TCRLA_Public/020805.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

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

           Monday, August 5, 2002, Vol. 3, Issue 153



IMAGEN SATELITAL: Claxson Extends Sr Note Exchange Offer
PEREZ COMPANC: Pecom Energia Completes Exchange Offer
TGN: Fitch Comments On Proposal to Creditors


GLOBAL CROSSING: 1H02 Results Show Operating Plan on Track
TYCO INTERNATIONAL: New CEO Writes Open Letter to Employees


AVANZIT: Closes Brazilian Operations
ELETROPAULO METROPOLITANA: Fitch Downgrades Ratings To 'B-'
KLABIN: Mildly Better 2Q02 Results Hampered by Currency Drop
MICROTEC: Faces Involuntary Bankruptcy Process


ENERSIS: 1H02 Consolidated Results Better Despite Slower Sales
TELEFONICA CTC: S&P Rates US$150M Bank Loan 'BBB'
WORLDCOM: CTC Denies Lawsuit Reports


ALESTRA: S&P Cuts Ratings to 'CC', Off Watch; Outlook Negative
ALESTRA: Analysts Expect Debt Restructuring Soon
GRUPO IUSACELL: Discusses Operations, Debt Load, Expectations
MEXICANA DE AVIACION: Governmet Extends $14.9M, 4-Yr. Loan
SAVIA: To Convert Seminis Preferred; Ownership Swells to 78%


GALICIA URUGUAY: Argentine Parent In Search of Foreign Investors


SIVENSA: Currency Shift Leads to $6.3M Profit Despite Slow Sales
SIVENSA: Reaches Debt Restructuring Accord With Banks
VANNESSA VENTURES: Publicly Rebuts CVG Accusations

     - - - - - - - - - -

IMAGEN SATELITAL: Claxson Extends Sr Note Exchange Offer
Claxson Interactive Group Inc. ("Claxson") announced an extension
of its pending exchange offer and consent solicitation (the
"Exchange Offer") for all U.S.$80 million outstanding principal
amount of the 11% Senior Notes due 2005 (144A Global CUSIP No.
44545HHA0 and Reg S Global ISIN No. USP52800AA04) (the "Old
Notes") of its subsidiary, Imagen Satelital S.A. ("Imagen").

The expiration date for the Exchange Offer has been extended from
5:00 p.m., New York City time, on July 31, 2002, to 5:00 p.m.,
New York City time, on August 14, 2002, unless further extended.
As of 5:00 p.m. July 31, 2002, Claxson had received tenders from
holders for approximately U.S. $7.7 million principal amount of
the outstanding Old Notes.

Claxson continues to solicit proxies from holders of the Old
Notes to vote in favor of the proposed amendments to the Old Note
indenture. As a result, Claxson has extended the consent payment
expiration date to 5:00 p.m. New York City time on August 14,
2002, unless further extended. Holders who have already tendered
or who tender their Old Notes on or prior to 5 p.m. August 14,
2002, and do not withdraw their tender, will be entitled to
receive the consent payment.

Claxson is currently in active discussions with the holders of
Old Notes who have not yet tendered with the goal of obtaining
full participation. The Exchange Offer continues to be
conditioned upon the receipt of tenders of at least 95% of the
outstanding principal amount of the Old Notes as well as the
approval by the Argentine Comision de Valores of the public
offering of the new notes in Argentina and other customary

Except for the extension of the expiration date and consent
payment expiration date, all other terms and provisions of the
Exchange Offer remain the same.

Informational documents relating to the Exchange Offer will only
be distributed to eligible investors who complete and return an
Eligibility Letter that has already been sent to investors. The
Eligibility Letter is available by contacting Tom Long at D.F.
King & Co., the Information Agent for the Exchange Offer, at
(212) 493-6920, or Eduardo Rodriguez Sapey at Banco Rio de la
Plata, the Argentina Trustee and Rep. Exchange Agent, at 011-
5411-4341 1013 in Buenos Aires, Argentina.

The new notes will not be registered under the U.S. Securities
Act of 1933, as amended, and will only be offered in the United
States to qualified institutional buyers and accredited investors
in private transactions and to persons outside the United States
in off-shore transactions. The new notes will be listed on the
Buenos Aires Stock Exchange.

This press release does not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of,
the New Notes in any state of the United States in which such
offer, solicitation or sale would be unlawful.

Claxson (Nasdaq: XSON) is a multimedia company providing branded
entertainment content targeted to Spanish and Portuguese speakers
around the world. Claxson has a portfolio of popular
entertainment brands that are distributed over multiple platforms
through its assets in pay television, broadcast television, radio
and the Internet. Claxson was formed in a merger transaction,
which combined El Sitio, Inc. and other media assets contributed
by funds affiliated with Hicks, Muse, Tate & Furst Inc. and
members of the Cisneros Group of Companies. Headquartered in
Buenos Aires, Argentina, and Miami Beach, Florida, Claxson has a
presence in all key Ibero-American countries, including without
limitation, Argentina, Mexico, Chile, Brazil, Spain, Portugal and
the United States.

CONTACT:  Claxson Interactive Group Inc.
          Ezequiel Paz, AVP, Corporate Finance
          Phone:  +1-305-894-3574, both of

PEREZ COMPANC: Pecom Energia Completes Exchange Offer
Pecom EnergĦa S.A. (Buenos Aires: PECO) announced Thursday that
it had successfully completed exchange the exchange offer on its
7 7/8% Notes due 2005, 9% Notes due 2007, 9% Notes due 2009 and 8
1/8% Notes due 2010 (together, the "New Notes") for any and all
outstanding 7 7/8% Notes due 2002, 9% Notes due 2004, 9% Notes
due 2006 and 8 1/8% Notes due 2007 (together, the "Existing

The Company said that it had accepted tenders of Existing Notes
from noteholders equal to approximately 91.8% of the total
aggregate principal amount of the Existing Notes outstanding and
had issued US$845,218,000 aggregate principal amount of New Notes
in connection with the exchange offer.

The successful refinancing of this indebtedness has improved the
Company's debt maturity profile by extending the maturity of each
series of notes by three years. The exchange represents a very
significant step to realign principal payments with cash flows
from operations and to establish a manageable debt maturity

The company believes that the success of the exchange offer
provides evidence of the confidence of the local and
international capital markets community in the company's business

Authorization for the public offering of the New Notes was
granted by the Argentine Comisi˘n Nacional de Valores (the "CNV")
pursuant to Certificate No. 202, dated May 4, 1998, and
Certificate No. 290, dated July 3, 2002.

Pecom EnergĦa S.A., controlled by Perez Companc S.A., is a
leading company in an important Argentine and Latin American
industry sector, including oil and gas production and
transportation, refining and petrochemicals, power generation,
transmission and distribution.

To see financial statements:

          Maipo 1 - Piso 22 - C1084ABA
          Buenos Aires, Argentina
          Phone: (54-11) 4344-6000
          Fax: (54-11) 4344-6315

TGN: Fitch Comments On Proposal to Creditors
Last week, Transportadora de Gas del Norte S.A. (TGN) presented a
temporary financial plan to its creditors that seeks to maintain
operational integrity as the company negotiates with Argentine
authorities. TGN is seeking tariff changes to offset effects
associated with the sovereign's decision to default on its
obligations and abandon convertibility.

The proposal aims to support TGN's cash generation ability in
anticipation of an eventual financial restructuring. The central
tenet of the proposed financial plan is a stand still agreement
that would allow the company to use its free cash flow to service
interest payments on a pari passu basis. Based on current and
projected operating parameters, TGN estimates that it can only
service an average of 27 per cent of its scheduled interest
payments over the ensuing two years. Thus, the plan represents a
material reduction in debt service payments to creditors through
the proposed interim period.

Although not necessarily positive for creditors in the short
term, Fitch Ratings' views TGN's proposal as a realistic attempt
to present a workable plan to creditors and as potentially
positive over the long term.

Regulated market participants, including TGN, are beginning to
negotiate revenue recovery mechanisms with the central objective
of ensuring sufficient cash flow generation to fund ongoing
operations while affording a balance to service existing debt
obligations. However, no material tariff increases are expected
until after the presidential elections scheduled for March 2003,
since neither party can be sure that any agreement would be
respected by the new administration. Ultimately, any sort of
tariff relief would be viewed positively and will be an important
step in allowing companies in default to begin renegotiating
long-term financing solutions with lenders.

Until that time, Fitch believes that companies and creditors
alike will need to take a realistic approach to the credit
problems faced by regulated public service companies, including
TGN. Without a meaningful tariff recovery, TGN will not have
sufficient cash to remain current on interest payments beyond
this year. TGN is not in a position to offer a realistic debt
exchange until a top-line solution is reached and the medium-to-
long term cash flow of the company can be adequately estimated.

Under current market conditions and in the absence of significant
tariff adjustments, TGN's cash generation ability has been and
will remain materially below historical levels in US dollar
terms. The company estimates that moving forward quarterly EBITDA
will average US$15 million versus US$46 million in 2001. Interest
over the coming four quarters is expected to total US$50 million.
Management is expected to prioritize its limited financial
flexibility toward maintaining the company's operational
integrity, including operating and maintenance capital
expenditures, as well as strategic investment to maintain or
increase US dollar denominated export cash flows.

While TGN is one of the first to propose this type of stand still
agreement, Fitch believes it will not be the last. No material
negotiations for tariff increases have occurred since the new
Minister of Economy was appointed in May 2002. As a result, the
time frame expected for the formulation and implementation of a
plan to improve the financial condition of regulated entities has
been extended. At this time, there is no clear indication as to
the ultimate timing for such negotiations. As noted, Fitch
believes that the Duhalde administration will not achieve any
significant advancement on this topic. Without a solution, it
appears that the financial stress on the public service companies
will preclude meaningful debt service payments to lenders.

CONTACT: Fitch Ratings
         Alejandro Bertuol, 212/908-0393 (New York)
         Jason Todd, 312/368-3217 (Chicago)
         Ana Paula Ares, 5411-4327-2444 (Buenos Aires)
         Cecilia Minguillon 5411-4327-2444 (Buenos Aires)
         James Jockle, 212/908-0547 (Media Relations/New York)

         Don Bosco 3672, (C120ABF) Buenos Aires, Argentina.
         Phone: (+54 11) 4959-2000
         Fax: (+54 11) 4959-2242
         Home Page:


GLOBAL CROSSING: 1H02 Results Show Operating Plan on Track
Global Crossing reported Thursday that it has met -- and in many
cases exceeded -- key performance goals for the first half of
2002. The performance targets were established for Global
Crossing (excluding Asia Global Crossing) in the operating plan
presented to its creditors in March. Consolidated results for the
month of June that include Asia Global Crossing reported in the
Monthly Operating Report (MOR) filed with the U.S. Bankruptcy
Court in the Southern District of New York are summarized later
in the release.

OPERATING RESULTS (excluding Asia Global Crossing)

Consolidated recurring service revenues for the first half of
2002 reached nearly $1,464 million versus a target of $1,436
million, while operating expenses for the first half totaled $533
million versus a target of $539 million. Global Crossing ended
the first half with $857 million in its bank accounts, reflecting
an aggregate cash burn of only $115 million since the end of
January 2002, when cash in bank accounts totaled $972 million.

As detailed in a press release on March 8, 2002, Global Crossing
established these and other specific financial targets in a
presentation to its creditors that month. John Legere, chief
executive officer of Global Crossing, said, "We are meeting and
exceeding our objectives in the midst of a turbulent economy and
the downturn of the telecom industry and, at the same time, we
are managing a competitive bidding process as part of our
restructuring efforts."

For the first half of the year, Global Crossing surpassed all of
the specified performance targets, including those for recurring
service revenue, operating expenses and cash in its bank

Service EBITDA exceeded plan goals, with actual results
reflecting a $203 million loss compared to a targeted loss of
$213 million during the first half of 2002.

              OPERATING RESULTS (excluding Asia Global Crossing)

                        FIRST HALF OF 2002
                               TARGET            ON TARGETS

Recurring Service
Revenue  $1,464 million      $1,436 million      $28 million

EBITDA   $(203) million      $(213) million      $10 million

Cash in
Bank      $857 million        $719 million     $138 million

Expenses  $533 million        $539 million       $6 million


Global Crossing filed Thursday a Monthly Operating Report (MOR)
for the month of June with the U.S. Bankruptcy Court for the
Southern District of New York, as required by its Chapter 11
reorganization process. These consolidated results in this MOR
include Asia Global Crossing and revenue from sales of capacity
in the form of IRUs that occurred in prior periods, recognized
ratably over the life of the relevant contracts.

Results reported in the June MOR include the following:

For continuing operations in June 2002, Global Crossing reported
consolidated revenue of approximately $250 million. Consolidated
operating expenses were reported at $74 million, while access and
maintenance costs were $193 million in June 2002.

In addition, Global Crossing reported a consolidated GAAP
(Generally Accepted Accounting Principles) cash balance as of
June 30, 2002 of approximately $1,239 million, including $393
million of cash held by Asia Global Crossing. Global Crossing's
$846 million GAAP cash balance (excluding Asia) is comprised of
$456 million unrestricted cash, $333 million in restricted cash
and $57 million of cash held by Global Marine.

Global Crossing reported a consolidated net loss of $173 million
for June 2002. This includes a $34 million restructuring charge
as a result of ongoing efforts to consolidate facilities and
reduce its workforce. Consolidated EBITDA was reported at a loss
of $17 million.

Definitions and Notes

"Service Revenue" refers to revenue less (i) any revenue
recognized immediately for circuit activations that qualifioA#as
sales-type leases and (ii) revenue recognized due to the
amortization of IRUs sold in prior periods and not recognized as
sales-type leases.

"Service EBITDA" refers to EBITDA (earnings before interest,
taxes, depreciation, and amortization) but excludes the
contribution of (i) any revenue recognized immediately for
circuit activations that qualified as sales-type leases and (ii)
revenue recognized due to the amortization of IRUs sold in prior
periods and not recognized as sales-type leases.

The results for Global Crossing (excluding Asia Global Crossing)
discussed in the "Operating Results (excluding Asia Global
Crossing)" section of this release have been prepared on a basis
consistent with targets presented to the creditors of Global
Crossing in March 2002, and include the results previously
reported in Monthly Operating Reports (MORs) prepared for the
months of February through June. No such MOR was prepared for the
month of January. These operating results exclude Global Marine
(which is a discontinued operation), exclude any revenue
contribution of sales of capacity in the form of IRUs
(indefeasible rights of use), and reflect certain eliminations
and adjustments not detailed in the MORs for the months of
February through June. Cash balances reported in this section are
bank balances, not reflecting the estimated impact of outstanding
checks and other adjustments as required by GAAP.

The information contained in this press release is qualified in
its entirety by reference to the MORs for the months of February
through June, including the footnotes to the financial statements
contained therein, copies of which are available through the U.S.
Bankruptcy Court for the Southern District of New York and on
Global Crossing's website. This month's MOR is available at These
MORs have been prepared pursuant to the requirements of the
Bankruptcy Code and the unaudited consolidated financial
statements contained in these MORs do not include all footnotes
and certain financial presentations normally required under GAAP.
In addition, any revenues, expenses, realized gains and losses,
and provisions resulting from the reorganization and
restructuring of Global Crossing are reported separately as
reorganization items in these MORs.

As discussed more fully in these MORs, Global Crossing has not
yet filed its Annual Report on Form 10-K for the year ended
December 31, 2001. Global Crossing's Board of Directors is
currently seeking to retain a new independent public accounting
firm to replace Arthur Andersen LLP as its auditors. In addition,
certain of Global Crossing's accounting practices are being
investigated by the U.S. Securities and Exchange Commission and
the U.S. Attorney's Office for the Central District of
California. Any changes to the financial statements resulting
from any of such factors and the completion of the 2001 financial
statement audit could materially affect the unaudited
consolidated financial statements contained in these MORs and the
information presented in this press release.

As previously announced, Global Crossing's net loss for the three
months ended December 31, 2001 is expected to reflect the write-
off of the remaining goodwill and other intangible assets, which
total approximately $8 billion, as well as a multi-billion dollar
write-down of tangible assets. The financial information included
within this press release and the MORs reflect the write-off of
all of the goodwill and other identifiable intangible assets, but
does not reflect any write-down of tangible asset value. Global
Crossing is currently in the process of evaluating its financial
forecasts to determine the impairment of its long-lived assets.
The pending write-down will also include $450 million
representing the difference between the proceeds received and the
carrying value of Asia Global Crossing's interest in Hutchison
Global Crossing, which was sold on April 30, 2002.

About Global Crossing

Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network, which reaches
27 countries and more than 200 major cities around the globe.
Global Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services. Global Crossing operates throughout the Americas and
Europe, and provides services in Asia through its subsidiary,
Asia Global Crossing.

On January 28, 2002, Global Crossing and certain of its
affiliates (excluding Asia Global Crossing and its subsidiaries)
commenced Chapter 11 cases in the United States Bankruptcy Court
for the Southern District of New York and coordinated proceedings
in the Supreme Court of Bermuda. On the same date, the Bermuda
Court granted an order appointing joint provisional liquidators
with the power to oversee the continuation and reorganization of
the Bermuda-incorporated companies' businesses under the control
of their boards of directors and under the supervision of the
U.S. Bankruptcy Court and the Supreme Court of Bermuda. On April
23, 2002, Global Crossing commenced a Chapter 11 case in the
United States Bankruptcy Court for the Southern District of New
York for its affiliate, GT UK, Ltd.

     Press Contacts
     Tisha Kresler
     +1 973-410-8666

     Kevin Burgoyne
     Latin America
     +1 305-808-5925

     Mish Desmidt
     +44 (0) 7771-668438

     Analysts/Investors Contact
     Ken Simril
     +1 310-385-3838

TYCO INTERNATIONAL: New CEO Writes Open Letter to Employees
Tyco International Ltd. (NYSE: TYC; BSX: TYC; LSE: TYI) announced
Thursday that the Company's newly appointed Chairman and CEO,
Edward D. Breen, is sending the following letter to the Company's

Dear Colleague,

As your new Chief Executive Officer, I wanted to write to you to
say I am very excited to be joining Tyco. This letter also gives
me a chance to share my perspective on the company, outline what
I see as our initial priorities and update you on the latest

As you might expect, before accepting this job, I took a close
look at Tyco. Of course, I wanted to learn more about the
problems that have affected the market value of the company,
damaged its credibility and created unnecessary turmoil and
difficulty for the people of Tyco. Let me emphasize that I
believe we will successfully tackle each and every one of these

At the same time, I want to highlight the many positives I found
in this company: very solid assets, strong business fundamentals,
market-leading products and the financial capacity to address not
only its problems but also its many opportunities. In addition,
it became evident to me that Tyco has terrific, dedicated people
in its various businesses around the world. That's the basic
reason the company achieved market-leadership positions and has
continued to turn out great products and serve its customers
faithfully, even as it has faced a storm of controversy and

In the final analysis, I concluded that the positives at Tyco far
outweigh all the negatives, and for me the company represents the
opportunity of a lifetime.

Now that I'm with Tyco and the leadership transition is moving
forward, I am determined to focus on these immediate priorities:

    * First, we must have an absolute commitment to integrity
      and trustworthiness throughout the organization. That is a
      fundamental imperative.
    * With that commitment, we will establish Tyco as a leader
      in creating and enforcing the best corporate governance
    * We will continue our relentless dedication to customer
      satisfaction, with consistently superior products and
    * We will continue to build our operating businesses -- the
      heart of this company -- and strengthen the leadership
      positions they hold in their industries.
    * The growth of the operating businesses will create new
      opportunities and the most positive work environment
      possible for the employees of Tyco.
    * If we do all this well, as I commit to you we shall, we
      will restore Tyco's credibility with all our constituencies
      and build value for our shareholders.

In order to achieve these goals, I need to be sure we have in
place the management team that will be working with me over the
long haul to concentrate on the challenges and opportunities that
lie ahead, and therefore I plan to add key people to my team in
the near future. Also, our Chief Financial Officer, Mark Swartz,
has talked with me about his plans and said he has decided to
leave the company. He will continue to serve in his present role
as I settle into my job, and until we complete a search for a new
CFO, which we are starting immediately. Mark has made many
significant contributions to the growth of Tyco over the years,
and we extend our gratitude to him.

In addition, Irving Gutin, who in June agreed to take on the role
of General Counsel on only a temporary basis, has told me he
wishes to retire from the company. He has agreed to remain in his
present role until we find a successor for him as well. Irving
deserves our gratitude not only for his many years of service to
the company, including his earlier tenure as General Counsel, but
also for his willingness to step back into that position on a
temporary basis under difficult circumstances.

With regard to one of the key priorities I have mentioned,
corporate governance, I am pleased to tell you that we have
retained a widely recognized and respected expert on these
matters, Michael Useem. He is Director of the Wharton Center for
Leadership and Change Management and Professor of Management in
the Wharton School at the University of Pennsylvania. Professor
Useem has worked with many companies on successful programs of
leadership change and governance and has written extensively on
these topics.

I have given Michael the following responsibilities: (1) develop
an objective, thorough and specific analysis of what constitutes
the best corporate governance practices; (2) assess, objectively
and in depth, this company's practices, compared to the best
corporate practices; (3) make specific recommendations as to how
to implement and enforce the best practices at Tyco; and (4) work
with me and the Board to ensure that necessary changes are made
quickly and effectively. Michael is to begin his work

With all the changes that are taking place at Tyco, I believe we
can look to a bright future. Through hard work and determination,
I am confident we are going to put the issues that have been
facing the company behind us, and I want you to know that I am
dedicated to doing that as quickly as we possibly can. The
challenges have not gone away, but I am convinced that by
focusing on the priorities outlined here, and by cooperating with
the authorities in their investigations, we'll get through this
difficult period.

As we do that, I believe an environment of openness and candor
will be critical. Therefore, you are going to hear from me fairly
often on new developments and our progress. But I see the
openness as a two-way street: I want you to feel free to let me
know about any problem that you see, or suggestion you might
have, related to our efforts to put this company on the right
track and keep it there.

As we move ahead, I also ask that you continue to focus, as you
have, on making the best products and providing the best service
for our customers. And, wherever your job may be at Tyco, take an
active role in creating a company of which we all will be proud -
- a company that is based first and foremost on integrity and is
a great place for all of us to work.

Thank you for your hard work, dedication and support.


    Ed Breen

About Tyco International Ltd.

Tyco International Ltd. is a diversified manufacturing and
service company. Tyco is the world's largest manufacturer and
servicer of electrical and electronic components; the world's
largest designer, manufacturer, installer and servicer of
undersea telecommunications systems; the world's largest
manufacturer, installer and provider of fire protection systems
and electronic security services; and the world's largest
manufacturer of specialty valves. Tyco also holds strong
leadership positions in disposable medical products and plastics
and adhesives. Tyco operates in more than 100 countries and had
fiscal 2001 revenues from continuing operations of approximately
$34 billion.

Media Contact:  Walter Montgomery (212) 424-1314, or
Investor Relations Contact:  Kathy Manning (603) 778-9700


AVANZIT: Closes Brazilian Operations
Av nzit SA, which is reducing its operations and workforce,
announced the closure of its Brazilian installations operations
and the sale of the activities belonging to its Comelta unit,
relates AFX.

The closure resulted to the firing of 750 employees. The Comelta
buyer is still unknown.

Meanwhile, Avanzit also revealed in a statement that its Avanzit
ENA SGT sub-unit has also filed for receivership, with the aim of
"facilitating" its restructuring.

Avanzit said the moves, which have "the backing of the banking
community," are aimed at "accelerating to the maximum its
economic recovery."

The Company said "important" developments have also been achieved
over the group's internal reorganization, both in terms of the
planned closure of loss making or non-core activities, as well as
over human resources, where talks with the unions are "very

Avanzit, which filed for receivership in May, signed an accord
with creditor banks in June to restructure its outstanding debt
of over EUR286 million.

ELETROPAULO METROPOLITANA: Fitch Downgrades Ratings To 'B-'
Fitch Ratings lowered the local and foreign currency ratings of
Eletropaulo Metropolitana Eletricidade de Sao Paulo S.A.'s
(Eletropaulo) to 'B-' from 'BB+' and 'B+', respectively. Further,
Fitch has lowered Eletropaulo's national scale rating to BB-
(bra), from AA(bra). The ratings are also placed on Rating Watch

Eletropaulo's credit ratings have been lowered to reflect the
impending unmitigated debt maturities, delay in receiving BNDES
cash, a continued slide in the Brazilian real, lack of
refinancing alternatives in Brazil and overall poor credit market
conditions facing Brazilian issuers. To address upcoming
maturities at Eletropaulo and its holding companies, AES ELPA and
AES Transgas, the company has retained a financial advisor to
help design a financial structure at both the operating and
holding company levels with the objective of lowering near term
liquidity needs and extending upcoming maturities. Near term
refinancing options available to the company are limited to
rolling over existing local and international bank transactions
and commercial paper as AES management recently repeated their
intention to not invest additional funds into Brazil.

Eletropaulo met with its lenders last week to present proposals
for maturities coming due in the second half of 2002 that will
better match debt maturities to cash flow with the goal of
honoring 100% of its obligations, according to the company.
Depending on the preliminary outcome and terms and conditions of
these discussions, additional rating actions may follow. Should
debt be exchanged on terms that represent a loss of net present
value, it would be viewed by Fitch as a distressed debt exchange
and would result in a downgrade to a default level.

Eletropaulo's debt maturity schedule is significant, with
approximately US$753 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$422 million), September (US$99
million) and December (US$116 million).

Repayment/refinancing sources are expected to come from the
remaining cash recovery related to the BNDES margin compensation
(R$560 million net proceeds) and rollover of maturing obligations
with existing creditors. Although Eletropaulo is expected to
receive the BNDES cash in early August, these proceeds will be
insufficient to cover all maturing debt, and to a lesser extent
in considering the recent devaluation of the Brazilian real. To
the extent the company applies the proceeds to cover capital
market maturities and rollover the near term bank maturities it
may be able to avoid a general forced restructuring. To preserve
cash, Eletropaulo has postponed the payment of its dividend that
was declared earlier this year.

Beyond the operating company concerns, the company is facing
refinancing risk at its holding companies, AES ELPA (voting) and
Transgas (non-voting), which will also likely be addressed. AES
has pledged the shares of SUL and Uruguaiana to BNDES in support
of the ELPA debt and has committed to applying dividends from
Eletropaulo to repay BNDES. Under the terms of the last
agreement, principal at AES ELPA 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.
Transgas has another US$330 million due January 2003 and US$275
million in January 2004. Should the required payments not be made
to BNDES, shares and control could revert back to BNDES, which
may affect the rating depending on the stated intentions of the
Brazilian development bank. Given potential dividend restrictions
at the Eletropaulo level, it is uncertain from where the holding
company will obtain sufficient funds to repay BNDES.

From an operational standpoint, Fitch continues to believe
Eletropaulo, the operating company, to be a viable company with
the ability to generate positive cash flow in a stable operating
environment. Significant near-term refinancing requirements in a
volatile Brazilian marketplace have exacerbated the company's
liquidity position. Devaluation of the real will likely stress
near-term cash flow due to the currency mismatch between real-
denominated revenues and U.S. dollar debt service. Eletropaulo
received an annual tariff increase of 14.2% in July 2002, which
while positive, should be partially offset by slower than
expected demand growth. 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.

Eletropaulo is the largest electricity distributor in Latin
America in terms of revenues, with a sales volume of 32,563 GWh
in 2001. 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 capital.

CONTACT:  Fitch Ratings
          Jason Todd, 312/368-3217
          Daniel Kastholm, CFA, 312/368-2070
          Jayme Bartling, 5511-287-3177

KLABIN: Mildly Better 2Q02 Results Hampered by Currency Drop
Second Quarter Highlights:

- Net revenue improves 3%, totaling R$ 585 million.
- Gross profit reaches R$ 234 million with a gross margin of 40%.
- Cash generation amounts to R$ 169 million (EBITDA margin of
- Exchange variations cause a net loss of R$ 230 million.

(The Company's operational and financial information consists of
consolidated figures stated in local currency, as per Brazilian
Corporate Law, except where otherwise indicated.)


In the second quarter of 2002, Klabin completed the expansion of
its market pulp mill at GuaĦba (RS), raising its production
capacity from 300 thousand to 400 thousand tons per year.

Meanwhile, market pulp and kraftliner prices began to pick up in
the international market. Overall, Klabin's operating performance
was quite satisfactory. However, the results were impaired by a
22% currency devaluation over the period and its accounting
effects on the Company's debt in foreign currency.

Klabin remains strongly committed to its debt reduction efforts.
In fact, it has cut its foreign currency debt by 11% since the
end of last year. Moreover, better results are expected for the
second semester thanks to the higher market pulp production at
GuaĦba, coupled with a continuous recovery in international
prices and rising exports.


Net revenue improved 3% in 2Q02, totaling R$ 585 million. Average
prices advanced 5% to R$ 1,371 per ton as a result of the
Brazilian currency devaluation and its effects on the Company's
export revenues. Sales decreased 2% in volume, closing the
quarter at 444 thousand tons, on account of a strike organized by
the Federal Tax inspectors, which delayed the shipping of 8
thousand tons of packaging paper. Another reason was the planned
shut-down at the market pulp production unit for the start-up of
its expansion project.

Gross profit was R$ 234 million, stable in relation to 2Q01, with
gross margin slightly contracting to 40% from 41%. This change
was partly due to a R$ 10 million increase in depreciation over
the quarter, resulting from the appraisal of the Company's assets
at Igaras in late 2001.

Gross margins were also affected by the pre-operating expenses
related to the start-up and additional depreciation of the GuaĦba
(RS) plant, in the amount of R$ 6 million.

Operating results before financial expenses (EBIT) dropped 27% to
R$ 90 million, as operating margins declined from 22% to 15%.
The referred reduction in operating margins can be attributed to
a 24% increase in export freight costs, from R$ 45 million in
2Q01 to R$ 56 million in 2Q02, in turn triggered by the currency
depreciation observed over the period, because this particular
expense is dollar-denominated. Furthermore, Klabin exported a
larger volume in 2Q02 as compared to 2Q01, more specifically 40%
versus 37%, respectively.

Finally, 2Q02 margins also reflect a goodwill amortization
expense (Igaras and Klamasa) in the amount of R$ 13.5 million per

Operating cash generation or EBITDA fell 7% to R$ 169 million in
2Q02. This decrease can be explained by the factors mentioned
above, in addition to a provision for the loss of irrecoverable
tax credits in the amount of R$ 5 million. The EBITDA margin
declined to 29% from 32%. EBITDA totaled R$ 351 million in the
first half of the year, resulting in an EBITDA margin of 31%.

Net financial expenses totaled R$ 323 million in 2Q02. Of this
amount, 76% or R$ 246 million refers to a 22% depreciation of the
Real against the U.S. dollar over the period. In the first half
of the year, net financial expenses amounted to R$ 414 million,
with R$ 266 million (64% of the total) corresponding to a 23%
variation in exchange rate.

Gross debt rose from R$ 2,526 million in December 2001 to R$
2,794 million at the end of the first semester of 2002. Forty-
five per cent (45%) of this amount refers to long-term contracts
with terms to maturity extending to the year 2008. Liabilities
denominated in foreign currency represent 69% of the Company's
total debt, and 59% of such obligations refer to export pre-

Net debt reached the R$ 2,688 million at the end of June,
accounting for 71% of total capitalization (62% in 2Q01).

Klabin's foreign currency debts fell 11% from US$ 758 million in
December 2001 to US$ 673 million in June 2002. In order to
protect the dollar denominated debt, which is not related to
trade finance (natural hedge), the Company had outstanding hedge
operations amounting to US$ 238 million at the end of June.

Klabin ended the second quarter of 2002 with a net loss of R$ 230
million, totaling R$ 223 million in the first half of the year.
This negative result is basically due to the impact of the
currency devaluation over the period.

Packaging paper - Although production was raised to a record
level at the Monte Alegre (PR) mill, sales remained at 135
thousand tons as in 2Q01 due to the Federal Tax inspectors'
strike. Net revenue jumped 12% to R$ 156 million due to improved
prices. The quarter also witnessed the beginning of cardboard
exports to China. In the first half of 2002, this segment
accounted for 32% of Klabin's total sales volume and 26% of its
net revenue.

Corrugated boxes - With the slowdown in economic activity,
corrugated boxes sales contracted, particularly in the month of
June, except for the case of tobacco boxes, which sold as much as
expected. Sales volume dipped 3% to 128 thousand tons, while net
revenue remained level at R$ 151 million. In the first half of
the year, corrugated boxes sales amounted to 249 thousand tons,
generating a net revenue of R$ 292 million, and accounting for
28% and 23% of the Company's consolidated sales volume and net
revenue, respectively.

Multiwall bags - The sluggish demand for cement products caused
multiwall bag sales to drift 6% in 2Q02, totaling 29 thousand
tons in volume. On the other hand, increased exports and higher
price quotations contributed to a 4% growth in net revenue,
pushing it up to R$ 55 million. Considering the figures for the
first semester of the year, multiwall bags represented 6% of the
Company's total sales volume, and 8% of its net revenue.

Pulp (market and dissolving) - On account of the shut-down at the
GuaĦba mill for the start-up of its expansion project and
adaptation of the new machinery and equipment, market pulp
production fell in the second quarter of 2002. Sales volume and
net revenue dropped 20%, totaling 76 thousand tons and R$ 81
million, respectively. Pulp sales in the first half of the year
amounted to 149 thousand tons, yielding a net revenue of R$ 151
million. As such, the segment contributed with 17% of Klabin's
consolidated sales volume and 12% of its total net revenue. The
decline in Norscan inventories helped market pulp prices to
recover. However, dissolving pulp prices remain low.

Tissue - Successful marketing initiatives expanded the share of
this segment in the family care market. Sales volume improved 13%
to 39 thousand tons in 2Q02, with net revenue rising 14% to R$
114 million. When compared to the consolidated figures for the
first half of the year, tissue sales accounted for 9% of the
total volume sold, and 17%
of the Company's net revenue.

Publication paper - The performance of this segment (newsprint
and printing & writing paper) benefited from a recovery in
newsprint sales, thanks to events such as the World Cup and the
upcoming presidential elections. Consequently, sales volume
improved 31% in relation to 2Q01, totaling 32 thousand tons.
However, net revenue increased by no more than 4%, a clear sign
that market prices remain low. In the first semester of 2002,
publication paper represented 7% and 6% of the Company's sales
volume and net revenue, respectively.

Wood - Here, sales rose sharply on account of increased exports
and wood sales to third parties in the domestic market.
Altogether, 581 thousand tons of eucalyptus and pinus logs were
sold in 2Q02, up 31% from 2Q01. Net revenue increased 37% to R$
38 million, totaling R$ 72 million in the first half of the year
and accounting for 8% of the Company's total revenue.

Sales destination - Exports amounted to 172 thousand tons in 2Q02
(351 thousand tons in 1Q02), posting a growth of 7% in the first
semester. They represent 40% of the total volume sold in 1H02, as
compared to 37% in 1H01. The participation of export sales in
total net revenue remained steady at 32%, because the positive
effect of the currency devaluation on exports was neutralized by
low international prices. Exports are expected to grow in the
second half due to the increased production of market pulp at
GuaĦba (RS).

Capital expenditures totaled R$ 57 million in 2Q02. A slice of R$
39 million was earmarked for expansion and upgrading projects, R$
20 million of which were used to enlarge the plant facilities at
GuaĦba, whose production capacity jumped from 300 thousand to 400
thousand tons/year. Another R$ 10 million were invested in a
third coater for Machine 7 at Monte Alegre (PR), and the
remaining R$ 9 million went to other projects.

In the second quarter of 2002, Klabin spent R$ 18 million on the
preventive maintenance of its industrial plants.

Klabin's preferred shares (KLBN4) were negotiated in all the
sessions held in 2Q02, totaling 3,185 transactions and 9% of all
the pulp & paper stocks traded at Bovespa [Sao Paulo Stock
Exchange]. Altogether, 21.7 million Klabin shares changed hands
over the period, with an average daily trade volume of R$ 347
thousand. KLBN4 closed the quarter quoted at R$ 0.96 per share, a
decline of 14%, while the Bovespa Index dropped 16% over the same

With a gross revenue of R$ 2.8 billion in 2001, Klabin is the
largest integrated producer of pulp and paper in Brazil, capable
of manufacturing up to 2 million tons of products for sale per
year. As part of its corporate strategy, the Company has decided
to focus on the following segments: packaging paper, cardboard,
corrugated boxes, multiwall bags, tissue paper, wood and pulp.
Klabin is the leader in almost all segments it operates.

To see financial statements:

          Ronald Seckelmann, Financial and IR Director
          Luiz Marciano Candalaft, IR Manager
          Tel: (55 11) 3225-4045

          Paulo Roberto Esteves
          Tel: (55 11) 3848-0887 Extension 205

MICROTEC: Faces Involuntary Bankruptcy Process
Brazilian PCs manufacturer, Microtec is currently dealing with
the bankruptcy process due to non-payment of hard disks loan, O
Estado de Sao Paulo reports. The bankruptcy action, launched by
Korean company Samsung, is the third the company would undergo.

Microtec has a production capacity of 150,000 units per year. It
ranks second to Itautec in sales for the first quarter of 2002.
For the year 2001, the Company is expecting a turnover of BRL120
million (US$34.582 million).

In January 2001, Microtec reduced its workforce from 1,200 to
250.  It also returned 25 properties that were previously
operational locations in Brazil.

Microtec denied the BRL100,000 (US$28,818) worth of orders that
it allegedly transacted.  It also expressed disagreement over the
necessity of the bankruptcy filing.

          R. Haward A. Acheson Junior, 393
          06700-000 Cotia, SP
          Phone: 5511/7922-0699
          Fax: 5511/7922-2372
          Contact: Mr. Antonio Claudio Guedes Rocha, IT Manager


ENERSIS: 1H02 Consolidated Results Better Despite Slower Sales


- As of July 2002, Mr. Pablo Yrarrazaval was appointed Chairman
of the Board of Enersis and Mr. Jos‚ L. Palomo, CFO of Endesa
(ELE) was appointed Director.

- On July 30th, 2002, Standard & Poor's affirmed Enersis and
Endesa Chile ratings. (BBB+ outlook negative)

- Enersis Net income reached US$ 34 million, 74% higher than 1H

- Operating revenues decreased by US$ 248 million or 12%,
basically related to the lower economic activity in Argentina.

- Operating expenses also decreased by US$ 169 million or 12%,
due to stringent cost control programs applied, and also as a
consequence of the lower activity already mentioned.

- Selling and administrative expenses decreased by US$ 27 million
or 15%.

- Operating income decreased by US$ 50 million or 10%.

- The company made extraordinary provisions for US$ 70 million
related to Argentine and Brazilian subsidiaries and using a
prudent accounting criterion.

- Net financial income improved by 9%.

- Labor productivity increased by 7%, from 1,310 up to 1,402
clients per employee.

- Clients increased in 437,000 new customers, equivalent to a
company of 1.5 times the size of RĦo Maipo.

- The RAIIDAIE(*) ratio remained flat, which confirms that lower
revenues coming from Argentina were compensated by higher
revenues from other subsidiaries as well as by better net
financial result.

(*) Net income before taxes, interest, depreciation,
amortization, and extraordinary items (as defined by the local

Enersis (NYSE: ENI), released consolidated financial results for
the half ended June 30th, 2002. All figures are in constant
Chilean Pesos and US$, and in accordance with Chilean Generally
Accepted Accounting Principles (GAAP) as seen in the standardized
form required by Chilean authorities (FECU). Figures
corresponding to June 30th, 2001 have been adjusted by the CPI
variation between both periods, equal to 2.1%.

For the purpose of converting Chilean pesos (Ch$) into US dollars
US$), the exchange rate prevailing as of June 30th 2002, equal to
US$ 1 = Ch$ 688.05, is used.

The consolidation includes the following investment vehicles and

a) In Chile: Endesa Chile (NYSE: EOC) and its subsidiaries,
Chilectra (OTC: CLRAY), RĦo Maipo, Synapsis, CAM Ltd. and Inm.
Manso de Velasco.

b) Outside of Chile: Distrilima (Per£), Cerj and Investluz
(Brazil), Edesur (Argentina), Luz de Bogot  (Colombia).


As of June 30th, 2002, the Company achieved a Net income of US$
34 million that represents an increase of 74% compared to the
first half of the previous year.


Operating income for the first half amounted to US$ 453 million,
a decrease of US$ 52 million or 10.3% with respect to the same
period of 2001. This fall in operating income was caused mainly
by the distribution subsidiary, Edesur.

In the Generation Business, our subsidiary Endesa Chile's
consolidated results rose by 5.6% to US$ 248 million during the
period. This growth in operating income can be explained mainly
by the improved operating
income in Chile and Peru.

In Chile, Operating income in the first half 2002 amounted to US$
118 million, an increase of 58.6%, due mainly to a rise by 9.8%
in the generation of hydroelectricity as a result of the copious
rainfall during this period that lead to improved levels of water
in the reservoirs. Another contributing factor was the increase
in average sales prices resulting from the company's marketing
policies that enabled it to obtain the best prices on the
unregulated clients and spot markets. Furthermore, the increase
in the generation of hydroelectricity allowed for a reduction of
US$ 8 million in the cost of purchasing energy and the reduction
in the generation of thermoelectricity lead to a decrease of US$
5 million in the cost of fuel.

With regard to Endesa Chile's subsidiary in Per£, Edegel, this
company's operating income increased by 9.1% to US$ 49 million.
This increase is explained by the higher sales prices on the spot
market, compensated by the decrease in physical sales of energy
on that market.

On the other hand, in Argentina the operating income fell by US$
22 million, with respect to the result as at June 30, 2001 to US$
4 million. This was mainly due to a decrease of 43% in physical
sales of energy and to a deterioration of the average sales
prices of energy from El Choc˘n as a result of the devaluation of
the Argentine Peso. In addition, the low prices of energy in
southern Brazil following the abundance of water in that zone
have meant that the exports from Argentina represented only 7.8%
during the semester. Nevertheless, the sales of energy have
partly compensated the fall in sales from Central Costanera.

In Brazil, the operating income of the subsidiary, Cachoeira
Dourada, decreased by 17% amounting to US$ 16 million mainly as a
result of a lower level of generation and greater purchases of
energy in order to comply with contractual commitments whilst the
levels in the reservoirs are recovering after a prolonged drought
in the southeast of Brazil.

In Colombia, operating income in the first semester of 2002
amounted to US$ 61 million, a decrease of 13%, due fundamentally
to lower average sales prices of energy resulting from the
abundance of water and the recovery of water levels in the

The Distribution Business has shown improved operating results in
its subsidiaries, Chilectra, Codensa, Cerj, Coelce and Edelnor
during the period ended on June 30, 2002 with increases of US$ 7
million, US$ 5 million, US$ 3 million, US$ 2 million, and US$ 0.3
million, respectively. These increases are principally due to
increased physical sales and a decrease in the cost of salaries.
The situation of the Argentinean subsidiary, Edesur, is quite
different. This company's operating income fell by US$ 76 million
due principally to the devaluation of the Argentine Peso and to a
decrease in sales of energy.

This significant negative impact on the operating income is what
provoked a net decrease, despite the improvements in the other
subsidiaries, in the consolidated operating income of Enersis in
comparison with the same period of last year.

Consolidated physical sales as at June 30, 2002 amounted to
24,067 GWh which, when compared to the figure of 24,838 GWh as at
the same date of the previous year, reflects a decrease of 771
GWh or 3.1%. This fall is due principally to the effect of the
Argentine crisis and to the energy rationing introduced by the
Brazilian authorities that lasted until the month of March of
this year and did not affect the first semester of the previous

Operating expenses decreased by US$ 169 million or 11.8% due to
the emphasis placed by the Enersis Group on strengthening its
operating capacities. This cost reduction partially compensated
the lower revenues already explained.

Administrative and selling expenses decreased by US$ 27 million
from a loss of US$ 184 million to a loss of US$ 157 million, due
to optimization in the labor force, lower general expenses,
exchange rate effect, and also because of lower provisions on
uncollectable accounts.

The previous variations resulted in that Operating income over
Operating revenues rose to 24.1% as of June 2002, 0.4 percent
points above the 23.7% achieved in the year 2001.


Non-operating income registered a loss of US$ 278 million, a
reduction of US$ 38 million or 12% compared to the loss for the
same period of 2001 and is explained as follows:

Net financial result improved by 8.7% or US$ 25 million compared
to June 2001, from a loss of US$292 million as of June 2001 to a
loss of US$266 million as of June 2002. This was the result of
significant efforts made in order to benefit from falling
relevant interest rates on the international markets with respect
to the previous period.

The losses from investments in related companies reflected a
reduction of US$ 1.7 million in their contribution from US$7
million to US$9 million as at the same date of last year,
basically as consequence of an important adjustment made by
related companies of Endesa Chile, due to the exchange rate
variation in the results of both periods in Endesa Chile's

Net other non-operating income registered a reduction of US$ 4
million or 5.2%, mainly due to:

- An increase of US$ 108 million in income derived from the
adjustment on converting over to Chilean Accounting Rules on
applying the norms contained in Technical Bulletin N§ 64,
particularly in respect of the subsidiaries in Brazil and
Argentina. This was principally due to the devaluation of the
Brazilian Real and the Argentine Peso against the US Dollar as at
June 30, 2002 in comparison with the same period of the previous

- Compensated by an increase of US$ 70 million in provisions made
because of the unstable situations in Argentina and Brazil.

- A reduction of US$11 million in the profit from forwards
contracts, which fell from a net profit of US$ 12 million as at
June 30, 2001 to a net profit of US$ 1 million this year.

- An increase of US$ 10 million in provisions for contingencies
in affiliated companies in Brazil.

- An increase of US$ 15 million in extraordinary expenses on
post-retirement benefits of the staff, mainly in respect to
pension schemes decreed by law for all Brazilian companies.

Net of monetary exposure, shows a reduction of US$ 17 million
with respect to the same period of last year from a loss of US$
37 million as June 30, 2001 to a loss of US$ 21 million in this
period. This was caused principally by the effects of the nominal
devaluation of 5.1% of the Chilean Peso against the US$ compared
with a devaluation of 9.6% as at the same date last year. These
effects were compensated to a large extent by forwards contracts.


Finally, the amortization on positive goodwill for the period
ended on June 30, 2002 amounted to US$58 million, an increase of
US$ 2 million with respect to the US$ 56 million as at June 30,
2001. The increase in the amortization is the result of the rise
in the positive goodwill produced by the purchase of shares in
Chilectra and RĦo Maipo and by controlling in US$ the positive
goodwill produced by the investments in corporations in countries
considered to be unstable in accordance with Technical Bulletin
N§ 64.


On a consolidated basis, as of March 31, 2002, 40% of the total
debt was expressed in variable terms (mainly Libor US$ and
Chilean TAB) whilst 60% was at fixed rates and secure.

As at the close of June 2002 the debt refinanced at variable
rates represented 32% of the total debt whilst 68% was at fixed
rates and secure.

The reduction in the percentage of debt at variable rates during
this semester is explained basically by the refinancing of
obligations (previously at variable terms) at fixed rates and by
closing operations to hedge the Libor US$ rate for US$ 1,000
million, of which US$ 700 million were done by Enersis and US$
300 million by Endesa Chile.

The company manages its interest rate risks by concentrating its
debt structure on the long term with a suitable combination of
debt at fixed rates and at variable rates.


The Company's exposure to an exchange risk is derived from the
assets and liabilities denominated in foreign currency, mainly in
US Dollars.

On a consolidated basis, as at March 31, 2002, Enersis had 71% of
its total debt expressed in US$. Bearing in mind the Dollar/CLP
forward position, the weight of this debt in US$ was reduced to

As at June 30, 2002, 69% of the debt was expressed in US$. When
considering the US$/CLP hedging policy mentioned below, the
percentage of the debt expressed in US$ is reduced to 61%.

The reason behind the largest part of our debt being denominated
in US$ is the fact that an important proportion of our revenues
is directly or indirectly related to the US$. Thus, the tariffs
in the majority of the countries in which we have operations are
tied to a large extent to the evolution of the US$, particularly
in Chile and Peru. In countries where the indexation of the US$
is lower, companies borrow a greater proportion of their loans in
local currency.

As mentioned before, despite the hedging, we are exposed to the
fluctuations between the Chilean Peso and the US$ rates of
exchange. These are managed through the use of financial
derivative instruments, basically US$/CLP forward contracts,
through which the exchange risk is hedged.

The exchange risk exposure is currently handled on a consolidated
basis, taking into consideration the portion of this risk that
our Chilean subsidiaries have not covered. The Company's policy
is to hedge between 70% and 85% of the booked exposure to
exchange risks.

On a consolidated basis, as at June 30, 2002, the Company had
US$/CLP forward contracts for US$ 582 million whilst as at March
31, 2002, the total was US$ 592 million. This reduction is due to
a decrease in the exposure to the variations in the US$ exchange
rate on our books.

Although the actual exchange risk to which we are exposed depends
on the fluctuation of the exchange rates at which the Company's
assets and liabilities are maintained, for accounting purposes,
our results are also affected bearing in mind the contents of
Technical Bulletin N§ 64.

In accordance with this Chilean accounting regulations, debts in
foreign currency that were utilized to finance investments in
countries with an "unstable currency" are matched to their
corresponding investment and the variations in the US$/Chilean
Peso rate on those matched debts are not reflected by entries in
the Income Statement.

Finally, here is a brief analysis of the Results of Enersis'
distribution subsidiaries:

Chilectra recorded a Net income of US$ 55 million as of June 30,
2002, US$ 9 million lower than first half
2001, mainly related to:

- Lower Non-Operating Income of US$ 31 million, primarily due to:
provisions accounted to record the economic situation related to
Chilectra's Brazilian and Argentinean subsidiaries of US$ 39
million; lower price level restatement of US$ 16 million; lower
goodwill amortization of US$ 7 million, and higher net financial
expenses of US$ 1 million. This figure was partially compensated
by higher profits from Cerj and Edelnor of US$ 24 million and US$
1 million respectively, and lower negative equity provisions from
investments of US$ 8 million.

- Higher Operating Income of US$ 7 million, mainly due to higher
energy sales of US$ 33 million, compensated by higher energy
purchases of US$ 26 million.

- Lower Tax payment of US$ 9 million, and lower minority
shareholders interest of US$ 7 million.

RĦo Maipo registered a Net income of US$ 7 million for the first
half ended June 30, 2002, which represents a decrease of US$ 0.1
million compared to the same period of 2001. This is mainly
explained by:

-  Lower Operating Income of US$ 0.6 million, basically due to
higher operating and maintenance cost related to the company's
electric grid of US$ 0.2 million and higher cost of third parties
services of US$ 0.3 million.

- Higher Non-Operating Income of US$ 0.4 million, primarily due
to higher revenues from non operating maintenance and services of
US$ 0.6 million.

Edesur recorded a Net Income of US$ 29 million as of June 30,
2002, US$ 17 million lower than first half 2001, which can be
broken down as follows:

- Lower Operating Income of US$ 76 million, mainly due to lower
Energy Sales of US$ 252 million, lower Other Operating Income of
US$ 22 million, which was compensated by lower Energy Purchases
US$ 128 million, lower Other Operating Costs of US$ 42 million
and lower SG&A expenses of US$ 27 million.

- Higher Non-Operating Income of US$ 22 million, mainly explained
by higher positive conversion effect of US$ 37 million recorded
as a result of the Argentinean Peso depreciation and the
application of Technical Bulletin Nĝ64 of Chilean accounting
principles, compensated by higher net financial expenses of US$
16 million.

- Lower Tax payment of US$ 37 million.

Edelnor Net income during the first half ended June 30, 2002 was
US$ 17 million, US$ 2 million higher compared to the previous
year. These results can be mainly explained by:

- Higher Non-Operating Income of US$ 2 million, mainly due to
higher positive conversion effect of US$ 2 million recorded as a
result of the Peruvian Peso depreciation and the application of
Technical Bulletin
Nĝ64 of Chilean accounting principles.

- Higher Operating Income of US$ 0.2 million, mainly explained by
lower uncollectable accounts of US$ 0.4 million.

- Lower Tax payment of US$ 0.1 million.

Cerj recorded a Net income of US$ 123 million as of June 30,
2002, US$ 64 million higher than the same period of 2001. This is
primarily due to:

- Higher Non-Operating Income of US$ 49 million, mainly due
higher positive conversion effect recorded as a result of the
Brazilian R$ depreciation and the application of Technical
Bulletin Nĝ64 of Chilean accounting principles of US$ 64 million,
higher net financial income of US$ 11 million, and lower losses
from Investluz of US$ 1 million. The above was compensated by
higher provisions for pension funds of US$ 14 million, and higher
labor trial contingencies' provisions of US$ 12 million.

- Higher Operating Income of US$ 3 million, primarily explained
by higher energy sales of US$ 34 million, and lower SG&A expenses
of US$ 4 million. The above was compensated by higher operating
and maintenance cost of US$ 14 million, higher depreciation and
amortization expenses of US$ 12 million, and higher energy
purchases of US$ 9 million.

- Lower Tax payment of US$ 12 million.

Coelce recorded a Net income of US$ 20 million as of June 30,
2002, US$ 9 million higher compared to the same period of 2001.
This result breaks down as follows:

- Higher Non-Operating Income of US$ 13 million, mainly explained
by higher positive conversion effect of US$ 15 million recorded
as a result of the Brazilian R$ depreciation and the application
of Technical Bulletin Nĝ64 of Chilean accounting principles,
compensated by higher net financial expenses of US$ 3 million.

- Higher Operating Income of US$ 2 million, mainly due to higher
energy sales of US$ 18 million, compensated by higher cost of
third parties services of US$ 7 million, higher energy purchases
of US$ 5 million, lower other operating revenues accrued from
electric grid rentals and tolls of US$ 2 million, and higher
depreciation and amortization expenses of US$ 1 million.

- Higher Tax payment of US$ 6 million.

Codensa registered a Net income of US$ 14 million for the first
half ended June 30, 2002. This figure, represented US$ 2 million
reduction since first half 2001. This is primarily attributed to:

- Higher Operating Income of US$ 4 million, primarily explained
by higher energy sales of US$ 11 million, compensated by higher
SG&A expenses of US$ 4 million, and higher depreciation and
amortization expenses of US$ 3 million.

- Lower Non-Operating Income of US$ 4 million, mainly due to
higher negative conversion effect recorded as a result of the
Colombian Peso depreciation and the application of Technical
Bulletin Nĝ64 of Chilean accounting principles of US$ 7 million,
compensated by lower provision for Municipalities public lighting
billing of US$ 3 million.

- Higher Tax payments of US$ 2 million.

During the period, the Company generated a net positive cash flow
of US$ 87 million.

Operating activities generated a net positive cash flow of US$327
million, 11.7% lower than the same period of the previous year.
This flow is mainly comprised of a profit for the period of US$34
million plus the net charges to income that do not represent cash
flow for US$154 million. Added to these is a reduction in assets
that affect the operating cash flow for US$229 million,
compensated in part by the reduction in liabilities that affect
the operating cash flow by US$91 million.

Financing activities produced a negative flow of US$55 million
due mainly to: payment of loans for a value of US$885 million, a
payment of dividends for US$98 million and the payment of Bonds
for US$28 million. These are compensated by the loans received
and the Bonds issued for US$817 million and US$173 million,

Investment activities generated a net negative cash flow of
US$185 million, basically explained by the addition of fixed
assets worth US$158 million, investments in financial instruments
for US$22 million, investments in subsidiaries for US$24 million
and other disbursements on investments of US$14 million. These
were partly compensated by the sale of fixed assets and other
income for US$25 million.

To see financial statements:

          Investor Relations:
          Ricardo Alvial
          Chief Investments & Risks Officer of Enersis
          Phone: (562) 353-4682

          Susana Rey,
          Ximena Rivas,
          Pablo Lanyi-Grunfeldt,

TELEFONICA CTC: S&P Rates US$150M Bank Loan 'BBB'
Standard & Poor's said Thursday it assigned its triple-'B'
foreign currency rating to Chile's largest telecom provider,
Compania de Telecomunicaciones de Chile S.A.'s (CTC) US$150
million syndicated bank loan disbursed in July 2002. Proceeds
will be used to refinance part of an existing US$180 million
syndicated loan leaving just US$105 million in maturities for the
rest of 2002, of which US$55 million correspond to the optional
prepayment of a local bond.

Concurrently, Standard & Poor's affirmed its triple-'B' local and
foreign currency corporate credit ratings on the company. The
outlook remains stable. As of June 30, 2002, CTC's total debt
amounted to approximately US$1.8 billion.

The loan will mature in two equal capital installments due on
April 2006 and April 2007 with quarterly interest payments for
the next six months (when payment frequency is redefined
according to the indenture). The interest rate will be LIBOR plus
an initial margin of 1% that would vary according to the
company's long-term debt ratings.

"First half earnings and coverage measures continue to show the
results of the company's cost cutting initiatives, the
strengthening of the mobile and corporate businesses, and the
debt reduction. However, EBITDA interest coverage of 5.1x and 12
month FFO to debt of 25.4% are still somewhat weak for the rating
category and Standard & Poor's expects CTC to continue improving
these measures in the short term," said Standard & Poor's credit
analyst Ivana Recalde.

"Although the conclusion of the month-long legal labor strike
faced by CTC implies a slowdown in the cost reduction process, we
still expect CTC's margins to continue to improve in the
following quarters," she added.

The strike took place during CTC's collective labor contracts
negotiations, and ended on July 29 when unions representing a
total of 3,445 employees invoked the application of Article 369
of the Chilean Labor Law.

Article 369 allows employees to freeze the conditions of the
previous labor contracts (due as of June 30, 2002) for an 18-
month period, and thus delays the adjustments of CTC's labor
costs to market conditions. During the 28-days strike, the
company suffered certain sabotage acts in its network but no
significant impact in operations.

CTC is Chile's largest telecommunications provider with 2.8
million lines in service and 1.7 million mobile subscribers as of
June 2002. The company provides local, long-distance, mobile, and
data services throughout the country.

CONTACT:  Telefonica CTC (Corporacion Telefonica Chilena S.A.)
          V. Providencia 111
          Providencia - Santiago
          Phone: (2) 2320511
                 (2) 6912020
          Home Page:
          Mr. Bruno Philippi, President
          Mr. Jacinto Daz, Vice President
          Gisela Escobar, Head of Investor Relations

WORLDCOM: CTC Denies Lawsuit Reports
Telefonica CTC Chile is not suing bankrupt US carrier WorldCom
Inc. to recoup outstanding payments, Chile's largest fixed line
operator said in a statement. The statement counters a report
released by Chilean business daily Estrategia that CTC had
initiated legal proceedings against WorldCom to recover about
CLP11.2 billion (US$16 million) in unpaid bills.

CTC said no lawsuit exists, and that it would take the necessary
steps to gain legal recognition of WorldCom's debts to the
Company under US bankruptcy law.

WorldCom owes Telefonica CTC CLP6.6 billion for services
rendered, while CTC's long distance subsidiary 188 Telefonica
Mundo owes WorldCom CLP4.6 billion, leaving a balance in CTC's
favor of CLP2 billion.

WorldCom filed the world's largest bankruptcy in July as it
buckled under US$40 billion in debt and US$3.85-billion
accounting scandal.

          500 Clinton Center Drive
          Clinton, MS 39056
          Phone: (601) 460-5600
          Fax: (601) 460-8350
          John Sidgmore, President and CEO


ALESTRA: S&P Cuts Ratings to 'CC', Off Watch; Outlook Negative
Standard & Poor's said Thursday it lowered its foreign and local
currency corporate credit ratings on Alestra S. de R.L. de C.V.
to double-'C' from triple-'C'-plus. The downgrade is based on the
Mexican telecom provider's announcement that its cash flow from
operations will not be sufficient to meet the interest payment on
its senior notes due in November 2002.

The ratings were removed from CreditWatch, where they were placed
March 18, 2002. The outlook on the ratings is negative. The
company's debt totaled US$619 million as of June 2002.

"This announcement reflects the likelihood that Alestra will
default on its debt obligations during financial year 2002,
probably by way of a bond restructuring," stated Standard &
Poor's credit analyst Manuel Guerena.

Alestra is working jointly with Morgan Stanley in analyzing
available options to address its financial condition.

Alestra is 49%-owned by AT&T Corp. (BBB+/Watch Neg/A-2) and 51%-
owned by Onexa S.A. de C.V. (owned by Grupo Alfa S.A. de C.V. and
Grupo Financiero BBVA Bancomer S.A. de C.V.). The company's
network covers 170 cities throughout Mexico, approximately 83% of
the Mexican long-distance market in terms of lines. Long-distance
related revenues represented 86% of total revenues during 2001,
and 79% as of June 30, 2002.

Credit Analyst: Manuel Guerena, Mexico City (52) 55-5279-2011

          1585 Broadway
          New York, New York 10036
          United States
          Phone: +1 212 761-4000
          Home Page

ALESTRA: Analysts Expect Debt Restructuring Soon
Stephen Balinskas, a Bear Stearns bond analyst, predicts
shareholders and management of Mexican long-distance carrier
Alestra proposing a restructuring of debts before year-end,
reports Business News Americas.

Mr. Balinskas believes that Alestra cannot survive with its
current debt load because the size of its current business is not
proportional to that of its debt.

Mexico's second-biggest industrial group Alfa, one of Alestra's
shareholders, earlier disclosed in its earnings statement that
Alestra lost MXN754 million (US$76.2 million) during 2Q02 on
revenues of US$107 million, up 6% over the previous quarter.

Mexican bank Banorte also released a statement last week saying
that the Company's losses have worsened considerably, and that
Alestra's shareholders and creditors must act quickly to come up
with a solution.

Alestra faces debt payments this year of US$47.5 million. These
include a US$12.5-million payment on the principal of a loan from
French bank BNP Paribas in October, plus two interest payments
amounting to US$35 million in November, for the Company's US$270
million in 12.1% eurobonds maturing in 2006 and US$300 million in
12.6% eurobonds maturing in 2009.

"Alestra has not generated the resources to honor the interest
payments of the eurobonds that it must make in November," the
Banorte report, published in Mexican daily El Financiero, said.
Alestra probably has about US$14 million-15 million on hand,
which will leave them with very little after the Paribas payment,
Balinskas added.

The anlayst, however, expects shareholders and creditors will
work out a long-term solution to Alestra's debt problem, rather
than simply renegotiating upcoming payments. The renegotiation
will likely include creditors taking a haircut and the
shareholders investing more money in the Company.

          16, Boulevard des Italiens
          75009 Paris Cedex 09, France
          Phone: +33-1-40-14-45-46
          Fax: +33-1-40-14-75-46
          Home Page:
          Michel Pebereau, Chairman and CEO
          Baudouin Prot, President and COO

GRUPO IUSACELL: Discusses Operations, Debt Load, Expectations
Grupo Iusacell, S.A. de C.V. (NYSE: CEL) (BMV: CEL) (Iusacell or
the Company) announced Thursday that no event of default has
occurred for any of the Company's obligations, and Management
does not anticipate any such event of default will occur in the
near future.

Note: The symbols "$" and US$" refer to Mexican pesos and U.S.
dollars, respectively.

Responding to the decline in the price of the Company's U.S.
traded ADRs, Carlos Espinal, Iusacell's newly appointed CEO,
commented, "There is absolutely no specific event or cause that
is triggering this selling activity. We are confident that our
business is headed in the right direction and our financial
position is sound."

Although a major ratings agency downgraded Iusacell's debt
earlier in the week, the Company believes that its decision was
heavily influenced by negative market conditions in the telecom
sector, as several other carriers in the world had been
downgraded in the past 90 days. Iusacell has no major principal
payments due in the 2002 and 2003 timeframe, and 2002 interest
payments on its Senior Notes due 2006 are covered by funds in an
escrow account.

The Company is in full compliance with all financial and
operating ratios of its debt instruments as of the end of the
second quarter and has no reason to believe it will not comply
with all of these covenants in the future.

Management believes that it is taking the responsible actions to
position the Company for long-term viability that will lead to
top-line revenue growth. The Company believes that prudent cash
management, enhanced value propositions to our customers and
leveraging existing network capacity will enable Iusacell to add
high-value subscribers and improve EBITDA margins in the coming

Iusacell is implementing actions to reduce postpaid churn, which
has decreased sequentially over the past three quarters,
improving to 3.2% for the second quarter down from the 4.2% peak
posted in the third quarter of 2001.

The Company's existing network capacity and the current level of
build-out in our PCS regions in northern Mexico allowed Iusacell
to reduce capital expenditures. Iusacell carefully evaluated
these capital expenditure cutbacks which, while important for our
long term business model, will not compromise 2002 or 2003
subscriber growth. As stated in the second quarter Earnings
Release, the revised 2002 capex budget, to be internally funded,
is approximately US$130 million, versus the US$250 million
originally projected.

Management believes that with the immediate action plan being
implemented; the right-sizing of its operations and focus on
higher-value propositions as well as the continued support from
its two principal shareholders, the Company's performance will
improve in the following quarters.

Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE: CEL; BMV: CEL) is a
wireless cellular and PCS service provider in seven of Mexico's
nine regions, including Mexico City, Guadalajara, Monterrey,
Tijuana, Acapulco, Puebla, Leon and Merida. The Company's service
regions encompass a total of approximately 91 million POPs,
representing approximately 90% of the country's total population.
Iusacell is under the management and operating control of
subsidiaries of Verizon Communications Inc. (NYSE: VZ).

CONTACT:  Investor Contacts:
           Russell A. Olson
           Chief Financial Officer
           Phone: 011-5255-5109-5751

           Carlos J. Moctezuma
           Manager, Investor Relations
           Phone: 011-5255-5109-5780

MEXICANA DE AVIACION: Governmet Extends $14.9M, 4-Yr. Loan
Mexicana de Aviacion SA, a unit of Mexican airline holding
company, Cintra SA, obtained a US$14.9-million loan from the
government, reports Dow Jones Newswires. The loan will help the
airline cover insurance premiums, which have soared since the
September 2001 terrorist attacks in the U.S.

Mexicana, in a press release, disclosed that the four-year loan
has a two-year grace period, paying interest of one percentage
point above the benchmark 28-day Cetes treasury bills. Interest
rates on 28-day Cetes stood at 6.71% last week.

"Mexicana is the first airline to receive this financing," the
press release said. Proceeds will be exclusively used to cover
higher premiums.

Cintra handles about 80% of domestic air travel through its
control of AeroMexico and Mexicana. The government is currently
seeking to privatize both carriers.

          Adolfo Crespo, V.P. of Public Affairs
          Division of Mexicana Airlines, +1-210-491-9764

          Xola 535, Piso 16, Col. del Valle
          03100 M,xico, D.F., Mexico
          Phone: +52-5-448-8050
          Fax: +52-5-448-8055
          Jaime Corredor Esnaola, Chairman
          Juan Dez-Canedo Ruiz, CEO
          Rodrigo Ocejo Rojo, CFO
          C.P. Francisco Cuevas Feliu, Investor Relations
          Xola 535, Piso 16
          Col. del Valle
          03100 M,xico, D.F.
          Tel. (52) 5 448 80 50
          Fax (52) 5 448 80 55

SAVIA: To Convert Seminis Preferred; Ownership Swells to 78%
Savia (BMV:SAVIA) (NYSE:VAI) announced Thursday that it has
reached an agreement with Seminis to convert Class C Preferred
Stock into Common Stock.

This conversion will increase Savias' majority interest in
Seminis to 77.5% enhancing its ownership in a subsidiary that has
demonstrated its cash generating potential.

The agreement, which remains subject to Seminis' stockholders and
Savias' Bank lenders approval, will allow the company to exchange
all of its outstanding Class C Preferred Stock having a principal
value of $120.2 million, Additional Paid-In Capital ("APIC") of
$46.7 million and unpaid and accrued dividends on the Class C
Preferred Stock and APIC of $10.0 million into 37,669,480 shares
of Class A common stock. Upon completion, Savia will hold 78.3
million shares of the 101,106,543 total outstanding shares of
common stock. Accrued dividends on the Class C Preferred Stock in
the amount of $15.0 million will remain due and payable to Savia.
The holding company will receive this dividend in cash and will
apply it to its working capital needs.

The transaction will have a positive impact on Seminis' earnings
per share available for common stockholders. By excluding accrued
dividends on Class C Preferred Stock and Additional Paid in
Capital and increasing the number of common shares outstanding,
pro forma fully diluted earnings per share available for common
stockholders for the third quarter fiscal year 2002 would be
$0.04 per common share compared to a net loss of $0.01 per common
share as reported last week in the company's preliminary results.
Under the same assumptions, pro forma fully diluted earnings per
share available for common stockholders for the first nine months
of fiscal year 2002 would be $0.09 per common share, compared to
a net loss of $0.05 per common share.

Mr. Alfonso Romo, Chairman and Chief Executive Officer,
commented: "We have brought the company to a point where we can
enhance our capital structure to make Seminis a more attractive
investment vehicle. These actions will provide the stockholders
with a stronger and more transparent capital and ownership
structure for the company. Equally important, this is
accomplished while preserving the cash available to achieve our
growth objective. This represents another important milestone for
Seminis and its growing financial strength."

Mr. Romo added: "By freeing Seminis from nearly $17 million in
annual dividend payments, we will positively impact our earnings
per share available to common stockholders. Common stockholders
will benefit from not having the company's current Class C
Preferred Stockholders with preferential rights over them."

"Also," he noted, "the equity of the company will no longer be
affected by payments on this Class C Preferred Stock. As a
consequence, the debt to equity ratio will have better trend."

The agreement, which received a Fairness Opinion from UBS
Warburg, was recommended by a special committee composed of
independent directors of Seminis' Board of Directors and has been
approved by Seminis' Board of Directors.

Savia ( participates in industries that offer
high growth potential in Mexico and internationally. Among its
main subsidiaries are: Seminis a global leader in the
development, production and commercialization of fruit and
vegetable seeds. Bionova, a company focused the distribution of
fresh fruits and vegetables in the NAFTA region, and Omega a real
estate development company.

To see Savia's latest financial statements:

         Investor Relations:
         Francisco Garza
         Phone: 5281-81735500
         Fax: 5281-81735508


GALICIA URUGUAY: Argentine Parent In Search of Foreign Investors
Struggling to avert liquidation of its Uruguayan subsidiary,
Banco de Galicia y Buenos Aires S.A., Argentina's third-largest
private bank in terms of deposits, is seeking a foreign partner
to invest in the financially beleaguered unit.

Citing banking executives, EFE reports that Banco Galicia intends
to search for a foreign partner for Banco Galicia Uruguay (BGU)
as soon as an agreement is reached with depositors. The
subsidiary is returning 100% of deposits, either in cash (3%),
fixed-term certificates of deposit or bonds.

BGU, which operates a full banking license in Uruguay and is the
country's biggest non-government bank by deposits, is facing an
imminent takeover by the Uruguayan Central Bank (BCU) because of
liquidity woes.

The bank was intervened by BCU and had its operations
subsequently suspended after losing some US$500 million between
December and January.

BGU had about US$1 billion of deposits, US$1.67 billion in assets
and US$231 million in shareholders equity as of Dec. 31. It has
some 13,000 clients, most of them Argentines.

          Tte. Gral Juan D. Peron 407
          1038 Buenos Aires, Argentina
          Phone: +54-11-6329-0000
          Fax: +54-11-6329-6100
          Home Page:

          World Trade Center
          Luis A. Herrera 1248 Piso 22 Montevideo
          Tel.:(+598-2) 628-1230


SIVENSA: Currency Shift Leads to $6.3M Profit Despite Slow Sales
Siderurgica Venezolana Sivensa is now back in the black after it
generated profits of US$6.3 million for the quarter ended June
30, against a loss of US$15.4 million in the same year-ago

According to a report by Bloomberg, the results of Venezuela's
largest publicly traded steel company were helped by the
country's decision to allow the currency to trade freely. Since
then, the bolivar has depreciated 44%, increasing the value in
domestic currency of the steel maker's dollar assets and

Operating profit fell 37% to US$2.78 million from US$4.42
million. Revenue dropped 25% to US$69.1 million from US$92.3

          Torre America, Piso 12
          Av. Venezuela
          Bello Monte
          Caracas, Venezuela
          Phone: (0212) 707.6200 /6145
          Fax. (0212) 762.9938 - 707.6335
          Home Page:
          Armando Rondon,  Corporate Planning Manager
          Phone: (58) (212) 707.62.80 / 707.61.27
          Fax: (58) (212) 707.63.52

          Peggy Medina
          Transfer Agent. Planivensa
          Phone: (58) (212) 707.64.66 / 707.64.68
          Fax: (58) (212) 707.64.56

SIVENSA: Reaches Debt Restructuring Accord With Banks
Sivensa, which defaulted on debt payments in December after weak
steel prices reduced revenue, concluded a $254-million
restructuring debt agreement with banks, Bloomberg reports,
citing a company statement.

Under the agreement, bank creditors acquired 15% of Sivensa's
shares and agreed to extend repayment of the debt to 2007 from
2001. Sivensa isn't required to pay interest on half the debt.

Banks also have the option to increase their equity stake in the
Company to as much as 80% depending on how much the steel maker
repays in 2007, Sivensa said.

Sivensa began talks in January, less than a year after it
refinanced US$245.8 million in debt with 16 banks. The Company
borrowed US$50 million each from Banque Paribas, Citicorp
Securities, ING Barings and Deutsche Morgan Grenfell in early
1998 to refinance short-term debt it assumed to acquire a stake
in steelmaker Siderurgica del Orinoco SA in December 1997.

VANNESSA VENTURES: Publicly Rebuts CVG Accusations
Vannessa Ventures Ltd. responded to a recent press release issued
by Corporacion Venezolana de Guayana (CVG) through Canada
NewsWire on July 24, 2002. The release, written and distributed
out of Miami and paid for by unknown entities, was based largely
on a fictitious report allegedly produced by a government

The release has since been pulled off Canada NewsWire's web site
because Imago Communications, the firm that has been representing
CVG, refused to disclose the party that authorized the release.

Instead of engaging in a direct dialogue with stakeholders
involved in the Las Cristinas deposit, namely Vannessa and the
Company's 95% owned Minera Las Cristinas (MINCA), CVG and certain
parties have chosen to wage a campaign of misinformation aimed at
discrediting Vannessa with the Venezuelan people and the
international mining and exploration community at large.

This latest attempt by CVG and other interested parties, which
have been unable to achieve their goals by legal means, is an
unnecessary and deplorable escalation of the dispute, the very
antithesis of building trust and honoring rights so essential to
the effective and speedy development of Las Cristinas.

The allegations raised in the release are patently obvious to
anyone familiar with the historical development of the Las
Cristinas project. Not responding will confuse Company's
stakeholders and interested parties who are unfamiliar with the
dispute and encourage more mudslinging from CVG and its


Considering the time-consuming and drawn out nature of proving
any mineral discovery economic, CVG's $500 million statement is
hyperbolic. MINCA only entered into an agreement with CVG to
carry out exploration, development and exploitation of alluvial
and vein deposits of gold and diamonds at Las Cristinas in 1992.

It was not until the spring of 1997 that a feasibility study was
completed and all licenses for the development were issued by the
Venezuelan government. During that period, well over US $100
million was spent on exploration, drilling, and commissioning the
feasibility study.

Shortly after that date, a court case initiated by Crystallex
International Corp. delayed the startup of construction until
Crystallex's claim was rejected by the Supreme Court of Venezuela
in June 1998. By that time, the price of gold had fallen to $250.
Subsequently, MINCA's Board of Directors, including two directors
representing CVG, approved the suspension of mine construction.

Also, considering a construction period of two to three years for
a project of that magnitude, the earliest date for production
would have been 2001. How CVG, with only five per cent equity
interest, could have earned US$500 million in a possible one-year
operation is anybody's guess.

MINCA has a three-phase plan that would have seen the Las
Cristinas project activated immediately and subsequently
developed in stages as dictated by the economics of the project
and the gold price.


CVG's press release states that Vannessa is carrying a deficit of
CDN $11 million "which reflects irregular financial situation
that does not inspire confidence."

It's true Vannessa had an accumulated deficit of $11 million as
at March 30, 2001. However, more than half of that amount, $6.5
million, is completely unrelated to Vannessa's activities and was
carried over from an inactive shell company Vannessa took over
when it went public in 1996.

It is normal for an exploration company to incur deficits during
property investigations and exploration and to write off those
costs when properties turn out to be uneconomic. Such losses,
however, are often more than offset by mineral discoveries or
advances made in moving a mineral deposit closer toward
production as evidenced by Vannessa's success in bringing
Guyana's first alluvial diamond mine into production and
advancing Costa Rica's Cerro Crucitas project to the
environmental permitting stage, one step short from production.



The release mentioned a report commissioned by the Venezuelan
government that is based on the "findings of a thorough
investigation undertaken at the Vancouver Stock Exchange"
regarding Vannessa's financial performance.

This is completely false. There has never been an investigation
to begin with. Furthermore, the Vancouver Stock Exchange no
longer exists.


Vannessa's diverse geographic reach, focus on operational
excellence and strong financial conditions have enabled it to
extract maximum value from distressed projects that became
available in the last several years.

Las Cristinas was no exception. Upon taking over the project from
Placer Dome, Vannessa had a plan in place to put Las Cristinas
into production in staged development. At the time, the Company
had a US $50 million line of credit to back up its plan. CVG
never gave MINCA an opportunity to implement its plans and, by
seizing the property, put hundreds of people out of work.

Regarding the Company's Cerro Crucitas' project in Costa Rica,
the Company has an indicative letter of financing from a large
financial institution to fund the project's US $28 million costs.

Vannessa's Maple Creek alluvial diamond mine is now operating.
The project is fully funded and is moving forward from a position
of strength.

Vannessa's projects may experience unexpected delays from time to
time due to factors beyond its control - and such challenges are
to be expected - but overall, the Company remains on track to
achieving its goals and objectives.


The Company has no conflicts in Costa Rica. Review of Vannessa's
Environmental Impact Statement is ongoing. There is no legal
challenge to Vannessa's Cerro Crucitas project or any other
projects, only an understandable desire by the Costa Rican
government to protect the environment, a commendable goal shared
by Vannessa.


MINCA, its legal representatives, journalists and shareholders
who have tried to obtain the report have been unable to do so.
According to the Secretariat of the Venezuelan government, no
such report is known or available for distribution.

A report by the "sub-Committee on Foreign Affairs" has been
quoted in one Venezuelan newspaper; however it turned out to be a
"paid advertisement" placed by the same Miami agency and not
identified as a "paid advertising" item at the time of
publication. MINCA is currently taking legal steps with respect
to the fictitious placements.


No comment.


CVG's continuing refusal to engage in a dialogue with MINCA has
set back the development of Las Cristinas and impaired the social
and economic development of communities in the region.

CVG's unlawful seizure of the mine site set a bad national
precedent and risks scaring off much needed foreign investment
which Venezuela requires to alleviate social and economic
problems. More than the ownership of Las Cristinas is at stake:
Venezuela's very own legal foundation and a sense of order which
encourages individuals and businesses to plan for the future and
to make rational decisions are also at risk.

This CVG-initiated dispute may look like a domestic squabble, but
the outcome will have broad international impact. CVG's action
must be reversed soon before the fallout from its action deters
foreign investment and does serious damage to Venezuela's
exploration and mining industry.

The protection of foreign investment and the need for fair due
judicial process are issues basic to all civil societies. Any
working, or aspiring, democracy has to decide how to make room
for fundamental rights of foreign businesses operating
legitimately within the bounds of national laws. Vannessa is
confident that in the end justice will prevail and that MINCA's
rightful ownership of Las Cristinas will be confirmed by the

Vannessa Ventures Ltd.'s shares are traded under the ticker
symbol VVV on the Toronto Venture Exchange, VNVNF on the OTC
Bulletin Board and VVT-WKN 914781 on the Berlin Stock Exchange.


Manfred Peschke, President

The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of the content of
this News Release.

          1710-1040 West Georgia Street
          Vancouver, B.C., Canada, V6E 4H1
          Tel: (604) 689-8927
          Fax: (604) 689-8907

          Kelly Samuels, B.Sc.
          (Geol.), Corporate Communications (604) 689-8927


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.

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