TCRLA_Public/020925.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

           Wednesday, September 25, 2002, Vol. 3, Issue 190

                           Headlines

A R G E N T I N A

* Fitch Issues Update On Argentine Structured Finance Deals


B E R M U D A

TYCO INTERNATIONAL: Tyco Board Aware of Bad Loans


B R A Z I L

CELESC: Signs 13-year, $78 Million PPA With Empresa Lages
CEMIG: Shares Plunge 7.9% As Real Loses Value
CEMIG/CELESC: May Face Punishment For Failing To Meet Deadline
CSN: Slowly Losing Value On Corus Merger Doubts
ELETROPAULO METROPOLITANA: Delays Payment on $191M Debt Again

FIERA: Winds Up Operations
VARIG: Expects Restructuring Complete By Year-End


C H I L E

EDELNOR: Seeks Court OK to Pay Ordinary Course Professionals
EDELNOR: S&P Cuts Ratings To `D' Following Bankruptcy Filing


C O L O M B I A

TELECOM: Deals With Another Lawsuit Concerning JV Contracts


M E X I C O

AHMSA: Gets Confirmation on Tariff Exemption
SATELITES MEXICANOS: S&P Lowers Ratings to `CCC+'
UNEFON: JP Morgan Reduces Parent To "Underperform"


P A R A G U A Y

ESSAP: Seeks Rate Increase To Support Foreign Debt Payments


T R I N I D A D   &   T O B A G O

BWIA: Worsening Condition Spurs Shareholder Apprehension
BWIA: Union Not Afraid Of Losing Chairman


U R U G U A Y

BANCO COMERCIAL/MONTEVIDEO/CAJA OBRERA: Uruguay Hires ING
UTE: Two Pre-Qualifiers Submit No Bids

     - - - - - - - - - -

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

* Fitch Issues Update On Argentine Structured Finance Deals
-----------------------------------------------------------
During the eight months since the Argentine default and
devaluation, Argentine structured finance transactions have been
placed under a tremendous amount of stress, and several winners
and losers have clearly emerged, according to a new report
published recently by Fitch Ratings. While several transactions
have been well structured to provide protection against the
stress of a sovereign default, Fitch anticipates additional
defaults in the near term, as the currency remains at a
punishingly low exchange rate.

"Future flow transactions are clearly best suited to survive a
crisis and have proven to be the most resilient structures during
the Argentine crisis," said Mia Koo, Director, Fitch Ratings.
"The nature of the future flow structure mitigates several
sovereign risks that have negatively impacted other structured
financings."

In addition to future flow structures, the new Fitch report also
reviews preferred creditor structured transactions, political
risk insurance, residential mortgage transactions, and province-
related structured financings. The report also highlights the
utility and energy sectors and outlines the current legal
environment and transfer and convertibility restrictions.

"Perhaps one of the most evident lessons from the Argentine
crisis is that the chaos surrounding the legal and financial
systems post-default can be protracted, and transparency is a
rarity," said Koo. "Monitoring the performance on the Argentine
transactions involves frequent interactions with issuers and
trustees to ensure that payment mechanics are intact."

The new report 'Argentine Structured Finance Performance Update'
can be found on the Fitch web site at www.fitchratings.com in the
comments section corresponding with the 'Sovereigns &
Subnationals' sector or contact the Ratings Desk at 800/893-4824.

CONTACT:  FITCH RATINGS
          Mia Koo, 212/908-0651
          Greg Kabance, 312/368-2052
          Matt Burkhard, 212/908-0540 (Media Relations)



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

TYCO INTERNATIONAL: Tyco Board Aware of Bad Loans
-------------------------------------------------
Minutes of a meeting earlier this year, according to an
Associated Press report, indicated that some members of Tyco
International Ltd.'s board knew of the controversial pay packages
allegedly arranged by former CEO L. Dennis Kozlowski.

In addition, a human resources official said a board member
pressured her to make it appear that one of the payment packages
was disapproved by changing the minutes of a Feb. 21 compensation
committee meeting.

The minutes under scrutiny show that members of the board present
during the meeting in Bermuda, where Tyco is based included
Stephen Ross, James Pasman and Peter Slusser, who is also part of
Tyco's compensation committee.

Earlier, Tyco's board stated that it was not aware of the excess
packages and loans given to Kozlowski, former general counsel
Mark Belnick, and former chief financial officer Mark Swartz.
Prosecutors had said that the corrupt executives misled the
board's directors.

Kozlowski and Swartz are free on bail after being charged with
grand larceny for allegedly stealing hundreds of millions from
the company. Belnick is also facing charges of falsifying
business documents to cover up improper loans.

The listed loans given to top executives included $14 million to
Belnick, $18.8 million to Kozlowski and $7 million to Swartz, as
shown in the compensation committee meeting minutes lawyers
involved in the investigation, the New York Times reported.

The Times also reported that the board did not disclose the
loans, nor did they take any actions against the executives until
early June.

One of Tyco's directors Wendy Lane said that the board was not
informed of any improper loans granted to Kozlowski, Swartz and
Belnick, nor of the forgiven loans worth millions.

"The indictment that was written shows the board was a victim of
a well-crafted scheme by the most senior management," Lane said
in a telephone interview.

After Kozlowski resigned in June and revelations on fraud cropped
up, the board launched an investigation on the executives'
finances.

Patricia Prue, Tyco's human resources director, sent a memo to
Swartz and John Fort, who served as interim chief executive after
Kozlowski's resignation saying director Josh Berman pressured her
into doing something "improper" concerning the internal
investigation.

Prue, who has been given immunity from prosecution in the case,
herself received a forgiven loan worth about US$1.3 million.



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

CELESC: Signs 13-year, $78 Million PPA With Empresa Lages
---------------------------------------------------------
Brazil's Santa Catarina state government announced that state
distributor Celesc reached a power purchase agreement with
biomass generator Empresa Lages Bioenergetica. The PPA, according
to Business News Americas, is for 13 years and is worth BRL267
million (US$77.7 million).

Lages Bioenergetica, which is a joint venture of Brazilian
entrepreneurs GeraSerra and local power generator Tractebel
Energia, will build an BRL80-million, 25MW co-generation
thermoelectric power plant fired by sawdust from a wood
manufacturing plant to be built in the municipality of Lages.

The plant will burn 34,000 tonnes of sawdust per month, or
408,000 tonnes yearly. The use of sawdust will reduce the
environmental damage caused by the wood manufacturers, as the
sawdust is presently dumped, Celesc president Jose Fernando
Xavier Faraco said. The plant will produce 25 tonnes of steam per
hour, which will be consumed by the local wood manufacturing
plants Batistella and Sofia.

Construction of the generation plant will begin before year-end
and should begin operations in May 2004.

An earlier edition of TCR-LA reported that Celesc warned it might
be forced to trim costs and limit investments if the federal
government fails to repay the BRL635-million (US$243 million)
debt it owes to the Company. The federal government was due to
pay the debt June 27 after it reached an agreement with the Santa
Catarina state government to assume the debt owed to the
distributor.

However, so far, the payment has not been made. Reportedly, the
issue is currently being studied by national development bank
BNDES, responsible for funding the repayment.

If the government pays up, Celesc could, in turn, pay off BRL664
million in short term debt, and free up money designated for
interest payments. The money could then be used to increase
Celesc's investments, Fonseca said.

CONTACTS:  CELESC
           Rodovia SC 404 - Km 3
           Itacorubi 88034-900 Florianopolis - SC
           Brazil
           Phone   +55 48 231 6011
           Home Page http://www.celesc.com.br
           Contacts:
           Francisco De Asis Kuster, Chairman
           Enio Andrade Branco, Finance Director


CEMIG: Shares Plunge 7.9% As Real Loses Value
---------------------------------------------
Shares of Cia. Energetica de Minas Gerais (Cemig) fell BRL1.98,
or 7.9%, to BRL23.12, reports Bloomberg. Brazil's largest
combined power distributor and generator has dollar-linked debt
and revenue in the Brazilian currency, the real. The currency
weakened 4.9% against the dollar Monday.

"Investors are selling stocks from companies with dollar-linked
debt and buying shares from companies with dollar-linked revenue,
such Vale, Aracruz," said Pedro Thomazoni, equity director at
Lloyds TSB Bank Plc's unit in Sao Paulo.


CEMIG/CELESC: May Face Punishment For Failing To Meet Deadline
--------------------------------------------------------------
Brazilian power companies Cemig and Celesc failed to spin off
their activities into separate companies by the September 21
deadline. Now, according to a report released by Business News
Americas, the country's power regulator Aneel is studying whether
to punish both companies for failing to meet the deadline.

The government obliged all formerly state-owned companies to
establish separate companies to manage separate concessions for
the different businesses, as a means of guaranteeing transparency
for the sector.

Originally, Cemig and Celesc were to have spun off their
generation, transmission and distribution businesses into
separate companies by the original deadline of December 2000. But
both secured extensions to this deadline. Both are still
controlled by their respective state governments, and both
claimed they were having problems getting the required
authorization from state legislatures.

Santa Catarina state's Celesc has requested an extension through
May 2003 to complete the operation, while, Minas Gerais state's
Cemig has not commented on the situation.

Punishment could include slapping the companies a fine of up to
25% of their annual revenues, suspend their concessions, prohibit
them from selling power to other states or prevent them from
participating in future power auctions and concessions.

CONTACT:  CEMIG
          Luiz Fernando Rolla, Investor Relations - CEMIG
          Tel: +55-31-3299-3930
          Fax: +55-31-3299-3933
          lrolla@cemig.com.br

          Vicky Osorio, The Anne McBride Company
          Tel: +1-212-983-1702
          Fax: +1-212-983-1736
          vicky@annemcbride.com


CSN: Slowly Losing Value On Corus Merger Doubts
-----------------------------------------------
Shares of Cia. Siderurgica Nacional (CSN) continue to lose value.
On Monday, the stock fell BRL2.33, or 6.7%, to BRL32.67, reports
Bloomberg. Corus Group Plc, Europe's second-largest steelmaker
agreed in July to buy Brazil's second-largest steel maker for
US$4.2 billion in stock and assumed debt.

"Investors are selling Cia. Siderurgica Nacional on concern Corus
may give up the transaction due to an economic crisis in Brazil,"
said Pedro Thomazoni, equity director at Lloyds TSB Bank Plc's
unit in Sao Paulo.

Just recently, Daniel C. Altman and Roberto Ellinghaus, analysts
with Bear, Stearns & Co. downgraded CSN to "peer perform" from
"outperform."

"The premise of our Aug. 8 upgrade of Cia. Siderurgica Nacional
was that Brazil risk would decline following the (International
Monetary Fund) package, which has not occurred," the analysts
said in a report. "While we see little downside, share
outperformance may be challenging while Brazilian fundamentals
remain weak."

To see financial statements: http://bankrupt.com/misc/CSN.pdf

CONTACT:  Jose Marcos Treiger
          CSN - Investor Relations General Manager
          Tel. +55 21 2586 1442
          Email: jmtreiger@csn.com.br
          URL: www.csn.com.br

          Isabel Viera
          Thomson Financial
          Tel. +1 (212) 701-1823
          Email: isabel.vieira@tfn.com
          URL: www.thomsonfinancial.com


ELETROPAULO METROPOLITANA: Delays Payment on $191M Debt Again
-------------------------------------------------------------
For the second time in a month, Brazilian distributor Eletropaulo
Metropolitana, which is controlled by U.S.-based AES Corp.,
postponed paying interest on US$191 million in debt with a group
of banks led by J.P. Morgan Chase & Co., reports Bloomberg.

Citing an Eletropaulo statement, the report reveals that the
biggest power distributor in Latin America concluded negotiations
with banks over new terms for the debt and extended the payment
to October 7, 2002.

Eletropaulo paid US$34 million of a US$225-million debt with
banks due Aug. 26 and delayed payment on the remainder to Sept.
9, then to Sept. 23.

"In the coming two weeks, we expect to complete the definitive
documentation that will reflect the already-agreed terms and
conditions" for the payment, Eletropaulo said.

According to Eletropaulo, most of the US$191 million debt will be
converted into Brazilian reais and will be repaid over the next
24 months.

The ailing Brazilian utility, which had its corporate debt rating
lowered to selective default from CC by Standard & Poor's last
month, is considering ceasing dividend payments in the coming
years. The decision however, depends on the outcome of the talks
with creditors.

Eletropaulo distributes electricity to about 14 million people in
Sao Paulo, Brazil's most populous city and financial center, and
23 surrounding municipalities.

CONTACT:  ELETROPAULO METROPOLITANA
          Avenida Alfredo Egidio de Souza Aranha 100-B,
          13 andar 04726-270 San Paulo
          Brazil
          Phone: +55-11-548-9461, +55 11 5696 3595
          Fax: +55-11-546-1933
          URL: http://www.eletropaulo.com.br
          Contacts:
          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: http://www.jpmorganchase.com/
          Contact:
          William Harrison, Jr., Chairman and CEO
          Dina Dublon, Chief Financial Officer
          Geoffrey Boisi, Co-CEO of the Investment Bank

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


FIERA: Winds Up Operations
--------------------------
Despite an announcement in October 2001 by Fiera's
(www.fiera.com) former chairman, Manuel Montero, that it would
reach break-even in March or April this year, the online retailer
closed its operations two months ago.

This was revealed in Business News Americas by a company source
to answer to queries on the sudden disappearance of the website.

Fiera kicked off operations late 1999 with units in Argentina,
Brazil, Chile, Colombia, Mexico, Puerto Rico, Spain and the US.

Fiera Brasil (www.fera.com) shut down late in May 2001. It was
revived however, two months later, after receiving a US$8 million
capital injection from its controller, the Latin American
Enterprise Fund. A month after it reopened, the site acquired
multimedia and entertainment products distributor Pc@Home
Entertainment.

The Latin American Enterprise Fund shares control of Fiera with
The Advent Group. Telmex owns 50% of TIF, which holds a 13.3%
stake in Fiera. Mexican investment group Inbursa and Telmex
parent company Grupo Carso each have 25% stakes in TIF.


VARIG: Expects Restructuring Complete By Year-End
-------------------------------------------------
Arnim Lore, the incoming chief executive of Brazilian airline
Viacao Aerea Rio Grandense SA (Varig), said that the ailing
airline expects to finalize a restructuring effort by the end of
the year, reports Dow Jones. To assist it in the process, the
Company has hired Bain & Co., KPMG and the Brazilian law firm of
Machado Meyer and Tavares Paes.

Currently, Varig, is in talks with suppliers, leasing companies
and creditors about ways to pay down its US$900-million debt load
and return to profitability, according to Lore. Creditors include
Boeing Co. and General Electric Co.'s (GE) aviation leasing unit.

Talks between the Company and creditors are being mediated by
Brazil's national development bank (BNDES), which is expected to
soon provide Varig with financing to help restructure the
Company's balance sheet, Lore said.

Critics believe that the nonprofit Rubem Berta foundation, which
controls 87% of Varig's stock, has hampered management at the
airline. A pilots' union proposal to restructure the Company
would reduce the stake of the foundation to 10% and remove
company executives from the foundation's board.

Varig ended the first half of 2002 with a loss of BRL1.04 billion
($1=BRL3.50) amid rising dollar-denominated operating costs and
greater competitive pressure from upstarts like discount carrier
Gol Transportes Aereos.

CONTACT:  VARIG (Viacao Aerea Rio-Grandense, S.A.)
          Rua 18 de Novembro No. 800, Sao Joao
          90240-040 Porto Alegre,
          Rio Grande do Sul, Brazil
          Phone: (51) 358-7039/7040
                 (51) 358-7010/7042
          Fax: +55-51-358-7001
          Home Page: www.varig.com.br/english/
          Contacts:
          Dorival Ramos Schultz, EVP Finance and CFO
          E-mail: dorival.schultz@varig.com.br

          Investor Relations:
          Av. Almirante Silvio de Noronha,
          n  365-Bloco "B" - s/458 / Centro
          Rio de Janeiro, Brazil

          BAIN & CO
          Primary Contact: Wendy Miller
          Two Copley Place, Boston, MA 02116
          USA
          Phone: +1-617-572-2000
          Fax: +1-617-572-2461
          Email: miles.cook@bain.com
          URL: http://www.bain.com

          KPMG Brazil
          Belo Horizonte
          Rua ParaĦba, 1122
          13th Floor
          30130-918 Belo Horizonte MG
          Telephone 55 (31) 3261 5444
          Telefax 55 (31) 3261 5151
                   or
          Brasilia
          SBS Quadra 2 BL A N 1
          Edificio Casa de Sao Paulo SL 502
          70078-900 BrasĦlia - DF
          Telephone 55 (61) 223 2024
          Telefax 55 (61) 224 0473



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C H I L E
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EDELNOR: Seeks Court OK to Pay Ordinary Course Professionals
------------------------------------------------------------
Empresa Electrica del Norte Grande S.A., wants to continue the
employment of professionals utilized in the ordinary course of
its business without submitting separate employment applications
and affidavits for each individual professional.

In its motion, the Debtor tells the U.S. Bankruptcy Court for the
Southern District of New York that it desires to continue to
employ the Ordinary Course Professionals to render services to
its estate similar to those services rendered prior to the
Petition Date. These services, the Debtor explains, are not
connected to the Debtor's chapter 11 case, but include legal,
accounting and auditing services used in the ordinary course of
the Debtor's business and operations.  The Debtor further seeks
to reserve the right to retain additional Ordinary Course
Professionals from time to time during this case, as the need
arises.

The Debtor submits that, in light of the additional cost
associated with the preparation of employment applications for
professionals who will receive relatively small fees, it is
impractical and inefficient for the Debtor to submit individual
applications for each professional. Accordingly, the Debtor
requests that this Court dispense with the requirement of
individual employment applications and retention orders with
respect to each Ordinary Course Professional, and that each
professional be retained from time to time as of the Petition
Date.

The Debtor proposes to pay each Ordinary Course Professional,
without a prior application to the Court provided that if any
amount owed for a professional's fees exceeds $20,000 per month,
then the payments to such professional shall be subject to the
prior approval of the Court. The Debtor believes at this time
that the fees payable to the Ordinary Course Professionals will
not exceed in the aggregate $40,000 per month.

Empresa Electrica del Norte Grande SA is a partially integrated
electric utility engaged in the generation, transmission and sale
of electric power in northern Chile. The Company filed for
chapter 11 protection on September 17, 2002. Lindsee Paige
Granfield, Esq., Thomas J. Moloney, Esq., at Cleary, Gottlieb,
Steen & Hamilton represent the Debtor in its restructuring
efforts.  When the Debtor filed for protection from its
creditors, it listed $612,861,000 in total assets and
$385,483,000 in total debts.

CONTACT:  EMPRESA ELECTRICA DEL NORTE GRANDE S.A. (EDELNOR)
          Avenida Apoqindo 3721, Oficina 81
          Las Condes
          Santiago, Chile

DEBTOR'S COUNSEL: Lindsee Paige Granfield, Esq.
                  Thomas J. Moloney, Esq.
                  CLEARY, GOTTLIEB, STEEN & HAMILTON
                  One Liberty Plaza
                  New York, NY 10006
                  (212) 225-2000
                  Fax : (212) 225-3499


EDELNOR: S&P Cuts Ratings To `D' Following Bankruptcy Filing
------------------------------------------------------------
Credit rating agency Standard and Poor's (S&P) downgraded the
ratings of Chilean thermo generator Edelnor to D from CC, reports
Business News Americas.

The downgrade came after Edelnor filed a prepackaged plan of
reorganization under chapter 11 of the US Bankruptcy Code on
September 17, 2002. Approximately US$340 million of debt is
affected.

According to the Company, as of September 16, holders of 98.7% of
the total outstanding principal amount of the participation
certificates voted to accept the reorganization plan.

Since FS Inversiones acquired Mirant's 82% stake in Edelnor in
January 2002, the investment firm has been trying to restructure
the company's debt. Edelnor and its board of directors have
decided to file for reorganization after receiving the necessary
support from noteholders of the company's participation
certificates to improve the company's financial position.
Alternatives were limited since the company did not have
sufficient cash balances nor the means to generate enough cash
flow to continue meeting full debt service under its current debt
structure.

Under the proposed reorganization, debt holders elected to
receive new 15 year senior secured participation certificates in
principal amount equal to 92.14% of the principal amount of their
participation certificates, a discounted cash payment equal to
38% of the principal amount of their participation certificates,
or a combination of the two. Both options are slightly more
favorable than terms originally offered to bondholders last year
when both Tractebel and AES Gener had made competing offers to
purchase the bonds.

Edelnor is a Chilean electric generating and transmission company
that supplies electricity under long-term purchased power
agreements to distribution companies and large industrial
consumers in Chile's northern region. Inversiones Mejillones,
owned by Belgium's Tractebel and Codelco, is expected to buy FS
Inversiones' shares in Edelnor upon completion of the debt
restructuring.



===============
C O L O M B I A
===============

TELECOM: Deals With Another Lawsuit Concerning JV Contracts
-----------------------------------------------------------
Colombia's embattled state telecommunications firm, Telecom, is
now faced with another lawsuit concerning joint-venture contracts
that did not yield promised results. According to a report
released by Reuters, Japan's NEC Corp (6701) and Itochu Corp
(8801) are suing Telecom for a total US$154 million to compensate
for disappointing results from the joint-venture contracts. NEC
is seeking US$140 million and Itochu US$14 million from Telecom.

In August, Telecom paid more than US$50 million to Canada's
Nortel Networks Corp (NT) after a Colombian tribunal ordered it
to make the payment. Moreover, Sweden's Ericsson (ERICb) is also
suing Telecom for about US$50 million.

Under the contracts, foreign firms installed 1.59 million
telephone lines. The installations did not yield the necessary
profits, and the foreign investors say that the contracts mean
that Telecom assumed the risk.

Telecom, which has lost US$180 million a year since 1996,
admitted that the lawsuits could cost it up to US$800 million
over the next few years and could ultimately drive it out of
business. Already, the Colombian government has said it won't put
more funds into Telecom.

CONTACT:  EMPRESA NACIONAL DE TELECOMUNICACIONES (TELECOM)
          Calle 23 No 13-49, Bogot
          Colombia
          Phone: 286-0077
                 282-8280
          Home Page: http://www.telecom.com.co/



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M E X I C O
===========

AHMSA: Gets Confirmation on Tariff Exemption
--------------------------------------------
Altos Hornos de Mexico SA (AHMSA) now has zero tariff on steel
plate imports, according to El Norte newspaper. The decision was
handed down by the US Department of Commerce (DOC) and published
on September 13 in the Federal Register, came after the Company
complained about anti-dumping duties slapped on Mexican steel
plate since 1993.

The DOC decided that steel plates AHMSA exports to the U.S.
between August 2000 and July 2001 were had not been sold below
fair market value.

The decision topples an earlier ruling that found AHMSA, along
with other companies, is guilty of dumping steel products on the
US market. This followed a petition submitted by a group of US-
based steel makers, including the now-bankrupt Geneva Steel. A
49.25% punitive tariff was imposed on the concerned items. The
rate was reduced to 20.34% by 2001.

However, the decision to scrap anti-dumping duty for the Company
is temporary. The DOC will make a definitive ruling within 120
days, during which it will hear views from other U.S. steel
makers.

The Mexican steel maker announced earlier this year that the U.S.
Court of International Trade has removed all tariffs on its
exports of steel plate.

As a result, AHMSA will now be allowed to compete under the same
conditions as U.S. steel producers. The ruling puts an end to an
antidumping probe that began 10 years ago and slapped a 49.25
percent duty on its plates, according to a report of the Troubled
Company Reporter.

AHMSA has been mired with problems following a drop in world
steel prices resulting from the 1998 Asian crisis. Since 1999,
AHMSA has suspended debt payment, and has been in negotiating
with lenders regarding debt restructuring.

CONTACT:  AHMSA
          Prolongacion B. Juarez s/n,
          Monclova , Coahuila 25770
          Mexico
          http://www.ahmsa.com
          Phone: +52 86 33 81 72
          Fax: +52 86 33 65 66
          Contacts:
          Alonso Ancira Elizondo, CEO, Vice Chairman, Pres./CEO
          Jorge Ancira Elizondo, Chief Financial Officer
          Manuel Ancira Elizondo, Chief Operating Officer


SATELITES MEXICANOS: S&P Lowers Ratings to `CCC+'
-------------------------------------------------
Due to high debt levels coupled with declining revenues and cash
flows, Standard & Poor's Ratings Services downgraded the ratings
of Satelites Mexicanos S.A. de C.V. (Satmex). According to
Reuters, S&P downgraded Satmex's local and foreign currency
corporate credit ratings to 'CCC+' from 'B'. The outlook is
negative. The cut followed a downgrade of parent company, Loral
Space & Communications Ltd. (Loral) to `CC' on Watch Neg.

"The negative outlook reflects concerns about Satmex's financial
flexibility and the challenging business environment that the
Company faces. The refinancing of Satmex 6's cost is key to the
Company's overall strategy of improving its financial profile.
Additionally, the renewal of Solidaridad 2 satellite insurance in
November 2002 adds to a challenging future for Satmex's financial
obligations, unless an economic turnaround comes quickly in the
form of new demand and clients," stated Standard & Poor's credit
analyst Patricia Calvo.

Satmex is an important asset for Loral, which owns a 50% economic
and 49% voting interest in the Company. Due to Loral's tight
liquidity, it may now not be able to support Satmex in the way it
did previously. Satmex's debt totals US$543 million.

Satmex's revenues decreased by a third during the first half of
2002 when compared to the same period of 2001, while its EBITDA
coverage of interest decreased to 1.2 times (x) from 1.6x. EBITDA
margin decreased to 56.1% as of June 2002, from 66.1% a year
earlier. Satmex's geographic coverage (or footprint) includes the
continental U.S., the Caribbean, and all Latin America except for
certain regions of Brazil.

Standard & Poor's expects that upon the launch of Satmex 6 GEO
satellite, the Company will improve the revenue growth potential
of its footprint. Satmex's fixed-satellite services were expected
to benefit from Internet-related signals transmissions, however
the future of this evolving market is now uncertain and less
promissory. Satmex is now focusing on the video demand and
corporate network markets that are more stable.

Satmex collected the insurance proceeds from the loss of the
Solidaridad 1 satellite in January 2001, proceeds that are
reserved to fund the construction of the powerful Satmex 6 GEO
satellite, scheduled to be launched in the first quarter of 2003,
and to fund the Company's floating-rate notes' (FRNs) interest
payments. As part of the insurance proceeds, Satmex had US$20.9
million as of June 2002 reserved on an escrow account for the
payment of the approximately US$16 million annual interests from
its FRNs, providing for roughly 16 months of interest service.

Interest on Satmex's high-yield bonds (US$32.4 million annually)
plus US$1 million on the FRNs' repayment, will have to be paid
through a combination of Satmex's approximately US$27.3 million
disposable cash reserve as of June 30, 2002, US$15.8 million
revolving credit line, and approximately US$13 million quarterly
EBITDA (US$24 million reported for the first half of 2002).
Standard & Poor's is concerned that the Company could exhaust its
remaining liquidity in 2003 given the potential for continued
industry weakness.

CONTACT:  SATELITES MEXICANOS, S.A. DE C.V.
          Cynthia Pelini of Satmex, +52-55-5201-0808
          Tony Doumlele, +1-212-338-5214 of Loral
          URL: http://www.satmex.com


UNEFON: JP Morgan Reduces Parent To "Underperform"
--------------------------------------------------
JP Morgan lowered equity ratings for Mexican broadcaster TV
Azteca, S.A. de C.V., one of the two largest producers of Spanish
language television programming in the world, to "underperform"
from "buy," relates Reuters.

The move comes amid mounting risk that the company may have to
bail out its 46.5%-owned mobile telephone affiliate Unefon, which
is currently locked in a legal battle with Nortel Networks
Limited. The legal proceedings prompted Azteca to announce last
week that it was delaying a planned spin-off of Unefon.

"The potential rerating in Azteca's stock we had expected from
the spin-off is on hold, while we believe that the risks of
seeing Azteca's balance sheet being used to bail out Unefon have
increased," Latin America media analyst Jean-Charles Lemardeley
said in a report.

Lemardeley said he was also cutting by 7% his estimate for
Azteca's full-year 2002 earnings before interest, taxes,
depreciation and amortization (EBITDA), following management's
forecast of higher programming costs.

Early this month, Unefon filed a lawsuit against Nortel alleging
that Nortel failed in its obligation to syndicate portions of
Unefon's indebtedness. Adequate syndication would have triggered
availability to Unefon of additional financing under its
agreement with Nortel.  The suit alleges that Nortel's failure to
"apply its best efforts" to syndicate the indebtedness "in a
diligent and timely manner" has resulted in lost profits, a
diminution in equity value, and has caused Unefon to default as a
consequence of Nortel's initial alleged default.

"Had Unefon been able to make use of the entire US$618 million
credit facility as originally agreed with Nortel, Unefon would
certainly be in a different business position," Pedro Padilla, TV
Azteca's Chief Executive Officer, had said, adding, "We believe
Unefon's current financial situation is a direct consequence of
the lack of financing, and that its claims against Nortel have
merit."



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

ESSAP: Seeks Rate Increase To Support Foreign Debt Payments
-----------------------------------------------------------
Paraguay's state water utility Essap (Empresa de Servicios
Sanitarios del Paraguay) is in dire need of a rate hike. The
company is calling for up to a 20% increase to meet its foreign
debt obligations, Business News Americas reports, citing Essap
chairman Cesar Pastore. The adjustment, according to the
executive would, increase the average bill to some US$0.38/cu. m.
from US$0.32/cu. m.

Essaps' total foreign debt has now gone up to some US$190
million, Pastore revealed. In order to decrease costs, the
Company has already implemented austerity plans. It has also
launched a campaign to combat illegal connections to increase
income. More than 40% of the water produced by Essap is not
billed.

But despite all these measures, Essap still faces an uncertain
financial future, said state reform minister, Oscar Stark, and
may not be able to pay next year's debt service.

Essap was due to be sold this year, but Paraguay's senate, faced
with political opposition, abandoned the transaction in June.


=================================
T R I N I D A D   &   T O B A G O
=================================

BWIA: Worsening Condition Spurs Shareholder Apprehension
--------------------------------------------------------
Trinidad national airline BWIA are jittery. The Trinidad Guardian
relates that Don Mullings, Investment Manager for Borse
Securities, said they have had a few calls from seriously
concerned shareholders of the airline. He also indicated that
there will be a loss of confidence in the Company by shareholders
because of the threat by the Company's chairman Lawrence Duprey,
to pull out.

"This is a very serious situation and shareholders need some
indication of when it will be resolved and how," said Mullings.

Meanwhile, Robert Myers, a Broker with CMMB said that investors
will have a hard time trying to sell their shares right now
because there are absolutely no buyers on the market.

CEO Conrad Aleong tried to update workers about the airlines true
financial situation.

In a letter addressed to the workers, Aleong stated: "The fact is
that BWIA is now on a slippery slope. The revenue loss from
cancellations and delays is estimated to be US$2.5 million. In
addition, this disrupted our customers, placed heavier work
burdens on you and caused us to transfer money to other carriers
who accepted our passengers."

The airline was forced to ask the Barbados government for
financial assistance to continue to carry out the Manchester
route, a recent addition to its list of destinations. The airline
also asked the Barbados government for financial support to
combat the events of September 11, but this is still under
review, said Aleong.

In his letter to the employees, Aleong posed the question: What
do we do next? "How do we find a way forward to continue to pay
salaries, fuel, aircraft leases and other suppliers bills? We
have to face the reality that we are at virtually the same place,
on the brink, as we were in 1998."

Aleong also said employees will be asked to choose what they want
to sacrifice to save the airline and their jobs through voluntary
pay cuts.

"It may be through change in work and rest rules, vacation
reduction or other means or combinations. But sacrifice we must!"
said Aleong.


BWIA: Union Not Afraid Of Losing Chairman
-----------------------------------------
"Take your money and go."

This was the remark issued by Christopher Abraham, president of
the Aviation Communication and Allied Workers Union (ACAWU), in
response to BWIA's chairman Lawrence Duprey's threat to withdraw
his shares from the airline.

"Duprey can feel free to take his money and go elsewhere. He is
not doing anyone any favors. This is not the first time he has
threatened to leave. In 1998, on Emancipation Day, he threatened
the same thing and the response from the workers was the same:
"leave," said Abraham.

Duprey threatened to pull out of the airline if employees do not
support the much- needed restructuring plans essential to its
survival.

"If there are employees or their representatives who pontificate
and feel that BWIA must do otherwise, or have convinced
themselves that they can better manage this crisis, then I am the
first one who will offer them my shares," Duprey said.

The chairman said other investors are willing to do the same.

He said BWIA's board of directors comprise mostly people who run
some of the region's most successful businesses. These members,
he added, have injected some US$182 million in the airline in
1995 and 2000 and are yet to receive a return on that investment.

They cannot continue to fund inefficiencies, he said.

He urged the airline to reach an agreement with its employees on
its restructuring plan by October 31. This, he added, is "in
order to have sufficient time to reorganize and restructure to
save the airline, or its fate will be in the hands of its
creditors."

Abraham and the workers are not hesitant to see Duprey go.
According to him they have a self-managed pension plan in excess
of US$100 million trusted in Clico.

"With our pensions, we are of more value to him than he is to
us," said Abraham. "If the Company is serious about cost and
management, then Duprey and the management have failed miserably.
Yes, there was 9/11 but the government owns 49% stake in the
Company, but the airline is reducing staff on the pretext of bad
business."

Abraham also said the airline is allowing its competition
lucrative access to the market. "BWIA has given up the entire
airbridge to Tobago Express, and this has created a vacuum for
Caribbean Star and Liat to come in," said Abraham.

He also said the airline's CEO, Conrad Aleong, signed a US$23
million contract with Technical Services, a Montreal-based
maintenance company, for the maintenance of the Airbus for the
next five years. This was in response to Duprey's comments on the
inefficiencies and in-house capabilities of the airline.

Abraham said the workers took offence in Duprey's public
statement.

"We cannot understand why he chose to communicate with the staff
publicly. The workers would have preferred some kind of dialogue
rather than a public announcement. Duprey has come to his own
conclusions without all the facts," said Abraham.



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

BANCO COMERCIAL/MONTEVIDEO/CAJA OBRERA: Uruguay Hires ING
---------------------------------------------------------
The Uruguayan government retained Netherlands-based ING Bank to
advise it on the fate of three suspended banks -- Banco
Comercial, Banco Montevideo and Caja Obrera, relates Business
News Americas. The Dutch bank will evaluate the viability of the
three banks and study merging them into one. Comercial, Montevide
and Caja Obrera were intervened and suspended in July and August
due to liquidity and capital problems.

According to a report by El Pais, Comercial's executive director
Paul Elberse returned from a visit to Washington where
international banks and multilateral organizations had expressed
interest in participating in a future capitalization of Banco
Comercial.

Greek business group Tsakos is currently performing a due
diligence on Montevideo and Caja Obrera and is expected to decide
whether to make a bid for the two suspended banks soon.

Gabriel Caracciollo, an S&P banking analyst, told Business News
Americas that it is still too early to predict what will finally
happen with the three banks, but what is clear is that they have
to be capitalized in order to operate again.


UTE: Two Pre-Qualifiers Submit No Bids
--------------------------------------
UTE, (Administracion Nacional de Usinas y Trasmisiones
Electricas) on Friday, failed to receive bids from France's
TotalFinaElf and Belgium's Tractebel. The two firms were the only
two pre-qualifiers for the contract to provide power to the state
power company, Business News Americas reports, citing UTE
spokesperson Ariel Faraut.

UTE received no information explanation for the companies'
failure to bid. Faraut added that UTE's board of directors
recently turned down a request from the two companies to extend
the deadline.

The winner of the tender was expected to invest some US$170
million over 30 months to overhaul and upgrade an existing thermo
plant and produce about 360MW of power for delivery to UTE. The
state company was expected to retain a minority stake in the
venture.

The UTE board will hold a meeting in the next few days to decide
on the next course of action.

Since the concession tender is put on hold, UTE's top priority is
now the lawsuit the Company filed against the Argentine
government for fixing electricity and natural gas prices in US
dollars.

UTE, which has a monopoly on all power generation, transmission
and distribution in Uruguay, has a contract with Cruz del Sur, a
natural gas transport company to feed the thermo plant beginning
September 2004. The contract prices were established in Argentine
pesos, but in April this year the Argentine government
unilaterally decreed that all gas exports should be paid with an
exchange rate of one US dollar to the Argentine peso, but
abandoned it after some time. The peso now trades at around 3.62
to the US dollar.

UTE is also suing the Argentine government for damages resulting
from electricity price indexation. This year, Uruguay has
purchased US$9 million worth of electricity but, if the prices
were adjusted to the Argentine governments requirements, UTE
would be bankrupt, according to UTE chairman Ricardo Scaglia
added.

Uruguay's currency has devalued from around 18 Uruguayan pesos to
the US dollar to 29 pesos in the last five months.

Last week, UTE announced it will delay payments totaling US$68
million coming due by the end of the month.

"UTE can meet its payments but took this decision to collaborate
with the country," Scaglia said.




               ***********


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

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

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

This material is copyrighted and any commercial use, resale or
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