TCRLA_Public/020627.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

                   L A T I N   A M E R I C A

           Thursday, June 27, 2002, Vol. 3, Issue 126

                           Headlines


A R G E N T I N A

AES CORP: In Talks With Authorities Over Return Of Concession
DISCO SA: Dutch Firm Swaps Debt for Equity; Ups Stake
TELECOM ARGENTINA: Suspends All Debt Interest Payments
TELECOM ARGENTINA: Acquisition Talks With Techtel Ongoing


B E R M U D A

GLOBAL CROSSING: Admits Destroying Documents
GLOBAL CROSSING: Cohen Milstein Clarifies SSB, Grubman Suit


B R A Z I L

AES CORP: Fitch Comments on AES Tiete Certificates Downgrade
ALCOA ALUMINIO: Fitch Lowers Currency Rating, Outlook
AMBEV: Ratings Lowered Over Currency, Outlook Concerns
ARACRUZ CELULOSE: Fitch Cuts Ratings, Places on Rating Watch Neg
BRASIL TELECOM: Fitch Affirms Ratings But Outlook Negative

COMPANHIA PETROLIFERA: Downgraded to `B+' After Currency Lowered
CSN: Currency Concerns Prompt Ratings Cut, Outlook Negative
CST: Currency Rating Cut, Secured Export Notes Affirmed
ELETROPAULO METROPOLITANA: Fitch Cuts Local, Foreign Currency
MRS LOGISTICA: Fitch Lowers on Currency, Liquidity Concerns

OPP QUIMICA: Local, Foreign Currency Ratings Lowered To `B+'
OPP FINANCE: Fitch Downgrades Ratings; Outlook Negative
SADIA SA: Fitch Takes Rating Actions After Brazil's Downgrade
TELE NORTE LESTE: Fitch Cuts Local, Foreign Currency Ratings
TELEMAR: Local, Foreign Currency Ratings Follow Brazil Lower

TRIKEM SA: Fitch Cuts Ratings, Rating Watch Negative Assigned
SAMARCO: Fitch Affirms Ratings as Stable
BCP: Launching New Service Over Idle Network Capacity
BRAZILIAN BANKS: Dodging Default Risk Tricky At Best - Analysts


C H I L E

AEROCONTINENTE: Announces Chilean Unit Bankruptcy
EDELNOR: Directors Wary Of Debt-Renegotiation
MADECO: Registers $96M 1Q02 Sales; Expects Weaker Results


P A R A G U A Y

BANCO ALEMAN: Owners Forfeit Control to Central Bank
GRUPO VELOX: Sells Garantia To Citibank


     - - - - - - - - - -


=================
A R G E N T I N A
=================

AES CORP: In Talks With Authorities Over Return Of Concession
-------------------------------------------------------------
Negotiations continue between U.S. power company AES Corp. and
Argentina's San Juan province government over returning the
construction and operation concession of the 187MW Caracoles
hydro complex.

According to a report by Business News Americas, AES won the
concession for the complex in 1997, but in February this year, it
asked the San Juan government for permission to return the
concession.

Since the 1997 acquisition, construction has gone ahead
sporadically and is currently suspended. According to an AES
source, the project was always dependent on securing financing
and, as Argentina's financial crisis makes it nearly impossible
to attract investment, AES requested to return the concession.

"The current scenario of economic uncertainty, which has caused a
lack of confidence in the financial markets, aggravated by the
difficult situation of the Argentine electricity market...makes
it impossible to secure financing for Caracoles," AES Caracoles
CEO Fabian de Achaval said in a statement.

The complex, which is sited on the San Juan river in San Juan
province, consists of three projects. First is the 123MW
Caracoles project, which is already 35% completed. Second is the
64MW Punta Negra project, which is scheduled to kick off
construction in 2005. The third is 45MW Ullum plant, which is
already in operation.


DISCO SA: Dutch Firm Swaps Debt for Equity; Ups Stake
-----------------------------------------------------
Royal Ahold NV is increasing its stake in Disco SA to 81% from
56% in a debt/equity swap, reports AFX, citing a company
spokeswoman. Royal Ahold spokeswoman Annemiek Louwers confirmed
that the Dutch company will will pay US$233.9 million for the
increased stake in Disco. According to Louwers, the deal already
has the approval of Disco's shareholders.

Consequently, the stake of Grupo Velox, controlled by the Peirano
family, will fall to 19% from 44%.

CONTACT:  DISCO S.A.
          Larrea 847, Piso 1
          1117 Buenos Aires, Argentina
          Phone: +54-11-4964-8000
          Fax: +54-11-4964-8039
          Home Page: http://www.disco.com.ar
          Contacts:
          Eduardo R. Orteu, Chief Executive Officer
          Jose Sanchez, Chief Financial Officer


TELECOM ARGENTINA: Suspends All Debt Interest Payments
------------------------------------------------------
Due to the difficult economic environment in Argentina, Telecom
Argentina Stet-France Telecom will cease upcoming interest
payments on all debt obligations.

"(The directors) have decided to suspend interest payments on all
its financial debts as a result of the continued devaluation and
volatility of the peso, less net cashflow ... and the uncertainty
over ... negotiations with the Argentine government over changes
to regulated tariffs," the Company said in a statement.

The debt interest payment freeze also applies to Telecom
Argentina's subsidiaries Personal and Publicom, and to interest
payments on EUR250 million worth of negotiable bonds that mature
on July 1.

The Company, which suspended payments on its debt principal in
April, said it intended to start debt restructuring talks with
its main creditors within 30 days.

Telecom Argentina lost ARS2.3 billion ($600 million) in the
quarter ended March 31. It has an estimated US$3.4 billion in
debt.

Earlier this month, Telecom Argentina said its net worth had been
slashed to about US$30 million, or less than 2% of its value
prior to January's devastating devaluation, hammered by weaker
demand as a four-year recession grinds on.

Telecom Argentina is 54.7%-controlled by Nortel Inversora, a
holding company owned in equal parts by France Telecom and
Telecom Italia. Most analysts believe the Telecom Argentina's
primary shareholders are unwilling to inject fresh funds into the
Company.

CONTACT:  TELECOM ARGENTINA STET - FRANCE TELECOM SA (TELECOM)
          Alicia Moreau de Justo 50, 10th Floor
          Capital Federal (1107) Repoblica Argentina
          Phone: +54 11 4968 4000
          Home Page: http://www.telecom.com.ar
          Contacts:
          Alberto J. Ricciardi, Chief Financial Officer
          Elvira Lazzati, Finance Director
          Pedro Insussarry, Investor Relations Manager
          Phone: (5411) 4968-3626/3627
          Fax: (5411) 4313-5842/3109
          Email: inversores@intersrv.telecom.com.


TELECOM ARGENTINA: Acquisition Talks With Techtel Ongoing
---------------------------------------------------------
Hector Masoero, the chief executive officer of Techtel, confirmed
that the Argentine broadband provider and Telmex subsidiary, is
in acquisition talks with Argentina's second largest telco,
Telecom Argentina, reports Business News Americas.

Techtel is controlled by mobile operator America Movil, a Telmex
subsidiary that forms part of the business empire of Mexican
magnate Carlos Slim. According to Masoero, it makes sense for
Telmex, Latin America's largest publicly traded company, to
consider acquiring Telecom.

"The Mexicans have a strong presence in all of the continent,
except for Argentina, Chile and Paraguay," he noted.

An equity analyst for a major Argentine investment bank suggests
that Telmex could acquire debt-burdened Telecom once it
restructures its debt next year. The scene will be right for
Telmex to enter the picture in about a year from now, when debt
restructuring negotiations with Telecom's creditors have
concluded, the analyst said.

"I doubt that Telmex, or any other player, would be willing to
get into Telecom before then," he said, adding, "I believe there
is true interest from Telmex," he said.

The analyst noted that Telecom, despite its debt burden, remains
an operationally viable company.



=============
B E R M U D A
=============

GLOBAL CROSSING: Admits Destroying Documents
--------------------------------------------
Global Crossing Ltd admitted that documents were destroyed before
and after its bankruptcy filing and disclosure of a federal
accounting probe, but the Company asserts that no evidence
related to either case was included in their elimination, the AP
reports.

The Hamilton, Bermuda-based company, which filed for Chapter 11
in January, confirmed the shredding incidents in a court filing
that was accidentally submitted and unsealed late Friday --
before a related settlement with one of its biggest shareholder
groups was finalized.

The settlement with two Ohio state employee pensions calls for
Global Crossing to actively collect and safeguard all relevant
documents held by individual defendants in the assorted legal
cases involving the company.

While the filing marks the first disclosure of shredding at
Global Crossing, there's no sign of the criminal behavior seen in
the Enron scandal, which led to this month's conviction of
accounting firm Arthur Andersen for destroying evidence.

However, the Ohio officials whose allegations prompted the
shredding disclosure complained on Monday that comments over the
weekend by an outside lawyer the company hired to investigate the
charges contradicted assurances it made in negotiating the
settlement.

Those remarks, paraphrased in Monday's edition of The New York
Times, said the attorney "was not entirely certain" that the
destroyed documents are definitely unrelated to any of the
current legal proceedings.

In a statement Friday night, Global Crossing had said, "While we
have found isolated incidences of document disposal in the
ordinary course of business, none of the documents involved
appear to have any relevance to pending litigation or
governmental investigations."

CONTACT:  GLOBAL CROSSING
          Media: (Latin America)
          Kendra Langlie
          Tel. +1-305-808-5912
          Email: kendra.langlie@globalcrossing.com

          Alejandra Fehrmman of ZCM Argentina
          Tel. + 5411-4327-9400, ext. 305
          Email: alef@zcm.com.ar

          Investors: Ken Simril of Global Crossing
          Tel. +1-310-385-3838
          Email: investors@globalcrossing.com


GLOBAL CROSSING: Cohen Milstein Clarifies SSB, Grubman Suit
-----------------------------------------------------------
Cohen, Milstein, Hausfeld & Toll, P.L.L.C. notifies purchasers of
the common stock of Global Crossing, Ltd. between May 24, 1999,
and Oct. 4, 2001 (the "Class Period"), that a securities fraud
lawsuit has been filed on their behalf in the United States
District Court for the Southern District of New York.

Clarifying recent events the firm reports that, although one law
firm recently issued a press release claiming that this case is
related to other pending litigation, there has been no court
determination to support such a claim. Thus, the deadline for
submitting requests for lead plaintiff, remains as described
below.

The suit, which was filed by the law firm of Cohen, Milstein,
Hausfeld & Toll, P.L.L.C., names the following as defendants:
Salomon Smith Barney, Inc., and its well known tele-
communications analyst, Jack Grubman. The suit asserts claims for
violations of Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934. The complaint alleges, among other things, that
defendants violated the Exchange Act by the issuance of analyst
reports which recommended the purchase of Global Crossing common
stock, but which failed to disclose that defendants were using
Grubman's reputation and analyst reports to obtain investment
banking business for Salomon.

Members of the Class described above who are interested in being
a lead plaintiff for this action against Salomon Smith Barney and
Grubman, should note that the deadline for making a request is
July 23, 2002. Questions pertaining to serving as a lead
plaintiff or this case should be directed to:

CONTACT:

Steven J. Toll or Robert Smits
COHEN, MILSTEIN, HAUSFELD & TOLL, P.L.L.C.
1100 New York Avenue N.W.
Suite 500 - West Tower
Washington, D.C.  20005
Telephone: 888-240-0775 or (202) 408-4600
E-mail address: stoll@cmht.com or rsmits@cmht.com



===========
B R A Z I L
===========

AES CORP: Fitch Comments on AES Tiete Certificates Downgrade
------------------------------------------------------------
Fitch Ratings earlier announced the rating downgrade of the AES
Tiete Certificates Grantor Trust to 'BB+' in conjunction with the
ratings downgrade of many Brazilian corporates, including that of
Eletropaulo Metropolitana Eletricidade de Sao Paulo S.A.'s
(Eletropaulo). The Brazilian corporates were downgraded following
the lowering of the country's sovereign rating to 'B+'.
Eletropaulo was downgraded to 'BB+' with a Negative Rating
Outlook. The downgrade of the Certificates was in part related to
the downgrade of Eletropaulo as well as the lack of an
electricity trading market, in combination with the sovereign
rating action. As the sovereign credit environment deteriorates,
risks of government meddling into the sector holds the potential
to increase.

Eletropaulo's credit rating has been under pressure as a result
of impending refinancing concerns, which have been exacerbated by
the continuing poor market conditions. The downgrade of the
sovereign implies a higher credit risk for corporates operating
in Brazil and reliant on local regulations such as Eletropaulo.
Similarly, the rating of the Certificates is based on the credit
quality of Tiete, which is derived from the credit quality of its
offtakers, the largest and most important of which is
Eletropaulo. As a result, the downgrade of Eletropaulo directly
affects the rating of the Certificates.

Additionally, the rating of the Certificates is based on the
dividend flow from Tiete to its holding companies, and therefore
considers the structural subordination of those dividends to the
liabilities at the operating company level, which further limits
the degree of separation of rating notches between the
Certificates and Eletropaulo.

The rating of the Certificates considered that Tiete's
contractual power sale arrangement with Eletropaulo provided a
floor amount of secure, investment grade quality revenues,
offsetting to some extent that the other distributions companies
to which Tiete sells are less credit worthy. Under a new,
separate contract Eletropaulo will increase its purchases to 100%
of Tiete's Assured Energy production by 2006 as the Initial
Contracts are phased out beginning in 2003. Fitch had also
previously expected that Tiete would benefit from secondary
revenue potential, in addition to contractual sales, from energy
sales in the MAE (spot market). And that in the event Tiete were
to lose the Eletropaulo contract and operate on a merchant basis,
Tiete would maintain sufficient earnings and cash flow to pay
dividends and service holding company debt (i.e., the
Certificates). This was based on the assumption that Tiete could
sell more energy at projected higher market prices, and offset
the increased market and business risk s of selling to the spot
market.

Unfortunately, the MAE has not been functioning since the
beginning of the electricity rationing in June 2001, which has
materially financially pressured those generation plants that
were developed to operate as merchant facilities. As a result,
Tiete can not currently rely on its ability to sell into the spot
market in the event Eletropaulo is unable or unwilling to make
payment. The downgrade of Eletropaulo implies that the risks
associated with payment to suppliers has increased; however,
under the terms of the initial contracts the generation companies
have the capability to recover payment directly from a
distributor's receivables bank account. This has not been tested.

The rating will be monitored and revised as necessary to reflect
the Eletropaulo rating, evolution of the MAE and other sovereign
credit developments. Additional developments one or more of these
issues will be considered in any future rating change of the
Certificates.

The certificates continue to benefit from a 6-month debt service
reserve account. Fitch anticipates that the company's cash
balance, future contract-based revenues, the end of rationing in
March 2002 should allow the company to meet future debt service
through dividend payments.

Tiete is a low-cost electric generating company that benefits
from a portfolio of hydroelectric assets and a base of contracted
revenues. Tiete is centrally dispatched by the independent system
operator to optimize system operation. Strong projected revenue
growth, stable operating costs, manageable hydrology and
regulatory risks, limited refinancing needs and experienced
ownership support Tiete's credit quality. For a copy of the AES
Tiete Certificates downgrade announcement please see press
release from June 25, 2002 'Fitch Takes Rating Action on
Brazilian Corporates & Structured Transactions'.

CONTACT: Fitch Ratings
         Jason Todd, 312/368-3217 (Chicago)
         Daniel Kastholm CFA, 312/368-2070 (Chicago)
         Jayme Bartling, 5511-287-3177 (Sao Paulo)
         James Jockle, 212/908-0547 (Media, New York)


ALCOA ALUMINIO: Fitch Lowers Currency Rating, Outlook
-----------------------------------------------------
Fitch took rating actions on Alcoa Aluminio S.A. following last
week's change in Brazil's foreign currency rating of 'BB-' Rating
Outlook Negative to `B+' Rating Outlook Negative. The rating
actions reflect the increased country risk and a weaker outlook
for economic growth for the company that depends primarily upon
the local Brazilian market.

Under the current conditions of persistent high domestic interest
rates and the decreasing availability of external credit lines,
the company may experience greater difficulty in refinancing
short- and medium-term debt obligations. Fitch will continue to
closely monitor the events in Brazil as well as other factors
that may affect the operating environment and credit risk of the
company.

Ratings Affected:

Alcoa Aluminio S.A.

--Foreign Currency downgraded to 'B+' from 'BB-', Outlook
Negative;
--Local Currency 'BBB-' placed on Rating Watch Negative, Outlook
Stable;
--Secured Export Notes 'BBB-' affirmed


AMBEV: Ratings Lowered Over Currency, Outlook Concerns
------------------------------------------------------
Fitch took rating actions on Companhia de Bebidas das Americas
S.A. (Ambev) following last week's change in Brazil's foreign
currency rating of 'BB-' Rating Outlook Negative to `B+' Rating
Outlook Negative. The rating actions reflect the increased
country risk and a weaker outlook for economic growth for the
company that depends primarily upon the local Brazilian market.
Under the current conditions of persistent high domestic interest
rates and the decreasing availability of external credit lines,
the company may experience greater difficulty in refinancing
short- and medium-term debt obligations.

Ratings Affected:

Companhia de Bebidas das Americas S.A.(Ambev)
--Foreign Currency downgraded to 'B+' from 'BB-', Outlook
Negative;
--Local Currency 'BBB-' placed on Rating Watch Negative, Outlook
Stable;
--PRI Notes 'BBB-' affirmed


ARACRUZ CELULOSE: Fitch Cuts Ratings, Places on Rating Watch Neg
----------------------------------------------------------------
Increased country risk and a weaker outlook for economic growth
for companies that depend primarily upon the local Brazilian
market prompted Fitch to take rating actions on Aracruz Celulose
S.A. The rating agency made the changes following last week's
change in Brazil's foreign currency rating of 'BB-' Rating
Outlook Negative to `B+' Rating Outlook Negative.

Under the current conditions of persistent high domestic interest
rates and the decreasing availability of external credit lines,
the company may experience greater difficulty in refinancing
short- and medium-term debt obligations. Fitch continues to
closely monitor the events in Brazil as well as other factors
that may affect the operating environment and credit risk of the
company.

Ratings Affected:

Aracruz Celulose S.A.

--Foreign Currency Downgraded to 'B+' from 'BB-', Outlook
Negative;
--Senior Secured LC 'BBB' placed on Rating Watch Negative,
Outlook Stable;
--Senior Unsecured LC 'BBB-' placed on Rating Watch Negative,
Outlook Stable;


BRASIL TELECOM: Fitch Affirms Ratings But Outlook Negative
----------------------------------------------------------
Fitch affirmed Brasil Telecom's ratings but changed the ratings
outlook to negative following last week's change in Brazil's
foreign currency rating of 'BB-' Rating Outlook Negative to `B+'
Rating Outlook Negative. The rating actions reflect the increased
country risk and a weaker outlook for economic growth for the
company that depends primarily upon the local Brazilian market.
Under the current conditions of persistent high domestic interest
rates and the decreasing availability of external credit lines,
the company may experience greater difficulty in refinancing
short- and medium-term debt obligations. Fitch will continue to
closely monitor the events in Brazil as well as other factors
that may affect the operating environment and credit risk of the
company.

Ratings Affected:

Brasil Telecom S.A.
--Local Currency 'BBB-' affirmed, Outlook Negative;

Brasil Telecom Participacoes S.A
--Local Currency 'BBB-' affirmed, Outlook Negative;


COMPANHIA PETROLIFERA: Downgraded to `B+' After Currency Lowered
----------------------------------------------------------------
Fitch lowered the foreign currency rating of Companhia
Petrolifera Marlim to 'B+' from 'BB-' and changed the Outlook to
Negative. The cut follows last week's change in Brazil's foreign
currency rating of 'BB-' Rating Outlook Negative to `B+' Rating
Outlook Negative. The rating action reflects the increased
country risk and a weaker outlook for economic growth for the
company that depends primarily upon the local Brazilian market.
Under the current conditions of persistent high domestic interest
rates and the decreasing availability of external credit lines,
the company may experience greater difficulty in refinancing
short- and medium-term debt obligations.


CSN: Currency Concerns Prompt Ratings Cut, Outlook Negative
-----------------------------------------------------------
Fitch Ratings lowered the ratings of Companhia Siderurgica
Nacional S.A. (CSN) and placed some of its ratings on Rating
Watch Negative. The rating actions follow last week's change in
Brazil's foreign currency rating of 'BB-' Rating Outlook Negative
to `B+' Rating Outlook Negative.

The rating actions reflect the increased country risk and a
weaker outlook for economic growth for the company that depends
primarily upon the local Brazilian market. Under the current
conditions of persistent high domestic interest rates and the
decreasing availability of external credit lines, the company may
experience greater difficulty in refinancing short- and medium-
term debt obligations.

Ratings affected:

Companhia Siderurgica Nacional S.A. (CSN)
--Foreign Currency lowered to 'B+' from 'BB-', Outlook Negative;
--CSN Island Corp. lowered to 'B+' from 'BB-', Outlook Negative;
--Local Currency 'BBB-' placed on Rating Watch Negative


CST: Currency Rating Cut, Secured Export Notes Affirmed
-------------------------------------------------------
Fitch Ratings reduced Companhia Siderurgica de Turbarao S.A.'s
(CST) foreign currency rating to 'B+' from 'BB-', and changed the
outlook to negative. The ratings agency also affirmed the `BBB'
rating of CST's secured export notes, maintaining the rating's
stable outlook. The rating actions follow last week's change in
Brazil's foreign currency rating of 'BB-' Rating Outlook Negative
to `B+' Rating Outlook Negative.

The rating actions reflect the increased country risk and a
weaker outlook for economic growth for the company that depends
primarily upon the local Brazilian market. Under the current
conditions of persistent high domestic interest rates and the
decreasing availability of external credit lines, the company may
experience greater difficulty in refinancing short- and medium-
term debt obligations.


ELETROPAULO METROPOLITANA: Fitch Cuts Local, Foreign Currency
-------------------------------------------------------------
Fitch downgraded Eletropaulo Metropolitana Eletricidade de Sao
Paulo S.A.'s local currency and foreign currency ratings to 'BB+'
from 'BBB- and changed the outlook to negative. The ratings
agency also affirmed the `BBB' rating of CST's secured export
notes, maintaining the rating's stable outlook. The actions
follow last week's change in Brazil's foreign currency rating of
'BB-' Rating Outlook Negative to `B+' Rating Outlook Negative.

Increased country risk and a weaker outlook for economic growth
for companies that depend primarily on the local Brazilian market
were the basis for the downgrades. Under the current conditions
of persistent high domestic interest rates and the decreasing
availability of external credit lines, the company may experience
greater difficulty in refinancing short- and medium-term debt
obligations. Fitch will continue to closely monitor the events in
Brazil as well as other factors that may affect the operating
environment and credit risk of the company.


MRS LOGISTICA: Fitch Lowers on Currency, Liquidity Concerns
-----------------------------------------------------------
Fitch took rating actions on MRS Logistica S.A. (MRS) following
last week's change in Brazil's foreign currency rating of 'BB-'
Rating Outlook Negative to `B+' Rating Outlook Negative. The
rating actions follow last week's change in Brazil's foreign
currency rating of 'BB-' Rating Outlook Negative to `B+' Rating
Outlook Negative. The rating actions reflect the increased
country risk and a weaker outlook for economic growth for the
company that depends primarily upon the local Brazilian market.

Under the current conditions of persistent high domestic interest
rates and the decreasing availability of external credit lines,
the company may experience greater difficulty in refinancing
short- and medium-term debt obligations. Fitch will continue to
closely monitor the events in Brazil as well as other factors
that may affect the operating environment and credit risk of the
company.

Ratings affected:

MRS Logistica S.A. (MRS)
--Foreign Currency downgraded to 'B+' from 'BB-', Outlook
Negative;
--Local Currency 'BB' affirmed, Outlook Negative


OPP QUIMICA: Local, Foreign Currency Ratings Lowered To `B+'
------------------------------------------------------------
OPP Quimica S.A. had its local and foreign currency rating
downgraded by Fitch Ratings to 'B+'/'BB-', and the outlook
changed to negative. The decision follows last week's change in
Brazil's foreign currency rating of 'BB-' Rating Outlook Negative
to `B+' Rating Outlook Negative.

The rating action reflects the increased country risk and a
weaker outlook for economic growth for the company that depends
primarily upon the local Brazilian market. Under the current
conditions of persistent high domestic interest rates and the
decreasing availability of external credit lines, the company may
experience greater difficulty in refinancing short- and medium-
term debt obligations.


OPP FINANCE: Fitch Downgrades Ratings; Outlook Negative
--------------------------------------------------------------
OPP Finance Ltd. had its foreign currency rating, as well as its
global notes downgraded by Fitch Ratings to 'B+'/'BB-', and the
outlook changed to negative. The rating action follows last
week's change in Brazil's foreign currency rating of 'BB-' Rating
Outlook Negative to `B+' Rating Outlook Negative. The rating
action reflects the increased country risk and a weaker outlook
for economic growth for the company that depends primarily upon
the local Brazilian market. Under the current conditions of
persistent high domestic interest rates and the decreasing
availability of external credit lines, the company may experience
greater difficulty in refinancing short- and medium-term debt
obligations. Fitch will continue to closely monitor the events in
Brazil as well as other factors that may affect the operating
environment and credit risk of the company.


RIPASA SA: Fitch Downgrades, Affirms Ratings
--------------------------------------------
Fitch Ratings downgraded the foreign currency rating of Ripasa
S.A. Celulose e Papel to 'B+'/'BB-' and changed the outlook to
negative. The ratings agency also affirmed the `BB' rating of
Ripasa's local currency and maintained the stable outlook. The
rating actions follow last week's change in Brazil's foreign
currency rating of 'BB-' Rating Outlook Negative to `B+' Rating
Outlook Negative.

The rating actions reflect the increased country risk and a
weaker outlook for economic growth for the company that depends
primarily upon the local Brazilian market. Under the current
conditions of persistent high domestic interest rates and the
decreasing availability of external credit lines, the company may
experience greater difficulty in refinancing short- and medium-
term debt obligations.

SADIA SA: Fitch Takes Rating Actions After Brazil's Downgrade
-------------------------------------------------------------
Fitch Ratings took rating actions on Sadia S.A. following last
week's change in Brazil's foreign currency rating of 'BB-' Rating
Outlook Negative to ``B+' Rating Outlook Negative. The rating
actions reflect the increased country risk and a weaker outlook
for economic growth for the company that depends primarily upon
the local Brazilian market. Under the current conditions of
persistent high domestic interest rates and the decreasing
availability of external credit lines, the company may experience
greater difficulty in refinancing short- and medium-term debt
obligations. Fitch will continue to closely monitor the events in
Brazil as well as other factors that may affect the operating
environment and credit risk of the company.

Ratings affected:

Sadia S.A.
--Foreign Currency lowered to 'B+' from 'BB-', Outlook Negative;
--Local Currency 'BB+' affirmed, Outlook Negative;
--IFC B Loan Part. 'BB+' affirmed, Outlook Negative;

  Structured Ratings Affirmed:

  Sadia IFC B Loan Certificates (1996)
  --IFC B Notes 'BB+';


TELE NORTE LESTE: Fitch Cuts Local, Foreign Currency Ratings
------------------------------------------------------------
Fitch reduced Tele Norte Leste Participacoes S.A.'s local
currency rating to 'BB+' from 'BBB-' and downgraded the Company's
foreign currency rating to 'B+' from 'BB-.' Fitch assigned a
negative outlook to the ratings. The rating actions follow last
week's change in Brazil's foreign currency rating of 'BB-' Rating
Outlook Negative to ``B+' Rating Outlook Negative. The rating
actions reflect the increased country risk and a weaker outlook
for economic growth for the company that depends primarily upon
the local Brazilian market. Under the current conditions of
persistent high domestic interest rates and the decreasing
availability of external credit lines, the company may experience
greater difficulty in refinancing short- and medium-term debt
obligations. Fitch will continue to closely monitor the events in
Brazil as well as other factors that may affect the operating
environment and credit risk of the company.


TELEMAR: Local, Foreign Currency Ratings Follow Brazil Lower
------------------------------------------------------------
Fitch downgraded Telemar Norte Leste S.A.'s local currency rating
to 'BBB-' from 'BBB' and reduced the Company's foreign currency
rating to 'B+' from 'BB-.' Fitch assigned a negative outlook to
the ratings. The rating actions follow last week's change in
Brazil's foreign currency rating of 'BB-' Rating Outlook Negative
to ``B+' Rating Outlook Negative. The rating actions reflect the
increased country risk and a weaker outlook for economic growth
for the company that depends primarily upon the local Brazilian
market. Under the current conditions of persistent high domestic
interest rates and the decreasing availability of external credit
lines, the company may experience greater difficulty in
refinancing short- and medium-term debt obligations. Fitch will
continue to closely monitor the events in Brazil as well as other
factors that may affect the operating environment and credit risk
of the company.


TRIKEM SA: Fitch Cuts Ratings, Rating Watch Negative Assigned
-------------------------------------------------------------
Fitch downgraded Trikem S.A.'s ratings and placed some of the
Company's ratings on rating watch negative. The rating actions
follow last week's change in Brazil's foreign currency rating of
'BB-' Rating Outlook Negative to `B+' Rating Outlook Negative.
The rating actions reflect the increased country risk and a
weaker outlook for economic growth for the company that depends
primarily upon the local Brazilian market. Under the current
conditions of persistent high domestic interest rates and the
decreasing availability of external credit lines, the company may
experience greater difficulty in refinancing short- and medium-
term debt obligations.

Ratings affected:

Trikem S.A.
--Local Currency downgraded to 'B+' from 'BB-', Outlook Negative;
--Foreign Currency downgraded to 'B+' from 'BB-', Outlook
Negative;

Trikem Export Trust
--Structured Notes 'BBB' placed on Rating Watch Negative;
--Investor Certificates 'BBB' Placed on Rating Watch Negative


SAMARCO: Fitch Affirms Ratings as Stable
----------------------------------------
Fitch Ratings affirmed the `BBB-` local currency rating of
Samarco Mineracao S.A. (Samarco), and maintained a stable outlook
on the ratings. The ratings agency also affirmed the `BBB-`
secured export notes rating of the Company. The rating actions
follow last week's change in Brazil's foreign currency rating of
'BB-' Rating Outlook Negative to ``B+' Rating Outlook Negative.
The rating actions reflect the increased country risk and a
weaker outlook for economic growth for the company that depends
primarily upon the local Brazilian market.

Under the current conditions of persistent high domestic interest
rates and the decreasing availability of external credit lines,
the company may experience greater difficulty in refinancing
short- and medium-term debt obligations. Fitch will continue to
closely monitor the events in Brazil as well as other factors
that may affect the operating environment and credit risk of the
company.


BCP: Launching New Service Over Idle Network Capacity
-----------------------------------------------------
Brazilian mobile operator BCP Telecomunicacoes S.A., the
embattled unit of U.S. phone company BellSouth Corp., plans to
use idle network capacity to offer corporate wireless services,
Brazilian daily Agencia Estado reports, citing BCP operations VP
Carlos Boschetti.

BCP will offer data services that it will bill on a per
transaction basis. The Company will consider launching the
services in partnership with a third party in the case of niche
markets or on its own when dealing with more than 100,000 users.

"It depends on the demand," BCP director Ricardo Santoro said.

Bellsouth has been trying to restructure its cash-strapped unit
since March, after it walked away from a US$375-million payment
the Brazilian wireless carrier owed on a US$1.6 billion bank
loan. However, an agreement with creditor banks is about to be
reached. The agreement reportedly will guarantee that the Company
will be able to make the day-to-day operating payments it needs
to stay afloat, while still paying off the debt owed to the group
of banks. The object of the agreement is to avoid a time-
consuming and probably damaging legal dispute over the debts, in
which the banks would try to gain access to BCP's cash flow.

CONTACT:  BCP TELECOMMUNICACOES, S.A.
          Rua Florida, 1970
          Sao Paulo, SP, Brasil
          CEP 04565-001
          Tel. 55-11-5509-6555
          Fax 55-11-5509-6257
          Home Page: http://www.bcp.com.br

          BELLSOUTH CORPORATION
          1155 Peachtree St. NE
          Atlanta, GA 30309-3610
          Phone: 404-249-2000
          Fax: 404-249-5599
          Home Page: http://www.bellsouth.com
          Contacts:
          Investor Relations
          Phone (US): 800.241.3419
          Fax: 404.249.2060
          E-mail: investor@bellsouth.com

          BANCO SAFRA
          Av. Paulista, 2100 - Sao Paulo
          Brazil - 01310-930
          Phone: (11) 3175-7575
          Home Page: http://www.safra.com.br/ingles/index.asp
          Contact: Carlos Alberto Vieira, President

CREDITORS: FLEETBOSTON FINANCIAL CORPORATION
           100 Federal St.
           Boston, MA 02110
           Phone: 617-434-2200
           Fax: 617-434-6943
           Home Page: http://www.fleetboston.com
           Contact:
           Investor Relations
           Phone: 617-434-2200

           Terrence Murray, Chairman
           Charles K. (Chad) Gifford, President/CEO/Director
           Eugene M. McQuade, Vice Chairman and CFO

           CITIBANK
           Avenida Paulista, 1111
           13th floor - room 5
           Sao Paulo 01311- 920
           Brazil
           Home Page: http://www.citibank.com.br
           Contact:
           Fernando Tafner
           Phone: 55-11-5576-2004
           E-mail: fernando.tafner@citicorp.com

           ABN AMRO HOLDING N.V.
           Foppingadreef 22
           1102 BS Amsterdam, The Netherlands
           Phone: +31-20-628-9393
           Fax: +31-20-629-9111
           Home Page: http://www.abnamro.com
           Contact:
           Investor Relations(HQ1191)
           Gustav Mahlerlaan 10
           PO Box 283
           1000 EA Amsterdam
           The Netherlands
           Tel. +31 (0) 20 628 78 35
           Phone:  +31 (0) 20 628 78 37
           E-mail: investorrelations@nl.abnamro.com


BRAZILIAN BANKS: Dodging Default Risk Tricky At Best - Analysts
---------------------------------------------------------------
Banking analysts see only one way out for Brazilian banks to flee
from a risk of default on government bonds in today's volatile
market. According to experts covering the sector, the only
alternative to reduce risk exposure is to slow loan growth to
almost zero.

Brazilian and international investors are jittery over
speculation that left-wing presidential candidate Luis Inacio
Lula da Silva could win the October election, causing stocks to
suffer and sending the country's currency to its all-time lows
against the dollar. Lula has spoken in favor of increasing
federal spending and renegotiating public sector debt.

"There is a risk of another Argentina if Lula gets in," said one
Madrid trader. "He has no market credibility and people don't
think he could manage the situation - whereas the current
government probably could."

Even if banks decided to purchase deposit certificates (CDs) as
an alternative to investing in government bonds, the bank issuing
the CDs would have to back them with government securities,
thereby passing along the risk, Standard & Poor's analyst Daniel
Araujo said. "There is no way out," he added.

The natural tendency for banks in the midst of a volatile market
and an election year is to avoid increasing their asset
portfolios, Araujo said. But if they do invest, "government
securities are by far the best investment alternative," he said.



=========
C H I L E
=========

AEROCONTINENTE: Announces Chilean Unit Bankruptcy
-------------------------------------------------
The Chilean unit of AeroContinente SA, Peru's biggest airline,
filed for bankruptcy after its local flights were grounded twice
because of a money-laundering investigation and failed
inspection.

Lupe Zevallos, the airline's president, flew from Peru to file
for bankruptcy Monday, due to "the concrete impossibility to
continue operations, since July 2001 unproven allegations have
caused a chain of problems," according to an airline statement.

"These problems have nothing to do with the proper operation of
the Company but have so compromised its technical efficiency that
the Chilean branch of AeroContinente must close its doors and
finalize its activities in this important market," said the
directors of AeroContinente in the statement.

Sources close to the Company's directors in Chile said, "this
decision is lamentable. It was no more than the consequence of a
series of unjust accusations which surrounded the airline and
caused its financial weakening."

AeroContinente still flies from Lima to Santiago and to Buenos
Aires with stopovers in Chile. The airline had gained 16% of
Chile's domestic market before an order to ground planes last
July took its market share below 7%. AeroContinente declined to
disclose its Chilean revenue. The airline employs about 300
people in Chile and had seven weekly flights between Santiago and
Arica, near the Peruvian border, and Punta Arenas, in southern
Chile.

CONTACT:  AEROCONTINENTE AIRLINES
          Jr. Moyobamba 101
          Tarapoto, Peru
          Phone: (094) 524332
          Fax: (094) 523704
          Home Page: http://www.aerocontinente.com/
          Contact: Sr. Zad­ Desm,, Vice President



EDELNOR: Directors Wary Of Debt-Renegotiation
---------------------------------------------
Neither Standard and Poor's (S&P) nor Fitch Ratings changed their
ratings in Empresa Electrica del Norte Grande S.A. (Edelnor) even
after the Chilean thermoelectric generator paid on June 17 one of
the US$4.7 million quotas of its US$340-million debt in bonds.

S&P maintained its 'CC-' Edelnor rating, although it recognized
the Company has made efforts to honor its commitments, as a
consequence of the expected improved cash flow added to a cost
reduction program.

Fitch, on the other hand, still rates Edelnor 'C', which implies
the Company is faced by an imminent default on payments.

However, Edelnor's directors seem to be unperturbed by the
Company's credit ratings. What concerns them most at the moment
is the renegotiation of the Company's debt in accordance with its
operations, company owner Fernando del Sol said.

Del Sol owns FS Inversiones, which has 82.3% of Edelnor.
Renegotiating the debt would allow FS Inversiones to go ahead
with the plan to sell control of the Company.

Analysts predict that the future prospects of Edelnor would
depend on restructuring the debt with bondholders, a process that
is underway and should be completed by September. This involves
renegotiating two issues: US$90 million to 2005, and US$250
million to 2006.

This restructuring of debt is a condition for Tractebel Andino, a
subsidiary of Belgium's Tractebel, to exercise its purchase
option for FS Inversiones' Edelnor stake.

CONTACT:  Empresa Electrica Del Norte Grande SA (EDELNOR)
          Avenida Grecia 750
          Antofagsta, Chile
          Phone: +56 55 248500
                 +56 55 248094
          Contact: Fernando del Sol, Chairman


MADECO: Registers $96M 1Q02 Sales; Expects Weaker Results
---------------------------------------------------------
Chilean wires and cables company Madeco posted sales of US$96
million for the Jan-Mar 2002 period and expects to end this year
with US$400 million in turnover, less than the US$500 million it
posted in the previous year.

Sales dropped because the Company almost had its business
paralyzed in Argentina due to the tight economic environment in
that country.

Madeco, which is majority-owned by Quinenco, the non-mining
holding of Chile's Luksic group, posted a first quarter loss of
US$15.3 million.

The Company will call on a shareholders' meeting on July 10 to
seek approval of a plan to carry out a capital increase for the
equivalent of no less than US$70 million by Sept. 30.

Proceeds of the issue will be used to pay roughly half of
Madeco's short and medium term bank debts. Madeco's total debt
stands at some US$325 million. The Company hired investment bank
Salomon Smith Barney (SSB) late last year to sort out its
financial difficulties, which it blames largely on the economic
crisis in Argentina, where it has invested heavily. It has
already closed some operations in Argentina.

Madeco, whose subsidiaries produce cable and wire, as well as
packaging, has also suffered a drop-off in telecommunications
investments in Brazil.

CONTACT:  MADECO SA
          Marisol Fernandez
          Investor Relations
          Voice: (56 2) 520-1380
          Fax: (56 2) 520-1545
          E-mail : mfl@madeco.cl
          Web Site: www.madeco.cl

ADVISER:  SALOMON SMITH BARNEY
          In New York:
          767 Fifth Avenue
          New York City
          New York
          Phone:  212-230-3500
          Home Page: http://www.salomonsmithbarney.com/



===============
P A R A G U A Y
===============

BANCO ALEMAN: Owners Forfeit Control to Central Bank
----------------------------------------------------
Paraguay's Central Bank took into receivership Banco Aleman, one
of the country's major private banks, to prevent a run by
depositors after its parent company, Grupo Velox, was declared
insolvent.

"The bank was caught in a cash-flow crisis so serious that it
made it impossible to continue to do business," Central Bank
chairman Raul Vera said, but pledged that the bank's 30,000
depositors and creditors would eventually get access to all their
money.

Vera announced that beginning July 1, depositors can recover sums
of up to PYG20 million (US$3,600) from the bank, while larger
claims will be processed from July 11th forward.

The bank's board of directors voted Sunday to liquidate after the
Securities Regulatory Agency authorized the Grupo Velox, which
has owned the Banco Aleman since 1989, to wind up its affairs and
sell off its remaining assets to pay creditors.

CONTACT:  BANCO ALEMAN PARAGUAYO S.A.
          Estrella Esquina 14 de Mayo
          Asuncion, PARAGUAY
          Tel: (59521) 418 3000
          Fax: (59521) 447 645
          Home Page: http://www.bancoaleman.com.py/
          Contact:
          Juan Peirano, Presidente
          Ricardo Castillo Fracchia, Vice President


GRUPO VELOX: Sells Garantia To Citibank
---------------------------------------
U.S.-based Citibank announced it acquired Grupo Velox's
Paraguayan subsidiary, Garantia financing and investment company.
Garantia's investors had begun to exit on rumors that its parent
is struggling with cash-flow problems stemming from Argentina's
banking restrictions.

"Citibank assumes full control of the Company, which is solvent
in itself but facing a volatile market situation not only in
Paraguay but in the region," said Luis Rodriguez, Citibank's
Latin America vice president.

The bank is making up to US$10 million available to Garantia to
enable it to tackle its immediate liquidity problems and survive
a possible run on deposits, Rodriguez said.

Grupo Velox is a Uruguayan-Argentine group currently in the midst
of a restructuring process.

CONTACT:  GRUPO VELOX
          Burgos 80, piso 5, Of. 501
          Las Condes
          Santiago, chile
          Phone: 208-8380
          Fax: 208-8332
          Home Page: http://www.finambras.com.br/grupo_velox.html





               ***********


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
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