TCRLA_Public/020618.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

           Tuesday, June 18, 2002, Vol. 3, Issue 119



HSBC ARGENTINA: Parent Transfers Funds To Shore Up Finances
TELEGLOBE: LatAm Assets To Go On The Block Separately


CAROLINA RE: Insolvency Evokes Mystery
TYCO INTERNATIONAL: CIT On CreditWatch, Developing Implications
TYCO INTERNATIONAL: Investigates Board Members


AES CORP.: Denies Local Units Of Additional Funds
SCOTIABANK: Investors Scrutinize Brazilian Exposure


MANQUEHUE NET: Receives Five Offers For Assets


EDT: Metrotel Directors Abandon Merger Intentions


AEROMEXICO: Lack Of Demand Forces Flight Reduction
HYLSAMEX: Hylsa Extends Exchange Offer Expiration Date
HYLSAMEX: One of BMV's Most Profitable Firms
SATMEX: High Debt, Declining Revenues Prompt S&P To Cut Ratings


AEROCONTINENTE: Head Seeks Govt. Backing To Regain Lost License


GALICIA URUGUAY: Parent Adds US$43M To Facilitate Withdrawals


AES CORP.: Bear Stearns Wary About Local Unit's Expectations

     - - - - - - - - - -


HSBC ARGENTINA: Parent Transfers Funds To Shore Up Finances
Europe's biggest bank by market value HSBC Holdings Plc
transferred US$211 million to its unit in Argentina, helping the
subsidiary to pay maturing bonds, reports Bloomberg.

HSBC Bank Argentina SA must pay US$158 million worth of bonds
maturing this week. Its parent has spent US$446 million so far
this year to shore it up after it ran out of cash resulting from
a run on deposits, debt default and devaluation.

HSBC transferred the cash to keep its unit in Argentina operating
even though the bank this year set aside US$1.1 billion to cover
losses from the devaluation and debt default.

Sir John Bond, HSBC Holdings' chairman, told shareholders last
month that Argentina's economy is in a "critical" situation and
that its unit ``is living hand to mouth.''

          10 Lower Thames St.
          London EC3R 6AE, United Kingdom
          Phone: +44-020-7260-0500
          Fax: +44-020-7260-0501
          Home Page:
          Sir John R. H. Bond, Group Chairman / Exec. Dir.
          Sir Brian Moffat, Deputy Chairman / Sr. Non-Exec. Dir.
          Keith R. Whitson, Group Chief Executive

          Av. de Mayo 701, Piso 27, (1084)
          Buenos Aires, Argentina
          Tel: 54 11 4 344 3333
          Fax: 54 11 4 334 6679
          Contact: Michael Smith, Chairman and Chief Executive

TELEGLOBE: LatAm Assets To Go On The Block Separately
Teleglobe, the bankrupt international network operator subsidiary
of Canadian-based BCE Inc., is selling its Latin American assets
as they do not constitute part of its core business, Business
News Americas reports citing Fernando Alonso, director of the
Latin American department at law firm Hunton & Williams, which is
involved in the bankruptcy process.

According to Alonso, Teleglobe will sell the assets separately.
Teleglobe has assets in Argentina, Brazil, Chile, Colombia, El
Salvador, Guatemala, Mexico and Panama. Teleglobe's Latin
American assets mainly include IRU or lease contracts with
customers for the delivery of capacity throughout the region.

Teleglobe has scheduled June 24 as the date to convene parties
interested in bidding for the company's assets, Alonso said.

Teleglobe is currently under bankruptcy protection in Canada and
is seeking that status for its US subsidiary as it tries to
restructure US$2.6 billion of debt and continue operating its
core voice business, after slashing its workforce of 1,850 by
almost half.

Although parent company BCE did not guarantee Teleglobe's debt,
it expects to take a write down of up to CAD8.5 billion (US$5.5
billion) in 2Q02.


             Carlos Pellegrini 1163 Piso 4
             Buenos Aires, Argentina C1009ABW
             Telephone: 54.11.6310.0100
             Facsimile: 54.11.6310.0101

             Rua Matias Aires, 402 9* Andar
             Sao Paulo, S.P. Brazil 01309-020

             World Trade Center
             Ave. Nueva Tajamar 481
             Torre Sur - Ofic. 1002 - Las Condes
             Santiago, Chile
             Telephone: 562.350.4260

             Calle 114 N*9-45 torre B, Of. 1008
             Teleport Business Park
             Santa Fe de Bogota
             Telephone: 571.657.9000
             Facsimile: 571.629.2897

             EL SALVADOR
             91 Ave Norte #626
             Colonia Escalon
             San Salvador, El Salvador
             Telephone: 503.263.4836
             Facsimile: 503.263.2466

             12 Calle / 1-25 / Zona 10
             Edificio Geminis 10
             Torre Norte - Oficina 611
             Guatemala City, Guatemala 01010
             Telephone: 502.335.3217
             Facsimile: 502.335.3221

             Blvd. Manuel A. Camacho 36, 21st floor
             Torre Esmeralda II
             Col. Lomas de Chapultepec
             11000 M,xico, D.F.
             Telephone: 52.55.5095.5900
             Facsimile: 52.55.5095.5928

             Edif. Plaza Obarrio - Of. 302
             Av. Samuel Lewis
             Panama City
             Telephone: 507.265.1329
             Facsimile: 507.265.7913


199 Bay Street, Commerce Court West
Toronto, Ontario M5L 1A2, Canada
Phone: (416) 980-2211
Fax:   (416) 980-5028
       (416) 980-5026
Home Page:
     Corporate Secretary
     Phone: (416) 980-3096
     Fax:   (416) 980-7012

     Investor Relations
     Phone: (416) 980-6657
     Fax:   (416) 980-5028

     Corporate Communications and Public Affairs
     Phone: (416) 980-4523
     Fax:   (416) 363-5347

     Office of the Ombudsman
     Phone: 1 800 308-6859
     Fax:   1 800 308-6861
            (416) 861-3313 (Toronto)
            (416) 980-3754 (Toronto)

Toronto-Dominion Centre,,
King St. West and Bay St.
Toronto, Ontario M5K 1A2, Canada
Phone: 416-982-8222
Fax: 416-982-5671
Home Page:
Anderson, M. Norman N., Director
Baille, A. Charles, Chairman
Bell, Allen W., Executive Vice President

151 O'Connor
Ottawa, Canada
K1A 1K3
Phone: (613) 598-2500
Fax: (613) 237-2690
Home Page:
Investor Relations
Fax: 613) 563-8834

Alex Watson, Portfolio Manager
Phone: (613)598-2800

Nancy Kyte, Investor Relations Manager
Phone: (613)598-3522

One Technology Center
Tulsa, OK 74103
Phone: 918-547-6000
Fax: 918-547-7134
Home Page:
     Howard E. Janzen, Chairman, President and CEO
     Scott E. Schubert, EVP and CFO

     Investor Relations
     Phone: 1.866.468.6924

Home Page:

New York Branch
North & Latin American Region
560 Lexington Avenue
New York, NY 10022
Tel  (212)310-9800
Fax (212)310-9841

Toronto Branch
BCE Place / Suite 3210
181 Bay Street
Toronto, Ontario M5J2T3
Tel (416)862-8840
Fax (416)862-2381

Representative Office for Mexico
Edificio Forum
Adres Bello No.10 Piso 16
Chapultepec Morales
11560 Mexico, D.F
Tel (0052-5)282-9111/14
Fax (0052-5)232-9115

Montreal  Branch
1501 McGill College Avenue / Suite 2060
Montreal, Quebec H3A 3M8
Tel  (514)985-0047
Fax (514)985-2610

Bank of Montreal Tower,
55 Bloor Street West, 8th Floor
Toronto, Ontario
M4W 3N5
Home Page:
Contact: John Graham, Ombudsman
Tel: 1-800-371-2541
Fax: 1-800-766-8029

Scotia Plaza,
44 King Street West
Toronto, Ontario
M5H 1H1
Home Page:
(416) 750-FUND (3863) (Greater Toronto Area)
1-800-268-9269 (Other Areas In Canada)

Bill Bailey, Ombudsman
Tel: 1-800-785-8772/(416) 933-3299
Fax: (416) 933-3276

Head Office
National Bank Tower
600 de La GauchetiSre West
Montreal, Quebec
H3B 4L2
Telephone: (514) 394-5000
Telex: 0525181
Home Page:
Elaine Carr
Director - Investor Relations
Telephone: (514) 394-0296
Fax : (514) 394-6196
Email :

Tour Banque Laurentienne
1981, McGill College Avenue
Montreal (Quebec)
H3A 3K3
Telephone:  (514) 284-4500 ext. 5996
Fax:  (514) 284-3396
Telex:  05-24217
Swift Code:  LBCMCAMM
Customer services: (514) 522-1846
1 800 LBC-1846
Home Page:
Michael Murray
Telephone:  (514) 284-4500 ext. 5907

P.O. Box 1
Royal Bank Plaza
Toronto, ON M5J 2J5
Phone: 416-974-5151
Home Page:
Investor Relations
Royal Bank of Canada
123 Front St West, Suite 600
Toronto, ON M5J 2M2
Phone: 416-955-7802
Fax: 416-955-7800

1188 West Georgia Street, 2nd Floor
Vancouver, BC V6E 4A2
Toll free number: 1-866-8mlhsbc (1-866-865-4722)
Home Page:
James H. Cleave, Chairman of the Board
Martin J.G. Glynn, President and Chief Executive Officer
J. Lindsay Gordon, Chief Operating Office

La #815 GC
1 Desjardins Complex
Montreal, QC H5B 1B3
Home Page:

BNP Tower
1981 McGill College avenue
Montreal, (Qc) H3A 2W8
Tel: (514) 285-6000
Fax: (514) 285-6278
Home Page:

Toronto, ON M5H 1J9, Canada
Phone: 416-204-3835
Fax: 416-595-0346

Headquarters for the Americas:
1251 Avenue of the Americas, New York, NY 10020-1104
Tel: (212) 782-4000
Fax: (212) 782-6415
Home Page:

Morgan Stanley, Dean Witter & Company
1585 Broadway
New York, New York 10036
United States
Phone: +1 212 761-4000
Fax: (212) 761-0086
Home Page


CAROLINA RE: Insolvency Evokes Mystery
The fate of Bermuda-based Carolina Re appears to be surrounded
with unanswered questions, reports Royal Gazette. Carolina Re
went into liquidation in December following an investigation into
its US-based parent Fortress Re, the failed airline insurer with
exclusively Japanese clients.

Earlier this month, Carolina Re Liquidator John McKenna of Ernst
& Young told The Wall Street Journal that he was investigating
the company to see if any Bermuda insurance regulations had been

Previous reports have suggested that North Carolina insurance
company Fortress Re had ceded hundreds of millions of dollars to
its Bermuda subsidiary.

Subsequently, Carolina Re paid more than US$400 million in
dividends to its owners, who were also the principals of Fortress
Re. When Japanese insurers, on whose behalf Fortress Re had
written insurance policies, sought to recover claims stemming
from a series of aviation disasters culminating in the September
11 terror attacks, they found that both Fortress and Carolina
were insolvent.

Carolina Re, which should have paid out an estimated US$600-
million, had just US$62 million in assets.

TeleBermuda International Ltd. (TBI), a former subsidiary of
GlobeNet, is nearly sold, reports The Bermuda Sun, citing
Telecommunications and E-commerce Minister Renee Webb.

Webb believes that just two bidders were currently left haggling
over the Company. The minister is hopeful that any potential
buyer of TBI, which handles 50% of the international calls on the
island, would at least in part be Bermudian.

The Government had said that it would be in the national interest
for the Company to be locally owned.

TBI's future has been clouded with uncertainty ever since U.S.
company 360networks, which bought TBI's former parent GlobeNet,
filed for protection from its creditors in Canada and the United
States in June 2001. As part of its bankruptcy filing, the
company reported US$1.2 billion in secured debt and US$1.45
billion of unsecured bond debt.

          Bermuda Commercial Bank Building
          2nd Floor 43 Victoria Street
          Hamilton HM12, Bermuda
          Tel: 441-296-9000
          Fax: 441-296-9010

TYCO INTERNATIONAL: CIT On CreditWatch, Developing Implications
Standard & Poor's ratings on CIT Group Inc. (BBB+/Watch Dev/A-2)
and its subsidiaries remain on CreditWatch with developing
implications following the news that parent company Tyco
International Ltd. (Tyco, BBB-/Watch Neg/A-3) received SEC
approval to move forward with an IPO for CIT.  CIT amended its S-
1 registration statement and refiled its 10Q for the quarter
ended March 31, 2002, incorporating a $4.51 billion impairment of
goodwill in accordance with SFAS 142 following discussions with
the SEC.  Following a complete separation from Tyco through the
successful execution of the IPO within about a month, in addition
to maintenance of financial strength, profitability, and asset
quality measures at current levels, CIT's ratings will likely go
to 'A/A-1'.  If, however, CIT is sold to a third party with a
higher credit rating, its ratings are likely to go higher.  The
ratings could be lowered further if CIT's parent's ratings are
lowered or if CIT is sold to a third party with a lower credit

         Lisa J. Archinow, CFA

         E. Richard Schmidt


Debt Rated          Rating Action               Rating     Trend

Commercial Paper    Under Review - Developing   R-1 (low)   Stb
CIT Group, Inc.
Medium Term Notes   Under Review - Developing   A           Stb
Newcourt Credit Group Inc.
Commercial Paper    Under Review - Developing   R-1 (low)   Stb
Newcourt Credit Group Inc.
Senior Debt         Under Review - Developing   A           Stb

Note: Newcourt commercial paper and public senior debt are
unconditionally guaranteed by CIT Group, Inc.

Rating actions taken by Dominion Bond Ratings Services (DBRS) on
Tyco International ("Tyco") have resulted in no changes for the
ratings or Under Review situation at CIT Group Inc. ("CIT",
presently wholly owned by Tyco), which remain as noted above. The
plan to separate CIT from the parent continues to move forward,
with CIT having filed Amendment No.2 to form S-1 on June 12,
2002. This filing details plans to issue 200 million shares in an
expected $25-$29 range (all figures are in U.S. currency) with
the potential for an additional sale of 20 million shares. CIT
would only receive cash to the extent that the over allotment was
successful. Excluding the latter potential, the filing notes that
a goodwill impairment charge of $4.5 billion at CIT will reduce
shareholders' equity to $6.5 billion, but the ratio of tangible
equity / managed assets would be unaffected, remaining above 9%.

DBRS continues to expect that CIT will be successful in
separating itself from Tyco and at that time, we will remove the
Company from Under Review and clarify all ratings related to CIT
on a truly stand-alone basis. While CIT has been negatively
impacted by the events at the parent, and the weak economic
environment has pressured credit quality and earnings to some
degree, CIT continues to have a strong, well-diversified lending
franchise with a conservative credit culture. Over the past year,
significant progress has been made in reducing costs,
restructuring the loan portfolio, and improving leverage.

CONTACT:  TEL:  416-593-5577 ext.2257  Jarmo Saari, CFA
          TEL:  416-593-5577 ext.2235  Kent Wideman, CFA

TYCO INTERNATIONAL: Investigates Board Members
Information coming out Friday revealed that Tyco International
Ltd is investigating financial transactions involving three board
members. These transactions, according to AP, were not previously
reported in public filings.

A source with knowledge of Tyco's ongoing internal investigation
said the Company is examining the 1996 sale of a New Hampshire
home by board member John Fort to former chief executive Dennis
Kozlowski. The investigation includes whether Kozlowski borrowed
from a stock-loan plan intended for other purposes to buy the
home in Rye, N.H., from Fort, said the source, who spoke on
condition of anonymity.

Fort was named Tyco's interim chief executive after Kozlowski
resigned June 3, a day before being charged with tax evasion in
New York connected to his purchase of pricey works of art. Tyco
started its probe after Kozlowski was indicted.

The source said the purchase was a private transaction at market
value and did not require public disclosure to investors.

The other two transactions being currently investigated involve
Fort's role as an investor in a buyout fund that made an US$810-
million purchase of Tyco operations in 1999 and a plane that
board member Stephen Foss leased to Tyco, the source said. A Tyco
spokesman said Fort abstained from voting on the sale and
disclosed his relationship with the fund.

The plane was leased to Tyco at below market rates after
competitive bidding, the source said. The plane was among the
Company aircraft Tyco eliminated Thursday as part of a
streamlining effort it announced.

Tyco executives refused to discuss details of the internal
investigation during Friday's conference call. Fort said the
probe could take six to eight weeks.


AES CORP.: Denies Local Units Of Additional Funds
Until it sees a clearer implementation of the regulatory system
in Brazil, United States power company AES Corp will not provide
any more cash for its subsidiaries in the country. News of the
position was announced by the Company's executives during a
conference call Thursday.

"Unless we can get more comfort on the implementation of the
regulatory system we cannot put any new money into this country,"
AES VP Paul Hanrahan said, adding that AES is "increasingly
frustrated" with regulatory implementation.

AES has revised its operating cash estimates from Brazil to US$85
million, down US$45 million from the original figures; some US$63
million has been received to date, CFO Barry Sharp said.

One of AES' Brazilian subsidiaries, Rio Grande do Sul state
distributor AES Sul, is unlikely to sign the scheduled rationing
settlement agreement, after retroactive regulatory change,
Hanrahan said.

Under wholesale market (MAE) rules, AES Sul could choose whether
to sell power from a certain hydro contract in the south or the
southeast, and through 2000 and 2001 chose to sell in the
southeast, thus getting higher prices.

Aneel then retroactively changed the interpretation of these
rules, forcing AES to give up the US$120-million gains from the
sales. AES will file injunctions against Aneel's ruling, Hanrahan

Another subsidiary affected is Companhia Energetica de Minas
Gerais, Brazil's biggest combined power distributor and
generator. According to Hanrahan, Cemig, as the company is known,
has been in the courts for years trying to regain its management
rights of the company, and the lack of progress continues to be

"At this point we're pushing very hard with the government to get
eventual resolution of the problems with Cemig," Hanrahan said.

With regards to Eletropaulo Metropolitana, Hanrahan acknowledged
concerns that there are "issues" with respect to refinancing at
the Sao Paulo distributor, including maturities that come due in
August (US$470 million) and September (US$110 million).

"We've had some delays in receiving the rationing loans from
[national development bank] BNDES as part of the rationing
settlement. These now look as if they will be disbursed in July
provided that the rationing settlement is signed by Eletropaulo
at the end of this week," he said.

Eletropaulo is pursuing other financings, but instability in the
Brazilian financial markets means these will not be completed
right now, Hanrahan said. Talks are in progress, but it is
unlikely they will be concluded in time for the August
maturities, he added.

Eletropaulo is therefore discussing bridge loans with banks to
reach through to late 2002 or early 2003, he said.

Recently appointed Eletropaulo CEO Mark Fitzpatrick said there is
the potential for cost savings and efficiencies at Eletropaulo
that could prove to be "material."

Eletropaulo has 70% of its dollar debt hedged; AES Sul has hedged
its interest payments through the rest of the year; and
Uruguaiana has a hedge built into its contract terms, the
executives said.

CONTACT:  AES Corporation
          Home Page:
          Kenneth R. Woodcock
          Phone: 703/522-1315
          Investor relations

          Avenida Barbacena, 1200
          Sto Agostinho  30123-970 Belo Horizonte - MG
          Phone   +55 31 299 4900
          Home Page
          Djalma Bastos De Morais, Chairman
          Geraldo De Oliveira Faria, Vice Chairman
          Cristiano Correa De Barros, Finance Director

          Avenida Alfredo Egidio de Souza Aranha 100-B,
          13 andar 04726-270 San Paulo
          Phone: +55-11-548-9461, +55 11 5696 3595
          Fax: +55-11-546-1933
          Luiz D. Travesso, Chairman and President
          Orestes GonOalves Jr., VP Finance/Investor Relations

Fitch Ratings has placed the 'BBB-' local currency rating of
Eletropaulo Metropolitana Eletricidade de Sao Paulo S.A.'s
(Eletropaulo) on Rating Watch Negative. The company's foreign
currency rating of 'BB-' remains on a Negative Rating Outlook and
is constrained by Brazil's sovereign foreign currency rating.

Eletropaulo's credit rating is under pressure as a result of
impending refinancing concerns, which have been exacerbated by
the continuing poor market conditions. Interest in Brazilian
corporate and sovereign debt issues has been weak in both the
domestic and international capital markets. Further, domestic
corporate issuers are being crowded out of the market by
government debt issues, which have recently been under-subscribed
in conjunction with local investors' lessened appetite for new
corporate debt due to new Central Bank mandated investment fund
regulations requiring entities to mark these asset to market. As
such, the refinancing options available to the company are most
likely local and/or international bank transactions or commercial

AES management noted in their recent conference call that they
are seeking to obtain some type of bridge financing until later
in the year, but would not invest additional funds into Brazil.
Fitch believes Eletropaulo to be a solid, financable company with
strong cash generation ability and expects the company to be able
to raise the required financing. Nevertheless, the expected
elevated cost of potential new debt issuances, depending on
interest rates and impact on average cost of debt, will likely
pressure credit protection measures and lead to a downgrade of
its local currency rating. The company's progress in obtaining
sufficient financing will be monitored closely and will be
reflected in any rating action.

Despite Eletropaulo's relatively successful track record of
accessing the capital markets, the company has yet to reduce its
short-term refinancing risk. Eletropaulo's debt maturity schedule
is significant, with approximately US$672 million maturing during
the remainder of 2002. Since January 2002, the company has repaid
more than US$200 million of maturities with cash generated from
operations and US$119 million in BNDES proceeds as part of the
revenue recovery agreement for 2001. The balance of 2002
maturities are concentrated in August (US$423 million), September
(US$107 million), and December (US$129 million).
Repayment/refinancing sources are expected to come from the
remaining cash recovery related to the BNDES margin compensation
(US$250 million) and operating cash flow as well as foreign
capital market transactions and bank loans potential with
preferred creditor support; the rollover of maturing bank loans
with existing lenders remains a possibility. Although Eletropaulo
is expected to receive the BNDES cash before debt maturity dates,
it will be insufficient to cover all debt. To preserve cash,
Eletropaulo is expected to distribute solely the minimum dividend
obligated by law (25% of 2001 net income) in the second quarter
of 2002, and after refinancing its 2002 debt maturities, the
company may pay remaining dividends, up to the maximum permitted
by law of 95% of 2001 net income if cash is available. Such
dividends are expected to be used to repay holding company debt.

From an operating standpoint, credit protection measures have
been acceptable for the rating category, and should improve going
forward, according to Fitch. Eletropaulo has benefited from
historically constructive tariff-based revenues that adjust by
inflation, an expected increase in Eletropaulo's revenue base
(due to a recent resolution reclassifying its 'low-income'
residential customer base), improved regulations (reflective in
the creation of a regulatory tracking account) and the company's
continued use of hedging instruments to help protect against
currency fluctuations. The company generates considerable cash,
with first quarter of 2002 reported EBITDA of R$333 million
(including R$192 million margin compensation). Quarterly
improvement is expected for the remainder of the year due to
continued growth and an expected tariff adjustment in July.

New accounting rules have increased non-cash expenses and will
reduce net income and dividends for the next five years allowing
the company the option of reducing debt levels. The company is
burdened with a R$2.4 billion unfunded pension liability, which
had previously been included in Fitch's analysis, but now must be
brought on balance sheet. Late last year, the CVM issued
Deliberation N. 371 that established new rules for the accounting
and reporting or employee benefits. As a result, Eletropaulo will
recognize the liability owed to Fundacao CESP in monthly
installments of R$40 million (R$480 million annually) over 5
years on the income statement, representing an additional R$324
million non-cash expense above the R$156 million already being
expensed. Positively from a credit standpoint, the company's
dividends will be limited allowing Eletropaulo to use cash flow
to reduce debt levels. Still, while reducing operating company
debt, Eletropaulo should be able to distribute material dividends
beginning 2003.

Beyond the operating company concerns, the company is facing
refinancing risk at its holding companies, AES ELPA (voting) and
TransGas (non-voting), as well. In April 2002, AES completed a
renegotiation with BNDES under which it paid interest of US$34
million. Under the terms of the agreement, principal was
deferred, with at least US$85 million payable in October 2002,
and the outstanding payable in two equal tranches in April 2003
and December 2003 (i.e., US$510 million minus US$85 million split
between April and December). AES has committed to applying
dividends from Eletropaulo to repay BNDES. AES has also pledged
the shares of AES SUL and Uruguaiana to BNDES in support of the
AES ELPA debt. TransGas has US$330 million due January 2003 and
US$275 million in January 2004. It is possible that BNDES would
consider extending the January 2003 maturity (probably during
4Q02) until January 2005 at market rates. Should the required
payments not be made to BNDES, shares and control would revert
back to BNDES relating to AES ELPA debt 'voting shares', which
could result in a downward rating action based on the sovereign
rating of Brazil.

Eletropaulo is the largest electricity distributor in Latin
America in terms of revenues, with a sales volume of 32,563 GWh
in 2001 due to the rationing. Since privatization on April 15,
1998, Eletropaulo has been owned by LightGas, now known as AES
ELPA. AES ELPA is 88.21% owned and controlled by AES. AES ELPA
owns 77.81% of Eletropaulo's voting shares and 30.97% of total

          Jason Todd, 1-312-368-3217
          Daniel Kastholm, 1-312-368-2070
          Jayme Bartling, 5511-287-3177
          James Jockle, 1-212-908-0547 (Media Relations)

SCOTIABANK: Investors Scrutinize Brazilian Exposure
Investors are now starting to evaluate Scotiabank's exposure to
Brazil due to the mounting political and economic uncertainty in
the country.

According to a report by the National Post, Scotiabank's total
exposure to Brazil stood at US$772-million in the second quarter
ended April 30. The exposure consists of three elements: US$34-
million in loans, US$415-million in trade financing and US$323-
million in government and other securities.

A Scotiabank spokeswoman declined to elaborate on these three
categories, but said, "We are comfortable with our exposure."

Scotiabank is the most active Canadian bank in Latin America,
where it took a $707-million hit from the collapse of Argentina's
financial system.

"If, indeed, the situation were to deteriorate [in Brazil] then
we would have to question Scotiabank what's in this $772-million
they've got there," said Jack Dzierwa, an analyst with Salomon
Smith Barney Inc. "If later something happens, it's totally
beyond their control."

On Wednesday, Brazil's real sagged to its lowest level in nearly
nine months against the U.S. dollar. Bond yields have soared more
than 20% this month, reflecting the view of investors that buying
Brazil's bonds looks increasingly risky. The Bovespa stock index
is down 10% year to date and is 20% off last year's level. And
the country's debt trades at less than 67 cents on the dollar.

CONTACT:  SCOTIABANK (Brazil)       
          Eduardo A. Klurfan
          Phone: (55-11) 3849-0737
          Fax: (55-11) 3849-3071
          Mail: Rua Leopoldo Couto de Magalhaes Jr.
          110, conj. 93
          04542-000 - Sao Paulo - SP


MANQUEHUE NET: Receives Five Offers For Assets
Cash-strapped Chilean fixed line operator, Manquehue Net,
received five non-binding offers for its assets as it attempts to
conclude its strategic partner search before December. Finding a
partner is one of the conditions of a syndicated loan.

According to a Business News Americas report, the offers came
from Chilean telecoms companies CMET, VTR Globalcom, GTD
Teleductos, Entel and US investment fund Southern Cross. The
offers represent the first step toward incorporating a strategic
partner into the Santiago-based firm.

Interested parties now have access to the Company's financial and
operating data.

Fitch Ratings Chile analyst Ivonne Ibanez said that Manquehue is
an attractive buy because it owns 100,000 telephone lines
distributed through 22 boroughs of Santiago and has a small
broadband client base, relates Business News Americas.

However, any new partner will have to reckon with Manquehue's
US$84.9-million debt load, US$63.6 million of which is long-term.
Manquehue needs to restructure its debt to extend its maturities
if it wants to attract partners, she said.

Interested bidders will be expected to make a binding offer
before the end of June. Ibanez said Manquehue is hoping to wrap
up the process by September.

Manquehue ended 2001 with a net loss of CLP11.3 billion (US$17.3
million), against a profit of CLP224,017 in the previous year.
Results showed little improvement in 1Q02, when the Company
reported a net loss of CLP2.15 billion, compared to the CLP922-
million loss in the same period last year.

Manquehue's current shareholders are the UK's National Grid
(NYSE: NGG) (30%); Chilean gas distributor Metrogas (25.6%); the
local Rabat family (21.2%); US-based network operator Williams
Communications (NYSE: WCG) (16.5%) and investment fund Xycom.

          Av. Condor 796, Enterprise City,
          Huechuraba Santiago Chile
          Phone: 00 562 243 8800
          Fax: 00 562 248 7292
          EMAIL: info@manquehue.netl
          Home Page:
          Mr. Miller Williams, President
          Sr.Jos, Luis Rabat Vilaplana, Vice President


EDT: Metrotel Directors Abandon Merger Intentions
The directors of Colombian local telephony provider Metrotel
(Metropolitana de Telecomunicaciones) withdrew their plan to
merge with the firm's insolvent competitor in Baranquilla
department EDT (Empresa Distrital de Telecom de Barranquilla),
reports Business News Americas. The pullout followed an
announcement by the Colombia's public services regulator that it
would liquidate EDT.

"It became evident that we would not have any interest in merging
with a company that has entered such a critical [financial]
position as EDT," Metrotel CEO Raul Navarro Martin-Leyes said.

Metrotel maintains a healthy financial position and has support
from private and public investors, all of which would be
jeopardized by exposure to a company as troubled as EDT, Navarro

A previous TCR-LA report suggested that the liquidation of the
Colombian telco would require COP579 billion (US$249 million).

Colombia's regulator needs COP152 billion to cover EDT's pension
liabilities, COP197 billion to compensate EDT employees for being
laid off and another COP230 billion to pay the Company's debts.

The regulator intervened EDT in May 2000 with a view to making
the Company viable and returning it to the Baranquilla city
government this month.

EDT has some 130,000 local telephony subscribers.


AEROMEXICO: Lack Of Demand Forces Flight Reduction
Aeromexico is cutting back on its flights from Ontario
International Airport to its Hermosillo hub from four days a week
to only Thursday and Sunday, says Knight-Ridder Business News,
citing a company spokeswoman. The change comes in response to
dwindling demand and difficulty filling the seats. According to
spokeswoman Mayte Sera-Weitzman, the cutback is scheduled at
least through early September.

A decision about whether to continue the Hermosillo service, and
at what frequency, will be made then, depending on how the twice-
weekly flights are received by the traveling public, Sera-
Weitzman said.

"Hermosillo is a new market for us and we still are trying to
adjust for the needs of the market," she said. "The market demand
is not there for those four days right now."

AeroMexico, Mexico's largest airline, already had scaled back the
service in March, when it started using smaller planes and flying
fewer days of the week. It cut back from 142-seat planes to 33-
seat planes and four days a week instead of every day.

AeroMexico is Ontario's first and only remaining international
airline. It reinstated flights between Ontario, Mexico City and
Guadalajara in December 2000 after a six-year absence.

Just recently, Aeromexico and its subsidiary Servicios Aereos
Litoral (Aerolitoral) froze their investment plans and non-
fundamental projects because of dwindling cash flow. Aeromexico
blamed part of the problem on the lack of credit for the payment
of terrorist insurance policies.

AeroMexico, is one of the two main units of airline holding
company Cintra SA, which is 65% owned by the Mexican government.
The airline is scheduled to be sold-off this year.

          Mayte Sera Weitzman of AeroMexico, +1-713-744-8446, or

HYLSAMEX: Hylsa Extends Exchange Offer Expiration Date
In an official company announcement, Hylsamex, S.A. de C.V. and
its subsidiary Hylsa, S.A. de C.V. ("Hylsa") disclosed Friday
that Hylsa is extending the expiration date for the exchange
offer for its 9 1/4% Notes due 2007 (the "2007 Notes") until 5:00
p.m., New York time, on June 28, 2002.

Hylsa is extending the expiration date to allow it to complete
the proposed restructuring of its outstanding debt. Hylsa has
reached an agreement in principle with the steering committee
representing its bank lenders with respect to the restructuring,
and has substantially agreed with the lenders on the
documentation for the restructured debt. Hylsa continues to make
significant progress toward satisfying the conditions precedent
for the effectiveness of the restructuring.

The terms of the exchange offer provide that the first interest
payment date for the 10 1/2% Notes due 2010 (the "2010 Notes")
will be June 15, 2002. Because the 2010 Notes will not be issued
as of that date, Hylsa will instead pay accrued and unpaid
interest on the closing date of the exchange offer on all 2007
Notes that are tendered and accepted for exchange at the rate of
9 1/4% per annum through June 14, 2002 and at the rate of 10 1/2%
per annum from June 15, 2002 through the closing date of the
exchange offer. On the closing date of the exchange offer, Hylsa
will pay accrued and unpaid interest at the rate of 9 1/4% per
annum through March 15, 2002 on all 2007 Notes not tendered for

In response to inquiries from holders of 2007 Notes that desire
to tender 2007 Notes in the exchange offer and receive the
exchange payment, Hylsa will again offer the exchange payment for
all 2007 Notes tendered prior to the expiration of the exchange
offer. Each holder that tenders 2007 Notes at or prior to 5:00
p.m., New York time, on June 28, 2002 will receive a $10 exchange
payment for each $1,000 principal amount of 2007 Notes tendered.
Holders that previously consented to the proposed amendments and
waiver under the indenture governing the 2007 Notes, but did not
tender their 2007 Notes, may tender their 2007 Notes at or prior
to 5:00 p.m., New York time, on June 28, 2002 and receive the
full $10 consent and exchange payment for each $1,000 principal
amount of 2007 Notes tendered (rather than the $5 consent

Hylsa has received tenders of approximately $159 million in
principal amount of its 2007 Notes in exchange for new 2010
Notes. Hylsa has satisfied the condition that it receive tenders
of at least 50% in principal amount of its outstanding 2007 Notes
and the consent of a majority in principal amount of its
outstanding 2007 Notes to the proposed amendments to the
indenture governing the 2007 Notes and the waiver of past
defaults under the indenture. 2007 Notes tendered and consents
delivered may not be withdrawn or revoked.

All other terms and conditions to the exchange offer and consent
solicitation remain unchanged.

The exchange offer continues to be subject to the consummation by
Hylsa of the overall restructuring of its outstanding debt, as
well as other customary conditions.

The new notes offered in the exchange offer will not be
registered under the Securities Act of 1933, as amended, and will
only be offered in the United States to qualified institutional
buyers in a private transaction, and outside the United States in
offshore transactions.

For further information (including requests for offer
documentation by eligible offerees), contact the information
agent for the Company:

          Steven Balet, 800/322-2885
          212/929-5500 (collect)

HYLSAMEX: One of BMV's Most Profitable Firms
Iron and steel company Hylsamex is now one of the most profitable
companies in the Mexican Stock Exchange (BMV) after it racked up
a 112% gain so far this year on the bourse, says Mexico City
daily el Economista.

Improvements at the Company began when it announced a debt
restructuring process in December 2001. The Company will propose
an increase in capital of some MXN3.5 billion (US$361 million) to
reach a total of MXN5.89 billion (US$609 million).

The capitalization process will be carried out through the issue
and subscription of "B" series shares, which closed at MXN10.60
(US$1.09) on Thursday.

          Investor Relations
          Margarita Gutierrez

          Ricardo Sada
          Phone: (52) 81 8865 1224
                 (52) 81 8865 1201
          Munich 101,
          San Nicolas de los Garza N.L., 66452

SATMEX: High Debt, Declining Revenues Prompt S&P To Cut Ratings
Standard & Poor's said Friday it lowered its foreign and local
currency corporate credit ratings on Satelites Mexicanos S.A. de
C.V. (Satmex) to single-'B' from single-'B'-plus. The rating
action reflects Satmex's high debt coupled with declining
revenues and cash flows, and the loss of a significant client
(Innova S. de R.L., B-/Stable/--).

The outlook on the ratings is still negative. Satmex's debt
totals US$556 million. Satmex is an important asset for Loral
Space & Communications Ltd. (B/Negative/--), which owns a 49%
economic and voting interest in Satmex, and for the United
Mexican States, owner of a 25% stake in the company.

"The outlook reflects concerns about Satmex's financial
flexibility and the challenging business environment that the
company faces. It also reflects no expectation that parent
company Loral would provide financial flexibility to Satmex,
which received important support from Loral in the past," said
Standard & Poor's credit analyst Manuel Guerena.

Innova was responsible for 19% of Satmex's revenues during 2001.
This client loss came at a time when several of the new
telecommunication clients are facing financial problems and have
cancelled their contracts with Satmex. These risks are partially
offset by valuable spatial slots and by management's ability to
cope with adverse business situations, as evidenced after the
loss of Solidaridad 1 satellite on August 2000.

Satmex's revenues decreased by a third during the first quarter
of 2002, and its EBITDA coverage of interest decreased to 1.3
times (x), from 1.6x for the same period last year. EBITDA margin
decreased to 57.4% as of March 2002, from 64.3% a year earlier,
causing its debt to last 12-months EBITDA to exceed 7.5x.

Satmex's geographic coverage (footprint) includes the continental
U.S., the Caribbean, and all Latin America except for certain
regions of Brazil. This footprint has a high growth potential in
the long term, but unfavorable in the short term; upon the launch
of Satmex 6 GEO satellite, the company will improve the revenue
growth potential of its footprint. Fixed satellite services like
Satmex's, were expected to benefit from Internet-related signals
transmissions, an evolving market whose future is now uncertain
and less promissory.


AEROCONTINENTE: Head Seeks Govt. Backing To Regain Lost License
Lupe Zevallos, the president of Peru's flagship airline
AeroContinente, is asking the government for help in restoring
its revoked license to operate in Chile.

Recently, Chilean aviation regulators revoked AeroContinente's
license to operate in the country, claiming that the Peruvian
airline had fallen behind on its maintenance and operating checks
as well as crew instruction and had failed to pay required fees
to the civil aviation authorities.

Zevallos' appeal to the Peruvian airline may involve asking it to
send a team to Chile to investigate the case and possible
retaliation against the Chilean airline LanChile, which operates
in Peru.

The president believes that the revocation of the license was
precipitated by AeroContinente's success in gaining a 15% share
of the Chilean market.

          Jr. Moyobamba 101
          Tarapoto, Peru
          Phone: (094) 524332
          Fax: (094) 523704
          Home Page:
          Contact: Sr. ZadI Desme, Vice President


GALICIA URUGUAY: Parent Adds US$43M To Facilitate Withdrawals
Argentine financial holding company Grupo Financiero Galicia
revealed plans to inject US$43 million into its Uruguayan unit,
Banco Galicia Uruguay SA, says Reuters. The move is aimed at
allowing savers to withdraw deposits from the bank after it was
taken over by the Central Bank on Feb. 13 because of a cash
crunch. The Central Bank also suspended activity at the bank,
including withdrawals, for 90 days after it lost roughly a third
of deposits in the first six weeks of the year.

Banco Galicia Uruguay is Uruguay's second-largest private bank,
in which many Argentines hold accounts. Uruguay is the main
offshore banking center for Argentines.

Argentina's financial crisis has spilled over to neighboring
Uruguay where savers have yanked deposits and banks have drawn on
funds held by the Uruguayan Central Bank.

           Head Office: Montevideo
           Word Trade Center
           Luis A. Herrera 128, pisos 21 y 22 (11300)
           Montevideo, Uruguay
           Tel: (059) 628-1230 Fax: (059) 628-3989

           Punta del Este
           Calle 18 (Baupres) 940 Punta del Este, Uruguay
           Tel: (0842) 41121/41122/44862 Fax: (0842) 44861

           Colonia Gral. Flores 200 Colonia de sacramento,
           Tel: (022) 24633/24634 Fax: (022) 24633/24634

           Salto Uruguay 534 Salto, Uruguay
           Tel: (00598) 73 28280/28281 Fax: (00598) 73 28280

           Teniente General Juan D. Per>n 456, Piso 3
           1038 Buenos Aires, Argentina
           Phone: (54 11) 4343 7528 / 9475
           Home Page:
           Eduardo J. Escasany,  Chairman and CEO
           Sergio Grinenco, CFO, Banco de Galicia y Buenos Aires


AES CORP.: Bear Stearns Wary About Local Unit's Expectations
Analysts at Bear Stearns are apprehensive that the U.S. power
giant AES Corp. can realize the full US$140 million that it
expects out of its Venezuelan subsidiary, Electricidad de Caracas
CA (EDC). The source of their leariness is the political and
economic instability gripping the country, relates Dow Jones.

"We remain cautious regarding the Company's Venezuela estimates,"
Bear Stearns said in a research note Thursday. "We believe that
EDC's US$61 million of dividends distributed in April...was
primarily from the US$92 million in proceeds from the March" sale
of EDC's stake in telecommunications company C.A. Nacional
Telefonos de Venezuela.

AES VP Paul Hanrahan, however, refuted the report, saying that
the dividends were not from the equity sale, but EDC's operating
cash flow. The sale's proceeds went to pay down debt at the
utility's operating company, he said.

Bear Stearns also warned that the 35% fall in Venezuela's bolivar
($1=VEB1185.5) so far this year has "significantly affected"
EDC's ongoing operations.

"This reduction more than offsets the 11%" total tariff increase
that AES received in the first quarter, it added.

Furthermore, with inflation that Bear Stearns projects at 27%
this year, Venezuelan authorities might defer further tariff
increases given the social reaction that more rate hikes could

"Finally, we reiterate our view that capital controls could be
implemented at any time in Venezuela given the country's
difficulty in defending its currency and its high political
instability," Bear Stearns said.

According to Hanrahan, the rate increase for which EDC is
scheduled later this year isn't large at 8% to 9%, but that the
unit only needs a total 20% rise in bolivar terms to reach its
dividend projection.

Also, the bolivar's devaluation helps EDC manage its local
currency debt, he added, noting that the unit has already hedged
its dollar-denominated obligations. EDC has also reduced its debt
to US$900 million from US$1.2 billion at end-2001. Short-term
debt has fallen to US$300 million from US$400 million, and US$200
million is in local currency.

Lastly, thanks to a shortfall in Venezuela's hydrogenerated
energy, EDC is selling more excess power into the national grid
than it had originally projected, he pointed out.


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 American is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ,
and Beard Group, Inc., Washington, DC. John D. Resnick, Edem
Psamathe P. Alfeche and Ma. Cristina Canson, Editors.

Copyright 2002.  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.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Latin America subscription rate is $575 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are $25 each.  For subscription information,
contact Christopher Beard at 240/629-3300.

* * * End of Transmission * * *