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| S&P: TGN CRIBs Failure Leads to Event of Default |
NEW YORK, March 26 /PRNewswire/ -- On March 11, 2002, U.S. Bank Trust
N.A., as TGN trustee, provided notice that an event of default had occurred
and is continuing under the TGN indenture. The event of default was caused by
the failure of Transportadora de Gas del Norte (TGN) to either reinstate funds
in the TGN reserve account or to deposit certain funds into an
inconvertibility account. The reserve account funds were used on Jan. 23,
2001, by U.S. Bank Trust N.A. to make a debt service payment to the TGN CRIBs
Financial Trust I investors. This event is considered an event of default
under the TGN CRIBs indenture. The next debt service payment on the CRIBs
bonds is due on July 23, 2002.
The convertability risk-insured bonds (CRIBs) are rated double-'C' by
Standard & Poor's. A downgrade to 'D' would be caused by either a nonpayment
to investors or if the underlying obligor seeks court protection against its
creditors. The event of default could create an acceleration of the
outstanding debt if the CRIBs trustee or noteholders representing not less
than 25% of the aggregate principal amount of the CRIBs outstanding declare
the CRIBs to be immediately due and payable.
The CRIBs were issued by the Argentine trustee, First Trust of New York
N.A. Representacion Permanente en Argentina, which was established for the
purpose of acquiring the TGN note as an underlying asset of the issuance of
the CRIBs notes.
TGN's inability to meet their financial obligations is related to the
pesification of the company's tariffs without allowing for any compensating
adjustments, combined with the freeze of tariffs, and the severe devaluation
of the peso. This situation caused a strong imbalance between TGN's revenues,
now in pesos, and the negative effect of the unsettling devaluation on the
company's U.S. dollar-denominated financial obligations. Furthermore, the very
depressed economic environment that is affecting collections, and the lack of
liquidity in the financial system further eroded the company's already
weakened financial profile. There are many uncertainties about the company's
cash flow going forward since tariffs are frozen, and the government has
established a 120-day (as of mid-February) time frame to renegotiate the
concession contracts. TGN's local and foreign currency rating is 'D'.
For more information, please contact the following analysts: Jorge Solari
and Juan De Mollein, Structured Finance, Buenos Aires; Diane Audino,
Structured Finance, New York; and Lidia Polakovic and Matias Badia, Industrial
Ratings, Buenos Aires.
SOURCE Standard & Poor's
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CONTACT:
Jorge Solari, Buenos Aires,
+1-54-114-891-2114, Juan Pablo De Mollein, Buenos Aires,
+54-114-891-2113, Diane Audino, New York, +1-212-438-2388, Lidia
Polakovic, Buenos Aires, +54-114-891-2130, Matias Badia, Buenos
Aires, +54-114-891-2129, all of S&P
