TCRLA_Public/020820.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

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

           Tuesday, August 20, 2002, Vol. 3, Issue 164



AEROLINEAS ARGENTINAS: Proposes Exit From Creditor Protection
BANCO HIPOTECARIO: Suspends Principal, Interest Payments
BANCO HIPOTECARIO: S&P Drops Ratings to 'D' After Suspension
SCOTIABANK QUILMES: Parent Expects Total Exit By This Week


FOSTER WHEELER: Loss Widens on $48.7 Million Goodwill Impairment
FOSTER WHEELER: Rolls Over Debt With New Credit Facilities


ACESITA: Struggles To Improve Financial Situation
COPEL: Reports Strong 1H02 Results Despite Real Slide
COPENE: Fitch Affirms Advisory Rating Assigned To Braskem
ELETROPAULO METROPOLITANA: Extends Deadline on Debt Talks
ESCELSA: Moody's Downgrades Debt Rating To B2

NATSTEEL BRASIL: Board Reports On $350M Sale Process
NET SERVICOS: Concludes Successful Recapitalization
NET SERVICOS: Seeking New Revenues From Network Lease Deals
TELEGLOBE: Sale Hearing Continued to August 29


MANQUEHUE NET: Fitch Drops Ratings To 'CCC+'; Outlook Negative


GRUPO IUSACELL: Review Outcome May Lead To Moody's Cut


FERTINITRO FINANCE: Moody's Cuts Ratings on Weakening Cash Flows

     - - - - - - - - - -


AEROLINEAS ARGENTINAS: Proposes Exit From Creditor Protection
If creditors accept its recently-submitted proposal, Aerolineas
Argentinas SA could manage to pull itself out of the current
creditor protection program under which it is operating.

In its proposal, the embattled airline offered to repay creditors
40% of its US$2.5 billion debt over the next two years. According
to El Cronista newspaper, Aerolineas has offered to make 15% of
the US$1-billion payout in three months, 30% in 12 months and 55%
in 24 months if its 600 creditors accept the plan.

Air Comet, led by Spanish travel company Viajes Marsans, bought
Aerolineas last October from the Spanish government holding
company SEPI. The sale was regarded as a bargain basement buy at
US$615 million.

Claiming Aerolineas Argentines was running up operating losses of
US$300 million per year and had a backlog of over US$900 million
in accumulated liabilities, a Madrid-appointed board filed for
bankruptcy protection and was about to close down when a buyer
came forward.

          Torre Bouchard 547, 1106 Buenos Aires, ARGENTINA
          Phone: (54-11) 4310-3000
          Fax: (54-11) 4310-3585
          Home Page:
          Patricio Zabalia Lagos, President

          AIR COMET
          Baha de Pollensa, 21-23
          Edificio Airplus
          28042 Madrid
          Phone: 913 993 674
          Fax:  913 291 146
          Antonio Mata, presidente de Air Comet

BANCO HIPOTECARIO: Suspends Principal, Interest Payments
The embattled Argentine financial system prompted Banco
Hipotecario SA to suspend principal and interest payments on
about US$1.15 billion in international debt, relates Bloomberg.
In a statement to the Buenos Aires bourse, Company spokesman Jose
Luis Olivero said that Argentina's biggest mortgage lender
defaulted on US$300 million in loans and US$850 million in bonds.

The default comes five months after bondholders agreed to extend
maturities and reduce interest on debt due this year. The news
underscores a worsening situation in the South American nation's
financial system. The bank hired ABN Amro NV and Salomon Smith
Barney, a unit of Citigroup Inc., to restructure the debt.

Hipotecario, owned by Argentina's IRSA Inversiones y
Representaciones SA and the government, had ARS4.3 billion
(US$1.2 billion) in assets at yearend.

          Reconquista 101
          (1005) - Capital Federal
          Buenos Aires
          Phone: 0800-999-4476
          Fax: (54-11) 4347-5278
          Home Page:
          Miguel A. Kiguel, Chairman


          388 Greenwich St.
          New York, NY 10013
          Phone: 212-816-6000
          Fax: 212-793-9086
          Home Page:
          Michael A. Carpenter, Chairman and CEO
          Michael J. Day, EVP and Controller

          Foppingadreef 22
          1102 BS Amsterdam, The Netherlands
          Phone: +31-20-628-9393
          Fax: +31-20-629-9111
          Home Page:
          Investor Relations(HQ1191)
          Gustav Mahlerlaan 10
          PO Box 283
          1000 EA Amsterdam
          The Netherlands
          Phone: +31 (0) 20 628 78 35
                 +31 (0) 20 628 78 37

BANCO HIPOTECARIO: S&P Drops Ratings to 'D' After Suspension
Standard & Poor's Ratings Services said that it lowered its
outstanding ratings on Banco Hipotecario S.A. to 'D' following
the bank's announcement that it will suspend payment on all of
its debt issues and begin a restructuring process intended to
give more equitable treatment to all of its creditors.

"The bank, along with the rest of the Argentine financial system,
has been adversely affected by the asymmetric devaluation of the
peso because all of its dollar-denominated loans were converted
into pesos at 1 to 1 exchange rate, with the principal indexed to
average salary variations, which typically lag behind inflation,"
noted Standard & Poor's credit analyst Gabriel Caracciolo."

Banco Hipotecario's funding structure consists almost completely
of dollar-denominated, cross-border debt. As a result, the
conversion has created a significant and growing currency gap
(which has not been compensated for by the government yet) that
has eroded its once-big equity base and heavily impaired its
capacity to generate enough cash flows to repay the debt.

CONTACT:  Gabriel Caracciolo, Buenos Aires
          Phone: (54) 114-891-2100

          Reconquista 101
          (1005) - Capital Federal
          Buenos Aires
          Phone: 0800-999-4476
          Fax: (54-11) 4347-5278
          Home Page:
          Miguel A. Kiguel, Chairman

SCOTIABANK QUILMES: Parent Expects Total Exit By This Week
Bank of Nova Scotia, the fourth-largest bank in Canada, could
pull out of Argentina as early as this week after locally owned
Banco Comafi SA and Banco Macro SA offered to take charge of
some, or all, of the 91 branches of its local unit Scotiabank

After the country defaulted on debt and devalued its currency,
Scotiabank is seeking to limit losses in Argentina by abandoning
its business and refusing central bank demands to bring in new

So far, Argentina's central bank hasn't revealed terms of the
transaction. Comafi and Macro are presenting a joint proposal to
take over Scotiabank Quilmes SA's assets and liabilities.
Regulators asked the two banks to revise initial proposals in
order to retain more Scotiabank employees, the central bank said.

Scotiabank has lost CAD707 million (US$452 million) in Argentina
since the country defaulted on US$95 billion of bonds in

           Alan Macdonald
           Chief Executive Officer
           Phone: (54-11) 4338-8000
           Fax: (54-11) 4338-8033
           Mail: 6th Floor
           Gral. J.D. Peron 564
           (C1038AAL) Buenos Aires

           Roy D. Scott
           Vice-President and Managing Director, Latin America
           Phone: (54-11) 4394-8726
           Fax: (54-11) 4328-1901
           Mail: P.O. Box 3955
           C1000WBN Correo Central
           Buenos Aires, Argentina


FOSTER WHEELER: Loss Widens on $48.7 Million Goodwill Impairment
Foster Wheeler Ltd. (NYSE:FWC) announced that it recently
finalized its valuation of goodwill impairment for one of its
Engineering and Construction units under the two-step evaluation
provisions of SFAS No. 142.

Accordingly, the Company has recorded an additional goodwill
impairment charge of $48.7 million in the second quarter. This
charge has been accounted for as the cumulative effect of a
change in accounting principle under the transition rules of SFAS
No. 142. The additional impairment charge includes a $24.0
million charge related to the same reporting unit previously
included as an asset impairment in the Company's second-quarter
earnings release, dated July 31, 2002. The Company is reporting
the charge at this time because it finalized its evaluation of
the goodwill impairment subsequent to the release of its second-
quarter earnings, but prior to the filing of its second-quarter

The net losses after the cumulative effect of a change in
accounting principle for goodwill impairment for the three and
six month periods ended June 28, 2002 were changed to $85.0
million and $183.1 million, respectively, in the second-quarter
financial statements. This compares to the previously reported
losses of $109.0 and $158.4 million, respectively.

In addition, as a result of performing the step one assessment
under SFAS No. 142 management has determined that a substantial
portion of the goodwill at an additional reporting unit in its
Energy Group may be impaired. The Company anticipates finalizing
the necessary step two evaluation procedures required under SFAS
No. 142 in the third quarter. The amount of goodwill related to
this reporting unit amounts to approximately $77.0 million.

Foster Wheeler Ltd. is a global company offering, through its
subsidiaries, a broad range of design, engineering, construction,
manufacturing, project development and management, research,
plant operation and environmental services. The corporation is
based in Hamilton, Bermuda, and its operational headquarters are
in Clinton, N.J. For more information about Foster Wheeler, visit
our World Wide Web site at

To see financial statements:

         John Doyle
         Phone: 908/730-4270
         Other Inquiries:
         Phone: 908/730-4000

FOSTER WHEELER: Rolls Over Debt With New Credit Facilities
Foster Wheeler Ltd. (NYSE: FWC) on Friday announced that it has
entered into new credit facilities, which will extend into 2005.
The new facilities will provide $82 million in increased
liquidity to the company. As a result of securing the new credit
facilities, $904 million of the company's $1.1 billion in
outstanding debt, previously classified as current, has been
reclassified as long-term. In addition, the company reported cash
balances worldwide of $344 million as of June 28, 2002.

The new credit arrangements include a $290 million senior secured
term loan and revolving credit facility that matures in April
2005, and has no scheduled principal payments prior to maturity.
The company has also entered into a $40 million receivables sale
agreement that matures in August 2005, and has replaced its
previous lease financing facility associated with its Clinton,
New Jersey, headquarters complex.

"I am extremely pleased that we have completed these
transactions, which provide greater financial flexibility and
enable us to be more competitive in the markets we serve," said
Raymond J. Milchovich, chairman, president and chief executive
officer of Foster Wheeler Ltd. "We now have the ability to
continue with our performance improvement initiatives, which
include a plan to generate more than $150 million in cash over
the next six months by monetizing assets, resolving project
claims and collecting overdue receivables."

The $290 million senior secured facility includes term loan,
revolver, and letter of credit components. This facility replaces
the company's previous bank credit facility. It is secured by the
domestic assets of the company, the assets and stock of its
domestic subsidiaries (excluding the accounts receivable of
certain subsidiaries), and a majority of the stock of its first-
tier foreign subsidiaries. The company is also required to
provide security for its outstanding 6 3/4 % Senior Notes, due
2005, pursuant to the indenture under which they were issued. The
Senior Notes will share, on a pari passu basis with the revolver,
a portion of the security pledged under the senior secured credit

The new $40 million receivables sale agreement replaces the
company's previous $50 million agreement, which was terminated
and repaid earlier this year. The company's previous lease
financing facility, associated with its Perryville III office
building, was replaced by a sale-leaseback agreement in
connection with the company's Perryville I building. Both
buildings are located at Perryville Corporate Park, Clinton, New

Also, as the company announced on July 31, 2002, under the terms
of the senior secured credit facility, Foster Wheeler has agreed
to continue to defer the dividend on its Preferred Capital Trust
I Securities.

Foster Wheeler Ltd. is a global company offering, through its
subsidiaries, a broad range of design, engineering, construction,
manufacturing, project development and management, research,
plant operation and environmental services. The corporation is
based in Hamilton, Bermuda, and its operational headquarters are
in Clinton, N.J. For more information about Foster Wheeler, visit
our World Wide Web site at

         John Doyle
         Phone: 908/730-4270
         Other Inquiries
         Phone: 908/730-4000


ACESITA: Struggles To Improve Financial Situation
Acesita, currently battling with dollar-denominated debts
totaling US$790 million and many short-term expirations, is
taking steps to improve its debt position.

Citing Rony Stefano, a steel analyst for BBV investment bank,
Business News Americas reports that the Belo Horizonte-based
stainless steel maker is looking to offload its 20% stake in slab
maker CST. The most likely buyer would be Luxembourg-based steel
group Arcelor, which has stakes in the two Brazilian mills, he

The acquisition of Acesita's 20% stake in CST would allow Arcelor
to inject capital into the ailing company and push forward
negotiations for a possible merger between CST and Belo
Horizonte-based flat steel maker Usiminas.

Besides Acesita's stake in CST, valued at US$500 million, Arcelor
holds another 17% in the slab maker's total capital.

"We are working with the controllers in search of the best
structure," Luiz Anibal de Lima Fernandes, Acesita's president

Besides Arcelor's 39% stake in CST's total common shares, other
investors with common shares include Brazilian pension funds
Previ (19%), Sistel (12%) and Petros (5.7%).

Acesita's net losses ballooned 114% to BRL239 million (US$80
million) for the first half of this year compared to the same
period last year. Its heavy debts stem from a round of
investments totaling US$780 million starting in 1992 and ending
in the first half of 2002. The company expects its results to
improve in the second half of the year.

"This will be a year of two very distinct halves," the president
said. After divesting other product lines, the strategy is to
concentrate on the production and sale of stainless steel. Lima
said the stainless steel market grows 6% per year.

          Avenida Joao Pinheiro, 580
          30130-180 Belo Horizonte, Minas Gerais, Brazil
          Phone: +55-31-3235-4200
          Fax: +55-31-3235-4294
          Luiz A. de Lima Fernandes, President
          Bernardo C. Marie Del Litto, Industrial Director
          Guilherme Amado, Financial Superintendent

COPEL: Reports Strong 1H02 Results Despite Real Slide
Companhia Paranaense de Energia - COPEL (NYSE: ELP / LATIBEX:
XCOP / BOVESPA: CPL3, CPL6), a leading Brazilian utility company
that generates, transmits, and distributes electric power to the
State of Paran , announced Thursday its operating results for the
six months of 2002. All figures included in this report are in
reais (R$) and were prepared in accordance with Brazilian GAAP
(corporate law).


- Net Income: Net income for the first half of 2002 amounted to
R$ 88.4 million, representing a profit of R$ 0.32 per lot of one
thousand shares and an "EBITDA margin" of 40.7%.

- Market Expansion: From January through June 2002, total power
consumption throughout COPEL's direct distribution area amounted
to 8,676 GWh, representing an increase of 0.8% over the same
period in 2001. However, total power consumption was 6.0% higher
in June 2002 than in June 2001.

- Capital Raising: In May 2002, COPEL successfully re-negotiated
to extend the terms of all of its Eurobonds, in the amount of US$
150 million, by three years, at a rate of 9.60% a year, through a
syndicated loan, and completed a second issuance of non-
convertible debentures in the amount of R$ 500 million, split in
three series. Series 1 and 2, amounting to R$ 100 million each,
are indexed to the CDI (Interbank Deposit Certificate) rate plus
a spread of 1.75% a year. Series 3, amounting to R$ 300 million,
is indexed to the IGP-M inflation index plus a spread of 13.25% a
year. Also in May 2002, COPEL paid a tranche of its Euro
Commercial Paper in the amount of US$ 67.2 million (R$ 167
million). With this capital raising and debt rollover, and after
the euro commercial paper payment, the Company has lengthened the
term of its debt profile and reduced its exposure to the US
dollar. On March 2002, of Copel's total debt was in foreign
currency, and 37.3% in domestic currency. By the end of June
2002, these percentages changed to 46.6% (foreign currency debt)
and 53.6% (domestic currency debt).

- The Abradee Award: For the third time in four years and the
second time in a row, COPEL was named the best power distribution
company in Brazil. This award is sponsored annually by the
Brazilian Association of Power Distribution Companies - ABRADEE.

- Latibex: Since June 19th 2002, COPEL's stock has been traded on
the European financial market. The Company's debut on the old
continent took place on Latibex, an exchange linked to the Madrid
Stock Exchange in Spain, where securities from Latin-American
companies are traded in Euros.

- Cien - On May 1st 2002, Cien's first line to COPEL entered
commercial operation. The amount of power contracted by COPEL, in
the first stage of the project, is 400 MW. The second Cien line,
which provides COPEL with an additional 400 MW, entered in
operation on August 1st 2002.

- Rate Increase: Under ANEEL Resolution no. 336, dated June 20th
2002 and effective June 24th 2002, COPEL Distribution's rates for
sales to final customers were increased by 10.96%.


COPEL's net income was R$ 88.4 million for the first six months
of 2002. Net revenues reached R$ 1.3 billion, compared to the R$
1.0 billion reported in same period of 2001. This 19.4% increase
reflects the 17.31% increase in retail tariffs effective June
24th, 2001 and the increase in wholesale tariffs occurred in
2001. The operating results reached R$ 153.9 million, a 40%
growth over the same period last year.

The market grew 0.8% when compared to the first semester last
year. This poor growth reflects the voluntary energy savings of
our residential and commercial customers, who consumed 3.3% and
0.5% less energy, respectively, compared to the same period last
year. If we compare the month June 2002 with June 2001, the
market increase was 6.0%, with very good growth rates for the
residential class (3.5%), industrial class (8.6%) and commercial
class (5.4%). This positive increase reflects the recovery of
consumption recovery following the voluntary energy savings.

COPEL's total customers as of June 30, 2002 reached 2,972,028, a
2.8% increase when compared to the same period of the previous

At the end of June 30, 2002, total operating expenses reached R$
882.7 million, a 11.8% increase over the same period last year
(789.6 million). The main reasons for this increase are:

- The R$ 45.4 million registered in pension fund basically
reflects, from 2002 on, the accounting of the increased
provisions for liabilities, caused by actuarial computation, in
accordance with Brazilian rules (CVM Resolution n. 371/2001).

- The 43.1% increase in "electricity purchased for resale"
basically reflects the purchase of energy from CIEN and the
exchange rate variation in this period, since the energy that
COPEL purchases from Itaipu is priced in dollars.

- Other operating expenses decreased 33.8% if compared to the
same period last year. This variation occurred due to the
accounting of R$ 12.8 million, in the second quarter 2001, as
additional provision for the Cofins charges.

The increase in financial expenses in this semester compared to
the same period last year, reflects basically the devaluation of
the Real, causing the company to account monetary variation.
Permanent assets increased by 1.3 % in the first six months of
2002, as a result of the increase in COPEL's investments in its

The capital expenditures for the semester amounted to R$ 159.3
million. Of this amount, R$ 31.7 million was invested in power
generation, R$ 13.7 million in transmission, R$ 60.9 million in
distribution, R$ 8.9 in Telecom and R$ 44.1 million in

As of June 30, 2002, COPEL's total assets were R$ 9.5 billion.
Debt amounted to R$ 1.95 billion, with a net debt-to-equity ratio
of 38.0%.

"The Company's results reflect the effects of the voluntary
energy savings, brought about by the National Rationing Program,
as well as the exchange rate variation that occurred this
semester. From January through June, the Real devalued by 22.58%
in relation to the US dollar. Of this amount 22.41% happened in
just the second quarter", said Mr. Ricardo Portugal Alves.

To see financial statements:

CONTACT:  COPEL (in Brazil)
          Othon Mader Ribas
          Tel. 011-5541-222-2027

          Solange Maueler
          Tel. 011-5541-331-4359

          (New York)
          Richard Huber
          Tel. 212-807-5026

          Isabel Vieira
          Tel. 212-807-5110

COPENE: Fitch Affirms Advisory Rating Assigned To Braskem
Fitch Ratings has affirmed Friday the national scale advisory
rating of 'A+(bra)' for Braskem S.A. (Braskem). A corporate
reorganization involving COPENE - Petroquimica do Nordeste S.A.
(Copene), OPP PP, and the special-purpose company 52.114 is
expected to take place on Aug. 16, 2002, and will result in the
creation of Braskem. Copene is the major shareholder of Polialden
Petroquimica S.A. (Polialden) and Politeno S.A.; OPP PP is
shareholder of OPP Quimica S.A. (OPP), Trikem S.A. and Copesul;
and the special-purpose company 52.114 is shareholder of
Nitrocarbono S.A. On Aug. 16, 2002, as Braskem is effectively
constituted, this advisory rating will become the company's
effective rating and, at the same time, Copene's rating of 'A-
(bra)' will be withdrawn.

Braskem's rating is supported by the expectation of significant
economies of scale and operational synergies; vertical
integration; strong positions in domestic and regional markets; a
clear, controlling shareholder structure with an emphasis on core
activities; attractive local industry fundamentals; a competitive
production cost profile; and proven access to the international
capital markets. The assigned rating is tempered by the
challenging integration process; significant leverage; exposure
to volatile commodity chemical markets; refinancing risk and
limited financial flexibility; domestic market concentration;
cyclical sensitivity of end markets; and an uncertain
macroeconomic environment.

The Braskem project involves the combination of all petrochemical
interests held by the Odebrecht and Mariani groups. The entity
will be the South America's largest integrated petrochemical
company, encompassing six first- and second-generation companies.
Braskem's production capacity will represent approximately 39% of
the region's (Southern Cone) polypropylene output, 51% of its PVC
and 31% of its polyethylene. Estimated revenues are supposed to
be higher than BRL8.0 billion, and EBITDA will be about BRL3.0
billion through 2004.

The main issue behind the project is the conversion into cash of
significant operational, commercial and tax synergies, which are
projected to exceed a present value of US$949 million over 10
years. The aforementioned will benefit the company with annual
cash benefits of about BRL330 million. By end-2002, Braskem
intends to consolidate the minority interests in Trikem,
Polialden and Nitrocarbono, into the project. The company expects
the consolidation of the group companies into one entity to
represent only 15% of the annual cash benefits.

As of March 2002, Braskem will be highly leveraged, with a total
debt of approximately BRL5.5 billion, causing a total debt/EBITDA
ratio exceeding 4.0 times (x), thus limiting the entity's
financial flexibility. Fitch will keep the assigned rating to
Braskem depending on the utilization of the synergy benefit
proceeds to reduce its current indebtedness level. These concerns
allow for the decline of liquidity and refinancing risks as well
as the company's debt adequacy level to cash flow from
operations. Fitch will closely monitor Braskem's credit profile
progress, the fulfillment of capital structure goals, competitive
position within served markets and the use of integration
synergies. Braskem's competitive position will be superior to
Copene's, given the project's features along with the new
company's unified management.

Fitch currently assigns Copene, the main platform of the
integration, a national scale rating of 'A-(bra)', which does not
incorporate the effects of the proposal integration in its credit
profile. In April 2002, Copene's Rating Outlook was changed to
Positive from Stable, reflecting efforts made by the shareholders
to that date at the integration of their petrochemical interests
into the upcoming company, know as Braskem. Thus far, Proppet was
incorporated by Copene at end-2001, making the company one of
five second-generation petrochemical companies to be
incorporated. The incorporation process is expected to generate
annual benefits of about BRL15 million through logistical
improvements, tax gains and better purchasing price conditions.
Other present synergies of Braskem are composed of the management
integration of Polialden and Conepar and better naphtha supply
conditions, thus, resulting in lower working capital needs of
about BRL400 million in 2002.

On Aug. 16, 2002, the groups Odebrecht and Mariani will integrate
their respective petrochemical interests into Copene (100% of
total and voting capital at OPP, 38.1% of total capital and 69%
of voting capital at Trikem, 29.5% of total and voting capital at
COPESUL and 92.29% of total capital at Nitrocarbono). Copene will
then adopt the name Braskem. Before the integration, as part of
management's efforts to perform the integration with transparency
and shareholders' commitment to keep a certain level of financial
health and liquidity ratios, Odebrecht S/A took a BRL592 million
debt from OPP and Trikem through its whole subsidiary ODBPar.
This debt, granted by BNDES in exchange for the equivalent amount
in debentures issued by OPP, will become Braskem's debentures
following the incorporation. The debentures convertible into
stock will have a five-year maturity, with bullet and interest
payments at its maturity end.

To see financial statements:

          Carlos Augusto de Oliveira Freitas
          Tel: +55-71-632-5847
          Fax: +55-71-632-5047
          Breakstone & Ruth International
          Luca Biondolillo
          Tel: 646-536-7012
          Fax: 646-536-7100

          Alejandro Bertuol, New York,
          Phone: 212/908-0393
          Jayme Bartling, Brazil
          Phone: 55 11 287-3177
          Rafael Guedes, Brazil
          Phone: 55 11 287-3177

ELETROPAULO METROPOLITANA: Extends Deadline on Debt Talks
Eletropaulo Metropolitana SA, the Brazilian power distribution
unit of AES Corp., was supposed to conclude talks with
bondholders August 16 aimed at averting default on US$150 million
worth of bonds. However, according to a report by Bloomberg, the
deadline was extended by two working days to give investors
enough time to respond.

"Some investors didn't have enough time to tender a response so
we decided to give them two more days," said Andrea Ruschmann,
the Company's vice president of finance.

The talks were aimed at reaching an agreement to roll over 80%
the debt with investors asked to accept payment of US$22.5
million, or 15% of the debt on time and the rest in a year. About
US$120 million of the bonds under discussion is due Aug. 21.
Another $30 million is due Sept. 5.

Should Eletropaulo default on its debt, investors are likely to
reduce credit line availability to Brazil, where banks are
already curtailing lending amid a one-third collapse in bond
prices and 26% slide in the currency this year. The declines stem
from investor concern that an opposition candidate may win
October's presidential election, increase spending and spark a
default on the Brazil's BRL1 trillion (US$355 million) in debt.

Eletropaulo is scheduled to repay about US$600 million in debt
coming due by the end of the year, including a US$225 million
loan from a syndicate of 11 banks arranged by J.P. Morgan Chase &
Co. The loan comes due on Aug. 26. As of June 30, the Company
reported BRL237 million in cash on hand.

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.

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

          J.P. MORGAN CHASE & CO.
          270 Park Avenue
          New York, NY 10017
          Phone: (212) 270-6000
          Fax: (212) 270-1648
          Home Page:
          William Harrison, Jr., Chairman/Chief Executive Officer
          Dina Dublon, Chief Financial Officer
          Geoffrey Boisi, Co-CEO of the Investment Bank

          Investor Relations
          Phone: (1-212) 270-6000

ESCELSA: Moody's Downgrades Debt Rating To B2
Brazilian utility Espirito Santo Centrais Eletricas S.A.
(ESCELSA) had its foreign currency debt rating (senior notes)
downgraded to B2 from B1 by Moody's Investors Service. Moody's
took the action after downgrading Brazil's foreign currency
rating for bonds and notes to B2 from B1.

ESCELSA transmits and distributes electricity within Espirito
Santo, an industrialized state in southeastern Brazil. It also
indirectly owns 65% of ENERSUL, which transmits and distributes
electricity within Mato Grosso do Sul, a more agrarian inland

To see latest financial statements:

          Paulo Roberto Zibetti Jorge
          Investors Relations Coordinator
          Phone: 55-27-3321-9135
          Fax: 55-27-3321-9149

          Curtis Smith
          Thomson Financial
          Phone: 55-11-3838-0887 ext. 215


NATSTEEL BRASIL: Board Reports On $350M Sale Process
In an official announcement, Natsteel Ltd's Board of Directors
detailed the Revised Offer from Crown Central Assets Limited of
S$350 Million that was accepted, subject to shareholders'
approval. (All amounts in Singaporean Dollars)

The Board of Directors (the "Board") of NatSteel Ltd ("NatSteel"
or the "Company") refers to its announcement made on 11 July 2002
pertaining to the offer (the "Offer") from Crown Central Assets
Limited ("CCL") to acquire all the businesses, undertakings and
assets of the Company, together with its investments in all the
subsidiaries and associated companies of NatSteel (the "Group")
other than the investments of NatSteel in NatSteel Broadway Ltd
("NBL") and NatSteel Brasil Ltda, free from all bank borrowings
of the Group as at 31 December 2001 (the "Target Assets").

Outcome of Competitive Sale Process

The Board has solicited, received and evaluated various offers
for the Target Assets, including the revised conditional offer
("Revised Offer") from CCL (a conformed copy of which is
attached) and other offers received from third parties, in a
competitive sale process conducted by the Company and its
financial adviser, Salomon Smith Barney Singapore Pte Ltd
("Salomon Smith Barney").

The Company, through Salomon Smith Barney, contacted over forty
parties, invited a shortlist of five prospective purchasers to
conduct due diligence on the Target Assets which included access
to data room, management presentations and site visits and
negotiated actively with prospective purchasers.

The Board wishes to announce that it has evaluated the various
offers and has accepted, subject to the approval of the
shareholders of NatSteel ("Shareholders"), the Revised Offer. In
the event of a competing bid, Shareholders are not precluded from
voting on such a bid.

Rationale for Accepting the Revised Offer, subject to
Shareholders' Approval

In making its decision, the Board's objectives are to act in the
interests of NatSteel, its employees and Shareholders as a whole
and to maximize shareholder value. The purchase consideration of
S$350 million under the Revised Offer represents a substantial
increase of 19 per cent over the original Offer of S$294 million.

The terms of the Revised Offer are also more attractive than that
of the other offers received by the Board. The Revised Offer
implies a higher value per share to Shareholders than the share
price of NatSteel as at the close of business on 16 August 2002,
and is anticipated to result in Shareholders receiving cash
distribution from the sale of the Target Assets to CCL in a
reasonable time frame.

The Revised Offer also takes into account the interest of
employees as CCL has confirmed in the Revised Offer that it plans
to operate the core businesses in substantially the same manner
as they are currently operated with plans to grow the Asian steel
franchise in key growth markets such as China.

Key Terms of the Revised Offer

Under the terms of the Revised Offer, CCL will pay S$350 million
("Purchase Consideration") in cash for the Target Assets less net
bank borrowings (excluding NBL), as measured by the consolidated
net debt (excluding NBL) as stated in the Company's audited
financial statements as at 31 December 2001.

The Revised Offer is subject to a number of conditions including
the execution of a definitive sale and purchase agreement, which
will include the following conditions precedent:

(a) the approval of the shareholders of NatSteel for the
transactions contemplated under the Agreement being obtained at a
shareholders' extraordinary general meeting ("EGM") and such
approval not being varied or revoked on or before Completion; and

(b) the completion of the disposal of the NatSteel's investment
in NatSteel Brasil Ltda. NatSteel will be required to pay a
termination fee of 3 per cent. of the Purchase Consideration in
the event that there is a successful competing offer (other than
by or on behalf of CCL) for (i) more than 50 per cent. of the
shares in the Company or (ii) all or substantially all of the
assets of the Group (including for the avoidance of doubt,
NatSteel) (whether by way of merger, purchase of shares, purchase
of assets or otherwise).

Evaluation of the Revised Offer

Upon satisfactory completion of the acquisition by CCL of the
Target Assets and the sale of NatSteel Brasil Ltda, NatSteel will
be an investment holding company with an expected total cash of
approximately S$733 million which includes cash from proceeds of
the Revised Offer of S$350 million less consolidated net debt as
at 31 December 2001 (excluding NBL) of S$211 million, proceeds
from the sale of NBL of S$334 million, estimated proceeds
(assuming tax free) from the sale of NatSteel Brasil Ltda of
S$249 million, proceeds of exercise of options and after netting
off estimated expenses. This represents approximately S$1.90 per
ordinary share of S$0.50 each in the capital of the Company,
based on a fully diluted share capital of 386.3 million shares on
liquidation. Under the original Offer of S$294 million, the cash
per share on a comparable basis is S$1.75 per share.

Preliminary Recommendation of the IFA, the Audit Committee and
the Special Committee

The independent financial adviser ("IFA"), ANZ Singapore Limited,
has reviewed the Revised Offer and other offers received to date
and has (subject to relevant legal documentation) at this stage
provided a preliminary recommendation to the Board to accept the
Revised Offer.
The proposed sale of the Target Assets to CCL will constitute an
"interested person transaction" under Chapter 9 of the Singapore
Exchange Securities Trading Limited ("SGXST") Listing Manual.

The Special Committee, comprising all members of the Audit
Committee (Mr Thai Chee Ken, Dr Cham Tao Soon and Mr Oliver Tan
Kok Kheng) and 2 other Independent Directors, Mr Lim Chee Onn and
Dr Tan Tat Wai, has reviewed the terms of the Revised Offer and
based on the preliminary view of the IFA, is of the preliminary
view that the sale of the Target Assets to CCL is on normal
commercial terms and the terms of such sale are not prejudicial
to the interests of NatSteel and its shareholders.

Further details of the Revised Offer, the final recommendation of
the Audit Committee and the advice of the IFA will be contained
in the shareholders' circular to be issued by the Company for the
purposes of convening an EGM. It is expected that at the EGM, the
approval of Shareholders will be sought for, inter alia, the
acquisition of the Target Assets by CCL and the voluntary
winding-up of the Company.

Process Going Forward

Subject to the conditions explained earlier, the sale of the
Target Assets to CCL is scheduled to complete during the fourth
quarter of 2002. The table below sets out the approximate timing
of key events (including the process relating to the voluntary
liquidation of the Company). Such timing is indicative and
subject to change.

Indicative Date          Key Event

End September 2002       Despatch of circular to Shareholders and
                         notice of EGM by NatSteel

October 2002             EGM to approve the Revised Offer and
                         voluntary liquidation of the Company

End of November 2002     Completion of the sale of the Target
                         Assets to CCL and suspension of trading
                         of shares in NatSteel

January 2003             Commencement of liquidation process and
                         interim payment to Shareholders

By end 2003              Dissolution of the Company and final
                         payment to Shareholders

The Board expects to the extent possible to make a payment as
soon as practicable to Shareholders pending the formal
liquidation of the Company. The Board is advised that in making
such payments, the Board will need to consider a number of
constraints including the availability of distributable reserves,
franking credits (to the extent applicable when distributions are
made) and the ability of the Company to make distributions in the
course of the liquidation process.

Assuming the transaction completes in the fourth quarter of 2002,
the Board expects to make an interim payment some time in January
2003. The remaining cash is expected to be distributed over the
remaining part of the year 2003.

Suspension of Trading on 16 August 2002

As part of the competitive sale process referred to above, the
Board received on 16 August 2002 a proposal in connection with
the shares in NatSteel and on that basis, suspended the trading
of such shares on the SGX-ST. The consideration under such
proposal was less than that under the Revised Offer. The proposal
was subject to further due diligence, financing, numerous
conditions precedent, warranties and undertakings by the Company.
In light of the terms of the Revised Offer vis-a-vis the terms of
the proposal, the Board has accepted, subject to Shareholder's
approval, the Revised Offer.

Interests of Directors and Substantial Shareholders

Save for Mr Ang Kong Hua (who is a director of the Company and
CCL), Mr Eric Ang Teik Lim (who is an officer of The Development
Bank of Singapore Ltd ("DBS Bank")) and DBS Bank (who is
providing financing to CCL), none of the other directors or
substantial shareholders of the Company has any interest in the
proposed sale of the Target Assets to
CCL. In view of its interests, DBS Bank has notified the Company
that it will abstain from voting at the EGM.

The Board will continue to keep the Shareholders informed as
developments warrant. In the meantime, the Shareholders are
advised to refrain from taking any action in relation to their
shares in the Company which may be prejudicial to their

17 AUGUST 2002


COMMUNICATIONS ADVISORS:  Weber Shandwick Singapore
                          Tel: +65 6825 8000
                          Andrew Pirie (Co-President,
                                        Asia Pacific)
                           Peter Poulos (Senior Vice President)
                           Ng Chip Keng (Account Manager)
                           DID: +65 6825 8084

FINANCIAL ADVISORS:  Salomon Smith Barney Singapore Pte Ltd
                     Tel: +65 6432 1240
                     Richard Seow (Managing Director)
                     Chang Tou-Chen (Director)
                     Feisal Zahir (Vice President)

NET SERVICOS: Concludes Successful Recapitalization
Net Servicos de Comunicacao SA, formerly known as Globo Cabo,
concluded last week a recapitalization process, which brought in
BRL1.2 billion, relates Dow Jones. The transaction, which
involved debt conversions and a share sale, gives the Company
some breathing room as it attempts to steer free from its debt,
which has strangled it for quite sometime now.

The offering, along with debt restructurings completed during the
quarter, will allow Net Servicos to stay free of roll-over risks
through 2003, and should stabilize its credit outlook as it tries
to reverse a declining user base trend and add new services to
its broadband network.

The operations were crucial as "the risk of refinancing now is
very, very high," Chief Financial Officer Leonardo Pereira said
on a Friday results call. Pereira said he now hopes rating
agencies that downgraded the Company on concerns it might not
complete the recapitalization will reverse course and raise the
Company's ratings. Standard & Poor's downgraded Globo Cabo's
credit rating to 'CCC+' from 'B+' in June.

Despite the success of the recapitalization program, some
investors say that Net Servicos' struggles are likely to continue
in the near-term following weak second-quarter results.

On Thursday, Net said that second-quarter revenue fell to US$118
million from US$127.8 million a year earlier. Earnings before
interest, tax, depreciation and amortization were flat at US$27.2
million, compared with US$27.5 million a year ago.

Losses widened to US$115.5 million from a loss of US$91.3 million
a year earlier. Foreign exchange charges from an 18% weakening in
Brazil's real during the quarter caused a net financial loss of
US$117.4 million, compared with a previous loss of US$57.8
million. Net debt at June 30 was US$554 million.

The Company also restated its first-quarter earnings on asset
write-downs of certain acquisitions, widening the first-quarter
net loss to US$391.4 million from a previous net loss of BRL83.3

Pereira on Friday said Brazil's volatile currency and slow growth
rate will likely continue to negatively impact the Company in the
near-term, calling the environment "very tough."

Net Servicos' shareholders include media giant Globo (42%),
communications company RBS (11%), Bradespar (6.02%), BNDESpar
(6.38%), Microsoft (7.47%). A new ownership structure will be
calculated when the capital increase is completed.

To see financial statements:

          CNPJ/MF n  00.108.786/0001-65
          NIRE n  35.300.177.240
          Companhia Aberta
          Rua Verbo Divino n  1.356 - 1 a, Sao Paulo-SP
          Leonardo P. Gomes Pereira
          Investor Relations and Chief Financial Officer

NET SERVICOS: Seeking New Revenues From Network Lease Deals
Net Servicos, which has never seen a profit, is stepping up
efforts to boost sales and reduce losses. As part of its plan,
the largest cable television operator in Brazil, is considering
leasing its network to Embratel Participacoes SA.

"We want our network to be used by other operators," Chief
Financial Officer Leonardo Pereira said in a conference call with
analysts. "This is an additional source of revenue for us that
has the potential to be very important."

Net Servicos and Embratel, Brazil's largest-long distance
telephone company, are now in talks Pereira said, adding that the
two companies haven't signed a definitive agreement.

Embratel, which is controlled by WorldCom Inc., recently obtained
a license to offer local phone services.

          Investor Relations
          Silvia Pereira
          Tel. (55 21) 2519-9662
          Fax: (55 21) 2519-6388
          Press Relations:
          Helena Duncan/Mariana Palmeira
          Tel: (55 21) 2519-3653/3654
          Fax: (55 21) 2519-8010

TELEGLOBE: Sale Hearing Continued to August 29
The bankruptcy court said it would continue to hear on August 29
Teleglobe Communications Corp.'s sale of its Latin American
business to SkyOnline Holdings LLC for US$6 million, says Dow
Jones. The extension is supposed to allow Teleglobe to deal with
an objection from World Data Consortium LLC, which said that the
terms of its US$5.25 million bid make it a better offer for the
estate and its creditors.

In its motion, Teleglobe revealed it executed a nonbinding letter
of intent to sell the assets to World Data in May. However, after
a series of negotiations with SkyOnline and World Data, Teleglobe
determined the SkyOnline bid was "the superior transaction."

The decision angered World Data, which said that it approached
Teleglobe about selling the Latin American business just as the
Company was preparing to shut it down.

On May 15, Teleglobe laid off virtually all of its Latin American
employees, according to World Data's objection. World Data said
that, to prevent mass defection of Teleglobe's customers, it
contracted, with Teleglobe's consent, recently laid-off employees
to continue working.

On May 23, World Data said it entered into a good-faith agreement
to purchase the assets and "was under the impression from
Teleglobe that it was the only prospective purchaser of the Latin
American business," according to the objection. World Data said
the parties agreed on a June 3 deadline to consummate the deal.

"Teleglobe subsequently failed to undertake any good-faith
efforts to complete a deal with World Data," the objection said.
"Teleglobe engaged in actions that directly frustrated the
parties' chances of meeting the (June 3 deadline)." Specifically,
World Data said Teleglobe failed to provide it with a draft
purchase agreement.

On May 23, Teleglobe told World Data that a second bidder had
emerged - SkyOnline. Still, on June 14, Teleglobe informed World
Data it was the winning bidder under a court-authorized sale
auction, according to the objection. World Data said the good
news was short-lived when it learned the debtor was entertaining
a revised order from SkyOnline that came in after the bid

World Data argues the revised SkyOnline bid should be thrown out
because it didn't meet the deadline. World Data also argues that
even with the higher cash offer, SkyOnline's bid is inferior and
that World Data is a "more financially viable and credible

Teleglobe cited consolidated assets of US$7.5 billion and
liabilities of US$4.1 billion in its Chapter 11 bankruptcy

The company is seeking court approval to sell its Latin American
business. The package is comprised of the legal entities, data-
related assets, contracts and operations of its various
subsidiaries in Mexico, Central America, the Caribbean and South
America. Teleglobe says the sale would maximize value for
stakeholders in light of the its current capital structure and
weak liquidity position.


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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

     Investor Relations
     Phone: 1.866.468.6924

Home Page:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


MANQUEHUE NET: Fitch Drops Ratings To 'CCC+'; Outlook Negative
Fitch Ratings downgraded the foreign currency and the
international scale local currency ratings of Manquehue Net S.A.
(Manquehue) to 'CCC+' Rating Outlook Negative from 'B+' Rating
Outlook Negative.

The rating actions reflect the company's continued weak financial
performance, debt restructuring uncertainties and uncertain
shareholder commitments as the company is up for sale. Credit
protection measures have declined as Manquehue increased debt by
more than US$55 million to fund its network buildout without
achieving the anticipated revenue growth. At 3M'02, EBITDA/gross
interest and debt/EBITDA was 1.6 times (x) and 7.4x,
respectively. Meanwhile, EBITDA/gross interest and debt/EBITDA
was 2.3x and 4.4x, respectively at 3M'01. Manquehue would violate
a syndicated loan covenant if debt/EBITDA exceeded 8.0x. The
execution risk of the company's strategy is quite uncertain.
Absent a material improvement in 2002 financial performance, the
ratings will remain under pressure.

The company's financial performance has been impacted by strong
competition. Manquehue faces significant competition from the
incumbent operator, Compania de Telecomunicaciones de Chile S.A.,
which controls approximately 77% of the local exchange sector and
is a leading long distance and broadband service provider. In
addition, Manquehue's financial performance has been impacted by
slower than anticipated growth in demand and revenues, which are
partially due to macroeconomic conditions.

Positively, Manquehue has extended a US$2 million equivalent
amortization due November 2002 until September 2004, restructured
roughly US$15 million of vendor financing and is in the process
of restructuring a US$30 million equivalent loan with Chilean
financial institutions. In addition, shareholders plan to enhance
liquidity with a ChP2 billion peso (approximately US$3 million)
subordinated loan by August 30, 2002, pending the conclusion of
the US$30 million equivalent loan restructuring.

Manquehue is not expected to receive substantial support from its
international shareholders. One of its shareholders, Williams
Communications, is bankrupt and is unlikely to provide any
shareholder support going forward. In addition, National Grid,
the largest shareholder has announced its intent to exit the
Latin American telecommunications sector. The current shareholder
structure is as follows: MetroGas S.A. (25.6%), Williams
Communications (16.4%), Rabat Family (21.2%), Xycom (6.8%), and
National Grid (30%).

At March 31, 2002, Manquehue had approximately US$9.9 million
equivalent of short-term debt. The extension of the November 2002
amortization and the proposed shareholder loan (if proceeds were
allocated to maturities) would result in roughly US$4.9 million
equivalent of short-term debt through March 2003. No significant
increase in debt is expected during 2002. Going forward, EBITDA
should remain positive and EBITDA/gross interest should remain
over 1x. Meanwhile, debt/EBITDA for 2002 may exceed 8.0x.

Manquehue benefits from its presence in selectively targeted
upper income residential markets and its growing presence as a
broadband communications provider to the corporate sector.
Manquehue has competitive interconnection rates, which are
regulated by Chilean regulator, Subtel. Recent regulatory rulings
have been designed to increase competition and lower
interconnection rates, which has somewhat benefited Manquehue.
The company is not subject to dominant carrier rules. Pricing for
local exchange service has roughly maintained parity with
competitors, but Manquehue benefits by its ability to provide
value added bundled services (e.g., third party cable, high-speed
Internet access, and voice telephony) to residential customers.

Manquehue has over 400km of fiber in and around Santiago and an
extensive underground duct system. The duct system, which
essentially acts as a conduit, provides the company significant
cost savings by allowing for rapid fiber deployment when demand
materializes while avoiding the need to obtain rights of way and
incurring the associated excavating and resurfacing costs.

The company also has a 30.1% stake in the trans-Andean long-haul
operator, Silica Networks. Williams Communications and National
Grid directly, and indirectly through Manquehue, have a 24.85%
and 59% ownership stake in Silica Networks, respectively.
Manquehue expects no meaningful contribution to financials from
Silica Networks in the near term as the long-haul sector has
experienced price erosion. Consequently, the shareholders of
Silica Networks are expected to monetize their investment in the
near term. Manquehue provides local exchange service in and
around Santiago, Chile. Manquehue has approximately 95,000 lines
in service or 2.6% of the Chilean market. Through its affiliate,
122 Manquehue Net, the company provides international and
national long distance service. Manquehue also provides Internet,
cable TV, and public telephony services.

          Randy Alvarado
          Phone: 312/368-3117, Chicago

          Ivonne Ibanez
          Phone: +011 562 206-7171, Santiago

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


GRUPO IUSACELL: Review Outcome May Lead To Moody's Cut
Moody's Investors Service placed some of the ratings of Grupo
Iusacell and Grupo Iusacell Celular under review for possible

For Grupo Iusacell, the ratings affected are:

- Senior implied rating of Ba2;
- Issuer rating of B1; and,
- Senior unsecured rating of B1

For Grupo Iusacell Celular, only its Senior Unsecured rating of
Ba2 is affected.

Moody's was prompted to take the actions on the following

1) Uncertain support from Verizon, the largest shareholder.
2) Performance declines, due largely to market share erosion
mainly to Telcel.
3) Continuous changes in Grupo Iusacell's management team which
has generated an inconsistent operating strategy.
4) A more difficult competitive environment following Telef˘nica
de Espana's recent acquisition of Pegaso, a wireless operator
with a national PCS license.
5) Weakening credit metrics.

The net debt to reported EBITDA ratio (excluding non-recurring
items) was 4.0x by the end of 2Q02, from 3.1x by year-end 2001,
while the EBITDA coverage was 2.1x in 2Q02, from last year-end
levels of 2.3x.

Moody's, however, recognizes Grupo Iusacell's efforts of
maintaining minimum short-term debt maturities, which eliminates
this refinancing risk. In addition, the company reduced the
projected capital expenditures for 2002 from US$250 million to
US$130 million.

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).

          Investor Contacts: Russell A. Olson, CFO
          Tel. 011-5255-5109-5751

          Carlos J. Moctezuma
          Manager, Investor Relations
          Tel. 011-5255-5109-5780
          Web site:

          Dennis Saputo, Senior Vice President - Corporate
          JOURNALISTS: 212-553-0376
          SUBSCRIBERS: 212-553-1653

          Martin R. Lara, Vice President - Senior Analyst
          Corporate Finance
          JOURNALISTS: 212-553-0376
          SUBSCRIBERS: 212-553-1653


FERTINITRO FINANCE: Moody's Cuts Ratings on Weakening Cash Flows
Moody's Investors Service downgraded the debt ratings of
FertiNitro Finance Inc., a financing vehicle whose debt is
guaranteed by Fertilizantes Nitrogenados de Venezuela,
Fertinitro, C.E.C ("FertiNitro").

Moody's downgraded FertiNitro's U.S. $250 million worth of
secured bonds to B2 from Ba3 due to deteriorating cash flows as a
result of additional operating problems and low market prices for
FertiNitro's fertilizer products. The outlook for this rating is

Moody's expects that FertiNitro will need to use project reserve
facilities and available sponsor support for its October, 2002
debt service payment. Currently, a US$60-million line of credit
facility and US$20 million of sponsor support is available.

The negative outlook reflects concern that operational problems,
gas supply constraints, liquidity and product price movements may
continue to result in weak cash flows for an extended period of

FertiNitro is 35%-owned indirectly by Koch Jose Cayman Limited,
ultimately majority-owned by Koch Industries Inc. through other
Koch subsidiaries ("Koch"), 35%-owned by Petroquimica de
Venezuela, S.A. ("Pequiven"), a wholly-owned subsidiary of PDVSA,
20%-owned by Snamprogetti, a wholly-owned subsidiary of
Snamprogetti S.p.A., and 10%-owned by Polar Jose Investments,
Limited ("Polar"), ultimately owned directly and indirectly by
the Polar Group.


S U B S C R I P T I O N   I N F O R M A T I O N

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

Copyright 2002.  All rights reserved.  ISSN 1529-2746.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

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

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

* * * End of Transmission * * *