TCRLA_Public/020930.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

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

           Monday, September 30, 2002, Vol. 3, Issue 193



BGN: Depositor Files Suit Against Foreign Owners
CLISA: Hires Banc Of America for Restructuring Advice
EDENOR/EDESUR: Due To Present Cases In Public Hearing On Sep 25
PECOM ENERGIA: Seeks Approval To Issue $2.5B In New Debt
REPSOL-YPF: Introduces New Corporate Governance Regulations


FLAG TELECOM: Announces Reorganization Plan Confirmation
TYCO INTERNATIONAL: Review Indicates No Restatement Needed


AES CORP.: Assessing Brazil's Readiness To Nationalize Assets
BELLSOUTH CORP.: Abandons Plan To Sell LatAm Stock
BRAZILIAN DISTRIBUTORS: Renegotiating Debts With Furnas
CSN: Approves Metalic Acquisition; Elects New Board
CSN: Finally Sees Profits In US Subsidiary

KLABIN SA: Hires JP Morgan To Coordinate Debt Talks
NET SERVICOS: Board Issues Minutes From Sep. 25, 2002 Meeting
ORGANIZACOES GLOBO: S&P Leaves Ratings Unchanged After Shakeup
VARIG: KPMG To Present Diagnosis In Less Than Two Months


CYCLELOGIC: Closes Down Two Websites
ENERSIS: Names Ex-Endesa CFO To Head Financial Activities


TELECOM: Increases Loss Forecast For This Year


HOVENSA: Fitch Downgrades Senior Secured Debt to 'BBB-`
* Fitch Special Report: LatAm Most Vulnerable To Contagion

     - - - - - - - - - -


BGN: Depositor Files Suit Against Foreign Owners
Monica Orlando, a Buenos Aires attorney, filed suit against J.P.
Morgan Chase & Co., Credit Suisse Group and Dresdner Bank AG,
reports Bloomberg. The action comes after she lost her savings,
which she entrusted to a bank owned in part by the three
international banks. When her money disappeared from the bank's
Uruguayan affiliate in January, she expected the three non-
Argentine owners to get it back.

The banks' chief executives, who sat on the board of the
Argentine bank, Buenos Aires-based Banco General de Negocios SA,
were also named as defendants in the complaint. At least four
other clients have sued and hundreds more say they plan to do the

BGN is in liquidation and as much as US$360 million has
disappeared from its affiliates in Uruguay, Panama and the Virgin
Islands, lawyers said.

"I feel absolutely defrauded," said Orlando. "We're talking about
some of the top banks in the world. After watching how they
played dumb, I saw no alternative but going to court."

However, spokespeople from J.P. Morgan, Credit Suisse and
Dresdner said the banks and their chief executives have done
nothing wrong and are not responsible for the lost funds. It was
the banks themselves that asked regulators and courts to
investigate what they say may be fraud committed by their local

To see the summary of BGN's financial statement:

          Esmeralda 120 - (C1035ABD)
          Capital Federal
          Phone: (54-11) 4394-3003
          Home Page:

          P.O. Box 1
          CH-8070 Zurich
          Tel. +41 (1) 212 16 16
          Fax. +41 (1) 333 25 87
          Contact: Lukas Muehlemann, chairman & CEO

          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 and CEO
          Dina Dublon, Chief Financial Officer
          Geoffrey Boisi, Co-CEO of the Investment Bank

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

          Jrgen-Ponto-Platz 1
          D-60301 Frankfurt/Main,
          Phone: +49-(0) 69/2 63-0
          Fax: General enquiries
               +49-(0) 69/2 63-48 31
               +49-(0) 69/2 63-40 04
          Home Page:
          Dr. Jur. Henning Schulte-Noelle
          Chairman of the Supervisory Board of Dresdner Bank AG

          Uwe Plucinski
          Deputy Chairman of the Supervisory Boa

CLISA: Hires Banc Of America for Restructuring Advice
Compania Latinoamericana de Infraestructura Servicios S.A. (the
"Company" or "CLISA") announced Thursday that it has engaged Banc
of America Securities LLC ("BAS") as its financial advisor. BAS
will advise the Company on its options related to a restructuring
of its outstanding US $100 million 11-5/8% Guaranteed Senior
Notes due 2004.

CLISA has been a principal participant in Argentina's
infrastructure privatization program and is currently one of the
leading Argentine infrastructure development and management
companies. The Company is comprised of four major operating
segments: mass transportation management, waste management,
construction and toll road management.

          Adalberto Campana

          Jonah Hirsch
          +1-888-292-0070 or,
          +1-704-388-4807 from outside the US

EDENOR/EDESUR: Due To Present Cases In Public Hearing On Sep 25
In a bid to force the Duhalde government to increase rates, which
have not changed since January this year, Buenos Aires
distributors Edenor and Edesur were slated to make presentations
at a public hearing scheduled for September 25.

Citing energy ministry representative Patricia Lopez, Business
News Americas reports that the two utilities were supposed to be
the first to present their cases.

"I think the hearing will represent the opinion of the majority
of consumers who don't support the rates increases. There is even
a power cut planned for 8pm on September 24 to protest the
measure," Lopez said.

The government has imposed 'social' rates designed to protect
consumers using less than 300kW from increases. However, there
are some consumers who would be able to pay much-needed
increases, but do not have to under the new system, Lopez said.

"The hearing is not empowered to make decisions regarding the
rates increases, but participants can express their opinions and
the hearing could continue the following day because everyone who
is registered has a right to speak their mind," said Lopez.

Rates were due to be set by August, at the end of a 120-day
consultation period. The government however decreed a further 120
days on September 17, and maintains the right to stretch the
deadline by an additional 60 days.

The unresolved issue of rates talks "is making investors less
patient with defaulting utilities," credit rating agency Standard
& Poor's said in a report Tuesday, adding that several investors
have already started lawsuits against defaulting utilities.

Edenor is an electricity distribution company serving the
northwestern half of the greater Buenos Aires area and the
northern portion of the Federal Capital -- within the city of
Buenos Aires -- under the exclusive 95-year concession granted by
the Argentine government.

Just recently, Fitch Ratings downgraded the local currency rating
assigned to Edenor to 'DD' from 'C' reflecting the non-payment of
principal in an amount of US$37.5 million on Sept. 15, 2002 under
the US$250 million FRN Notes. The FRNs were originally issued
under the company's euro medium-term notes program.

At present, the company is negotiating with all its creditors for
the extension of all of its principal maturities until March
2003. The negotiations are part of a general restructuring of the
company's debt (approximately US$510 million).

Edesur, on the other hand, distributes electricity to southern
Buenos Aires and the industrial belt around the capital. It
posted a first-quarter loss of ARS370 million (US$115.6 million),
or close to 86% of all profits earned by the firm since it was
privatized in 1992. The company has close to US$206.4 million in

          Azopardo Building
          Azopardo 1025 (1107) Capital Federal
          Phone: (54-11) 4346-5000
          Fax: (54-11) 4346-5300
          E-mai: to
          Home Page:

          EDESUR S.A.
          Gte. Gral.: Ing. Rafael Fernandez Morande
          San Jos, 140, 3o P
          Capital Federal 1076
          Home Page:
          Tel.: 4370-3700/4370-3370

PECOM ENERGIA: Seeks Approval To Issue $2.5B In New Debt
Argentine energy group Pecom Energia, which is controlled by
Perez Companc, is making the necessary regulatory preparations to
issue up to US$2.5 billion in new debt, says Reuters.

"The Company has sought authorization to issue class J, K, L and
M commercial paper," Pecom Energia said in a statement to the
Buenos Aires Stock Exchange.

The move to seek an approval for the planned issuance follows
last month's US$845.2-million debt swap to help it stay afloat
amid a deep recession.

In July, Perez Companc announced it had reached a preliminary
agreement to sell 58.6% of its capital to Brazil's Petrobras for
US$1.125 billon. The transaction has not yet been completed
pending completion of last month's debt swap.

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

REPSOL-YPF: Introduces New Corporate Governance Regulations
In an effort to become more transparent and to protect
shareholder and investor interest, Spanish-Argentine oil and
energy company Repsol-YPF SA introduced its recently revised
corporate governance regulations.

Dow Jones reports that under these regulations, the chairman,
chief executive and chief financial officer must approve the
company's annual financial statements, and Repsol's outside
auditor won't be able to carry out other services for the

To give greater independence to Repsol's internal supervisory
bodies, executive directors won't be able to sit on the auditing
and control committee or on the appointments and remuneration

Moreover, a new committee for investments, strategy and
competition will be set up, and will report to the board on core
strategic decisions, on major investments and divestments, and on
compliance with competition law.

Repsol said the measures strengthen the role "played by the board
of directors so as to increase the members' implication in the
control of company management and the protection of its

          Alfonso Cortina De Alcocer, Chairman & CEO
          Ramon Blanco Balin, Vice Chairman
          Carmelo De Las Morenas Lopez, CFO

          Their Address:
          Paseo de la Castellana 278
          28046 Madrid, Spain
          Phone   +34 91 348 81 00
          Home Page:
          Av. Roque S enz Pe a, 777.
          C.P 1364. Buenos Aires


FLAG TELECOM: Announces Reorganization Plan Confirmation
FLAG Telecom Holdings Limited (OTC: FTHLQ), along with its group
companies ("FLAG Telecom"), announced Thursday that the U.S.
Bankruptcy Court for the Southern District of New York has
confirmed its Chapter 11 Plan of Reorganization (the "Plan"),
less than six months after FLAG Telecom filed for Chapter 11
protection. The Plan significantly reduces the Company's debt
levels, provides for FLAG Telecom's worldwide business to emerge
intact from Chapter 11 and will result in creditors owning the
equity of the reorganized Company. As a result of this order,
FLAG Telecom anticipates that the Plan of Reorganization will
become effective on or about October 7, 2002, at which point FLAG
will emerge from Chapter 11.

About the FLAG Telecom Group

The FLAG Telecom Group is a leading global network services
provider and independent carriers' carrier providing an
innovative range of products and services to the international
carrier community, ASPs and ISPs across an international network
platform designed to support the next generation of IP over
optical data networks. On April 12 and April 23, 2002, FLAG
Telecom Holdings Limited and certain of its subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy
Court for the Southern District of New York. Also, FLAG Telecom
Holdings Limited and the other companies continue to operate
their businesses as Debtors In Possession under Chapter 11
protection. FLAG Telecom Holdings Limited and certain of its
Bermuda-registered subsidiaries - FLAG Limited, FLAG Atlantic
Limited and FLAG Asia Limited - filed parallel proceedings in
Bermuda to seek the appointment of provisional liquidators to
obtain a moratorium to preserve the companies from creditor
actions. Provisional liquidators were appointed and part of their
role is to oversee and liaise with the directors of the companies
in effecting a reorganization under Chapter 11. Recent news
releases and further information are on FLAG Telecom's website

          John Draheim, +44 20 7317 0826

          Investor Relations:
          David Morales, +44 20 7317 0837

TYCO INTERNATIONAL: Review Indicates No Restatement Needed
The law firm of David Boies has completed 40% of its review of
Tyco International's financial statements and, so far, "they
haven't found anything that would require a restatement,"
according to the Company's new Chairman and Chief Executive
Edward Breen.

Boies was hired in April to look into loans issued to then-Chief
Executive Dennis Kozlowski and other executives and was kept on
after Kozlowski resigned and was charged with sales tax evasion
in New York in June.

Earlier this month, Kozlowski, former Chief Financial Officer
Mark Swartz, both Boca Raton residents, and former general
counsel Mark Belnick were charged in New York in the alleged
looting of US$600 million from Tyco.

Boies, of Boies Schiller & Flexner, is doing a comprehensive
review of the Company's accounting since 1999.

"This is the kind of scrutiny that may be unique. Certainly, it's
rare in a corporation," Boies said. "If there was anything in
there that would be serious or material, we would have an
indication by now."

Tyco International Ltd. is a diversified manufacturing and
service company. Tyco is the world's largest manufacturer and
servicer of electrical and electronic components; the world's
largest designer, manufacturer, installer and servicer of
undersea telecommunications systems; the world's largest
manufacturer, installer and provider of fire protection systems
and electronic security services; and the world's largest
manufacturer of specialty valves. Tyco also holds strong
leadership positions in disposable medical products, financing
and leasing capital, plastics and adhesives. Tyco operates in
more than 100 countries and had fiscal 2001 sales in excess of
$36 billion.


     Kristin Garvin
     (925) 463-4353

     Peter Ferris
     (212) 424-1366


AES CORP.: Assessing Brazil's Readiness To Nationalize Assets
AES Corp. initiated a program to test whether Brazil is prepared
to nationalize foreign-owned assets such as Eletropaolo
Metropolitana, relates Dow Jones. The U.S-based power giant,
according to Chairman Roger W. Sant, refuses to put any more
money into Brazil until it gets some assurance that a more
friendly regulatory group is in place.  The plan involves not
repaying a loan to Brazil's National Development Bank due in mid-

With leftist Workers Party candidate Luiz Inacio Lula da Silva
far ahead of the other presidential candidates in the polls, the
likelihood of nationalization has increased, however. The
election takes place Oct. 6.

"He said he wouldn't unwind any of the current privatization,"
but is against further privatization, Sant said.

Sant noted that the outside world's assessment of Brazil's
currency seems to be inversely proportionate to Lula's growing
popularity within Brazil. The value of the real has fallen so
much that if AES were to walk away from its investment in Brazil,
the foreign exchange adjustment on its balance sheet would be an
increase, Sant said.

While it owes BNDES money, it was a compensation from the bank
for losses due a government-imposed power rationing program last
year that enabled Eletropaolo pay off US$120 million in
commercial paper that came due Aug. 21. Eletropaolo has about
US$580 million in debt due by the end of 2002.

          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

BELLSOUTH CORP.: Abandons Plan To Sell LatAm Stock
Atlanta-based telecommunications company BellSouth Corp. filed an
application with the U.S. Securities and Exchange Commission to
withdraw a plan to sell up to $1 billion of its Latin America
Group common stock. The change in strategy was prompted by
political and economic uncertainty in Latin America, the Company
said in the filing.

BellSouth's decision highlights the Company's troubles in Latin
America, where its revenue fell 20% in the second quarter to
US$598 million. The decline largely was due to currency
devaluations regionwide and customer losses in two of the
hardest-hit countries: Argentina and Venezuela.

BellSouth owns 44.5% of BCP Telecomunicacoes S.A., the cash-
strapped Brazilian mobile operator which currently has
liabilities of US$1.6 billion. BCP defaulted in March on US$375
million in debts stemming from license fees and the costs
associated with building its network.

BellSouth is liable for about US$600 million in debt held by
Latin American operations in which it has a stake.

          Rua Florida, 1970
          Sao Paulo, SP, Brasil
          CEP 04565-001
          Tel. 55-11-5509-6555
          Fax 55-11-5509-6257
          Home Page:

          1155 Peachtree St. NE
          Atlanta, GA 30309-3610
          Phone: 404-249-2000
          Fax: 404-249-5599
          Home Page:
          Investor Relations
          Phone (US): 800.241.3419
          Fax: 404.249.2060

BRAZILIAN DISTRIBUTORS: Renegotiating Debts With Furnas
A spokesman from Furnas Centrais Eletricas disclosed that the
unit of federal electricity holding Centrais Eletricas
Brasileiras (Eletrobras) is now in talks with clients in an
effort negotiate their debts with the company, reports Dow Jones.
Clients include Eletropaulo Metropolitana, Light Servicos de
Eletricidade, and Companhia Paulista de Forca e Luz (CPFL).

Talks focus on the lack of payments, which has added up to more
than BRL300 million ($1=BRL3.665) in the past few weeks. Market
sources revealed that there's about BRL1.2 billion in total
overdue payments to Furnas.

Eletropaulo owes Furnas around US$60 million, market analysts
say, while CPFL had nearly BRL30 million in overdue payments, the
sources added.

Rio de Janeiro distributor Light failed to pay BRL88 million
worth of electricity it acquired from Furnas in August. Light, a
unit of France's Electricite de France, said it was experiencing
temporary cash-flow problems and made that payment Friday after
a 20-day delay.

          Avenida Marechal Floriano, 168
          20080-002 Rio de Janeiro, Brazil
          Phone: +55-21-2211-2794
          Fax:   +55-21-2211-2993
          Home Page:
          Bo Gosta Kallstrand, Chairman
          Michel Gaillard, President and CEO
          Joel Nicolas, Executive Director, Operation
          Paulo Roberto Ribeiro Pinto, Executive Director,
                                 Investor Relations and CFO

          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

CSN: Approves Metalic Acquisition; Elects New Board
Companhia Siderurgica Nacional (CSN) (BOVESPA: CSNA3) (NYSE: SID)
announced that in an Extraordinary Shareholders' Meeting held
Thursday, 84% of shareholders present, representing 59.93% of the
voting capital, approved the acquisition of Cia Metalic Nordeste
("Metalic"). The acquisition price was R$108.5 million, adjusted
by the IGP-M inflation index since July 1, 2002 plus 12% per
year, to be paid in 12 consecutive monthly installments.

METALIC -- a strategic investment for CSN

Located in Fortaleza, Ceara, Metalic has an annual production
capacity of 1 billion two-piece steel cans and is the only
company in Brazil producing this type of packaging for the
beverage sector. Steel beverage cans offer higher resistance
during filling, transportation and storage, with virtually no
apparent difference from aluminum cans to end consumers. The raw
material used is DWI (Draw Wall Ironing) tin-plate, produced, in
Brazil, exclusively by CSN at its Volta Redonda Steel Mill.

Metalic supplies the main soft-drink, beer and fruit juice
companies in the Northeast of Brazil, and currently maintains a
5% market share in the two-piece metallic beverage can segment.

Commenting on this acquisition, Vasco Dias Junior, CSN's
Commercial Executive Officer remarked, "The acquisition of
Metalic is an important strategic step for CSN to enable the
Company to consolidate its position in this segment by building a
platform for further development of this market in Brazil. Annual
two-piece can consumption in Brazil is of approximately

11 billion cans per year, with an expected growth potential of up
to 15 billion cans, in the coming years. It's a paradox that in a
country, such as Brazil, with one of the most competitive steel
industries in the world, steel cans only make up 5% of the
domestic market, whereas in Germany, France and Asia, this share
is over 50%."

New Board of Directors and Audit Committee Elected

The Shareholders' Meeting also approved, by unanimous vote, nine
Board of Directors members, which will serve until the Annual
Shareholders' Meeting of 2003. Re-elected to the Board were
Antonio Francisco dos Santos, Benjamin Steinbruch, Jacks
Rabinovich, Mauro Molchansky, Edmar Lisboa Bacha, Dionisio Dias
Carneiro Netto and Vagner Laerte Ardeo, while Fernando Perrone
and Eustaquio Coelho Lott were elected to replace Paulo Aguiar
Cunha and Fulvio Vieira Fonseca.

At the request of the shareholder Fundacao Vale do Rio Doce de
Seguridade Social (Valia), the Audit Committee was installed and
will serve until the Annual Shareholders' Meeting of 2003.
Elected as members of the Audit Committee were Eduardo de
Carvalho Duarte, Harry Morgenstern and Ademir Jose Scarpin, with
Claudia Machado Alves, Adherbal Correa Bernardes and Mendel
Vasserman, respectively, serving as alternates.

Companhia Siderurgica Nacional, located in the state of Rio de
Janeiro, Brazil, is a steel complex integrated by investments in
infrastructure and logistics, that combines in its operation
captive mines, an integrated steel mill, service centers, ports
and railways. With a total annual production capacity of
5,400,000 tonnes of crude steel and gross revenues of R$4.0
billion reported in 2001, CSN is also the only tin-plate producer
in Brazil and one of the five largest tin-plate producers

CONTACT:  Companhia Siderurgica Nacional
          Jose Marcos Treiger, Investor Relations General Manager

          Isabel Viera, +1-212-807-5110

          Web site:

CSN: Finally Sees Profits In US Subsidiary
Rio de Janeiro-based flat steel maker CSN finally turned a
profit in its North American subsidiary, CSN-LLC. According to
Business News Americas, the Heartland, Indiana-based cold-rolling
mill posted a profit of US$3.5 million in the month of August.

Jose Paulo de Oliveira Alves, CSN's executive in charge of the
plant, attributed the unit's good performance to the impact of US
safeguards on imports. The price of the company's cold-rolled
products increased to US$480-500/t from US$260/t during the
sector's steel crisis.

The executive said the mill is still only operating at 50% of
installed capacity and sales hover around 40,000t a month,
resulting in annual revenue of US$180 million - 200 million.

"It is a company to gross US$450 million to US$500 million when
it is completely integrated," Alves said.

CSN purchased Heartland in a bankruptcy auction for US$50 million
and invested another US$55 million in working capital,
liabilities with local governments and small works to bring the
mill up to par.

KLABIN SA: Hires JP Morgan To Coordinate Debt Talks
Klabin SA, Brazil's biggest pulp and paper company, hired J.P.
Morgan Chase & Co. to coordinate debt restructuring talks with
creditors. According to Valor Economico newspaper, the Brazilian
company is currently in negotiations with bondholders to extend
payment of US$109 million in debt due by yearend by up to two
years. The pulp and paper company has a US$50-million Eurobond
due in November and another US$59 million bond maturing in

In a proposal distributed to creditors, the Company proposed to
pay 15% of the amount due on time and extending payments on the
remainder for an additional two years.

Local companies, such as Klabin, are having a hard time
fulfilling their payment obligations, as foreign investors
continue shaking their heads at the idea of renewing even
relatively stable short-term credit.

Investors are skeptical about extending credit any longer due to
Brazil's debt burden and October presidential elections

To see Klabin's latest financial statements:

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

NET SERVICOS: Board Issues Minutes From Sep. 25, 2002 Meeting
1. VENUE, TIME AND DATE: At the Company headquarters, located at
1356 Verbo Divino Street, 1st floor, Sao Paulo, SP, at 14h00
(Brazilian time) on September 25, 2002.

2. ATTENDANCE: The members of the Board of Directors, whose
signatures are below in these minutes, were present.

3. MEETING BOARD: Roberto Irineu Marinho, Chairman, and R“mulo de
Mello Dias, Secretary.

4. AGENDA: To deliberate about the confirmation of the total
subscription of the capital increase of the Company, as approved
in the Board of Directors' meeting held on August 19, 2002, as
well as to deliberate about the confirmation of the partial
subscription of shares related to the additional amount of the
capital increase aforementioned, as approved on the item 5.(c) of
the minutes of Board of Directors Meeting held on August 19,

5. DELIBERATIONS: The attending members of the Board of Directors
have decided, unanimously, to approve the confirmation of the
total subscription of the Company's capital increase totaling R$
532,478,758.00 (Five hundred and thirty-two million, four hundred
and seventy-eight thousand and seven hundred and fifty-eight
Reais), through (i) a private subscription issue of 276,082,012
common shares and 484,601,928 preferred share, all of them being
nominatives and without nominal value, at an issue price of R$
0,70 (seventy cents - Brazilian Real) per common and preferred
shares, as approved on the item 5.(b) of the minutes of the Board
of Directors Meeting held on August 19, 2002, and (ii) the
private subscription issue, within the limits of the additional
amount of the capital increase, as approved on the item 5.(c)
Board of Directors Meeting held on August 19, 2002, of 187 common
shares and 35,895,716 preferred shares, all of them being
nominatives and without nominal value at an issue price of R$
0,70 (seventy cents - Brazilian Real) per common and preferred
shares, thus increasing the Company's capital from R$
2,191,044,910.01 (Two billion, one hundred and ninety-one
million, forty-four thousand, nine hundred and ten Reais and one
cent), comprised of 552,289,144 common shares and 679,986,543
preferred shares, to R$ 2,748,650,800.11 (Two billion, seven
hundred and forty-eight million, six hundred and fifty thousand,
eight hundred Reais and eleven cents), comprised of 828,371,343
common shares and 1,200,484,187 preferred shares, all of them
being nominatives and without nominal value.

6. CLOSING: Having no further issues, the meeting was closed and
these minutes were drawn up and later read and approved by the
attending Board of Directors' members and signed by all. Sao
Paulo, September 25, 2002. Signatures: Roberto Irineu Marinho -
Chairman; R“mulo de Mello Dias - Secretary; Henri Philippe
Reichstul - Director; Mauro MuratĒrio Not - Director; R“mulo de
Mello Dias- Director; Nelson Pacheco Sirotsky - Director; Ronnie
Vaz Moreira - Director; Stefan Alexander - Director; Jorge Luiz
de Barros NĒbrega - Director.

To see company's latest 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

ORGANIZACOES GLOBO: S&P Leaves Ratings Unchanged After Shakeup
Standard & Poor's Ratings Services said that the management
changes announced Thursday by Organizacoes Globo (OG, Globo
Organizations) do not have any immediate affect on the corporate
credit ratings on Brazilian radio and TV broadcasters, Globopar
S.A. (single-'B'/Negative/--) and unit TV Globo Ltda. (single-

Under the announced changes, Roberto Irineu Marinho will be the
Chief Executive Officer and Chairman of OG, and TV Globo will
take responsibility for several functions previously held by
Globopar. In turn, Globopar will be responsible only for the
financial activities of the group. Moreover, OG has also decided
to postpone its plan to create a new holding company, which will
incorporate all of the group's media businesses under a single
structure, and accordingly the intended IPO.

The main drivers for the ratings continue to be the improvement
of the group's cost position and the structure of its debt
profile. The changes announced Thursday are part of the group's
efforts to achieve cost reductions since it will eliminate
duplicated structures and reduce overhead expenses.

However, the effects of these changes on the group's financial
profile are unclear at this point in time. The group continues to
face the challenges presented by the Brazil's current difficult
macroeconomic environment to improve cash flow and financial
ratios, as well as to accomplish a refinancing strategy that will
resolve short-term maturities and result in stronger financial

Standard & Poor's continues to expect a recovery of margins and
an improvement in financial ratios in order to maintain the
ratings at the present category.

CONTACT: Milena Zaniboni, Sao Paulo (55) 11-5501-8945
         Jean-Pierre Gil, Sao Paulo (55) 11-5501-8946

VARIG: KPMG To Present Diagnosis In Less Than Two Months
KPMG, which the Fundacao Rubem Berta foundation contracted to
assist in the restructuring of Varig, is expected to present
within 6 to 8 weeks its financial findings about the cash-
strapped Brazilian airline.

Rubem Berta, which controls 87% of Varig's stock, and the
Company' creditors, led by Unibanco, will evaluate the study
which may include mergers, selling some of its 11 companies, lay-
offs and other assets sales.

Critics believe that the nonprofit Rubem Berta foundation has
hampered management at the airline, which is currently staggering
with a US$900-million debt load. 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:
          Dorival Ramos Schultz, EVP Finance and CFO

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

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


CYCLELOGIC: Closes Down Two Websites
Following a strategic decision to focus more on "wireless"
operations,  Regional portal Cyclelogic (formerly StarMedia)
pulled the plug on two websites. Citing Cyclelogic content
manager Carlos Pardo, Business News Americas reports that on
September 15, the Company closed down Chilean entertainment site ( and e-mail services provider (

Although the two closed websites have declared they will not sell
their directory databases, Pardo said no decision has been made
on that issue and selling the directories is still an option.
New York-based StarMedia inherited Panoramas and Openchile when
it acquired the holding company Servicios Interactivos from
Chilean businessman Jorge Arancibia.

In July this year, StarMedia also sold its Web-based assets to
Spanish Internet company eresMas in an US$8-million cash deal.
The sale included StarMedia's interactive community, known as
Latin Red (, and its flagship StarMedia portal

Two weeks later French ISP, and France Telecom subsidiary,
Wanadoo agreed to acquire Eresmas from Spanish telecoms group
Auna through a share swap equivalent to 3.6% of Wanadoo stock,
then valued at EUR255 million euros (US$259 million).

Launched amid the so-called portal wars of the mid-1990s with
plans to dominate Latin American and Spanish-speaking markets as
a kind of Spanish version of Yahoo!, StarMedia once boasted a
market capitalization of about US$2 billion at the height of the
tech bubble. After spending lavishly to grab early market share,
the Nasdaq sell-off in the spring of 2000 cut off its capital
spigot. With the collapse of the online advertising market later
that year, its financial difficulties kept mounting.

ENERSIS: Names Ex-Endesa CFO To Head Financial Activities
As part of an ongoing management restructuring, Chilean
electricity holding company, Enersis SA, took in a former chief
financial officer at the Company's electricity generator Empresa
Nacional de Electricidad SA (Endesa Chile) to head its economic,
financial and investment activities.

On Thursday, Enersis announced it appointed Mario Valcarce for
the position, which includes responsibility for investor
relations, risk management, and accounting. Valcarce's official
title is Chief Executive Economic and Investments Officer.

Enersis and Endesa Chile are controlled by Spanish utility Endesa
SA. Both have seen their share prices plummet due to concerns
stemming from worries regarding their crisis-hit Argentinean and
Brazilian operations.

To see financial statements:

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

          Susana Rey,
          Ximena Rivas,
          Pablo Lanyi-Grunfeldt,


TELECOM: Increases Loss Forecast For This Year
Now teetering on the edge of collapse due to a series of lawsuits
from joint-venture partners, Colombia's state-owned Telecom
(Empresa Nacional de Telecomunicaciones) is predicting a loss of
about US$180 million this year. The figure is twice as much as
expected in July, relates Reuters.

According to company president Alfonso Gomez, the loss does not
include court settlements. Telecom has already announced it faces
payouts of up to about US$800 million to joint-venture partners
alleging that they never made the promised returns on contracts
to install 1.59 million telephone lines in the 1990s.

"The Company's financial situation is difficult ... The Company's
cash flow is under strain," said Gomez, adding that losses would
total about 500 billion pesos, or roughly US$180 million.

Gomez, who took over Telecom three weeks ago, said he is still
trying to assess the Company's situation and declined to make
predictions about a future which Colombia's former government
said could end with liquidation.

"It wouldn't be serious or responsible to say what's going to
happen in a year's time. Whatever the case, however, the courts
are reducing the firm's room to maneuver," he said, without
providing details of how long the Company's cash reserves would
hold out.

Newly-elected President Alvaro Uribe's government has said it
won't spend money to keep Telecom afloat, saying that state funds
must go to the vital areas of defense and social programs as the
country struggles with a 38-year-old guerrilla war.

          Calle 23 No 13-49, Bogot
          Phone: 286-0077
          Home Page:


HOVENSA: Fitch Downgrades Senior Secured Debt to 'BBB-`
Fitch Ratings has downgraded HOVENSA LLC's senior secured debt
rating to 'BBB-' from 'BBB'. The rating action reflects Fitch's
concerns regarding constrained liquidity over the next few years
as HOVENSA undergoes a substantial capital expenditure (capex)
program required to comply with recently enacted low sulfur
gasoline and diesel regulations. The rating action also takes
into account approximately $60 million higher annual operating
expenses than originally projected, which further negatively
impacts operating cash flow and liquidity. A weakened liquidity
position could hinder HOVENSA's ability to service its debt on a
timely basis. To mitigate such risk, measures are being taken to
fortify HOVENSA's liquidity position during the low sulfur capex
period, which Fitch views as beneficial. HOVENSA's current senior
secured debt is comprised of a US$450 million bank term loan due
2008, and a US$150 million senior secured bank revolver due 2007.
The 'BBB-' rating also applies to HOVENSA's anticipated $111.8
million senior secured tax-exempt bonds which is expected to be
issued later this year. HOVENSA, a limited liability company
which owns and operates a 495,000 barrels per day (bpd) crude oil
refinery in the U.S. Virgin Islands, is indirectly owned 50% by
Amerada Hess Corporation (Hess) and 50% by Petroleos de
Venezuela, S.A. (PDVSA), (together, the sponsors).

The bank debt was put in place in February 2000 to assist in the
financing of the coker upgrade and improvement capex program. The
major component of the program is the addition of a 58,000 bpd
delayed coking unit, enabling the refinery to process low cost
heavy sour crude oil. Construction of the coker upgrade project
recently completed at an estimated cost $615 million, or 15% over
the original budget. Mechanical completion was reached in July
2002 and the coker unit commenced operations in August 2002.
Financial completion is expected to be realized in early 2003.
Once the requirements for financial completion have been met, the
sponsors' several completion guarantees will be released, and
HOVENSA will be required to meet all of its financial obligations
on a stand-alone basis. Financial completion must be achieved by
September 2003 to avoid an event of default under the financing

Similar to other U.S. refiners, HOVENSA now faces a sizable
capital expenditure program to comply with new EPA sulfur
standards that will be phased in over the next few years.
Additionally, a ban on the gasoline additive, MTBE, is currently
being discussed by the EPA but has not yet been enacted. HOVENSA
has estimated that the low sulfur program will cost approximately
$460 million, while expenditures to address a potential ban on
MTBE are projected to be an additional $74 million. The vast
majority of the capex spending is projected to occur in 2003 and

Consistent with single-asset non-recourse project finance
structures, HOVENSA has limited sources of liquidity and
limitations on incurring additional debt. Furthermore, while the
coker upgrade project should enhance HOVENSA's relative
competitive position, the refinery remains subject to cyclical
industry fundamentals and dynamics that can cause cash flow to be
quite volatile. The existing sources of liquidity include the
$150 million bank revolver, which is currently undrawn, $30
million of post-completion sponsor support and the six-month debt
service reserve account ('DSRA'). HOVENSA and the sponsors are
taking additional steps to bolster liquidity through the low
sulfur capex period. During the low-sulfur capex period, the
sponsors have agreed to increase their post-completion financial
support from $30 million to $80 million and HOVENSA has agreed to
increase the DSRA by three months to nine-months. Additionally,
HOVENSA is preparing to issue $111.8 million of senior secured
tax-exempt 19-year bonds later this year. Taken together, these
additional measures will incrementally strengthen HOVENSA's
liquidity position by approximately $180 million, which Fitch
believes should be sufficient under various stress scenarios to
meet all anticipated financial obligations. Despite the fact the
tax-exempt bond issue increases overall leverage, Fitch views the
proposed bond issue as a credit positive. The 19-year term is
appropriate given the long-term useful life of refinery assets.
Also, because there will be no scheduled principal amortization
until 2014, the proposed bond issue complements the bank term
loan, which amortizes fully over the next six years.

          John W. Kunkle, 312/606-2329
          Caren Y. Chang, 312/368-3151
          Bryan Caviness, 312/368-2056 (Chicago)
          Alejandro Bertuol, 212/908-0393 (New York)
          Media Relations:
          James Jockle, 212/908-0547 (New York)

* Fitch Special Report: LatAm Most Vulnerable To Contagion
A new Fitch Ratings Special Report that ranks countries by their
vulnerability to financial contagion says Latin American
sovereignties are among the most vulnerable. In a feature
entitled 'Contagion: Which Emerging Markets are Most
Vulnerable?,' Fitch ranks 26 emerging market economies (EMEs)
according to their vulnerability to a financial shock from Brazil
or Turkey.

All the major countries in Latin America rated by Fitch fall in
either the 'high vulnerability' or 'moderate vulnerability'
categories. Excluding Argentina, Brazil and Turkey, three
countries which have been mired in a financial crisis for some
time and could in fact be the future source of contagion, the top
ten most vulnerable EMEs include all the major Latin American
countries (including Colombia, Uruguay, Venezuela, Panama, Mexico
and El Salvador) rated by Fitch, except Chile and Peru, both of
which have more comfortable external financing positions than
most of their neighbors. Likewise, non-Latins, such as Lebanon,
Tunisia, the Ukraine and Romania, figure in the top ten most

Countries in the category of 'least vulnerable' to financial
contagion are those in Emerging Asia, where strong external
balance sheets leave these countries well-placed to absorb
financial shocks, and Russia and Bulgaria in East Europe, both of
which have ample external liquidity positions and modest domestic
financing needs.

Market expectations of a strong US-led recovery have been
disappointed in recent months, leading to further sharp falls in
developed market asset prices. Increased market volatility and
high profile corporate failures and the prospect of war in Iraq
have fuelled rising risk aversion. Against this backdrop,
emerging market investors and policymakers also have to contend
with the on-going financial crises in Brazil and Turkey.

In this Special Report, Fitch assesses the vulnerability of EMEs
to such crises by looking at the adequacy of international
reserves and domestic financial markets, as well as the
vulnerability of EMEs to changes in investor sentiment, both in
the debt capital markets and among large international banks.
Vulnerability of a sovereign to contagion is assessed relative to
its peers.

For most EMEs, the capacity to absorb shocks emanating from
international capital markets is stronger than in 1997. For the
EMEs covered in this report, official international reserves of
some US$732 billion exceed external debt payments (including
short-term debt) of US$467 billion due next year, in contrast to
1997 when reserves were US$480 billion compared to US$490 billion
of external debt maturing in 1998. The distribution of these
reserves across EMEs is, to be sure, not even, with Asia quite
strong and Latin America quite weak in terms of foreign exchange
reserves. Yet a greater prevalence of flexible exchange rates now
than in 1997 across all EME regions represents a cushion against
rapid reserve loss.

The contagion risks from a deepening of the crisis in Brazil are
much greater than those that would arise from a credit event in
Turkey. International investors and banks' exposure to Brazil is
much greater, while Spanish and US banks that have invested
heavily in Brazil are also the largest creditors to the rest of
Latin America, most notably Mexico.

Mexico and Russia appear the most vulnerable to asset price
contagion, given their heavy weights in emerging market fixed
income portfolios. However, Mexico's vulnerability is mitigated
by investment grade credit fundamentals and a robust domestic
debt market, while Russia's external liquidity position is a
strong bulwark against contagion.

CONTACT:          Fitch Ratings
                  David Riley, 44-207-417-8338 (London)
                  Roger M. Scher, 212/908-0240 (New York)
                  Morgan C. Harting, 212/908-0820 (New York)
                  Media Relations:
                  Kris Anderson, 44 20 7417 4361 (London)


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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