty, and the royalty
of 16.66% that applies to the strategic associations is deducted
from the tax. Effectively, remittances payable to the
government on the value of crude at the wellhead are doubled.
Royalties were previously raised ahead of expectations in 2004
from a preferential rate of 1% to 16.66% in 2004. The agreed 1%
rate was adopted in the 1990s to incentivize private development
of the Orinoco Basin reserves at a time of prolonged weakness in
oil prices and in recognition of Venezuela's need to improve its
oil-producing infrastructure.
The government has also announced its intention of increasing
from 34% to 50% the corporate income tax applicable to the
strategic associations. Fitch anticipates that the much heavier
royalty and tax burdens combined with the deleterious effect of
persistent double-digit inflation in Venezuela will
substantially diminish cash flows available for debt service.
In its oil price deck, Fitch expects a gradual return to the
long-term historical average in the mid-US$20s per barrel for
West Texas Intermediate by 2009, which combined with imposed
limits by the government on production, could result in net
revenue falls of as much as 60%. Despite the operational success
of the projects and the benefit of unexpectedly high oil prices,
royalty and tax remittances reduced project revenue in 2005 by
an average of 40% from 2004. Fitch considers it likely that
with the most recent revisions of the fiscal regime applicable
to the projects and a decline in oil prices to historical
averages, the ability of the projects to service debt
obligations in full could be impaired by 2011 or earlier.
The Rating Watch Negative status indicates there is a reasonable
probability of additional rating downgrades in coming months.
In addition to the oil extraction tax, the law amendment created
a new levy of 0.1% on hydrocarbon export registrations that will
be computed on the product's sales price to customers.
Additional taxes and royalty increases cannot be ruled out.
The Rating Watch also portends the uncertainty associated with a
restructuring of the strategic associations as 'mixed
enterprises'. It remains unclear whether the government will in
fact pursue such a restructuring and whether the foreign
partners in the associations will accept or reject the terms of
the Chavez administration. However, using the government's
treatment of the operating agreements between Petroleos de
Venezuela SA and foreign producers as a guide, in essence, the
private partners in the associations might relinquish majority
ownership in the existing associations such that PDVSA will hold
at least 51% of the equity as well as operating control of the
projects. A restructuring raises serious concerns regarding
compliance with the terms of the Common Security Agreements and
the Transfer Restriction Agreements that govern the debt
financing of the projects as well as the Charters that underpin
the project's legal existence.
Petrozuata, Cerro Negro, Sincor, and Hamaca are all domiciled in
Venezuela and are key to the development of the Orinoco Basin's
extra heavy crude oil reserves. Debtholders rely solely on the
ability of each project to generate sufficient cash flow from
operations to meet scheduled debt service. Revenues are largely
derived from the sale of syncrude exports.
Petrozuata is owned 50.1% by a ConocoPhillips subsidiary and
49.9% by a PDVSA subsidiary.
SINCRUDOS DE ORIENTE: Fitch Lowers Senior Debt Ratings to B+
------------------------------------------------------------
Fitch has downgraded to 'B+' from 'BB' the ratings that apply to
the senior secured debt obligations of the four Venezuelan heavy
oil strategic associations:
-- Petrozuata Finance Inc.,
-- Cerro Negro Finance Ltd.,
-- Sincrudos de Oriente Sincor, C.A., and
-- Petrolera Hamaca, S.A..
The ratings are placed on Rating Watch Negative.
The rating action applies to this debt obligation of Sincrudos
de Oriente Sincor, C.A.:
-- US$1.2 billion senior bank loan.
The National Assembly amended the organic hydrocarbons law to
impose a new oil extraction tax of 33.33%. The tax is
calculated on the same basis as the oil royalty, and the royalty
of 16.66% that applies to the strategic associations is deducted
from the tax. Effectively, remittances payable to the government
on the value of crude at the well head are doubled. Royalties
were previously raised ahead of expectations in 2004 from a
preferential rate of 1% to 16.66% in 2004. The agreed 1% rate
was adopted in the 1990s to incentivize private development of
the Orinoco Basin reserves at a time of prolonged weakness in
oil prices and in recognition of Venezuela's need to improve its
oil-producing infrastructure.
The government has also announced its intention of increasing
from 34% to 50% the corporate income tax applicable to the
strategic associations. Fitch anticipates that the much heavier
royalty and tax burdens combined with the deleterious effect of
persistent double-digit inflation in Venezuela will
substantially diminish cash flows available for debt service.
In its oil price deck, Fitch expects a gradual return to the
long-term historical average in the mid-US$20s per barrel for
West Texas Intermediate by 2009, which combined with imposed
limits by the government on production, could result in net
revenue falls of as much as 60%. Despite the operational success
of the projects and the benefit of unexpectedly high oil prices,
royalty and tax remittances reduced project revenue in 2005 by
an average of 40% from 2004. Fitch considers it likely that
with the most recent revisions of the fiscal regime applicable
to the projects and a decline in oil prices to historical
averages, the ability of the projects to service debt
obligations in full could be impaired by 2011 or earlier.
The Rating Watch Negative status indicates there is a reasonable
probability of additional rating downgrades in coming months.
In addition to the oil extraction tax, the law amendment created
a new levy of 0.1% on hydrocarbon export registrations that will
be computed on the product's sales price to customers.
Additional taxes and royalty increases cannot be ruled out.
The Rating Watch also portends the uncertainty associated with a
restructuring of the strategic associations as 'mixed
enterprises'. It remains unclear whether the government will in
fact pursue such a restructuring and whether the foreign
partners in the associations will accept or reject the terms of
the Chavez administration. However, using the government's
treatment of the operating agreements between Petroleos de
Venezuela SA and foreign producers as a guide, in essence, the
private partners in the associations might relinquish majority
ownership in the existing associations such that PDVSA will hold
at least 51% of the equity as well as operating control of the
projects. A restructuring raises serious concerns regarding
compliance with the terms of the Common Security Agreements and
the Transfer Restriction Agreements that govern the debt
financing of the projects as well as the Charters that underpin
the project's legal existence.
Petrozuata, Cerro Negro, Sincor, and Hamaca are all domiciled in
Venezuela and are key to the development of the Orinoco Basin's
extra heavy crude oil reserves. Debtholders rely solely on the
ability of each project to generate sufficient cash flow from
operations to meet scheduled debt service. Revenues are largely
derived from the sale of syncrude exports.
Sincor is owned 47% by a TOTAL subsidiary, 38% by a PDVSA
subsidiary, and 15% by a Statoil subsidiary.
* VENEZUELA: Sends 100,000 Barrels of Oil to Haiti
--------------------------------------------------
Venezuela's Vice President Jose Vicente Rangel told the
Associated Press that his country has sent about 10,000 barrels
of diesel fuel and gasoline to Haiti as part of a preferential
fuel pact between the two countries.
Venezuela's Vice President Jose Vicente Rangel told AP on Friday
that the shipment would reach Haitian shores on May 13.
AP recalls that President Hugo Chavez of Venezuela offered to
Haitian President-elect Rene Preval in April:
-- free diesel fuel for hospitals and schools,
-- low-interest loans, and
-- generously financed oil sales under Venezuela's
Petrocaribe accord, allowing for deferred payment and
long-term financing for fuel shipments.
According to AP, Petrocaribe allows other countries to initially
pay a portion of the oil bill. The remainder will be financed
through low-interest loans over 25 years. Some are also allowed
to pay partly in agricultural goods.
AP states that Haiti will become a member of the pact on May 15,
after Mr. Preval's inauguration as the president of Haiti.
* * *
As reported in the Troubled Company Reporter on April 12, 2006,
president-elect Preval appealed for urgent international help to
spur development in the Western Hemisphere's poorest country and
called on all Haitians to join in a national dialogue to promote
peace, democracy and stability.
"Poverty, widespread unemployment, the state of dilapidation of
basic infrastructures that are necessary for development,
chronic insecurity - these are all the major challenges to be
faced by the next government," President Preval was quoted by
the Associated Press as saying.
President Preval explained that increased international
assistance is "indispensable" to Haiti's economic recovery, to
create conditions for investment and job creation, to improve
social services, and to reform democratic institutions including
parliament, municipalities, the judicial system, and the
national police, the AP relates.
* * *
Venezuela's foreign currency long-term debt is rated B2 by
Moody's, B+ by Standard & Poor's, and BB- by Fitch.
* VENEZUELA: Will Host Business Round with Paraguayan Investors
---------------------------------------------------------------
Paraguayan companies will be in Caracas from May 15 to 18 to
discuss business with Venezuelan firms.
Alejandro Uzcategui, head of Empresarios por Venezuela, told El
Universal that during the business rounds, about US$40 million
in deals will be reached with Paraguayan businessmen.
Other participants of the event include:
* the Venezuelan-Paraguayan Chamber of Trade;
* the Venezuelan Chapter of Mercosur International Chamber;
* the Paraguayan embassy to Caracas; and
* the Venezuelan Ministry of Basic Industries and Mining.
* * *
Venezuela's foreign currency long-term debt is rated B2 by
Moody's, B+ by Standard & Poor's, and BB- by Fitch.
***********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter - Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA. Marjorie C. Sabijon, Sheryl Joy P. Olano, and
Stella Mae Hechanova, Editors.
Copyright 2006. All rights reserved. ISSN 1529-2746.
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