/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/060802.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 Wednesday, August 2, 2006, Vol. 7, Issue 152 Headlines A R G E N T I N A A. MARCOS: Trustee to Submit General Report in Court on Aug. 24 ABIS SRL: Trustee to Present General Report in Court on Aug. 25 AUTOMOTORES MUSCIO: General Report Due in Court on Aug. 28 BALL CORP: Board of Directors Approves New Rights Agreement C M L SA: Trustee to Present General Report in Court on Aug. 30 COCO S: Trustee Will Deliver General Report in Court on Aug. 15 COMPANHIA DE ALIMENTOS: Fitch Rates US$120-Mil. Notes at D(arg) COMPANIA SUIZO: Trustee to Submit General Report on Aug. 15 EKHOSON SA: Trustee to File General Report in Court on Aug. 30 ELECTRICIDAD ARGENTINA: Fitch Arg Puts raB+ Ratings on Two Notes FIDEICOMISO (MULTIPYME II): Moody's LatAm Assigns B1 Debt Rating FIDEICOMISO (SECUPYME XIX): Moody's LatAm Assigns B1 Debt Rating GOLD SKIN: Trustee to Present General Report in Court on Aug. 29 HIDROELECTRICA PIEDRA: Fitch Assigns BB- Ratings on Eight Debts SELECTRADE SA: General Report Submission Is Set for Aug. 16 VADEMARCO SA: Individual Reports Due in Court on Aug. 29 B A H A M A S COMPLETE RETREATS: Brings In Dechert LLP as Bankruptcy Counsel COMPLETE RETREATS: Taps XRoads Solutions as Financial Advisor WINN-DIXIE: Files June 2006 Monthly Operating Report B A R B A D O S SECUNDA INTERNATIONAL: Tender Offer Will Expire on Aug. 11 B E R M U D A GLOBAL ALLOYS: Creditors Must File Proofs of Claim by Aug. 7 SCOTTISH RE: Possible Loss Prompts AM Best to Lower Ratings SCOTTISH RE: Loss Warning Prompts Moody's to Lower Ratings SCOTTISH RE: Loss Announcement Cues S&P to Put Ratings on Watch B O L I V I A PETROLEOS DE VENEZUELA: Begins Bolivia Hydrocarbon Prospecting * BOLIVIA: Minister Orders Iberoamerica Crude Supply Pact Probe B R A Z I L ALERIS INT: Announces Results of Tender Offer Concluded July 31 AMERICAN AXLE: Sales Reach US$874.6MM in Second Quarter of 2006 COMPANHIA ENERGETICA: Infovias Sells All Shares in Way TV to TNL GOL LINHAS: Receives Boeing's 737 Planes With Enhanced Features MRS LOGISTICA: Posts BRL115 Mil. Second Quarter 2006 Net Profit SFBC INTERNATIONAL: Resolves Land Lease Litigation with East Bay VARIG: Brazilian Labor Court Freezes US$75,000,000 Volo Funds C A Y M A N I S L A N D S CITIC CAPITAL: Deadline for Proofs of Claim Filing Is on Aug. 24 DYNAMIC CREDIT: Filing of Proofs of Claim Is Until Aug. 24 E&H REAL: Shareholders Convene for a Final Meeting on Aug. 21 GRANGE LIMITED: Creditors Must File Proofs of Claim by Aug. 24 HERBALIFE INTERNATIONAL: S&P Rates US$300MM Bank Facility at BB+ HORATIO CORP: Shareholders Gather for a Final Meeting on Aug. 21 HORATIO REAL: Final Shareholders Meeting Is Set for Aug. 21 JEFFERIES (MASTER): Proofs of Claim Must be Filed by Aug. 24 JEFFERIES REAL: Creditors Must File Proofs of Claim by Aug. 24 KAYEFF (M): Final Shareholders Meeting Is Set for Aug. 21 KAYEFF (R): Will Hold Final Shareholders Meeting on Aug. 21 LAWRENCIUM CORP: Final Shareholders Meeting Is on Aug. 21 NATICA INSURANCE: Creditors Must File Proofs of Claim by Aug. 24 NYK STAR: Proofs of Claim Filing Deadline Is on Aug. 24 RIGHT CO: Deadline for Proofs of Claim Filing Is on Aug. 24 TEMPO CAPITAL: Last Day to File Proofs of Claim Is on Aug. 24 C H I L E BLOCKBUSTER: Reports US$68.4 Mil. Second Quarter 2006 Net Income ENERSIS SA: Names Klaus Winkler as Unit's New General Manager ENERSIS SA: Net Income Reaches CLP218.227B in First Six Months C O L O M B I A ECOPETROL SA: Pension Fund Managers May Bid for 20% Stake TERMOEMCALI: S&P Says CCC+ Rating Reflects Dependence on Emcali C O S T A R I C A * COSTA RICA: Government Internet Firm Will Cut Rates * COSTA RICA: Will Launch Bidding for Hydroelectric Studies C U B A * CUBA: New York Food Entrepreneurs Seek New Market in Country D O M I N I C A * DOMINICA: IMF Completes Sixth Review on PRGF Arrangement D O M I N I C A N R E P U B L I C * DOMINICAN REPUBLIC: Gov't Steps Up Efforts in Oil Exploration E L S A L V A D O R * EL SALVADOR: Mulls Using Wind & Wave Power for Electricity G U A T E M A L A * GUATEMALA: Launching Bidding for Studies on Hydro Projects H O N D U R A S * HONDURAS: Inks Protocol on Bilateral Talks with Kazakhstan J A M A I C A AIR JAMAICA: Inks Deal with Caribbean Star to Improve Services NATIONAL WATER: Loses Millions of Dollars on Illegal Connection SUGAR COMPANY: Farmers Group Says Production Targets Unrealistic * JAMAICA: Total Public Debt Growing M E X I C O AVAYA: Posts US$44 Mil. Net Income for Third Fiscal Quarter 2006 BANCO MERCANTIL: Fitch Upgrades Individual Rating to C from C/D DRESSER INC: Prepays US$20MM on Senior Unsecured Term Loan GRUPO FINANCIERO: Fitch Upgrades Individual Rating to C from C/D LIBBEY INC: Sales Up 9.3% to US$158 Million in Second Quarter NORTEL NETWORKS: Forms Strategic Alliance with Microsoft Corp. P A N A M A SOLO CUP: Names Eric Simonsen as Interim Chief Financial Officer P A R A G U A Y * PARAGUAY: Ministry Receives New Bids for Highway Projects * PARAGUAY: Mulls Metallurgic Strategic Alliance with Brazil P U E R T O R I C O ADELPHIA COMMS: Closes Asset Sale to Time Warner Cable & Comcast ADELPHIA COMM: Files June 2006 Monthly Operating Report ADELPHIA: US Ct. Wants Update on Century-TCI et al. Plan by Oct. MAXXAM INC: PALCO Names George O'Brien as New President & CEO SANTANDER BANCORP: Posts US$6.1 Million Second Quarter Net Loss ZALE CORP: Elects Mary E. Burton as President & CEO U R U G U A Y * URUGUAY: Bandes Local Unit Begins Operations in Country V E N E Z U E L A ARVINMERITOR INC: Sales Up 4% to US$2.5 Bil. in Third Quarter PETROLEOS DE VENEZUELA: Gazprom Will Help to Develop Gas Plan - - - - - ================= A R G E N T I N A ================= A. MARCOS: Trustee to Submit General Report in Court on Aug. 24 --------------------------------------------------------------- Estudio Sastre, Lostao & Romano, the court-appointed trustee for A. Marcos y Cia. S.A.'s bankruptcy case, will submit in court a general report that contains an audit of the company's accounting and banking records on Aug. 24, 2006. Estudio Sastre filed the individual reports in court on June 27, 2006. The trustee can be reached at: Estudio Sastre, Lostao & Romano Tucuman 1539 Buenos Aires, Argentina ABIS SRL: Trustee to Present General Report in Court on Aug. 25 --------------------------------------------------------------- Mario Leizerow, the court-appointed trustee for Abis S.R.L.'s bankruptcy proceeding, will present in court a general report that contains an audit of the company's accounting and banking records on Aug. 25, 2006. Mr. Leizerow verified creditors' proofs of claim until May 16, 2006. He submitted the validated claims in court as individual reports on June 29, 2006. The debtor can be reached at: Abis S.R.L. Avenida del Libertador 7420 Buenos Aires, Argentina The trustee can be reached at: Mario Leizerow Bouchard 644 Buenos Aires, Argentina AUTOMOTORES MUSCIO: General Report Due in Court on Aug. 28 ---------------------------------------------------------- Court-appointed trustee Hector Garcia will present in court a general report that contains an audit of Automotores Muscio S.A.'s accounting and banking records and a summary of events pertaining to the liquidation proceeding on Aug. 28, 2006. Mr. Garcia verified creditors' proofs of claim until May 5, 2006. He submitted the validated claims in court as individual reports on June 6, 2006. The trustee can be reached at: Hector Garcia Uruguay 572 Buenos Aires, Argentina BALL CORP: Board of Directors Approves New Rights Agreement ----------------------------------------------------------- The Ball Corp.'s Board of Directors approved the execution of a new Rights Agreement with Computershare Investor Services, LLC, as Rights Agent. The new rights agreement replaces the existing agreement between Ball Corp. and First Chicago Trust Company of New York, which will expire on August 4, 2006. Ball Corp. disclosed that in connection with the implementation of the New Rights Agreement, its board of directors declared a dividend distribution of one right for each outstanding share of its common stock, without par value, to the stockholders of record on August 7, 2006. Each new right will entitle the registered holder to purchase from the company a unit consisting of one one-thousandth of a share of its Series A Junior Participating Preferred Stock at a price of US$185.00 per unit. Ball Corp. further disclosed that initially, the Rights will be attached to all Common Stock certificates representing shares then outstanding, and no separate Rights Certificates will be distributed. A complete text of the New Rights Agreement may be viewed for free at http://ResearchArchives.com/t/s?e89 Headquartered in Broomfield, Colorado, Ball Corporation -- http://www.ball.com/-- is a supplier of high-quality metal and plastic packaging products and owns Ball Aerospace & Technologies Corp., which develops sensors, spacecraft, systems and components for government and commercial customers. Ball reported 2005 sales of US$5.7 billion and the company employs 13,100 people worldwide including Argentina. * * * As reported in the Troubled Company Reporter on Mar. 6, 2006, Moody's Investors Service assigned ratings to Ball Corp's US$500 million senior secured term loan D, rated Ba1, and US$450 million senior unsecured notes due 2016-2018, rated Ba2. It also affirmed existing ratings, which include Ba1 Ratings on US$1.475 billion senior secured credit facilities and US$550 million senior unsecured notes due Dec. 12, 2012. Moody's said the ratings outlook is stable. As reported in the Troubled Company Reporter on Mar. 2, 2006, Fitch said Ball Corporation's recently announced acquisitions will not affect the company's credit ratings based on the currently available information. Fitch currently rates BLL as: -- Issuer default rating (IDR) 'BB' -- Senior secured credit facilities 'BB+' -- Senior unsecured notes 'BB' As reported in the Troubled Company Reporter on Feb. 20, 2006, Standard & Poor's Ratings Services revised its outlook on Broomfield, Colo.-based Ball Corp. to stable from positive. At the same time, it affirmed its ratings, including 'BB+' corporate credit rating, on the metal can and plastic packaging producer. These actions follow the announcement by Ball of its entry into a definitive agreement to acquire U.S. Can Corp.'s U.S. and Argentinean operations for approximately 1.1 million shares of Ball common stock and the assumption of a US$550 million debt. C M L SA: Trustee to Present General Report in Court on Aug. 30 --------------------------------------------------------------- Abel Alexis Latendorf, the court-appointed trustee for C M L S.A.'s bankruptcy case, will present in court a general report that contains an audit of the company's accounting and banking records on Aug. 30, 2006. Mr. Latendorf verified creditors' proofs of claim until May 17, 2006. He submitted the validated claims in court as individual reports on June 30, 2006. The trustee can be reached at: Abel Alexis Latendorf Piedras 153 Buenos Aires COCO S: Trustee Will Deliver General Report in Court on Aug. 15 --------------------------------------------------------------- Court-appointed trustee Luis Maria Rementeria will deliver in court a general report that contains an audit of Coco s S.R.L.'s accounting and banking records and a summary of events pertaining to the liquidation proceeding on Aug. 15, 2006. Ms. Rementeria verified creditors' proofs of claim until May 5, 2006. She submitted the validated claims in court as individual reports on June 20, 2006. The debtor can be reached at: Coco s S.R.L. Yerbal 6312 Buenos Aires, Argentina The trustee can be reached at: Luis Maria Rementeria Piedras 1315 Buenos Aires, Argentina COMPANHIA DE ALIMENTOS: Fitch Rates US$120-Mil. Notes at D(arg) --------------------------------------------------------------- Companhia de Alimentos Fargo SA's US$120 million Obligaciones Negociables is rated D(arg) Fitch Argentina Calificadora de Riesgo SA. The rate was given because the company has not paidthe interests of the Obligaciones Negociables since Feb. 2002. The amount of funds generated by Fargo has decreased and the strong devaluation of the pesos have affected the capacity of the company to pay its financial comittments in international currency. In order to preserve the amount of funds available, Fargo presented Concurso Preventivo de Acreedores on June 28, 2002, which is currently pending. The company still shows a sustainable growth in the level of income, but a lower rate compared to 2004. In Dec. 2005, the net income of Fargo reached US$200.7 million with a 19% growth compared to 2004, trend that continued to be the same during the first trimester of 2006, with a growth in the annual income of the 24%. It is expected that the income in 2006 would not be larger than in 2005. Nevertheless, the larger income, the reaccomodation of certain expenses, together with the support from main clients have determinated a reduction on its operation levels. In Dec. 2005, Frago had an EBITDA of 8.7% compared to 9% of the previous year. Despite that, in March 2006, a slight recovery was perceived, it is expected that the EBITDA in 2006 would be similar to the one of 2005. Fargo is Argentina's largest producer and distributor of packaged bread with a 51% market share, according to Fitch Ratings Argentina. It is also the sole bread supplier for McDonald's in the country. Fargo is controlled by the Mexican investor Chico Pardo (70%) and the Bimbo group (30%). The company has a debt of US$185 million, from which US$120 million belong to Obligaciones Negociables. COMPANIA SUIZO: Trustee to Submit General Report on Aug. 15 ----------------------------------------------------------- Court-appointed trustee Beatriz del Carmen Muruaga will present in court a general report that contains an audit of Compania Suizo Argentina de Construcciones Civiles S.A.'s accounting and banking records and a summary of events pertaining to the reorganization proceeding on Aug. 15, 2006. Ms. Del Carmen Muruaga verified creditors' proofs of claim until May 8, 2006. She submitted the validated claims in court as individual reports on June 20, 2006. Court No. 18 in Buenos Aires approved Compania Suizo's petition to reorganize its business after it defaulted on its obligations since Feb. 20, 2005. The trustee can be reached at: Beatriz del Carmen Muruaga Aguero 1290 Buenos Aires, Argentina EKHOSON SA: Trustee to File General Report in Court on Aug. 30 -------------------------------------------------------------- Court-appointed trustee Rodolfo Fernando Daniel Torella will deliver in court a general report that contains an audit of Ekhoson S.A.'s accounting and business records and a summary of events pertaining the liquidation proceeding on Aug. 30, 2006. Mr. Torella verified creditors' proofs of claim until May 17, 2006. He submitted the validated claims in court as individual reports on June 30, 2006. The trustee can be reached at: Rodolfo Fernando Daniel Torella Arcos 3726 Buenos Aires, Argentina ELECTRICIDAD ARGENTINA: Fitch Arg Puts raB+ Ratings on Two Notes ---------------------------------------------------------------- Fitch Argentina assigned raB+ ratings on Electricidad Argentina S.A.'s Obligaciones Negociables for US$15,000,000 and US$75,000,000. The rating action was done based on the company's financial status at Mar. 31, 2006. FIDEICOMISO (MULTIPYME II): Moody's LatAm Assigns B1 Debt Rating ---------------------------------------------------------------- Moody's Latin America assigned a national scale rating of Aa3.ar and a global local currency rating of B1 to the debt securities of Fideicomiso Financiero Multipyme II issued by Bapro Mandatos y Negocios S.A. -- acting solely in its capacity as Issuer and Trustee. The rated securities are backed by a pool of bills of exchange signed by agricultural producers in Argentina. The bills of exchange are guaranteed by Garantizar S.G.R., which is a financial guarantor in Argentina. Garantizar has a local currency national scale insurance financial strength rating of Aa3.ar and global local currency insurance financial strength rating of B1. The rating assigned to this transaction is primarily based on the rating of Garantizar. Therefore, any future change in the rating of the guarantor may lead to a change in the rating assigned to this transaction. The rating addresses the payment of interest and principal on the legal final maturity date of the securities. Rating Action US$4,280,000 in Fixed Rate Debt Securities of "Fideicomiso Financiero MULTIPYME II", rated Aa3.ar Structure Bapro Mandatos y Negocios S.A. (Issuer and Trustee) issued one class of debt securities denominated in Argentine pesos. The rated securities will bear a 6% annual interest rate. The rated securities will be repaid from cash flow arising from the assets of the Trust, constituted by a pool of fixed rate bills of exchange denominated in US dollars signed by agricultural producers and guaranteed by Garantizar S.G.R. The bills of exchange will bear the same interest rate as the rated securities. Although the rated securities (and the bills of exchange) are denominated in US dollars, they are payable in Argentine pesos at the exchange rate published by Banco de la Nacion Argentina as of the day prior to the date that the funds are initially deposited into the Trust account. As a result, the dollar is used as a currency of reference and not as a mean of payment. For that reason, the transaction is considered to be denominated in local currency. If, eight days before the final maturity date, the funds on deposit in the trust account are not sufficient to make payments to investors, the Trustee is obligated to request Garantizar to make payment under the bills of exchange. Garantizar, in turn, will have five days to make this payment into the trust account. Under the terms of the transaction documents, the trustee has up to two days to distribute interest and principal payments to investors. Interest on the securities will accrue up to the date on which the funds are initially deposited by either Garantizar, the exporter, or the individual producers into the Trust account. The designated Trustee in this transaction is Bapro Mandatos y Negocios S.A., which is the Banco de la Provincia de Buenos Aires' trustee company. Banco Provincia is the second largest bank in Argentina (10% of deposits) and it is rated by Moody's on the Ba1/Aaa.ar level for local currency deposits. FIDEICOMISO (SECUPYME XIX): Moody's LatAm Assigns B1 Debt Rating ---------------------------------------------------------------- Moody's Latin America assigned a national scale rating of Aa3.ar and a global local currency rating of B1 to the debt securities of Fideicomiso Financiero Secupyme XIX issued by Banco de Valores S.A. -- acting solely in its capacity as Issuer and Trustee. The rated securities are backed by a pool of bills of exchange signed by agricultural producers in Argentina. The bills of exchange are guaranteed by Garantizar S.G.R., which is a financial guarantor in Argentina. Garantizar has a local currency national scale insurance financial strength rating of Aa3.ar and global local currency insurance financial strength rating of B1. The rating assigned to this transaction is primarily based on the rating of Garantizar. Therefore, any future change in the rating of the guarantor may lead to a change in the rating assigned to this transaction. The rating addresses the payment of interest and principal on or before the legal final maturity date of the securities. Rating Action US$3,136,000 in Fixed Rate Debt Securities of "Fideicomiso Financiero SECUPYME XIX", rated Aa3.ar Structure Banco de Valores S.A. (Issuer and Trustee) issued one class of debt securities denominated in US dollars. The rated securities will bear a 6% annual interest rate. The rated securities will be repaid from cash flow arising from the assets of the Trust, constituted by a pool of fixed rate bills of exchange denominated in US dollars signed by agricultural producers and guaranteed by Garantizar S.G.R. The bills of exchange will bear the same interest rate as the rated securities. Although the rated securities (and the bills of exchange) are denominated in US dollars, they are payable in Argentine pesos at the exchange rate published by Banco de la Nacion Argentina as of the day prior to the date that the funds are initially deposited into the Trust account. As a result, the dollar is used as a currency of reference and not as a mean of payment. For that reason, the transaction is considered to be denominated in local currency. If, eight days before the final maturity date, the funds on deposit in the trust account are not sufficient to make payments to investors, the Trustee is obligated to request Garantizar to make payment under the bills of exchange. Garantizar, in turn, will have five days to make this payment into the trust account. Under the terms of the transaction documents, the trustee has up to two days to distribute interest and principal payments to investors. Interest on the securities will accrue up to the date on which the funds are initially deposited by either Garantizar, the exporter, or the individual producers into the Trust account. GOLD SKIN: Trustee to Present General Report in Court on Aug. 29 ---------------------------------------------------------------- Court-appointed trustee Claudio Jorge Haimovici will present in court a general report that contains an audit of Gold Skin S.A.'s accounting and banking records and a summary of events pertaining to the liquidation proceeding on Aug. 29, 2006. Mr. Haimovici verified creditors' proofs of claim until May 5, 2006. He submitted the validated claims in court as individual reports on June 23, 2006. The trustee can be reached at: Claudio Jorge Haimovici Sarmiento 3843 Buenos Aires, Argentina HIDROELECTRICA PIEDRA: Fitch Assigns BB- Ratings on Eight Debts --------------------------------------------------------------- These debts of Hidroelectrica Piedra del Aguila S.A. are rated BB- by Fitch: -- Obligaciones Negociables Clase I for US$97,300,000, included under the program of US$300 million; -- Obligaciones Negociables Clase II for US$97,300,000 included under the program of US$300 million; -- Obligaciones Negociables Serie A for US$64,500,000; -- Obligaciones Negociables Serie B for US$35,600,000; -- Clase III for US$62,500,000 included under the program of US$300 million; -- Obligaciones Negociables Serie C for US$39,300,000; -- Obligaciones Negociables Simples for US$300,000,000; -- Program of ONS for US$300 million; and -- Obligaciones Negociables Serie D for US$22,800,000. The rating actions were done based on the Hidroelectrica Piedra's financial status at Mar. 31, 2006. SELECTRADE SA: General Report Submission Is Set for Aug. 16 ----------------------------------------------------------- Court-appointed trustee Pablo L. Peregal will deliver in court a general report that contains an audit of Selectrade S.A.'s accounting and banking records and a summary of events pertaining to the liquidation proceeding on Aug. 16, 2006. Mr. Peregal verified creditors' proofs of claim until May 8, 2006. He submitted the validated claims in court as individual reports on June 21, 2006. The trustee can be reached at: Pablo L. Peregal Avenida Leandro N. Alem 651 Buenos Aires, Argentina VADEMARCO SA: Individual Reports Due in Court on Aug. 29 -------------------------------------------------------- Oscar Ricardo Scally, the court-appointed trustee for Vadermaco S.A.'s reorganization proceeding, will submit individual reports in court on Aug. 29, 2006. He will also present a general report that contains an audit of the company's accounting and banking records on Oct. 10, 2006. On April 13, 2007, Vadermaco's creditors will vote on a settlement plan that the company will lay on the table. Mr. Scally verified creditors' proofs of claim until July 3, 2006. The trustee can be reached at: Oscar Ricardo Scally Arenales 875 Buenos Aires, Argentina ============= B A H A M A S ============= COMPLETE RETREATS: Brings In Dechert LLP as Bankruptcy Counsel -------------------------------------------------------------- Complete Retreats LLC and its debtor-affiliates ask permission from the U.S. Bankruptcy Court for the District of Connecticut to employ Dechert LLP as their bankruptcy and restructuring attorneys. Dechert is expected to: (a) provide legal advice with respect to the Debtors' powers and duties as debtors-in-possession in the continued operation of their business and management of their properties; (b) take all necessary actions to protect and preserve the Debtors' estates; (c) prepare all necessary motions, applications, answers, proposed orders, reports, and other papers in connection with the administration of the Debtors' estates; (d) negotiate and draft any agreements for the provision of financing to the Debtors; (e) negotiate and draft any agreements for the sale or purchase of any assets of the Debtors, if appropriate; (f) negotiate and draft a plan of reorganization and all other related documents; (g) take all steps necessary to confirm and implement a plan of reorganization; and (h) perform all other necessary and appropriate legal services in connection with the prosecution of the bankruptcy cases. Mr. McGrath contends that because of the size and complexity of the Debtors' business and the transactions that are likely to arise in the Chapter 11 proceedings, the Debtors will need the services of Dechert in the performance of their duties. Dechert will charge the Debtors on an hourly basis in accordance with its ordinary and customary rates: Attorneys US$250 to US$825 per hour Paralegals US$145 to US$220 per hour Joel H. Levitin, Esq., a partner at Dechert LLP, assures the Court that his firm is competent to represent the interests of the Debtors, and has not and will not represent any shareholder, director, officer, lender, creditor, or equity holder of the Debtors in any matter related to the bankruptcy cases. Dechert does not represent any interest adverse to the estates of the Debtors, their creditors, or any other parties-in- interest, Mr. Levitin attests. Mr. Levitin further assures the Court that Dechert is a "disinterested person," as referenced in Section 327 of the Bankruptcy Code and as defined in Sections 101(14) and 1107(b) of the Bankruptcy Code. U.S. Trustee Objects According to the United States Trustee, retention applications are not first day matters and if they are heard at all, only interim relief should be granted. If the Court decides to conduct a hearing on the retention application, then Dechert should comply with Rule 2014 of the Federal Rules of Bankruptcy Procedure in its entirety, the U.S. Trustee asserts. The U.S. Trustee asks the Court to require Dechert to provide these additional disclosures: (a) a supplemental affidavit identifying: * each request for payment issued within 120 days before the filing of the petition; * the time period covered by each identified request for payment; and * both the date and amount of any payment received within 90 days before the Debtors' bankruptcy filing. (b) a supplemented Levitin Affidavit, which provides more detail including, but not limited to, the percentage of revenues of each of the clients listed for the year before the Debtors' bankruptcy filing. To the extent that any of the creditors listed in the Affidavit exceed 1% of the firm's annual revenue, then the Debtors must retain a conflicts counsel, the U.S. Trustee says. The application to retain conflicts counsel must be filed prior to the entry of a final order approving Dechert's retention; and (c) clarify, in a separate affidavit: * whether it can be adverse to any of the parties listed in the Levitin Affidavit; * that it received funds for its postpetition retainer prepetition; * where it is holding the funds; and * whether it intends to apply the retainer to the first fee application. About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed US$308,000,000 in total debts. (Complete Retreats Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945- 7000). COMPLETE RETREATS: Taps XRoads Solutions as Financial Advisor ------------------------------------------------------------- Complete Retreats LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Connecticut for authority to employ XRoads Solutions Group LLC as their financial and restructuring advisor. In late June 2006, the Debtors hired XRoads Solutions to assist them in the management of their business and in the exploration of strategic alternatives. In a retention letter dated July 20, 2006, the Debtors proposed to continue XRoads' employment as their financial and restructuring advisor. Holly Felder Etlin, a principal at XRoads, has agreed to serve as the Debtors' Chief Restructuring Officer during the course of the Chapter 11 cases. Ms. Etlin provides a fresh perspective on their business, the Debtors tell the Court, as well as valuable expertise on various business management and restructuring issues. The Debtors relate that they are familiar with the professional standing and reputation of XRoads and that XRoads is well qualified to advise them during the bankruptcy proceedings. Pursuant to the Retention Letter, XRoads will continue to: (a) provide the services of Ms. Etlin, as well as other supporting personnel; (b) develop, refine, implement, and monitor the Debtors' turnaround efforts; (c) evaluate the Debtors' strategic alternatives; (d) assist in implementing any approved capital structure; (e) review, assess and develop action plans of key contracts; (f) review and validate the Debtors' cash flow forecasts and related processes; (g) evaluate the Debtors' business plan; (h) assist in the development and implementation of a recapitalization plan; (i) provide financial information in support of, and participation in, the Debtors' investment banking process; (j) assist in communications with, negotiations with, and presentations to vendors, creditors, and other key constituents of the Debtors; (k) assist in the development of employee-related plans; (l) assume the leadership role for the design and implementation of new effective management and financial reporting methodologies for the Debtors' business; and (m) analyze and lead the Debtors' cash management and related activities. In addition, XRoads Case Management Services, LLC, an affiliate of XRoads, will provide bankruptcy case support, administrative and noticing services to the Debtors, Ms. Etlin informs the Court. XRoads will charge the Debtors a fixed minimum fee of US$150,000 per month, provided that if their services total more than 480 hours, the Debtors will pay XRoads US$375 per excess hour. If any Restructurings are consummated during the term of their engagement and 12 months after the termination of their services, XRoads will receive a transaction fee equal to: (a) 0.5% of the first US$100,000,000 in cumulative face value of the Debtors' debt securities or other indebtedness, obligations, or liabilities restructured; and (b) 0.25% of all amounts in excess of US$100,000,000 in face value of the Debtors' cumulative debt securities or other indebtedness, obligations, or liabilities restructured. If any Sale Transactions are consummated during the term of their engagement and 12 months after the termination of their services, XRoads will receive a performance fee equal to: (a) 0.5% of the first US$100,000,000 of Aggregate Gross Consideration paid; and (b) 0.25% of the Aggregate Gross Consideration paid in excess of US$100,000,000. Ms. Etlin assures the Court that XRoads has not been retained to assist any entity or person other than the Debtors on matters relating to the bankruptcy proceedings. XRoads is disinterested, as defined in Section 101(14) of the Bankruptcy Code, Ms. Etlin affirms, and does not hold or represent an interest adverse to the Debtors or their estates. U.S. Trustee Objects Pursuant to Sections 101(31)(B)(ii) and (iii) of the Bankruptcy Code, officers of debtors are insiders. Pursuant to Section 101(14)(A) of the Bankruptcy Code, insiders are not disinterested. The United States Trustee argues that since XRoads Principal Holly Felder Etlin will act as the Debtors' CRO, she is not disinterested, and thus cannot be retained under Section 327 of the Bankruptcy Code. In addition, because other XRoads employees will serve as "supporting personnel" for Ms. Etlin, the firm is not disinterested, the U.S. Trustee asserts. Accordingly, the U.S. Trustee asks the Court to deny the Debtors' application. About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed US$308,000,000 in total debts. (Complete Retreats Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945- 7000). WINN-DIXIE: Files June 2006 Monthly Operating Report ---------------------------------------------------- Winn-Dixie Stores, Inc., et al. Unaudited Consolidated Balance Sheet At June 28, 2006 (In Thousands) Assets Current Assets: Cash and cash equivalents US$187,514 Marketable securities 14,308 Trade and other receivables, net 148,384 Insurance claims receivable 45,547 Income tax receivable 30,382 Merchandise inventories, net 473,808 Prepaid expenses and other current assets 31,064 Assets held for sale 41,939 ---------- Total current assets 972,946 Property, plant and equipment, net 499,965 Other assets, net 104,953 ---------- Total assets US$1,577,864 ========== Liabilities and Shareholders' Deficit Current liabilities: Current borrowings under DIP Credit facility US$40,000 Current portion of long-term debt 232 Current obligations under capital leases 3,661 Accounts payable 238,778 Reserve for self-insurance liabilities 87,633 Accrued wages and salaries 75,730 Accrued rent 36,576 Accrued expenses 103,566 Liabilities related to assets held for sale 8,777 ---------- Total current liabilities 594,953 Reserve for self-insurance liabilities 144,243 Long-term debt 164 Obligations under capital leases 3,696 Other liabilities 15,599 ---------- Total liabilities not subject to compromise 758,655 Liabilities subject to compromise 1,122,836 ---------- Total liabilities 1,881,491 Shareholders' deficit: Common stock 141,858 Additional paid-in capital 35,214 Accumulated deficit (447,019) Accumulated other comprehensive loss (33,680) ---------- Total shareholders' deficit (303,627) ---------- Total liabilities and shareholders' deficit US$1,577,864 ========== Winn-Dixie Stores, Inc., et al. Unaudited Consolidated Statement of Operations Four Weeks Ended June 28, 2006 (In Thousands) Net sales US$542,769 Cost of sales 395,772 ---------- Gross profit on sales 146,997 Other operating and administrative expenses 164,116 Restructuring gains (40,023) ---------- Operating loss 22,904 Interest expense, net 81 ---------- Loss before reorganization items and income taxes 22,823 Reorganization items, net expense 4,702 Income tax expense - ---------- Net earnings from continuing operations 18,121 Discontinued operations: Loss from discontinued operations (14) Gain on disposal of discontinued operations 5,481 Income tax expense - ---------- Net earnings from discontinued operations 5,467 ---------- Net earnings US$23,588 ========== Winn-Dixie Stores, Inc., et al. Unaudited Consolidated Statement of Cash Flows Four Weeks Ended June 28, 2006 (In Thousands) Cash flows from operating activities Net earnings US$23,588 Adjustment to reconcile net loss to net cash provided by operating activities: Gain on sales of assets, net (41,837) Reorganization items, net 4,702 Depreciation and amortization 8,598 Stock compensation plans 544 Change in operating assets and liabilities: Trade and other receivables (4,499) Merchandise inventories (25,565) Prepaid expenses and other current assets 4,696 Accounts payable 28,555 Reserve for self-insurance liabilities (391) Lease liability on closed facilities (8,238) Income taxes receivable 134 Defined benefit plan (126) Other accrued expenses (5,750) ---------- Net cash used in operating activities before reorganization items (15,589) Cash effect of reorganization items (733) ---------- Net cash provided by operating activities (16,322) ---------- Cash flows from investing activities: Purchases of property, plant and equipment (4,900) Increase in investments and other assets 392 Proceeds from sales of assets 55,328 Purchases of marketable securities (346) Sales of marketable securities 579 Other (302) ---------- Net cash used in investing activities 50,751 ---------- Cash flows from financing activities Gross borrowings on DIP Credit Facility 458 Gross payments on DIP Credit Facility (458) Principal payments on capital lease obligations (119) Principal payments on long-term debt (18) Other (137) ---------- Net cash used in financing activities (274) ---------- Increase in cash and cash equivalents 34,155 Cash and cash equivalents classified as Assets held for sale (8,084) Cash and cash equivalents at beginning of period 161,443 ---------- Cash and cash equivalents at end of period US$187,514 ========== 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. 45; Bankruptcy Creditors' Service, Inc., 215/945- 7000). =============== B A R B A D O S =============== SECUNDA INTERNATIONAL: Tender Offer Will Expire on Aug. 11 ---------------------------------------------------------- Secunda International Limited reported that its pending tender offer and consent solicitation for any and all of its US$125 million Senior Secured Floating Rate Notes due 2012 (CUSIP No. 81370FAB4) pursuant to the Offer to Purchase and Consent Solicitation Statement dated June 27, 2006, has been extended to 5:00 p.m., New York City time, on August 11, 2006. The previously reported expiration time for the Tender Offer was July 28, 2006, at 5:00 p.m., New York City time. As previously reported, 100.0% of the Notes were tendered prior to the Consent Time, which was 5:00 p.m., New York City time on July 12, 2006. The "Tender Offer Yield" for the Tender Offer is 5.658%, which was determined by reference to a fixed spread of 50 basis points over the yield of the 2 3.8% U.S. Treasury Note due August 31, 2006, calculated at 2:00 p.m., New York City time, on July 14, 2006. Assuming the actual settlement date is August 14, 2006, the total consideration would be US$1,043.58 for each US$1,000 principal amount of Senior Secured Notes that was validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on July 12, 2006, including the consent payment of US$30.00 per US$1,000 principal amount of Senior Secured Notes. Except for the extension of the expiration date, all other terms and conditions of the Tender Offer remain unchanged. The Tender Offer is subject to the satisfaction of certain conditions, including the receipt of tenders from holders of a majority in principal amount of the outstanding Notes, entering into a new credit facility or another financing vehicle that provides the Company with sufficient cash to fund the Tender Offer, the successful pricing, as determined in the Company's sole discretion, of the initial public offering of the Company's common shares in Canada, and satisfaction of customary conditions. Additional information concerning the Tender Offer may be obtained by contacting: Banc of America Securities LLC, High Yield Special Products, (212) 847-5836 (collect) or (888) 292-0070 (U.S. toll-free) In the event that the Tender Offer is not consummated, the Company says it will offer to registered holders of the Notes to purchase for cash, Notes in an aggregate principal amount of up to US$3,800,000, on a pro rata basis and on the terms and subject to the conditions set forth in an offer to purchase to be dated August 1, 2006, copies of which may be obtained by contacting D.F. King and Co., Inc., the information agent for the Annual Reduction Offer, at (212) 269-5550 (collect) or (800) 758-5378 (U.S. toll- free). Pursuant to the terms of the Indenture governing the Notes, on August 1, 2006, the Company is required to make an offer to purchase Notes in an aggregate principal amount of US$3,800,000 at a purchase price in cash equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase. The Annual Reduction Offer is currently scheduled to expire at 5:00 p.m., New York City time on August 29, 2006. Subject to the requirements of the Indenture, the Annual Reduction Offer will be extended as necessary to permit Notes that are currently tendered in the Tender Offer to be tendered in the Annual Reduction Offer if the Tender Offer is not consummated. Headquartered in Nova Scotia, Secunda International Limited -- http://www.secunda.com/-- is a wholly owned Canadian vessel owner/ operator with locations in the UK and Barbados. Secunda is the leading supplier of marine support services to oil and gas companies in one of the world's harshest marine environments -- off the East Coast of Canada. * * * As reported in the Troubled Company Reporter on June 29, 2006, Standard & Poor's Ratings Services held its 'B-' long-term corporate credit and senior secured debt ratings on offshore support vessel provider Secunda International Inc. on CreditWatch with positive implications, where they were placed Sept. 29, 2005. ============= B E R M U D A ============= GLOBAL ALLOYS: Creditors Must File Proofs of Claim by Aug. 7 ------------------------------------------------------------ Global Alloys Ltd.'s creditors are given until Aug. 7, 2006, to prove their claims to Roderick M. Forrest, the company's liquidator, or be excluded from receiving any distribution or payment. Creditors are required to send by Aug. 7 their full names, addresses, the full particulars of their debts or claims, and the names and addresses of their lawyers, if any, to Mr. Forrest. A final general meeting will be held at the liquidator's place of business on Aug. 28, 2006, at 10:00 a.m., or as soon as possible. Global Alloys' shareholders will determine during the meeting, through a resolution, the manner in which the books, accounts and documents of the company and of the liquidator will be disposed. The shareholders of the company agreed on July 12, 2006, to place Global Alloys in voluntary liquidation under Bermuda's Companies Act 1981. The debtor can be reached at: Global Alloys Ltd. Chancery Hall, 52 Reid Street Hamilton HM 12, Bermuda The liquidator can be reached at: Roderick M. Forrest Wakefield Quin, Chancery Hall 52 Reid Street, Hamilton, Bermuda SCOTTISH RE: Possible Loss Prompts AM Best to Lower Ratings ----------------------------------------------------------- A.M. Best Co. has downgraded the financial strength rating to B++ from A- and the issuer credit ratings to "bbb+" from "a-" of the primary operating insurance subsidiaries of Scottish Re Group Limited (Scottish Re) (Cayman Islands). A.M. Best has also downgraded the ICR of Scottish Re to "bb+" from "bbb-". All FSR and debt ratings have been placed under review with negative implications. These rating actions follow Scottish Re's announcement that it expects a second quarter loss of approximately US$130 million when it reports earnings on August 3, 2006. A.M. Best is concerned about the magnitude of the loss and the potential for further deterioration in the company's operating performance. Moreover, A.M. Best has had concerns with the Scottish Re's aggressive acquisition strategy, along with the impact on earnings from spread compression and higher lapses on interest sensitive products due to higher interest rates. Lastly, A.M. Best notes that the company's chief executive officer has resigned unexpectedly and the company has engaged investment bankers to evaluate strategic alternatives and review capital sources. A.M. Best will hold discussions with Scottish Re's management to analyze the drivers of the loss, implications for further adverse earnings developments, its liquidity needs and sources of funding and management succession and strategic plans. Following the completion of its analysis, A.M. Best will make a determination on what further rating actions may be appropriate. The FSR has been downgraded to B++ from A- and the ICRs have been downgraded to "bbb+" from "a-" and placed under review with negative implications for these subsidiaries of Scottish Re Group Limited: -- Scottish Annuity & Life Insurance Company (Cayman) Ltd; -- Scottish Re (U.S.), Inc.; -- Scottish Re Life Corporation; -- Scottish Re Limited; and -- Orkney Re, Inc. The ICR has been downgraded to "bb+" from "bbb-" and placed under review with negative implications for Scottish Re Group Limited. These debt ratings have been downgraded and placed under review with negative implications: Scottish Re Group Limited -- "bb+" from "bbb-" on US$115 million 4.5% senior unsecured convertible notes, due 2022; -- "bb-" from "bb" on US$143 million 5.875% of hybrid capital units, due 2007; and -- "bb-" from "bb" on US$125 million non-cumulative preferred shares; Stingray Pass-thru Trust -- "bbb+" from "a-" on US$325 million senior unsecured pass-thru certificates, due 2012 These indicative ratings for debt securities under the shelf registration have been downgraded and placed under review with negative implications: Scottish Re Group Limited -- "bb-" from "bb" on preferred stock; -- "bb" from "bb+" on subordinated debt; and -- "bb+" from "bbb-" on senior unsecured debt. Scottish Holdings Statutory Trust II and III -- "bb" from "bb+" on preferred securities. SCOTTISH RE: Loss Warning Prompts Moody's to Lower Ratings ---------------------------------------------------------- Following Scottish Re Group Limited's profit warning, Moody's Investors Service has downgraded to Ba2 from Baa2 the senior unsecured debt rating of Scottish Re; the rating agency also downgraded to Baa2 from A3 the insurance financial strength ratings of the company's core insurance subsidiaries, Scottish Annuity & Life Insurance Company (Cayman) Ltd. and Scottish Re (U.S.), Inc. All debt and IFS ratings of Scottish Re remain on negative outlook. On July 31, Scottish Re announced it expects to report a net operating loss available to ordinary shareholders of approximately US$130 million for the second quarter ended June 30, 2006. As a result Moody's commented that the company will not meet the earning's expectations for the company's ratings as previously outlined by Moody's. The rating agency noted that the company has announced a series of "one time charges" and accounting adjustments over a period of multiple quarters. Despite a number of recent investments in personnel and systems to improve risk management and internal controls at the company, the recent earnings announcement diminishes Moody's confidence that there will not be further adverse developments over the near to medium term. The rating agency also noted that the company will be challenged to write business following the recent earnings' misses, thereby reducing future earnings growth. However, the company's liquidity profile and capital position appear adequate over the near to medium term. The company also announced that Scott E. Willkomm has resigned his position as President and Chief Executive Officer. Moody's commented that the recent events at the company suggest problems with the quality of its governance. The departure of the CEO, who had been with Scottish Re since 2000 as president and CFO, raises concerns about the board's CEO and senior executive succession-planning efforts. Consistent with Moody's practice of widening the notching between the IFS ratings and debt ratings at the holding company as a company's ratings move down, the debt ratings were downgraded three notches as opposed to two for the IFS ratings. These ratings were downgraded and remain on negative outlook: Scottish Re Group Limited -- Senior Unsecured, to Ba2 from Baa2; -- Senior Unsecured Shelf, to (P)Ba2 from (P)Baa2; -- Subordinate Shelf, to (P)Ba3 from (P)Baa3; -- Junior subordinate Shelf, to (P)B1 from (P)Ba1; -- Preferred Stock, to B1 from Ba1; and -- Preferred Shelf, to (P)B1 from (P)Ba1 Scottish Holdings Statutory Trust II -- Preferred Shelf, to (P)Ba3 from (P)Baa3 Scottish Holdings Statutory Trust III -- Preferred Shelf, to (P)Ba3 from (P)Baa3 Scottish Annuity & Life Ins Co (Cayman) Ltd -- IFSR, to Baa2 from A3 Premium Asset Trust Series 2004-4 -- Senior unsecured, to Baa2 from A3 Scottish Re (U.S.), Inc. -- IFSR, to Baa2 from A3 Stingray Pass-Through Trust -- Senior Secured, to Baa2 from A3 On October 18, 2004, Moody's affirmed the ratings of Scottish Re and its subsidiaries following the announcement that Scottish Re had agreed to acquire the individual life reinsurance business of ING Re. The outlook for the ratings was lowered to negative from stable at that time. Scottish Re Group Limited is a Cayman Islands company with principal executive offices located in Bermuda; it also has significant operations in Charlotte, NC, Denver, CO and Windsor, England. On March 31, 2006, Scottish Re reported assets of US$12.3 billion and shareholders' equity of US$1.2 billion. SCOTTISH RE: Loss Announcement Cues S&P to Put Ratings on Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BBB- counterparty credit rating on Scottish Re Group Ltd. on CreditWatch with negative implications. Standard & Poor's also said that it placed its various ratings on Scottish Re's operating subsidiaries and other related entities on CreditWatch negative. These rating actions follow the announcement by the company of an expected net operating loss of US$130 million for the quarter ended June 30, 2006. The company also announced the resignation of CEO Scott Willkomm as well as the engagement of Goldman Sachs and Bear Stearns to explore strategic alternatives and potential sources of capital. "The announced loss for the second quarter as well as the low earnings experienced in the first quarter resulted from the company's very rapid acquisition pace over the past few years," explained Standard & Poor's credit analyst Neil Strauss. "This, in turn, led to operational weaknesses and the need for revision of the assumptions that underlie financial results." The low level of earnings and high level of volatility in the first half of 2006 are not consistent with what is expected for the current ratings. The company has grown revenues and reinsurance in- force at an extremely strong rate over the past several years, vaulting it to third-largest life reinsurer in the U.S. as of Dec. 31, 2005, primarily through the aforementioned acquisitions. Because of the loss and resulting negative effect on Scottish Re's financial flexibility, there is a need for capital to be raised to augment anticipated liquidity and collateral needs over the next several quarters, including potential debt redemption in December 2006. The ratings will remain on CreditWatch until the capital has been raised and the company's strategic alternatives have been clarified. As a result, the ultimate ratings will depend on the: -- resulting capital, -- liquidity, and -- business position of the company. ============= B O L I V I A ============= PETROLEOS DE VENEZUELA: Begins Bolivia Hydrocarbon Prospecting -------------------------------------------------------------- Petroleos de Venezuela SA has started prospecting for oil and natural gas in Bolivia, El Universal reports. As soon as the survey is completed, Petroleos de Venezuela will determine the amount of future investments in joint ventures with Bolivia's Yacimientos Petroliferos Fiscales Bolivianos, the Associated Press reports, citing official news agency ABN. "A survey is under way to assess reserves in four blocks YPFB has designated for prospection and drilling of gas and oil. Depending on the result, we are to quantify our investment and the way investment will be made, which could be through a joint venture," Petroleos de Venezuela general manager Miguel Tarazona told El Universal. Petroleos de Venezuela's activities in Bolivia is in accordance with oil cooperation accords inked in May between Presidents Hugo Chavez and his Bolivian counterpart, Evo Morales. At that time, Venezuelan and Bolivian authorities estimated Venezuelan investment at US$1.2 billion. Petroleos de Venezuela SA 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. Fitch said the Rating Outlook is Stable. Both rating actions followed Fitch's November 2005 upgrade of Venezuela's sovereign rating. * BOLIVIA: Minister Orders Iberoamerica Crude Supply Pact Probe --------------------------------------------------------------- Andres Soliz Rada, Bolivia's hydrocarbons minister, has ordered an investigation on the crude supply contract between Yacimientos Petroleros Fiscales Bolivianos aka YPFB -- the country's state-run oil company -- and Iberoamerica, a local trading firm, Agencia Boliviana de Informacion reports. Business News Americas relates that YPFB, under a contract, sells 2,000 barrels of crude a day at a low price to Univen Petroquimica, a Brazilian refiner, for the latter's diesel. Iberoamerica Trading SRL acts as an intermediary for the exchange. Superintendencia de Hidrocarburos -- the hydrocarbons regulator of Bolivia -- had said that the exchange would result in an annual loss of US$3.8 million, BNamericas says. As reported in the Troubled Company Reporter-Latin America on July 31, 2006, Minister Soliz and Jorge Alvarado -- the head of YPFB -- said that the exchange would save Bolivia US$4 million, assuring that it would not cost the country US$2 million. Minister Soliz had said that Bolivia lacks refining capacity in Cochabamba and Santa Cruz, and wants to avoid a diesel shortage in those places. ABI underscores that Minister Rada has assigned the investigation to the hydrocarbons ministry's internal audit unit. Minster Soliz also ordered the audit to clarify the conflict between YPFB and the Superintendencia de Hidrocarburos. A second audit of Iberoamerica's crude export authorization solicitation was ordered by Minister Soliz to verify that the firm has complied with the law, BNamericas states. * * * 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 =========== ALERIS INT: Announces Results of Tender Offer Concluded July 31 --------------------------------------------------------------- Aleris International, Inc., disclosed that the tender offer to purchase for cash any and all of its outstanding 10-3/8% Senior Secured Notes Due 2010 (CUSIP No. 449681AC9) and 9% Senior Notes Due 2014 (CUSIP No. 014477AA1) expired on July 31, 2006, at 5:00 p.m., New York City time. The offer was previously set to expire at midnight, New York City time, on July 28, 2006. The tender offer was extended in order to coordinate with Aleris's closing of the acquisition of the downstream aluminum business of Corus Group plc and the related debt financings described in the Tender Offer and Consent Solicitation Statement, dated June 30, 2006. The requisite consents have been received to eliminate or make less restrictive substantially all of the restrictive covenants and events of default and certain related provisions contained in the indentures governing the Notes. As a result of obtaining the requisite consents, Aleris executed and delivered supplemental indentures setting forth the amendments to the indentures governing the Notes. The supplemental indentures provide that the amendments to the indentures will only become operative when validly tendered Notes are accepted for purchase pursuant to the tender offer. In addition, Aleris has been advised by the depositary for the tender offer that, as of 5:00 p.m., New York City time, on July 28, 2006, approximately US$200,830,000 principal amount, or 96.17%, of the outstanding principal amount of the 10-3/8% Notes and US$124,910,000 principal amount, or 99.93%, of the outstanding principal amount of the 9% Notes, and the consents related thereto, have been validly tendered. Withdrawal rights of tendering holders of the Notes that tendered prior to the expiration of the consent date of 5:00 p.m., New York City time, on July 14, 2006, have expired. The dealer manager for the tender offer and the solicitation agent for the consent solicitation can be contacted at: Deutsche Bank Securities Inc. Tel: (212) 250-6008 (collect) The depositary and information agent can be contacted at: Mackenzie Partners, Inc. Tel: (212) 929-5500 (collect) (800) 322-2885 (toll-free) About Aleris International Headquartered in Beachwood, Ohio, a suburb of Cleveland, Aleris International, Inc. -- http://www.aleris.com/-- is a major North American manufacturer of rolled aluminum products and is a global leader in aluminum recycling and the production of specification alloys. The company is also a leading manufacturer of value-added zinc products that include zinc oxide, zinc dust and zinc metal. The Company operates 42 production facilities in the United States, Brazil, Germany, Mexico and Wales, and employs approximately 4,200 people. * * * Moody's Investors Service affirmed on July 10, 2006, Aleris International, Inc.'s B1 corporate family rating. In a related rating action, Moody's assigned a Ba3 rating to the company's proposed 7-year senior secured guaranteed term loans aggregating US$650 million, which Aleris is issuing to partially finance its EUR691 million acquisition of certain aluminum assets from Corus Group plc and refinance its existing debt. Moody's affirmed these ratings: -- US$210 million senior secured notes, 10.375% due 2010: B2; and -- US$125 million senior unsecured notes, 9.0% due 2014: B3. Moody's assigned this rating: -- US$400 million senior secured guaranteed term loan due 2013: Ba3. AMERICAN AXLE: Sales Reach US$874.6MM in Second Quarter of 2006 --------------------------------------------------------------- American Axle & Manufacturing Holdings, Inc., reported its financial results for the second quarter of 2006. Second Quarter 2006 Highlights -- Second quarter sales of US$874.6 million versus USUS$867.7 million in the second quarter of 2005; -- 2% year-over-year decline in production volumes, offset by a 3% increase in content per vehicle; -- Non-GM sales increased by 10.5% to US$204.5 million, totaling 23% of net sales; -- Net earnings of US$20.4 million or US$0.40 per share; -- Year-to-date improvement of US$52 million in free cash flow; and -- Increased available liquidity by successfully closing on a US$200 million unsecured term loan. AAM's earnings in the second quarter of 2006 were US$20.4 million or US$0.40 per share. This compares to earnings of US$18.9 million or US$0.37 per share in the second quarter of 2005. AAM's second quarter earnings in 2006 reflect the impact of a one-time non-cash charge of US$2.4 million, or approximately US$0.03 per share, to write off unamortized debt issuance costs related to the cash conversion of approximately US$128.4 million of AAM's Senior Convertible Notes due 2024. An additional US$21.6 million of these Notes remain outstanding as of June 30, 2006. AAM's second quarter earnings in 2006 also reflect the impact of an unfavorable tax adjustment of US$2.6 million, or US$0.05 per share, related to the settlement of prior year foreign jurisdiction tax liabilities. AAM's earnings in the second quarter of 2005 included a charge of US$8.9 million, or US$0.12 per share, related to voluntary lump-sum separation payments accepted by 162 hourly associates. Net sales in the second quarter of 2006 were US$874.6 million as compared to US$867.7 million in the second quarter of 2005. Non-GM sales in the quarter were US$204.5 million and now represent 23% of AAM's total sales. On a year-to- date basis through the second quarter of 2006, AAM's non-GM sales have increased US$53.9 million or 15% over the prior year. "In the second quarter of 2006, AAM benefited from strong demand for GM's full-size utility vehicles and the increase in our content appearing on these outstanding new vehicles. We look forward to supporting the launch of GM's new full-size pick-ups later this year," said American Axle & Manufacturing Co-Founder, Chairman of the Board & CEO, Richard E. Dauch. "AAM is also looking forward to the launch of production at our new regional manufacturing facilities in Changshu, China and Olawa, Poland. With the addition of these new low-cost manufacturing facilities, as well as the continuing development of our products supporting passenger car and crossover vehicle applications, AAM is well positioned for profitable growth and diversification in 2007 and beyond." AAM sales in the quarter reflect an estimated 5% increase in customer production volumes for the major full-size truck and SUV programs it currently supports for GM and The Chrysler Group as compared to the second quarter of 2005. AAM estimates that customer production volumes for its mid-sized pick- up truck and SUV programs were down approximately 23% in the quarter on a year-over-year basis. AAM's content per vehicle increased by approximately 3% to US$1,216 in the second quarter of 2006 as compared to US$1,185 in the second quarter of 2005. This increase is due primarily to the impact of new AAM content appearing on GM's full-size utility vehicles, as well as production mix shifts favoring AAM's axles and driveline systems for the Dodge Ram heavy-duty series pick-ups and the four-wheel-drive HUMMER H3 in the mid- size SUV segment. Gross margin in the second quarter of 2006 was 10.3% as compared to 9.8% in the second quarter of 2005. Operating income was US$40.5 million or 4.6% of sales in the quarter as compared to US$36.4 million or 4.2% of sales in the second quarter of 2005. Net sales in the first half of 2006 were US$1.7 billion, approximately the same as the first half of 2005. Gross margin was 9.0% in the first half of 2006 as compared to 9.4% for the first half of 2005. Operating income for the first half of 2006 was US$55.5 million or 3.2% of sales as compared to US$62.1 million or 3.7% of sales for the first half of 2005. AAM's gross margin and operating margin performance in the first half of 2006 reflects the impact of higher non-cash expenses related to depreciation, amortization, pension and postretirement benefits and stock-based compensation. Higher fringe benefit costs, including supplemental unemployment benefits paid to certain of AAM's hourly associates, also pressured margins in the first half of 2006. AAM's SG&A spending in the second quarter of 2006 was US$49.4 million as compared to US$49.0 million in the second quarter of 2005. In the first half of 2006, AAM's SG&A spending was US$97.9 million or 5.7% of sales as compared to US$95.6 million or 5.7% of sales in the first half of 2005. AAM increased its R&D spending in the first half of 2006 by US$3.6 million on a year-over-year basis. AAM has also increased SG&A spending in 2006 to support its expanded foreign business and technical offices. AAM defines free cash flow to be net cash provided by (or used in) operating activities less capital expenditures and dividends paid. Net cash provided by operating activities in the first half of 2006 was US$99.7 million as compared to US$52.4 million in the first half of 2005. Capital spending in the first half of 2006 was down US$5.2 million on a year-over-year basis to US$156.0 million. Reflecting the impact of this activity and dividend payments of US$15.5 million, AAM's free cash flow in the first half of 2006 improved by US$52 million as compared to the first half of 2005. Recent Developments On June 8, 2006, AAM received financing commitments for a US$200 million senior unsecured term loan. Proceeds from this financing, which closed on June 28, 2006, will be used for general corporate purposes and to finance payments made upon the cash conversion of American Axle & Manufacturing Holdings, Inc. Senior Convertible Notes due 2024. AAM expects its full year 2006 earnings to be in the range of US$1.00 - US$1.10 per share to reflect the anticipated impact of the term loan financing. On May 31, 2006, AAM purchased a manufacturing building in Olawa, Poland. In addition, AAM purchased approximately 75 acres of land in an industrial park adjacent to the building for future development. AAM has designed a new 170,000 square-foot, state-of-the-art manufacturing plant for that site, to accommodate future manufacturing requirements. Operations will begin in late 2006. Non-GAAP Financial Information In addition to the results reported in accordance with accounting principles generally accepted in the United States of America included within this press release, AAM has provided certain information, which includes non-GAAP financial measures. Such information is reconciled to its closest GAAP measure in accordance with the Securities and Exchange Commission rules and is included in the attached supplemental data. Management believes that these non-GAAP financial measures are useful to both management and its stockholders in their analysis of the Company's business and operating performance. Management also uses this information for operational planning and decision-making purposes. Non-GAAP financial measures are not and should not be considered a substitute for any GAAP measure. Additionally, non-GAAP financial measures as presented by AAM may not be comparable to similarly titled measures reported by other companies. American Axle & Manufacturing Holdings, Inc. Condensed Consolidated Statements Of Income (Unaudited) Three months ended Six months ended June 30, June 30, 2006 2005 2006 2005 (In millions, except per share data) Net sales US$874.6 US$867.7 US$1,709.4 US$1,686.6 Cost of goods sold 784.7 782.3 1,556.0 1,528.9 Gross profit 89.9 85.4 153.4 157.7 Selling, general and administrative expenses 49.4 49.0 97.9 95.6 Operating income 40.5 36.4 55.5 62.1 Net interest expense (7.9) (6.6) (15.3) (12.7) Other income (expense) Debt refinancing costs (2.4) - (2.4) - Other, net 0.7 (1.7) 1.4 (1.4) Income before income taxes 30.9 28.1 39.2 48.0 Income taxes 10.5 9.2 10.1 15.8 Net income US$20.4 US$18.9 US$29.1 US$32.2 Diluted earnings per share US$0.40 US$0.37 US$0.57 US$0.63 Diluted shares outstanding 51.2 50.9 51.1 50.9 American Axle & Manufacturing Holdings, Inc. Condensed Consolidated Balance Sheets June 30, December 31, 2006 2005 (Unaudited) (In millions) Assets Current assets Cash and cash equivalents US$10.8 US$3.7 Accounts receivable, net 428.1 328.0 Inventories, net 226.0 207.2 Prepaid expenses and other 57.7 45.5 Deferred income taxes 19.8 17.0 Total current assets 742.4 601.4 Property, plant and equipment, net 1,910.2 1,836.0 Deferred income taxes 6.0 3.0 Goodwill 147.8 147.8 Other assets and deferred charges 72.5 78.4 Total assets US$2,878.9 US$2,666.6 Liabilities And Stockholders' Equity Current liabilities Accounts payable US$432.6 US$381.1 Other accrued expenses 152.0 168.1 Total current liabilities 584.6 549.2 Long-term debt 591.3 489.2 Deferred income taxes 113.2 116.1 Postretirement benefits and other long-term liabilities 572.0 517.3 Total liabilities 1,861.1 1,671.8 Stockholders' equity 1,017.8 994.8 Total liabilities and stockholders' equity US$2,878.9 US$2,666.6 American Axle & Manufacturing, Inc., headquartered in Detroit, MI, is a world leader in the manufacture, design, engineering and validation of driveline systems and related components and modules, chassis systems, and metal formed products for light truck, SUVs and passenger cars. The company has manufacturing locations in the U.S.A., Mexico, the United Kingdom and Brazil. The company reported revenues of US$3.4 billion in 2005 and has approximately 10,900 employees. * * * Standard & Poor's Ratings Services assigned on June 9, 2006, its 'BB' rating to American Axle & Manufacturing Inc.'s US$200 million senior unsecured term loan maturing in April 2010. At the same time, the 'BB' corporate credit ratings on the auto supplier and on its parent company, American Axle & Manufacturing Holdings Inc., were affirmed. The outlook is negative. Total consolidated debt at March 31, 2006, was about US$575 million. * * * Fitch Ratings has assigned on June 9, 2006, an indicative rating of 'BB' to the senior unsecured term loan announced by American Axle & Manufacturing Holdings, Inc., subject to review of the final amount and terms of the new agreement. The company's current ratings are: -- Issuer Default Rating (IDR) 'BB'; -- Senior unsecured 'BB'. * * * Moody's Investors Service affirmed on June 16, 2006, the Ba3 Corporate Family rating of American Axle & Manufacturing Holdings, Inc. and assigned a Ba3 rating to a new term loan for American Axle & Manufacturing, Inc. At the same time, the rating agency raised American Axle's Speculative Grade Liquidity rating to SGL-2 from SGL-3. COMPANHIA ENERGETICA: Infovias Sells All Shares in Way TV to TNL ---------------------------------------------------------------- Companhia Energetica de Minas Gerais disclosed that its subsidiary Empresa de Infovias S.A. sold 100% of its shares in WAY TV Belo Horizonte S.A. to TNL PCS Participacoes S.A. for BRL91,412,782.62 in a public auction held at the Sao Paulo Stock Exchange on July 27, 2006. Financial settlement of the auction took place upon signing of the share sale contract, on August 1, 2006. The sale price paid is being held in custody by Banco do Brasil S.A., in accordance with the contract, until consent for disposal of the control of Way Brasil has been given by the Brazilian telecommunications regulator, Anatel, and until the shares will be transferred to the Purchaser and the funds will be released to the shareholders. Companhia Energetica de Minas Gerais -- http://www.cemig.com.br/ -- is one of the largest and most important electric energy utilities in Brazil due to its strategic location, its technical expertise and its market. Cemig's concession area extends throughout nearly 96.7% of the State of Minas Gerais, Brazil. Cemig owns and operates 52 power plants, of which six are in partnership with private enterprises, relying on a predominantly hydroelectric energy matrix. Electric energy is produced to supply more than 17 million people living in the state's 774 municipalities. In addition to those 52 plants, another three are currently under construction. Cemig is also active in several other states, through ventures for the generation or the commercialization of energy in these Brazilian states: in Santa Catarina (generation), Rio de Janeiro (commercialization and generation), Esprito Santo (generation) and Rio Grande do Sul (commercialization). * * * Cemig's BRL312,500,000 12.7% debentures due Nov. 1, 2009, carry Moody's B1 rating. GOL LINHAS: Receives Boeing's 737 Planes With Enhanced Features --------------------------------------------------------------- Boeing delivered to GOL Linhas Aereas Inteligentes the first Next-Generation 737 with enhanced short runway landing and takeoff capabilities. The 737-800 is the first of that model type delivered to GOL as the carrier augments capacity on domestic and regional international routes. It is also the first delivery of 67 737- 800s the all-Boeing carrier has on order for delivery out to 2012. The airline currently operates 50 737s. "We have worked with GOL to enhance the 737 and add value to its operations. Our partnership drove development of these enhancements that now will benefit the product line and many airlines around the world," said John Wojick, vice president Sales, Latin America and the Caribbean, Boeing Commercial Airplanes. The 737 design enhancements allow operators to fly increased payload in and out of airports with runways less than 5,000 feet long. The design enhancements include a two-position tail skid that enables reduced approach speeds, sealed leading-edge slats that provide increased lift during takeoff, and increased flight spoiler deflection on the ground that improves takeoff and landing performance. "Boeing helped us to expand our capacity on the most profitable route in Brazil, (Sao Paulo-Rio De Janeiro) while offering comfort and safety to our clients," said David Barioni, GOL's vice president, technical. The short-field performance changes were developed starting in 2004 in response to GOL's needs at Santos Dumont airstrip in Rio de Janeiro. That 4,300-foot runway is short compared to other runways and could not accommodate larger airplanes at higher approach speeds with full payloads. The short-field design package is an option on the 737-600, -700 and -800 and is standard equipment for the new 737-900ER. The enhancements increase payload capability for landing up to 8,000 pounds on the 737-800 and 737-900ER and up to 4,000 pounds on the 737-600 and 737-700. They also increase payload capability for takeoff up to 2,000 pounds on the 737-800 and 737-900ER and up to 400 pounds on the 737-600 and 737-700. To date, 11 customers have ordered the short-field performance package for more than 250 airplanes. In addition to GOL, Alaska Airlines, Air Europe, Air India, Egyptair, GE Commercial Aviation Services (GECAS), Hapagfly, Japan Airlines, Pegasus Airlines, Sky Airlines and Turkish Airlines are among some of the operators that have ordered the design package. About Gol Linhas Headquartered in Sao Paulo, Brazil, Gol Linhas Areas Inteligentes S.A. -- http://www.voegol.com.br-- through its subsidiary, Gol Transportes Aereos S.A., provides airline services in Brazil, Argentina, Bolivia, Uruguay, and Paraguay. The company's services include passenger, cargo, and charter services. As of March 20, 2006, Gol Linhas provided 440 daily flights to 49 destinations and operated a fleet of 45 Boeing 737 aircraft. The company was founded in 2001. * * * On March 21, 2006, Moody's Rating Services assigned a Ba2 rating on Gol's Long-Term Corporate Family Rating. On June 14, 2006, Fitch Ratings assigned a rating of 'BB' to GOL Linhas' outstanding US$200 million 8.75% perpetual bond. In addition, Fitch assigned: -- National Scale Rating of 'AA-(bra)' with Stable Outlook, and -- Local Currency Issuer Default Rating of 'BB+'- with Stable Outlook. MRS LOGISTICA: Posts BRL115 Mil. Second Quarter 2006 Net Profit --------------------------------------------------------------- MRS Logistica's second quarter net profit increased 6.6% to BRL115 million, compared with the BRL107 million recorded in the same quarter in 2005, Business News Americas reports, citing a press release from the company. MRS Logistica's net revenue increased 15.2% to BRL474 million in the second quarter of 2006, compared with the same period last year. Net revenue of MRS Logistica in the first half of 2006 increased 9% to BRL885 million, from the same period of last year. Increase in revenue was due to larger transport volumes as well as higher average tariffs. MRS posted these results for the second quarter of 2006: -- Earnings before Interest, Taxes, Depreciation, and Amortization or EBITDA increased 9.2% to BRL410 million in the first half of the year, compared with the same period last year; -- EBITDA margin stayed at 46.4%; -- Transport volume in the second quarter of 2006 increased 11.9% to 27.9Mt, compared with the first quarter of 2006. -- Transport volume in the first half of 2006 increased 1.0% to 52.9Mt, compared with the same period last year; -- Container transport in the first half of 2006 increased 11% to 59,570 TEUs (Twenty-Foot Equivalent Unit), compared with the 53,846 TEUs recorded in 2005. BNamericas relates that MRS Logistica's most transported products include: -- iron ore for export, -- coal and coke, -- steel products, -- cement, -- bauxite, and -- agricultural products. MRS Logistica said early this year that the container transport was one of its primary growth targets, BNamericas states. MRS Logistica operates 1,700km of track in Sao Paulo, Minas Gerais, and Rio de Janeiro. It primarily transports cargo for major shareholders. * * * As reported on Nov. 10, 2005, Standard & Poor's Ratings Services revised the outlook on the BB- long-term foreign currency rating of MRS Logistica S.A. to positive from stable, following the revision of the foreign currency outlook of the Federative Republic of Brazil. SFBC INTERNATIONAL: Resolves Land Lease Litigation with East Bay ---------------------------------------------------------------- SFBC International, Inc., reached an agreement with East Bay Corp., to settle all pending litigation regarding a land lease at SFBC's Miami facility. The terms of the settlement include the cancellation of the existing land lease. Additionally, if East Bay's parcel is sold or re-leased to a third party anytime within the next four years, SFBC will receive 6% of East Bay's net proceeds. This settlement does not impact the adjacent parcel of land SFBC acquired in the first quarter of 2005. Including this adjacent parcel of land, SFBC owns approximately 56% of the land area at 11190 Biscayne Boulevard, where the Company's Miami facility is located. East Bay continues to own the remaining 44%. SFBC expects to sell its land on Biscayne Boulevard because it no longer serves any business purpose for future SFBC operations. While SFBC does not anticipate an immediate sale of its property, SFBC and East Bay have agreed to cooperate with each other and believe that a combined sale of their respective properties may maximize their value. Based upon estimated current market prices and current zoning, the value of SFBC's land owned at this location combined with the Company's former CPA building in the Miami area, which is currently for sale, is estimated to be approximately US$9 million to US$12 million. In the event the Company is able to obtain more favorable zoning for the Miami land, the Company believes that the value of the land will increase. As required under the existing covenants of the Company's credit facility, any proceeds received from the sale of these properties in excess of US$500,000 will be used to pay down the amount outstanding under the Company's credit facility. All other terms of the settlement will remain confidential. About SFBC International, Inc. Based in Princeton, New Jersey, SFBC International, Inc. (NASDAQ: SFCC) -- http://www.sfbci.com/and http://www.pharmanet.com-- is an international drug development services company offering a comprehensive range of clinical development, clinical and bioanalytical laboratory, and consulting services to the branded pharmaceutical, biotechnology, generic drug and medical device industries. SFBC has more than 35 offices, facilities and laboratories with approximately 2,500 employees strategically located throughout the world. In Latin America, SFBC is headquartered in Brazil. * * * As reported in the Troubled Company Reporter on May 22, 2006, Standard & Poor's Ratings Services held its ratings on Princeton, New Jersey-based contract research services provider SFBC International Inc., including the 'B+' corporate credit rating, under CreditWatch with negative implications, where they were placed on May 11, 2006. VARIG: Brazilian Labor Court Freezes US$75,000,000 Volo Funds ----------------------------------------------------------- The 33rd section of the Rio de Janeiro Labor Court granted on Tuesday a request by airline workers' unions for preliminary injunction freezing US$75,000,000 deposited by Volo do Brasil to VARIG S.A.'s account, Investnews (Brazil) reports. The amount was Volo's first installment toward buying VARIG's assets and had been allocated to pay operating costs, The Associated Press says. The Labor Court, however, directed VARIG to use the money to settle the airline's labor debts for canceling work contracts. Meanwhile, hundreds of workers at VARIG went on indefinite strike after the airline announced its plan to cut ties with 5,500 workers as part of its plan of judicial recovery. VARIG said last week that it would keep around 40% of its 9,485 employees and gradually rehire the dismissed workers once it resumes growth. According to EFE News Services (U.S.) Inc., VARIG has estimated the layoffs to cost at around BRL253 million -- about US$116 million. VARIG is currently operating 10 aircraft with flights in seven Brazilian cities -- Sao Paulo, Rio de Janeiro, Porto Alegre, Fortaleza, Salvador, Recife and Manaus. The airline still flies to Frankfurt, Germany; Buenos Aires, Argentina; Miami and New York, in the U.S. About VARIG Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's largest air carrier and the largest air carrier in Latin America. VARIG's principal business is the transportation of passengers and cargo by air on domestic routes within Brazil and on international routes between Brazil and North and South America, Europe and Asia. VARIG carries approximately 13 million passengers annually and employs approximately 11,456 full-time employees, of which approximately 133 are employed in the United States. The Company, along with two affiliates, filed for a judicial reorganization proceeding under the New Bankruptcy and Restructuring Law of Brazil on June 17, 2005, due to a competitive landscape, high fuel costs, cash flow deficit, and high operating leverage. The Debtors may be the first case under the new law, which took effect on June 9, 2005. Similar to a chapter 11 debtor-in-possession under the U.S. Bankruptcy Code, the Debtors remain in possession and control of their estate pending the Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de Advocacia Sergio Bermudes, represents the carrier in Brazil. Each of the Debtors' Boards of Directors authorized Vicente Cervo as foreign representative. In this capacity, Mr. Cervo filed a Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury Winthrop Shaw Pittman LLP represents Mr. Cervo in the United States. As of March 31, 2005, the Debtors reported BRL2,979,309,000 in total assets and BRL9,474,930,000 in total debts. =========================== C A Y M A N I S L A N D S =========================== CITIC CAPITAL: Deadline for Proofs of Claim Filing Is on Aug. 24 ---------------------------------------------------------------- Citic Capital-Parallax Asia Fund, Ltd.'s creditors are required to submit proofs of claim by Aug. 24, 2006, to the company's liquidator: Linburgh Martin John Sutlic P.O. Box 1034, George Town Grand Cayman, Cayman Islands Creditors who are not able to comply with the Aug. 24 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Citic Capital's shareholders agreed on June 5, 2006, for the company's voluntary liquidation under Section 135 of the Companies Law (2004 Revision) of the Cayman Islands. Parties-in-interest may contact: Thiry Gordon Close Brothers (Cayman) Limited Fourth Floor, Harbour Place P.O. Box 1034, George Town Grand Cayman, Cayman Islands Tel: (345) 949-8455 Fax: (345) 949-8499 DYNAMIC CREDIT: Filing of Proofs of Claim Is Until Aug. 24 ---------------------------------------------------------- Dynamic Credit Opportunities Fund I Offshore, Ltd.'s creditors are required to submit proofs of claim by Aug. 24, 2006, to the company's liquidator: dms Corporate Services Ltd. Ansbacher House, Second Floor 20 Genesis Close, George Town P.O. Box 31910 SMB Grand Cayman, Cayman Islands Creditors who are not able to comply with the Aug. 24 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Dynamic Credit's shareholders agreed on July 7, 2006, for the company's voluntary liquidation under Section 135 of the Companies Law (2004 Revision) of the Cayman Islands. Parties-in-interest may contact: Angela Nightingale dms Corporate Services Ltd. Ansbacher House P.O. Box 31910 SMB, Grand Cayman Tel: (345) 946-7665 Fax: (345) 946-7666 E&H REAL: Shareholders Convene for a Final Meeting on Aug. 21 ------------------------------------------------------------- E&H Real Estate Corp.'s shareholders will convene for a final meeting at 1:00 p.m. on Aug. 21, 2006, at: 24th Floor, St. George's Building 2 Ice House Street, Hong Kong These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidator can be reached at: John A. H. Leigh 24th Floor, St. George's Building 2 Ice House Street, Hong Kong Tel: 00 852 2524-9221 Fax: 00 852 2845-9133 GRANGE LIMITED: Creditors Must File Proofs of Claim by Aug. 24 -------------------------------------------------------------- Grange Limited's creditors are required to submit proofs of claim by Aug. 24, 2006, to the company's liquidator: Ogier Corporate Services (UK) Limited Equitable House, 47 King William Street London, EC4R 9JD Creditors who are not able to comply with the Aug. 24 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Grange Limited's shareholders agreed on June 27, 2006, for the company's voluntary liquidation under Section 135 of the Companies Law (2004 Revision) of the Cayman Islands. HERBALIFE INTERNATIONAL: S&P Rates US$300MM Bank Facility at BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its bank loan and recovery ratings to Herbalife International Inc.'s US$300 million bank financing. Herbalife International Inc. is the borrower under the facility, which is comprised of a US$200 million six-year first-lien term loan and a US$100 million six- year first-lien revolving credit facility. The first-lien loans are rated 'BB+', the same as the corporate credit rating, with recovery ratings of '3', indicating the expectation of meaningful (50%-80%) recovery of principal in the event of default. Proceeds from the facilities will be used to redeem the company's US$165 million 9.5% notes due 2011 and pay the related accrued interest. All obligations under the credit facility are unconditionally guaranteed by Herbalife Ltd., the parent company, and its direct and indirect wholly owned subsidiaries except certain non-U.S. subsidiaries. The facility is secured by a first-priority security interest in substantially all present and future tangible and intangible assets of the company, including a pledge of 100% of the stock of domestic subsidiaries and 66% of the stock of non-U.S. subsidiaries. Ratings List Herbalife International Inc. Corporate credit rating BB+/Stable/-- Ratings Assigned US$200 mil first-lien term loan BB+ Recovery rating 3 US$100 million first-lien credit fac BB+ Recovery rating 3 HORATIO CORP: Shareholders Gather for a Final Meeting on Aug. 21 ---------------------------------------------------------------- Horatio Corp.'s shareholders will convene for a final meeting at 12:30 p.m. on Aug. 21, 2006, at: 24th Floor, St. George's Building 2 Ice House Street, Hong Kong These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidator can be reached at: John A. H. Leigh 24th Floor, St. George's Building 2 Ice House Street, Hong Kong Tel: 00 852 2524-9221 Fax: 00 852 2845-9133 HORATIO REAL: Final Shareholders Meeting Is Set for Aug. 21 ----------------------------------------------------------- Horatio Real Estate Corp.'s final shareholders meeting will be at 1:30 p.m. on Aug. 21, 2006, at: 24th Floor, St. George's Building 2 Ice House Street, Hong Kong These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidator can be reached at: John A. H. Leigh 24th Floor, St. George's Building 2 Ice House Street, Hong Kong Tel: 00 852 2524-9221 Fax: 00 852 2845-9133 JEFFERIES (MASTER): Proofs of Claim Must be Filed by Aug. 24 ------------------------------------------------------------ Jefferies Real Asset Master Fund, Ltd.'s creditors are required to submit proofs of claim by Aug. 24, 2006, to the company's liquidator: dms Corporate Services Ltd. Ansbacher House, Second Floor 20 Genesis Close, George Town P.O. Box 31910 SMB Grand Cayman, Cayman Islands Creditors who are not able to comply with the Aug. 24 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Jefferies Real's shareholders agreed on July 7, 2006, for the company's voluntary liquidation under Section 135 of the Companies Law (2004 Revision) of the Cayman Islands. Parties-in-interest may contact: Angela Nightingale dms Corporate Services Ltd. Ansbacher House P.O. Box 31910 SMB, Grand Cayman Tel: (345) 946-7665 Fax: (345) 946-7666 JEFFERIES REAL: Creditors Must File Proofs of Claim by Aug. 24 -------------------------------------------------------------- Jefferies Real Asset Fund (Cayman), Ltd.'s creditors are required to submit proofs of claim by Aug. 24, 2006, to the company's liquidator: dms Corporate Services Ltd. Ansbacher House, Second Floor 20 Genesis Close, George Town P.O. Box 31910 SMB Grand Cayman, Cayman Islands Creditors who are not able to comply with the Aug. 24 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Jefferies Real's shareholders agreed on June 13, 2006, for the company's voluntary liquidation under Section 135 of the Companies Law (2004 Revision) of the Cayman Islands. Parties-in-interest may contact: Angela Nightingale dms Corporate Services Ltd. Ansbacher House P.O. Box 31910 SMB, Grand Cayman Tel: (345) 946-7665 Fax: (345) 946-7666 KAYEFF (M): Final Shareholders Meeting Is Set for Aug. 21 --------------------------------------------------------- Kayeff (M) Corp.'s final shareholders meeting will be at 10:00 a.m. on Aug. 21, 2006, at: 24th Floor, St. George's Building 2 Ice House Street, Hong Kong These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidator can be reached at: John A. H. Leigh 24th Floor, St. George's Building 2 Ice House Street, Hong Kong Tel: 00 852 2524-9221 Fax: 00 852 2845-9133 KAYEFF (R): Will Hold Final Shareholders Meeting on Aug. 21 ----------------------------------------------------------- Kayeff (R) Corp.'s final shareholders meeting will be at 10:00 a.m. on Aug. 21, 2006, at: 24th Floor, St. George's Building 2 Ice House Street, Hong Kong These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidator can be reached at: John A. H. Leigh 24th Floor, St. George's Building 2 Ice House Street, Hong Kong Tel: 00 852 2524-9221 Fax: 00 852 2845-9133 LAWRENCIUM CORP: Final Shareholders Meeting Is on Aug. 21 --------------------------------------------------------- Lawrencium Corp.'s final shareholders meeting will be at 12:00 p.m. on Aug. 21, 2006, at: 24th Floor, St. George's Building 2 Ice House Street, Hong Kong These agenda will be taken during the meeting: 1) accounting of the liquidation process showing how the winding up has been conducted during the preceding year, 2) requesting the members' approval of the liquidation fees incurred to date, approval of the liquidator's estimated costs to completion, and 3) hearing any explanation that may be given by the liquidator. A member entitled to attend and vote at the meeting may appoint a proxy, who need not be a member, in his stead. The liquidator can be reached at: John A. H. Leigh 24th Floor, St. George's Building 2 Ice House Street, Hong Kong Tel: 00 852 2524-9221 Fax: 00 852 2845-9133 NATICA INSURANCE: Creditors Must File Proofs of Claim by Aug. 24 ---------------------------------------------------------------- Natica Insurance Company, Ltd.'s creditors are required to submit proofs of claim by Aug. 24, 2006, to the company's liquidator: Global Captive Management Ltd. Genesis Building P.O. Box 1363, George Town Grand Cayman, Cayman Islands Creditors who are not able to comply with the Aug. 24 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Natica Insurance's shareholders agreed on June 9, 2006, for the company's voluntary liquidation under Section 135 of the Companies Law (2004 Revision) of the Cayman Islands. Parties-in-interest may contact: Peter Mackay Global Captive Management Ltd. Genesis Building P.O. Box 1363, George Town Grand Cayman, Cayman Islands NYK STAR: Proofs of Claim Filing Deadline Is on Aug. 24 ------------------------------------------------------- Nyk Star Reefers Inc.'s creditors are required to submit proofs of claim by Aug. 24, 2006, to the company's liquidator: Ian Wight Stuart Sybersma Deloitte P.O. Box 1787, George Town Grand Cayman, Cayman Islands Creditors who are not able to comply with the Aug. 24 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Nyk Star's shareholders agreed on June 27, 2006, for the company's voluntary liquidation under Section 135 of the Companies Law (2004 Revision) of the Cayman Islands. Parties-in-interest may contact: Mark Pulvirenti Deloitte P.O. Box 1787, George Town Grand Cayman, Cayman Islands Tel: (345) 949-7500 Fax: (345) 949-8258 RIGHT CO: Deadline for Proofs of Claim Filing Is on Aug. 24 ----------------------------------------------------------- Right Co. Limited's creditors are required to submit proofs of claim by Aug. 24, 2006, to the company's liquidator: David Dyer Deutsche Bank (Cayman) Limited P.O. Box 1984GT, George Town Grand Cayman, Cayman Islands Creditors who are not able to comply with the Aug. 24 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Right Co.'s shareholders agreed on July 14, 2006, for the company's voluntary liquidation under Section 135 of the Companies Law (2004 Revision) of the Cayman Islands. TEMPO CAPITAL: Last Day to File Proofs of Claim Is on Aug. 24 ------------------------------------------------------------- Tempo Capital Corp.'s creditors are required to submit proofs of claim by Aug. 24, 2006, to the company's liquidators: John Cullinane Derrie Boggess c/o Walkers SPV Limited P.O. Box 908, George Town Grand Cayman, Cayman Islands Tel: (345) 914-6305 Creditors who are not able to comply with the Aug. 24 deadline won't receive any distribution that the liquidator will make. Creditors are required to present proofs of claim personally or through their solicitors. Tempo Capital's shareholders agreed on July 3, 2006, for the company's voluntary liquidation under Section 135 of the Companies Law (2004 Revision) of the Cayman Islands. ========= C H I L E ========= BLOCKBUSTER: Reports US$68.4 Mil. Second Quarter 2006 Net Income ---------------------------------------------------------------- Blockbuster Inc. reported US$68.4 million net income for the second quarter of 2006 compared with a net loss of US$57.2 million for the second quarter of 2005. Excluding the impact of favorable tax audit settlements, costs incurred for store closures and discontinued operations in Spain, adjusted net loss totaled US$21.4 million an improvement of US$23.2 million as compared with adjusted net loss of US$44.6 million for the second quarter of 2005. "Our second quarter 2006 results mark our third consecutive quarter of solid performance and demonstrate the continued successful execution of our business plan," said Blockbuster Chairman and chief exevutive officer John Antioco. "Domestic same-store movie rental revenues increased 3.8%. Our profitability and cash flow have improved significantly year- over-year, and as a result, our balance sheet is much healthier. We have also gained momentum in our online business. In short, we achieved our objectives for the quarter and will continue to work toward driving improved results while focusing on our combined in-store and online offering." Blockbuster disclosed revenues for the second quarter of 2006 declined 5% to US$1.32 billion compared with US$1.39 billion for the second quarter of last year, due to closure of stores and lower margin retail sales. Blockbuster's operating loss for the second quarter of 2006 was US$6.4 million, an improvement of US$49.6 million from an operating loss of US$56 million for the second quarter of 2005. Blockbuster's income from continuing operations, excluding a gain of US$7.7 million on discontinued operations in Spain, totaled US$60.7 million for the second quarter of 2006 compared with a loss from operations of US$55.4 million for the second quarter of 2005. Blockbuster's operating income increased US$147.9 million to US$20.7 million for the first six months of 2006 from a loss of US$127.2 million for the first six months of 2005 and cash flow provided by operating activities for the first six months of 2006 increased by US$205 million to US$17.7 million from a US$187.3 million deficit for the first six months of 2005. It also disclosed that cash flow was impacted by a settlement of income tax audits, which resulted in a cash receipt of approximately US$21 million and a reduction of accrued liabilities. The Company paid down approximately US$150 million in debt including the entire US$135 million balance outstanding under its revolving credit facility at December 31, 2005, increasing its borrowing capacity to approximately US$293 million at June 30, 2006. About Blockbuster Blockbuster Inc. (NYSE: BBI, BBI.B) -- http://www.blockbuster.com/-- is a global provider of in-home movie and game entertainment, with more than 9,000 stores throughout the Americas, Europe, Asia and Australia. The company operates in Puerto Rico, Argentina, Brazil and Chile. * * * As reported in the Troubled Company Reporter on Mar. 15, 2006, Moody's Investors Service affirmed Blockbuster Inc. long-term debt ratings and its SGL-3 speculative grade liquidity rating. Moody's affirmed its B3 rating on the company's Corporate family rating and Senior secured bank credit facilities at B3. Moody's also affirmed its Caa3 rating on the company's senior subordinated notes. Standard & Poor's Ratings Services lowered, in November 2005, its corporate credit and bank loan ratings on Blockbuster Inc. to 'B-' from 'B' and the subordinated note rating to 'CCC' from 'CCC+'. S&P said the outlook is negative. Fitch downgraded, in August 2005, Blockbuster Inc.'s Issuer default rating to 'CCC' from 'B+'; Senior secured credit facility to 'CCC' from 'B+' with an 'R4' recovery rating; and Senior subordinated notes to 'CC' from 'B-' with an 'R6' recovery rating. ENERSIS SA: Names Klaus Winkler as Unit's New General Manager ------------------------------------------------------------- Enersis S.A. approved the appointment of Klaus Winkler S. as General Manager of its subsidiary, Compania Americana de Multiservicios, CAM Chile, replacing Pantaleon Calvo G., who, in turn, will assume a new function in the Distribution and Services Regional Management of Chilectra. Klaus Winkler S. is a professional with a vast experience in the group. To date, he was Planning and New Business Manager of Chilectra and during his career, he has held important positions in Spain, the United States and Chile in relation to the development of the generating and distribution businesses. The Enersis Board also approved the appointment of Andreas Gebhardt S. as Marketing Manager of its subsidiary, Chilectra. Before the appointment, he was Operations Manager of CAM Chile. * * * Oct. 18, 2005, Moody's Investors Service affirmed the ratings of Enersis S.A., Empresa Nacional de Electricidad S.A. (Endesa Chile), and Endesa Chile Overseas Co., all Ba1 senior unsecured, and revised the rating outlook for all three issuers to positive from stable. Endesa Chile is a 60% subsidiary of Enersis. Endesa Chile Overseas Co. is a subsidiary of Endesa Chile and its ratings are based upon the guarantee of timely payment by Endesa Chile. ENERSIS SA: Net Income Reaches CLP218.227B in First Six Months -------------------------------------------------------------- Enersis S.A. reported net income of CLP218,227 billion as of the close of the first half of this year. This figure is due to the excellent operating results, which grew by 41.2%, to the improved non-operating result obtained during the period on reducing the losses to CLP115.545 million and to the recording of the positive effect on the deferred taxes in Chilectra (ex Elesur S.A.), as a result of the merger with Elesur. It is important to point out that since October 2005, with the creation of the Holding Company, Endesa Brasil, Central Geradora Termeletrica Fortaleza or CGTF and Companhia de Interconexao Energetica or CIEN, started being consolidated with the financial statements of Enersis, which when compared on equal terms (pro forma financial statements), show an operating result that grew by 23.9%. The fairly stable economic situation registered in all five countries where the Enersis Group operate, has significantly stimulated the consumption of electric energy. As a result of this, income from sales increased by 14% or by more than CLP200 billion. This positive effect was based on the increase in sales to end-clients in distribution and on the sales of the generating subsidiaries due to the greater need for energy to satisfy this growing demand. Another element worthy of mention is the fact that the operating margin for the period compared to the previous period rose from 29% to 34%. Operating Income Operating income grew by 41.2% basically because, whilst operating revenues rose by 14%, the costs associated to the sale of energy and power fell from 47% to 45%, as a proportion of the total operating costs. It is also the consequence of the improvement in the result of the electric energy and power distributing business by 34%. An element that compensated slightly for this growth was the increase of 6% in the administrative and selling expenses, principally as a result of the consolidation of CIEN and CGTF. Nevertheless, the variations pointed out also confirm the growing efficiency in the company's performance. Generating Business In the first half of 2006, the subsidiary, Endesa Chile achieved a net income of CLP124.310 billion, which represents an improvement of 286%. This increase is a reflection of the improved operating and non-operating results. Endesa's operating income amounted to CLP242.547 million, an increase of 29%. This is due to the operating figures achieved in Chile as a consequence of the higher sale prices and of the increase in hydraulic production. The consolidated figures as of June, 2005 included the operating figures of Cachoeira Dourada in Brazil, which was deconsolidated at the beginning of the fourth quarter of that year, when it became a part of Endesa Brasil, consolidated in the financial statements of Enersis. EBITDA increased by 29%. The composition of EBITDA by country, adjusted by the participation in the ownership of each subsidiary shows that Chile contributes with 76%, Colombia 10%, Argentina 7% and Peru 6%. The increase of 115% in the operating income in Chile is a product of the recording of the generating costs reflected in the marginal cost of the system. As of June 1, Etevensa merged its operations with Edegel, a subsidiary of Endesa Chile, in Peru and as a result, the company increased its thermal capacity by 315 MW, improving in this way its exposure to hydrology and boosting its marketing policy, in addition to increasing its market share to 33% in terms of installed capacity. The increase in the production of hydroelectricity permitted a 22% reduction in the purchase of energy, which implied a reduction of 4% in the cost of acquiring the energy. On the other hand, fuel costs increased by 10%, amounting to CLP108,856 million, as a result of the increased consumption of the Costanera plant in Argentina and a worsened hydrology in Peru that implied a greater thermal generation utilizing the recently incorporated Etevensa in Edegel, Peru. In Argentina, the high internal demand has provoked strong needs for energy, with the total generation of the subsidiaries in that country increasing by 7%. The high rainfall has permitted hydroelectric generation to increase by 61% with respect to the previous year. There was also an increase in the prices of energy due to the transfer of the greater cost of fuel in the system, which permitted the income for sales to increase by 15%. The greater production and the impact of higher gas prices have implied a greater expense on fuels that rose by 22%. Notwithstanding this rise, the operating result during the first half of 2006 registered an increase of 55%. In Colombia the operating result fell by 20% due to the lower income from sales as a result of a decrease of 6% in physical sales of energy as well as lower prices on the wholesale market due to an abundant rainfall. The above was partially compensated by a fall of CLP2.015 billion in operating costs. It is important to point out that the operating figures of Colombia have been adversely affected by the depreciation of the Colombian Peso against the US Dollar, which is added to the appreciation of the Chilean currency in the same period. In Peru Edegel registered a fall of 7% in its operating result. Although sales revenues rose by 22%, as a result of an increase of 32% in physical sales of energy, the lower rainfall and the increase in sales forced a greater thermal production with the consequent increase in operating costs of 52%. This increase in costs is mainly the product of an increase of CLP12.078 billion in fuel costs. In Chile operating income amounted to CLP317.472 billion, CLP51.240 billion higher than that registered as of the close of June 2005. The high demand and repeated cuts in the supply of natural gas from Argentina have put pressure on the electric system and the spot price has reached levels of over US$140 per MWh in the Alto Jahuel node system. Worthy of note is that on average during the first half of this year the spot price on the Alto Jahuel node system reached US$60.69 per MWh. During the first half, Endesa Chile increased its physical sales of energy on the spot market by 18%, making this its principal source of income. In turn, physical sales of energy to regulated clients, which are subject to a new scenario of recording of generating costs following the introduction of the Short Law II, increased by 2%, reaching 5.345 GWh. The improved hydrological situation in Chile permitted an increase of 8% in the generation of electricity with 82% corresponding to hydroelectric generation, in contrast to the first half of the previous year in which the hydraulic generation represented only 73%. The lower thermal generation permitted fuel costs to decrease by 30% and purchases of energy to reduce by 29%. In this way, operating costs decreased by 13%. Distribution Business Distribution showed a 5.3% increase in physical sales as a result of a steady growth in demand in the six areas under concession of the Enersis Group in Latin America. The growth in sales is the combined result of a greater per capita demand and the incorporation of more than 350,000 new clients. These two characteristics of the distribution business constitute the essential factors that explain the stability of the cash flows coming from those investments. In Brazil, the subsidiary, Ampla (Rio de Janeiro) registered an increase of 45% in its operating income. This positive variation is associated to an 8% increase in physical sales, mainly due to the incorporation of 104,000 new clients and to lower losses of energy that fell from 23.4% to 22.4%. Coelce, a subsidiary of the State of Sao Paulo registered a notable 109% increase in its operating income. This positive change is explained by the 2% rise in physical sales and by the highest sales margin during this period. Just as in Ampla, the client base rose by 103,000 new consumers, whilst the losses of energy fell from 14.1% to 12.9%. In Argentina, the subsidiary, Edesur registered a 5% increase in physical sales, a situation that explains the improved operating income. This positive effect is related to the increase in demand for energy and to the readjustment of the tariff established as of last November. Just as in the case of the Brazilian subsidiaries, Edesur also reported an increase in its base of customers, which rose by 26,000 new consumers. Another very important element of in performance is that the losses of energy fell from 11.0% to 10.4%. Codensa (Bogota) registered a 10% higher operating income. This significant growth is explained mainly by the improved sales margin associated with the reduction in the losses of energy as well as a 6% increase in physical sales of energy. Confirming the growing tendency, the consumer base grew by 65,000 clients, with a better energy loss index, which fell from 9.5% to 9.1%. Edelnor (Lima) increased its operating income by 5% as a consequence of a greater demand for energy and improved unit sales margins. Whilse physical sales grew by 7%, the client base increased by 21,000 and losses of energy decreased slightly from 8.5% to 8.4%. Chilectra registered a rise of 9% in its operating income. This increase is related to a 5% increment in physical sales and to an improved sales margin, associated to lower energy losses and to an increase in sales. The customer base rose by 34,000 and the losses of energy decreased from 5.4% to 5.3%. Non-Operating Result In addition to the important operating growth, the Enersis Group registered an improvement of 50% in its non-operating losses, which decreased from CLP231.339 billion to CLP115.794 billion. This positive evolution is explained, in summary, by these effects: a) Decrease of 24% in net financial expenses, as a result of a greater financial income obtained from investing its cash surpluses, and of a lower average debt between the two periods, despite the fact that the figures as of June 2006 include in the consolidation two new companies (CIEN and CGTF). b) Increase of 7% in the profits from investments in related companies. The greater profit arises mainly because in June 2005 the Proportional Equity Value (PEV) recorded on CIEN and CGTF corresponded to a net loss of CLP2.286 billion, whereas in June 2006, the PEV recorded is zero as the two companies have been consolidated with Enersis since October 2005. c) An item that explains in a significant manner the improved non-operating result, corresponded to other non-operating income and expenses, that moved from a net loss of CLP58.397 billion to a net profit of CLP15.937 billion during this latter period. The principal reasons that explain this positive evolution are related to the application of Technical Bulletin No. 64. d) The item taxes (Income or Deferred Taxes) present an expense lower by CLP50.075 million. Investments The best result described has also become the best financial and liquidity profile for the company. Thus, for example, an important indicator such as the EBITDA, reported a growth of 26%. This improved financial position permits the Enersis Group to better project the investments it must carry out year after year in order to maintain its condition as the regional leader. The distribution is highly investment intensive in order to maintain confidence in the supply. To have electricity distribution networks that guarantee a low level of interruptions requires making permanent investments that will ensure that the various consumer, industrial, public lighting, business and domestic segments do not suffer interruptions to their daily processes. Furthermore, this vast plan of investments, totally financed by the respective subsidiaries, contributes towards satisfying, in a prompt and reliable manner, the supply of electric energy to the more than 350,000 new clients that are incorporated each year to the consumer base of the Enersis Group, a key element in the stability of the cash flows from this line of business. In parallel to this plan, the Group considers a plan of investments in expansion within which it would highlights: -- Palmucho, pass-through hydroelectricity plant currently under construction. This 32-MW plant that will take advantage of the ecological flows from the Ralco plant, will require a total investment projected at US$37.5 million. Its startup is programmed for the second half of the year 2007. -- San Isidro II, thermal plant along side San Isidro, located in Quillota, is also in the construction stage. The subsidiary, Endesa Chile, has already agreed to proceed with Mitsubishi as the supplier of the turbine for this plant, which is contemplated to have a maximum power in a combined cycle with liquefied natural gas of 377 MW. It is expected to start commercial operations in an open cycle at the end of March 2007. The combined cycle will start commercial operations by the end of February 2008. Its investment is projected at US$200 million. -- Ojos de Agua, a mini hydroelectricity plant located some 100 kilometers from the city of Talca, in the Cipreses river valley, downstream from the La Invernada lake, will have a power of 9 MW, with an estimated average annual production of 60 GWh and considers an investment of US$16 million. With regard to the eolian projects, technical feasibility studies are currently underway for the implementation of an eolian camp in the Central Interconnected System. These were born out of Endesa Chile's initiative to develop non- conventional renewable energy projects and their installed capacity is estimated to be over 9 MW. With respect to the development of Plants in Aysen, Endesa Chile continues with on site prospecting in addition to advancing in its constant efforts to achieve better communications and inform the regional communities and authorities of the benefits of the project. These plants, which consider a total installed capacity of 2,430 MW, would require an investment of around US$2,400 million and the first of these is expected to commence operations as from the year 2012. * * * Oct. 18, 2005, Moody's Investors Service affirmed the ratings of Enersis S.A., Empresa Nacional de Electricidad S.A. (Endesa Chile), and Endesa Chile Overseas Co., all Ba1 senior unsecured, and revised the rating outlook for all three issuers to positive from stable. Endesa Chile is a 60% subsidiary of Enersis. Endesa Chile Overseas Co. is a subsidiary of Endesa Chile and its ratings are based upon the guarantee of timely payment by Endesa Chile. =============== C O L O M B I A =============== ECOPETROL SA: Pension Fund Managers May Bid for 20% Stake --------------------------------------------------------- Luis Fernando Alarcon -- the president of Asofondos, the pension fund association -- told Business News Americas that the AFP or the six pension fund managers in Colombia is considering making a bid for a 20% stake in Ecopetrol SA, the country's state-run oil firm. As reported in the Troubled Company Reporter-Latin America on July 31, 2006, the Colombian mines and energy ministry said that Ecopetrol received the government's approval to sell up to 20% of the company. According to the ministry, the private sector participation would help ensure Ecopetrol's financial and administrative independence needed to carry out investments on exploration and production as well as to upgrade oil infrastructure. President Alvaro Uribe said that Colombia would boast a larger and stronger company and that new oil discoveries require funds to be injected into Ecopetrol. Mr. Alarcon told BNamericas, "In a first stage, we [Asofondos] are interested, depending on the sale conditions. I think that is obvious and I couldn't answer any other way. However, I think the sale structuring process could take at least a year." The AFPs won in a bidding in July a 97.2% stake in Ecogas, the state-run gas transport firm, for COP750 billion, BNamericas relates. Ecopetrol is an integrated-oil company that is wholly owned by the Colombian government. The company's activities include exploration for and production of crude oil and natural gas, as well as refining, transportation, and marketing of crude oil, natural gas and refined products. Ecopetrol is Latin America's fourth-largest integrated-oil concern. Operations are organized into Exploration & Production, Refining & Marketing, Transportation, and International Commerce & Gas. On June 27, 2006, Fitch Ratings revised the rating outlook of the long-term foreign currency issuer default rating of Ecopetrol S.A. to Positive from Stable. This rating action follows the recent revision in the Rating Outlook to Positive from Stable of the 'BB' foreign currency IDR of the Republic of Colombia. Ecopetrol's IDR remain strongly linked with the credit profile of the Republic of Colombia. TERMOEMCALI: S&P Says CCC+ Rating Reflects Dependence on Emcali --------------------------------------------------------------- The 'CCC+' long-term rating on TermoEmcali Funding Corp.'s US$153.7 million restructured senior secured notes reflects that the company depends on Emcali EICE ESP's payment obligations under the tranche E notes as the source of repayment for the restructured notes. The restructured senior secured notes are amortized in monthly installments, with a final maturity on Dec. 31, 2019. The rating on the restructured notes reflects these weaknesses: -- A high degree of uncertainty about Emcali's ability and willingness to honor its payment obligations with TermoEmcali under tranche E; -- Emcali's vulnerable historical financial position, as well as the absence of a recent track record that signals a significant financial improvement; -- A weak security package for a project finance transaction since it includes only a cross-default clause with all the other restructured debt; and -- Low demand for TermoEmcali's generated thermal power, explained by the surplus of hydroelectric power in Colombia. These weaknesses are tempered by these strengths: -- The improved economic growth prospects in the region, driven by increased foreign investment and exports; and -- Emcali's dominant market position in all of its business segments. Although Standard & Poor's Ratings Services deems that Emcali's suspension of payments to TermoEmcali in 2003 under the purchase-power agreement raises questions regarding Emcali's willingness to honor its tranche E obligations in a scenario of tight liquidity, Emcali has met all scheduled payments under the tranche E notes since the restructure. As of July 15, 2006, debt outstanding on the restructured notes was approximately US$136 million. The TermoEmcali power plant is a 233.8 MW combined-cycle facility located 10 kilometers outside of Cali, adjacent to the Guachal electric substation. The facility uses natural gas as the primary fuel input, and diesel as the back-up fuel. A water intake from the Cauca River, which runs adjacent to the plant, supplies cooling water. Emcali is a municipal industrial and commercial state-owned company providing electricity, water, sewage, and local landline telephone service in and around the city of Cali, which went into payment suspension three years ago and which resumed payments approximately nine months ago. The stable outlook reflects Standard & Poor's expectations that Emcali will generate sufficient cash to meet its obligations with TermoEmcali under tranche E over the next 12 months. A slowdown in cash generation at Emcali or any sign of reduced willingness from Emcali to comply with the tranche E amortization schedule could lead to a negative rating action. A rating upgrade could only be achieved upon completing an assessment of Emcali 's creditworthiness. =================== C O S T A R I C A =================== * COSTA RICA: Government Internet Firm Will Cut Rates ----------------------------------------------------- Radiografica Costarricense S.A., the government Internet firm, told A.M. Costa Rica that it has authorize a cut in rates as well as an increase in connection speed. According to A.M. Costa Rica, Radiografica did not specify the rate cuts. However, the cable modem rate for 256 download and 64 kilobits per second upload is expected to drop from US$25 per month to US$17 per month. A.M. Costa Rica relates that there will be similar reduction in higher speeds. Radiografica will disclose the full rate structure as well as new options this week, A.M. Costa Rica states. About Radiografica Costarricense Radiografica Costarricense aka RACSA is owned by the Instituto Costarricense de Electricidad, which is supplying high-speed Internet. * * * Costa Rica is rated by Moody's: -- CC LT Foreign Bank Depst Ba2, -- CC LT Foreign Curr Debt Ba1, -- CC ST Foreign Bank Depst NP, -- CC ST Foreign Curr Debt NP, -- Foreign Currency LT Debt Ba1, and -- Local Currency LT Debt Ba1. Fitch assigned these ratings to Costa Rica: -- Foreign currency long-term debt, BB, -- Local currency long-term debt, BB, and -- Foreign currency short-term debt, B. Costa Rica carries these ratings from Standard & Poor's: -- Foreign Currency LT Debt BB, -- Local Currency LT Debt BB+, -- Foreign Currency ST Debt B, and -- Local Currency ST Debt B. * COSTA RICA: Will Launch Bidding for Hydroelectric Studies ----------------------------------------------------------- Instituto Costarricense de Electricidad aka ICE, the state-run power firm of Costa Rica, will launch bidding for complementary studies into the Boruca hydroelectric project, Business News Americas reports, citing a project official. The official told BNamericas that the work would complement existing technical, social, environmental and financial studies for an initial project that would have 709-megawatt generation capacity. BNamericas relates that the Inter-American Development Bank will help fund the studies, which would last for a year and would cost US$4 million. According to BNamericas, the official said that the updated project would generate 631 megawatts. It would be constructed 40 kilometers upstream from the original project on the river General Superior. The new location is geologically more favorable. There would be no need to transfer indigenous residents and the project would only affect four kilometers of the Inter-American highway unlike the first project planned, which could affect 40 kilometers of the highway, the official told BNamericas. * * * Costa Rica is rated by Moody's: -- CC LT Foreign Bank Depst Ba2, -- CC LT Foreign Curr Debt Ba1, -- CC ST Foreign Bank Depst NP, -- CC ST Foreign Curr Debt NP, -- Foreign Currency LT Debt Ba1, and -- Local Currency LT Debt Ba1. Fitch assigned these ratings to Costa Rica: -- Foreign currency long-term debt, BB, -- Local currency long-term debt, BB, and -- Foreign currency short-term debt, B. Costa Rica carries these ratings from Standard & Poor's: -- Foreign Currency LT Debt BB, -- Local Currency LT Debt BB+, -- Foreign Currency ST Debt B, and -- Local Currency ST Debt B. ======= C U B A ======= * CUBA: New York Food Entrepreneurs Seek New Market in Country -------------------------------------------------------------- A group of entrepreneurs from New York visited Cuba to find a new market for their food products, NY1 News reports. Tony Martinez, a representative of the Visionary Trade and Export in Bronx, told NY1, "Cuba represents a good opportunity, a great market opportunity to reestablish contacts. As I say, on this island there's 11.5 million people besides Fidel Castro, and they all need to eat." According to NY1, Mr. Martinez helped organize the trade mission to Cuba and navigate the legal limits. NY 1 relates that the US has banned trade and travel to Cuba. However, the sale of US food and agricultural products to Cuba was allowed in 2000 under the Trade Sanctions Reform Act. The report underscores that Cuba has spent over US$1.8 billion for more than six million tons of food from the US. According to the Cuban government, it is prepared to buy more. Pedro Alvarez Borrego, the chairperson and chief executive officer of ALIMPORT, told NY1, "In our discussions with New York-based companies, we have seen that there is room for business growth between us." NY1 states that Cuba's foreign and trade ministry issued two letters of intent: -- to buy oils, mayonnaise and butter from Plantation Foods; and -- to buy meat from Titan Capital Management. Michael Washor, a lawyer from Manhattan who represented Plantation Foods and Titan Capital Management, told NY1, "They have negotiated in good faith. They have set forth an atmosphere that is inviting." Details on the agreement are yet to be negotiated, according to NY1. NY1 states that Plantation Foods and Titan Capital will meet again with the Cuban foreign trade ministry in October, bringing with them samples of their products. However, Cuban officials told NY1 that US policies remain a source of insecurity when trying to purchase American products. Mr. Borrego told NY1, "Cuba never knows if and when a license will be granted or withheld, or if travel will be allowed in the airport, and all of this means that Cuba cannot be overly dependent on the supplies coming from the United States." NY1 reports that the entrepreneurs who visited Cuba promised their support to the country. Steven Washor, a representative of the Titan Capital, told NY1, "When we go back to the United States we'll do everything in our power to influence politicians." "They want to start relationships with each and every individual state in the US to, down the line, have the states lobby on their favorite to break the embargo," Felix Ortiz, the chief executive officer of the Visionary Trade told NY1. * * * Moody's assigned these ratings to 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 =============== * DOMINICA: IMF Completes Sixth Review on PRGF Arrangement ---------------------------------------------------------- The Executive Board of the International Monetary Fund has completed the sixth review of Dominica's performance under its three-year Poverty Reduction and Growth Facility or PRGF arrangement originally approved on December 29, 2003, for an amount equivalent to SDR7.68 million (about US$11.3 million). The Board also completed a financing assurances review, which is required in accordance with the IMF Guidelines on Conditionality to determine whether adequate safeguards remain in place for Dominica's further use of IMF resources and whether Dominica's adjustment efforts are undermined by developments in creditor- debtor relations. Completion of the review enables the release of an amount equivalent to SDR1.16 million (about US$1.7 million), which will bring total disbursements to SDR6.5 million (about US$9.6 million). Agustin Carstens, Deputy Managing Director and Acting Chair, said, "The Dominican authorities are to be commended for their efforts in achieving macroeconomic stability through sustained fiscal consolidation and a collaborative debt restructuring effort. Dominica's strong macroeconomic performance during 2005-06, which was supported by a solid fiscal policy performance, has set the stage for the moving forward with the implementation of robust structural reforms that will establish the foundations for sustained, strong growth and poverty reduction. The recently completed Growth and Social Protection Strategy, which sets out the authorities' approach to poverty reduction, is a further welcome step in this direction. "The strong stance of the recently approved budget for FY 2006/07, which incorporates a primary surplus target of 3 percent of GDP, has been set in line with the attainment of medium-term sustainability for public finances and debt. The budget also includes fiscal reforms aimed at reducing the government's wage bill and strengthening budget execution and financial management. "The introduction of a value added tax and an excise tax in March 2006 marked an important step for Dominica. Regrettably, subsequent amendments that provided incentives to selected sectors weakened a regime that was designed with few exemptions and a limited set of zero-rated supplies. In light of this, the authorities' commitment to ensure that the VAT regime remains nondistortionary is welcome. A planned comprehensive review of the VAT regime will contribute to setting the scope for future revenue reforms. The authorities' emphasis on establishing an administration regime that sustains a high level of compliance, supported by a good audit system, and timely refunds is commendable. "While progress has been made in a number of structural areas, the pace of reform should be accelerated in line with the priorities set out in the GSPS, including amending the Electricity Supply Act and related legislation; eliminating the unfunded liability of the Dominica Social Security; and addressing the fragility of the AID Bank addressed. These structural reforms will play an important role in enhancing the economy's growth potential and alleviating existing vulnerabilities. "The authorities' good-faith efforts to reach collaborative settlements with the remaining creditors in the debt restructuring process are commendable. "Close interaction with donors in the period ahead will facilitate the provision of technical and financial assistance in important areas," Mr. Carstens said. =================================== D O M I N I C A N R E P U B L I C =================================== * DOMINICAN REPUBLIC: Gov't Steps Up Efforts in Oil Exploration --------------------------------------------------------------- The government of the Dominican Republic will increase efforts in exploring for oil in the country, Dominican Today reports. According to Dominican Today, the government does not discard the possibility of finding petroleum and natural gas in Dominican territory. Dominican Today relates that the government will launch before the end of 2006 a real exploration policy to look for hydrocarbons. Ruben Montas, the director of the National Energy Commission, told Dominican Today that authorities have decided to search for petroleum and natural gas. By the end of the year, there would be a bidding for a drilling contract with firms having sufficient technological capacity to find fossil fuels in coastal waters or on land. "We did not discard that possibility, specifically of petroleum and natural gas. We are elaborating plan of action of short reach this year, which will also serve to divide the national territory and its surrounding waters in a type of quadrants, which will be bid and granted to companies with technological capacity and sufficient economic resources to initiate an exploration of greater reach," Mr. Montas told BNamericas. * * * The Troubled Company Reporter-Latin America reported on May 9, 2006, that Fitch Ratings upgraded these debt and issuer Default Ratings of the Dominican Republic: -- Long-term foreign currency Issuer Default Rating to B from B-; -- Country ceiling upgraded to B+ from B-; -- Foreign currency bonds due 2006 to B-/RR4 from CCC+/RR4; -- Foreign currency Brady bonds due 2009 to B/RR4 from B-/RR4; -- Foreign currency bonds due 2011 to B/RR4 from B-/RR4; -- Foreign currency bonds due 2013 to B-/RR4 from CCC+/RR4; -- Foreign currency bonds due 2018 to B/RR4 from B-/RR4; and -- Foreign currency collateralized Brady bonds due 2024 to B+/RR3 from B/RR3. Fitch also affirmed these ratings: -- Long-term local currency Issuer Default Rating: B; and -- Short-term Issuer Default Rating: B. Additionally, Fitch assigned a debt and Recovery Rating to this issue: -- Foreign currency bonds due 2027: B/RR4. Fitch said the rating outlook for the long-term foreign and local currency IDRs is Stable. ===================== E L S A L V A D O R ===================== * EL SALVADOR: Mulls Using Wind & Wave Power for Electricity ------------------------------------------------------------ CEL, the state-owned power firm of El Salvador, is considering using wind and wave power on electricity generation, El Mundo reports. Jaime Contreras, the engineering manager of CEL, told Business News Americas that the company is mulling over a wind pilot project on the departments of: -- La Union, -- Sonsonate, -- Metapan, and -- Ahuachapan. Nicolas Salume, the president of CEL, told BNamericas, "We are looking at four areas, where we are going to place metering towers to have a statistics base and find out how much wind passes there a second." BNamericas states that the wind metering will take one year. According to El Mundo, the wind project has been in the works for two years. In those years, pre-feasibility studies started with the aid of the Finnish government. BNamericas underscores that Mr. Contreras also said that another future generation alternative being studied is the production of electricity through ocean waves. However, Mr. Contreras stated that Israeli consultants say that using ocean waves costs three times more than traditional hydro production, because of the type of equipment and infrastructure needed, BNamericas relates. * * * Fitch Ratings assigned these ratings on El Salvador: Rating Rating Date ------ ----------- Country Ceiling BB+ Jun. 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 ================= G U A T E M A L A ================= * GUATEMALA: Launching Bidding for Studies on Hydro Projects ------------------------------------------------------------ The agriculture ministry of Guatemala will launch bidding for feasibility studies in August on the construction of 11 small- scale hydro projects, Business News Americas reports, citing an official from Instituto Nacional de Electrificacion aka INDE, the state power firm. In an effort to ease the effect of rising fuel prices on thermo generation, the government is considering to use its hydroelectric potential, BNamericas states. The official told BNamericas that the studies will take at least six months and that the office of the ministry's Plamar irrigation modernization plan will organize the tender process. BNamericas relates that the projects would range from 200 kilowatts to three megawatts. They would need a total of US$20 million. According to BNamericas, the plan is part of an accord signed with INDE and the energy ministry. The report underscores that Guatemala needs to add 125 megawatts of installed capacity per year through 2020, when power demand is expected to reach 3,125 megawatts. * * * 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+ =============== H O N D U R A S =============== * HONDURAS: Inks Protocol on Bilateral Talks with Kazakhstan ------------------------------------------------------------ Honduras signed a protocol on the completion of the bilateral talks with Kazakhstan, Kazinform reports. According to Kazinform, the negotiations revolve around the access of the Honduran goods and services to Kazakhstan. Honduras and Kazakhstan debated issues on customs and tariff policy in three rounds of talks, Kazinform says. * * * 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 ============= AIR JAMAICA: Inks Deal with Caribbean Star to Improve Services -------------------------------------------------------------- Air Jamaica entered into a new deal with Antigua-based Caribbean Star Airlines to boost regional air transportation, Air Jamaica reports. The agreement will improve connectivity for persons traveling to and from most Caribbean destinations, both Air Jamaica and Caribbean Star told Radio Jamaica. Sun Weekend states that passengers save time and money on multi- carrier itineraries for intra-regional and North America travel. According to Sun Weekend, the agreement benefits the traveling public in two primary ways: -- Improved Connectivity: Caribbean Star will adjust its flight schedules to better coincide with Air Jamaica service to/from Barbados and Grenada. Travelers will then spend less time at the airport waiting to make connecting flights; and -- Improved Pricing: Travellers based in Antigua, Dominica, Grenada, Guyana, St. Lucia, St. Vincent and Trinidad & Tobago can take advantage of lower fares when connecting from Caribbean Star flights to Air Jamaica service to Jamaica and 11 gateways in North America. Michael Conway, the chief executive officer of Air Jamaica, told Sun Weekend, "Air Jamaica's role is to make travel to and from the Caribbean more accessible and affordable. This partnership with Caribbean Star is a clear demonstration that by working more closely together, Caribbean airlines can better compete in the marketplace by providing our customers with more choices and better schedules." Skip Barnette, the president and chief executive officer of Caribbean Star and its sister carrier Caribbean Sun, told Sun Weekend, "For those who don't think that Caribbean carriers can work together for the better good of the traveling public, think again. Caribbean Star and Caribbean Sun are 100% committed to providing the very best in air transportation services for our customers, and we are extremely pleased to have Air Jamaica as a partner. Along similar lines, we're also working through our membership in ALTA to find additional avenues of cooperation with our regional partners." ALTA or the Latin American Air Transportation Association is a private, non-profit organization formed by Latin American and Caribbean commercial airlines aiming to combine and coordinate the efforts for its members to facilitate air transport development in the region. * * * On July 21, 2006, Standard & Poor's Rating Services assigned B long-term foreign issuer credit rating on Air Jamaica Ltd., which is equal to the long-term foreign currency sovereign credit rating on Jamaica, is based on the government's unconditional guarantee of both principal and interest payments. NATIONAL WATER: Loses Millions of Dollars on Illegal Connection --------------------------------------------------------------- E.G. Hunter, the president of the National Water Commission, told Radio Jamaica that the company is losing millions of dollars due to illegal connections. According to Radio Jamaica, the National Water is struggling to deal with the problem. The company does not collect for 60% of the water it produces, mainly due to illegal activities. Approximately seven out of 10 clients whose water is disconnected for nonpayment of bills illegally reconnect to the National Water's system, Radio Jamaica relates, citing Mr. Hunter. * * * As reported in the Troubled Company Reporter on Feb. 7, 2006, the National Water Commission of Jamaica had been criticized for failing to act promptly in cutting its losses. For the fiscal years 2002 and 2003, the water commission accumulated a net loss of US$2.11 billion. The deficit fell to US$1.86 billion the following year, and to US$670 million in 2004 and 2005. SUGAR COMPANY: Farmers Group Says Production Targets Unrealistic ---------------------------------------------------------------- Allan Rickard, the chairperson of the All Island Jamaica Cane Farmers Association, told Radio Jamaica that the sugar production targets the Sugar Company of Jamaica set for this year were unrealistic. Karl Jamex, the general manager of the Jamaica Cane Products Sales, told RJR News that overall production was 30,000 tones lesser than the one projected. The cane replanting program must be launched as part of efforts in increasing sugar production, Radio Jamaica relates, citing Mr. Rickards. The All Island Jamaica Cane Farmers Association told Radio Jamaica that it is not surprised that the targets set by the Sugar Company have not been reached. Sugar Company of Jamaica registered a net loss of almost US$1.1 billion for the financial year ended Sept. 30, 2005, 80% higher than the US$600 million reported in the previous financial year. Sugar Company blamed its financial deterioration to the reduction in sugar cane production. * JAMAICA: Total Public Debt Growing ------------------------------------ The total public debt of Jamaica continues to grow, Radio Jamaica reports. The report says Jamaica was unable to decrease its debt despite annual debt management strategies the finance minister presented. Radio Jamaica underscores that the finance ministry reported that Jamaica's debt amounted to US$858 billion at the end of April, indicating that the debt has increased US$11 billion from the US$847 billion recorded in March. According to Radio Jamaica, US$368 billion of the total amount of debt was external. US$489 billion was from domestic creditors. Jamaica's debt portfolio has risen by US$16 billion since the beginning of the year, Radio Jamaica says. * * * On May 26, 2006, Moody's Investors Service upgraded Jamaica's rating under a revised foreign currency ceiling: -- Long-term foreign currency rating: Ba3 from B1 with stable outlook. =========== M E X I C O =========== AVAYA: Posts US$44 Mil. Net Income for Third Fiscal Quarter 2006 ---------------------------------------------------------------- Avaya Inc. reported net income of US$44 million in the third fiscal quarter of 2006 compared to net income of US$194 million in the same quarter last year. Avaya reported that its third quarter results were affected by US$22 million restructuring charges in its Europe, Middle East and Africa region and a US$29 million asset impairment charge. The company's third fiscal quarter 2006 revenues increased 4.9% to US$1.297 billion compared to US$1.236 billion in the same period last year. Product sales worldwide rose 12% over the same period, with U.S. product sales rising 15%. Avaya's operating income for the quarter was US$28 million. It also generated US$181 million in operating cash flow and had US$822 million in cash at the end of the quarter. "We delivered another solid quarter of product sales growth. Driven by a 23 percent increase in IP line shipments, overall product sales rose 12 percent, U.S. product sales increased 15 percent, and we shipped our 10 millionth IP line," said Garry K. McGuire, chief financial officer, Avaya. "While we are encouraged by these positive trends, higher costs and expenses during the quarter affected operating results. We remain focused on improving our cost and expense profile across geographies and businesses, particularly in Europe." The company reported net income of US$153 million for the first nine months of fiscal 2006 compared to net income of US$261 million for the same period in 2005. Avaya's revenues for the first nine months of fiscal 2006 were US$3.784 billion compared to US$3.606 billion last year. The company generated operating cash flow of US$456 million in the first nine months of fiscal 2006 compared to US$186 million in the year ago period. Customer Update The company disclosed that Kimberly-Clark chose Avaya MultiVantage Communications Applications to connect to its more than 57,000 employees worldwide. It also disclosed that it was selected to participate in a US$4 billion project to overhaul voice and data communications infrastructures of U.S. Army bases worldwide. ING Mexico, a provider of insurance, pension benefits and financial services, chose an Avaya contact center solution, and established a contact center in Mexico City with 305 employees handling an average of 220,000 calls each month. Vanguard, a mutual fund firm in the U.S., selected Avaya for IP telephony networking, applications and more than 18,000 endpoints around the world including project design, implementation and management and five years of maintenance services. Market Leadership Avaya was named, for the third consecutive quarter, the leader in U.S. Enterprise Telephony for the first quarter of 2006 according to InfoTech's InfoTrack for Enterprise Communications, First Quarter 2006 Report. The company reportedly captured 19.8% of the U.S. Enterprise Telephony market in the first quarter. Headquartered in Basking Ridge, New Jersey, Avaya, Inc. (NYSE:AV) -- http://www.avaya.com/-- designs, builds and manages communications networks for more than one million businesses worldwide, including more than 90% of the FORTUNE 500(R). The company's Latin American operations are located in Mexico, Brazil and Argentina. Avaya is a world leader in secure and reliable Internet Protocol telephony systems and communications software applications and services. * * * As reported in the Troubled Company Reporter on Jan. 31, 2005, Standard & Poor's Ratings Services raised its corporate credit rating on Avaya, Inc., to 'BB' from 'B+'. As reported in the Troubled Company Reporter on Jan. 21, 2005, Moody's Investors Service upgraded the senior implied rating of Avaya, Inc., to Ba3 from B1. Moody's said the ratings outlook is positive. BANCO MERCANTIL: Fitch Upgrades Individual Rating to C from C/D --------------------------------------------------------------- Fitch upgraded the individual and Issuer Default Ratings of Mexico's Grupo Financiero Banorte and Banco Mercantil del Norte as: Grupo Financiero Banorte (GFNorte) and Banco Mercantil del Norte (Banorte): -- Foreign & local currency IDR to 'BBB' from 'BBB-'; -- Short-term local currency to 'F2' from 'F3'; and -- Individual to 'C' from 'C/D'. The Ratings Outlook is Stable. At the same time, Banorte's national-scale long-term rating was upgraded to 'AA+(mex)' from 'AA(mex)', while subordinated debentures BANORTE 02D were upgraded to 'AA(mex)' from 'AA- (mex)'. These ratings were affirmed: GFNorte -- Short-term foreign currency IDR 'F3'; and -- Support '5'. Banorte -- Short-term foreign currency IDR 'F3'; -- Short-term national-scale rating 'F1+(mex)'; and -- Support '3'. These upgrades reflect steady and sustainable improvements in the financial condition of GFNorte and Banorte. Owing to system-wide resumption in lending and the group's enhanced asset-liability mix, profitability has increased and now mirrors that of its major peers, on the back of wider interest margins, expanding fee revenue and gradually improving operating efficiency. The confluence of higher profitability and a conservative dividend policy have also enhanced capital adequacy (March 2006: 11.6% consolidated equity-to-assets ratio for GFNorte). Fitch expects retained earnings to partially offset pressures on capital and liquidity ratios arising from loan growth. Asset quality continues to improve aided by loan growth, charge- offs and collection efforts (March 2006: 1.58% of past due loans and reserve coverage at 171% for GFNorte). The seasoning of the retail loan portfolio and the increasing share of riskier consumer loans will likely continue to somewhat impact charge- offs and provisioning going forward. After the securitization of Bancrecer's IPAB notes (2004) and the amortization of the balance of these notes in 2005 and 2006, public sector exposure and the proportion of lower-yielding assets have dramatically decreased. Banorte's support rating of '3' reflect Fitch's view that given the bank's relative size within the Mexican banking sector, support could be provided by official sources wishing to maintain confidence in the system. In contrast, GFNorte's support rating of '5' reflects Fitch's belief that any support from the government would be directed to the operating entities rather than to the holding company. GFNorte is the largest locally-owned financial group in Mexico. Banorte and Banco del Centro (Bancen) are the main subsidiaries, jointly accounting for over 90% of the group's assets and earnings and together makeup GFNorte's banking business. While fully integrated on a commercial and operational basis for a number of years, Banorte and Bancen remained separated legal entities for tax purposes. While Banorte's performance has somewhat trailed that of GFNorte because Bancen has a disproportionate allocation of capital and revenue streams, the two banks will be fully merged in the third quarter 2006, which will bring Banorte's financial profile closer to GFNorte's. GFNorte has a 96% stake in Banorte, the fifth largest bank in the country, with asset and deposit market shares of 8.1% and 9.2%, respectively, as of March 2006. DRESSER INC: Prepays US$20MM on Senior Unsecured Term Loan ---------------------------------------------------------- Dresser, Inc., made an optional prepayment of US$20 million on its senior secured term loan, reducing the balance of the senior secured term loan to US$95 million. Dresser noted that it has made a total of US$50 million in prepayments in 2006, which is indicative of the continued strong operating performance across the company. About Dresser, Inc. Based in Addison, Texas, Dresser, Inc. -- http://www.dresser.com/-- designs, manufactures and markets equipment and services sold primarily to customers in the flow control, measurement systems, and compression and power systems segments of the energy industry. The Company has a comprehensive global presence, with over 8,500 employees and a sales presence in over 100 countries worldwide including Mexico and Puerto Rico. * * * As reported in the Troubled Company Reporter on March 30, 2006, Moody's Investors Service placed the Ba3 Corporate Family Rating; the Ba3 rated senior secured Tranche C term loan maturing 2009; the B1 rated senior unsecured term loan maturing 2010; and the B2 rated senior subordinated notes maturing 2011 for Dresser, Inc., under review for possible downgrade as a result of the company's inability to file its 2005 Annual Report on Form 10-K by the March 31, 2006, requirement. GRUPO FINANCIERO: Fitch Upgrades Individual Rating to C from C/D ---------------------------------------------------------------- Fitch upgraded the individual and Issuer Default Ratings of Mexico's Grupo Financiero Banorte and Banco Mercantil del Norte as: Grupo Financiero Banorte (GFNorte) and Banco Mercantil del Norte (Banorte): -- Foreign & local currency IDR to 'BBB' from 'BBB-'; -- Short-term local currency to 'F2' from 'F3'; and -- Individual to 'C' from 'C/D'. The Ratings Outlook is Stable. At the same time, Banorte's national-scale long-term rating was upgraded to 'AA+(mex)' from 'AA(mex)', while subordinated debentures BANORTE 02D were upgraded to 'AA(mex)' from 'AA- (mex)'. These ratings were affirmed: GFNorte -- Short-term foreign currency IDR 'F3'; and -- Support '5'. Banorte -- Short-term foreign currency IDR 'F3'; -- Short-term national-scale rating 'F1+(mex)'; and -- Support '3'. These upgrades reflect steady and sustainable improvements in the financial condition of GFNorte and Banorte. Owing to system-wide resumption in lending and the group's enhanced asset-liability mix, profitability has increased and now mirrors that of its major peers, on the back of wider interest margins, expanding fee revenue and gradually improving operating efficiency. The confluence of higher profitability and a conservative dividend policy have also enhanced capital adequacy (March 2006: 11.6% consolidated equity-to-assets ratio for GFNorte). Fitch expects retained earnings to partially offset pressures on capital and liquidity ratios arising from loan growth. Asset quality continues to improve aided by loan growth, charge- offs and collection efforts (March 2006: 1.58% of past due loans and reserve coverage at 171% for GFNorte). The seasoning of the retail loan portfolio and the increasing share of riskier consumer loans will likely continue to somewhat impact charge- offs and provisioning going forward. After the securitization of Bancrecer's IPAB notes (2004) and the amortization of the balance of these notes in 2005 and 2006, public sector exposure and the proportion of lower-yielding assets have dramatically decreased. Banorte's support rating of '3' reflect Fitch's view that given the bank's relative size within the Mexican banking sector, support could be provided by official sources wishing to maintain confidence in the system. In contrast, GFNorte's support rating of '5' reflects Fitch's belief that any support from the government would be directed to the operating entities rather than to the holding company. GFNorte is the largest locally-owned financial group in Mexico. Banorte and Banco del Centro (Bancen) are the main subsidiaries, jointly accounting for over 90% of the group's assets and earnings and together makeup GFNorte's banking business. While fully integrated on a commercial and operational basis for a number of years, Banorte and Bancen remained separated legal entities for tax purposes. While Banorte's performance has somewhat trailed that of GFNorte because Bancen has a disproportionate allocation of capital and revenue streams, the two banks will be fully merged in the third quarter 2006, which will bring Banorte's financial profile closer to GFNorte's. GFNorte has a 96% stake in Banorte, the fifth largest bank in the country, with asset and deposit market shares of 8.1% and 9.2%, respectively, as of March 2006. LIBBEY INC: Sales Up 9.3% to US$158 Million in Second Quarter ------------------------------------------------------------- Libbey Inc. reported improved second quarter financial results on an adjusted basis, excluding special charges related to the Crisa acquisition and refinancing completed on June 16, 2006. Sales increased 9.3% to US$158.0 million from US$144.5 million in the prior year second quarter. Libbey reported a net loss of US$9.6 million, or US$0.68 per share, for the second quarter ended June 30, 2006, as compared with a net loss of US$0.9 million or US$0.06 per share in the prior year quarter. The net loss for the quarter included a total of US$13.4 million, or US$0.95 per share, in special charges related to the consolidation of two of its recently acquired Mexican facilities and the write-off of finance fees. The company posted second quarter adjusted net income, excluding special charges of US$3.9 million, or US$0.27 per share, as compared with US$3.4 million, or US$0.25 per share, for the year-ago quarter. Second Quarter Results For the quarter-ended June 30, 2006, sales increased 9.3% to US$158.0 million from US$144.5 million in the year-ago quarter. The increase in sales was primarily attributable to the consolidation of sales of Crisa, the Company's former joint venture in Mexico, for the last two weeks of June, a more than 10% increase in shipments to retail and export glassware customers and shipments of Traex products, an 8 percent increase in shipments of Royal Leerdam and Crisal products and a 5% increase in sales to foodservice glassware customers. Shipments of Syracuse China products were down approximately 8 percent as the result of the work stoppage early in the quarter and shipments of World Tableware products were down slightly. Excluding Crisa's sales, sales were up 4.0 percent in total. The company reported a loss from operations of US$4.1 million during the quarter, as compared to income from operations of US$2.5 million in the year-ago quarter. Income from operations, excluding special charges, was US$11.0 million during the quarter, as compared to US$8.9 million for the year-ago quarter (see Table 2). Factors contributing to the increase in income from operations were higher sales, higher production activity and reduced selling, general and administrative expenses due to the salary workforce reduction implemented at the end of the second quarter of last year. Partially offsetting these improvements were slightly higher manufacturing expenses at the company's Syracuse China operations related to the work stoppage, a US$0.6 million increase in natural gas costs and US$1.5 million in increased pension and postretirement welfare expenses. From April 1, 2006 until June 16, 2006, when the Company acquired 100% ownership of Crisa, pretax equity earnings from Crisa were US$0.9 million as compared to an equity loss of US$0.8 million in the second quarter of 2005. The increased earnings were the result of increased and more profitable sales, higher translation gain, and lower natural gas and electricity costs. Libbey reported that adjusted EBITDA increased to US$19.2 million in the second quarter of 2006 as compared to US$16.6 million in the year-ago quarter. Interest expense increased US$6.7 million compared with the year-ago period as a result of the refinancing consummated on June 16, 2006. Contributing to the increase in interest expense was a write-off of US$4.9 million of financing fees associated with debt retired during the quarter, higher debt and higher average interest rates. The effective tax rate remained unchanged at 33 percent for the quarter. Libbey reported a net loss was US$9.6 million, or US$0.68 per diluted share, compared with a diluted loss per share of US$0.06 in the second quarter of 2005. The company reported that its diluted earnings per share for the second quarter of 2006, and excluding special charges of US$15.1 million pretax relating to the announced consolidation of two of its recently acquired Mexican facilities and the write-off of US$4.9 million pretax of finance fees was US$0.27 per diluted share. This compares to diluted earnings per share of US$0.25 during the second quarter of 2005, excluding the impact of special charges relating to the 2005 salary reduction program and the capacity realignment charges associated with the shutdown of Libbey's City of Industry, California, facility in February 2005. Six-Month Results For the six months ended June 30, 2006, sales increased 6.8% to US$292.9 million from US$274.3 million in the year-ago period. Excluding Crisa's sales during the last two weeks of June 2006, sales increased 4.0% compared with the first six months of 2005. This increase in sales was attributable to increases of at least 8% in shipments to foodservice glassware customers, retail customers, export customers, Traex customers and Crisal customers. Sales of Royal Leerdam products increased almost 2% as compared to the first six months of 2005. Shipments to industrial customers were down over 10% during the first half of 2006, while shipments of Syracuse China and World Tableware products were down slightly. Libbey reported a loss from operations of US$1.1 million during the first six months of 2006 as compared to income from operations of US$2.6 million during the year-ago period. Adjusted income from operations, excluding special charges, was US$14.1 million for the first six months of 2006, as compared to US$12.0 million for the year-ago period. Contributing to the increase in adjusted income from operations were higher sales, higher production activity and improved operating results at Crisal in Portugal. Equity earnings from Crisa were US$2.0 million on a pretax basis, as compared to a pretax loss of US$0.2 million in the year-ago period. The increased equity earnings were the result of increased and more profitable sales, higher translation gain, and lower natural gas and electricity costs. For the first six months of 2006, adjusted EBITDA was US$32.0 million, a 10.6% increase over adjusted EBITDA of US$29.0 million during the first half of 2005. Interest expense increased US$7.0 million compared with the year-ago period as a result of the refinancing completed on June 16, 2006. Contributing to the increase in interest expense were a write-off of US$4.9 million of financing fees associated with debt retired during the quarter, higher debt and higher average interest rates. The company recorded a net loss of US$9.1 million, or US$0.64 per diluted share, compared with a net loss of US$2.5 million, or US$0.18 per diluted share, in the year-ago period. The company reported that its diluted earnings per share for the first six months of 2006 and excluding special charges of US$15.1 million pretax relating to the announced consolidation of two of its recently acquired Mexican facilities and the write-off of US$4.9 million pretax of finance fees were US$0.31 per diluted share. This compares to diluted earnings per share of US$0.27 during the first six months of 2005, excluding the impact of special charges relating to the 2005 salary reduction program and the capacity realignment charges associated with the shutdown of Libbey's City of Industry, California, facility in February 2005. Cash Flow Year-to-date cash flow from operations increased US$8.9 million, or 77.3% to US$20.4 million as compared to the year-ago period. Contributing to the increase in operating cash flow were higher earnings and a reduction in working capital. Working capital, defined as inventories and accounts receivable less accounts payable, increased by US$44.3 million from US$170.3 million to US$214.6 million compared to June 30, 2005 due to the acquisition of Crisa. Excluding working capital of US$54.5 million at Crisa at June 30, 2006, the company's working capital was US$10.2 million lower than the year-ago period, reflecting the company's continued efforts to reduce its investment in working capital. Pro Forma Results Libbey reported that pro forma adjusted EBITDA increased to US$27.2 million in the second quarter of 2006 as compared to US$24.1 million in the year-ago quarter. For the first six months of 2006, pro forma adjusted EBITDA was US$49.5 million, a 10.3% increase over pro forma adjusted EBITDA of US$44.9 million during the first half of 2005. Outlook for 2006 John F. Meier, chairman and chief executive officer, commenting on the quarter, said, "We are pleased with the addition of Crisa to the Libbey family and with the strength of our core business performance. Sales to foodservice glassware customers were strong and shipments to retail customers were especially robust. We saw a solid performance from Crisa, our recently acquired Mexican glass tableware operation." Meier also added, "With the closing of our acquisition of the remaining 51 percent of Crisa on June 16, 2006, we will now be including their results of operations for the balance of 2006. We are well into our consolidation of the facilities in Mexico, and we look forward to harvesting those future savings." He added, "We expect third and fourth quarter sales to increase by 4 to 5 percent as compared with the pro forma third and fourth quarter sales in 2005. Earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to be between US$18.5 million and US$19.5 million in each of the third and fourth quarters of 2006." Libbey also confirmed that it is on schedule to begin production in early 2007 at its new glass tableware production facility in China. About Libbey Inc. Based in Toledo, Ohio, Libbey Inc. -- http://www.libbey.com/ -- operates glass tableware manufacturing plants in the United States in Louisiana and Ohio, in Mexico, Portugal and the Netherlands. Its Crisa subsidiary, located in Monterrey, Mexico, is the leading producer of glass tableware in Mexico and Latin America. Its Royal Leerdam subsidiary, located in Leerdam, Netherlands, is among the world leaders in producing and selling glass stemware to retail, foodservice and industrial clients. Its Crisal subsidiary, located in Portugal, provides an expanded presence in Europe. Its Syracuse China subsidiary designs, manufactures and distributes an extensive line of high- quality ceramic dinnerware, principally for foodservice establishments in the United States. Its World Tableware subsidiary imports and sells a full-line of metal flatware and hollowware and an assortment of ceramic dinnerware and other tabletop items principally for foodservice establishments in the United States. Its Traex subsidiary, located in Wisconsin, designs, manufactures and distributes an extensive line of plastic items for the foodservice industry. In 2005, Libbey Inc.'s net sales totaled USUS$568.1 million. * * * Standard & Poor's Ratings Services assigned on May 16, 2006, its 'B' corporate credit rating to Libbey Inc. At the same time, Standard & Poor's assigned its 'B' senior unsecured debt rating to the company's proposed USUS$400 million of senior unsecured notes due 2014, which will be issued by the company's wholly owned subsidiary Libbey Glass Inc. and guaranteed on a senior basis by Libbey Inc. Standard & Poor's said the outlook is stable. NORTEL NETWORKS: Forms Strategic Alliance with Microsoft Corp. -------------------------------------------------------------- The convergence of the communications and IT industries took a significant step forward as Microsoft Corp. and Nortel Networks Corp. reported a strategic alliance based on a shared vision for unified communications. By engaging the companies at the technology, marketing and business levels, the alliance will allow both companies to drive new growth opportunities and has the potential to ultimately transform businesses communications, reducing costs and complexity and improving productivity for customers. By combining Nortel's network quality and reliability with Microsoft(R) software's ease of use, the alliance will accelerate the availability of unified communications -- an industry concept that uses advanced technologies to break down today's device- and network-centric silos of communication (such as e-mail, instant messaging, telephony and multimedia conferencing) and makes it easy and efficient for workers to reach colleagues, partners and customers with the devices and applications they use most. Taking a decisive step further, Nortel and Microsoft will transition traditional business phone systems into software, with a Microsoft unified communications software platform and Nortel software products to provide further advanced telephony functionality. This software-centric approach will provide the easiest transition path for businesses, helping enable them to reduce the total cost of ownership and better protect current and future investments. It will also more quickly enable the creation of new, innovative applications. "Nortel and Microsoft have each led fundamental transformations in their own market -- Nortel's digital innovation and Microsoft's software on every desktop," said Mike Zafirovski, president and CEO of Nortel. "By combining our unique strengths, Microsoft and Nortel will accelerate the delivery of unified communications -- delivering to our customers a higher-quality user experience, with greater reliability and lower total cost of ownership. That's where we can make a real difference." "We are investing together because the communications industry is at an inflection point," said Steve Ballmer, CEO of Microsoft. "We will have deep collaboration in product development with Nortel, allowing us to rapidly deliver high- quality, highly reliable solutions that will support mission- critical communications. The opportunity for our customers is fantastic. We will enable them to realize tremendous economic and business benefits from unified communications." "This is a gutsy play for Nortel -- accelerating the move of our voice technology into software and working with the world's software leader as part of our broader business strategy to transform the company into a software and services leader," Mr. Zafirovski said. "From this transaction, we believe we can capture well beyond US$1 billion in new revenue, ramping up with increased momentum through 2009 via professional services, voice products and applications, as well as data pull-through in the enterprise." "Unified communications will drive the next major advance in individual, team and organizational productivity in today's 24x7, always-connected and increasingly mobile work environment," said Jeff Raikes, president of the Business Division at Microsoft. "Our software-based approach puts people at the center of communications through a single identity across e-mail, voice mail, voice over Internet protocol call processing, instant messaging and video, and intuitively embeds communications capabilities into people's everyday work processes, including the Microsoft Office system and third-party software applications." Components of the Agreement 1) Strategic alliance * The companies will enter into a four-year alliance agreement, with provisions for its extension. * Nortel will be Microsoft's strategic partner for advanced unified communications solutions and systems integration. * The two companies will form the Innovative Communications Alliance -- http://www.innovativecommunicationsalliance.com -- as a go-to-market vehicle. * Microsoft and Nortel will deploy the other's technologies in their enterprise networks. 2) Solutions and systems integration * Nortel becomes a strategic systems integration partner for the advanced unified communications solution. * Nortel believes it can capture substantial new revenue through service offerings such as convergence planning, integration, optimization, monitoring and managed services. 3) Joint product development * Nortel and Microsoft will form joint teams to collaborate on product development that spans enterprise, mobile and wireline carrier solutions. * The two companies will cross-license intellectual property. * Nortel and Microsoft will engage in early-stage integration and testing. * Nortel will deliver solutions that complement Microsoft's unified communications platform, including enterprise contact center applications, mission-critical telephony functions, advanced mobility capabilities and data networking infrastructure. 4) Go-to-market initiatives * Microsoft and Nortel will jointly sell the advanced unified communications solution and integration services. The plan is to develop a training and incentive program for the companies' sales teams. * Both companies will invest substantial resources in marketing, business development and delivery. * Microsoft and Nortel will build a joint channel ecosystem using both companies' systems integrator, reseller, and service provider relationships. * The two companies will develop a series of compelling solutions for a range of customers, including small and medium-sized business, large corporations and service providers. About Microsoft Headquartered in Redmond, Washington, Microsoft Corp. (Nasdaq: MSFT) provides software, services and solutions that help people and businesses realize their full potential. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries including Mexico. * * * As reported in the Troubled Company Reporter on July 10, 2006, Dominion Bond Rating Service confirmed the long-term ratings of Nortel Networks Capital Corporation, Nortel Networks Corporation, and Nortel Networks Limited at B (low) along with the preferred share ratings of Nortel Networks Limited at Pfd-5 (low). All trends are Stable. DBRS confirmed B (low) Stb Senior Unsecured Notes; B (low) Stb Convertible Notes; B (low) Stb Notes & Long-Term Senior Debt; Pfd-5 (low) Stb Class A, Redeemable Preferred Shares; and Pfd-5 (low) Stb Class A, Non-Cumulative Redeemable Preferred Shares. As reported in the Troubled Company Reporter on June 20, 2006, Moody's Investors Service affirmed the B3 corporate family rating of Nortel; assigned a B3 rating to the proposed US$2 billion senior note issue; downgraded the US$200 million 6.875% Senior Notes due 2023 and revised the outlook to stable from negative. Standard & Poor's also affirmed its 'B-' long-term and 'B-2' short-term corporate credit ratings on the company, and assigned its 'B-' senior unsecured debt rating to the company's proposed US$2 billion notes. The outlook is stable. =========== P A N A M A =========== SOLO CUP: Names Eric Simonsen as Interim Chief Financial Officer ---------------------------------------------------------------- The Board of Directors of Solo Cup Company appointed Eric A. Simonsen interim chief financial officer of the company. While the company continues its search for a permanent CFO, Mr. Simonsen will report directly to Robert Korzenski, president and chief operating officer of the company and have responsibility for the company's finance and accounting functions. "Eric brings more than 35 years of financial experience and leadership to the Solo team" said Mr. Korzenski. "We believe his hands on style and executive management experience will enhance the company's financial position and global operations." Mr. Simonsen is a managing director of AlixPartners, a financial advisory firm specializing in performance improvement and corporate restructuring. Prior to joining AlixPartners in 2002, Simonsen spent ten years at Allmerica Financial Corporation, a Fortune 400 financial services company where he was CFO and chief of operations. His appointments while at AlixPartners have included CFO, chief administrative officer, chief operating officer and corporate controller. Mr. Simonsen also owned and built The Lincoln Group, a US$225 million paper and cloth products manufacturing and distribution company. Additionally, he was a certified public accountant and managing partner for Price Waterhouse. Mr. Simonsen holds a master's degree in business administration in corporate finance and a bachelor's degree in accounting from Lehigh University. The company also announced the appointment of Norman W. Alpert to its Board of Directors to replace John R. Woodard who resigned his position to take on additional responsibilities at Vestar. Mr. Alpert was previously a director of the company from February 2004 until February 2006. About Solo Cup Headquartered in Highland Park, Illinois, Solo Cup Company -- http://www.solocup.com/-- manufactures disposable foodservice products for the consumer and retail, foodservice, packaging, and international markets. Solo Cup has broad expertise in plastic, paper, and foam disposables and creates brand name products under the Solo, Sweetheart, Fonda, and Hoffmaster names. The Company was established in 1936 and has a global presence with facilities in Asia, Canada, Europe, Mexico, Panama and the United States. * * * As reported in the Troubled Company Reporter on Apr. 4, 2006, Moody's Investors Service assigned ratings on Solo Cup Company's US$80 million senior secured second lien term loan due 2012 at B3; US$150 million senior secured revolving credit facility maturing Feb. 27, 2010, at B2; US$638 million senior secured term loan B due Feb. 27, 2011, at B2; US$325 million 8.5% senior subordinated notes due Feb. 15, 2014, at Caa1; and Corporate Family Rating at B2. =============== P A R A G U A Y =============== * PARAGUAY: Ministry Receives New Bids for Highway Projects ----------------------------------------------------------- MOPC, the public works ministry of Paraguay, posted in its Web site that it has received new bids for the construction of two stretches of highway in the San Pedro department after the initial proposals went beyond the official project budget. Business News Americas reports that Consorcio Victoria made a US$35.9 million proposal, the cheapest of the initial offers made for the 59-kilometer Ruta 11 highway between San Pedro and Nueva Germania. According to BNamericas, Consorcio Jejui made the lowest bid for the construction of the 27-kilometer stretch of Ruta 10 leading from Yasy Kany to Capi'ibary at US$13.0 million. However, the cheapest offer for the road at the second bidding was US$10.8 million, the report states. BNamericas says that about 10 entities -- both national and international -- qualified to bid for the projects. Firms offering for the San Pedro-Nueva Germania highway include: -- Consorcio Victoria, -- Tecnoedil Constructora, -- Construccion y Asociados, -- Talavera y Ortellado Construcciones, -- Empresa Constructora Minera Paraguaya, -- Benito Roggio e Hijos, -- Constructora Asuncion y Asociados, and -- Consorcio Jejui. Companies bidding for the Yasy Kany-Capi'ibary works were: -- Consorcio Jejui, -- Concret Mix, -- CDD Construcciones, -- Consorcio Victoria, and -- Benito Roggio e Hijos. BNamericas underscores that the banks providing the financing will study all the proposals the firms presented. Works on the projects are expected to start in September. The Andean Development Corporation, says BNamericas, contributed a US$10 million loan for the projects. The Organization of the Petroleum Exporting Countries lent US$12 million. Paraguayan authorities will provide the remaining amount needed for the projects, BNamericas states. * * * 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 * PARAGUAY: Mulls Metallurgic Strategic Alliance with Brazil ------------------------------------------------------------ Officials of the Centro de Industriales Metalurgicos or CIME, Paraguay's center for metallurgical industries, met with steel makers from Brazil to discuss on strategic alliances, Business News Americas reports. Portal Paraguayo de Noticias relates that the tool industry could be included in the strategic alliance. According to BNamericas, the Brazilian firms considered the possibility of partnerships due to problems on meeting market demand resulting from tax burdens. Through a special processing deal, the pieces that cannot be manufactured in Brazil would be made in Paraguay. The products could be assembled or finished in Brazil, Roberto Daher, the head of CIME, told BNamericas. * * * 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 U E R T O R I C O ===================== ADELPHIA COMMS: Closes Asset Sale to Time Warner Cable & Comcast ---------------------------------------------------------------- Adelphia Communications Corporation completed the sale of substantially all of its assets to Time Warner Cable and Comcast Corporation for aggregate consideration of US$12.5 billion in cash and 16% of the equity of Time Warner's cable subsidiary. As a result of the sale, Adelphia will no longer operate as a U.S. cable company. Its approximately 4.8 million customers will be distributed between Time Warner Cable and Comcast. Teams from the buyers and Adelphia have worked together for months to ensure an orderly transition for customers, communities and the almost 13,000 Adelphia employees who will transfer to Time Warner Cable and Comcast. "The successful closing of this sale signals a major achievement for Adelphia's Chapter 11 bankruptcy case on several fronts," said Chairman and CEO William Schleyer. "We've maximized the recovery for our creditors, dramatically improved the quality and performance of the systems going to Time Warner Cable and Comcast and saved almost 13,000 jobs. That stands in stark contrast to the situation almost 40 months ago when there was serious talk of liquidating Adelphia." Concurrent with the closing of the sale, Adelphia also consummated a plan of reorganization for the former joint ventures with Comcast (Century-TCI and Parnassos), resulting in the repayment in full of approximately US$1.7 billion of indebtedness. Adelphia Communications Corporation will hold the remaining sale proceeds for distribution to its creditors through a Plan of Reorganization as it seeks to resolve its Chapter 11 bankruptcy case in the U.S. Bankruptcy Court for the Southern District of New York. As reported in the Troubled Company Reporter on July 25, 2006, Adelphia reported an agreement on a framework for a Plan of Reorganization intended to result in a fourth quarter 2006 emergence from Chapter 11. The agreement enjoys widespread support among Adelphia's major unsecured creditors, including the Official Committee of Unsecured Creditors, though several constituencies do not support it. Adelphia's obligations under the agreement and the reorganization plan envisioned by it are subject to approval by the Bankruptcy Court. "While our focus now turns to achieving a confirmed Plan of Reorganization as soon as possible," added Mr. Schleyer, "we should take this opportunity to thank Adelphia's employees who had the faith to endure through four years of uncertainty and whose hard work significantly increased values to our creditors and delivered much-improved cable systems to our buyers." UBS Investment Bank and Allen & Company LLC served as Adelphia's financial advisors for the sale transaction. Sullivan & Cromwell LLP served as Adelphia's legal advisor for the sale. Willkie Farr & Gallagher LLP continues to serve as Adelphia's legal counsel for the Chapter 11 bankruptcy process. About Adelphia Communications Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is a cable television company in the U.S., serving customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. ADELPHIA COMM: Files June 2006 Monthly Operating Report ------------------------------------------------------- Adelphia Communications Corporation, et al. Unaudited Consolidated Balance Sheet As of June 30, 2006 (US Dollars in thousands) ASSETS Cash and cash equivalents US$731,722 Restricted cash 3,893 Accounts receivables - net 105,244 Receivable for securities 7,167 Other current assets 201,107 ----------- Total current assets 1,049,133 Restricted cash 2,751 Investments in equity affiliates 6,194 Property and equipment - net 4,215,300 Intangible assets - net 7,479,648 Other noncurrent assets - net 120,934 ----------- Total Assets US$12,873,960 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable US$114,225 Subscriber advance payments and deposits 34,020 Payable to non-filing entities 1,543 Accrued liabilities 589,975 Deferred income 19,115 Current portion of parent and subsidiary debt 959,431 ----------- Total current liabilities 1,718,309 Other liabilities 32,108 Deferred income 56,149 Deferred income taxes 883,135 ----------- Total noncurrent liabilities 971,392 Liabilities subject to compromise 18,372,813 ----------- Total liabilities 21,062,514 Minority interests in equity of subsidiary 60,201 Stockholders' equity: Series preferred stock 397 Class A and Class B common stock 2,548 Additional paid-in capital 9,516,510 Accumulated other comprehensive income 60 Accumulated deficit (17,740,333) Treasury stock, at cost (27,937) ----------- Total stockholders' equity (8,248,755) ----------- Total liabilities and stockholders' equity US$12,873,960 =========== Adelphia Communications Corporation, et al. Unaudited Consolidated Statement of Operations Month Ended June 30, 2006 (US Dollars in thousands) Revenue US$397,297 Cost and expenses: Direct operating and programming 249,082 Selling, general and administrative 23,898 Investigation, re-audit and sale transaction costs 4,775 Depreciation and amortization 80,400 Impairment of long-lived assets - Provision for uncollectible amounts from Rigases - Gains on dispositions of long-lived assets (157) ----------- Operating income (loss) US$39,299 Other income (expense): Interest expense (99,127) Impairment of cost & available for sale investments - Other income (expense) - net (31,707) ----------- Total other expense - net (130,834) ----------- Loss from continuing operations before reorganization (91,535) Reorganization expenses due to bankruptcy (20,327) ----------- Loss from continuing operations before income taxes (111,862) Income tax benefit - Share of losses of equity affiliates - net 324 Minority's interest in subsidiary losses - net 14,221 ----------- Net loss (97,317) Beneficial conversion feature - ----------- Net loss applicable to common stockholders (US$97,317) =========== Adelphia Communications Corporation, et al. Unaudited Consolidated Statement of Cash Flows For the Month Ended June 30, 2006 (Dollars in thousands) Cash flows from operating activities: Net loss US$97,317) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 80,400 Impairment of long-lived assets - Provision for uncollectible amounts from Rigases 2,863 Gains on disposition of long-lived assets (157) Amortization of debt issuance costs 225 Impairment of cost & available for sale investments - Provision for loss contingencies 30,000 Reorganization expenses due to bankruptcy 20,327 Deferred tax expense (benefit) - Share in losses of equity affiliates - net (324) Minority interest in losses of subsidiaries (14,221) Other noncash gains (384) Depreciation, amortization and other non-cash items from discontinued operations - Change in operating assets & liabilities (33,020) ----------- Net cash provided by operating activities before payment of reorganization expenses (US$11,608) Reorganization expenses paid during the period (10,340) ----------- Net cash provided by (used in) operating activities (21,948) Cash flows from investing activities: Expenditures for property, plant and equipment (37,881) Changes in restricted cash 262,480 Proceeds from sale of investments - Other (411) ----------- Net cash used in investing activities 224,188 Cash flows from financing activities: Proceeds from debt 16,000 Repayments of debt (7,929) Payment of debt issuance costs - ----------- Net cash provided by financing activities 8,071 Change in cash and cash equivalents cash 210,311 Cash, beginning of period 521,411 ----------- Cash, end of period US$731,722 =========== About Adelphia Communications Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly adminsitered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 143; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA: US Ct. Wants Update on Century-TCI et al. Plan by Oct. ---------------------------------------------------------------- In a post-confirmation order and notice, the Honorable Robert D. Gerber rules that the Plan Administrator is responsible for informing the U.S. Bankruptcy Court for the Southern District of New York of the progress made toward: (i) consummation of the Plan of Reorganization of the Century-TCI and the Parnassos Debtors; (ii) entry of a final decree under Rule 3022 of the Federal Rules of Bankruptcy Procedure; and (iii) case closing under Section 350 of the Bankruptcy Code. The Century-TCI Debtors and the Parnassos Debtors are debtor- affiliates of Adelphia Communications Corporation. As defined in the Plan for Century-TCI and Parnassos Debtors, Adelphia sits as the interim Plan Administrator. The Century-TCI Debtors are comprised of: * Century-TCI California, L.P., * Century-TCI California Communications, L.P., * Century-TCI Distribution Company, LLC, and * Century-TCI Holdings, LLC, The Parnassos Debtors are comprised of: * Parnassos Communications, L.P., * Parnassos Distribution Company I, LLC, * Parnassos Distribution Company II, LLC, * Parnassos, L.P., * Parnassos Holdings, LLC, and * Western NY Cablevision, L.P. Judge Gerber directs the responsible party appointed as Plan Administrator to file by October 14, 2006, a status report detailing the actions taken by the Responsible Party and the progress made toward the consummation of the JV Plan. After October 14, reports should be filed every January 15th, April 15th, July 15th, and October 15th until a final decree has been entered. Judge Gerber further directs the Responsible Party that within 60 days after paying the final distribution required by the JV Plan, the Responsible Party should file a closing report in accordance with Local Bankruptcy Rule 3022-1 and an application for a final decree. About Adelphia Communications Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly adminsitered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 142; Bankruptcy Creditors' Service, Inc., 215/945-7000) MAXXAM INC: PALCO Names George O'Brien as New President & CEO ------------------------------------------------------------- The Pacific Lumber Company disclosed that George A. O'Brien, formerly Senior Vice President with International Paper Company, is the new president and chief executive officer. Mr. O'Brien was responsible for the overall forest products group while at IP until his retirement in mid-2005. Robert Manne, who has been chief executive officer since 2001, will continue for one year as a consultant. Charles Hurwitz, chief executive officer of MAXXAM Inc., the parent company of Pacific Lumber Company, said, "I am deeply appreciative of the efforts of the employees of PALCO who continue to do an outstanding job, and I look forward to assisting George in his efforts to keep PALCO headed in the right direction. He successfully ran IP's forest products business, which included one of the largest timber operations in the world and a major wood products business, and I am confident that George will add to the long and proud traditions of The Pacific Lumber Company." Mr. Hurwitz went on to say, "All of the people associated with PALCO owe Robert a deep debt of gratitude for his efforts, and we are very pleased that he will remain as a consultant for a year." Headquartered in Houston, Texas, MAXXAM Inc. (AMEX: MXM) operates businesses ranging from aluminum and timber products to real estate and horse racing. MAXXAM's top revenue source is Kaiser Aluminum, which has been in Chapter 11 bankruptcy since 2002. MAXXAM's timber subsidiary, Pacific Lumber, owns about 205,000 acres of old-growth redwood and Douglas fir timberlands in Humboldt County, California. MAXXAM's real estate interests include commercial and residential properties in Arizona, California, Texas, and Puerto Rico. The Company also owns the Sam Houston Race Park, a horseracing track near Houston. Its Chairman and CEO, Charles Hurwitz, controls 77% of MAXXAM. * * * At March 31, 2006, Maxxam's balance sheet showed US$1.013 billion in total assets and US$1.684 billion in total liabilities, resulting in a US$671.3 million stockholders' deficit. SANTANDER BANCORP: Posts US$6.1 Million Second Quarter Net Loss --------------------------------------------------------------- Santander Bancorp said in a statement that it incurred a US$6.1 million loss in loan sales and a US$2.3 million reduction in other income in the second quarter. Business News Americas relates that Santander Bancorp's net income dropped 43.9% to US$11 million or US$0.24 per share, compared with the US$19.6 million or US$0.42 per share recorded in the same quarter in 2005. Thomas Monaco, a senior analyst at Sterne Agee, told BNamericas, "Second quarter operating results of US$0.33 per share were US$0.04 below consensus forecasts and US$0.01 below our expectations. We are reducing our 2006 earnings per share forecast by US$0.19 per share to US$1.17 and our 2007 forecast by US$0.43 to US$1.26 per share." According to BNamericas, Santander Bancorp posted a net interest income of US$7.2 million, which is 44% higher than the amount reported in the same period in 2005. Net interest margin increased 97 basis points to 3.94% in the second quarter of 2006 from the 2.97% recorded in the same quarter last year. Santander Bancorp told BNamericas that it registered an impact on net interest income through the settlement of US$910 million in commercial loans secured by mortgages in the first half of 2006. The report underscores that Santander Bancorp's net loans increased 7.7% to US$6.4 billion at the end of June 2006, compared with the same period last year. Provisions for loan losses increased 294% to US$16 million while operating expenses grew 26.5% to US$69.2 million. Santander Bancorp told BNamericas that the Island Finance operations, which reflected the first full quarter of operations, resulted to: -- higher net interest income, -- loan loss provisions, and -- operating expenses. Santander Bancorp completed the acquisition of Island Finance on Feb. 28 for US$734 million in cash and debt, BNamericas relates. The report emphasizes that the first half earnings of Santander Bancorp decreased 46.4% to US$24.4 million or US$0.52 per share, compared to the US$45.5 million or US$0.98 per share recorded in the first half of 2005. Meanwhile, Santander Bancorp's total assets increased 4.9% to US$8.9 billion at the end of June, compared with the same month in 2005. Francisco Luzon -- who heads the Latin American operations of Grupo Santander, Santander Bancorp's parent firm -- told BNamericas in July that Santander Bancorp was aiming to have a 15% share in the local mortgage loan market in up to five years through organic growth. Santander BanCorp is a publicly held financial holding company that is traded on the New York Stock Exchange (SBP) and on Latibex (Madrid Stock Exchange) (XSBP). About 91% of the outstanding common stock of Santander BanCorp is owned by Banco Santander Central Hispano, S.A aka Santander. The company has four wholly owned subsidiaries -- Banco Santander Puerto Rico, Santander Securities Corporation, Santander Financial Services and Santander Insurance Agency. * * * As reported in the Troubled Company Reporter on May 30, 2006, Fitch affirmed the Individual ratings of Santander Bancorp and Banco Santander Puerto Rico at 'C'. ZALE CORP: Elects Mary E. Burton as President & CEO --------------------------------------------------- Zale Corp. elected Mary E. Burton president and chief executive officer effective July 24, 2006. Ms. Burton had been serving as interim chief executive officer since February 1, 2006. She will continue as a director of the Company. Ms. Burton, 54, has served as a director of the Company since August 1, 2003. Since July 1992, She has served as chief executive officer of BB Capital, Inc., a retail advisory and management services company. Ms. Burton was also chief executive officer of the Cosmetic Center, Inc., a chain of 250 specialty retail stores, from June 1998 to April 1999. Prior to that, she served as chief executive officer of PIP Printing from July 1991 to July 1992, and as chief executive officer of Supercuts, Inc. from September 1987 to June 1991. She is also a director of Staples, Inc., Rent-A-Center, Inc. and Aeropostale, Inc. The Company disclosed that Ms. Burton will receive an annual base salary of US$850,000 and in addition will receive a bonus, a minimum of US$850,000, based upon the Company's performance for the fiscal year ending July 31, 2007. In addition, she will receive equity compensation consisting of: (a) 25,000 shares of performance based restricted stock or restricted stock units; (b) 25,000 shares of time vesting restricted stock or restricted stock units; and (c) a ten-year option to purchase 125,000 shares at an exercise price of US$24.61 per share, with the option vesting over four years. Headquartered in Irving, Texas, Zale Corporation (NYSE: ZLC) -- http://www.zalecorp.com/-- is North America's largest specialty retailer of fine jewelry operating approximately 2,345 retail locations throughout the United States, Canada and Puerto Rico. Zale Corporation's brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Bailey Banks & Biddle, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Through its ZLC Direct organization, Zale also operates online at http://www.zales.com/ and http://www.baileybanksandbiddle.com/ * * * As reported in the Troubled Company Reporter on April 12, 2006, Zale Corporation reported that the Securities and Exchange Commission initiated a non-public investigation relating to various accounting and other matters related to the Company, including accounting for extended service agreements, leases, and accrued payroll. Subpoenas issued in connection with the SEC investigation ask for materials relating to these accounting matters as well as to executive compensation and severance, earnings guidance, stock trading, and the timing of certain vendor payments. Zale believes that its accounting complied with generally accepted accounting principles and is reviewing the matter. The Company will cooperate fully with the SEC's investigation. ============= U R U G U A Y ============= * URUGUAY: Bandes Local Unit Begins Operations in Country --------------------------------------------------------- Banco de Desarrollo Economico y Social de Venezuela, or Bandes, has started operations in Uruguay after it purchased Cooperativa Nacional de Ahorro Credito. The new bank is named Bandes Uruguay, El Universal reports. "We are about to open our doors. There are some minor requirements yet to be filled, but we are waiting for an authorization from the Central Bank of Uruguay soon," Bandes president Edgar Hernandez Behrens was quoted by Efe as saying in a news conference. According to Mr. Behrens, Bandes has lent US$47.2 million in loans to its Uruguayan unit for payment to Cofac savers, Efe reports. The new branch, Mr. Behrens said, will offer priority attention to micro-businesses, cooperatives and sectors deprived of access to the financial system, Efe relates. El Universal says that Bandes has contributed US$10 million in assets to the new bank. It also plans to contribute US$10 million for capitalization. By the end of this year, Bandes is to earmark another US$15 million to pay for a portion of deposits of Cofac savers. * * * 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 ================= ARVINMERITOR INC: Sales Up 4% to US$2.5 Bil. in Third Quarter ------------------------------------------------------------- ArvinMeritor, Inc. reported financial results for its third fiscal quarter ended June 30, 2006. Third-Quarter Fiscal Year 2006 Highlights -- Record sales of US$2.5 billion, up 4% from the third quarter of fiscal 2005. -- Net income was US$20 million or US$0.29 per diluted share, compared to US$46 million, or US$0.66 per diluted share in the same period last year. -- On a GAAP basis, income from continuing operations was US$25 million or US$0.36 per diluted share, compared to US$50 million or US$0.72 per diluted share in the same period last year; this decline was primarily due to a labor disruption at an ArvinMeritor brake facility in Canada which unfavorably impacted income from continuing operations by US$28 million, after-tax. -- Income from continuing operations, before special items, was US$51 million or US$0.73 per diluted share, exceeding the previous guidance of US$0.60 to US$0.70 per diluted share. -- Free cash flow was US$155 million, an improvement of US$96 million from the same period last year. -- Continued reduction of net debt -- down US$481 million from the same period last year. -- Completed new US$1.15 billion secured credit facilities that extend maturities to 2011 and 2012. -- Announced the divestitures of two additional businesses within Light Vehicle Aftermarket (LVA). "Our results for the third quarter of fiscal 2006 build upon the continued execution of our strategic initiatives, including previously announced restructuring activities and our ongoing focus on operational performance," said Chairman, CEO and President Chip McClure. "However, we cannot discount the significant impact of the labor disruption that occurred in June at our brake facility in Tilbury, Ontario. "We regret the disruption and inconvenience this temporary work stoppage had on the production schedules of certain customers, but we are pleased that this situation was quickly resolved. We are back on track and running at full capacity to provide the superior support and service our customers have come to expect from us. Excluding the impact of this disruption, we are proud of the performance we delivered in the quarter, exceeding the top end of our guidance range." Third-Quarter Fiscal Year 2006 Results For the third quarter of fiscal year 2006, ArvinMeritor posted sales of US$2.5 billion, a 4-percent increase compared to the same period last year, and a record quarter for the company. The primary factors contributing to the increase were improved Light Vehicle Systems (LVS) sales in Europe and Asia/Pacific, and strong growth in the company's commercial specialty business, which provides a comprehensive line of components for vehicles including: -- fire and rescue; -- construction and utility; -- military; -- school buses; -- motor homes and -- custom chassis. Operating income was US$47 million, down 49%, compared to US$93 million in the prior year's third quarter, primarily due to the Tilbury labor disruption. Income from continuing operations was US$25 million or US$0.36 per diluted share, compared to US$50 million or US$0.72 per diluted share a year ago. Income from continuing operations, before special items, was flat from the same period last year at US$51 million or US$0.73 per diluted share. The company recorded a loss from discontinued operations of US$5 million or US$0.07 per diluted share, compared to a loss of US$4 million or US$0.06 per diluted share last year. Fourth-Quarter and Full-Year 2006 Outlook The company's fiscal year 2006 outlook for light vehicle production in North America is 15.8 million vehicles, up slightly from the previous forecast, and 16.4 million vehicles in Western Europe, unchanged from the prior forecast. The outlook for North American Class 8 truck production is 340,000 units in fiscal year 2006, also unchanged from the previous forecast. In Western Europe, the company is raising its outlook for heavy- and medium- duty trucks to 439,000, an increase of 14,000 units. "The company's sales for fiscal year 2006 will remain strong, specifically within the North America Class 8 truck market, and we are forecasting full- year sales to be approximately US$9 billion," McClure said. The company is raising its full-year guidance and expects income from continuing operations, before special items, to be in the range of US$1.65 to US$1.75 per diluted share, up from the previously forecasted range of US$1.60 to US$1.70 per diluted share. "Based on our continued focus on working capital improvements and our strong results year-to-date, we are also increasing our free cash flow forecast to the range of US$200 million to US$225 million, up from the previously forecasted range of US$120 million to US$170 million," said Jim Donlon, senior vice president and CFO. McClure added, "We are starting to see the financial and operational benefits of restructuring the company, specifically within the LVS business group, and we have made significant progress toward our goal to divest our LVA businesses. We are committed to improving our performance, executing our strategy and capitalizing on the significant opportunities we see across our businesses and in the global markets." Arvinmeritor, Inc. Consolidated Statement Of Operations (Unaudited, in millions, except per share amounts) Quarter Ended Nine Months Ended June 30, June 30, 2006 2005 2006 2005 (Unaudited) Sales US$2,477 US$2,389 US$6,877 US$6,713 Cost of sales (2,327) (2,186) (6,426) (6,222) Gross Margin 150 203 451 491 Selling, general, And administrative (105) (104) (294) (286) Restructuring costs (1) (6) (19) (65) Other expense 3 - 23 (12) Operating Income 47 93 161 128 Equity in earnings of affiliates 10 7 25 20 Interest expense, net and other (28) (31) (104) (89) Income Before Income Taxes 29 69 82 59 Benefit (provision) for income taxes - (15) 11 (12) Minority interests (4) (4) (10) (4) Income from continuing operations 25 50 83 43 Income (loss) from discontinued operations (5) (4) 16 (12) Net Income US$20 US$46 US$99 US$31 Diluted Earnings Per Share Continuing operations US$0.36 US$0.72 US$1.19 US$0.62 Discontinued operations (0.07) (0.06) 0.23 (0.17) Diluted earnings per share US$0.29 US$0.66 US$1.42 US$0.45 Diluted shares outstanding 70.1 69.2 69.9 69.3 Arvinmeritor, Inc. Consolidated Business Segment Information (In millions) Quarter Ended June 30, Nine Months Ended June 30, 2006 2005 2006 2005 (Unaudited) (Unaudited) Sales: Light Vehicle Systems US$1,322 US$1,271 US$3,707 US$3,656 Commercial Vehicle Systems 1,155 1,118 3,170 3,057 Total sales US$2,477 US$2,389 US$6,877 US$6,713 Operating income (loss): Light Vehicle Systems US$37 US$23 US$26 US$(10) Commercial Vehicle Systems 14 72 143 146 Segment operating income 51 95 169 136 Unallocated corporate costs (4) (2) (8) (8) Total operating income US$47 US$93 US$161 US$128 Arvinmeritor, Inc. Summary Consolidated Balance Sheet (In millions) June 30, September 30, 2006 2005 (Unaudited) Assets Cash and cash equivalents US$365 US$187 Receivables, net 1,723 1,655 Inventories 591 541 Other current assets 284 256 Assets of discontinued operations 308 531 Net property 971 1,013 Goodwill 810 801 Other assets 835 886 Total Assets US$5,887 US$5,870 Liabilities And Shareowners' Equity Short-term debt US$60 US$131 Accounts payable 1,703 1,483 Other current liabilities 658 667 Liabilities of discontinued operations 150 242 Long-term debt 1,288 1,451 Retirement benefits 608 754 Other liabilities 228 209 Minority interests 60 58 Shareowners' equity 1,132 875 Total liabilities and shareowners' equity US$5,887 US$5,870 Headquartered in Troy, Michigan, ArvinMeritor, Inc. -- http://www.arvinmeritor.com/-- is a premier US$8.8 billion global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company serves light vehicle, commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets. ArvinMeritor employs approximately 29,000 people at more than 120 manufacturing facilities in 25 countries. It maintains 23 facilities in Venezuela, Brazil and Argentina. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM. * * * Moody's Investors Service has downgraded on July 25, 2006, approximately US$10.9 million of ArvinMeritor, Inc.'s remaining notes that were issued under its 1990 indenture and affirmed ratings on all of the company's other unsecured notes at Ba3. The action follows ArvinMeritor depositing approximately US$11.9 million of an investment in a money market fund into an escrow account for the benefit of note holders. Moody's Investors Service downgraded these ratings: -- 6.625% notes maturing in 2008 (approximately US$4.7 million remaining) to Ba3 from Ba2; and -- 7.125% notes maturing in 2009 (approximately US$6.1 million remaining) to Ba3 from Ba2. PETROLEOS DE VENEZUELA: Gazprom Will Help to Develop Gas Plan ------------------------------------------------------------- Petroleos de Venezuela SA inked an agreement for the development of a 50-year gas plan with Russia's state-controlled oil firm, OAO GAzprom. Gazprom, being the world's largest gas producer, will help Petroleos de Venezuela work out a plan to develop its gas industry. The strategy will include development of the internal market and regional interconnection. Venezuela's minister of energy and petroleum Rafael Ramirez disclosed to the Associated Press that the two state firms' representatives will discuss potential incorporation of Gazprom in the proposed US$20-billion South American gas pipeline. The 8,000 km-pipeline will run from Caracas to Buenos Aires. About Gazprom Headquartered in Moscow, Russia, OAO Gazprom -- http://www.gazprom.ru/eng-- produces 94% of the country's natural gas, controls 25% of the world's reserves, and is also the world's largest gas producer. It focuses on gas exploration, processing, transport, and marketing. Standard & Poor's Ratings Services raised on Jan. 17, 206, its long-term corporate credit rating on OAO Gazprom to 'BB+' from 'BB'. About Petroleos de Venezuela Petroleos de Venezuela SA 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. Fitch said the Rating Outlook is Stable. Both rating actions followed Fitch's November 2005 upgrade of Venezuela's sovereign rating. *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter - Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Marjorie C. Sabijon, Sheryl Joy P. Olano, Stella Mae Hechanova, and Christian Toledo, Editors. Copyright 2006. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. 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