TCRLA_Public/030522.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, May 22, 2003, Vol. 4, Issue 100



ACINDAR: Bond Issue Subject of May 30 Shareholder Meeting
BANCO DE LA PAMPA: Bonds Get `BB(arg)+'; `BBB(arg)-' Ratings
BANCO FRANCES: Fitch Rates US$1 Billion of Bonds `BBB(arg)+'
CAPEX: Fitch Issues Default Ratings to Two Bond Traunches
DINAR: Viability Dwindles, Problems Continue

IMPSA: Fitch Rates Bonds `Junk' Rating
LAPA: Pres Duhalde Approves Replacement Company's Creation
TASA/COINTEL/THA: S&P Revises Ratings To `CC' From `SD'
TELFONICA DE ARGENTINA: Aims To Keep Up With Debt Payments


AES CORP.: BNDES Trashes Debt-Restructuring Proposal
CEMIG: Stock Drops on Planned Acquisition of AES Asset
USIMINAS: Denies Reported Preparations For Debt Issue


SUPERMERCADOS UNIMARC: 1Q03 Results Disappoint as Sales Drop


AVIANCA: Reduces Workforce, Air Fleet to Survive


AIR JAMAICA: Suspends Belize Flights As Demand Wanes


DESC: S&P Lowers Corporate Credit Rating to 'BB-'
GRUPO IUSACELL: Shelves National Expansion
GRUPO TFM: 1Q03 Numbers Modestly Lower
GRUPO TMM: Reports First Quarter Financial Results
MEXLUB: Pemex Becomes 100% Owner
TV AZTECA: Weak Economy Takes Toll on Shares


CORPORACION FINANCIERA: Goverment Intervenes Over Liquidity Woes
ESSAP: Obtains Financial Backing From Finance Ministry

T R I N I D A D   &   T O B A G O

CARONI LTD.: Lowers Output Expectations


URUGUAYAN BANKS: Fitch Content With Bond Swap Effects


CITGO PETROLEUM: Fitch Affirms Rating; Removes Rating Watch

   - - - - - - - - - - -


ACINDAR: Bond Issue Subject of May 30 Shareholder Meeting
Shareholders of Argentine steelmaker Acindar postponed a meeting,
previously scheduled for May 16, to May 30, reports Business News
Americas. At the meeting, shareholders will discuss, among other
things, whether to approve a bond and/or convertible debenture
issue of up to US$350 million. Acindar, which defaulted on its
US$354-million debt in December 2001, is undergoing a
restructuring process. The Company is controlled by the Acevedo
family and Brazilian steel company Belgo-Mineira.

CONTACT:  Acindar Industria Argentina de Aceros SA
          2739 Estanislao Zeballos Beccar
          Buenos Aires
          Phone: +54 11 4719 8500
          Fax: +54 11 4719 8501
          Home Page:
          Arturo Tomas Acevedo, Chairman

BANCO DE LA PAMPA: Bonds Get `BB(arg)+'; `BBB(arg)-' Ratings
Corporate bonds issued by Banco de la Pampa received junk ratings
from Fitch Argentina Calificadors de Riesgo S.A., the National
Securities Commission of Argentina reveals on its Web site.

The bonds, called "obligaciones negociables subordinadas", were
rated `BB(arg)+', says the NSC. These bonds, classified under
`simple issue', are worth a total of US$10 million, and come due
on December 22, 2005.

Fitch said that the `BB(arg)+' rating denotes a fairly weak
protection parameters relative to other issues in Argentina.
Payment on this debt is fairly uncertain.

Meanwhile, some US$100 million worth of bonds were rated
`BBB(arg)-`. The bonds, which the NSC described as "obligaciones
negociables subordinadas y no subordinadas", are classified under
`simple issue'. The maturity date, however, was not indicated.

According to the ratings agency, `BBB(arg)-' ratings denote an
adequate credit risk relative to other issues in Argentina.
However, changes in circumstances or economic conditions are more
likely to affect the capacity for timely repayment.

BANCO FRANCES: Fitch Rates US$1 Billion of Bonds `BBB(arg)+'
Fitch Argentina Calificadora de Riesgo S.A. assigned a rating of
`BBB(arg)+' to corporate bonds issued by BBVA Banco Frances S.A.
The National Securities Commission of Argentina described the
bonds as "programa de obligaciones negociables" and classified
them under `Program'. The bonds, whose maturity date was not
indicated, are worth a total of US$1 billion.

The rating, based on the Company's financials as of the end of
December 2002, denotes an adequate credit risk relative to other
issues in Argentina, said Fitch.

The Company's principal activity is the provision of general
banking services to corporate and retail customers including
deposits, checking and savings accounts, automatic teller
machines, Visa credit cards, mortgage financing, commercial
loans, Credit-Logro consumer loans, electronic collections,
foreign currency transactions, investment advisory services, and
custody of securities and travelers' check, pension and asset
management, insurance and other related services.

CONTACT:  BBVA Banco Frances SA
          199 Reconquista
          Buenos Aires
          Phone: +54 11 4346 4000
          Home Page:
          Jaime Guardiola Romajaro, Chairman

CAPEX: Fitch Issues Default Ratings to Two Bond Traunches
The National Securities Commission announced that two series of
bonds issued by Capex S.A. received junk ratings from Fitch. The
ratings were based on the Company's financial situation as of the
end of January this year.

Classified under `simple issue', bonds which the NSC described as
"obligaciones negociables simples" were rated `D(arg)'. These
bonds, worth a total of US$40 million, mature on June 11, 2004.

Another set of bonds, this time worth US$105 million received the
same ratings. The NSC also described this set as "obligaciones
negociables simples", also under `simple issue'. This set would
mature on December 23, 2004.

In the meantime, bonds also called "obligaciones negociables
simples" were rated `C(arg)'. This means that debt has weak
protection parameters relative to other issues in Argentina. This
set of bonds would mature on the first day of January 2005.

          5/F DepartmentC
          948/950 Av Cordoba
          Buenos Aires
          Phone: +54 11 4322 4884
          Home Page:
          Enrique Gotz, Chairman
          Dr. Alejandro Enrique Gotz, Vice Chairman

DINAR: Viability Dwindles, Problems Continue
Argentine airline Dinar, which has asked for its 'concurso
preventivo' last year registering debts of US$25 million, has
seen three changes in its ownership structure.

The current owner, according to Clarin, is Fideicomiso Ca¤uelas,
whose shareholders are not known in the air flight business.
Dinar now has only one plane but it is grounded, as it needs
repair and the Company doesn't have enough money to pay for the

IMPSA: Fitch Rates Bonds `Junk' Rating
Fitch Argentina Calificadora de Riesgo S.A. assigned less than
investment grade ratings to various bonds issued by Industrias
Metalurgicas Pescarmona Sociedade Anonima (IMPSA). The ratings
were based on the Company's financials as of January 31, 2003.

According to the National Securities Commission of Argentina,
Fitch issued a 'C(arg)' rating to the following bonds:

-- US$250 million of bonds called "programa de obligaciones
negociables" , classified under `program'.

-- US$9.004 million of bonds called "SERIE 7 DE POR ON US$ 9, 04
and/or class'.

-- US$11.359 million worth of bonds called "obligaciones
negociables serie 11", under `series and/or class'.

-- US$700,000 of bonds called "obligaciones negociables Serie
12", under `series and/or class'.

The maturity dates of these bonds were not indicated in the

Fitch said the given rating denotes an extremely weak credit risk
relative to other issues in Argentina. Capacity for meeting
financial commitments on these bonds is solely reliant upon
sustained, favorable business or economic conditions.

Concurrently, another set of the Company's bonds were given
default ratings by the same ratings agency. Fitch issued a rating
of `D(arg)' to US$150 million worth of bonds called "2 Serie
emitada por US$ 150 millones del programa global de US$ 250
millones", which matured in May last year. The rating signifies
that the obligation is in financial default.

LAPA: Pres Duhalde Approves Replacement Company's Creation
Argentine President Eduardo Duhalde has finally signed the
proposal to replace the embattled LAPA with a new company, which
is linked to state-owned Intercargo, reports Clarin. The
establishment of the new company will allow LAPA to continue
operations temporarily with state funds, leading to privatization
later on.

The new company, which will be registered as 'sociedad de derecho
privado' under the law 19.550, will initially operate with 5
planes and will absorb the 850 employees of LAPA, says Clarin.

LAPA has been in bankruptcy protection since May 2001, but its
financial crisis deepened in April when two of its four Boeing
737-200s were repossessed after payments were missed, and a fifth
sub-leased aircraft was returned to American Falcon.

TASA/COINTEL/THA: S&P Revises Ratings To `CC' From `SD'
Standard & Poor's Ratings Services upgraded ratings on Argentine
telecom provider Telefonica de Argentina S.A. (TASA) and holding
companies Compania Internacional de Telecomunicaciones S.A.
(COINTEL) and Telefonica Holding de Argentina S.A. (THA) to 'CC'.
The outlook is negative.

The foreign currency ratings of TASA, COINTEL, and THA were
revised to 'CC' from 'SD' (selective default) where they were
placed on Jan. 21, 2002, reflecting the difficulties faced by
companies operating in Argentina to fulfill all their foreign
currency obligations in a timely manner due to sovereign induced

"Following the publication of Communication 3944 by the Central
Bank on May 6, 2003, foreign exchange controls are no longer a
limitation to the companies' ability to make payments to foreign
creditors," said credit analyst Ivana Recalde. "Nevertheless, the
group's liquidity is very tight. Funding flexibility is impaired
by the limited credit availability for Argentine companies, the
mismatch between peso flows and a high dollar debt burden, and
the weaker expectations of support from its Spanish parent,
Telefonica S.A. (TESA) who directly and indirectly owns almost
100% of the three Argentine entities," she added.

As of December 2002, aggregated debt at TASA, COINTEL, and CEI
was about US$2.8 billion, of which about US$1.6 billion matures
before December 2003 and about US$700 million matures in 2004.
Those maturities include US$1.5 billion in intercompany loans
provided by TESA or its affiliates, which are classified as
short-term debt. The pesification and freeze of tariffs after the
severe devaluation of the peso since early 2002 significantly
weakened TASA's capacity to service its debt and stream up the
dividends, which constitute its holding companies' only cash

The downgrade of the local currency corporate credit rating of
COINTEL and THA to 'CC' from 'CCC-' reflects the significant
refinancing risk faced by the group as a result of the factors
mentioned above.

TASA is one of two incumbent telephone companies in Argentina,
with approximately 55% of total lines in service. COINTEL owns
64.83% of TASA, and THA owns 50% of COINTEL. The stakes in TASA
and COINTEL are COINTEL's and THA's only significant assets. All
operations are carried out at the TASA level.

TELFONICA DE ARGENTINA: Aims To Keep Up With Debt Payments
Telefonica de Argentina SA gained approval from its board to swap
two series of convertible bonds worth a total of some US$670
million, reports Dow Jones. The Company, which is controlled by
Spanish telecommunications giant Telefonica SA, said in a filing
with the Argentine stock exchange that it would respect the
interest rates and principal of its obligations but would seek to
extend the maturity of its debt.

The Company said it hopes to swap convertible bonds due to mature
in 2004 for new convertible bonds, which mature in 2007, and
another series of convertible bonds due to mature in 2008 for new
paper, which mature in 2010.

Creditors who participate in the swaps would get cash payment,
the filing said.

Meanwhile, the Company proposed a complex voluntary debt exchange
that involves swapping convertible bonds issued by one
shareholder, due to mature next year, for new paper with a
maturity date of 2011, which would be issued by another
shareholder. The two shareholders - Telefonica Internacional SA,
or TISA, and Compania Internacional de Telecomunicaciones SA are
both controlled by Spain's Telefonica SA.

Again, the Company said it would make cash payments to those who
participate and promised to keep up on its interest payments.

The recently approved voluntary debt swap offer and the proposed
complex voluntary debt exchange are part of Telefonica de
Argentina's latest efforts to keep servicing its obligations.

          Tucuman 1, 18th Floor, 1049
          Buenos Aires, Argentina
          Phone: (212) 688-6840
          Home Page:
          Carlos Fernandez-Prida Mendez Nunez, Chairman
          Paul Burton Savoldelli, Vice Chairman
          Fernando Raul Borio, Secretary


AES CORP.: BNDES Trashes Debt-Restructuring Proposal
U.S. energy firm AES Corp. was dealt with a blow Tuesday when
Brazil's National Development Bank (BNDES) rejected a proposal to
restructure the debt load of its biggest Brazilian asset, Reuters
indicates. BNDES president Carlos Lessa said the bank received a
proposal from AES last Friday, but discarded the plan because it
did not foresee the reimbursement in cash for missed debt

Earlier this year, AES defaulted on a US$1.2-billion loan from
BNDES that was used to buy Eletropaulo Metropolitana Eletricidade
de Sao Paulo, Latin America's biggest power distributor.

Earlier this month, BNDES moved to strip AES of control of
Eletropaulo by announcing plans to auction off the Sao Paulo-
based distributor's ordinary voting shares.

Lessa said the bank is currently in the process of drawing up the
decree that would authorize the auction, but did not say when it
would be ready.

AES can contest the move in court, says Reuters.

          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

CEMIG: Stock Drops on Planned Acquisition of AES Asset
Shares of Cemig fell 59 centavos, or 1.9%, to BRL29.81, reports
Bloomberg. Citing Cemig Chief Executive Djalma Morais, Valor
Economico newspaper reports that the utility is interested in
buying the stake held by AES Corp. in Eletropaulo Metropolitana

"In our view, any potential big acquisition in the short term
would likely imply increased corporate governance risk and
potentially lower dividends for Cemig shareholders in the short
term," F. Rowe Michels, an analyst with Bear, Stearns & Co., said
in a report.

USIMINAS: Denies Reported Preparations For Debt Issue
Usinas Siderurgicas de Minas Gerais Usiminas PN A is not
preparing a debt issue, clarifies a spokesman for the Company,
denying reports made by local paper Valor Economico. The Sao
Paulo business daily reports that the Brazilian flat steelmaker
would issue debt that that would mature in at least one year, and
would be guaranteed with export receipts.

The spokesman told Business News Americas that the Company is not
in the process of issuing US$100 million-150 million in debt on
international capital markets backed by export receivables.

CONTACT:  Usinas Siderurgicas de Minas Gerais Usiminas PN A
          Rua Prof. Jose Vieira de
          Mendonca, 3011
          Engenheiro Nogueira
          31310-260 Belo Horizonte - MG
          Tel  +55 31 3499-8000
          Fax  +55 31 3499-8475
          Jose Augusto Muller de Oliveira Gomes, Chairman


SUPERMERCADOS UNIMARC: 1Q03 Results Disappoint as Sales Drop
Supermercados Unimarc S.A. (until April 30, 2003 listed on the
NYSE under symbol UNR), a leading Chilean retailer, announced
Tuesday results for the first quarter 2003. Figures are expressed
in Chilean pesos at March 31, 2003 and are reported in accordance
with Chilean Generally Accepted Accounting Principles (GAAP). At
March 31, 2003, the exchange rate was Ch$ 731.56 = US$1.

Supermercados Unimarc reported net sales of Ch$30,435 million
during the first quarter 2003, a 5.4% increase compared to
Ch$28,873 million reported during the first quarter 2002.

Net sales increased during the first quarter 2003 mainly due to
the opening of a new supermarket and the renovation plan of
existing stores in spite of greater competition and a decrease in
consumer spending.

The Company's same store sales decreased 5.9% during the first
quarter 2003 compared to the first quarter 2002.

Gross profit during the first quarter 2003 was Ch$6,757 million,
which represents a 10.2% decrease compared to Ch$7,526 million in
the first quarter 2002.

As a percentage of sales, gross margins were 22.2% during the
first quarter 2003 and 26.1% during the first quarter 2002.

Selling, General and Administrative (SG&A) expenses during the
first quarter 2003 were Ch$7,834 millions, a 9.0% increase
compared to Ch$7,189 million reported during the first quarter

As a percentage of sales, SG&A expenses were 25.7% for the first
quarter 2003 and 24.9% for the first quarter 2002. The opening of
new supermarkets and the renovation of existing ones explain this

Operating loss for the first quarter 2003 was Ch$1,076 million
and for the first quarter 2002 operating income was Ch$337

The non-operating result for the first quarter 2003 was Ch$-1,325
million and a non-operating result was Ch$3,103 million for the
first quarter 2002.

Net loss for the first quarter 2003 was Ch$-2,521 million, while
net income for the first quarter 2002 was Ch$3,651 million.

The EBITDA margin increased from 3,4% in the first quarter 2002,
to 4.8% in the first quarter 2003.

Net loss per share at the end of the first quarter of 2003 was
Ch$2.00. Net loss per ADR was Ch$99.90, or US$ 0.14.

At the end of the first quarter of 2003, Unimarc had 36 stores in
Chile, with a total sales area of 65,285 square meters. In April
2003 Unimarc opened a supermarket in the City of Pitrufquen,
which is located in the IX Region of Chile.

UNIMARC is the fourth largest food retailer in Chile and operated
36 supermarkets in Chile during the first quarter 2003. The
stores target the middle- to high-income level group. The Company
offers a wide selection of both food and non-food items. Its
efforts aim to offer its customers the lowest price in the market
and personalized attention.


AVIANCA: Reduces Workforce, Air Fleet to Survive
Colombian airline Avianca will cut its workforce by roughly 30%
and return about 43% of its airplanes to the lessors to save
US$32 million a year on rental fees as it struggles to emerge
from bankruptcy.

Avianca President Juan Emilio Posada told a press conference that
13 of its 30 aircraft will be returned to various lessors,
including Pegasus Aviation Inc., Ansett Worldwide Aviation Ltd.
and Debis Finance Ireland Plc.

Avianca filed for protection from its creditors in a New York
court on March 21, citing rising fuel and insurance costs. The
airline, the flagship of the Summa Alliance that also includes
two smaller carriers, was seeking to restructure US$130 million
in debt with bondholders, aircraft leasers and suppliers to help
it become profitable.

Filing for Chapter 11 protection will probably help the airline
and its affiliates to survive because it allows the Company to
reduce its overall liabilities, said Bob Booth, chairman of the
Miami-based consultant Aviation Management Services.

Avianca, which is the oldest airline in the Americas and is
formally known as Aerovias Nacionales de Colombia SA, is jointly
owned by the investment holding Valores Bavaria SA and the
National Federation of Colombian Coffee Growers.

          P.O. Box 151310
          Av. el Dorado no. 93-30
          Bogota, Colombia
          Phone: (1) 413 9511
                 (1) 295 8977


AIR JAMAICA: Suspends Belize Flights As Demand Wanes
Troubled regional carrier Air Jamaica announced that its services
to Belize will be suspended starting June 2. A report by the
Jamaica Observer quoted Air Jamaica Executive vice-president and
chief revenue officer John Lewis as saying the passenger bookings
and yields are too low for the service to continue.

The airline added that passengers holding confirmed bookings on
any flight to Belize after June 1 will be accommodated on other

Air Jamaica said that services to the Belize was suffered major
setbacks with the build-up to war between the United States and
Iraq. The service showed much promise when it was opened last

Air Jamaica has instituted several cost cutting measures such as
reducing staff, salary give-backs and operational and aircraft
lease costs which yielded savings of $880 million. The company's
tour arm Air Jamaica Vacations also saved over $336 million from
staff cutbacks and a reorganization of its operations, the
Company said.

CONTACT: Air Jamaica
         4 St. Lucia Avenue
         Kingston 5,
         Phone: 876/922-3460
         Fax: 929-5643
         Gordon Stewart, Chairman
         Allen Chastanet, Vice President for Marketing and Sales


DESC: S&P Lowers Corporate Credit Rating to 'BB-'
Standard & Poor's Ratings Services said Tuesday that it lowered
its local and foreign currency corporate credit ratings on Desc
S.A. de C.V. and its autoparts subsidiary, Desc Automotriz S.A.
de C.V. to 'BB-' from 'BB'. Desc is a Mexico-based diversified
holding company whose subsidiaries operate in the autoparts,
chemical, food, and real estate sectors.

Standard & Poor's 'B+' rating on Desc's 8.75% notes due 2007
remains unchanged. The rating on the notes reflects the
structural subordination of the issue. The ratings remain on
CreditWatch with negative implications, where they were placed
Dec. 19, 2002.

"The downgrade reflects the continued weakness in Desc's
operating performance during the first quarter of 2003, following
the operating loss reported in the fourth quarter of 2002,"
stated Standard & Poor's credit analyst Jose Coballasi.

The weakness in the company's operating results is reflected in
its key financial measures. For the last 12 months ended March
31, 2003, the company's EBITDA interest coverage, total debt to
EBITDA, and FFO to total debt ratios were 2.6x, 5.3x, and 4.4%.
Desc's liquidity is limited and has weakened over the past six
months. During the first quarter, the company reduced its cash
position by $100 million in order to fund its working capital
needs and capital expenditures, and to pay down debt. The company
faces short-term debt maturities of $260 million during the rest
of 2003.

As of the first quarter, it held about $100 million in cash and
had approximately $65 million available under a committed line of

Desc anticipates generating modest discretionary cash flow during
the year and expects capital expenditures of about $100 million.
The company is also under negotiations to sell assets from its
business portfolio and has earmarked the proceeds for debt
reduction. During the first quarter, the company did not meet the
leverage ratio target set forth in the syndicated loans arranged
by Citibank and BBVA Bancomer during 2002. The company is
negotiating a waiver with the lenders.

The sluggish economic environment that prevails in Mexico and the
U.S. continues to hurt the performance of Desc's business
portfolio. The year-over-year drop in the company's first quarter
numbers reflects lower sales in the autoparts business as a
result of temporary shutdowns in some assembly plants to reduce
inventory levels; the closing of the DaimlerChrysler's plant in
Mexico City; and the delay in one of the Tractor projects. First
quarter numbers also reflect pricing pressure and higher raw
materials costs in the chemical sector.

The CreditWatch listing will be resolved upon the evaluation of
Desc's operating performance over the coming months, the
negotiation of the waiver under its syndicated loans, the success
of the company's asset sale program, and the evolution of its
plans to improve its liquidity and financial profile in light of
the company's short-term debt maturities.

ANALYST:  Jose Coballasi, Mexico City (52) 55-5279-2014

GRUPO IUSACELL: Shelves National Expansion
Verizon Wireless International president Daniel Petri indicated
to Business News Americas that its Mexican mobile operator
Iusacell is indefinitely putting off plans to expand its CDMA2000
1xRTT network outside of Mexico City. Speaking Monday at the
Mobile Americas 2003 conference in Miami, Petri said Iusacell
introduced the network in late 2002 "to get the corporate market
to pay attention to us."

Indeed, the unit has "accomplished the immediate goal of catching
attention." But Petri said the service is "not taking off
dramatically" and not to expect expansion of the network to new

"We're still focused on phase one," he said.

Accordingly, the Company will continue building out its footprint
in the capital. Iusacell's corporate marketing director Fernando
Zamarripa recently told Business News Americas the Company would
upgrade more base stations and switching centers in Mexico City
this year.

CONTACT:     Grupo Iusacell, S.A. de C.V., Mexico City
             Russell A. Olson, 011-5255-5109-5751
             Carlos J. Moctezuma, 011-5255-5109-5780

             Web site at

GRUPO TFM: 1Q03 Numbers Modestly Lower
Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V. and
subsidiaries ("TFM") reported first quarter results on Tuesday.


TFM's first quarter car loads grew 12.3 percent compared to the
first quarter of 2002, the main segments contributing to this
volume increase were Cement, metals and minerals; Chemicals,
Intermodal; Agroindustrial; and Mexrail. The Automotive segment
reduced the number of car loads, and the revenues of this segment
were approximately $10.0 million lower than the revenues of the
first quarter of 2002. Volume increase was explained by the
conversion effort; the recovery of the steel industry; and the
penetration of the intermodal segment. Consolidated net revenues
for the first quarter of 2003 were $168.5 million, which
represented a decrease of $2.3 million or minus 1.3 percent from
revenues of $170.8 million for the same period in 2002. Peso
depreciation affected revenues by approximately $17.0 million
during the first quarter of 2003, compared with revenues of first
quarter 2002. Peso depreciation averaged 18.6 percent on a yearly

Operating profit for the first quarter of 2003 was $27.9 million,
representing a decrease of $7.0 million from the first quarter of
2002. The decrease in operating profit for the first quarter of
2003 was mainly due to the above mentioned decrease in revenues,
because of the Mexican peso devaluation, and an increase in fuel
prices as a consequence of the Iraq war. As a result of the
foregoing, TFM's operating ratio for the first quarter of 2003
was 83.5 percent. The company continues implementing various cost
reduction actions especially in salaries and fringe benefits.


Net financial expenses incurred in the first quarter of 2003 were
$32.5 million. TFM recognized a $5.1 million foreign exchange
loss resulting from a devaluation of the peso against the dollar
during the first quarter of 2003.


Net income for the first quarter of 2003 was negatively impacted
by a deferred income tax expense of $7.0 million basically as a
result of the reduction in tax credit values due to the
depreciation of the peso.


EBITDA for the first quarter of 2003 was $45.3 million. EBITDA
margin (EBITDA as a percentage of revenues) for the first quarter
of 2003 was 26.9 percent.


During May 2003, TFM sold the 51 percent of the shares of
Mexrail, Inc. to Kansas City Southern (KCS) that includes the
TexMex railroad and the Laredo railroad-bridge, receiving an
amount of $32.6 million. Proceeds of this sale will be reinvested
in TFM. The financial statements shown in this release continues
to include the consolidation of Mexrail into TFM.


As of March 31, 2003, accounts receivable decreased by 6.2
percent to $190.0 million from $202.5 million at December 31,

As of March 31, 2003, accounts payable and accrued expenses were
$135.7 million, an increase of $7.0 million or 5.4 percent from
December 31, 2002. From this balance, $17.9 million corresponds
to Mexrail. TFM's capital expenditures were $8.7 million during
the first quarter of 2003.

At the end of the first quarter, TFM had an outstanding net debt
balance of $971.9 million, including the discounted value of
$115.0 million of U.S. commercial paper issuance, and $44.2
million of cash and cash equivalents.

To see financial statements:

GRUPO TMM: Reports First Quarter Financial Results
Grupo TMM, S.A. (NYSE:TMM), the largest Latin American multi-
modal transportation and logistics company and owner of the
controlling interest in Mexico's busiest railway, TFM, reported
revenues from consolidated operations of $215.5 million for the
first quarter of 2003, compared to revenues from consolidated
operations of $224.4 million for the same period of 2002. Reduced
revenue was reported across all divisions, except Ports, due to
the 18.6 percent average depreciation of the peso and continued
unfavorable economic conditions, further impacted by
significantly reduced automobile revenue from the railroad.
Consolidated EBITDA (Earnings Before Income, Taxes and
Depreciation) was $49.4 million for the first quarter of 2003,
compared to $62.4 million in the first quarter of 2002.

To ensure consistency in reporting, all revenue from operations
sold as part of the sale of its 51 percent interest in TMM Ports
and Terminals to an affiliate of its current partner in the
division, SSA Mexico, are being reported as discontinued
operations. Included in the transaction were the operations
performed by the division at the ports of Manzanillo, Cozumel,
Veracruz and Progreso. Revenues from continuing operations
include the ports of Acapulco and Tuxpan. Revenue from these
ports increased 19.3 percent to $5.8 million, compared to $4.9
million from these same two ports during the first quarter of

Grupo TMM's consolidated first quarter 2003 operating income
decreased $9.6 million, from $36.3 million in 2002 to $26.7
million in 2003 and net income for the quarter decreased from
$11.9 million in 2002 to a loss of $27.9 million in 2003, caused
primarily by sluggish market conditions, higher fuel costs and
the impact of peso devaluation, which in the second quarter
appears to be reversing.


On May 14, 2003, the company announced that it completed the sale
of its 51 percent interest in the TMM Ports and Terminals
division to an affiliate of its current partner in the division,
SSA Mexico. Included in the transaction were the operations
currently performed by the division at the ports of Manzanillo,
Cozumel, Veracruz and Progreso. Net proceeds from the transaction
of approximately $114 million will be used to repurchase
receivables sold to a trust under the company's existing
Receivables Securitization Facility in an amount of $31.7
million, to repay other indebtedness and for working capital

Also, the company reached an agreement with one of the holders ‹f
certificates under its Receivables Securitization Facility to
extend approximately $49.7 million of the certificates until June
30, 2003.

On April 22, 2003, the company announced it had entered into
definitive agreements to place its interest in Grupo TFM (TFM)
under common control with Kansas City Southern (KCS) for $200
million in cash and 18 million shares of KCS common stock. Grupo
TMM will receive an additional cash payment, not to exceed $180
million, upon the successful resolution of the VAT lawsuit.

As part of the transaction, KCS will assume the outstanding
contingent obligations of Grupo TMM to purchase shares of TFM
held by the government of Mexico upon exercise of a put valued at
approximately $480 million as of December 31, 2002. The combined
companies of Grupo TFM and KCS will be renamed NAFTA Rail and
will continue to trade on the NYSE. At the closing, Jose Serrano,
Chairman of Grupo TMM will remain Chairman of TFM and become Vice
Chairman of NAFTA Rail. Both Mr. Serrano and Javier Segovia,
president of Grupo TMM, will become members of the NAFTA Rail
Board of Directors.

Grupo TMM will become the largest stockholder of NAFTA Rail,
which, on a combined basis after giving effect to the
transaction, would have had fiscal year 2002 revenues and EBITDA
of approximately $1.3 billion and $368 million, respectively.

Once the transaction closes, the results of TFM will no longer be
included in the Grupo TMM's consolidated financial statements,
including the approximately $993 million of TFM's outstanding
debt (net of TFM's cash) as of December 31, 2002.

The transaction requires approval by the stockholders of KCS and
the stockholders and bondholders of Grupo TMM and certain
governmental approvals, including approval of the Mexican
Competition Commission, the Mexican Foreign Investment
Commission, and the United States Surface Transportation Board
("STB") approval for KCS's acquisition of the Tex-Mex Railway.
KCS has already obtained $200 million in financing to close the

This transaction, together with the sale of the Grupo TMM's
interest in TMM ports and Terminals brings the total amount of
expected cash proceeds from asset transactions under contract to
approximately $270 million plus 18 million shares of NAFTA Rail,
and up to a potential total number of $450 million upon the
successful resolution of certain future contingencies, which
includes the VAT award.


The company was granted an injunction by a court of local
jurisdiction in Mexico (the "Court"), which by its terms,
prevents for all purposes in Mexico any of the company's current
creditors from bringing any claims in Mexico for defaults on the
company's existing debt obligations while the Order is in effect.
The Order will stay in effect until the conclusion of the case on
the merits of the claim.

On May 15, 2003, the company announced it initiated a legal
proceeding in Mexico and petitioned the court for an order which
effectively prevents creditors of the company including all the
holders of the notes from pursuing in Mexico the exercise of
their remedies. The company initiated the proceedings to prevent
the effects of an imminent default, and provided the company with
the additional time to complete the re-structuring or re-
financing of its debt obligations in an orderly fashion and to
preserve the company's business. The company, in seeking this
relief has acknowledged its legal obligation to make payments and
cited, among other factors, the efforts that the company had made
in good faith over an extended period of time to re-structure its
obligations through the exchange offers. The company requested
that the court allow at least one year of relief from the
exercise of remedies by all such creditors.

Management will work diligently to resolve issues with all
creditors in a manner that is in the interests of the company. In
the interim the company will preserve cash as it continues to
operate its business in a way that compliments its customers'
needs and expectations.

Javier Segovia, president of Grupo TMM, said, "Having amended the
bond exchange three times, extended it five times and made a
personal appeal to bond holders on a conference call held on May
6, 2003, we were left with no other choice, but to seek an order
that grants us relief from actions that could have been taken by
our creditors. I must stress that we did this to protect the
equity investors, employees and the company from being forced
down a path that would focus on meeting the company's short-term
obligations, not on the future of TMM. We are exploring many
alternatives, each with a focus on maximizing value for investors
and treating the bondholders fairly."


As previously disclosed on December 9, 2002, the Federal Tribunal
of Fiscal and Administrative Justice (the "Tax Court") in Mexico
issued a ruling denying TFM's right to receive a value added tax
(VAT) refund from the Mexican Federal Government. The lower
court's objection stated that the law was violated by issuing a
certificate in the name of a third party and not to TFM, but it
also stated that TFM did not have a right to that certificate.

Based on the advice of TFM's legal counsel, who has carefully
reviewed the prior favorable decision of the appellate court,
Grupo TMM remains confident of TFM's right under Mexican law to
receive the VAT refund. TFM has returned to the Mexican
Magistrates Court (Federal Court) and requested that they enforce
the original ruling as outlined in their decision of September
25, 2002.


(Unconsolidated TMM includes its Specialized Maritime, Logistics
and Port and Terminal operations.) Revenues from unconsolidated
operations were $51.0 million for the first quarter of 2003,
compared to revenues of $70.4 million for the same period of
2002. Unconsolidated EBITDA was $4.1 million for the first
quarter of 2003, an EBITDA margin of 8.1 percent.

Grupo TMM's unconsolidated first quarter 2003 operating loss was
$1.1 million compared to operating income of $0.6 million in
2002. In 2003, unconsolidated net income for the quarter was a
loss of $27.9 million, compared to a gain of $11.9 million for
the first quarter of 2002. Operating and net income in the first
quarter of 2003 were impacted primarily by sluggish demand,
higher financial costs associated with the convertible and
securitization, and the impact of peso devaluation on both the
exchange rate and value of the company's deferred tax credits.

Grupo TMM will broadcast its first quarter 2003 conference call
for investors over the Internet on Wednesday, May 21, 2003, at
11:00 a.m. EDT. To listen to the live call, please go to register,
download and install any necessary audio software, or dial 800-
218-0713 (domestic) or 303-262-2141 (international). If you are
unable to participate on the call, a replay will be available
through May 28, 2003, 11:59 p.m. EST at this website or by
dialing 800-405-2236 or 303-590-3000 and entering conference ID

Headquartered in Mexico City, Grupo TMM is Latin America's
largest multimodal transportation company. Through its branch
offices and network of subsidiary companies, Grupo TMM provides a
dynamic combination of ocean and land transportation services.
Grupo TMM also has a significant interest in Transportacion
Ferroviaria Mexicana (TFM), which operates Mexico's Northeast
railway and carries over 40 percent of the country's rail cargo.
Visit Grupo TMM's web site at and TFM's web site
at Both sites offer Spanish/English language

To see financial statements:

MEXLUB: Pemex Becomes 100% Owner
Mexico's state oil company Pemex now owns 100% of Mexicana de
Lubricantes (Mexlub) after it exercised an option to buy out
Impulsora Jalisciense's 51% stake in the lubricants joint
venture. Pemex said Mexlub's poor economic performance led the
state company to exercise its option.

"In its 10 years of operations, Mexlub has had losses in excess
of 600 million pesos ($1=MXN10.3170), and profits of only MXN70
million," Pemex said.

Mexlub has the exclusive lubricant and oil distribution rights at
Pemex service stations throughout Mexico. All service stations in
Mexico belong to Pemex.

But despite this dominant position, Mexlub has racked up some
MXN1 billion (US$109mn) in debts since Impulsora Jaliscense
purchased a controlling share in the Company for US$120 million
in 1993.

Pemex will seek to renegotiate Mexlub's debt with main creditor
Grupo Financiero Banorte SA.

TV AZTECA: Weak Economy Takes Toll on Shares
Shares of TV Azteca, Mexico's second-largest broadcaster,
declined 13 centavos, or 3.5%, to MXN3.63 on investor concern a
strong peso and record low interest rates are pointing to a weak
Mexican economy.

According to Bloomberg, the stock fell on expectations that
demand for advertising spots will wane as the economy, which
contracted in the first quarter from the fourth, fails to show
signs of a recovery. A stronger peso, which gained 1 percent
against the dollar today while interest rates fell to historic
lows in last week's Treasury bill auction, are signs that
consumer demand is weak, said Alfredo Rotemberg, who helps manage
about US$500 million in Latin American equities at the Armada
International Equity Fund in Cleveland, Ohio.

"The Mexican economy is not doing very well," Rotemberg said.
"The peso is strong and interest rates are not rising, and they
tend to rise when the economy is thriving, as demand grows and
people spend."


CORPORACION FINANCIERA: Goverment Intervenes Over Liquidity Woes
Corporacion Financiera, a Paraguayan finance company which is
experiencing liquidity problems, was intervened by the central
bank, reports Business News Americas. According to a central bank
spokesperson, the government's intervention committee will
investigate the real situation of the finance company and issue
its verdict this week or next. The committee is likely to declare
the closure of the Company, the spokesperson added.

ESSAP: Obtains Financial Backing From Finance Ministry
Paraguayan state water utility Essap averted a default after the
country's president, Luis Gonzalez Macchi, ordered the finance
ministry to pay the Inter-American Development Bank (IDB) US$2.33
million, reports Business News Americas. The payment corresponds
to a US$79.6-million loan approved by the IDB in 1995 for a
US$140-million urban water supply and sewerage project.

Essap is seeking for an up to 20% rates increase in order to help
it meet its foreign debt obligations, which this year will reach
some US$19.5 million, according to company chairman Cesar

But earlier this month, Gonzalez indicated that any public
service rates increases would correspond to President-elect
Nicanor Duarte's administration that takes office August 15.

T R I N I D A D   &   T O B A G O

CARONI LTD.: Lowers Output Expectations
Trinidad & Tobago state sugar enterprise Caroni (1975) Ltd.
reduced its estimated sugar output by 31,000 tonnes. The Trinidad
Express reports that the Company expects to produce 65,000 tonnes
of sugar, instead of its original target 96,000 tonnes, just two
weeks before the close of this year's crop.

According to a senior Caroni official, the Company's failure to
meet its expected output was due to industrial problems, and this
year's drought. He explained that the while sunshine is good for
ripening the cane; too much of it affects the yield per acre.

Up to last Saturday, from 768,000 tonnes of cane, Caroni had
produced just 58,697 tonnes of sugar, the report reveals.

The report adds that the Company's officials did not declare how
many unplanned fires took place this year, as it might have had
affected this year's yield.

However, the official said, "What I can say is that the fires
also seriously affected the crop."

CONTACT:  Caroni Limited
          Old Southern Main Road, Caroni,
          Trinidad & Tobago
          Phone: (868) 663-1781 or 662-0879
          Fax: (868) 663-1404


URUGUAYAN BANKS: Fitch Content With Bond Swap Effects
Fitch Ratings banking analyst Peter Shaw said that Uruguay's
recently announced bond swap will have no significant adverse
effects on the country's private sector banks. According to Mr.
Shaw, private sector banks in Uruguay have minimal exposure to
the government debt.

In fact, the swap may even have an indirectly positice effect on
the local private sector banks in the long term, Business News
Americas suggests.

Last week, the government announced that the bond swap has
received the necessary approval from majority of its bondholders.

Fitch Ratings "deems the exchange to be an event of default under
its criteria for distressed debt exchanges" as bondholders stand
to lose from the extended maturities of the new bonds, reports
Business News Americas.

However, Fitch Ratings' director and senior Uruguayan sovereign
analyst Morgan Harting said that the bond swap - although
negative for bondholders - is set to give the embattled Uruguayan
government some leeway to improve its finances, which may affect
the economy in a positive way.


CITGO PETROLEUM: Fitch Affirms Rating; Removes Rating Watch
Fitch Ratings has affirmed the senior unsecured debt rating of
CITGO Petroleum Corporation at 'B+'. Fitch has also assigned a
rating of 'BB' to CITGO's $200 million secured term loan and
raised the rating of the senior notes of PDV America, Inc. to 'B'
from 'B-'. CITGO is owned by PDV America, an indirect, wholly
owned subsidiary of Petroleos de Venezuela S.A. (PDVSA), the
state-owned oil company of Venezuela. Fitch has removed CITGO and
PDV America's ratings from Rating Watch Negative. The Rating
Outlook for the debt of CITGO and PDV America is Stable.

The removal of the Rating Watch reflects the significantly
improved liquidity position of CITGO as a result of management's
actions following the general strike in Venezuela. In February,
CITGO issued $550 million of 11-3/8% senior unsecured notes.
CITGO has also entered into a $200 million three year term loan
secured by the company's 15.8% interest in the Colonial Pipeline
and 6.8% interest in the Explorer Pipeline. The company also
established a new $200 million dollar accounts receivable
securitization facility. At the end of the first quarter, CITGO
had $481 million of cash, no borrowings under its $545 million
credit facilities and approximately $175 million of availability
under the new securitization program.

The ratings, however, reflect Fitch's expectation that the
proceeds from the recent $550 million bond offering will be used
to pay the maturity of PDV America's $500 million of senior notes
in August 2003. Fitch views the PDV America senior notes to
ultimately be an obligation of PDVSA. The senior notes are
supported by Mirror Notes issued by PDVSA and held by PDV
America. Under the indentures of the recent bond offering, CITGO
can make a one-time dividend payment to PDV America towards the
August maturity subject to a post-dividend liquidity of $350
million. Fitch expects CITGO to pay for the full $500 million
maturity in August.

The ratings also reflect the potential for further interference
from PDVSA as CITGO enters a period of high capital requirements
to meet the upcoming low sulfur regulations. CITGO estimates the
total capital expenditures to meet environmental regulations to
be approximately $1.3 billion over the next five years. Financial
flexibility could be limited by further dividend payments or
additional force majeure situations interrupting CITGO's supply
of heavy Venezuelan crude. Exclusive of supporting the PDV
America maturity, the indentures of CITGO's recent bond offering
restrict future dividend payments to:

--50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) beginning Jan. 1, 2003.

--A post-dividend liquidity requirement of $250 million

--The aggregate amount of dividends during the most recent four
quarters cannot exceed free cash flow during the same period
(beginning no earlier than Jan. 1, 2003).

CITGO also continues to address the loss of some letters of
credit (LCs) supporting the company's tax exempt bonds. Through
May, CITGO repurchased approximately $82 million of bonds when LC
providers did not to renew the LCs supporting the bonds. Further
loss of LC support could place a strain on the company's
liquidity position if CITGO is not able to replace the LCs or
issue new bonds. For the remainder of 2003, CITGO has
approximately $200 million of LCs supporting tax-exempt bonds
that are subject to renewal in 2003.

In spite of the Venezuelan supply disruption, CITGO was able to
maintain operations without interruption in the first quarter,
generating $189 million of EBITDA (excluding $118 million of
insurance recoveries in the quarter) behind strong industry
margins. With the additional debt on CITGO's balance sheet, Fitch
would expect CITGO to produce EBITDA-to-interest coverage of 4.0
to 6.0 times (x) with leverage, as measured by debt-to-EBITDA of
approximately 3.0x in a mid-cycle margin environment.

CITGO is one of the largest independent crude oil refiners in the
United States with three modern, highly complex crude oil
refineries and two asphalt refineries with a combined capacity of
756,000 barrels per day. The company also owns approximately 41%
interest in LYONDELL-CITGO Refining L.P. (LCR), a limited
liability company that owns and operates a 265,000-barrel per day
(BPD) crude oil refinery in Houston, Texas. CITGO branded fuels
are marketed through approximately 13,000 independently owned and
operated retail sites.

CONTACT:  Bryan Caviness +1-312-368-2056, Chicago
          Alejandro Bertuol +1-212-908-0393, New York

MEDIA RELATIONS: James Jockle +1-212-908-0547, New York


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 2003.  All rights reserved.  ISSN 1529-2746.

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

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

The TCR Latin America subscription rate is $575 per half-year,
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or balance thereof are $25 each.  For subscription information,
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