TCRLA_Public/050715.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 15, 2005, Vol. 6, Issue 139

                            Headlines


A R G E N T I N A

AGUAS PROVINCIALES: Galicia Partnership Expected to Continue
ARBOLEA PATAGONICA: Court Mandates Liquidation Process
COCOLOR S.R.L.: Liquidates Assets to Pay Debts
COVALPET S.A.: Court to Oversee Bankruptcy Proceedings
EMBERSON HOTELS: Enters Bankruptcy on Court Orders

EMPRESA DE TRANSPORTES: Begins Liquidation
IRSA: Buys 6,309,060 Ordinary via Open Market
MAGIK S.A.: Initiates Bankruptcy Proceedings
PAN AMERICAN ENERGY: Secures $250M Loan From IFC
SOCIEDAD TECNICA: Court Converts Reorganization to Bankruptcy

TAMECO S.R.L.: Court Orders Liquidation


B R A Z I L

CSN: Mulls Reopening of Perpetual Bond Issue
GRUPO VOTORANTIM: Hopes to Conclude Votocel Sale Next Month
PARMALAT: Judge Throws Out Fraud Allegations vs. Bank of America
RBS PARTICIPACOES: S&P Affirms 'B-' Corporate Credit Rating
USIMINAS: CVRD Affirms Commitment, Backs Investment Plan

VARIG: Venezuela's Conviasa Eyeing Stake in Uruguayan Airline


M E X I C O

BALLY TOTAL: Discloses Financial Updates, Seeks Waiver Extension


P E R U

* PERU: Fitch Assigns 'BB' to Upcoming Dollar Issue


U R U G U A Y

GALICIA URUGUAY: Argentine Central Bank OKs Boden Transfer


V E N E Z U E L A

PDVSA: Likely to Postpone Gas License Grants to Yearend


     - - - - - - - - - -


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

AGUAS PROVINCIALES: Galicia Partnership Expected to Continue
------------------------------------------------------------
Banco de Galicia has until today, July 15, to reaffirm its
commitment to water utility Aguas Provinciales de Santa Fe,
reports Business News Americas. As proof of its intention to
stay on as minority partner, Galicia, together with Emgasud -
its partner in Aguas Provinciales - must hand the Santa Fe
government today the purchase contracts and bank guarantees
needed to continue operating the utility.

In addition, Galicia and Emgasud will have to present the Santa
Fe government with a work proposal, which must include the
acceptation that rates will not be raised this year and that the
contract will be renegotiated in 2006.

They will also need to show authorities the contract for the
technical operation of Aguas Provinciales, signed with the
former operator, French firm Suez, and valid until the end of
next year.

"There is no problem in signing these commitments. We are
certain that we can make the company profitable and efficient
with only a few adjustments that will not involve the number of
staff," the new owners of Aguas de Santa Fe were quoted as
saying.

Suez announced its exit in May after talks with local
authorities over a tariff hike failed.


ARBOLEA PATAGONICA: Court Mandates Liquidation Process
------------------------------------------------------
Arbolea Patagonica S.R.L. enters bankruptcy protection after
Court No. 2 of Comodoro Rivadavia's civil and commercial
tribunal ordered the Company's liquidation. The order
effectively transfers control of the Company's assets to a
court-appointed trustee who will supervise the liquidation
proceedings.

Infobae reports that the court selected Walmyr Herberto Grosso
Sheridan as trustee. Mr. Sheridan will be verifying creditors'
proofs of claim until the end of the verification phase on Aug.
19, 2005.

Argentine bankruptcy law requires the trustee to provide the
court with individual reports on the forwarded claims and a
general report containing an audit of the company's accounting
and business records. The individual reports will be submitted
on Oct. 7, 2005 followed by the general report, which is due on
Dec. 5, 2005.

CONTACT: Arbolea Patagonica S.R.L.   
         Benito Grillo 185
         Comodoro Rivadavia (Chubut)

         Mr. Walmyr Herberto Grosso Sheridan, Trustee
         Rivadavia 985
         Comodoro Rivadavia (Chubut)


COCOLOR S.R.L.: Liquidates Assets to Pay Debts
----------------------------------------------
Buenos Aires-based Cocolor S.R.L. will begin liquidating its
assets following the pronouncement of the city's civil and
commercial Court No. 18 that the Company is bankrupt, reports
Infobae.

The bankruptcy ruling places the company under the supervision
of court-appointed trustee, Maria Luisa Ledesma. The trustee
will verify creditors' proofs of claim until Oct. 13, 2005. The
validated claims will be presented in court as individual
reports.

Ms. Ledesma will also submit a general report, containing a
summary of the company's financial status as well as relevant
events pertaining to the bankruptcy.

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

CONTACT: Cocolor S.R.L.
         Cucha Cucha 2651
         Buenos Aires

         Ms. Maria Luisa Ledesma, Trustee
         Avda Cordoba 1351
         Buenos Aires


COVALPET S.A.: Court to Oversee Bankruptcy Proceedings
------------------------------------------------------
Court No. 2 of Comodoro Rivadavia's civil and commercial
tribunal ordered the liquidation of Covalpet S.A. after the
Company defaulted on its obligations, Infobae reveals. The
liquidation pronouncement will effectively place the company's
affairs as well as its assets under the control of Walmyr
Herberto Grosso Sheridan, the court-appointed trustee.

Mr. Sheridan will verify creditors' proofs of claim until Aug.
19, 2005. The verified claims will serve as basis for the
individual reports to be submitted in court on Oct. 7, 2005. The
submission of the general report follows on Dec. 5, 2005.

The case will end with the disposal of the company's assets in
favor of its creditors.

CONTACT: Mr. Walmyr Herberto Grosso Sheridan, Trustee
         Rivadavia 985
         Comodoro Rivadavia (Chubut)


EMBERSON HOTELS: Enters Bankruptcy on Court Orders
--------------------------------------------------
Buenos Aires' civil and commercial Court No. 22 declared
Emberson Hotels S.A. bankrupt after the Company defaulted on its
debt payments. The bankruptcy order effectively places the
Company's affairs as well as its assets under the control of
court-appointed trustee, Sara Clara Gusner (Sindico Suplente).

The trustee tasked with verifying the authenticity of claims
presented by the Company's creditors. The verification phase is
ongoing until July 31, 2005.

Following claims verification, the trustee will submit the
individual reports based on the forwarded claims for final
approval by the court on Nov. 14, 2005. A general report will
also be submitted on Dec. 27, 2005.

Infobae reports that Clerk No. 44 assists the court on this
case, which will end with the disposal of the company's assets
in favor of its creditors.

CONTACT: Sara Clara Gusner (Sindico Suplente)
         Avda Raul Scalabrini Ortiz 2089
         Buenos Aires


EMPRESA DE TRANSPORTES: Begins Liquidation
------------------------------------------
Empresa de Transportes Los Andes S.A.C. of Buenos Aires will
begin liquidating its assets after Court No. 12 of the city's
civil and commercial tribunal declared the Company bankrupt.
Infobae reveals that the bankruptcy process will commence under
the supervision of court-appointed trustee, Jorge Fernando
Podhorzer.

The trustee will review claims forwarded by the Company's
creditors until Oct. 3, 2005. After claims verification, Mr.
Podhorzer will submit the individual reports for court approval
on Nov. 14, 2005. The general report will follow on Dec. 27,
2005. Clerk No. 23 assists the court on this case.

CONTACT: Mr. Jorge Fernando Podhorzer, Trustee
         Pasaje del Carmen 716
         Buenos Aires


IRSA: Buys 6,309,060 Ordinary via Open Market
---------------------------------------------
Inversiones y Representaciones S.A. revealed in a letter to the
Comision Nacional de Valores on July 11, 2005 that it acquired
from the market the amount of 6,309,060 ordinary shares with
face value pesos 0.10 each and with one vote each of Alto
Palermo S.A. (APSA) for a total amount of pesos $3,517,568.80,
which represents the 0.80% of the outstanding authorized
capital. The Company has not intention to substantially modify
its participation in Alto Palermo S.A. (APSA).

CONTACT: IRSA Inversiones y Representaciones S. A.
         Alejandro Elsztain, Director
         Gabriel Blasi, CFO
         Tel: +011-5411 4323-7449
         E-mail: finanzas@irsa.com.ar


MAGIK S.A.: Initiates Bankruptcy Proceedings
--------------------------------------------
Buenos Aires' civil and commercial Court No. 1 declared Magik
S.A. "Quiebra," reports Infobae. Clerk No. 1 assists the court
on the case, which will close with the liquidation of the
Company's assets to repay creditors.

Jose Eduardo Obes, who has been appointed as trustee, will
verify creditors' claims until Sep. 21, 2005 and then prepare
the individual reports based on the results of the verification
process. After presenting these reports to court, the trustee
will submit the general report.

CONTACT: Mr. Jose Eduardo Obes, Trustee
         Lavalle 1619
         Buenos Aires


PAN AMERICAN ENERGY: Secures $250M Loan From IFC
------------------------------------------------
The International Finance Corporation, the private sector arm of
the World Bank Group, has signed a $250 million loan for
Argentina-based Pan American Energy LLC. A joint venture company
between BP plc and Bridas Corporation, Pan American is the
second-largest oil and gas producer in Argentina, accounting for
about 13 percent of the country's output.

The loan will finance part of the Argentine Branch's 2005
capital expenditure program, which is primarily focused on its
operations in the Golfo San Jorge basin in southern Argentina.

IFC's US$250 million loan package comprises a US$115 million
loan for IFC's own account and a US$135 million loan for the
account of commercial banks. Commercial bank participation was
closed with an oversubscription. The seven-year tenor of the IFC
syndicated loan is the longest tenor raised for an Argentine
borrower since the country's economic crisis in 2001.

Rashad Kaldany, IFC's Director for Oil, Gas, Mining, and
Chemicals, said, "IFC's financing will support a company that is
recognized as a good corporate citizen. Pan American Energy has
a strong development impact in the regions in which it operates,
through high levels of employment, contributions to fiscal
revenues, and development of local industries and small and
medium enterprises. In addition, its substantial gas production
and strategically located gas reserves provide a clean source of
fuel and help alleviate the current supply shortage in
Argentina"

Atul Mehta, IFC's Director for Latin America and the Caribbean,
noted, "IFC is pleased to continue supporting Argentina's
successful export-oriented companies, which have played an
important role in the recovery of the country's economy." He
added, "This operation complements IFC's regional strategy to
act as a catalyst for investment in Argentina by helping to
mobilize long-term financing from the international commercial
markets."

Richard Spies, CEO of Pan American Energy, said, "We are
delighted to have built on our long-standing relationship with
IFC, in a transaction that is aligned with our company's long-
term development programs. We believe that IFC's interest in
environmental and social sustainability will only help us
improve on a strong, industry-leading performance."

Rodolfo Berisso, Pan American Energy's Vice President of Finance
and Planning, added, "With IFC's presence, we have been able to
set a new benchmark for Argentine companies in long-term
financing from international commercial banks. IFC conducted the
entire process in a very efficient manner that allowed
completion within the agreed timeline."


SOCIEDAD TECNICA: Court Converts Reorganization to Bankruptcy
-------------------------------------------------------------
Sociedad Tecnica Mediterranea S.R.L., which was undergoing
reorganization, entered bankruptcy on orders from Cordoba's
civil and commercial Court No. 8, according to Infobae. The
court assigned Susana Nieves del Milagro Martin, Liliana Beatriz
D Ortencio y Jose Angel Diani as the Company's receivers.

The credit verification process will be done in the ordinary
course according to local bankruptcy law, says the report.

CONTACT: Sociedad Tecnica Mediterranea S.R.L.
         Huergo 4381
         Barrio San Lorenzo (Cordoba)  

         Ms. Susana Nieves del Milagro Martin
         Ms. Liliana Beatriz D Ortencio y Jose Angel Diani  
  
         La Rioja 619
         Ciudad de Cordoba (Cordoba)


TAMECO S.R.L.: Court Orders Liquidation
---------------------------------------
Tameco S.R.L. prepares to wind-up its operations following the
bankruptcy pronouncement issued by Court No. 2 of Comodoro
Rivadavia's civil and commercial tribunal. The declaration
effectively prohibits the company from administering its assets,
control of which will be transferred to a court-appointed
trustee.

Infobae reports that the court appointed Mr. Walmyr Herberto
Grosso Sheridan as trustee. Mr. Sheridan will be reviewing
creditors' proofs of claim until Aug. 19, 2005. The verified
claims will serve as basis for the individual reports to be
presented for court approval on Oct. 7, 2005. The trustee will
also submit a general report of the case on Dec. 5, 2005.

The case will end with the sale of the Company's assets.
Proceeds from the sale will be used to repay the Company's
debts.

CONTACT: Tameco S.R.L.  
         Pedro Ortega 2945
         Barrio Humberto Beghin
         Comodoro Rivadavia (Chubut)

         Mr. Walmyr Herberto Grosso Sheridan, Trustee
         Rivadavia 985
         Comodoro Rivadavia (Chubut)


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

CSN: Mulls Reopening of Perpetual Bond Issue
--------------------------------------------
After raising US$500 million from a recent bond issue, steel
company Companhia Siderurgica Nacional SA (SID) is planning to
reopen an issue of perpetual bonds in hopes to raise another
US$100 million to US$200 million, Dow Jones Newswires reports,
citing a person familiar with the situation.

"If we decide to reopen, the value should reach $100 to $200
million this time," the source, who requested anonymity, said,
adding, "We are expecting to place the bonds soon, maybe this
week."

The planned issue would be coordinated by Credit Suisse First
Boston and Deutsche Bank, the source said.

CONTACT: Mr. Marcos Leite Ferreira
         CSN - Investor Relations
         Phone: (55 11) 3049-7591
         E-mail: marcos.ferreira@csn.com.br
         Web site: http://www.csn.com.br/


GRUPO VOTORANTIM: Hopes to Conclude Votocel Sale Next Month
-----------------------------------------------------------
Mining and industrial conglomerate Grupo Votorantim is selling
its Votocel plastic film packaging unit to Argentina's Vitopel,
reports Dow Jones Newswires. The operation is valued at US$120
million and is expected to be concluded by August 1. Votorantim
said proceeds of the transaction will be reinvested into its
operations in Brazil.

Votocel, a market leader in Brazil for producing bi-oriented
polypropylene (BOPP), ended 2004 with revenues of BRL360
million.

Vitopel, which is controlled by private equity funds of JP
Morgan and Credit Suisse First Boston, operates in Brazil and
Argentina.


PARMALAT: Judge Throws Out Fraud Allegations vs. Bank of America
----------------------------------------------------------------
Judge Lewis A. Kaplan of the U.S. District Court in Manhattan
dismissed some allegations of wrongdoing by Bank of America
Corp. arising from an equity investment in a Parmalat subsidiary
in Brazil and loans to other Parmalat subsidiaries.

The plaintiffs had sought to hold the bank liable for its
actions related to the transactions. They also claimed the bank
knew of Parmalat's true value, but was "motivated to
participate" in a fraud to keep its lucrative banking
relationship with the Company.

Judge Kaplan also dismissed claims against Citigroup Inc. over
its role in various transactions, as well as its alleged role in
approving a 2003 Parmalat press release related to a Citigroup
financing vehicle, Buconero LLC. Buconero means "black hole" in
Italian.

Kaplan, however, left intact claims against Citigroup and
Italy's Banca Nazionale del Lavoro SpA involving allegedly
worthless invoices. He also refused to throw out claims that
Credit Suisse Group Inc.'s Credit Suisse First Boston unit
designed some transactions it knew Parmalat would use to conceal
debt.

The lawsuit was filed on behalf of investors who bought Parmalat
securities from 1999 through 2003. The 368-page complaint
details various alleged fraudulent acts by Parmalat and the
banks.

Parmalat filed for bankruptcy in 2003, and several of its former
top executives, including Parmalat founder Calisto Tanzi, are
facing criminal charges stemming from a probe into the Company's
collapse.


RBS PARTICIPACOES: S&P Affirms 'B-' Corporate Credit Rating
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed Wednesday its 'B-'
local and foreign currency corporate credit ratings on RBS
Participacoes S.A. (RBS), as well as its 'B-' rating on RBS' $58
million MTNs maturing in 2007. At the same time, the outlook was
revised to positive from stable.

Brazil-based RBS Participacoes S.A. is part of the RBS Group
(RBS), which operates in television and radio broadcasting,
newspaper publishing, and other media businesses in the southern
states of the country. Total gross debt for the combined RBS
entities as of May 2005 was $215 million.

"The outlook revision reflects the consistent improvements in
RBS' cash flow protection measures, which are fueled mainly by
the positive performance of the advertising market in Brazil but
also reflect a more intrinsic change in the company's cost
structure," said Standard & Poor's credit analyst Milena
Zaniboni.

The ratings on RBS Group reflect the Group's susceptibility to
the volatile results of the media industry in Brazil, its
leveraged financial profile, and its challenges to service debt
due to its still-thin free operating cash generation. While the
profile of the Group's bank debt and senior notes has improved
considerably since 2003, it is expected that RBS will have to
resort to its cash reserves to meet all amortizations until 2006
and will still run some refinancing risk in 2007. These
vulnerabilities are partially offset by the group's dominant
share of audience and advertising in its service area, its
quality programming and the distribution of TV Globo's high-
quality content, the sustained recovery of the Brazilian media
industry at least during 2005, and its track record of financial
support from shareholders.

The analysis is based on a combined view of RBS Group companies
to reflect the group's commitments and financial flexibility in
a more comprehensive way. Financial information includes the
combined figures of all media entities (Media Companies, which
also includes the cash collection company RBS Administracao e
Cobrancas), RBS Participacoes, and offshore RBS Par Ltd. RBS
Administracao e Cobrancas is not part of the group of companies
that guarantee the notes.

The positive outlook indicates that Standard & Poor's expects
RBS to be able to sustain the improved operating profitability
it has been posting in the past few quarters, including a higher
positive free cash flow to cover a wider part of its debt
maturities in the next several years. Nevertheless, earnings
volatility and some refinancing risk continue to constrain the
rating. If RBS is able to sustain its current stronger results,
represented by FFO to debt of higher than 15% and total debt to
EBITDA lower than 4x in the short term, and solve the
refinancing requirements for 2007, the ratings could be raised.
On the other hand, as leverage is still high and financial
results are linked to the local economy, a deceleration or
downturn in advertising or economic prospects for Brazil would
lead to an outlook revision to stable or even negative.

Primary Credit Analyst: Milena Zaniboni, Sao Paulo (55) 11-5501-
8945; milena_zaniboni@standardandpoors.com


USIMINAS: CVRD Affirms Commitment, Backs Investment Plan
--------------------------------------------------------
Apparently mining giant Companhia Vale do Rio Doce (CVRD) has
changed its mind about selling its stake in steel firm Usiminas
after the latter revealed a plan to build a new blast furnace.
According to Dow Jones Newswires, steel firm Usiminas plans to
build a new blast furnace at its Ipatinga unit in Minas Gerais
state. The plan seemed to appeal to CVRD, which said that it is
willing to keep its stake in the Company and is prepared to put
up cash for new investments.

"If Usiminas invests, we are ready to remain in the company and
also to put in more money so the firm can build a new blast
furnace, grow and gain scale," CVRD's chairman, Roger Agnelli,
was quoted as saying.

Usiminas is conducting feasibility studies for building the
blast furnace, which would add some 2 million metric tons of
steel production per year and require some US$800 million
investments. The Company is due to present the report to its
board of directors on August 24.

CVRD owns 23% of Usiminas, the largest single stake in the
company, but is not part of the controlling group of
shareholders.

Usiminas is the leader supplier of flat steel products to the
Brazilian domestic market, besides selling its coated and
uncoated flat steels to a number of industries and distributors
in foreign markets.

CONTACT: Usinas Siderurgicas Minas Gerais SA
         Mr. Bruno Seno
         Phone: +55 (31) 3499-8710
         E-mail: brunofusaro@usiminas.com.br


VARIG: Venezuela's Conviasa Eyeing Stake in Uruguayan Airline
-------------------------------------------------------------
Venezuela's tourism minister announced Wednesday that the
country's new state airline Conviasa is preparing to buy
Brazilian carrier Varig's 49% stake in the Uruguayan airline
Pluna, reports Reuters.

"A feasible scenario would be to buy Varig's stake, make a
strategic alliance between Conviasa and Pluna and consolidate a
joint venture to take advantage of equipment and routes,"
Tourism Minister Wilmar Castro was quoted as saying.

Conviasa currently operates two planes but plans to expand the
fleet to 12 aircraft this year. Venezuelan President Hugo Chavez
reportedly plans to invest US$95 million in the expansion as
part his plan to restore a national airline after Viasa went
bankrupt in 1997.

VARIG wants to unload its 49% stake in Pluna as it tries to
maneuver itself out of its financial predicament. Weighed down
by BRL9.5 billion of debts, VARIG filed for protection from
creditors in a Rio de Janeiro court on June 17.

CONTACT:  VARIG S.A. (Viacao Aerea Rio-Grandense)
          Avenida Almirante Silvio de Noronha, 365
          Rio de Janeiro, RJ 20021-010
          Brazil

          VICENTE CERVO - FOREIGN REPRESENTATIVE OF VARIG
          Attorneys for the Foreign Representative:
               PILLSBURY WINTHROP SHAW PITMAN LLP
               1540 Broadway
               New York, New York 10036-4039
               (212) 858-1000 (Phone)
               (212) 858-1500 (Fax)
               Rick B. Antonoff (RBA-4158)


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

BALLY TOTAL: Discloses Financial Updates, Seeks Waiver Extension
----------------------------------------------------------------
Bally Total Fitness Holding Corporation (NYSE: BFT) announced
Wednesday selected operating data for the quarter ended March
31, 2005 and five months ended May 31, 2005.

In addition, it also announced its intention to seek a 90-day
extension of the existing waivers from its public noteholders
until October 31, 2005. The original waivers, which relate to
the Company's delay in providing financial statements as
required by indentures governing its outstanding notes, expire
on July 31, 2005.

Commenting on the status of the restatement process, Paul
Toback, Chairman and Chief Executive Officer stated, "During the
past nine months, we have made substantial progress towards
completing this audit despite having to replace several key
finance executives, hiring a new CFO, Treasurer and Controller
and dealing with many complex accounting issues, several of
which were unearthed during the process. Now I believe that
barring any unforeseen circumstances, we are close to completing
this long process despite needing a little more time to do so."

Mr. Toback added, "On the issue of the performance of the
business, our business redesign through our Build Your Own
Membership program, is in the early stages of implementation and
we are introducing it into our major markets during the second
half of this year. The preliminary indications are positive,
including early demonstrations of an improvement in the
retention of members during their first 30 days. Similarly, it
appears as though, we are experiencing an increase in our
average down payment in markets that have rolled out the Build
Your Own Membership program, which is an indication of our
customers' ability and willingness to stay and pay."

Consent for Extension of Waiver

Bally will not be able to provide its audited financial
statements for 2002-2004 by July 31, 2005 and will seek an
extension for up to 90 days of the waivers of reporting covenant
defaults from holders of its 10-1/2% Senior Notes due 2011 and
9-7/8% Senior Subordinated Notes due 2007 under the indentures
governing the notes. These defaults result from the Company's
previously announced failure to timely provide its financial
statements for the second and third quarters and full year 2004
and the first quarter of 2005 with the Securities and Exchange
Commission and deliver such financial statements to the trustee
and holders of notes pursuant to the indentures.
The original waivers, which were obtained in December 2004,
expire on July 31, 2005.

If the waivers are not extended, the Company will be in default
under its indentures after July 31, 2005. At any time
thereafter, the obligations of the Company under its public
notes could be accelerated after notice and the passage of cure
periods under the indentures. Moreover, the Company's credit
facility provides for a cross-default 10 days after delivery of
such notice under either indenture, which would give the
Company's lenders under the credit facility the right to
accelerate the Company's obligations thereunder.

As a result of the previously disclosed investigation conducted
by the Company's Audit Committee, which found multiple errors in
the Company's past accounting, the Company decided to no longer
rely on Ernst & Young LLP's reports with respect to prior year
audits and engaged KPMG LLP to audit the Company's financial
statements for 2002-2004.

Bally's management has devoted a significant amount of their
efforts and Company resources towards completing the multi-year
audit. A key part of this effort has been bringing in new
financial and accounting leadership. In recent months, the
Company has appointed a new Chief Financial Officer, Treasurer,
Controller and Assistant Controller. Given these parties'
limited tenure with Bally, the involvement of a new auditing
firm and the complexity surrounding the accounting issues
involved, including, among others, revenue recognition and the
valuation of goodwill and other intangible assets relating to
prior acquisitions, Bally does not expect to complete such
audits by July 31, 2005.

Resolution of all remaining audit issues is expected to be
completed in order to make the necessary filings with the
Securities and Exchange Commission, the trustee and the
noteholders no later than October 31, 2005. The Company also
expects a delay in filing its 10-Q report for the quarter ended
June 30, 2005, which would also be covered by the waiver
extension.

Operational Overview

In the first five months of 2005, Bally continued the
transformation of its business according to the plan laid out
several months ago. Month-to- month memberships, an add-on
program for friends and family and a results guarantee have
helped drive results in 2005. In the first quarter of 2005, new
joining members increased 11% compared to the prior year period.
For the five months ending May 31, 2005, new joining members
rose 8% over the same period in the prior year. For the
corresponding periods, new memberships (contracts which
represent one or more members) increased 4% and 2%,
respectively, over 2004.

The total number of members at May 31, 2005 was up 1% over the
same period in 2004.

The Company is beginning to roll out its new Build Your Own
Membership program, which it expects will improve member
retention and customer satisfaction when fully implemented.

Operating Data

The following operating data reflect membership sales and cash
flow data. The following operating data has not been audited or
reviewed by KPMG LLP and therefore is subject to change, which
changes may be material individually or in the aggregate.
Interim cash flow data and/or trends should not be considered
indicative of data or trends to be expected for annual or other
interim periods.

Three Months Ended March 31, 2005

The following table shows new joining members, new memberships
sold and related data for the three months ended March 31, 2005
and 2004 (in thousands except monthly data):


Operating Data                                                        
                                      Three months ended
                                           March 31,
                                    2005         2004  % Change


New joining members                  361          325      11%

Average committed monthly fee per
member (dollars)                   $36.43       $38.52      -5%

Average committed duration per member
(in months)                          27.7         30.0      -8%
   
New memberships                       251          241       4%
  
Average committed monthly fee per
membership (dollars)               $53.16       $52.83       1%

Average committed duration per
membership (in months)               27.3         29.5      -7%
   
Gross committed membership fees:

Total Company                    $364,257     $375,614      -3%
    
Same club                        $336,529     $359,618      -6%
   
Members (end of period)             4,081        4,029       1%

Gross committed membership fees is an operating measure, which
includes potential future value of all initial membership fee
revenue, dues revenue, earned finance charges and membership-
related products and services revenue from new membership sales
in a period. It is measured on a gross basis before
consideration of any uncollectible amounts. A growing percentage
of Bally memberships are pay-as-you-go memberships that only
include one-month credit to gross committed membership fees. The
Company tracks gross committed membership revenue as an
indicator of its current sales activities.

The following table shows cash flow and selected balance sheet
data for the three months ended March 31, 2005 and 2004 and as
of March 31, 2005 and December 31, 2004 (in thousands):

Cash Flow Data

                                          Three months ended
                                                March 31,
                                       2005              2004
           
                                              
Cash provided by operating
activities                          $22,914           $13,313
   
Cash used in investing activities    (7,867)          (14,021)
   
Free cash flow (deficit)            $15,047             $(708)

Selected Balance Sheet Data

                               As of                     As of
                          March 31, 2005        December 31,
2004

Cash and equivalents           $33,412                $19,516
Total debt                     756,978                760,676
Net debt                      $723,566                $741,160

Five Months Ended May 31, 2005

The following table shows new joining members, new membership
sales and related data for the five months ended May 31, 2005
and 2004 (in thousands except monthly data):

Operating Data                                                           
                         
                                      Five months ended
                                            May 31,
                                    2005         2004  % Change

New joining members                 557          517       8%

Average committed monthly fee per
member (dollars)                 $36.15       $38.35      -6%
   
Average committed duration per member
(in months)                        27.4         29.8      -8%
   
New memberships                     390          383       2%
   
Average committed monthly fee per
membership (dollars)             $52.78       $52.84       0%
Average committed duration per
membership (in months)             26.8         29.2      -8%
   
Gross committed membership fees:
    
Total Company                  $551,680     $590,889      -7%
    
Same club                      $510,968     $566,965     -10%
   
Members (end of period)           4,070        4,033       1%

The following table shows selected cash flow data for the five
months ended May 31, 2005 and 2004 and balance sheet data as of
May 31, 2005 (in thousands):

Cash Flow Data
                                        Five months ended
                                            May 31,
                                      2005               2004

Cash provided by operating
activities                           $17,873            $12,117
     
Cash used in investing activities    (11,563)           (23,051)
     
Free cash flow (deficit)              $6,310           $(10,934)


Selected Balance Sheet Data
                                As of               As of
                            May 31, 2005      December 31, 2004

Cash and equivalents            $24,704             $19,516
Total debt                      757,152             760,676
Net debt                       $732,448            $741,160

As of July 12, 2005, the Company had no borrowings outstanding
but has issued approximately $9.8 million of letters of credit
under the $100 million revolving credit portion of its $275
million credit facility.

Bally will be hosting a conference call on Wednesday, July 13,
2005, at 11:00 a.m. Central Time. In order to participate,
please dial (800) 599-9829, international (617) 847-8703, at
least 15 minutes before the start of the call and use ID Code
"Bally Total Fitness". The conference call can also be accessed
through the Company's web site, where it will be available for
replay through July 27, 2005.

Bally Total Fitness is the largest and only nationwide
commercial operator of fitness centers, with approximately four
million members and 440 facilities located in 29 states, Mexico,
Canada, Korea, China and the Caribbean under the Bally Total
Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle
Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R)
brands. With an estimated 150 million annual visits to its
clubs, Bally offers a unique platform for distribution of a wide
range of products and services targeted to active, fitness-
conscious adult consumers.

CONTACT: Bally Total Fitness
        Matt Messinger
        Phone: (773) 864-6850
        E-mail: mmessinger@ballyfitness.com

        URL: http://www.ballyfitness.com

        Brunswick Group       
        Frank De Maria
        Phone: (212) 333-3810
        E-mail: fdemaria@brunswickgroup.com


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

* PERU: Fitch Assigns 'BB' to Upcoming Dollar Issue
---------------------------------------------------
Fitch Ratings, the international rating agency, expects to
assign a long-term foreign currency rating of 'BB' to the
Republic of Peru's upcoming US$750 million 20-year bond issue.
The Rating Outlook is Stable. This issuance is part of the
government's plan to finance a prepayment of US$1.55 billion in
Paris Club debt, as well as provide prefinancing for a portion
of 2006 public financing needs.

Fitch upgraded Peru's long-term foreign currency rating to 'BB'
from 'BB-' in November 2004, reflecting the passage of pension
reform and robust macroeconomic and fiscal performance. Since
2002, fiscal deficit reduction has proceeded in the face of a
challenging domestic political environment, which combined with
stronger growth has contributed to a decline in Peru's public
debt burden. The general government deficit, which has declined
from 2.1% of GDP in 2002 to 1.2% in 2004, is likely to fall to
1.0% of GDP this year. Given the strong performance of tax
revenues through May, even with increased expenditures in the
run-up to the 2006 elections, Fitch believes this target will be
attainable.

Solid GDP and export growth continues to underpin Peru's
sovereign creditworthiness and should provide a sufficient
buffer to deal with possible adverse shocks, whether election-
related or externally-driven. A revival in private investment
has broadened from mining and energy to include the consumer
goods sector. A solid balance of payments performance continues
to diminish Peru's vulnerability to external shocks, reflected
in international reserve accumulation of US$1.3 billion since
year-end 2004 and Peru's low external financing needs of about
15% of reserves. Peru's high net external debt declined to 110%
of external receipts in 2004 from 175% in 2000 and will continue
declining this year given benign external conditions and some
reduction of external debt with the prepayment of Paris Club
debt. However, this ratio will remain high relative to the
median of 49% for similarly rated credits.

Peruvian politics may continue to pose risks to the economic
policy framework. However, with the 2006 general election in
view, the political parties have been supporting prudent policy
settings and modest reforms to enhance their credibility with
the electorate. A smooth transition to the next government and
maintenance of prudent macroeconomic settings would be positive
for creditworthiness. On the other hand, a populist departure
from the current policy framework would be negative.

CONTACT: Theresa Paiz Fredel, +1-212-908-0534, New York
         Roger M. Scher, +1-212-908-0240, New York

MEDIA RELATIONS: Kenneth Reed +1-212-908-0540, New York



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

GALICIA URUGUAY: Argentine Central Bank OKs Boden Transfer
----------------------------------------------------------
Banco de Galicia y Buenos Aires S.A. (Buenos Aires Stock
Exchange: GALI) (the "Bank") announced Wednesday that, as part
of the exchange of liabilities for Boden 2012 bonds and cash
carried out by Banco Galicia Uruguay S.A. ("Galicia Uruguay"),
that closed on May 27, 2005, the Argentine Central Bank has
authorized the Bank to transfer to Galicia Uruguay, a wholly
owned subsidiary of the Bank, US$196 million of face value of
Boden 2012.

These bonds were used by Galicia Uruguay to settle the exchange
offer, pursuant to the expressions of interest received from its
creditors. Galicia Uruguay has accepted expressions of interest
from its creditors for US$243 million.

In addition, Grupo Financiero Galicia S.A. (Buenos Aires Stock
Exchange/Nasdaq: GGAL) ("Grupo Galicia"), the Bank's controlling
company, announced Wednesday that it has forgiven US$43 million
of subordinated negotiable obligations issued by Galicia
Uruguay.

Galicia Uruguay's exchange offer together with the debt
forgiveness by Grupo Galicia, are of direct benefit to the Bank,
not only because of the significant reduction in its
consolidated liabilities, but also because of the US$43 million
increase in its shareholders' equity resulting from Grupo
Galicia's debt forgiveness. In addition, the Bank's regulatory
capital will increase by US$64.5 million, given that the
increase in shareholders' equity allows for a greater amount of
subordinated debt (issued as part of the restructuring of the
Bank's foreign debt) to be computed as supplementary capital.

CONTACT:  Banco de Galicia Y Buenos Aires
          Tte Gral Juan D Peron 407
          Buenos Aires
          Argentina
          C1038AAI
          Phone: +54 11 6329 0000
          Fax: +54 11 6329 6100
          Home Page: http://www.bancogalicia.com.ar
          Contact:
          Juan Martin Etchegoyhen, Chairman
          Antonio R. Garces, Vice Chairman

          Grupo Financiero Galicia SA
          2nd Floor
          No 456 Tte Gral Juan D Peron
          Buenos Aires
          Argentina 1038
          Phone: +54 11 4343 7528/9475
          Home Page: http://www.gfgsa.com
          Contact: Atty. Abel Ayerza, Chairman



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

PDVSA: Likely to Postpone Gas License Grants to Yearend
-------------------------------------------------------
State oil firm PDVSA may not be able to award six offshore
natural gas blocks in the first stage of the Rafael Urdaneta
project between September and October as planned, reports
Business News Americas. Under the original timetable, PDVSA will
receive bids until July 27 and award the blocks in September-
October.

However, Tino Bonadonna, the president of Venezuelan gas
processors association (AVPG), indicated that the awarding could
be pushed back to November-December as a result of the delay in
processing the requests.

The delay is due to the "process of revising and updating all of
the clarifications that have arrived at PDVSA," Mr. Bonadonna
said.

"PDVSA is processing the body of information in order to have a
reference base before it can proceed with the phase of receiving
offers, both technical and economic," he added.

The Rafael Urdaneta Project is made up by a total of 29 blocks,
18 located in the Gulf of Venezuela and 11 in Northeast Falcon.
Together, they cover an area of approximately 30,000 square
kilometers, where probable gas reserves are estimated at 26
trillion cubic feet (TCF).

Twenty-nine national and foreign energy companies bought a data
pack for the tender in April. The licenses will have a 25-year
duration and PDVSA retains the right to obtain a 35% stake in
the projects if and when commerciality is declared.




                            ***********


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

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