TCRLA_Public/040716.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

             Friday, July 16, 2004, Vol. 5, Issue 140

                           Headlines

A R G E N T I N A

A & B CONSTRUCCIONES S.A.: Judge Confirms Bankruptcy
CLUB YEERON: Court Oks Creditor's Bankruptcy Call
ELEVADORES SANSONETTI: Trustee Prepares Reports for Submission
EMPRESA FRUTICOLA: General Report Due Tuesday
EMSEL S.A.: Court Declares Company Bankrupt

HANDYPLAST: General Report Submission Approaches
MENLO S.A.: Trustee to File Individual Reports Wednesday
NII HOLDINGS: Updates Incorporation Certificate, Bylaws
SERMACO S.R.L.: Asks Court for Reorganization


B R A Z I L

EMBRATEL: Releases Second Quarter 2004 Earnings Preview
NET SERVICOS: Comments On Going Concern Qualification
ODEBRECHT: Forecasts 11-12% Growth in Petrochemicals
TAM: Seeks As Much As $200M In Planned IPO


C H I L E

AES GENER: Local Subsidiary Won't Pay Export Tax
ENERSIS: Former Execs Could Face Up to $100M in Fines
TELEFONICA CTC: S&P To Affirm Ratings if Sub Sale is Approved
TELEFONICA CTC: SVS Scraps Speculation Surrounding Sale of ADRs


C O S T A   R I C A

* IMF Director Supports Costa Rica's Economic Reform Agenda


M E X I C O

AHMSA: Fires CEO Following Ex-Chairman's Arrest
AXTEL: Canadian Shareholder Sells 1.5% Stake
EMPRESAS ICA: Slim Family, Others Slash Ownership to 7.9%
GRUPO IUSACELL: Pioneers 3GCDMA Technology in Mexico
LUZ Y FUERZA: Cuts Power to Non-Paying Municipalities


P E R U

AERO CONTINENTE: Suspension Worsens Government's Reputation
* Analysts Wary of Peru's $1B Bond Issue


V E N E Z U E L A

PDVSA: Fitch Affirms PDVSA Fin After $2.5B Tender Announcement
PDVSA: OPIC Approves Expropriation Claim

     -  -  -  -  -  -  -  -

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

A & B CONSTRUCCIONES S.A.: Judge Confirms Bankruptcy
--------------------------------------------------------
A & B Construcciones S.A. was declared bankrupt after Judge
Fernandez of Buenos Aires Court No. 19 endorsed the liquidation
petition filed by Banca Nazionale del Laboro. Argentine daily La
Nacion reports that the bank has claims totaling US$13,105.69
against the troubled construction company.

The court assigned Mr. Aldo Mackman to supervize the liquidation
process as trustee. He will validate creditors' proofs of claims
until September 27, 2004.

CONTACT: A & B Construcciones S.A.
         San Martin 977
         Buenos Aires

         Mr. Aldo Mackman, Trustee
         Alsina 1441
         Buenos Aires


CLUB YEERON: Court Oks Creditor's Bankruptcy Call
-------------------------------------------------
Judge Fernandez of Buenos Aires Court No. 19 declared Asociacion
Civil Club Yeeron bankrupt, says La Nacion. The ruling comes in
approval of the bankruptcy petition filed by the Company's
creditor, Ms. Fatima Mencia, for nonpayment of US$14,355.92 in
debt.

Clerk No. 37, Dr. Mazzoni, assists the court on the case, which
will conclude with the liquidation of the Company's assets.

The Company's trustee, Ms. Raquel Steinhaus, will examine and
authenticate creditors' claims until September 21, 2004. This is
done to determine the nature and amount of the Company's debts.
Creditors must have their claims authenticated by the trustee by
the said date in order to qualify for the payments that will be
made after the Company's assets are liquidated.

CONTACT: Asociacion Civil Club Yeeron
         Avenida General Paz 10.840
         Buenos Aires

         Ms. Raquel Steinhaus, Trustee
         Paraguay 577
         Buenos Aires


ELEVADORES SANSONETTI: Trustee Prepares Reports for Submission
--------------------------------------------------------------
Individual reports from the Elevadores Sansonetti S.A.
bankruptcy are scheduled for submission on Monday, July 19,
2004. These reports contain summaries of all claims submitted
during the verification period. Mr. Nestor Agustin Iribe, the
trustee, will also submit a general report on the case on
September 15, 2004.

Buenos Aires Court No. 18 has jurisdiction over this case.

CONTACT: Mr. Nestor Agustin Iribe, Trustee
         Avenida Corrientes 1250
         Buenos Aires


EMPRESA FRUTICOLA: General Report Due Tuesday
---------------------------------------------
Bankrupt Argentine company Empresa Fruticola S.A. will enter the
final stage of its bankruptcy after the court-appointed trustee,
Ms. Cecilia Montelvetti, submits the general report on the case
on July 20, 2004.

Upon submission of all required documents, the court will then
authorize the liquidation of the company's assets in order to
repay its creditors.

CONTACT:  Ms. Cecilia Montelvetti, Trustee
          General Urquiza 2134
          Buenos Aires


EMSEL S.A.: Court Declares Company Bankrupt
-------------------------------------------
Court No. 12 Judge Ojea Quintana declared local company Emsel
S.A. bankrupt after Mr. Abdon Dominguez, the Company's creditor,
requested for the company's liquidation, relates La Nacion.

The Company will undergo the bankruptcy process with Mr. Luis
Krajl as trustee. Creditors are required to present their proofs
of claims to the trustee for verification before September 3,
2004.

Creditors who fail to have their claims authenticated by the
said date will be disqualified from the payments that will be
made after the Company's assets are liquidated at the end of the
bankruptcy process.

Dr. Perea, Clerk No. 23, assists the court on the case.

CONTACT: Emsel S.A.
         Deheza 2386
         Buenos Aires

         Mr. Luis Krajl
         Bouchard 468
         Buenos Aires


HANDYPLAST: General Report Submission Approaches
------------------------------------------------
Argentine accounting firm Estudio Polistina, Rancano, acting as
trustee, is scheduled to submit a general report on the
Handyplast S.A. bankruptcy on July 20, 2004. This report
provides the court with an audit report of the Company's
accounting and business records.

Judge No. 7 of the San Martin Civil and Commercial Tribunal
handles this case, which will close with the liquidation of the
Company's assets to repay creditors.

CONTACT:  HANDYPLAST S.A.
          Lamadrid 2063
          San Martin

          Estudio Polistina, Rancano - Trustee
          Pueyrredon 2700 Villa Maipu
          San Martin


MENLO S.A.: Trustee to File Individual Reports Wednesday
--------------------------------------------------------
Buenos Aires Court No. 26 expects to receive individual reports
on the Menlo S.A. bankruptcy on Wednesday, July 21, 2004. These
reports, prepared by trustee Pablo Javier Kainsky, are based on
the claims submitted during the verification phase. Creditors
with unverified claims will be disqualified from the payments to
be made once the Company's assets are liquidated.

CONTACT:  Menlo S.A.
          Maipu 872
          Buenos Aires

          Mr. Pablo Javier Kainsky, Trustee
          Reconquista 715
          Buenos Aires


NII HOLDINGS: Updates Incorporation Certificate, Bylaws
-------------------------------------------------------
NII Holdings released the following relevant information
pertaining to its Restated Certificate of Incorporation and
Amended and Restated Bylaws on July 14, 2004:

UPDATED DESCRIPTION OF CAPITAL STOCK

On February 24, 2004, we adopted amendments to our Restated
Certificate of Incorporation and Amended and Restated Bylaws.
Our Amended and Restated Certificate of Incorporation became
effective on May 5, 2004. Our Amended and Restated Bylaws became
effective on February 24, 2004.

The following is a description of our capital stock. This
description is qualified in its entirety by reference to
applicable provisions of Delaware law and our Amended and
Restated Certificate of Incorporation and our Amended and
Restated Bylaws, the complete text of which are filed as
exhibits to our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2004 and our Annual Report on Form 10-K for the
year ended December 31, 2003, respectively.

Authorized Shares

Our Amended and Restated Certificate of Incorporation authorizes
capital stock of 310,000,001 shares, consisting of 300,000,000
shares of common stock, par value $0.001 per share, one share of
preferred stock, par value $1.00 per share, which we refer to as
our Special Director Preferred Stock, and 10,000,000shares of
undesignated preferred stock, par value $0.001 per share.

Under the provisions of our Amended and Restated Certificate of
Incorporation, our Special Director Preferred Stock was to
remain outstanding so long as Motorola Credit Corporation or
certain permitted transferees held a majority in principal
amount of the aggregate indebtedness outstanding under two of
our financing agreements.

As of July 12, 2004, Motorola Credit Corporation no longer held
a majority in principal amount of the aggregate indebtedness
outstanding under those financing agreements (as hereinafter
discussed). Accordingly, as provided in our Amended and Restated
Certificate of Incorporation, our Special Director Preferred
Stock automatically expired, terminated and is of no further
force or effect, and we are prohibited from reissuing our
Special Director Preferred Stock.

Common Stock

Holders of common stock are entitled to one vote per share in
person or by proxy for each share held of record on all matters
submitted to a vote of our stockholders on which the holders of
our common stock are entitled to vote. Holders of our common
stock vote together as one class on all matters submitted to a
vote of our stockholders generally. Subject to the preferences
of any preferred stock then outstanding, the holders of common
stock are entitled to receive dividends and other distributions
in cash, property or shares of our stock as may be declared
thereon by our board of directors from time to time out of our
assets or funds legally available therefor.

Upon liquidation, winding-up or dissolution of us, whether
voluntarily or involuntarily, the holders of our common stock
shall be entitled to share ratably in the net assets remaining
after payment of all liquidation preferences, if any, applicable
to any outstanding preferred stock.

Our common stock has no preemptive or conversion rights or the
benefit of any sinking fund and is not subject to redemption or
to liability for any further calls by us.

The transfer agent and registrar for our common stock is
EquiServe Trust Company, N.A. Our common stock trades on the
Nasdaq National Market under thetrading symbol "NIHD."

Certificate of Incorporation and Bylaws

Our Amended and Restated Certificate of Incorporation provides
that during the time that our Special Director Preferred Stock
is outstanding:

(i) the holder thereof has the power and authority to nominate,
elect, remove and replace a single member of our board of
directors,

(ii) our board of directors must consist of nine directors and
cannot be changed without the consent of two thirds of the
members of the board of directors, and

(iii) the holder of our Special Director Preferred Stock has
certain consent rights with respect to the size of our board of
directors and amendments to our Amended and Restated Certificate
of Incorporation.

Upon the automatic expiration of our Special Director Preferred
Stock on July 12, 2004, the above provisions of our Amended and
Restated Certificate of Incorporation became inoperative and
were of no further force or effect. This expiration of our
Special Director Preferred Stock also caused certain provisions
of our Amended and Restated Bylaws relating to our board of
directors became operative on that date.

The size of our board of directors is now fixed in accordance
with our Amended and Restated Bylaws, which provide that our
board of directors shall establish by resolution the number of
directors within a range of no fewer than one member or no more
than twelve members. Our Amended and Restated Certificate of
Incorporation requires that our board of directors consist of
three classes, with the term of office of one class expiring
each year.

Our board of directors has the authority, without further action
by our stockholders, to issue shares of undesignated preferred
stock from time to time in one or more series. The board can fix
the number of shares and relative designations, voting powers,
preferences, participating, optional and other special rights
and restrictions of that preferred stock. The rights,
preferences, privileges and restrictions or qualifications of
different series of preferred stock may differ with respect to
dividend rates, amounts payable on liquidation, voting rights,
conversion rights, redemption provisions, sinking fund
provisions and other matters.

The issuance of preferred stock could decrease the amount of
earnings and assets available for distribution to holders of
common stock, adversely affect the rights and powers, including
voting rights, of holders of common stock, and have the effect
of delaying, deterring or preventing a change in control.

In accordance with Delaware law, any action required or
permitted to betaken at a stockholders' meeting may be taken
without a meeting or a vote if the action is consented to in
writing by holders of outstanding stock having the votes
necessary to authorize the action. Our Amended and Restated
Bylaws provide that the chairman of the board and chief
executive officer may call special meetings of the stockholders
for any purpose at any time. Further, the Amended and Restated
Bylaws provide that a special meeting may be called by the
secretary upon the written request of a majority of the board of
directors or of any holder of Special Director Preferred Stock
or of stockholders holding a majority of the entire capital
stock issued and outstanding and entitled to vote. This request
must state the purposes of the proposed meeting.

Anti-Takeover Statute

We are subject to Section 203 of the Delaware General
Corporation Law, which regulates certain corporate acquisitions.
In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a business combination with an
interested stockholder (generally a person who owns 15% or more
of the outstanding voting stock) for a period of three years
following the date the person became an interested stockholder,
unless:

- before the stockholder became an interested stockholder, the
board of directors approved either the business combination or
the transaction that resulted in the stockholder becoming an
interested stockholder;

- upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock outstanding
at the time the transaction began, excluding shares owned by
persons who are directors and also officers and employee stock
plans in which employee participants do not have the right to
determine confidentially whether shares held subject to the plan
will be tendered in a tender offer or exchange offer; or

- at or after the time the stockholder became an interested
stockholder, the business combination is approved by the board
of directors and authorized by the affirmative vote of at least
66 2/3% of the outstanding voting stock that is not owned by the
interested stockholder.

Under some circumstances, Section 203 of the Delaware General
Corporation Law makes it more difficult for an interested
stockholder to effect various business combinations with a
company for a three-year period, although the stockholders of a
company may elect to exclude the company from the restrictions
imposed under this section.

PAY OFF OF OUR INTERNATIONAL EQUIPMENT FACILITY

On July 12, 2004, we paid off the remaining $52.6 million
outstanding under our international equipment facility between
us and Motorola Credit Corporation. Under the terms of the
international equipment facility and related agreements,
Motorola Credit Corporation was a secured creditor and held
senior liens on substantially all of the assets of us and our
various foreign and domestic subsidiaries and affiliates. Upon
the payoff of the international equipment facility, Motorola
Credit Corporation released its liens on these assets.

Also, on July 12, 2004, the trustee for the 13% Senior Secured
Discount Notes due 2009 of our subsidiary, NII Holdings (Cayman,
Ltd.), which had been previously either defeased or purchased by
us in a tender offer that closed on March 8, 2004, released its
security interests in that same collateral.

Motorola Credit Corporation and the trustee were jointly secured
pursuant to an intercreditor agreement, and the collateral agent
under that intercreditor agreement has agreed to take all
necessary actions to release all of our collateral from the
liens securing these former indebtednesses. As a result, upon
the completion of the ministerial actions necessary to release
the liens against said collateral in the various jurisdictions
where it is located, our assets will no longer be encumbered.

In addition, our one authorized share of Special Director
Preferred Stock, which Motorola Credit Corporation was entitled
to hold so long as Motorola Credit Corporation or certain
permitted transferees held a majority in principal amount of
certain of our aggregate indebtedness, automatically terminated
with the pay off of the international equipment facility. During
the time that our Special Director Preferred Stock was
outstanding,

(i) Motorola Credit Corporation had the power and authority to
nominate, elect, remove and replace a single member of our board
of directors,

(ii) our board of directors had to consist of nine directors and
could not be changed without the consent of two thirds of the
members of the board of directors, and

(iii) Motorola Credit Corporation had certain consent rights
with respect to the size of our board of directors and
amendments to our Amended and Restated Certificate of
Incorporation. Upon the automatic expiration of our Special
Director Preferred Stock on July 12, 2004, Motorola Credit
Corporation's rights to the above provisions terminated.

CONTACT: NII Holdings Inc
         10700 Parkridge Boulevard, Suite 600
         Reston, VA 20191
         Phone: (703) 390-5100
         Email: claudia.restrepo@nii.com

         Web Site: www.nextelinternational.com


SERMACO S.R.L.: Asks Court for Reorganization
---------------------------------------------
Sermaco S.R.L., a carbon paper and ink producer in Buenos Aires,
has requested for reorganization after failing to pay its
liabilities since March 3 this year, says La Nacion.

The reorganization petition, once approved by the court, will
allow the company to negotiate a settlement with its creditors
in order to avoid a straight liquidation.

The case is pending before Judge Gonzalez of the city's Court
No. 8. Dr. Saravia, Clerk of Court No. 16, assists on this case.

CONTACT: Sermaco S.R.L.
         Lope de Vega 1183
         Buenos Aires



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

EMBRATEL: Releases Second Quarter 2004 Earnings Preview
-------------------------------------------------------
Embratel Participacoes S.A. ("Embrapar") announced Wednesday a
brief preview of some elements of the second quarter 2004
earnings announcement to be released Wednesday, July 21, 2004,
after the market closes.

- Voice revenues were impacted by intensified competition, the
elimination of SMP revenues due to the fact that cellular
providers were unable to bill co-billed customers and to the
introduction of new anti-fraud detection practices, which caused
revenues to decline 9.5 percent quarter-over-quarter.

- Interconnection costs rose due to several factors, including
higher mobile interconnection tariffs. Telco ratio rose by 2.4
percentage points.

- Several non-recurring items impacted EBITDA and Net income.
Above EBITDA, non- recurring cash and non-cash payments,
reversals and recoveries amounted to a net decrease in expenses
of R$12 million, and below EBITDA non-cash recoveries
represented a R$126 million addition to net income before taxes.

Embratel is the premium telecommunications provider in Brazil
and offers an ample variety of telecom services -- local and
long distance telephony, advanced voice, high-speed data
transmission, Internet, satellite data communications, and
corporate networks.

The company is a leader in the country for data services and
Internet, and is highly qualified to be an all-distance network
carrier in Latin America. Embratel's network spreads
countrywide, with almost 29 thousand kms of optic cables, which
represents about one million and sixty-nine thousand km of fiber
optics.

CONTACT: Ms. Silvia M.R. Pereira
         Investor Relations
         tel: (55 21) 2121-9662
         fax: (55 21) 2121-6388
         email: silvia.pereira@embratel

         Web Site: www.embratel.com.br


NET SERVICOS: Comments On Going Concern Qualification
-----------------------------------------------------
Net Servicos de Comunicacao S.A (Nasdaq:NETC - News;
BOVESPA:PLIM4), the largest Pay-TV multi-service operator in
Latin America, an important provider of bi-directional broadband
Internet access (Virtua) and multimedia and data communication
services for corporate networks, a publicly held company,
publicly announces, in conformance with Nasdaq's Marketplace
Rule 4350(b)(1)(B), that its Form 20-F for the fiscal year ended
December 31, 2003, which was filed on June 30, 2004, contained
an audit opinion that included a going concern qualification.

The audit opinion cited the Company's recurring operating
losses, working capital deficiency, and the fact the Company
remains in default under its debt agreements.

This announcement does not reflect any change or amendment to
the financial statements as filed, and does not affect the
status of the Company's capital restructuring plan.

In a press release issued on June 27, 2004, the Company
announced that it had agreed on the terms to be implemented in
connection with its capital restructuring with creditors
representing approximately 70 percent of the Company's
outstanding financial debt.

CONTACT: Net Servicos de Comunicacao S.A
         Mr. Marcio Minoru
         Mr. Rodrigo Alves
         55-11-5186-2811
         ri@netservicos.com.br

         Web Site: nettv.globo.com


ODEBRECHT: Forecasts 11-12% Growth in Petrochemicals
----------------------------------------------------
Odebrecht, the parent company of Brazilian PVC producer Braskem,
says that it expects an 11 to 12 percent growth in its
petrochemicals operations this year if GDP increases by 3.5% -
4%.

Valor economy reports that the restructuring of the group's
businesses has reduced debt from BRL9 billion in 2002 to BRL7.7
billion last year. Along the way, the Company has sold assets
totaling US$800 million.

However, Odebrecht does not expect big changes in the
construction sector because of the lack of new infrastructure
investments in the country.


TAM: Seeks As Much As $200M In Planned IPO
------------------------------------------
Brazil's largest airline, TAM Linhas Aereas, seeks to raise up
to US$200 million early next year by selling stock in the local
and foreign market, according to the Company's president.

"We hope to raise a minimum of US$100 million because anything
less wouldn't be very attractive for investors," said TAM
President Marco Antonio Bologna.

The sale would effectively constitute an initial public offering
for TAM, which currently lists only about 0.5% of its stock on
the Sao Paulo market.

Brazil's Rolim family owns 73% of the airline's capital, while
investment funds hold the remaining 27%.

Bolgona said TAM would like to list shares on the Sao Paulo
Stock Exchange and also American Depositary Receipts on the New
York Stock Exchange.

Separately, TAM's CEO Bologna said he expects to get permission
from antitrust regulators by October to continue a code-sharing
program with Brazil's second biggest carrier, Viacao Aerea Rio
Grandense SA (Varig).

Brazil's government first allowed Varig and TAM to start selling
tickets on shared flights last year after the two carriers
announced they planned to merge.

However, the airlines have scrapped plans to merge but still
would like to continue with the code-sharing program.

A full corporate merger wouldn't be allowed under Brazilian law,
Bologna said, since one airline can't control more than half the
market. TAM controlled 34% of Brazil's market in June, versus
31% for Varig and 22% for Gol Linhas Aereas Inteligentes SA
(GOL), Brazil's new low-cost airline.

Bologna said TAM will need some time to reorganize its network
if antitrust authorities say the code-sharing must stop.

CONTACT:  TAM - Linhas Aereas
          Av. Jurandir, 856
          Jd. Aeroporto - Sao Paulo - SP
          Zip code: 04072-000
          PABX: (011) 5582-8811
          Web site: http://www.tam.com.br



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

AES GENER: Local Subsidiary Won't Pay Export Tax
------------------------------------------------
The Electrica Santiago (Essa), a unit of Chilean generator AES
Gener, Chile's securities regulator, the SVS, says it will not
pay its Argentine gas suppliers to cover a 20% gas export tax
imposed by Argentina's government in May.

Business News Americas reports that Essa said it has been
notified by the gas suppliers about their intention to pass the
cost unto the Company.

But in a statement to the regulator, Essa said, "We reject this
measure because its origin is objectionable in light of the
existing contracts we have with these suppliers,"

Argentina's President Nestor Kirchner signed decree 645 to levy
the tax on natural gas exports in order to increase tax revenues
and ease the energy shortage in the domestic market.

CONTACT:  AES Gener S.A.
          Mr. Daniel Aninat
          (562) 686-8938
               OR
          Vanessa Thiers
          (562) 686-8948
          Web Site: www.aesgener.cl


ENERSIS: Former Execs Could Face Up to $100M in Fines
-----------------------------------------------------
Chilean Securities Superintendent Alejandro Ferreiro said
Wednesday the former executives at local utilities holding
Enersis SA accused of manipulating the Company's sale to Spanish
utility Endesa SA could face up to US$100 million in fines.

This, if the Supreme Court upholds a guilty verdict imposed by
the regulator SVS seven years ago.

Dow Jones Newswires recalls the Santiago appeals court upheld
last week the SVS's US$59 million fine levied against locally
well-known entrepreneurs - Jose Yuraszeck, Luis Fernando
Mackenna, Marcos Zylberberg, Arsenio Molina, Marcelo Brito and
Eduardo Gardella - for putting their interests ahead of those of
other shareholders when Endesa bought Enersis.

According to Ferreiro, it could easily take another year for the
Supreme Court to issue a final ruling in the case, which could
elevate the fine to US$100 million, as interest would be due.
However, if the court reduces the fine, it would be considered a
completely new fine and no interest would be due, he added.

CONTACT:  Enersis SA
          Avenida Kennedy Vitacura No 5454
          Santiago Chile  1557
          Phone: +56 2 353 4400
          Fax:  +56 2 378 4768
          Home Page: http://www.enersis.cl
          Contacts:
          Engr Alfredo Llorente Legaz, Chairman
          Engr Rafael Miranda Robredo, Vice Chairman


TELEFONICA CTC: S&P To Affirm Ratings if Sub Sale is Approved
-------------------------------------------------------------
Compania de Telecomunicaciones de Chile S.A. (CTC) shareholders
were scheduled to meet Wednesday to decide whether to approve
the sale of the Company's mobile operations to Telefonica
Moviles S.A. (TEM).

Should the transaction be approved as proposed, Standard &
Poor's Ratings Services expects to affirm CTC's long-term
ratings at 'BBB' and remove them from CreditWatch, where they
were placed on May 20, 2004.

The new outlook is expected to be stable.

However, the ratings will remain on CreditWatch Negative until
the final conditions of the divestment are known. The company
has obtained the necessary waivers from its creditors, but the
transaction is still subject to shareholder approval.

TEM offered to acquire 100% of the equity in CTC's mobile
operations (Telefonica Movil Chile S.A.) at a price of $1,250
million (US$1,007 million for the equity and US$243 million to
pay down Telefonica Movil Chile's debt with CTC). As part of the
transaction, CTC would also distribute an extraordinary dividend
payment of about $800 million.

Standard & Poor's expects CTC to apply the approximately US$400
million remaining after the dividend payment to reduce debt. In
Standard & Poor's opinion, debt reduction should offset lower
revenues (of about 30%) and EBITDA (of about 20%), allowing the
company to maintain robust financial indicators. In addition,
although CTC's remaining businesses are expected to exhibit
slower growth and are subject to regulation, they should also
show higher stability and lower investment requirements.

Standard & Poor's anticipates that CTC may maintain some of the
proceeds from the sale in cash until the debt is effectively
paid down, which would decrease the net debt. In addition, a
reduced capital expenditure program and still solid and stable
pro forma cash generation from the fixed-line businesses should
compensate for the increased exposure to regulatory pressures
and expected lower growth of the remaining, more mature business
lines. If the sale goes through as expected, Standard & Poor's
estimates that 2005 net debt to capitalization should be
approximately 20%, compared to 36% in 2003, while FFO coverage
of net debt would exceed 50% (compared to 44% in 2003). EBITDA
to gross interest should remain in line with former expectations
at about 6x.

CTC is Chile's largest telecommunications provider and enjoys a
leading competitive position in the Chilean telecommunications
sector and moderate financial policy that is enhanced by the
strength and expertise of its major owner, Telefonica de Espana
S.A. These strengths are partially offset by regulatory risk and
tariff revisions, which could result in aggressive interference
in CTC's local-service pricing strategy. In addition, CTC faces
increasing competition in most segments. As of March 2004, CTC
had consolidated debt of about US$1.4 billion.

CONTACT:  Ivana Recalde, Buenos Aires (54) 114-891-2127
          Marta Castelli, Buenos Aires (54) 114-891-2128


TELEFONICA CTC: SVS Scraps Speculation Surrounding Sale of ADRs
---------------------------------------------------------------
Chile's securities regulator SVS told reporters Wednesday that
Spanish telecommunications giant Telefonica SA (TEF) isn't
planning a public bid for Compania Telefonica de Chile SA's
(CTC) outstanding shares, relates Dow Jones Newswires.

The securities watchdog's Superintendent Alejandro Ferreiro made
these assurance following speculation that Telefonica might
launch an all-out bid for CTC after it bought 3 million CTC ADRs
from Citigroup Global Markets Inc. in a cash deal for an
undisclosed sum. The deal raised Telefonica's stake in CTC to
44.9%.

But according to Mr. Ferreiro: "We've been in touch with the
executives and they have said there's nothing" behind last
week's deal.

The regulator has found no impropriety in the deal, Ferreiro
added.

Telefonica's purchase of CTC's ADRs came about a week before an
extraordinary shareholder meeting scheduled for July 15 at which
shareholders will be asked to approve CTC's plan to sell its
mobile operations to its parent company's mobile unit,
Telefonica Moviles (TEM).

Telefonica will pay CTC US$1.01 billion and assume US$243
million in debt for the mobile unit. Some shareholders have
publicly said Telefonica's offer is insufficient. CTC has been
holding last-ditch talks with shareholders in the past few days
to help secure approval for the sale.

The SVS says it will closely monitor the meetings to ensure
there are no improprieties.

CONTACT: TELEFONICA CTC CHILE
         Sofia Chellew
         E-mail: schelle@ctc.cl
         Tel.:56-2-691 3867

         Veronica Gaete
         E-mail: vgaete@ctc.cl
         Tel.:56-2-691 3867

         M.Jose Rodriguez
         E-mail: mjrodri@ctc.cl
         Tel.:56-2-691 3867

         Florencia Acosta
         E-mail: macosta@ctc.cl
         Tel.:56-2-691 3867



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

* IMF Director Supports Costa Rica's Economic Reform Agenda
-----------------------------------------------------------
International Monetary Fund (IMF) Deputy Managing Director
Agustín Carstens made the following statement in San Jose on
July 12, 2004:

"This is my first visit to Costa Rica as Deputy Managing
Director of the Fund, and it is a great pleasure for me to be
here today. This morning, I had the privilege of meeting with
President Abel Pacheco. I also had productive meetings with
Finance Minister Alberto Dent, Central Bank President Francisco
de Paula Gutierrez, and coordinator of the economic team Ronulfo
Jimenez. The Fund greatly values this opportunity to continue
developing the productive dialogue with the Costa Rican
authorities.

"Costa Rica is a pillar of democratic tradition in Central
America. Its sound institutions and impressive social
development track record are models for other countries in the
region. Costa Rica has continued to record strong economic
growth during the recent global and regional downturn, which
attests to its resilience and sound growth potential. Over the
past decade, Costa Rica has succeeded in diversifying its export
base and in attracting sizable foreign direct investment flows.
Sound institutions, high levels of education, and an outward-
looking growth strategy have been important assets in these
efforts.

"Looking forward, the outlook for Costa Rica is favorable,
although there are major challenges to overcome. In particular,
I fully agree with the Costa Rican authorities that the upward
trend in public debt needs to be reversed to ensure the
sustainability of the public finances, and to continue
strengthening the financial system. I was encouraged by
President Pacheco's assurance that the tax reform before
Congress and the adoption of the Free Trade Agreement between
Central America and the United States are priorities for the
government and have the broad support of Costa Rican society.

"To maximize the benefits of integration with the global and
regional economy, and to address more effectively Costa Rica's
challenges, we discussed the need for a comprehensive reform
agenda. We agreed on the importance of complementing the current
initiatives with a strengthening of tax administration, reforms
in public spending, and better performance by public
enterprises. We shared the view that monetary policy should
focus on reducing inflation to low single digits and, to this
end, it will be necessary to recapitalize the central bank. In
the financial sector, it is essential to level the playing field
between public and private banks, local and offshore banks, and
colón and dollars intermediation. On these bases, it will be
possible to revive intermediation in colones and gradually
reduce the dollarization of the financial system.

"A comprehensive reform agenda would also be a key factor in
harnessing Costa Rica's considerable growth potential and
capitalizing on its impressive record of social progress. I
fully share the authorities' view that to make such an agenda
feasible, the reforms will need to be carefully prioritized and,
more importantly, have the support of Costa Rican society.

"During our meetings, I also had the opportunity to hear the
views of the authorities on how the Fund could further enhance
its cooperation with Costa Rica. We agreed that there is scope
for more technical assistance, especially in regard to the
financial system, tax policy, and macroeconomic statistics. We
wish to continue developing the close dialogue we have maintain
thus far with Costa Rica and wish to have the opportunity to
jointly meet the challenges facing the region."

CONTACT: IMF EXTERNAL RELATIONS DEPARTMENT

         Public Affairs:
         Tel: 202-623-7300
         Fax: 202-623-6278

         Media Relations:
         Tel: 202-623-7100
         Fax: 202-623-6772

         Web Site: www.imf.org



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

AHMSA: Fires CEO Following Ex-Chairman's Arrest
-----------------------------------------------
Altos Hornos de Mexico SA (Ahmsa) has fired Mr. William H.
Bricker, the independent chief executive named by the Mexican
steel company three months ago to facilitate debt talks with
unpaid creditors, reports Dow Jones.

Mr. Bricker, an expert in restructuring debt, was designated CEO
this year as part of a restructuring agreement with federal
authorities. In April, he laid out his own three-tier strategy
to reach an agreement with creditors on its US$1.8-billion in
defaulted debt.

However, this week's arrest of former Ahmsa president Xavier
Autrey effectively nullifies the Company's obligation to adhere
to restructuring terms.

Mr. Luis Zamudio Miechielsen has been appointed to replace Mr.
Bricker, whose removal, as suggested by Ahmsa, was only because
of the arrests, and not a reflection of his performance at the
Company. It also ratified the Vector brokerage as its
representative in debt talks.

Ahmsa officials could not say whether the steelmaker will move
forward with Bricker's strategy, as Vector is now in charge of
restructuring agreements.


AXTEL: Canadian Shareholder Sells 1.5% Stake
--------------------------------------------
A 1.5 percent equity in Mexican telecommunications provider
Axtel recently changed hands after Bell Canada International
Inc. sold the shares for US$2 million. The shares, which have
been previously written-off by BCI, was purchased by some
Axtel's current shareholders.

The Canadian company has sold most of its assets as it prepares
to wind up its operations under a court-supervised Plan of
Arrangement. The liquidation of BCI's assets is intended to pay
its outstanding debts and distribute any net proceeds to the
Company's shareholders.

BCI's failed investments in Brazil and other Latin American
countries contributed heavily to its bankruptcy.


EMPRESAS ICA: Slim Family, Others Slash Ownership to 7.9%
---------------------------------------------------------
A group comprised of the Slim Family in Mexico, CGT and Telmex,
reduced its stake in Mexican construction company Empresas ICA
Sociedad Controladora SA (ICA) to 7.9%, Dow Jones reports,
citing a filing with the Securities and Exchange Commission
Wednesday.

The amended Schedule 13D filing showed that the group
beneficially owns 147.4 million ordinary participation
certificates. It sold 19.7 million shares between June 23 and
July 7 for US$3.45 to US$3.66 a share. On June 28, the group
reported an 8.7% stake, with beneficial ownership of 163 million
ordinary participation certificates.

Founded in 1947, ICA has completed construction and engineering
projects in 21 countries. ICA's principal business units include
Civil Construction, and Industrial Construction. Through its
subsidiaries, ICA also develops housing, manages airports, and
operates tunnels, highways, and municipal services under
government concession contracts and/or partial sale of long term
contract rights.

CONTACT: Empresas ICA
         Col. Escandon Del Migual Hidalgo
         Mexico City
         11800
         Mexico
         Phone: 525-272-9991
         inversionistas@ica.com.mx

         Web Site: www.ica.com.mx


GRUPO IUSACELL: Pioneers 3GCDMA Technology in Mexico
----------------------------------------------------
Grupo Iusacell, S.A de C.V. [BMV: CEL, NYSE: CEL] informs that
as of this month, Iusacell will integrate QUALCOMM'S BREW
solution to its system, thus allowing subscribers to surf and
download a variety of applications, such as e-mail, ring tones,
screen savers, games, and photo transmission, through its mobile
telephones. These devices will also soon feature video
transmission.

Iusacell is the first cell phone company in our country to have
a full coverage third generation technology, 3GCDMA, thus
providing users with the "3-G Iusacell" service, which offers a
wide range of multimedia applications, so that customers have
the possibility to use cell phones as a communication tool that
complements their lifestyles.

Third Generation is the state-of-the-art technology within the
cell phone industry that features the highest quality and speed
in voice and data transmission.

"In Iusacell, we want to give customers the best service and
attention; we want them to see Iusacell as a cell phone company
that can offer the best and most advanced technology with great
coverage, and as a company that cares about customers' needs.
Our slogan "En Iusacell pensamos en ti" (We Think of You in
Iusacell) is aimed at having a closer approach with current and
potential users," said Gustavo Guzman, General Director, Grupo
Iusacell.

"The growth potential of the Mexican wireless data market is
enormous, and we working at QUALCOMM are looking forward to
joining Iusacell in this effort," said Flavio Mansi, Business
Development Vice President, QUALCOMM Inc. Mexico and Central
America. "The election of the BREW solution by Iusacell places
the company as the Mexican wireless market leader and
consolidates the solution as the best option for carriers, due
to its flexibility, easy implementation, and wide support from
an international developer community."

Besides being wireless, completely portable, and needless to
connect to Internet, "3-G Iusacell" is easy to use, fast, and
immediate. Users will be able to surf from their cell phones and
to have a wide range of productive services at hand.

"3-G Iusacell" provides customers with the following products:

- E-mail: Convert Iusacell cell phones in mobile offices by
synchronizing them with personal e-mail accounts.

- Ring Tones: Personalize Iusacell cell phones with several ring
tones.

- Games: Turn cell phones into entertainment centers by
downloading games from the catalog.

- Images: Personalize Iusacell cell phones with the best images.

- Photo album: Create photo albums by uploading photos and
images to Internet, and then download them to cell phones and
send them to friends and family via e-mail.

- News Center: Get the world's most important news directly on
your Iusacell cell phone.

- Photos: Iusacell cell phones offer the features of a camera
and allow both shooting and sending photos.

- Videos: Iusacell users will soon be able to download, see, and
send their favorite videos through their cell phones.

"Today, we think about our customers and work for them. We are
looking for their complete satisfaction and this is why we
created our new plans, named 'Planes a Tu Medida' (Plans That
Fit You), that meet the needs of each of our customers,
regardless of their profile or lifestyle," said the director.

This is how Iusacell is the first company in Mexico to offer
multimedia services and applications based on 3GCDMA, providing
its customers with the best technology for their benefit.

Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE: CEL; BMV: CEL) is
a wireless cellular and PCS service provider in Mexico
encompassing a total of approximately 92 million POPs,
representing approximately 90% of the country's total
population.

Independently of the negotiations towards the restructure of its
debt, Iusacell reinforces its commitment with customers,
employees and suppliers and guarantees the highest quality
standards in its daily operations offering more and better voice
communication and data services through state-of-the-art
technology, as the new 3G network, in more populations, thanks
to its aggressive expansion plan.

QUALCOMM Incorporated (http://www.qualcomm.com)is a leader in
developing and delivering innovative digital wireless
communications products and services based on the Company's CDMA
digital technology. Headquartered in San Diego, Calif., QUALCOMM
is included in the S&P 500 Index and is a 2003 FORTUNE 500(R)
company traded on The Nasdaq Stock Market(R) under the ticker
symbol QCOM.

CONTACT: Grupo Iusacell, S.A. de C.V

         Mr. Jose Luis Riera K.
         Chief Financial Officer
         5255-5109-5927

         Mr. J. Victor Ferrer
         Finance Manager
         5255-5109-5927
         vferrer@iusacell.com.mx,

         Web Site: www.iusacell.com


LUZ Y FUERZA: Cuts Power to Non-Paying Municipalities
-----------------------------------------------------
State-owned Mexican power distributor Luz y Fuerza del Centro
(LFC) discontinued service to the municipalities of
Chimalhuacan, Tecamac and Chicoloapan and their respective water
utilities after they failed to make a debt payment, reports
Business News Americas.

LFC said it warned the municipalities earlier this month that
service would be halted if they fail to pay their debts totaling
MXN246 million (US$21.5mn).

Mr. Javier Rosado, the Company's billing manager, said LFC will
continue cutting service to municipalities and their water
utilities if they don't pay for power consumption.

The measure is part of the Company's efforts to curb losses.

LFC earlier revealed that it is posting nearly MXN6 billion
(US$521mn) in annual losses, a problem that is driving the
Company to the edge of bankruptcy.



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

AERO CONTINENTE: Suspension Worsens Government's Reputation
-----------------------------------------------------------
Peru's largest airline, Aero Continente, remained grounded for a
second day Tuesday, after the Transportation Ministry froze
activity of the carrier on failure to renew its insurance
policy.

Experts say the decision to suspend the airline, which serves
65% of the local air travel market, casts the government in a
negative light, particularly as Peru hosts the Copa America, a
soccer tournament, which is taking place in several Peruvian
cities.

"This was a tremendous mistake at an inopportune moment. Rather
than defending the Copa America, the government has become its
main enemy," Luis Benavente, polling director at the University
of Lima's public opinion group, was quoted by Dow Jones
Newswires as saying.

Aero Continente allegedly failed to meet insurance requirements
after the U.S. government last month placed its founder on a
list of overseas drug kingpins, a move that barred U.S.
companies from dealing with it.

Peru's government, which initially said it would back the
airline in its quest to find a non-U.S. insurer, instead pulled
the plug Monday.

Industry officials say Aero Continente's flights are being
diverted to eight other airlines as well as charter carriers.


* Analysts Wary of Peru's $1B Bond Issue
----------------------------------------
Peru's scheme to ease a looming debt payment to the Paris Club
with a US$1 million bond issue could face lukewarm reception
from investors.

The country's Economy Minister, Mr. Pedro Pablo Kuczynski, says
that the country plans to reduce its annual amortization bill by
US$200 million per year in the next five years with the 10 to
15-year bond issue.

Analysts however have not been optimistic about the new bonds.
In a Reuters article, Mr. Art Speinmetz, who manages US$2
billion of emerging market debt at Oppenheimer Funds, stated
that it would be difficult for Peru to sell the bonds at this
time because the market is wary of increased supply.

The managing director of Pacific Investment Management Co., Mr.
Mohamed El-Erian, also advises against such a move because the
unpredictable political situation in Peru limits the investor
base for Peruvian paper. For this reason, he adds that "you
can't bank on the ability to find another $1 billion of demand
for Peruvian paper. It's not out there."

Peru owes US$8.543 billion to the Paris Club and US$1.09 billion
of this amount becomes due next year.



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

PDVSA: Fitch Affirms PDVSA Fin After $2.5B Tender Announcement
--------------------------------------------------------------
Fitch Ratings affirmed the 'BB-' rating for PDVSA Finance Ltd
(PDVSA Finance) following the $2.5 billion tender offer and
proposed amendments that were announced on July 13, 2004.
Consistent with Fitch's previous view, the credit quality of the
vehicle has not been negatively affected by these changes. While
Fitch believes the removal of two important customers, the
changing of covenants, and the reduction in financial reporting
requirements negatively impacts the vehicle, the massive de-
leveraging more than compensates the remaining investors.

The amendments required a majority of outstanding notes to be
tendered, and as Fitch anticipated, the tender included the vast
majority of the outstanding notes (greater than 95%). While the
final amortization schedule will not be finalized until July 27,
given the estimated export volumes which will remain in the
PDVSA Finance vehicle, the debt service coverage ratios (DSCRs)
will be well over 100 times (x).

The original structure securitized the majority of PDVSA's
existing and future receivables generated from sales of crude
oil and oil products to designated customers who have signed
Notice & Acknowledgement (N&A) agreements. Prior to the tender
offer, it was a requirement that oil exports going to designated
customers during any consecutive twelve-month period be the
lesser of 80% of eligible export sales of oil are less than 30
degrees gravity and 27 million barrels of oil are less than 30
degrees gravity.

The most significant change to the PDVSA Finance structure is
the removal of two of the largest customers, Citgo Petroleum
(Citgo) and Hovensa LLC (Hovensa). The other amendments change
the covenants and events of default to reflect the removal of
the collateral and provide PDVSA with additional flexibility
regarding financial reporting. The main covenant change is the
export revenue requirement mentioned in the previous paragraph.
The new requirement is that oil exports going to designated
customers be the lesser of 40% of eligible export sales of oil
less than 30 degrees gravity and 4.5 million barrels of oil less
than 30 degrees gravity.

PDVSA Finance collections will continue to come from a variety
of customers including Conoco Phillips, Lyondell Citgo, and
Exxon Mobil. All of these customers continue to be obligated
under the Notice and Acknowledgements to make payments into an
offshore collection account. At current price and production
levels, Fitch estimates that the PDVSA Finance vehicle will
continue to generate in excess of $4 billion in annual
collections. Given the remaining debt amortizations and these
levels of collection, the DSCRs would be more than sufficient to
protect against drastic price and volume decreases. The
transaction continues to benefit from a 4.0x's DSCR trigger as
well as a three-month principal and interest reserve.

As in all future flow export receivables securitizations, this
transaction is exposed to product and payment diversion by the
company or the sovereign. Fitch believes this risk increased
when the Venezuelan government tightened its control over the
oil company after the oil strikes in early 2003. Even with the
significant decrease in outstanding notes, diversion risk
remains a constraining factor to the 'BB-' rating, and there are
a variety of potential actions that could be taken to disrupt
the cash flows of the transaction.

Fitch will continue to monitor this transaction and will update
its view as the final effects of the tender are realized over
the next few weeks.

CONTACT:  Greg Kabance +1-312-368-2052, Chicago
          Jennifer Conner +1-312-368-2080, Chicago
          Jason Todd +1-312-368-3217, Chicago
          Carlos Fiorillo +58 212 286 3356, Venezuela

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


PDVSA: OPIC Approves Expropriation Claim
----------------------------------------
The Overseas Private Investment Corp. (OPIC) approved an
expropriation claim by U.S. engineering firm Science
Applications International Corp. (SAIC) involving a joint
venture with Venezuelan state-oil giant Petroleos de Venezuela
SA (PdVSA).

OPIC said that it would pay SAIC six million dollars based on
SAIC's claim that its investment in Venezuela has been
expropriated. SAIC reported the loss of a 60% interest it had in
Intesa -a firm created in 1997 to provide outsourced
information-technology services to Pdvsa.

In a statement, OPIC said it based its decision on "a number of
public declarations by Venezuelan president Hugo Chavez
acknowledging the nationalization of Intesa."

OPIC is involved in 12 other projects in Venezuela. Spinelli
said those projects haven't run into any problems of which he's
aware.



                            ***********


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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Copyright 2004.  All rights reserved.  ISSN 1529-2746.

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