TCRLA_Public/021226.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

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

           Thursday, December 26, 2002, Vol. 3, Issue 254



AES CORP: Contemplates Continued Argentinean Presence
DRESDNER BANK: Losses Prompt LatAm WorkForce Reduction
INTESABCI: Encouraged by Restructuring, Fitch Ups Watch Negative
* IMF Talks with Argentina Expected to Resume After Elections


MRM: Files Official Workout Plan with Supreme Court
SAGE: Absent New Funds by Year-End, Bermuda Unit To Curtail Ops


ACESITA: CVRD, ARCELOR Make Firm Proposal To Buy CST Shares
AES CORP.: Andres Completes $145M Financing for Power Project
BCP: Bracing For Increased Competition; Forecasts Band-C Auction
BESC: President Resigns Amid Privatization Conflicts
CEMAR: Aneel Reopens Cemar Pre-qualification Process
CSN: Planconsult Values CTE At BRL970 Mln
TELEMAR: Issues Notice On Payment of Interest on Capital
VARIG: Investor Negotiating To Inject New Cash
BRAZILIAN POWER PLANTS: Lula to Divert From Caroso's Sale Plans


AES GENER: S&P Lowers Ratings On Liquidity Concerns


SEVEN SEAS: Updates Position; Amex Delisting Appeal Unlikely


NCB: S&P Revises Foreign Currency Outlook To Negative


AHMSA: To Submit New Debt Plan To Creditors In February
BANCO DEL SURESTE: IPAB To Pay Out MXN1.77 Billion Bail Out
CORPORACION DURANGO: Defaults on Part of $85M
EMPRESAS ICA: Renews Cost, Debt Reduction Efforts
GRUPO MEXICO: Asarco Reducing Mission Unit Copper Production


BACKUS: Bavaria Agrees To Buy Polar's Stake

     - - - - - - - - - -


AES CORP: Contemplates Continued Argentinean Presence
The Argentine government's refusal to allow power companies to
raise electricity rates to compensate for declines in the
national currency is making U.S. power giant AES Corp. reconsider
its presence in the country.

"If we don't seem to return to a more normal market, we will
reevaluate whether we want to stay," Joseph Brandt, president of
the Arlington, Virginia-based company's Argentina operation,
said, adding that his company needs 30% to 50% rate increase
"very quickly."

AES shares are down 81% this year, in part because of the
devaluation, which led the Argentina unit to default on US$750
million of debt.

The Company, which shed units in Africa and Australia this month
to raise money, in April said it wrote US$473 million off the
value of projects in Argentina and Brazil.

Although not as drastic as the Argentina currency devaluation,
the Brazilian currency has fallen 33% this year.

DRESDNER BANK: Losses Prompt LatAm WorkForce Reduction
German bank Dresdner Bank AG will chuck off one-third of its
Latin American workforce after eliminating 240 employees in the
region, aiming to focus on its larger clients. The bank has
undertaken a program to cut about 11,000 jobs worldwide.

Dresdner Bank Lateinamerika had been suffering losses as Latin
America suffers through huge debt defaults, currency devaluations
and continued recession. The labor cost reductions are just one
part of the company's plan for reducing losses in its Latin
American arm.

Dresdner spokesman Karl- Friedrich Brenner said, "The overall
strategy of Dresdner is not to be a global actor anymore, but to
step back and focus on the core business, concentrating on Europe
and Germany.

Bloomberg News reported that the company's public offerings and
loans in the Latin American region this year had dropped to US$35
billion, down by 40 percent from US$59 billion last year.

Fierce competition forced the bank to reduce its fees, while
struggling with an increase in bad loans as economic growth
slowed while sinking stock markets cut fees.

Meanwhile, banks in the region are cutting back operations on
concerns over a possible default from Brazil's incoming
administration and the political unrest in Venezuela.

German insurer Allianz AG owns Dresdner Bank.

In related news, the bank's employees may still expect more cuts
after Allianz chief Henning Schulte-Noelle steps down in April to
be replaced by Michael Diekmann. Investors say that Dresdner may
increase emphasis on insurance, which would result in more job

CONTACT:  Allianz AG
          Head Office
          Koeniginstrasse 28
          80802 Muenchen
          Tel  +49 89 38 00 00
          Fax  +49 89 34 99 41

INTESABCI: Encouraged by Restructuring, Fitch Ups Watch Negative
Fitch Ratings, the international rating agency, removed Friday
the Long-term and Individual ratings of IntesaBCI from Rating
Watch Negative, and affirmed them at 'A+' and 'C' respectively.
The Short-term and Support ratings of 'F1' and '2' were affirmed.
The Outlook for the Long-term rating is Stable.

The rating action follows an encouraging start by management in
implementing measures to restructure the bank. As a result of
asset sales and a reduction in large corporate risk weighted
assets, the bank's funding structure has improved. In addition,
its capital adequacy ratios are much stronger, although Fitch
would like to see them stronger still. IntesaBCI has started to
prune its onerous international and large corporate credit
exposure and to tighten credit procedures and has also taken the
first steps in tackling its costs. As a result of an agreement
with trade unions, the bank will save EUR500m in personnel
expenses by 2005. These and other measures should help to boost
core earnings, while the cost of the put warrants in 2001-2002
will not be repeated. Thus some of the goals highlighted in the
plan presented in September 2002 have been met.

While these first signs show the determination of the bank to
meet the challenges facing it, much work remains to be done.
Withdrawal from Latin America has started, and IntesaBCI has
signed an agreement to sell its subsidiary in Argentina. Credit
risk, and in particular the bank's risk concentration, remains a
concern in a slower economic environment. Fitch notes that it is
probable that loan loss provisions will continue to absorb a
sizeable proportion of pre-provisions operating profit. In the
medium-term, the switch to more fragmented domestic retail
lending should help improve asset quality, as should more
sophisticated credit controls. Market risk will be reduced with a
smaller trading book, and stricter value at risk controls.

Fitch is satisfied that the bank should be able to strengthen
income generation, but considers that it may be challenging for
IntesaBCI to realise its goal of EUR1.5bn of extra income, and
EUR700m fewer loan loss provisions by 2005. However, and
management has said that if expected revenues fall short it will
make additional savings elsewhere. The bank could also sell more
non-core assets to help it reach its targets. Should IntesaBCI
materially fail to reach some of its key targets, then the agency
would review the ratings.

Note to Editors: Fitch Ratings's Support and Individual Ratings
for Banks

Fitch's Individual ratings assess how a bank would be viewed if
it were entirely independent and could not rely on external
support. Its Support ratings deal with the question of whether a
bank would receive support from its owners or from the state if
it were to get into difficulty. These ratings are not debt
ratings but rather, respectively, an assessment of the intrinsic
strength of a bank and of any level of outside support that may,
or may not, be available to it.

CONTACT:  Fitch Ratings (London)
          Matthew Taylor, +44 (0)207 417 4345
          Matthew Hegarty, +44 (0)207 417 6319
          Kris Anderson, 44 20 7417 4361, Media Relations

* IMF Talks with Argentina Expected to Resume After Elections
The International Monetary Fund has agreed consider Argentina's
petition to negotiate a "transitional" lending program, according
to Xinhua News' Sunday Edition. The report added that talks on a
comprehensive new aid program to the country are postponed until
after the presidential elections.

Argentine President Eduardo Duhalde said on Saturday that
negotiations on rescheduling repayment of the country's foreign
debt could end on January 8.

Argentina had been seeking an aid package from the IMF for almost
a year now. The lender had cut off the country's credit line
after it defaulted on US$95 of debt in December last year.

Argentina hoped to get aid in order to keep up with about US$18
billion of debt coming due this year and the next.

According to Duhalde, the provisional agreement will allow
Argentina to reenter the international financial community, by
not increasing its indebtedness and consolidating the incipient
recovery of its economy, following four years of recession.
However, the agreement does not include new credit loans for the

Economy Minister Roberto Lavagna said that the new agreement will
not be cause for any alterations of the country's expenditure,
tax rates or the exchange rate between the Argentine peso and the
American dollar. Next year, the local currency is expected to
stay at ARS3.61 to the dollar.

In earlier talks between the two parties, the IMF had asked for a
number of changes in the government's monetary policy. However,
Duhalde said, it would be difficult to drum up legislative
support for such changes as the elections approach. The president
also said that the intervention on Spain, Italy and the United
States had helped in speeding up talks between the country and
the lender.

The president also said that the intervention on Spain, Italy and
the United States had helped in speeding up talks between the
country and the lender.

Argentina had been seeking an aid package from the IMF for almost
a year now. The lender had cut off the country's credit line
after it defaulted on US$95 of debt in December last year.

Argentina hoped to get aid in order to keep up with about US$18
billion of debt coming due this year and the next.


MRM: Files Official Workout Plan with Supreme Court
Mutual Risk Management Ltd. ("MRM") filed a proposed Scheme of
Arrangement with creditors on December 16, 2002 at the Supreme
Court of Bermuda. On December 19, 2002, the Bermuda Court
directed that official meetings for Scheme creditors be held in
Bermuda on February 5, 2003. The purpose of the meetings is to
consider and, if thought fit, approve the proposed Scheme.
Assuming a positive vote, MRM will then apply to the Supreme
Court for an Order approving the Scheme.

The principle purpose of the Scheme is to restructure MRM's
senior debt. The principal amount of the debt is approximately
$198 million, comprised of approximately $110 million owing under
the Company's credit facility and approximately $88 million owing
to holders of the Company's 9 3/8% debentures. Under the proposed
restructuring, the senior debt holders would exchange their
existing debt for cash, preferred stock and warrants to purchase
15% of the common stock of the Company on a fully diluted basis
as well as debt, preferred stock and 74.7% of the common stock,
on a fully diluted basis, of the Company's subsidiary, MRM
Services Ltd. ("MRM Services"). MRM Services (currently doing
business as IAS Park and soon to be renamed IAS Park Ltd.) holds
the Company's fee-based businesses.

IAS Park has approximately 300 employees with the major units in
the group being the captive management division, which will
operate under the IAS banner, and the insurance/reinsurance
broking division, which will operate under the Park banner. The
Group will be headquartered in Bermuda where some 150 staff are
located and will also have offices in the U.K., the U.S., Cayman
Islands, Amsterdam, Guernsey and Barbados.

After the proposed restructuring, the Company's remaining
principal assets would be 20% of the common shares of MRM
Services and all of the common stock of its U.S. insurance
companies which currently are the subject of the previously
announced rehabilitation, conservation and liquidation
proceedings. Dividend and other payments in respect of such
common shares will be subordinate to the debt and preferred stock
of MRM Services and the Company.

The company's press release contains forward-looking statements
within the meaning of the U.S. federal securities laws. The
company cautions that it intends these forward-looking statements
to be covered by the safe harbor provisions for forward-looking
statements contained in these laws. These statements are not
guarantees of performance. Actual results may differ materially
from those projected in such forward-looking statements and
therefore you should not place undue reliance on them. In
particular the successful completion of the proposed Scheme of
Arrangement requires a vote in favor by the requisite number of
MRM's creditors and approval by the Bermuda courts. MRM
undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new
information, future developments or otherwise.

         David Ezekiel
         Angus H. Ayliffe
         441 295 5688

SAGE: Absent New Funds by Year-End, Bermuda Unit To Curtail Ops
Following previous announcements regarding international capital
raising initiatives, the Sage Group Limited has approved plans to
suspend the marketing and underwriting activities of Sage Life
Assurance of America, Inc. ("Sage Life USA") and Sage Life
(Bermuda) Limited ("Sage Life Bermuda") and to cease all new
sales of these operations with effect from 1 January 2003. This
action will be taken if additional sources of capital necessary
to support sales momentum and infrastructure are not secured by
that date. The plans include disbanding existing sales, marketing
and ancillary resources from mid-January 2003. Administration
capabilities will be retained to continue servicing existing
contract owners.

The decision to close the international operations to new
business in January, if additional capital is not secured, was
made despite the fact that projected total sales for the Sage
Group financial reporting period 1 April 2002 to 31 December 2002
of approximately $160 million represent an increase of 18% on the
comparable nine month period in the previous year. Assets under
management currently amount to $306 million. However, the
necessary capital to sustain expansion is currently not
accessible, given prolonged weak global capital markets and the
negative sentiment which has severely impacted the life insurance
sector. Sage Group considered it prudent to utilize existing
resources for the management of the existing business on the

Sage Group continues to explore a variety of alternatives for its
international activities including an outright sale of Sage Life
USA and Sage Life Bermuda. The Group remains constrained by
currency controls from utilizing South African funds for the cash
needs of its international activities.

Contract owner assets of Sage Life USA and Sage Life Bermuda are
fully funded and held in separate accounts which are not subject
to any general claims against the relevant companies. In
addition, the death benefit and other guaranteed rider features
have been reinsured with highly-rated reinsurers. All contract
owner benefits and rights remain fully in force.

Sage Group Limited is a publicly traded life insurance group on
the JSE Securities Exchange in South Africa.

     (Incorporated in the Republic of South Africa)
     (Registration number 1970/010541/06)
     (Share code SGG ISIN no ZAE000006623)

CONTACT:  Sage Group Limited
          Robin Marsden

          Bernie Nackan, Executive Director


ACESITA: CVRD, ARCELOR Make Firm Proposal To Buy CST Shares
Companhia Vale do Rio Doce (NYSE: RIO) (CVRD), the world's
largest producer of iron ore, and Arcelor, the world's largest
steel maker, inform that they made a joint proposal to purchase
the stake of Acesita S.A. (ACESITA) in Companhia Siderurgica de
Tubarao (CST), the world's largest exporter of steel slabs.

ACESITA holds 50.1% of the stock of Acos Planos do Sul (APS), who
in turn holds 37.29% of the total capital of CST, a participation
comprising 43.91% of CST's common shares and 33.14% of CST's
preferred shares. APS is part of CST's shareholders controlling
group, which also comprises CVRD, Kawasaki Steel Corporation
(KSC) and California Steel Industry (CSI). CST shares held by
APS, corresponding to 29.64% of its voting capital, are bound to
the CST controlling group's shareholder agreement. CSI is a
North-American steel producer, whose control is divided between
CVRD (50%) and KSC (50%).

Arcelor holds 49.9% of the capital of APS, whereas CVRD holds
22.85% of the total capital of CST, a stake made up of 20.51% of
CST's common shares and 24.32% of CST's preferred shares.

CVRD and Arcelor are proposing to pay Acesita an average price of
US$ 21.58 per 1,000 shares. To purchase ACESITA indirect
participation in the voting capital of CST, bound to the control
of the latter, KSC and CSI must waive their rights of first
refusal to acquire the aforementioned shares.

CVRD and Arcelor may examine the possibility of jointly making
the purchase of stakes of other CST shareholders, including KSG
and CSI.

CVRD and Arcelor agreed to speed up all the studies needed to
begin the building of CST third blast furnace in order to start
up its operations in 2006.

The increase of CVRD's stake in CST is structured so that CVRD
may reduce it significantly in the future. Therefore, CVRD's
increased stake in CST has a transitory character.

The proposed transaction reflects CVRD's already manifested
intention to help the restructuring of the Brazilian steel
industry to make feasible a healthy growth process, creating
opportunities for expanding CVRD's iron ore and pellets

CONTACT:  Roberto Castello Branco

          Andreia Reis

          Barbara Geluda

          Daniela Tinoco

          Eduardo Mello Francom

          Rafael Azevedo

AES CORP.: Andres Completes $145M Financing for Power Project
The AES Corporation (NYSE:AES) announced Friday that its
subsidiary, AES Andres, completed a $145 million non-recourse
financing to fund the completion of the construction of a $400
million liquefied natural gas ("LNG") import terminal, re-
gasification facility, pipeline and 300 MW dual fuel-fired
(natural gas and No. 2 oil) combined cycle power plant.

The medium-term, non-recourse loan is a three-tranche facility in
which Banco Popular Dominicano ("BPD"), the largest bank in the
Dominican Republic, acted as lead arranger. BPD led a syndicate
consisting of 5 banks, which also included Banco Popular Puerto
Rico, Banco BHD, Banco Mercantil, and Banco Profesional. In
addition, TCW Global Project Fund, a fund managed by an affiliate
of Trust Company of the West ("TCW"), provided funding for a
second tranche. The third tranche consists of extended terms on
vendor receivables provided by contractors on the project.

The complex of facilities is in an advanced stage of
construction. The LNG terminal is expected to commence commercial
operations in February 2003, supplying natural gas to an AES
affiliate, the AES Los Mina power facility, which now fires oil.
The Andres combined cycle power plant is expected to initiate
commercial operations in August 2003.

Paul Hanrahan, President and Chief Executive Officer, stated, "We
are pleased to have completed this financing during a time when
AES is focused on enhancing liquidity, delevering our balance
sheet and strengthening our businesses around the world. AES is
focused on meeting the energy needs of the Dominican Republic and
excited about this opportunity to introduce natural gas to this
fast growing republic of over 8 million people."

Greg Adams, Project Director of AES Andres, commented, "We
completed this financing with strong support from Dominican and
international financial institutions, as well as participation
from some of our largest contractors. AES appreciates the
commitment BPD, TCW and our vendors have shown in helping to make
this project a reality. We note that this is the largest private
financing achieved in the history of the Dominican banking

AES is a leading global power company comprised of contract
generation, competitive supply, large utilities and growth
distribution businesses.

The company's generating assets include interests in 176
facilities totaling over 60 gigawatts of capacity, in 33
countries. AES's electricity distribution network sells 108,000
gigawatt hours per year to over 16 million end-use customers.

For more general information visit our web site at or
contact investor relations at

CONTACT: The AES Corporation
         Kenneth R. Woodcock, 703/522-1315

BCP: Bracing For Increased Competition; Forecasts Band-C Auction
Brazilian cellular operator BCP has increased its sales outlets
in the second half of this year by 40 percent compared to the
first half as it prepares to face more competition, reports local
daily Estadao, citing the Company's commercial director Gilberto

BCP now has 550 indirect sales outlets, 18 kiosks in shopping
malls, and 20 proprietary outlets. It is also planning to open
another 5 proprietary units early next year. BCP Prepaid cards
are available at 20,000 sales points, which is expected to reach
25,000 by March.

Vasconcelos added that BCP has 1.7 million users in Sao Paulo.

BCP, a unit of BellSouth Corp., faces competition from Portugal
Telecom's (NYSE: PT) Telesp Celular unit, Telecom Italia Movil
and Nextel, in the Sao Paulo area alone.

However, the report added, America Movil (NYSE: AMX) subsidiary
Telecom Americas acquired a Band-E PCS license for Sao Paulo in
mid-November, and telecoms regulator Anatel is currently
receiving applications for Sao Paulo's Band-C license. More than
one operator has expressed interest in this license so it is
likely to go to auction.

          Rua FlĒrida, 1970 4o andar
          Sao Paulo - SP
          Tel: 55 11 5509-6428
          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

BESC: President Resigns Amid Privatization Conflicts
Natalicio Pegorini, the president of Brazil's former Santa
Catarina state bank Besc, left his post last week, and said that
his job of preparing the bank for privatization is done. Besc was
scheduled for privatization December 16 with a minimum bid price
of BRL520 million, but the supreme court suspended the operation
following a lawsuit filed by the Santa Catarina state government.

Santa Catarina contended that it spent BRL1.5 billion in cleaning
up the bank's accounts, but its minimum sale price is about a
third of the amount invested by the state. This would mean Santa
Catarina would be left with a debt of about BRL1 billion.

Mr. Pegorini admitted that it would be difficult to reverse the
bank's privatization at this stage, and called for an immediate
replacement of the board in order to stem the bank's losses.

"It is important that the new board be set up quickly because
losses are accumulating every month while the bank is not in full
operation," according to Mr. Pegorini and financial daily Gazeta

While Besc has a 16% market share of deposits within the state,
its loan portfolio stands at only 4% of the market, reflecting
the bank's tendency to avoid risk in the run up to privatization.

Four private banks have qualified to bid: Dutch-based ABN Amro
and Brazilian banks Itau, Bradesco and Unibanco.

CEMAR: Aneel Reopens Cemar Pre-qualification Process
Brazil's power regulator Aneel reopened the process to pre-
qualify bidders for the sale of Maranhao state distributor Cemar.
The news comes after none of the three pre-qualifiers - SVM
Participacoes e Empreendimentos, part of the GP Capital group of
GP Investimentos; Docas Investimentos of Brazilian businessman
Nelson Tanure; and Canada's Brascan Participacoes Financeiras -
successfully completed talks with all of Cemar's creditors by the
December 11 deadline.

US-based PPL Global is selling its 84% stake in Cemar after
writing off its investment in the unit, as well as a US$24-
million loan. Rather than offering cash for the shares, the
bidders were asked to provide the best proposals for
restructuring Cemar's debt. The winner will be chosen on the
basis of the best solution that covers most of the debts.

Cemar's owes Brazil's federal power sector holding Eletrobras,
its main creditor, BRL334 million (US$88mn) for power purchases
made since 2000. It owes a total of BRL210 million to other
individual creditors for a variety of services.

The new deadline for receiving bids will be on February 5, 2003,
a winner will be chosen a few days later, and the Company will be
formally transferred to the new shareholder on February 17.

Aneel took over operations at Cemar in August, after the Company
filed for protection from creditors. It will run the Company
until the handover date.

          Av. Colares Moreira, 477
          65075-441 - Sao Luiz- MA
          PHONE: (98) 217-2119
          FAX: (98) 235-3024

            Avenida Presidente Vargas 409, 13 Andar
            20071-003 Rio de Janeiro Brazil
            Phone: (21) 2514-5151
            Fax: +55-21-2242-2697
            Home Page:
            Cladio da Silva avila, President
            Jose Alexandre Nogueira de Resende, Director of
                                  Financial and Market Relations

            Investor Relations Division
            Phone: (0XX21) 2514-6207 / 2514-6333
            Av. Presidente Vargas, 409 - 9  andar
            20071-003 - Rio de Janeiro - RJ

            Av. Presidente Vargas, 489 -13  andar.
            20071-003- Rio do Janeiro RJ
            Phone: + (55+61) 429 5139
            Fax: +(55+61) 328 1373
            Home Page:
            Mr. Arlindo Soares Castanheira, Investor Relations
            Phone: 55 21 2514.6331
                   55 21 2514.6333
            Fax: 55 21 2242.2694

            100 Federal Street
            Boston, MA 02110
            Phone: (617) 434-2200
            Fax: (617) 434-6943


            PPL GLOBAL (90%)
            11350 Random Hills Road
            Suite 400
            Fairfax, VA 22030

            Phone: 703-293-2600
            Fax: 703-293-2659
            William F. HechtChairman, President/CEO
            John R. Biggar, Executive Vice President/CFO

CSN: Planconsult Values CTE At BRL970 Mln
Planconsult Planejamento e Consultoria Ltda., hired by Brazilian
flat steelmaker CSN to evaluate CTE II power plant, said that the
thermoelectric plant was worth around BRL1.05 billion (US$300mn).
But after considering depreciation incurred in the first two
years of the plant's operation, Planconsult said the asset had a
market value of roughly BRL970 million, or BRL508 million more
than its current book value.

The evaluation was unanimously approved by all of CSN's
shareholders except MSCI, which reportedly abstained from voting.
The official due diligence work up is part of the process of
selling the asset, CSN told the Sao Paulo stock exchange.

CSN is trying to sell CTE to focus on the core business of steel
production. CSN intends to transfer the plant and its outstanding
debt of US$250 million to a new company called NewCo. Oliveira
Trust Participacoes will acquire NewCo's capital and in exchange
issue convertible debentures to CSN.

CSN will sign a long-term contract with NewCo for the supply of
electricity to the mill, which needs 385MW.

CSN retains a 24.8% stake in hydroelectric dams Ita and
Igarapava, which provide its mills with 167MW and 21.7MW,

CSN has lost money in the last four quarters and has been hurt by
the recent collapse of a US$3.5-billion takeover by Europe's
Corus Group Plc.

CONTACT:  Luciana Paulo Ferreira, CSN - Investor Relations
          Tel. 021 2586 1442

TELEMAR: Issues Notice On Payment of Interest on Capital
We hereby inform our shareholders that the Board of Directors has
authorized the payment of R$ 500,000,000.00 (five hundred million
reais) as Interest on Capital ("IOC"), to be distributed along
with the mandatory dividends related to 2002, the value of which
is yet to be announced, according to paragraph 7, article 9 of
law 9249/95, and corresponding to the positions held on
12/31/2002. This payment will be proposed in the general
Shareholders Meeting to be held up until 04/30/2004, as described

1. Payable Value: To the shareholders who, on Dec. 31, 2002, hold
common shares (TNLP3) or preferred shares (TNLP4 - TNE), R$

1.333101379250 per thousand shares will be paid as interest on
capital, which represents R$ 1.1331361724 net of taxes;

2. Interest on IOC: the Board of Directors will propose to the
General Shareholder's Meeting that the value to be remunerated
will be adjusted by applying the Taxa Referencial (TR) to the
principal amount for the period from January 1st, 2003 until the
payment date.

3. Payment: The payment dates will be established as determined
by the Company's Administration, to be approved by the General
Shareholders' Meeting from April 30, 2003;

4. Taxes: The principal amount of the IOC (item 1) and the
accrued interest (item 2) will be subject to taxation, as
determined in the current legislation. Any shareholders who are
exempt from paying this tax should present the appropriate
documents that prove their fiscal status in advance at any Banco
do Brasil office;

5. Trading Date "ex-IOC": The shares will be traded "ex-IOC"
starting from 01/02/2003, based on the position as of December
31, 2002.

Rio de Janeiro, December 20, 2002
Marcos Grodetzky
Investor Relations Officer

VARIG: Investor Negotiating To Inject New Cash
The association of Varig pilots Apvar (Associacao de Pilotos da
Varig) revealed that an entity is negotiating to capitalize the
ailing Brazilian airline, relates Folha de Sao Paulo. The entity,
an English-Spanish group that plays in communications segment, is
willing to inject US$250 million in Varig, Apvar affirmed.

Varig is struggling with debts totaling US$764 million and a
negative net equity of US$450 million. Its long-running financial
crisis came to a head last month when the Foundation ditched an
agreement between the airline's board of directors and creditors,
prompting the resignation of Varig's top executive and directors.

The rejection also ended any chance of receiving help from the
government, which was ready to inject capital of US$300 million
through the National Economic and Social Development Bank
(BNDES). The government said it would only provide funds if Varig
presented a solid restructuring plan.

The Company's new interim president, Manuel Guedes, described the
situation at the Company as delicate but he stressed that the
US$764-million can be renegotiated.

Varig, Brazil's flagship airline, has a fleet of 100 planes,
employs 15,000 people and serves 110 domestic and 27
international destinations.

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

              BAIN & CO
              Primary Contact: Wendy Miller
              Two Copley Place, Boston, MA 02116
              Phone: +1-617-572-2000
              Fax: +1-617-572-2461

BRAZILIAN POWER PLANTS: Lula to Divert From Caroso's Sale Plans
Brazilian President-elect Inacio Lula da Silva plans to stop the
sale of state-owned power plants and oversee the electricity
grid's planning and management, according to the Saturday edition
of Bloomberg News. Mr. Lula's plans were revealed by newly
appointed Energy Minister Dilma Rousseff. However, said Rousseff,
Lula does not want to alienate investors and is taking actions to
give compensation to power companies that never got their
receivables from the government.

Mr. Lula's plans are a reversal of President Henrique Cardoso's
plans to privatize state-owned power companies. After the new
plants had not received adequate investments during Cardoso's
term, the country had been forced to ration electricity.

President-elect Lula's adviser, Luiz Pinguelli, said that Mr.
Lula is likely to abandon energy auctions and other measures
implemented by President Cardoso to allow market forces to
regulate the industry and guide investment.

Power companies in Brazil had halted construction of new plants,
partly due to the rationing, coupled with heavy debt and losses
from the inability of rates increases to keep up with the
declining value of the Brazilian real.

"We had a terrible experience last year with power rationing,"
said Rousseff, who is Rio Grande do Sur's energy secretary. He
added, "The power sector should not be an obstacle but a tool for
development of Brazil."

Mr. Pinguelli, who is co-director of the graduate engineering
school at the Federal University of Rio de Janeiro, said that it
is possible that the government would create a state-owned
company to oversee planning, investment and operations of the
country's electrical system.

The report said that Mr. Lula might find difficulties in
attracting the US$2 billion in investments needed to avert future
power shortages in the country within the next few years.

David Hurd, an analyst at Deutsche Bank Securities in Baltimore,
said that soon-to-be President Lula and his subordinates have
revealed they are interested in tightening controls on power
companies' ability to raise rates, which would make it hard for
utilities to earn adequate returns on their investments.

Mr. Hurd says that Brazil has an energy surplus because energy
consumption had remained at 14 percent below previous levels
after the government had out an end to the energy rationing.

He added that within four years Brazil will need to add as much
as 3,500MW of electricity generation capacity a year -- at a cost
of roughly US$2 billion -- to assure demand doesn't outstrip
supply, he said.

"The biggest problem is that government policy in the power
sector is completely messed up," said Frank McGann, an
electricity analyst at Merrill Lynch & Co. in New York.


AES GENER: S&P Lowers Ratings On Liquidity Concerns
Standard & Poor's Ratings Services lowered Friday its ratings on
Chile-based power generator AES Gener S.A. (AES Gener) to 'B+'
from 'BB', reflecting its weak liquidity position, which could be
insufficient to face debt maturities coming due in the second
half of 2003.

"We expected AES Gener to substantially improve its liquidity
through asset sales or any other committed funding alternatives
before the end of 2002 so that the company would be able to face
interest and debt payments for approximately $140 million in
2003," said credit analyst Sergio Fuentes. "However, delays in
achieving those solutions have increased the risks posed by the
upcoming maturities and have caused the current downgrade,"
continued Mr. Fuentes.

The ratings remain on CreditWatch negative due to potential
continuing delays in strengthening the company's liquidity.

This scenario assumes that AES Gener will continue to have
restricted access to the credit market. If the company's
liquidity is not improved in upcoming months, the ratings of AES
Gener would be further lowered. AES Gener is the second-largest
power generator in the Chilean electricity market, accounting for
almost 20% of the country's total generating capacity.

Analyst:  Sergio Fuentes
          Buenos Aires
          Tel: (54) 114-891-2131

          Marta Castelli
          Buenos Aires
          Tel: (54) 114-891-2128


SEVEN SEAS: Updates Position; Amex Delisting Appeal Unlikely
Seven Seas Petroleum Inc. (Amex: SEV) announced the American
Stock Exchange has issued a decision to delist the Company's
shares. The Company has until December 26, 2002 to appeal the
ruling. As previously announced, Seven Seas cannot meet the
listing standards and therefore does not expect to appeal the
decision. The Company's shares will cease trading on the Amex on
December 27, 2002. The Company plans to pursue quotation of
shares on the OTC Bulletin Board.

Seven Seas Petroleum Inc. is an independent oil and gas
exploration and production company operating in Colombia, South


NCB: S&P Revises Foreign Currency Outlook To Negative
Standard & Poor's Ratings Services said Friday that it revised
its outlook on its foreign currency rating assigned to National
Commercial Bank Jamaica Ltd. (NCB) to negative from stable. The
long- and short-term foreign and local currency ratings of 'B+/B'
were affirmed. The stable outlook on the local currency rating
was affirmed.

"The outlook revision follows the rating actions on Jamaica's
sovereign credit ratings, and reflects NCB's significant exposure
to Jamaica's sovereign risk, with most of the bank's assets
represented by government securities," said credit analyst David

The bank's steps toward improving its financial profile are
expected to continue.

ANALYSTS:  David Olivares, Mexico City (52) 55-5279-2006
           Ursula M Wilhelm, Mexico City (52) 55-5279-2007


AHMSA: To Submit New Debt Plan To Creditors In February
Mexican iron and steel company AHMSA, which halted payments of
its US$1.85 billion in debt, will submit a new financial
restructuring plan to creditor banks in February, relates
Business News Americas.

The idea is to submit specific proposals to each creditor, giving
the banks a "menu of options" from which to choose.

AHMSA earlier submitted a restructuring plan but creditors
rejected it, deeming the offers insufficient. Under the plan,
AHMSA's controlling group GAN offered to give the financial
institutions 40% of the Company in return for writing off US$1.3
billion of the debt while GAN would maintain 50.1% of shares and
the other US$500 million in debt would be paid off over 15 years.

With the new plan, company officials say they aim to avoid the
mistake of offering the "same deal" to all banks.

For three years, AHMSA and lenders were in talks to restructure
debt after the Company ran into deep trouble following a drop in
world steel prices resulting from the 1998 Asian crisis and an
excess of steel products in the market.

Creditors walked away from talks earlier this year saying AHMSA
management had no desire to strike a deal.

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

BANCO DEL SURESTE: IPAB To Pay Out MXN1.77 Billion Bail Out
In two weeks' time, the Bank Savings Protection Institute (IPAB)
will pay out MXN1.77 billion (US$174.3 million) to cover 95.03%
of the deposits belonging to Banco del Sureste, reports Mexico
City daily el Economista. IPAB is still in the process of paying
some 1,878 requests, as well as 1,576 with balances of more than
1,000 pesos (US$98.50), which have still not been reclaimed by
their owners.

Banco del Sureste, which began operating in June 1994, has been
in liquidation since Dec. 1. The bank's latest financial
statement (up to Oct. 31, 2002) showed that it lacks MXN1.5
billion in capital.

Sureste had 22 branches, a total of 42,940 clients and 47,002
accounts, of which 7,798 contained more than MXN1,000 (US$98.50).

CORPORACION DURANGO: Defaults on Part of $85M
Corporacion Durango SA, Latin America's largest paper company,
said it defaulted on part of its US$850 million debt, relates
Bloomberg. The Company didn't specify how much debt on which
agreements were not met but told the Mexican stock exchange that
it has hired Rothschild Inc. and PricewaterhouseCoopers to help
it negotiate new payment terms with creditors.

Durango's debt swelled to US$850 million trying to become the
preferred packaging company for the more than 3,000 foreign-owned
import-export factories, known as maquiladoras, which account for
nearly half of Mexico's exports to the U.S.

Mexico's exports to the U.S. rose 16% in 1999 and 24% in 2000
before dropping 3.3% last year. Along with lower demand,
Durango's average prices have tumbled, dropping 14% to US$506 per
ton in the third quarter compared with US$587 a ton in the same
period last year, the Company revealed in its third- quarter
earnings report.

Prices have fallen another US$20 from then and aren't likely to
go up until Mexican exports to the U.S. increas, said Rafael
Elias- Linero, an analyst with UBS Warburg before Durango's
default announcement.

In his report released last month, Craig Munro, an analyst at
Banc of America Securities stated that Durango was planning to
sell US$90 million of assets to help pay US$107 million of
interest payments and US$110 million of principal on loans to
banks including JP Morgan Chase, Citigroup's Banamex unit and
California Commerce Bank.

           Mayela R. Velasco
           +52 (1) 829 1008

           Arturo Diaz Medina
           +52 (1) 829 1015

EMPRESAS ICA: Renews Cost, Debt Reduction Efforts
Empresas ICA Sociedad Controladora SA, Mexico's largest
construction company, lowered its debt following a bond buyback,
relates Bloomberg. In a statement to the Mexican stock exchange,
the construction company revealed it bought back about US$71
million of subordinated convertible bonds due March 2004 thereby
reducing the outstanding amount to US$96.3 million.

In addition, the Company also paid off MXN372 million (US$37
million) of debt with a MXN1.18-billion loan it got from the
Mexican bank Grupo Financiero Inbursa SA earlier this month.

Aside from the debt reduction plans, the Company is also cutting
costs in order to find profitability. The measure includes
cutting an unspecified number of jobs that would save the Company
MXN121 million a year but will initially cost MXN150 million in
severance payments, Chief Financial Officer Jose Luis Guerrero
Alvarez said.

ICA's share price has plummeted 56% this year on investor concern
that a recovery in Mexico's construction industry might not come
in time to prevent the Company from defaulting on its US$519
million debt.

To see financial statements:

             Bernardo Quintana Isaac, Chairman/Pres/CEO
             Jos, L. Guerrero Alvarez, EVP Finance and CFO

             THEIR ADDRESS:
             Mineria No. 145, Colonia Escand>n
             11800 Mexico, D.F., Mexico
             Phone: +52-55-5272-9991
             Fax: +52-55-5227-5012

GRUPO MEXICO: Asarco Reducing Mission Unit Copper Production
Asarco, Inc., a subsidiary of Grupo Mexico S.A. de C.V.,
announced Friday that it has decided to significantly cut copper
production at its Mission mining complex in southern Arizona.
As a result of the reduction, the Mission complex will operate at
15 percent of its established capacity.

The decision to curtail operations will shrink annual production
of contained copper at Mission to approximately 22,000 metric
tons, roughly 15 percent of its peak production levels reached
less than four years ago. The reduction also will impact Asarco's
downstream operations at the Hayden, Arizona, copper smelter,
reducing production by approximately 33 percent, and at the
Amarillo, Texas, refinery by approximately 13 percent. Employment
at the affected operations will be reduced according to the
adjusted production levels.

The decision follows an extensive review of various production
scenarios. The company announced in October that it was exploring
the possibility of closing the Mission operations by the end of
the year. Asarco will continue to review the situation at Mission
and other operations.

          Clay Allen, 602/977-6515


BACKUS: Bavaria Agrees To Buy Polar's Stake
Empresas Polar and Grupo Empresarial Bavaria announced Friday
that the two companies have reached an agreement whereby Bavaria
will increase its shareholding in Union de Cervecerias Peruanas
Backus & Johnston. Under the terms of the agreement, Bavaria will
carry out a Public Tender Offer (OPA) or a purchase offer
directed to all minority shareholders of Backus & Johnston who
wish to sell their shares in the company, under the same terms
and conditions as those offered to Polar, with the authorization
of the Comision Nacional Supervisora de Empresas y Valores

Bavaria will purchase 19,260,978 Class A common shares of Backus
from two subsidiary companies of Polar under the agreement. In
addition it will acquire the minority shareholdings of Polar in
two companies which are shareholders in Backus.

The total purchase price paid by Bavaria for all the shares owned
by Polar was US$567,800,901 based on a unit price of US$27 for
each Class A share. One- half of the purchase price was in cash,
while the remaining 50 percent will be due in one year, and will
be guaranteed by a pledge of all the Backus shares owned by

Lorenzo Mendoza, Executive President of Empresas Polar stated:
"We are very pleased with the terms of the agreement. The
obligation of Bavaria to carry out a Public Tender Offer or a
purchase offer under CONASEV authorization, ensures that all
Backus shareholders who wish to sell their shares will have the
opportunity to receive the same price and other conditions that
Polar is receiving from Bavaria. In this manner, we are
preserving the principles of transparency and equal treatment for
all shareholders that we have always supported. In addition, this
transaction is an excellent business for our shareholders,
considering that Polar's average purchase price for its shares
was about US$10 per share."

Julio Mario Santo Domingo, the Chairman of the Board of Bavaria
stated, "The increase in Bavaria's shareholding in Backus is a
source of satisfaction for us. It is also a demonstration of our
confidence in Peru and in the beer sector."

Polar and Bavaria notified the CONASEV Friday of the agreement
with respect to the shares owned by Polar's subsidiaries and the
subsequent Offer that Bavaria will make to the other holders of
Class A shares of Backus & Johnston, with the confidence that
this agreement will benefit Backus, all its shareholders, its
employees, as well as the rest of the Peruvian stock market and
the economy of Peru.

The signing of this agreement puts an end to the legal disputes
with respect to the purchase of Backus shares. The negotiation
preserves the principles of transparency and equal treatment that
are essential in the stock market.

Grupo Empresarial Bavaria is the largest beverage company in
Colombia and second largest brewer in South America with leading
positions in Colombia, Ecuador, and Panama. Its Aguila, Poker,
Costena, Pilsen, and Club Colombia brands are leaders in
Colombia. In Ecuador, Bavaria is the market leader with the
Pilsener, Club and Dorada brands of beer. The company is also the
market leader in Panama with the Atlas and Balboa brands. Bavaria
also sells fruit beverages and mineral water. The parent company
Bavaria S.A. is listed on the Mercado de Valores de Colombia
under the symbol BAVAR CB.

Empresas Polar is regarded as one of Venezuela's most important
private industrial conglomerates and a solid player in the Latin
American manufacturing sector. The company produces mass
consumption goods such as: beer, malt beverage, soft drinks,
mineral water, energy drinks, juices, cornmeal, oatmeal, corn
oil, rice, pasta, margarine, sauces, frozen seafood, tuna, ice
cream and snacks, among other goods. Polar also has strategic
investments in other important productive sectors of Venezuela
including the oil, petrochemical, and banking industries. In Peru
it maintains commercial activities through Snacks America Latina,
in partnership with Pepsi Co., and in the food industry through
Mavesa del Peru. It also maintains production and Commercial
activities in Colombia.

          Cecilia Orozco

          Daniel Wilson

          Patricia Gutierrez

          Juan Cortinas



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 Oona G. Oyangoren, Editors.

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

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