TCRLA_Public/030708.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

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

          Tuesday, July 8, 2003, Vol. 4, Issue 133

                           Headlines



A R G E N T I N A

AA2000: Newly-Created Commission To Review Contract
APSA: Fitch Rates Bonds 'BBB(arg)-', Shares `3'
CHOCHA: Court Declares Bankruptcy
COLORIN: Evaluadora Issues Junk Ratings To Bonds
ECIPSA: Evaluadora Moves Bonds To Junk Territory

EDEERSA: EPRE Decision Stands Court Review
EDESUR: Fitch Rates US$450 Million of Bonds 'B(arg)'
JORGE ALFONSO DELUCA: Initiates Reorganization Process
IMPRESORA AR YA: Court Declares Bankruptcy
LATIN FRUT: Declared Bankrupt By Local Court

MILLENIUM TRUST: Debt Securities Get Default Ratings from S&P
MOVILAN: Court Grants Creditor's Request For Bankruptcy
POLIELECTRIC: Creditor's Request For Bankruptcy Granted
REPSOL YPF: Unveils $20.1B Expansion Plans
SWEET VICTORIAN: Calls Creditors To Meeting
VERA: Creditors Summoned To Meeting


B O L I V I A

COTEL: Tapia's Intervention Term Continues


B R A Z I L

ELETROPAULO METROPOLITANA: Price Hike Spurs Mixed Reactions


C H I L E

EDELNOR: Time Limit to Improve Credit Rating Set


C O L O M B I A

PAZ DEL RIO: Workers Set to Assume Control


M E X I C O

PEMEX: Awards ING $197M Insurance Contract
TELSCAPE INT'L: Hires ASK to Litigate Preferential Claims


P E R U

MINERA VOLCAN: Minsur Evaluates Potential Purchase of Chungar


P U E R T O   R I C O

RSA: Moody's Downgrades Ratings to Baa2


U R U G U A Y

UTE: Strikes Agreement To Delay Natgas Contract For One Year


     - - - - - - - - - -

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

AA2000: Newly-Created Commission To Review Contract
---------------------------------------------------
Argentine President Nestor Kirchner created a commission to
renegotiate contracts and rates with privatized public service
companies, reports Business News Americas. The commission, known
as the "Unidad de Renegociacion y Analisis de Contratos de
Servicios Publicos," will review a contract that involved airport
concessionaire Aeropuertos Argentina 2000 (AA2000).

In May, a federal judge suspended a decree signed by former
Argentine President Eduardo Duhalde that ended contract re-
negotiations with AA2000.

The decree, one of Duhalde's last actions before stepping down
May 25, cut AA2000's required annual payment to the government by
more than half and did not require the concessionaire to move
Jorge Newberry national airport to Ezeiza international airport,
although AA2000 would have to take out insurance in order to
guarantee the annual fee.

AA2000 spokesperson Sergio Resumil said previously, "When we won
the tender we had offered 171mn pesos [currently US$59.4mn], with
a base of 23 million passengers. According to the new agreement,
with the level of traffic that does not exceed 12 million
passengers, we will pay 100mn pesos/yr, in monthly installments."
AA2000's original contract called for two yearly payments of
US$85.5mn.

The decree also called for AA2000 to invest ARS2.6 billion
through 2028 versus the ARS2.23 billion it had to invest
originally when one peso was equal to one US dollar.

AA2000, which operates 32 airports in Argentina, is a
multinational consortium formed by Corporacion America
Sudamericana (35%), Societa Per Azioni Esercizi Aeroportuali
(28%), Simest Spa (8%), Ogden Corporation (28%), and RIVA (1%).


APSA: Fitch Rates Bonds 'BBB(arg)-', Shares `3'
-----------------------------------------------
Some ARS85 million of corporate bonds issued by Alto Palermo S.A.
were rated 'BBB(arg)' with negative outlook by Fitch Argentina
Calificadora de Riesgo, relates the National Securities
Commission of Argentina. The recently released rating means that
the bonds have an adequate credit risk relative to other issues
in the country, and was based on the Company's finances as of the
end of March 2003.

The bonds were described as "Obligaciones Negociables Simples no
convertibles en acciones", and matures on April 7, 2005. These
were classified under "Simple Issue."

Meanwhile, the Company's stocks, described as "accione
ordinarias" were rated '3' by the same ratings agency.


CHOCHA: Court Declares Bankruptcy
---------------------------------
Argentina-based shoe producer Chocha S.A. was declared bankrupt
after the court granted a request filed by the Company's creditor
Ramiro Ferrer. A local source reveals that the Company owes some
$41,038 to Mr. Ferrer.

Court No. 13 of Buenos Aires, under Dr. Carlos Villar handles the
case. Mr. Dante Giampolo was assigned receiver for the process.
The deadline for verification of claims is on August 20 this
year.

CONTACT:  Chocha S.A.
          6th Floor D
          Bartolome Mitre Street No. 1738
          Buenos Aires

          Mr. Dante Giampolo
          5th Floor C
          Anchorena St. No. 627
          Buenos Aires
          Phone: 48629266


COLORIN: Evaluadora Issues Junk Ratings To Bonds
------------------------------------------------
Evaluadora Latinoamericana S.A. calificadora de Riesgo rates
corporate bonds issued by Colorin Industria de Materiales 'D',
which denotes that the bonds are in default or possess a high
risk of nonpayment.

The National Securities Commission of Argentina described the
bonds as "Obligaciones Negociables", classified under "Simple
Issue." The bonds, worth a total of US$47 million, mature on
March 21 2006.


ECIPSA: Evaluadora Moves Bonds To Junk Territory
------------------------------------------------
Corporate bonds issued by Empresa Constructora Inmobilaria del
Plata S.A. (ECIPSA) were rated 'C' by local ratings agency
Evaluadora Latinoamericana S.A. Calificadora de Riesgo. The
rating, based on the Company's finances as of the end of January
2003, means that the bonds have a high risk of nonpayment.
Investors face a possible loss of capital.

The National Securities Commission of Argentina described the
bonds as "Obligaciones Negociables" and classified it under
"simple issue." The bonds were worth a total of US$6.6 million.


EDEERSA: EPRE Decision Stands Court Review
------------------------------------------
A court upheld a decision by the Entre Rios provincial power
regulator (Epre) to reject the transfer of shares in local
distributor Edeersa to a trust fund, Business News Americas
reports, citing an Edeersa source.

The court's ruling, which was a blow to the Company's workers who
filed an injunction against Epre's decision, allows the
government of Entre Rios to exercise its right to take 51% of
Edeersa's shares.

Business News Americas recalls that US energy company PSEG
abandoned its 90% interest in Edeersa in late March after failed
attempts to sell the Company, and transferred the shares to a
trust fund benefiting current Edeersa employees, including
existing shareholders.

The shares would remain in the trust fund for five years, after
which they would be distributed amongst Edeersa employees and
board members according to a pre-determined formula.

But EPRE rejected the plan believing that it breaks the terms of
Edeersa's concession contract, the source said.

Workers tried to bring an injunction against the EPRE decision,
but "the court ruled that an injunction is not the correct
procedure to try to defend our rights," the source said, adding
that Edeersa workers are not giving up. The workers' lawyers plan
to launch another lawsuit in the next few days, the source said.

However, such a lawsuit in the normal legal process could take
months or even years, the source said, which would give the Entre
Rios province the opportunity to exercise its right, under the
concession contract, to take 51% of the shares.

At the moment Edeersa's shares are still in the trust fund, but
if the government decides to take the shares, it would then be
legally obliged to sell the distributor through a public bidding
process, the source said. The government has not set a deadline
for a decision.


EDESUR: Fitch Rates US$450 Million of Bonds 'B(arg)'
----------------------------------------------------
Fitch Argentina Calificadora de Riesgo S.A. issued 'B(arg)'
ratings to corporte bonds issued by Edesur S.A. recently.
According to the National Securities Commission of Argentina,
rating was based on the Company's financial situation as of the
end of March this year.

Bonds, which the NSC described as "Programa de Obligaciones
Negociables" worth US$450 million, received the ratings. The
bonds' maturity date was not revealed, however.

The ratings agency said that the rating means that the bonds have
a significantly weak credit risk relative to other issues in
Argentina. Financial commitments are being met but a limited
margin of safety remains and capacity for timely payments is
contingent upon a sustained favorable business and economic
condition.


JORGE ALFONSO DELUCA: Initiates Reorganization Process
------------------------------------------------------
Argentine sports clothing maker Jorge Alfonso Deluca presented a
motion for "concurso preventivo" to a court, taking the first
step towards reorganization, newspaper El clarin Comercial
reports. The Company stopped making debt payments last month.

Court No. 5 of Buenos Aires, which is under Dr. Gerardo Vasallo,
handles the case, with assistance from Dr. Valeria Perez Casado
of Secretary No. 9.

The Court assigned Ms. Laura Angelini as receiver for the
process. Claims will be verified until September 1 this year,
says the report.

CONTACT:  Jorge Alfonso Deluca
          Virrey Arredondo 3047
          7 Piso Argentina

          Ms. Laura Angelini
          2 Piso C
          Uruguay 618
          Buenos Airesn


IMPRESORA AR YA: Court Declares Bankruptcy
------------------------------------------
Following a request by Torra Papel Argentina S.A., graphic arts
company Impresora Ar Ya S.R.L. was declared bankrupt recently.
Court No. 7 of Buenos Aires, which is under Dr. Gutierrez
Cabello, ruled the bankruptcy after the Ar Ya failed to pay its
US$5,186 debt to Torra Papel.

Assigned receiver for the case is Ms. Alicia Romeo, to whom
creditors must have their claims verified before September 19,
2003.

CONTACT:  Impresora Ar Ya S.R.L.
          Borges Street No. 4912
          Buenos Aires

          Ms. Alicia Romeo
          7th Floor C
          Rodriguez Pena St. No. 694
          Buenos Aires


LATIN FRUT: Declared Bankrupt By Local Court
--------------------------------------------
Buenos Aires Court No. 4, which is under Dr. Fernando Ottolenghi,
declared Latin Frut S.A. under bankruptcy, reports a local
source, without revealing the reasons behind the ruling.
Creditors are advised to have their claims verified by the
assigned receiver, Mr. Nestor Monti, befpre September 2, 2003.

CONTACT:  Latin Frut S.A.
          Nazca St. No. 4248
          Buenos Aires

          Mr. Nestor Monti
          7th Floor
          Del Libertador Ave. No. 10778
          Buenos Aires


MILLENIUM TRUST: Debt Securities Get Default Ratings from S&P
-------------------------------------------------------------
Standard & Poor's International Ratings, Ltd. Sucursal Argentina
issued default ratings to US$5 billion worth of debt security
from Millenium Trust. The debt security was described as "Titulos
de Deuda Tipo A", with undisclosed maturity date.

S&P said that an obligation is rated 'raD' when it is in payment
default or the obligor has filed for bankruptcy. The same rating
may also be given when interest or principal payments are not
made on the date due, even if the applicable grace period has not
expired, unless S&P believes that such payments will be made
during such grace period.


MOVILAN: Court Grants Creditor's Request For Bankruptcy
-------------------------------------------------------
Argentine transport company Movilan S.A. was declared bankrupt by
a Buenos Aires Court, according to a local source. The ruling
grants a request filed the company's creditor, Ms. Maria Cristina
Gribando, to whom the Company owes some $10,634.

The Court, under Dr. Fernando Ottolenghi, designated Mr. Gustavo
Pagliere as receiver. Creditors must have the receiver verify
their claims before August 4, 2003.

CONTACT:  Movilan S.A.
          3rd Floor
          Montevideo Street No. 7513
          Buenos Aires

          Mr. Gustavo Pagliere
          8th Floor E
          Tucuman Street No. 1428
          Buenos Aires
          Phone: 43748006  


POLIELECTRIC: Creditor's Request For Bankruptcy Granted
-------------------------------------------------------
Court No. 11 of Buenos Aires declared Buenos Aires-based company
Polielectric S.A.I.C. upon a requst by Gerardo Donato, to whom
the Company owes some ARS156,000. The Court, which is under Dr.
Miguel Bargallo, assigned Mr. Sergio Barragan as receiver.
Creditors are advised to have their claims verified by September
9 this year.

CONTACT:  Polielectric S.A.I.C.
          11th Floor A
          Soldado de la Independencia St. No. 810
          Buenos Aires

          Mr. Sergio Barragan
          1st Floor
          Ave. Rivadavia 666
          Buenos Aires
          Phone: 43439186
        

REPSOL YPF: Unveils $20.1B Expansion Plans
------------------------------------------
Spanish oil company Repsold-YPF unveiled its EUR17.5-billion
(today some US$20.1bn) expansion plans for Latin America and
North Africa through 2007, reports Business News Americas.
Accordingly, about EUR9.11 billion will go into exploration and
production (E&P) projects, focusing on developing new fields in
Argentina, Trinidad and Tobago, Venezuela, Bolivia, Libya and
Algeria.

About EUR4.59 billion will go to refining and marketing, while
EUR2.23 billion will be invested in electricity and gas projects,
and EUR1.2 billion on its chemicals business, reveals Dow Jones.

The Company has also set aside EUR404 million for corporate and
other expenditure. Repsol said it hopes to fund these investments
entirely with cash flow, which means no extra debt will be
incurred.

CONTACT:  Repsol YPF SA
          Paseo de la Castellana 278
          28046 Madrid
          Spain
          Phone: +34 91 348 81 00
          Fax  +34 91 348 28 21
          Telex  48162 RESOLE
          Home Page: http://www.repsol.com
          Contacts:
          Alfonso Cortina de Alcocer, Chairman
          Jose Vilarasu Salat, Vice Chairman
          Antonio Hernandez-Gil Alvarez Cienfuegos, Vice Chairman


SWEET VICTORIAN: Calls Creditors To Meeting
-------------------------------------------
Sweet Victorian S.A., which recently filed for "concurso
preventivo," is now announcing its initial creditors' meeting,
said the local source. The textile producer stopped making debt
payments since June 20 this year. The case is being heard at
Buenos Aires Court No. 23, under Dr. Villanueva.

CONTACT:  Sweet Victorian S.A.
          Azara St. No. 764
          Buenos Aires


VERA: Creditors Summoned To Meeting
-----------------------------------
Troubled chlorine producer Vera S.A. is calling its creditors to
a meeting, relates a local source, without indicating the
intended date and place. The Company, which stopped paying debts
in December last year, declared ARS35,000 in liabilities.

The Company's case is handled by Court No. 21 of Buenos Aires,
which is under Dr. Paez Castaneda. Mr. Rafael Barreiro of
Secretary No. 42 assists the Court on the matter.

CONTACT:  Vera S.A.
          Ground Floor A
          Sarmiento 2069
          Buenos Aires



=============
B O L I V I A
=============

COTEL: Tapia's Intervention Term Continues
------------------------------------------
Javier Tapia, the intervener of La Paz-based local telephony
cooperative Cotel, gets an additional 90-day intervention, says
Business News Americas. Bolivia's telecoms regulator Sittel
allowed the extension after Tapia failed to complete all the
legal, administrative and technical tasks required of him by July
3, the last day of his first 90-day term intervention.

The main outstanding task is selection of a committee to manage
the election of new administrative and oversight boards. To that
end, he has written to organizations such as the church, consumer
defense organizations, neighborhood watchdog groups or private
companies to ask for candidates. Cotel members have set July 20
as the deadline for convening the committee, which will have a
30-day window to organize the elections.



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

ELETROPAULO METROPOLITANA: Price Hike Spurs Mixed Reactions
-----------------------------------------------------------
Brazil's electricity market regulator Aneel awarded power utility
Eletropaulo Metropolitana a 10.95% price increase, a move, which
got mixed reactions from analysts, reveals Business News
Americas. The rate hike, which was less than the 34.46% increase
Eletropaulo requested, and was implemented Friday, is not enough
to cover Eletropaulo's operating commitments, let alone its heavy
debt burden, according to Raphael Quintanilha, an electric power
analyst at the local unit of Portugal's Espirito Santo
Securities.

"Operationally, the price hike does not remunerate the activity
of Eletropaulo," he said. "The company will have to reduce costs,
and investments may have to be cut."

Investment in distribution was already too low and technical
losses too high for Aneel's liking, analyst Rosangela Ribeiro, of
Sudameris bank, said. As a result of the low increase,
Eletropaulo's revenues and EBITDA will be affected, she said,
according to a Gazeta Mercantil report.

Meanwhile, other sector sources quoted in local press said that
the low increase was government "punishment" of AES for its
difficulties in repaying loans.

Armando Franco, an analyst at Sao Paulo consulting firm
Tendencias Consultoria Integrada, said the process was absolutely
transparent and fair, and that Eletropaulo's problems lie with
bad management rather than operational difficulties.

"I have seen studies that show that as the US dollar has fallen
(against the Brazilian real) since the period when Aneel closed
the adjustment index and today, the price adjustment could have
been 2% lower than the final result," Mr. Franco told Business
News Americas.

Eletropaulo's argument for a higher price revision figure is
based on the difficulties that it has been facing, including the
nine months of rationing, drop in demand and so forth, Mr. Franco
said. The value of the tariffs is adequate for a company with
Eletropaulo's characteristics, he said, acknowledging that the
Company will have to seek greater efficiencies to bring itself
into line with the model company used by Aneel.

"The price would remunerate the capital, if the capital structure
were appropriate," Mr. Franco said.

"It seems to me the solution for Eletropaulo's problems today is
through a capital injection from the controlling company [AES] to
bring the company back to financial health, than through an
increase in the price," he said, adding that Aneel cannot be held
responsible for the capital structure chosen by the company's
management.

"AES's plan was to use the Eletropaulo operations to pay for the
company, and that is not working out," he said. However, a
capital increase depends on the financial strength of AES, which
is "not the best."



=========
C H I L E
=========

EDELNOR: Time Limit to Improve Credit Rating Set
------------------------------------------------
Chilean power generator Edelnor informed the country's securities
commission that local natural gas transport company Gasoducto
NorAndino has given it until December 31, 2003 to provide
guarantees for its natural gas supply contracts. According to
Business News Americas, Edelnor's existing gas transport
agreement (GTA), signed with NorAndino in 1997, required it to
maintain a credit rating of BB+ or higher with credit rating
agency Standard and Poor's (S&P). Norandino and Edelnor are
controlled by Belgian energy company Tractebel.

In June, Standard & Poor's raised its local and foreign corporate
credit ratings on Edelnor to 'B-' from 'CC' after the Company
completed its Chapter 11 reorganization and strategic plan.

CONTACT:  Empresa Electrica Del Norte Grande SA
          Avenida Grecia 750
          Antofagasta, Chile
          Phone: +56 55 248500
                 +56 55 248094
          Contact: Fernando del Sol, Chairman



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

PAZ DEL RIO: Workers Set to Assume Control
------------------------------------------
The workers of Acerias Paz del Rio are poised to take control of
the Colombian steelmaker after agreeing to inject COP50 billion
(US$17.7 million) into the ailing company, Business News Americas
reports, citing Lanota.com news service. According to the
transaction, the workers will buy 5 billion shares from the
Company at the nominal value of 10 pesos a piece and pay for them
via a four-year credit from state business development agency
IFI, according the report.

Consequently, employees will increase their stake in the Company
from 9% to 39%, making them the largest shareholding group, while
other shareholders will see their stakes fall, including the
Boyaca departmental government's stake from 32% to 21.5% and
IFI's from 14% to 9.5%.

Paz del Rio, which is in a form of bankruptcy protection, is due
to sign a debt restructuring agreement with creditors on July 18,
paving the way for investment of US$11 million to boost output by
30,000t/y from the current 250,000t.

CONTACT:  ACERIAS PAZ DEL RIO S.A.
          Carrera 8 # 13-31, Pisos 7 al 11
          Bogota, D.C.
          Phone: (091) 282-8111
          Fax: (091) 282-6268 282-3480
          E-mail: apdr@multi.net.co



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

PEMEX: Awards ING $197M Insurance Contract
------------------------------------------
Petroleos Mexicanos (Pemex), Mexico's state-owned oil company,
awarded ING Groep NV a MXN2.0 billion (US$197 million) contract
to insure its plants and oil rigs, reports Bloomberg, citing
Reforma newspaper. ING, which outbid four other insurers,
reinsured the policy with Kot Insurance Company, which is owned
by Pemex, the paper says, adding that ING won the same contract
last year.

The policy was 25% cheaper than last year's and covers all of
Pemex's installations including 151 floating platforms, six
refineries, eight petrochemical plants and 10 gas processing
centers.


TELSCAPE INT'L: Hires ASK to Litigate Preferential Claims
---------------------------------------------------------
David Neier, the Chapter 11 Trustee for Telscape International,
Inc., and its debtor-affiliates, asks for authority from the U.S.
Bankruptcy Court for the District of Delaware to employ ASK
Financial as Special Counsel to analyze & litigate preference
claims. The Trustee expects to rely on ASK for advice in
analyzing the Debtors' avoidance claims and to pursue these
actions on the Debtors' behalf.

Because the deadline to file avoidance actions is fast
approaching and there is no source of immediately available funds
to pay professionals, the Trustee requires that ASK immediately
perform the preference analysis so that the potential recovery to
the Debtors' estate can be analyzed.

The Trustee estimates that there are over one thousand creditors
that received approximately over $21 million in transfers during
the 90-day preference period. However, in order to properly
evaluate these transfers a significant amount of data
reconstruction must occur. Due to the length of time this may
take it is important that the data mining process commence as
soon as possible. ASK has the expertise to oversee this data
mining process and more importantly can convert the recovered
data into a format that is compatible with its unique analysis
programs. Once the data conversion is complete ASK can quickly
produce a complete analysis.

The Trustee expects ASK to provide:

  A. Preference Analysis

     At the Trustee's discretion, ASK may also perform an
     analysis of paid invoice transactions from prior periods to
     compare the course of business dealings.

     The Preference Analysis includes a net preferential
     transfer analysis of all transactions that occurred within
     the 90-day period prior to the Petition Date, including the
     preparation and submission to the Trustee of certain
     Reports.

     The Trustee will pay an analysis fee of $25,000 plus a per
     transaction fee of $0.35 for each electronic data
     transaction over 35,000 and $0.52 for each paper
     transaction over 35,000.

     ASK will apply the flat fee to the paper transactions first
     so that the higher excess fees would apply only if the
     total paper transactions exceeded 35,000.  ASK agrees that
     its analysis fees will be paid as an expense to be deducted
     from the Debtors' share of the preference recovery
     proceeds.

  B. Collection and Litigation of Identified Preference Claims

     ASK will pursue collection via the use of pre-suit demand
     letters and, if necessary, the filing of adversary
     proceedings. ASK will prosecute all adversary proceedings
     by obtaining judgments by motion, trial and/or default.
     Thereafter ASK will enforce the judgments by
     domesticating them in other jurisdictions and engaging in
     appropriate post judgment judicial enforcement proceedings.

     With respect to the collection and litigation of the
     preference claims, ASK will be paid a per Net Vendor
     contingency fee of:

       i) 33.33% of Collections Realized Before Judgment;

      ii) 40% for the first $20,000 Collections Realized After
          Entry of Judgment and 33.33 % of the balance; and

     iii) 16.67 % as to any collections from a Net Vendor
          exceeding $100,000.

Telscape International is a leading integrated communications
provider serving the Hispanic markets in the United States,
Mexico and Central America, offering local and long distance
telephone, internet and pre-paid calling card services. The
Company filed for Chapter 11 protection on April 27, 2001 (Bankr.
Del. Case No. 01-1563).



=======
P E R U
=======

MINERA VOLCAN: Minsur Evaluates Potential Purchase of Chungar
-------------------------------------------------------------
Cash-strapped Volcan, formerly Peru's largest zinc miner, may be
looking at local tin producer Minsur as a potential buyer for its
Chungar unit in central Peru's Pasco deparment, Business News
Americas indicates.

Minsur, the world's third largest tin miner and the only one in
Peru, has sent General Manager Fausto Zavaleta, and Deputy
Manager Fortunato Brescia to access information on Chungar and,
if positive, to negotiate the purchase of the unit.

Besides Minsur, Brazilian industrial conglomerate Votorantim and
Swiss natural resources group Glencore have signed
confidentiality agreements with Volcan to have access to the
Company's documents in order to evaluate investment options.

Hard-hit by low zinc prices, Volcan has been looking for a
strategic partner for some time to help solve its financial
problems. The Company owes about US$100 million to financial
institutions and US$50 million to suppliers. It reported a net
loss of PEN40.7 million (US$12mn) for 2002, up from a loss of
PEN35.2 million soles the previous year.



=====================
P U E R T O   R I C O
=====================

RSA: Moody's Downgrades Ratings to Baa2
---------------------------------------
UK-based Royal & Sun Alliance Insurance Group (RSA) plans to sell
assets, including its Puerto Rican business, in the near future,
reports Business News Americas. While the plan is expected to
provide the Company with additional capital and liquidity in the
near term, that didn't stop international rating agency Moody's
to downgrade the Company and its subsidiaries one notch to Baa2.
Moody's believes the plan is "insufficient to mitigate fully the
concerns" that prompted the downgrade.

Moody's cut RSA's Insurance Financial Strength Rating to Baa2;
maintained its Commercial Paper rating at P-3; and cut the
Company's subordinated debt rating to Ba2, from Ba1.

According to Moody's, despite recent improvement in the group's
capital position, it has concerns about legacy issues in the USA,
its ability to capitalize fully on favorable market conditions,
and its ability to maintain its position and earnings in some of
its core markets.

In addition, Moody's noted that first quarter 2003 results were
positive at the group level for the first time in a number of
years. While performance in 2003 and beyond should benefit from a
favorable premium rate environment and actions being taken by
management regarding the restructuring of the group and cost-
cutting measures, Moody's believes that meaningful capital
replenishment from retained earnings will take time to achieve.

Besides Puerto Rico, RSA also runs insurance operations in
Argentina, Brazil, Chile, Colombia, Peru, Mexico, Uruguay and
Venezuela.



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

UTE: Strikes Agreement To Delay Natgas Contract For One Year
------------------------------------------------------------
Uruguay's state power company UTE gained more financial breathing
room following a deal with Pan American Energy and Wintershall,
says South American Business Information. In October 2000, UTE
signed a firm contract with pipeline operator Cruz del Sur to buy
natural gas, which would be used to fire a thermoelectric power
plant, and start paying for it September 2004. However, financing
problems delayed the construction of the plant.

The recent agreement with the pipeline owners - Pan American
Energy and Wintershall - allows the Company to postpone the start
of the payment until December 2005, said UTE president Ricardo
Scaglia

As part of the bargain, UTE must demonstrate by September 2004
that it has secured at least 15% of the financing for
construction of the plant, acquired the land and obtained
environmental licensing, Scaglia said.

Still there are pending questions on the UTE contract.

The two sides have not resolved a dispute over the currency in
which the contracts are to be paid. Following the devaluation of
the Argentine peso, the Argentine government converted export
contracts into US dollars.

UTE opposes this conversion and is seeking to pay the figures in
Argentine pesos, which would be approximately three times cheaper
than paying the figures in US dollars.

Meanwhile, UTE is planning to restart the tender of the contract
to build the thermo plant, estimated to require some US$160
million investments and capable of producing anywhere between
300-400MW, Scaglia said.



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

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