TCRLA_Public/050609.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

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

            Thursday, June 9, 2005, Vol. 6, Issue 113



ACEROS ZAPLA: Workers Go On Strike to Demand Wage Increase
ARTES GRAFICAS: Local Court OKs "Concurso Preventivo" Petition
CAMERPLAST S.R.L.: Court OKs Creditor's Bankruptcy Call
CENTRIFIN S.A.: Court Grants Reorganization Plea
EL MUELLE: Reorganization Proceeds To Bankruptcy

ESTRUCTURAS METALICAS: Court Declares Company Bankrupt
IDEAS GRAFICAS: Court Designates Trustee for Liquidation
KEY ENERGY: Receives Notice of Default From Bondholders
METROGAS: Rating Reflects Decision to Suspend Debt Payments
PAMPA BYTES: Court Converts Reorganization to Bankruptcy

PONY EXPRESS: Initiates Bankruptcy Proceedings
ROILMAR S.A.: Court Deems Bankruptcy Necessary
SATELITAL: Liquidates Assets to Pay Debts
TALLERES OLGUIN: Court Appoints Trustee for Reorganization
* ARGENTINA: World Bank Approves $150M for Provincial Roads  


* BELIZE: Moody's Cuts Ratings, Changes Outlook to Negative


LORAL SPACE: Wins Contract to Build Satellite for XM


* BOLIVIA: S&P Revises Outlook to Negative, Affirms Ratings


BANCO BMG: S&P Assigns 'BB-' Rating to $150M MTNs
VARIG: Debt Dilemma Likely to Hinder Reorganization


* HAITI: World Bank Approves $2M Grant


AHMSA: Kicks Off Study of Timna Copper Mine


PDVSA: Denies Reports on Alleged Transfer of Orimulsion Rights
PDVSA: IDB Apprised of Experience in Social Development
PDVSA: To Hire Replacements for Fired Workers
PDVSA: Lawmakers Recommend 60% Control Over New JVs

     -  -  -  -  -  -  -  -                               


ACEROS ZAPLA: Workers Go On Strike to Demand Wage Increase
Workers at steel producer Aceros Zapla, in the town of Palpala
in the northwest province of Jujuy, began a strike on June 2,
paralyzing the plant's operations, reports Business News

According to company engineer Luis Miguel Zayago, workers are
demanding a salary hike of ARS300 (US$104) a month and are
refusing to negotiate despite offers from management.

The management has offered ARS130 hike by June, to be upped to
ARS160 by July and to ARS200 by August. "But the union rejected
the offer," Zayago said.

Zayago assured customers that the strike will not immediately
affect supply.

Zapla has 50% of its stocks in Palpala and the other 50% in
other provinces, "so there will not be an immediate shortage.
Some clients could be affected, but only a few," he added.

Aceros Zapla, which employs 700 workers, produces hot-rolled
long steel primarily for the oil industry and construction and
also for the automobile industry, machinery and equipment

ARTES GRAFICAS: Local Court OKs "Concurso Preventivo" Petition
Court No. 3 of Mendoza's civil and commercial tribunal granted
Artes Graficas Melfa S.A. approval on its petition to start a
reorganization process, reports Infobae. The Court, however, is
yet to appoint a receiver, as well as establish a timetable for
the Company's reorganization process.

CONTACT: Artes Graficas Melfa S.A.

CAMERPLAST S.R.L.: Court OKs Creditor's Bankruptcy Call
Camerplast S.R.L., a company which operates in the plastic
industry, entered bankruptcy after Court No. 6 of Buenos Aires'
civil and commercial tribunal approved a bankruptcy motion filed
by the Union Obreros y Empleados Plasticos, reports La Nacion.
The Company's failure to pay P1,845.37 in debt prompted the
creditor to file the petition.

Working with the city's Clerk No. 11, the court assigned Ms.
Adriana Benzer as trustee for the bankruptcy process. The
trustee's duties include the authentication of the Company's
debts and the preparation of the individual and general reports.
Creditors are required to present their proofs of claim to the
trustee before Aug. 31, 2005.

The Company's assets will be liquidated at the end of the
bankruptcy process to repay creditors. Payments will be based on
the results of the verification process.

CONTACT: Camerplast S.R.L.
         Colonel Apolinario Figueroa 474
         Buenos Aires

         Ms. Adriana Benzer, Trustee
         Montevideo 149
         Buenos Aires

CENTRIFIN S.A.: Court Grants Reorganization Plea
Centrifin S.A. successfully petitioned for reorganization after
Court No. 2 of Buenos Aires' civil and commercial tribunal
issued a resolution opening the Company's insolvency

Under insolvency protection, the Company will continue to manage
its assets subject to certain conditions imposed by Argentine
law and the oversight of a court-appointed trustee.

Infobae relates that Jorge Eladio Feito will serve as trustee
during the course of the reorganization. The trustee will be
accepting creditors' proofs of claim for verification until June
21, 2005.

After verifications, the trustee will prepare the individual
reports and submit it in court on Aug. 16, 2005. He will also
present a general report for court review on Sep. 28, 2005.

The Company will endorse the settlement proposal, drafted from
the submitted claims, for approval by the creditors during the
informative assembly scheduled on April 12, 2006.

CONTACT: Mr. Jorge Eladio Feito, Trustee
         Medrano 537
         Buenos Aires

EL MUELLE: Reorganization Proceeds To Bankruptcy
The reorganization of El Muelle Place S.R.L. has progressed into
bankruptcy. Argentine news source Infobae relates that San
Lorenzo Court No. 19 of Buenos Aires' civil and commercial
tribunal ruled that the Company is "Quiebra Decretada".

The report adds that the court assigned Carlos Enrique Wulff as
trustee, who will verify creditors' proofs of claim until July
1, 2005.

The court also ordered the trustee to prepare individual reports
after the verification process is completed, and have them ready
by Aug. 12, 2005. A general report on the bankruptcy process is
expected on Sep. 26, 2005.

CONTACT: El Muelle Place S.R.L.
         Guemes 4173
         Buenos Aires

         Mr. Carlos Enrique Wulff, Trustee
         Virrey del Pino 2354
         Buenos Aires

ESTRUCTURAS METALICAS: Court Declares Company Bankrupt
Court No. 6 of Buenos Aires' civil and commercial tribunal
declared local company Estructuras Metalicas SRL "Quiebra",
relates La Nacion. The court approved the bankruptcy petition
filed by Granalladora Americana S.C.A., whom the Company has
debts amounting to ARS1,689.

The Company will undergo the bankruptcy process with Cesar
Pireni as trustee. Creditors are required to present proofs of
their claim to Mr. Pireni for verification before Aug. 15, 2005.
Creditors who fail to submit the required documents by the said
date will not qualify for any post-liquidation distributions.

Clerk No. 12 assists the court on the case.

CONTACT: Estructuras Metalicas S.R.L.
         Anchorena 1758
         Buenos Aires

         Mr. Cesar Pireni, Trustee
         Avenida Callao 930
         Buenos Aires

IDEAS GRAFICAS: Court Designates Trustee for Liquidation
Buenos Aires accountant Susana Ines Santorsola was assigned
trustee for the liquidation of local company Ideas Graficas
S.A., relates Infobae.

Ms. will verify creditors' claims until July 28, 2005, the
source adds. After that, she will prepare the individual
reports, which are to be submitted in court on Sep. 8, 2005. The
submission of the general report should follow on Oct. 20, 2005.

The city's civil and commercial Court No. 12 holds jurisdiction
over the Company's case. Clerk No. 24 assists the court with the
wind-up proceedings.

CONTACT: Ms. Susana Ines Santorsola, Trustee
         Marcelo T. de Alvear 1364
         Buenos Aires

KEY ENERGY: Receives Notice of Default From Bondholders
Key Energy Services, Inc. (OTC Pink Sheets: KEGS) announced
Tuesday it has received notice from the trustee that the Company
is in breach of the financial reporting covenants contained in
the indentures of its 8.375% Senior Notes due 2008 and 6.375%
Senior Notes due 2013, and stating that unless the deficiency is
remedied within 60 days, an event of default would occur under
the indentures.

Unless the deficiency is cured or waived within the 60 day cure
period (before August 5, 2005), the trustee or holders of 25% of
the outstanding principal amount of either series of notes will
have the right to accelerate the maturity of that series of
notes. The default notice pertains to the failure of the Company
to file its Annual Report on Form 10-K for the year ending
December 31, 2003 by the May 31, 2005 deadline. Under terms of
the most recent consents by the noteholders, the Company has
until July 31, 2005 to file its Annual Report on Form 10-K for
the year ending December 31, 2004 and until August 31, 2005 to
file its Quarterly Reports on Form 10-Q for 2005.

Key Energy Services, Inc. is the world's largest rig-based,
onshore well service company. The Company provides diversified
energy operations including well servicing, contract drilling,
pressure pumping, fishing and rental tool services and other
oilfield services. The Company has operations in all major
onshore oil and gas producing regions of the continental United
States and internationally in Argentina and Egypt.

CONTACT:  Key Energy Services, Inc.
          John M. Daniel
          Tel: +1-432-620-0300

METROGAS: Rating Reflects Decision to Suspend Debt Payments

Corporate Credit Rating: D/Nm/--

Outstanding Rating(s)
   Senior unsecured debt (Foreign currency): D

Major Rating Factors

    * Argentina's largest natural gas distributor

    * High regulatory risk and uncertainties about future cash-
flow generation ability
    * Timing of renegotiation remains uncertain
    * Restricted financial flexibility


The 'D' rating on Metrogas S.A. reflects the company's decision
to suspend interest and principal payments on all of its
outstanding debt following the negative impact on its financial
profile of government intervention in the concessions pricing
mechanism (with the pesification and freeze of the tariffs) and
a severe devaluation of the Argentine peso and high inflation.
This situation has created a significant mismatch between
Metrogas' peso-denominated cash flow and its mostly U.S. dollar-
and euro-denominated debt, and led to the suspension of payments
in March 2002. The company has retained J.P. Morgan Chase Bank
Buenos Aires Branch and JP Morgan Securities as its advisor for
this process. Furthermore, there are still uncertainties about
the company's cash-flow generation potential, given that the
renegotiation of the concession contracts in Argentina, mandated
by the government after the pesification of the tariffs, is
still pending.

On Nov. 7, 2003, Metrogas launched a proposal to restructure all
its financial debt under an out-of-court agreement (Acuerdo
Preventivo Extrajudicial-APE). As of March 31, 2005, Metrogas
had $538 million of debt (including $380 million in bonds, $73
million in bank loans, and accrued interest expenses). The
company offered two options for restructuring, as follows:

    - A cash tender offer for up to $100 million (at a price of
$0.50 per $1 of principal amount); and

    - A modified option, under which the principal amount is
increased by capitalizing interest expenses at 2.5% since the
last payment. The final maturity date is extended by nine years.
In addition, a cash sweep for 50% of excess funds generation is

After many extensions, the current expiration date of the APE
solicitation is now July 18, 2005. As of May 18, 2005, favorable
votes reached about $77 million of the total debt. Standard &
Poor's Ratings Services will closely monitor further
developments under the restructuring process and, once it is
completed, evaluate Metrogas' resulting repayment capacity to
determine the appropriate rating.

During 2004, the natural gas regulatory framework in Argentina
was exposed to significant changes, which we expect to continue
in the medium term. The final effect of those changes on the
company's cash-generation ability is still uncertain. On Feb.
13, 2004, the Argentine government issued Decrees 180/2004 and
181/2004, introducing changes in the existing regulation.
Distributors could be negatively affected, as large industrial
and commercial consumers will have to buy natural gas directly
from producers or brokers, thus bypassing the distributors.
Although this does not affect the value added of distribution
charges collected by the distributors, it affects their ability
to use contracted capacity efficiently and may affect margins.

A positive factor for the company is Decree 1834/2002, issued on
Sept. 17, 2002, which states that during the public emergency
period (which currently lasts until December 2005), insolvency,
voluntary filing for reorganization, or a creditor requesting
bankruptcy will not constitute cause for termination of the
concession. These provisions allow companies to file for the
protection of such proceedings, somewhat alleviating their cash
needs and giving them more leverage to negotiate with investors
without risking the loss of the concession.

During fiscal 2004 and first-quarter 2005, demand continued to
grow, with 21.5% and 13.4% increases in Metrogas' total volumes
delivered, when compared to 2003 and first-quarter 2004,
respectively. Since the pesification and freezing of natural gas
tariffs, the relative price of natural gas decreased and energy
demand started to replace the more expensive crude-related
products with natural gas. The growth of demand, in a relatively
moderate-inflation and stable U.S. dollar exchange rate,
resulted in increased cash generation and better operating
results for Metrogas: EBITDA margin reached 18.4% for the last
12 months ended March 31, 2005, from 17.8% in fiscal 2004 and
17.1% in 2003. Nevertheless, Metrogas' future performance will
remain conditioned by the outcome of the renegotiation of its
concession contract and by the debt profile resulting from its
debt restructuring.

Metrogas is Argentina's largest natural gas distributor, serving
about 1.9 million customers through a 35-year exclusive
concession to distribute natural gas in the Buenos Aires
metropolitan region, Argentina's most densely populated area.


Although Metrogas had about $138 million in cash and short-term
investments as of March 31, 2005, its financial flexibility and
liquidity position are severely restricted given its current
default situation, and will remain constrained while the company
negotiates with creditors to adapt its interest burden and
maturity schedule to its current cash-flow generation. We expect
the company to use most of this cash in its restructuring

Business Description

Metrogas is Argentina's largest natural gas distributor, serving
approximately 1.9 million customers through a 35-year exclusive
concession to distribute natural gas in the Buenos Aires
metropolitan region, Argentina's most densely populated area.

Metrogas is 70% controlled by Gas Argentino S.A, of which 54.67%
is owned by British Gas and 45.33% by YPF S.A. In addition,
private investors hold 20% of Metrogas' shares, while company
employees retain 10%.

Business Profile

Metrogas' business profile deteriorated significantly following
the measures adopted by the Argentine government, which exposed
Metrogas to increased regulatory risk. As the peso was devalued
in early January 2002, the Argentine government pesified and
froze tariffs of public service companies, which were dollar
denominated according to the concession contracts; suspended
tariff adjustments; and mandated the renegotiation of the
concession contracts for all public services companies to curb
price increases after the change in the monetary regime.

Metrogas continues to face high regulatory uncertainties-40
months after mandatory pesification and tariff freezes, there
have not been significant improvements in the renegotiation of
the company's concession contract, which was mandated by the
government in 2002.

Until the renegotiation of the concession contracts is
concluded-especially the terms of the tariff-setting mechanism,
the viability of the company's economic model, and its future-
cash-flow generation remains unclear. Quality standards and the
manner in which tariffs will be set from now on for natural gas
utilities will be critical to the company's future financial
performance. After several postponements, the Argentine
government extended the date by which the renegotiation of
concessions for public services must be completed to December
2005. Thus, there are still significant uncertainties about the
terms (e.g., extension, tariffs, and quality of service
required) of Metrogas' concession contract.

In addition, there is currently a mismatch between gas supply
and demand in Argentina, mainly caused by the price distortion
introduced by the freezing of gas prices to regulated customers
in a context of a severe devaluation of the peso. This resulted
in a de facto freeze of natural gas wellhead prices while the
prices of other competitive fuels (most importantly, crude oil
derivatives) caught up with the international price and caused
demand to replace the more expensive crude-related products with
natural gas. In this context, the government has taken several
measures. For example, in February 2004, Decrees 180/2004 and
181/2004 introduced changes to the existing natural gas
regulation, and in April 2004, Resolution No. 208 defined
certain conditions to establish a price increase path for
natural gas in the domestic market. Distributors could be
negatively affected by Decrees 180 and 181, as large industrial
and commercial consumers will have to buy natural gas directly
from producers or brokers, thus bypassing the distributors.
Although this does not affect the value added of distribution
charge collected by the distributors, it affects their ability
to use contracted capacity efficiently and may affect on

Financial Policy

Since 2002, Metrogas' financials show the negative effects
resulting from the pesification and freeze of tariffs during a
period in which the peso depreciated from Argentine peso (ArP) 1
= $1 in December 2001 to ArP2.92 = $1 as of March 31, 2005.
Since 2003, the negative effects of the pesification and freeze
of tariffs were partially compensated by a significant increase
in volume sales.

During fiscal 2004, total volume delivered (including natural
gas sales and transportation and distribution services)
increased by 21.5% compared with 2003, showing increases in
volumes delivered to industrial and commercial customers (due to
the higher economic activity), power plants (due to increasing
electricity demand and lower hydrology), and users of compressed
natural gas (due to a higher rate of conversion of vehicles
taking into account the significant greater prices for
alternative fuels such as gasoline). All these increases were
partially compensated by a 2.9% decrease in volumes delivered to
residential users due to higher average temperatures recorded.
During first-quarter 2005, demand continued strong, with total
volume delivered increasing by 13.4% compared to the same period
of 2004. This was mainly caused by the price distortion
explained above, and to a lesser extent by higher economic
activity. Increasing demand, under a moderate-inflation
environment and stability of the U.S. dollar exchange rate,
resulted in better operating results for the company. EBITDA
margin increased to 18.4% for the past 12 months ended March 31,
2005, from 17.8% in 2004 and 17.1% in 2003, respectively.

As a result of the negative effects of devaluation on financial
debt (mainly dollar- and euro-denominated) and the pesification
and freezing of tariffs, Metrogas was affected by a strong
imbalance between its peso-denominated cash flow and its foreign
currency-denominated debt. In addition, total debt increased to
69.7% of total capital as of March 31, 2005, compared to 42.2%
in 2001. The company suspended all the payments related to its
financial obligations in March 2002. As of March 31, 2005,
Metrogas had about $538 million in total financial debt (64%
dollar denominated, 31% euro denominated, and 5% Argentine

In Standard & Poor's opinion, Metrogas' future financial
performance will depend mainly on the outcome of the
renegotiation of the company's concession contract, especially
regarding future tariff-setting mechanisms, but also on the
evolution of macroeconomic variables such as exchange rate and
inflation. In addition, financial flexibility will remain
severely restricted while the company negotiates with creditors
to adapt its interest burden and maturity schedule to its
current cash-flow generation.

Primary Credit Analyst: Luciano Gremone, Buenos Aires
(54) 11-4891-2143;

Secondary Credit Analyst: Pablo Lutereau, Buenos Aires
(54) 114-891-2125;

PAMPA BYTES: Court Converts Reorganization to Bankruptcy
Pampa Bytes S.A., which was undergoing reorganization, entered
bankruptcy on orders from Buenos Aires' civil and commercial
Court No. 14, according to Infobae. The court, assisted by Clerk
No. 28, assigned Pedro Alfredo Valle as the Company's receiver.

The credit verification process will be done "por via
incidental", says the report, adding that the court ordered the
receiver to submit the general report on Oct. 20, 2005.

CONTACT: Mr. Pedro Alfredo Valle, Trustee
         Avda de Mayo 1260
         Buenos Aires

PONY EXPRESS: Initiates Bankruptcy Proceedings
Buenos Aires' civil and commercial Court No. 16 declared Pony
Express Mensajeria S.R.L. "Quiebra," reports Infobae. Clerk No.
31 assists the court on the case, which will close with the
liquidation of the Company's assets to repay creditors.

Jorge David Jalfin, who has been appointed as trustee, will
verify creditors' claims until Aug. 24, 2005 and then prepare
the individual reports based on the results of the verification

The individual reports will then be submitted to court on Oct.
5, 2005, followed by the general report on Nov. 17, 2005.

CONTACT: Pony Express Mensajeria S.R.L.
         Bulnes 597
         Buenos Aires

         Jorge David Jalfin
         Sarmiento 1452
         Buenos Aires

ROILMAR S.A.: Court Deems Bankruptcy Necessary
Roilmar S.A., which was undergoing reorganization, entered
bankruptcy on orders from La Plata's civil and commercial Court
No. 13. Infobae relates that the court appointed Mr. Nestor R.
Grosso to be the receiver on the case. Mr. Grosso will conduct
the credit verification process "por via incidental."

CONTACT: Roilmar S.A.
         Calle 2 Nro. 3951
         Mr. Nestor R. Grosso, Trustee
         Calle 49 Nro. 365
         La Plata

SATELITAL: Liquidates Assets to Pay Debts
Satelital del Plata S.R.L. will begin liquidating its assets
following the pronouncement of Buenos Aires' civil and
commercial Court No. 19 that the Company is bankrupt, Infobae

The bankruptcy ruling places the Company under the supervision
of court-appointed trustee, Horacio Jose Eugenio Caliri. The
trustee will verify creditors' proofs of claim until June 13,
2005. The validated claims will be presented in court as
individual reports on Aug. 9, 2005.

Mr. Caliri 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 Sep. 21, 2005.

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

CONTACT: Mr. Horacio Jose Eugenio Caliri, Trustee
         Lavalle 1206
         Buenos Aires

TALLERES OLGUIN: Court Appoints Trustee for Reorganization
Talleres Olguin S.A., a company operating in Mendoza, is ready
to start its reorganization after Court No. 3 of the city's
civil and commercial tribunal appointed Alfonso Alfonso to
supervise the proceedings as trustee.

An Infobae report states that Mr. Alfonso verified creditors
claims until March 14, 2005. Afterwards, he presented these
claims as individual reports for final review by the court on
April 29, 2005. He will also provide the court with a general
report pertaining to Talleres Olguin's reorganization on June
14, 2005. The court has scheduled the informative assembly on
Nov. 29, 2005.

CONTACT: Talleres Olguin S.A.
         Dorrego 45 de Dorrego
         Guaymallen (Mendoza)

         Mr. Alfonso Alfonso, Trustee
         Avda Mitre 1448

* ARGENTINA: World Bank Approves $150M for Provincial Roads  
The World Bank approved Tuesday a $150 million loan for
Argentina to support road investment programs at the provincial
level in Chubut, Corrientes, Cordoba, Entre Rios, Neuquen and
Santa Fe.   The project will also improve the reliability of
essential roads that facilitate access of provincial production
to the markets, as a means of facilitating the return to a path
of sustained economic growth and poverty alleviation.
"This loan is an integral part of our strategy to support
infrastructure operations in Argentina. With this operation, we
have now approved four operations for $630 million in the past
six months and we will continue to further support the
investments needs in infrastructure," said Axel van Trotsenburg,
World Bank Country Director for Argentina, Chile, Paraguay and
Uruguay. "We are supporting this project because improving
provincial roads will benefit the agricultural and industrial
industry. It has been estimated that nearly 60% of logistic
costs in the country are transport costs. The loan will
contribute to the reduction of operating and time related
The Provincial Road Infrastructure 2 Project will support the
provincial network by: (i) strengthening the planning process to
support the preparation and implementation of comprehensive
multi-year road programs; (ii) introducing the use of
performance-based contracts as a key step toward implementing a
sustainable and cost effective road management strategy; and
(iii) bringing about the required capacities in the provincial
road agencies to confront the introduction of new management
strategies, gradually supporting their transformation into
results-oriented organizations.

More specifically, the project will:

- Rehabilitate and maintain some 2,200 km of roads through
Performance-based Rehabilitation and Maintenance Contracts

- Rehabilitate and/or pave 270 km through traditional
admeasurements type contracts;

- Develop a comprehensive routine maintenance program over
9,400 km approximately to ensure that no potholes remains open,
no edge break occurs between the pavement and the shoulders and
that all horizontal marking and vertical signs are adequately
restored to comply with the most critical road safety

The road network in Argentina has a total length of about
630,000 km (11% paved), divided in three administrative levels:
national, provincial and municipal. More than 70% of total
traffic volumes are concentrated in the paved national and
provincial network. Provincial road networks comprise about
190,000 km that are under the jurisdiction of 23 Provincial Road
Agencies (DPVs), representing 30% of the country's total road
length. These networks serve as main collectors of the system of
rural and local roads under the responsibility of municipal
governments (400,000 Km), connecting productive areas with
consumption centers, ports and other export gateways through the
national system of national highways (38,000 km).
"One of the main issues to be addressed is the development of a
more comprehensive and efficient road management strategy in the
provinces, based on appropriate design and maintenance
standards, that ensures the convergence of the road assets
towards a steady state-condition," said Maria Marcela Silva,
World Bank task manager for the project.
The objectives of this operation are in line with the Country
Assistance Strategy (CAS) discussed by the Board in April 2004,
which contemplates the improvement of infrastructure assets as
key to sustained economic growth and mitigating the severity of
poverty, as recent empirical research shows, improvements in the
stock and quality of the road network leads to higher rates of
economic growth and better income distribution.

The $150 million single-currency, fixed spread loan has a
repayment period of 12.5 years, including 6.5 years of grace.

CONTACT: World Bank  
         Yanina Budkin
         Phone:(5411) 4316-9700

         Alejandra Viveros
         Phone:(202) 473-4306


* BELIZE: Moody's Cuts Ratings, Changes Outlook to Negative
Moody's Investors Service has downgraded Belize's foreign-
currency ratings and changed the outlook on all its ratings to
negative from stable in light of the country's increased
external vulnerability and macroeconomic conditions that have
not been consistent with fiscal and debt sustainability.

Moody's has changed the foreign-currency country ceiling to B3
from B2, as well as the country ceiling for foreign-currency
deposits to Caa1 from B3. The government's local-currency rating
was also downgraded to B3 from B1. In doing so, Moody's
concluded that, to date, the various attempts by the government
to correct the situation have proven to be insufficient

The rating agency also noted the presence of additional credit
risk factors derived from the potential pressures posed by
economic policies that, to date, have been inconsistent with the
country's fixed exchange rate regime.

The negative outlook reflects Moody's concerns about the
government's ability to carry out fiscal and monetary
adjustments that are sufficient to reverse the deterioration in
credit indicators.

The ratings downgrade also incorporates indications by the
government that it intends to engage creditors in order to
explore alternatives to improve Belize's external debt profile.
Moody's believes that debt restructuring represents a credit
event that is increasingly likely to materialize. An assessment
of the severity of such an event represents an important factor
for Belize's credit perspective and will influence future rating
actions by Moody's.

The rating agency said it will closely monitor the government's
recently announced "Adjustment Program" to determine if it is
effective in restoring Belize's debt dynamics to a sustainable


LORAL SPACE: Wins Contract to Build Satellite for XM
Space Systems/Loral (SS/L) announced Tuesday that it has been
awarded a contract by XM Satellite Radio, Washington DC, to
build XM-5, a high-power, digital audio radio service (DARS)
satellite that will serve as a ground spare in the XM Satellite
Radio fleet, ensuring XM subscribers across North America with
continued high-quality, digital- music, entertainment and data

"This order from XM, our fourth commercial satellite award in
2005, validates SS/L's leadership in the industry," said Bernard
L. Schwartz, chairman and CEO of Loral Space & Communications.
"We are exceedingly proud of SS/L for continuing to gain market
share in the satellite manufacturing industry under challenging

Scheduled for delivery in 2007, XM-5 has an on-orbit design life
of 15 years and will carry a state-of-the-art DARS payload
featuring two large, unfurlable mesh antennas. Its end-of-life
power capability of more than 18 kilowatts will make it one of
the world's most powerful communications satellites.  

"SS/L has built some of the world's most advanced direct-to-user
communications satellites, allowing consumers and enterprises an
expanded array of entertainment and services," said C. Patrick
DeWitt, president, Space Systems/Loral. "SS/L welcomes XM to
Loral's family of customers and looks forward to providing a
reliable and powerful platform for its successful satellite
radio service."

XM-5 is based on SS/L's space-proven 1300 platform, which has an
excellent record of reliable operation. Its high efficiency
solar arrays and lightweight batteries are designed to provide
uninterrupted electrical power. In all, SS/L satellites have
amassed more than 1,200 years of reliable on-orbit service.

XM is America's number one satellite radio service with more
than 4 million subscribers.  Broadcasting live daily from
studios in Washington, DC, New York City and Nashville at the
Country Music Hall of Fame, XM's 2005 lineup includes more than
150 digital channels of acclaimed radio programming from coast
to coast.  XM was named Best Radio Service at the 2004 Billboard
Digital Entertainment Awards.  For more information about XM
hardware, programming and partnerships, please visit  

Space Systems/Loral, a subsidiary of Loral Space &
Communications (OTCBB: LRLSQ), is a premier designer,
manufacturer, and integrator of powerful satellites and
satellite systems. SS/L also provides a range of related
services that include mission control operations and procurement
of launch services. Based in Palo Alto, Calif., the company has
an international base of commercial and governmental customers
whose applications include broadband digital communications,
direct-to-home broadcast, defense communications, environmental
monitoring, and air traffic control. SS/L is ISO 9001:2000
certified. For more information, visit     

Loral Space & Communications is a satellite communications
company. In addition to Space Systems/Loral, through its Skynet
subsidiary Loral owns and operates a fleet of telecommunications
satellites used to broadcast video entertainment programming,
and for broadband data transmission, Internet services and other
value-added communications services.

          John McCarthy
          (212) 338-5345
          Web site:


* BOLIVIA: S&P Revises Outlook to Negative, Affirms Ratings
Standard & Poor's Ratings Services revised its outlook on the
Republic of Bolivia to negative from stable.

Standard & Poor's also said that it affirmed its 'B-' long-term
and 'C' short-term credit ratings on Bolivia.

In addition, as a direct result of the action on the Bolivian
sovereign, Standard & Poor's revised its outlook on Banco
Mercantil S.A. to negative from stable.

Standard & Poor's also affirmed its 'B-' long-term and 'C'
short-term credit ratings on Banco Mercantil.

"The revised outlook on Bolivia is based on weakening
governability in the country derived from the increasingly
severe political fragmentation across regional, social, and
ethnic divisions," explained Standard & Poor's credit analyst
Sebastian Briozzo. President Carlos Mesa's offer to resign his
post Monday underscores the difficulties posed by this
phenomenon. Regardless of the outcome of the current crisis, the
level of polarization makes it unlikely that anyone could build
a government agenda that can find some support among the
disparate groups. Standard & Poor's believes that political
turmoil in Bolivia will continue even if there are early
presidential elections.

Recently, most of the country's economic indicators have
improved. For example, GDP grew by 2.4% in 2003 and 3.7% in
2004, the budget deficit decreased to 6.1% of GDP in 2004 from
8.1% in 2003, and exports increased by an estimated 35% in 2004,
boosted by high commodity prices. Regardless, increasing
political instability led to an almost complete disruption of
activities in the capital city of La Paz this past week.

The deterioration in Bolivia's institutional framework
negatively affects the already frail operating environment of
Bolivian banks, making banking more difficult in a country that
already poses big challenges to its financial institutions.
Nevertheless, Banco Mercantil has shown a relatively consistent
performance over the past stressful times, and, at this point,
the ratings remain constrained by the sovereign's

Even though multilateral funds--coupled with access to domestic
borrowing--should continue to provide financing for the
government over the short term, Standard & Poor's believes that
Bolivia's ability to honor its domestically issued government
bonds (Bolivia does not have any indebtedness outstanding in
international capital markets) would be threatened if political
developments worsens. "Signs of a further deterioration in
governability might trigger a downgrade," Mr. Briozzo added.
"Conversely, the emergence of a solution to the country's
immediate political agenda that has sufficient support across
political parties and social groups could stabilize the country.
Such an agreement would therefore constitute a positive rating
factor and might lead to a revision of the outlook back to

PRIMARY CREDIT ANALYST: Sebastian Briozzo, New York
(1) 212-438-7342;


Joydeep Mukherji, New York
(1) 212-438-7351;

Carina Lopez, Buenos Aires
(54) 11-4891-2118;


BANCO BMG: S&P Assigns 'BB-' Rating to $150M MTNs
Standard & Poor's Ratings Services assigned its 'BB-' foreign-
currency long-term senior unsecured debt rating to Banco BMG
S.A.'s $150 million MTNs.

"The counterparty credit ratings assigned to Banco BMG (BB-
/Stable/B) incorporate the intrinsic risks to a small to midsize
bank operating in a highly competitive market, with significant
product concentration," said Standard & Poor's credit analyst
Daniel Araujo. The ratings also incorporate the challenge to
consolidate a stable and diversified funding base to support its
growth strategy. These risks are partially offset by the bank's
position as one of the leaders in its niche market, good
business execution and controls benefiting from technological
features and distribution capabilities, consistent growth in its
loan portfolio, and high profitability, while maintaining good
asset quality indicators.

Banco BMG holds a leading market share in the payroll discount
segment and has been able to capture the strong growth of the
industry as a pioneer in this market. It has long developed the
technology and distribution capabilities to achieve a large
number of target clients and show continuous expansion in its
portfolio. The successful implementation and execution of its
niche strategy reflect a large and loyal distribution network
based on bank correspondents and agents that cover most of the
country and an updated technological platform allowing for good
control of operations and agile decision making.

The main challenges in the medium term are to confront the
competitive pressures from new entrants in a market viewed as
very attractive by larger players and the maintenance of more
stable and diversified funding to sustain its strategic plan.
Based on the opportunities currently available in the market and
the bank's expertise, we expect Banco BMG to continue benefiting
from the potential market expansion, although its high
participation tends to decline gradually as other players fight
for market share. The increase in volumes should compensate for
the gradual decline in bank spreads in the medium term.

The stable outlook on the counterparty credit ratings of Banco
BMG reflects our expectations that Banco BMG will benefit from
the maintenance of its core competencies, with further growth in
its niche operations in payroll-discount loans, maintaining
asset quality and capitalization at levels similar to those of
2004. The bank is also expected to maintain efficiency
indicators at levels better than the market average, with the
ratio of nonfinancial expenses to revenues ranging from 40%-50%.

The ratings may be lowered or the outlook may be revised to
negative if there is a significant worsening in asset quality to
levels higher than 5% (loans from "E" to "H" according to local
regulations); if profitability (ROA) levels drop drastically to
less than 1.5% on an adjusted basis (excluding sales of the loan
portfolio); if funding becomes problematic to support the bank's
operations; and if liquidity is significantly impaired.

The ratings are not constrained by the sovereign credit rating
on Brazil, meaning that an upgrade of the sovereign credit
rating would not prompt a rating or outlook change at Banco BMG.
If, on the other hand, the foreign currency sovereign credit
rating is lowered or its outlook revised to negative, the
foreign currency rating on Banco BMG would be changed in tandem.

VARIG: Debt Dilemma Likely to Hinder Reorganization
Analysts and officials believe that Brazilian flagship airline
still faces a major debt problem as part of its reorganization,
relates Dow Jones Newswires.

Varig has debts totaling approximately BRL9 billion, of which
BRL2.5 billion are owed to the Federal Tax Authority and to the
Federal Airport Authority.

Last week, the airline signed a memorandum of understanding with
Portugal's TAP Air Portugal (TPA.YY) on ways for the Portuguese
company to aid the financially stricken Brazilian carrier.

On Thursday, executives from Varig and TAP met with top
government officials to seek a solution to Varig's debt problem.

According to Dow Jones Newswires, the executives appealed to
Finance Minister Antonio Palocci to "marry up" Varig's BRL2.5
billion in government-held debts with the BRL2.5 billion in
damages awarded to it by a federal appeals court last year for
losses from government price control policies in the 1990s.

However, Finance Ministry officials said Palocci rejected the
appeal, saying the federal government was still in the process
of appealing the court decision.

Finance Ministry officials added Palocci was unwilling to cancel
the government's appeal in the price control case because of the
administration's commitment to fiscal austerity.

Meanwhile, Pedro Galdi, an airline industry analyst for the ABN-
Amro Bank subsidiary in Brazil believes that the federal
government "will eventually give Varig a break."

"It's a fact that, if Varig were to go under, its rivals would
not have the scale to be able to take over all of its routes."

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:


* HAITI: World Bank Approves $2M Grant
The World Bank Group's Board of Directors approved Tuesday a
US$2 million grant from the International Development
Association (IDA) to assist the Government of Haiti in its
efforts to strengthen economic governance.  

"Without careful and accountable management of public resources      
- including those supplied by donors - poverty reduction,
emergency relief, and recovery will not be effective," said
Caroline Anstey, World Bank's Country Director for the
Caribbean. "The grant approved today supports more inclusive
government policies and programs not only by strengthening the
public's access to information, but by having civil society
groups monitor and oversee the progress of government reform."  

The Economic Governance Technical Assistance Grant (EGTAG) aims
to improve the government's ability to program, execute and
track use of public resources and better link them to concrete
development goals. It will also strengthen the government's role
as an overseer of procurement practices. A human resource
management plan and system will be developed. The grant will
also assist with the development of the Anti-Corruption Unit as
an effective check on corruption while also encouraging the
greater involvement of civil society in its own operations, and
as a monitor of economic governance reforms. Finally, the grant
will fund an adequate system for communicating information on
the reform programs, and coordinating activities financed by
different donors.

Specifically, the project will support the following activities:

Financial Resource Management: This component will aim to
develop the government's capacity to produce and execute a
budget, track its implementation, and reduce irregular uses and

Human Resource Development: This component will support the
development of a Human Resource Management System and the
strengthening of human resources capacity under the direction of
the Human Resources Unit within the Prime Minister's Office.

Anticorruption and Civil Society Engagement: The EGTAG will help
develop the Anticorruption Unit capacity, including skills and
techniques needed for diagnosing institutional vulnerabilities
and the design of remedies. It will also provide assistance in
drafting improved laws, such as a freedom of information law,
and fund an evaluation of the early performance of the
mechanisms for monitoring of economic governance reforms by
civil society organizations.

Communication, Coordination and Project Management: This
component will strengthen the Ministry of Economy and Finance
program for communication of economic governance reforms to the
public, enhance its ability to coordinate donor programs in
economic governance and strengthen the Project Coordination

"The proposed operation is part of a package of assistance the
Bank is providing to Haiti in the area of economic governance,"
said Linn Hammergren, World Bank's team leader for the grant.
"The grant approved today is intended to build on progress
already achieved by the Low-Income Countries Under Stress Trust
Fund, and the Economic Governance Reform Operation, to move
Haiti towards   more sustainable patterns of good economic

The World Bank's Board of Directors approved a two-year
Transitional Support Strategy for Haiti on January 6, 2005,
along with two operations for US$73 million to support economic
governance reforms and emergency recovery efforts in flood-
affected areas.  The two operations, financed by the
International Development Association (IDA), are the first
approved by the Bank for the Government of Haiti since 1996.

The Bank's Transitional Support Strategy is built on two
pillars: one is to help the government deliver hope to the
population through quick wins-in the provision of basic services
and job creation; and the second is to restore credibility in
public institutions by helping the government launch reforms
that promote sound economic governance and institutional

The Bank is providing a total of US$75 million in financing from
IDA this fiscal year, of which US$38 million will be provided in
the form of grants. In addition to these US$75 million, the
World Bank is providing a grant of US$6.4 million drawn from the
LICUS Trust Fund.  The Bank has disbursed US$50 million from IDA
and from the Low-Income Countries Under Stress (LICUS) Trust
Fund. The Bank also expects to be able to provide 100 percent of
its IDA assistance on grant terms for investment projects in
World Bank fiscal year 2006.

CONTACT: World Bank  
         Karina Manasseh
         Phone:(202) 473-1729


AHMSA: Kicks Off Study of Timna Copper Mine
Mexican steelmaker Altos Hornos de Mexico SA (AHMSA) has started
conducting a study on how to revive Israel's Timna copper mine
following authorization from Israel's national infrastructure

The Company, which created a subsidiary in Israel known as Timna
Mines Ltd., is likely to complete the studies in one year.

"If [AHMSA] shows copper can be produced in an economically
feasible way, then it can receive a development permit," said
Israeli mining commissioner Yaakov Mimran.

According to reports, AHMSA also needs to prove that it complies
with environmental protection regulations.

Troubled Company Reporter - Latin America earlier reported the
AHMSA will invest US$100 million in a pilot for the project. As
part of the pilot, AHMSA will employ 700 people, training them
as miners, at Timna through the end of 2006.

AHMSA posted a 1,318% increase in profits in the 1Q05,
registering MXN1.74 billion (US$158 million) compared to ARS123
million in the 1Q04. The Company also saw its sales of steel
increase 3% to 645,000t in the first quarter compared to 1Q04,
while sales revenues increased 55.5% to MXN5.8 billion during
the same period.

Since its defaulted on US$187 billion in debt, AHMSA has seen
its fortunes turn on soaring steel prices.

         International Operations
         Prolongacion Juarez s/n
         Monclova, Coah., 25770
         Phone: + 52 (866) 649 34 00
         Fax: + 52 (866) 649 23 10
         Web site:


PDVSA: Denies Reports on Alleged Transfer of Orimulsion Rights
"PDVSA reminds public opinion that its business policy, as
stated on numerous occasions, is aimed at raising the value of
our main natural resource: oil, and the development of third-
party strategies which do not undermine the rights of the
Republic, but preserve our national sovereignty."

The version contained in Sunday's El Universal newspaper
regarding the alleged transfer by Petroleos de Venezuela of "all
rights over the Orimulsion(R) trademarks and patents, without
any reservation or limitation whatsoever" is totally untrue.

Through Bitor, PDVSA signed in 2001 a joint venture agreement
with China National Petroleum Corporation and Petrochina Fuel.
The agreement in question was totally in accordance the
Corporation's internal regulations and with the laws of the
Republic in force at the time, and by means of which Orifuel
Sinoven S.A. (Sinovensa), a company to engage in the manufacture
Orimulsion(R), was founded.

By means of this agreement, Sinovensa would share -prior
agreement with Intevep- the Orimulsion(R) patent, which is the
Bolivarian Republic of Venezuela's property. The partner
companies, like PDVSA, normally use technologies from other
countries and companies in the development of their activities.
As it is standard practice internationally, Sinovensa will pay a
royalty to the owner for the use of this technology, and it is
so established in the pertinent legal document.

The object of this joint venture is the construction of a 7.25
million metric ton per year module for the manufacture of
Orimulsion(R), to be built in the Jose Industrial Complex areas,
together with the corresponding facilities for shipping the
finished product.

The aforementioned newspaper version, which alleged furthermore
that PDVSA had transferred its list of Orimulsion(R) customers
and contracts to Sinovensa, is totally without foundation in
fact. PDVSA continues fulfilling its commitments to its
customers regarding Orimulsion(R) supplies, in accordance with
the contracts in force, from its plant located in Morichal, in
the Orinoco Oil Blt.

CONTACT: Petroleos de Venezuela S.A.
         Edificio Petroleos de Venezuela
         Avenida Libertador, La Campina, Apartado 169
         Caracas, 1010-A, Venezuela
         Phone: +58-212-708-4111
         Fax: +58-212-708-4661
         Web site:

PDVSA: IDB Apprised of Experience in Social Development
Issues such as PDVSA's solid financial standing, the state-owned
oil company's corporate budget, and the role of oil in levering
social development in Venezuela, were amply covered at the
meeting held by the Energy and Petroleum Minister and President
of Petroleos de Venezuela, Rafael Ramirez Carreno, with members
of the Inter-American Development Bank's Executive Board.

Minister Ramirez considered that the meeting had afforded an
excellent opportunity to show the world what is being done in
Venezuela, something that has no equal in Latin America.

"We are very happy and proud of the role being played by our
country and by the New PDVSA", he said.

The corporate finance subject was presented and developed
extensively by Ramirez, who dwelt on the budget, income, profits
and strengths of the national oil company.

Ramirez explained to his IDB guests that PDVSA devotes 26% of
its budget to social development. He added that US$6.6 billion
are set aside for investment in the areas of oil, natural gas
and refining. Similarly, he pointed out that PDVSA invests $1.8
billion in social development through the Missions Fund for the
needy, the Zamora Fund for the development of Agriculture, and
the Infrastructure Fund.

"Our budget is structured on the basis of a $23 per barrel
price, and we have at the moment an average per-barrel income of
$39.80. In this sense, he explained how, after deducting the
royalty and income tax legal commitments, "We are enabled by the
rules to continue contributing to the Fund for the Social
Development of the Country (Fondespa). In 2004 Fondespa had
available $2 billion, which were invested in important projects,
of which the IDB was apprised. This year Fondespa has $700
million, allowing us thereby to continue sustaining these
national development projects".

Worthy of note among other subjects touched upon were the
Petrosur and Petrocaribe energy cooperation initiatives with
countries in Latin America and the Caribbean.

Rapprochement Mission

IDB Representative Rom n Mayorga was accompanied by the
executive directors for Venezuela, Panama, Belize, Costa Rica,
El Salvador, Guatemala, Honduras, Nicaragua, Brazil, Surinam,
Bahamas, Barbados, Guyana, Jamaica, Trinidad and Tobago,
Austria, Denmark, Spain, Finland, France, Norway, Sweden,
Germany, Belgium, the Low Countries, Israel, Italy, Switzerland,
Colombia, Peru, Chile, Ecuador, Uruguay, Argentina, Haiti,
Japan, Korea, Croatia, Slovenia, Portugal and the United
Kingdom. Besides Minister Ramirez, members of the PDVSA Board of
Directors were also present.

The IDB mission spokesman indicated that the visit was included
in the organization's mandate to produce a rapprochement with
the member countries with a view to learning about their
experiences and realities, so as to identify areas for future
collaboration and help.

PDVSA: To Hire Replacements for Fired Workers
PDVSA Deputy President of exploration and production Luis Vierma
blamed the government's decision to fire 20,000 skilled workers
in 2003 for the current state of "emergency" at the state oil

Business News Americas recalls that President Hugo Chavez fired
the workers for supporting the 2002-2003 oil strike that nearly
toppled his administration.

"If I was to tell you that a company lost 20,000 employees that
it educated and sent to courses abroad and in Venezuela so that
they were better professionals, and that these people left and
we are not in an emergency, that would be very foolish," Vierma

PDVSA has ruled out taking back fired workers to address the
issue of depleted workforce. Instead, the Company will hire new
employees and institute special training programs for them in
the form of crash courses in several areas of operation.

"We are going to recover that lost expertise and for that we
have a group of young people who have a different work attitude
and a great desire to forge themselves a future in PDVSA,"
Vierma said.

"How long will this emergency last? A long time... An oil
engineer is not made in a year," he added.

PDVSA: Lawmakers Recommend 60% Control Over New JVs
The National Assembly investigating the operating agreements
signed between PDVSA and private oil firms in the 1990s advised
that PDVSA should hold at least a 60% stake in the new joint
venture partnerships to be established with these firms, reports
Business News Americas.

In April, Energy and Oil Minister Rafael Ramirez ordered the
conversion of the 32 existing agreements into joint venture
partnerships, under which PDVSA would hold at least a 51% stake.

Ramirez, who is also president of PDVSA, gave the companies
until December 31 to migrate to the new JVs.

In order to qualify for the new JVs, companies must pay back
taxes to national tax authority Seniat, which has said the 22
companies in the operating agreements owe about US$2 billion in
unpaid income tax.


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

Troubled Company Reporter - Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA. John D. Resnick, Edem Psamathe P. Alfeche and
Sheryl Joy P. Olano, Editors.

Copyright 2005.  All rights reserved.  ISSN 1529-2746.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
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Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.

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* * * End of Transmission * * *