TCRLA_Public/040608.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, June 8, 2004, Vol. 5, Issue 112

                          Headlines


A R G E N T I N A

ESTACION DE SERVICIO RUTA: Enters Bankruptcy on Court Orders
ESTIQUIM S.A.: Liquidates Assets to Pay Debts
FRIGOLINO: Gets Court Approval for Reorganization
HERNANDEZ Y CIA: Verification Deadline Extended
IMPSA: Fitch Argentina Maintains Ratings on Corporate Bonds

OBRAS Y PINTURAS: Reports Submission Set
TELECOM ARGENTINA: Head of Bondholder Group OKs Debt Offer
TELECOM ARGENTINA: $3.2B of Bonds Remain in Default
ZARNIPLAST: Liquidates Assets to Pay Debts


B E L I Z E

* S&P Assigns 'B+' Rating to Belize's Proposed 30-Year Bond


B R A Z I L

CEMIG: Moody's America Latina Ups, Affirms Ratings
CESP: Strives to Lower Debt to $2B by 2010
ELETROPAULO METROPOLITANA: BNDES Extends $168M Emergency Loan  
PARMALAT BRAZIL: Parent Sees Positive Outlook for Unit
PARMALAT BRAZIL: Faces $184 Currency Exchange Probe

VARIG: TAP Mulls Taking Up to 20% Stake
             

C O L O M B I A

AVIANCA: Copa Withdraws Takeover Bid


C O S T A   R I C A

ICE: Plans Rates Increase for Local Calls


J A M A I C A

* IMF Concludes Annual Article IV Review of Jamaica's Economy



M E X I C O

CYDSA: Shareholders To Turn Over 60% of Equity to Creditors
GRUPO TFM: Moody's Reduces Senior Unsecured Rating


U R U G U A Y

PARMALAT URUGUAY: Conaprole's Acquisition Bid Frets Milk Farmers


V E N E Z U E L A

PDVSA: Analysts Unsure About Capacity to Reach Opec Quota

     -  -  -  -  -  -  -  -                          

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

ESTACION DE SERVICIO RUTA: Enters Bankruptcy on Court Orders
------------------------------------------------------------
Buenos Aires Court No. 13 declared Estacion de Servicio Ruta 197
S.R.L. bankrupt after the Company defaulted on its debt
payments. The bankruptcy order effectively places the Company's
affairs as well as its assets under the control of court-
appointed Trustee, Mr. Agustin Cueli Gomez.

As the Trustee, Mr. Gomez will verify the authenticity of claims
presented by the Company's creditors. The verification phase
continues until August 4, 2004.

Infobae reported that Clerk No. 26 assists the court on this
case, which will end with the disposal of the Company's assets
in favor of its creditors.

CONTACT: Mr. Agustin Cueli Gomez, Trustee
         Avda Corrientes 915
         Buenos Aires


ESTIQUIM S.A.: Liquidates Assets to Pay Debts
---------------------------------------------
Buenos Aires-based Estiquim S.A. will begin liquidating its
assets following the pronouncement of the city's Court No. 1
that the Company is bankrupt, reports Infobae.

The bankruptcy ruling places the Company under the supervision
of court-appointed trustee, Ms. Adriana Raquel Esnaola. The
trustee will verify creditors' proofs of claims until July 21,
2004.

The bankruptcy process will end with the disposal company assets
in favor of its creditors.

CONTACT: Ms. Adriana Raquel Esnaola, Trustee
         Juncal 615
         Buenos Aires

         
FRIGOLINO: Gets Court Approval for Reorganization
-------------------------------------------------
Mar del Plata-based, Frigolino S.A., successfully appealed for
the conversion to reorganization of a liquidation order issued
by the city's Court No. 6, Infobae reveals. The reorganization
will allow the Company to propose a settlement plan for its
creditors so as to avoid a straight liquidation.

Ms. Ana Maria Gutman will oversee the reorganization as the
court-appointed trustee. Clerk No. 2 assists the court on this
case.

CONTACT: Frigolino S.A.
         Calle F s/n entre A y G
         Puerto de Mar del Plata

         Ms. Ana Maria Gutman, Trustee
         San Martin 4141
         Mar del Plata

  
HERNANDEZ Y CIA: Verification Deadline Extended
-----------------------------------------------
Infobae reported Cordoba Court No. 3 has moved the verification
deadline for the Hernandez y Cia bankruptcy case from May 19 to
June 4, 2004. The individual reports based on the verified
claims will be submitted to court on July 30, 2004 followed by
the general report on September 31, 2004.

The case will close with the disposal of the Company's assets to
repay its debts.

CONTACT: Hernandez y Cia S.R.L.
         Ovidio Lagos 216
         Cordoba

         Mr. Carlos Alberto Ortiz
         Arturo M Bas 60
         Cordoba


IMPSA: Fitch Argentina Maintains Ratings on Corporate Bonds
-----------------------------------------------------------
Fitch Argentina Calificadora de Riego S.A maintains a `D(arg)'
rating on US$150 million worth of corporate bonds issued by
Industrias Metalurgicas Pescarmona SA (IMPSA), the CNV says.

The affected bonds, issued under "series and/or class," were
described as "2 Serie emitida por US$150 millones del Programa
Global de US$ 250 millones." The bonds expired on May 30, 2002.

A `D (arg)'' rating indicates a company has defaulted on its
financial commitment.

At the same time, Fitch maintains a `C(arg)' rating on US$250
million worth of IMPSA's bonds, which were classified under
program and described as "Programa de obligaciones negociables."
The bonds expired on June 2, 2004

A `C(arg)' rating indicates a highly uncertain capacity for
timely payment of financial commitments relative to other
issuers or issues in the same country. Capacity or meeting
financial commitments is solely reliant upon a sustained,
favorable business and economic environment, said Fitch.

The ratings assigned were based on IMPSA's financial health as
of January 31, 2004


OBRAS Y PINTURAS: Reports Submission Set
----------------------------------------
Ms. Andrea Rut Cetlinas, the trustee assigned to supervise the
liquidation of Obras y Pinturas S.R.L., will submit on September
17, 2004 the validated individual claims of the case for court
approval. These reports explain the basis for the accepted and
rejected claims. The trustee will also submit a general report
on October 29, 2004.

Infobae reports that Court No. 2 has jurisdiction over this
bankruptcy case, while Clerk No. 4 assists.

CONTACT: Ms. Andrea Rut Cetlinas, Trustee
         Lavalle 1678
         Buenos Aires


TELECOM ARGENTINA: Head of Bondholder Group OKs Debt Offer
----------------------------------------------------------
After improving its debt offer in early May, Telecom Argentina
has gained backing from a group of Italian bondholders. Nicola
Stock, who represents most of the Italian bondholders through
Task Force Argentina (TFA), told creditors to accept the par
option of the new offer.

Bondholders grouped in TFA hold approximately US$750 million in
Telecom's notes, which accounts for around 25% of its total
debt.

Telecom's executives are quite optimistic about the results of
the offer.

"We are confident that we will reach an agreement with our
creditors soon," pointed out Amadeo Vazquez, president of the
Company, during a seminar.

Even though this is the first public display of support to the
proposal, the improvements made by Telecom have been well
received in the market. James Harper, VP of BCP Securities,
stated that the new offer carries a very positive change for
creditors. "This offer has been outlined in agreement with the
committee of creditors and I don't think they will have trouble
in closing a deal," explained Harper.

Even though the Company has not yet launched the proposal
officially, this is supposed to occur some time this month.

Telecom accrues US$2.7 billion in debt -without taking into
account the debt of its mobile unit Personal-. Since it seeks to
subscribe an out-of-court agreement (APE), it needs at least 66%
of backing to make the accord binding to all creditors, after
getting court approval.

With the backing of Italian bondholders, Telecom would already
have around 25% of adhesion. But the committee of creditors,
which holds over US$1.2 billion -or 40%- of Telecom's debt,
would also accept the proposal, given that they took part in the
talks that led to the improvements. The rest of the debt is
distributed among banks, export credit agencies and other
creditors.

CONTACT:  TELECOM ARGENTINA S.A.
          Alicia Moreau de Justo 50, 10th Floor
          Capital Federal (1107) Republica Argentina
          Phone: +54 11 4968 4000
          Home Page: http://www.telecom.com.ar
          Contacts:
          Alberto J. Ricciardi, Chief Financial Officer
          Elvira Lazzati, Finance Director
          Pedro Insussarry, Investor Relations Manager
          Phone: (5411) 4968-3626/3627
          Fax: (5411) 4313-5842/3109
          E-mail: inversores@intersrv.telecom.com.ar


TELECOM ARGENTINA: $3.2B of Bonds Remain in Default
---------------------------------------------------
Fitch Argentina Calificadora de Riesgo S.A. maintains a `D(arg)'
rating on a total of US$3.2 billion of corporate bonds issued by
Telecom Argentina S.A. (formerly Telecom Argentina STET-France
Telecom S.A.), the Comision Nacional de Valores (CNV) reports.

The bonds in default are:

-- US$200 million worth of "Programa de ON simples" which
expired June 2, 2004;

-- US$1.5 billion worth of "Programa Global de ONs autorizado
por Asamblea de fecha 16.3.99", due on August 2, 2004; and

-- US$1.5 billion of "Programa de obligaciones negociables",
which expired June 2, 2004.

All the above bonds were classified under "Program."

The rating action was taken based on the Company's finances as
of March 31, 2004.

CONTACT:  TELECOM ARGENTINA S.A.
          Alicia Moreau de Justo 50, 10th Floor
          Capital Federal (1107) Republica Argentina
          Phone: +54 11 4968 4000
          Home Page: http://www.telecom.com.ar

          Contacts:
          Alberto J. Ricciardi, Chief Financial Officer
          Elvira Lazzati, Finance Director
          Pedro Insussarry, Investor Relations Manager
          Phone: (5411) 4968-3626/3627
          Fax: (5411) 4313-5842/3109
          E-mail: inversores@intersrv.telecom.com.ar


ZARNIPLAST: Liquidates Assets to Pay Debts
------------------------------------------
Buenos Aires-based Zarniplast S.R.L. will begin liquidating its
assets following the pronouncement of the city's Court No. 2
that the Company is bankrupt, reports Infobae.

The bankruptcy ruling places the Company under the supervision
of court-appointed trustee, Mr. Aldo Manuel Fernandez. The
trustee will verify creditors' proofs of claims until August 9,
2004. The validated claims will be presented in court as
individual reports on September 3, 2004.

Mr. Fernandez will also submit a general report, containing a
summary of the Company's financial status as well as relevant
events pertaining to the bankruptcy, on October 18, 2004.

The bankruptcy process will end with the disposal company assets
in favor of its creditors.

CONTACT: Mr. Aldo Manuel Fernandez, Trustee
         Fray Justo Santa Maria de Oro 2366
         Buenos Aires



===========
B E L I Z E
===========

* S&P Assigns 'B+' Rating to Belize's Proposed 30-Year Bond
-----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' senior
unsecured long-term foreign currency debt rating to Belize's
proposed 30-year U.S. dollar bond putable in 2011.

"This bond issue is part of the government's ongoing strategy to
refinance its direct external obligations as well as the
government-guaranteed external debt of the Development Finance
Corporation (DFC), the country's government-owned development
bank," said Standard & Poor's credit analyst Olga Kalinina. "In
fact, this is the government's third issue since August 2002,
the proceeds of which will be mainly used to refinance existing
public-sector debt."

According to Mrs. Kalinina, about 80% of the bond's proceeds are
expected to be used to refinance the government's direct debt
and repay the DFC's external debt, which it incurred as part of
its government-guaranteed mortgage securitization operations. As
such, the debt issue is expected to improve both the interest
and maturity profiles of the general government debt and reduce
the DFC's external debt as part of the DFC's restructuring
program.

Standard & Poor's said that a high public-sector burden remains
one of the main constraining factors on the credit rating on
Belize. Standing at 106% of GDP at year-end 2003, public-sector
debt comprises the general government debt (73% of GDP), debt of
DFC (18% of GDP), liabilities of other public enterprises (4%),
and government guarantees of the mortgage-backed security
program administered by DFC (11%). On a net basis, at 82% of
GDP, Belize's net public-sector debt is higher than that of many
of its peers and above the 'B' median's 70%. As 75% of the total
public debt is external, the equally high net public-sector
external debt stood at 118% of current account receipts at year-
end 2003 compared with 91% for the 'B' median.

In this context, the stabilization of the debt trajectory and
gradual reduction of the debt burden--underpinned by the
reduction in the fiscal deficits and stronger growth prospects--
is essential to support the country's creditworthiness. "In
fact, a further reduction in the general government deficit to a
planned 0.9% of GDP in 2004, down from 3.3% in 2003 and 4.3% in
2002 (including a social security surplus estimated at 0.7% of
GDP), is key to stabilizing the government's high debt burden
and to building up reserves," Ms. Kalinina noted. "On the other
hand, fiscal slippages or new balance-of-payments pressure could
lead to a further debt increase and undermine the peg with the
U.S. dollar, which, in turn, could impair the government's
creditworthiness."

ANALYSTS:  Olga Kalinina, CFA, New York (1) 212-438-7350
           Olga_kalinina@standardandpoors.com

           Helena Hessel, New York (1) 212-438-7349  
           Helena_hessel@standardandpoors.com



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

CEMIG: Moody's America Latina Ups, Affirms Ratings
--------------------------------------------------
Moody's America Latina upgraded its national scale ratings of
Brazilian power utility Cemig to Baa2.br from Baa3.br and
affirmed its global local currency scale ratings at B1.

The rating outlook was changed to stable from negative.

The ratings agency attributed the National Scale Rating upgrade
and the change in outlook to an improvement in Cemig's financial
performance since year-end 2002.

Moody's expects the improvement to continue to strengthen
following the 19.13% average tariff increase approved in April
2004.

However, Cemig's ratings also consider the B3 rating of the
state of Minas Gerais, the Company's controlling shareholder,
which reflects the state's heavy, growing debt burden and a
structural fiscal imbalance.

Moody's America Latina observes that there is no clear ring-
fencing of Cemig's cash flows from its controlling shareholder,
thus leaving the Company exposed to the risk of a cash drain in
a scenario under which the state experiences a serious fiscal
crisis.

Cemig's ratings also consider uncertainties related to the
evolving regulatory environment for Brazil's electricity sector,
its exposure to devaluation risk, with approximately BRL800
million in un-hedged foreign currency denominated debt and
refinancing risk associated with the Company's BRL1.6 billion
short term debt position as of March 31, 2004.

CONTACT: CEMIG
         Av.Barbacena, 1200
         Santo Agostinho - CEP 30190-131
         Brasil
         Fax (0XX31)299-4691
         Tel.: (0XX31)349-2111


CESP: Strives to Lower Debt to $2B by 2010
------------------------------------------
State-owned Brazilian power generator Cesp will prioritize debt
payments and reduce investments this year as the debt-laden
company strives to reduce its liabilities to US$2 billion from
the current level of US$4.4bn by 2010. Cesp's original debt
totaled US$11.2 billion in 1995 when the company first began
restructuring.   

Business News Americas reports that one of the projects Cesp has
outlined under its controlled investment program is the US$15-20
million modernization of the 3,444MW Ilha Solteira and 1,551MW
Jupia hydro plants.

Last year, the company experienced a BRL500-million reduction on
revenue caused by the expiry of its energy sales contracts
coupled with a glut in energy supply, which drove down power
rates in the region.

Sao Paulo state government controls Cesp, which has installed
capacity of about 7,450MW in its six plants.


ELETROPAULO METROPOLITANA: BNDES Extends $168M Emergency Loan  
-------------------------------------------------------------
Brazil's national development bank BNDES paid power distributor
Eletropaulo Metropolitana Eletricidade de Sao Paulo SA BRL521.4
million (US$168 million) in emergency loans Friday.

BNDES made the payment as part of the CVA financing program
instituted to help power companies after they were prevented
from recovering from consumers losses stemming from dollarized
power purchases last year.

The utility, an affiliate of U.S. power firm AES Corp., now
expects to receive another BRL240 million (US$76 million) in the
next 30 days from the bank for losses during the government-
imposed energy rationing of 2001-2002, when drought depleted
Brazil's hydroelectric reserves.

In a statement, Eletropaulo said it would use BRL312 million of
the financing to pay down outstanding sector obligations and the
remainder to pay creditors under the March 12 debt renegotiation
agreement.

Eletropaulo concluded a BRL2.3-billion debt-restructuring
agreement with private creditors in March and last year signed a
US$1.1-billion debt-for-equity agreement with BNDES.

Eletropaulo will pay back the financing to BNDES in 24 months
with extra revenue seen from July onwards after Aneel grants
this year's rates increase, which is expected to include half of
the 7.4% that was withheld from the 2003 rates increase,
Eletropaulo CFO Andrea Ruschmann said.

The other half of the withheld adjustment is expected to be
granted in July 2005, she said.

CONTACT:  ELETROPAULO METROPOLITANA
          Avenida Alfredo Egidio de Souza Aranha 100-B,
          13 andar 04726-270 San Paulo
          Brazil
          Phone: +55-11-548-9461, +55 11 5696 3595
          Fax: +55-11-546-1933
          URL: http://www.eletropaulo.com.br
          Contacts:
          Luiz D. Travesso, Chairman and President
          Orestes Gonzalves Jr., VP Finance/Investor Relations


PARMALAT BRAZIL: Parent Sees Positive Outlook for Unit
------------------------------------------------------
Officers of troubled food group Parmalat are optimistic that its
Brazilian operations will break-even at operating cash level in
September.

Reuters reveals that the company has assured its creditors
during a slide presentation in Milan that sales are recovering
in one of its key markets.

Parmalat also announced that it is back in control, both
operationally and as shareholders, of Parmalat Brazil. A new and
streamlined management team in Brazil will guide the company to
an immediate restructuring of its debts.


PARMALAT BRAZIL: Faces $184 Currency Exchange Probe
---------------------------------------------------
Parmalat Brazil has not escaped the scandal that has mired its
Italian parent company in debt and accusations of accounting
misconduct. The Brazilian Central Bank's Department for the
Combat Against Currency and Financial Crimes revealed on
Thursday that it is investigating suspected fraudulent currency
exchange contracts, valued at US$184 million, entered by the
Italian group's units in the country.

Europe Intelligence Wire states that the Central Bank's
investigations will run parallel to the probes in Italy where
charges have been made against key company executives as well as
several financial institutions involved in the multi-billion
scandal.   

Parmalat Brasil Industria de Alimentos, the main subsidiary in
Brazil, has cut production and laid-off workers in the wake of
the crisis.


VARIG: TAP Mulls Taking Up to 20% Stake
---------------------------------------
TAP-Air Portugal is looking at the possibility of taking up to a
20% stake in Brazil's Varig over the next three years, Expresso
newspaper reported.

In addition, the flag carrier is interested in a management
accord with Varig, Latin America's biggest airline.

"In three years time, it would be interesting if TAP were
authorized to take up to 20% of Varig's capital," Expresso
quoted TAP sources as saying.

TAP has been studying a plan for closer ties with Varig for six
months, Express said, adding that it has an accord with Varig to
maintain its aircraft.

TAP, along with South African Airways and Finland's Blue1, were
inducted into the world's largest airline grouping, Star
Alliance, on Saturday.

Varig is already a member of the network that covers 755
airports in 132 countries.

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

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

             

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

AVIANCA: Copa Withdraws Takeover Bid
------------------------------------
Panama's Copa Airlines announced Friday it "will not make a
counter bid" for Colombian airline Avianca, relates EFE.

The decision follows Avianca's announcement that it has accepted
an offer by Brazilian conglomerate Grupo Sinergy.

In March, Sinergy offered to buy a 75% stake in Avianca for
US$64 million, as well as assume some US$300 million of the
airline's debts.

Avianca, which filed for bankruptcy protection in March 2003 in
New York, announced Monday that it had accepted Synergy's offer
because it "adequately complies with the necessary requirements
for the company to emerge from Chapter 11 in a satisfactory
way."

Copa and its U.S.-based partner Continental Airlines said,
however, that their offer was "very favorable" to the interests
of Avianca, its workers and its creditors. Copa and Continental
had offered some US$80 million in cash and another US$60 million
to cover the pensions of pilots and other workers.

Avianca has until June 11 to present its financial restructuring
plan to the bankruptcy court in New York.



===================
C O S T A   R I C A
===================

ICE: Plans Rates Increase for Local Calls
-----------------------------------------
Costa Rican electric and telecom regulator ICE is preparing to
realign call rates in the country to boost overall revenues by
US$9.65 million per year, reports Business News Americas.

ICE plans to initiate a 12% average increase in local call
rates, which could translate into a gain of US$5.28 million from
fixed telephony revenues and US$12.46 million from mobile
charges.

The scheme proposes to raise mobile telephony charges from
US$6.68 to US$7.47 to cover inflation. Fixed line long distance
calls made between 10pm and 7am to other Central American
countries will also increase 25%. In addition, installation
charges will go up from US$37.93 to US$42.53.

To complement the planned increases, ICE will seek a 33%
reduction for calls to Mexico, Canada, and the United States as
well as an 8% cut for all calls to Europe. Although this
translates into a US$8.27 million reduction in revenues, the
charge-cuts will enable the country to post international call
charges at competitive levels. The reduction will be offset by
the increase in local fixed-line charges, which at present are
subsidized from international call earnings.



=============
J A M A I C A
=============

* IMF Concludes Annual Article IV Review of Jamaica's Economy
-------------------------------------------------------------
The following statement was issued in Kingston on June 4, 2004:

"The IMF staff mission has concluded its visit to Kingston in
connection with the IMF's annual Article IV review of the
Jamaican economy. The staff appreciated the constructive and
open discussions with the authorities, which covered recent
economic developments, the near term outlook, and the
authorities' strategy for the medium-term.

"Jamaica's improved economic performance over the past year-with
stronger growth and declining inflation and interest rates-owes
much to the government's renewed fiscal adjustment effort. The
country has also benefited from the better international
economic environment, especially the global economic recovery.
Looking forward, the mission welcomes the authorities' intention
to implement a strong adjustment and reform program to improve
resilience to shocks, promote economic and financial stability,
and lay the basis for sustained growth with reduced poverty.

"In that context, the discussions focused on the following
areas:

- The Government's medium-term fiscal strategy, aimed at
achieving debt sustainability through an ambitious and sustained
budget adjustment. To this end, the Fund staff welcomed the
authorities' intention to reduce the budget deficit to 3-4
percent of GDP in FY 2004/05, and balance the budget by FY
2005/06.

- The Government's structural and social policies to improve
productivity and the environment for private investment. This is
needed to spur growth, essential for debt sustainability as well
as for poverty reduction. To these ends, beginning in the coming
year, the authorities plan to simplify the tax system,
strengthen tax and customs administration, improve public
expenditure management, and develop measures aimed at reducing
crime.

- The Government's steps to increase domestic consensus and
ownership of reforms. To this end, the authorities have engaged
in discussions with labor union and business leaders, and signed
a wage restraint agreement with major public sector unions. The
mission has also been encouraged in its discussions with
representatives of the private sector by indications of an
emerging consensus on the need for a broader social partnership.

- The Government's planned reforms to strengthen the stability
of the financial sector. To this end, the authorities intend to
strengthen the regulatory framework, in particular the
prudential standards for securities brokers. The mission
welcomes the authorities' request for participation in the joint
IMF and World Bank Financial Sector Assessment Program in early
2005.

"The IMF Executive Board is expected to discuss the staff's
detailed report and assessment of the authorities' program in
the context of the 2004 Article IV Consultation this summer. The
authorities have requested the Fund staff to undertake intensive
surveillance of Jamaica's economic performance. In that context,
a staff visit to assess the progress in implementing the
Government's program is planned for the fall; that assessment
will be reported to the Fund's Executive Board for information."

CONTACT: IMF EXTERNAL RELATIONS DEPARTMENT
         Public Affairs: 202-623-7300 - Fax: 202-623-6278
         Media Relations: 202-623-7100 - Fax: 202-623-6772



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

CYDSA: Shareholders To Turn Over 60% of Equity to Creditors
-----------------------------------------------------------
Shareholders of Cydsa SA, the ailing Mexican textiles and
synthetic-fibers conglomerate, were expected to hand over 60% of
their equity to bondholders controlling the Company's debt on
Monday, according to an online report released by the Wall
Street Journal.

The deal follows two years of tough negotiations between the
Company and distressed debt trader Fintech Advisory Ltd. of
London and New York.

Under the deal, Fintech Advisory Ltd. of London and New York
will convert US$159 million face amount in Cydsa notes due in
2009 for 60% of Cydsa stock, split between voting and nonvoting
shares.

Furthermore, Fintech, which bought the notes at between 18 cents
and 42 cents on the dollar, will continue to hold US$25.5
million in restructured debt, payable by May 2007.

Mr. Tomas Gonzalez Sada will retain his posts as Cydsa's
chairman and chief executive, but he will essentially be on the
hook for the remaining debt: The note is to be backed by an
additional 20% stake in Cydsa, which Mr. Gonzalez holds, but
which Fintech will assume should Cydsa fail to service the debt.

The transaction, according to Sandor Valner of Valor
Consultores, a Mexico City-based investment bank, buys Mr.
Gonzalez time, but it also puts his creditors in the driver's
seat.

"This is a watershed event. It's the first time international
bondholders get the majority of the equity of a listed Mexican
company as part of a debt restructuring,"

CONTACT:  CYDSA, S.A. DE C.V.
          Jesus Montemayor, Treasury Director
          +011-528-18-152-4585
          E-mail: jmontemayor@cydsa.com


GRUPO TFM: Moody's Reduces Senior Unsecured Rating
--------------------------------------------------
Closing a review of Grupo Transportacion Ferroviaria Mexicana's
(TFM) rating that began on January 21, 2004, Moody's Investors
Service downgraded the Mexican rail concessionaire's senior
unsecured rating to B2 from B1. The outlook is negative.

According to Moody's, the downgrade reflects TFM's relatively
weak recent financial performance with lower than expected free
cash flow that has resulted in a slower rate of debt reduction,
and the expectation of no material improvement in revenue and
operating profits over the near term because of the railroad's
high exposure to the automotive sector.

The negative outlook anticipates that TFM's bank credit
agreement will be extended within the near term, but also takes
into account TFM's need to strengthen its alternative funding
sources beyond its modest free cash flow in anticipation of debt
amortization in 2005 and afterwards.

While TFM's ability to strengthen funding sources remains a
concern, the ownership dispute between company shareholders
Kansas City Southern (KCS; NYSE: KSU) and Grupo TMM (NYSE: TMM)
is not likely to impact operations or financial results.



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

PARMALAT URUGUAY: Conaprole's Acquisition Bid Frets Milk Farmers
----------------------------------------------------------------
Conaprole's bid to acquire the local assets of bankrupt food
company Parmalat triggered concerns among milk farmers that the
purchase would create a near monopoly affecting milk prices.

El Salvador Economico reports that Conaprole has expressed
interest in purchasing Parmalat by itself or in partnership with
Glanbia. Taking over Parmalat would open a 20% share in the milk
market for the Uruguayan dairy products cooperative.

Parmalat Uruguay reports assets of US$18 million, annual sales
of US$45 million and debts of US$30 million.



=================
V E N E Z U E L A
=================

PDVSA: Analysts Unsure About Capacity to Reach Opec Quota
---------------------------------------------------------
Analysts don't expect Venezuela's state oil company PDVSA to
reach its higher Opec quota of 2.99 million barrels a day (mb/d)
in August, relates Business News Americas.

David Voght, an analyst at IPD Latin America, said that in order
to reach its new Opec quota, not only would PDVSA have to lift
production dramatically by 500,000b/d in the next two months,
but also it would have to take into account the 25% natural
decline rate in its oil fields.

"That's a monumental task for the limited human resources in
PDVSA right now," Voght said. "We're not seeing much work being
farmed out to field service companies, so I would say PDVSA's
production is stagnant right now."

Previously, PDVSA's official statements revealed that the
Company is producing about 3.1mb/d. But the figure is inflated,
Voght said, adding that the actual production is more like 2.5-
2.6mb/d.

Venezuela's Opec quota in April was 2.7mb/d.



                            ***********


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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